Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

HSBC SAIp65

VIEWS: 199 PAGES: 52

									This Statement of Additional Information (SAI) contains details of HSBC Mutual

Fund, its constitution, and certain tax, legal and general information. It is incorporated
by reference (is legally a part of the Combined Scheme Information Document).



This SAI is dated 20 May, 2009.




   Sponsor:
   HSBC Securities and Capital Markets (India) Private Limited
   Regd. Office: 52/60, Mahatma Gandhi Road, Fort, Mumbai 400 001.


   Trustee:
   Board of Trustees
   Office: 314, D. N. Road, Fort, Mumbai 400 001.


   Asset Management Company:
   HSBC Asset Management (India) Private Limited
   Corp. & Regd. Office: 314, D. N. Road, Fort, Mumbai 400 001.
                                                                                                                                                      Statement of Additional Information


                                                                                           TABLE OF CONTENTS

                                                                                             Page No.                                                                                                    Page No.

I.    INFORMATION ABOUT SPONSOR, ASSET                                                                               5.      Joint Applicants ..................................................................... 35
      MANAGEMENT COMPANY AND TRUSTEES ...................... 2
                                                                                                                     6.      Duration of the Scheme / Plan ............................................. 35
A.    Constitution of the Mutual Fund ................................................. 2                            7.      Procedure and Manner of Winding up ................................. 35

B.    Sponsor .......................................................................................... 2           8.      Unclaimed Redemption / Dividend Amount ........................ 35
                                                                                                                     9.      Suspension of Sale / Repurchase / Switch of Units ............ 36
C.    Board of Trustees (the Trustees) ................................................... 2
                                                                                                                     10. Requirements of Know Your Customer (KYC) under
D.    Asset Management Company ........................................................ 5                                Prevention of Money Laundering Act (PMLA) ................... 36

E.    Key Employees of the AMC and relevant experience ............... 8                                             11. Freezing / Seizure of Accounts ............................................. 36

F.    Service providers ........................................................................... 14          C.   General Information ..................................................................... 36

      1. Custodian .................................................................................... 14           1.      Inter-Scheme Transfer of Investments .................................. 36

      2. Registrar & Transfer Agent ....................................................... 14                       2.      Associate Transactions .......................................................... 37

      3. Statutory auditor ......................................................................... 14              3.      Underwriting .......................................................................... 43
                                                                                                                     4.      Securities / Stock Lending by the Mutual Fund .................. 43
      4. Legal Counsel ............................................................................. 14
                                                                                                                     5.      Borrowing by the Mutual Fund ............................................ 44
      5. Fund Accountant ......................................................................... 14
                                                                                                                     6.      Master Account / Folio .......................................................... 44
      6. Collecting Bankers ..................................................................... 14
                                                                                                                     7.      Fractional Units ..................................................................... 44

II.   CONDENSED FINANCIAL INFORMATION (CFI) ............. 15                                                         8.      Personal Identification Number (PIN) .................................. 44
                                                                                                                     9.      Policy on Offshore Investments by the
III. HOW TO APPLY? ....................................................................... 21                                Scheme and the Plans thereunder ......................................... 44
                                                                                                                     10. Power to make Rules ............................................................. 45
IV. RIGHTS OF UNITHOLDERS OF THE SCHEME ................ 23                                                          11. Power to remove Difficulties ................................................ 45
                                                                                                                     12. Scheme to be binding on the Unitholders ............................ 45
V.    INVESTMENT VALUATION NORMS FOR                                                                                 13. Unambiguous and Unconditional requests ........................... 45
      SECURITIES AND OTHER ASSETS ....................................... 24
                                                                                                                     14. Acts done in good faith ......................................................... 45

VI. ACCOUNTING POLICIES AND STANDARDS ..................... 29                                                       15. Lien ........................................................................................ 45
                                                                                                                     16. Units with Depository ........................................................... 45
VII. TAX & LEGAL & GENERAL INFORMATION .................... 32                                                       17. Electronic Clearing Service (ECS) ....................................... 45

A.    Taxation on investing in Mutual Funds ..................................... 32                                 18. Client Information ................................................................. 46
                                                                                                                     19. Website ................................................................................... 46
B.    Legal Information ......................................................................... 34
                                                                                                                     20. Web transactions Facility ...................................................... 46
      1.      Nomination Facility ............................................................... 34
                                                                                                                     21. Transaction by Distributor ..................................................... 46
      2.      Transfer & Transmission of Units ........................................ 34
                                                                                                                     22. Brokers ................................................................................... 47
      3.      Pledge ..................................................................................... 34
                                                                                                                     23. Documents Available for Inspection ..................................... 47
      4.      Applications under Power of Attorney /
                                                                                                                     24. Investor Grievances Redressal Mechanism ........................ 4p7
              Body Corporate / Registered Society /
              Trust / Partnership ................................................................. 35




HSBC Mututal Fund                                                                                                                                                                                                     1
Statement of Additional Information


I. INFORMATION ABOUT SPONSOR,                                             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
ASSET MANAGEMENT COMPANY                                                  contribution towards the corpus of the Mutual Fund. HSCI is not
AND TRUSTEES                                                              responsible nor liable for any loss or shortfall resulting from the
                                                                          operation of the Scheme beyond this contribution.
THE HSBC GROUP                                                            HSCI is a member of the HSBC Group, one of the largest banking
The Sponsor of HSBC Mutual Fund is HSBC Securities and Capital            and financial services organisations, in the world. Headquartered in
Markets (India) Private Limited, a member of the HSBC Group, one          London, HSBC operates through long-established businesses in
of the largest banking and financial services organisations in the        five regions: Europe, Asia-Pacific region, Middle East, America and
world. As at December 2008, HSBC had total assets of US$ 2527             Africa. Through its global network of some 9,500 offices in 86
billion. Headquartered in London, HSBC operates through long-             countries and territories, HSBC provides a comprehensive range of
established businesses in five regions: Europe, The Asia Pacific          financial services to personal, commercial, corporate, institutional
Region, the Americas, The Middle East and Africa. Through its             and investment and private banking clients.
global network of about 9500 offices in 86 countries and territories,
HSBC provides a comprehensive range of financial services to more         HSCI offers integrated investment banking services, securities and
than 128 million customers: personal, commercial, corporate,              corporate finance & advisory. HSCI is a member of The Bombay
institutional and investment and private banking clients.                 Stock Exchange Limited and National Stock Exchange (capital and
                                                                          derivative market segments) and is also a category I merchant
HSBC Global Asset Management is the core global investment                banker and underwriter registered with Securities and Exchange
management business of the HSBC Group. With dedicated investment          Board of India.
professionals across Europe, Africa, Asia Pacific and the Americas,
HSBC Global Asset Management has strong global investment                 Equities: HSCI is primarily an institutional stockbroker, with a
capabilities that are delivered to clients locally. For institutions,     client base spanning foreign institutional investors, Indian financial
corporates and financial intermediaries, a comprehensive range of         institutions, mutual funds and select retail clients. The business is
investment management solutions are offered. For high net worth           backed by comprehensive research covering around 62 of India's
individuals, HSBC Global Asset Management works with the                  largest, actively traded securities across 13 industry groups.
relationship managers of the individuals to provide bespoke portfolio     Global Investment Banking: HSCI provides public and private sector
management services. HSBC Global Asset Management has funds               corporates and government clients with strategic and financial advice
under management & distribution of US$ 354.6 billion (as at               in the areas of mergers and acquisitions, primary and secondary
March 31, 2009).                                                          market funding, privatisations, structured financial solutions and
HSBC Asset Management (India) Private Limited, the Asset                  project export finance.
Management Company (AMC) of HSBC Mutual Fund is a subsidiary              HSCI holds 100% of the paid-up equity share capital of the AMC.
of HSBC Securities and Capital Markets (India) Private Limited.
                                                                          Financial Performance of HSCI (past three years):
A. Constitution of the Mutual Fund                                                                                                (Rs. in '000)
HSBC Mutual Fund ("the Mutual Fund" or "the Fund") has been
                                                                           Particulars         2007 - 2008      2006 - 2007      2005 - 2006
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,
                                                                           Net Worth              2,170,656        1,809,712        1,460,327
2002 with HSBC Securities and Capital Markets (India) Private
Limited, as the Sponsor and the Board of Individual Trustees. The
                                                                           Total Income           1,499,127        1,313,881        1,040,186
office of the Sub-Registrar of Assurances at Mumbai has registered
the Trust Deed establishing the Fund under the Registration Act,
                                                                           Profit after tax         496,925          441,837          387,713
1908. The Fund was registered with SEBI vide registration number
MF/046/02/5 dated May 27, 2002.                                            Assets Under                N.A.             N.A.             N.A.
The office of the Mutual Fund is at 314, D. N. Road, Fort,                 Management
Mumbai - 400 001.                                                          (if applicable)
The Trust has been formed for the purpose of pooling of capital from
the public for collective investment in securities / any other property   C. Board of Trustees (the Trustees)
for the purpose of providing facilities for participation by persons      The Sponsor has appointed a Board of Individual Trustees (the
as beneficiaries in such properties / investments and in the profits /    Trustees) for managing the HSBC Mutual Fund. The Board of
income arising therefrom.                                                 Individual Trustees (the "Trustee"), shall discharge its obligations
                                                                          as trustee of the HSBC Mutual Fund. The Trustee ensures that the
B. Sponsor                                                                transactions entered into by the AMC are in accordance with the
HSBC Mutual Fund is sponsored by HSBC Securities and Capital              SEBI Regulations and will also review the activities carried on by
Markets (India) Private Limited (HSCI). The Sponsor is the Settler        the AMC.




2                                                                                                                      HSBC Mututal Fund
                                                                                                 Statement of Additional Information


Details of Trustee Directors:
Name                        Age      Qualification                      Brief Experience
N. P. Gidwani               68       B.Sc. (Bombay) Maths Hons.,        He is a fellow member of the Institute of Chartered Accountant.
                                     C.A. (Scotland), F.C.A (India)     He is an Independent Financial / Management Consultant in
                                                                        India from 1993. He is the Chairman of the Board of Trustees.
                                                                        He is also a director on the Board of various companies and
                                                                        trustee of various charitable institutions.
Dr. Rudolf Apenbrink        45       Master of Arts in Business         He is the Chief Executive Officer of HSBC Investments (Hongkong)
                                     Administration (Major in           Limited. He is also a director on the Board of other
                                     Finance), University of Georgia,   company.
                                     Athens, USA
Nasser Munjee               56       B.Sc. (Economics),                 He is the Chairman of Development Credit Bank and Senior
                                     M.Sc. (Economics), London          Advisor - Infrastructure with KPMG. He is also a director on the
                                     School of Economics                Board of various companies and trustee of various charitable
                                                                        institutions.
Manu Tandon                 65       B.Com, ACA - Institute of          He is the Managing Director of Elantas Beck India Limited from
                                     Chartered Accountants -            1994. He is also a director on the Board of various companies.
                                     England & Wales
Mehli Mistri                69       B.A. (Hons), Mumbai,               He was Ex-MD of Saudi American Bank (Citibank affiliate) and
                                     Advanced Management                Ex-CEO of ANZ Grindlays Bank. Presently, he is not a Director
                                     Program (AMP) -                    on the Board of any other company.
                                     Harvard University
Dilip J. Thakkar            72       B.Com., LL.B., F.C.A               He is a fellow member of the Institute of Chartered Accountant
                                                                        and is in practice from 1961. He is a Partner with two firms of
                                                                        Chartered Accountants in India. He is also a director on the
                                                                        Board of various companies.
Mr. N. P. Gidwani and Dr. Rudolf Apenbrink are associated with the Sponsor. Mr. Nasser Munjee, Mr. Manu Tandon, Mr. Mehli Mistri
and Mr. Dilip J. Thakkar are independent Trustees. Thus, 4 out of the 6 Trustees are independent Trustees.
Responsibilities and duties of the Trustees as well as the specific              so appointed shall immediately and independently report
and general due diligence:                                                       to the Board any non-compliance observed;
Pursuant to the Trust Deed dated February 7, 2002 constituting the          l    Appointed registrars and laid down parameters for their
Mutual Fund and in terms of the SEBI (Mutual Funds) Regulations,                 supervision;
1996, the rights and obligations of the Trustees are as under:
                                                                            l    Prepared a compliance manual and designed internal
l    Each of the Trustees in carrying out his responsibilities as a              control mechanisms including internal audit systems and
     member of the Board of Trustees, shall maintain arm's length
                                                                            l    Specified norms for empanelment of brokers and marketing
     relationship with other companies, or institutions or financial
                                                                                 agents.
     intermediaries or any body corporate with which he may be
     associated.                                                        l   The Trustees shall ensure that the AMC has been diligent in
                                                                            empanelling brokers, in monitoring securities transactions with
l    The Trustees shall have a right to obtain from the AMC such
                                                                            brokers and avoiding undue concentration of business with any
     information as is considered necessary by them.
                                                                            broker.
l    The Trustees shall ensure before the launch of any scheme that
                                                                        l   The Trustees are required to ensure that the AMC has not given
     the AMC has : -
                                                                            any undue or unfair advantage to any associate or dealt with
     l    Systems in place for its back office, dealing room and            any of the associates of the AMC in any manner detrimental
          accounting;                                                       to the interests of the Unitholders.
     l    Appointed all key personnel including fund manager(s)         l   The Trustees are required to ensure that the transactions entered
          for the Scheme and submitted to the Trustees their bio-           into by the AMC are in accordance with the SEBI (Mutual
          data which shall contain the educational qualifications,          Funds) Regulations, 1996 and the provisions of the Scheme.
          past experience in the securities market within 15 days of
                                                                        l   The Trustees are required to ensure that the AMC has been
          their appointment;
                                                                            managing the Scheme independently of other activities and has
     l    Appointed auditors to audit the accounts of the Scheme;           taken adequate steps to ensure that the interest of investors of
                                                                            one Scheme are not compromised with those of any other
     l    Appointed compliance officer who shall be responsible
                                                                            Scheme or of other activities of the AMC.
          for monitoring the compliance of the Act, rules and
          regulations, notifications, guidelines, instructions etc.     l   The Trustees are required to ensure that all the activities of the
          issued by the Board or the Central Government and for             AMC are in accordance with the provisions of SEBI (Mutual
          redressal of investors' grievances. The compliance officer        Funds) Regulations, 1996.



HSBC Mututal Fund                                                                                                                           3
Statement of Additional Information


l   Where the Trustees have reason to believe that the conduct of        l    The Trustees are required to periodically review all service
    the business of the Fund is not in accordance with the                    contracts such as custody arrangements, transfer agency of
    Regulations and the provisions of the Scheme, they are required           securities and satisfy themselves that such contracts are executed
    to take such remedial steps as are necessary by them and to               in the interest of the Unitholders.
    immediately inform SEBI of the violation and the action taken
                                                                         l    The Trustees are required to ensure that there is no conflict of
    by them.
                                                                              interest between the manner of deployment of its net worth by
l   Each of the Trustees are required to file with the Fund the               the AMC and the interest of the Unitholders.
    details of his securities' transactions on a quarterly basis, in
                                                                         l    The Trustees are required to periodically review the investor
    accordance with guidelines issued by SEBI from time to time.
                                                                              complaints received and the redressal of the same by the AMC.
l   The Trustees are accountable for and are required to be the
                                                                         l    The Trustees are required to abide by the Code of Conduct as
    custodian of the Fund's property of the respective Scheme and
                                                                              specified in the Fifth Schedule of the SEBI (Mutual Funds)
    to hold the same in trust for the benefit of the Unitholders in
                                                                              Regulations, 1996.
    accordance with the SEBI (Mutual Funds) Regulations, 1996
    and the provisions of the Trust Deed.                                l    The Trustees have to furnish to SEBI on a half yearly basis:-
l   The Trustees are required to take steps to ensure that the                l    a report on the activities of the Fund;
    transactions of the Fund are in accordance with the provisions
                                                                              l    a certificate stating that the Trustees have satisfied
    of the Trust Deed.
                                                                                   themselves that there have been no instances of self dealing
l   The Trustees are responsible for the calculation of any income                 or front running by any of the Trustees, directors and key
    due to be paid to the Fund and also of any income received in                  personnel of the AMC;
    the Mutual Fund for the holders of the Units of any Scheme
                                                                              l    a certificate to the effect that the AMC has been managing
    in accordance with the SEBI (Mutual Funds) Regulations,
                                                                                   the Scheme independently of any other activities and in
    1996 and the Trust Deed.
                                                                                   case any activities of the nature referred to in Regulation
l   The Trustees are required to obtain the consent of the Unitholders             24, sub-regulation (2) of the SEBI (Mutual Funds)
    of a Scheme:                                                                   Regulations, 1996 have been undertaken, the AMC has
                                                                                   taken adequate steps to ensure that the interest of the
l   When required to do so by SEBI in the interest of the Unitholders
                                                                                   Unitholders is protected.
    of that Scheme; or
                                                                              l    The independent Trustees are required to give their
l   Upon the request of three-fourths of the Unitholders of any
                                                                                   comments on the report received from the AMC regarding
    Scheme under the Fund for that Scheme; or
                                                                                   the investments by the Mutual Fund in the securities of
l   If a majority of the Trustees decide to wind up the Scheme or                  the group companies of the Sponsor.
    prematurely redeem the Units.
                                                                         l    No amendment to the Trust Deed shall be carried out without
l   The Trustees shall ensure that no change in the fundamental               prior approval of SEBI and Unitholders' approval / consent
    attributes of any Scheme or the Trust or fees and expenses                will be obtained where it affects the interests of Unitholders as
    payable or any other change which would modify the Scheme                 per the procedure / provisions laid down in the Regulations.
    and affect the interests of Unitholders, shall be carried out
                                                                         l    The Trustees shall exercise due diligence as under:
    unless:
    l    a written communication about the proposed change is            A.   General Due Diligence:
         sent to each Unitholder and an advertisement is given in             l    The Trustees shall be discerning in the appointment of the
         one English daily newspaper having nationwide circulation                 directors of the AMC.
         as well as in a newspaper published in the language of the
         region where the Head Office of the Mutual Fund is                   l    The Trustees shall review the desirability of the
         situated; and                                                             continuance of the AMC if substantial irregularities are
                                                                                   observed in the Schemes and shall not allow the AMC to
    l    the Unitholders are given an option to exit at the prevailing             float any new Scheme.
         Net Asset Value without any exit load.
                                                                              l    The Trustee shall ensure that the trust property is properly
l   The Trustees are required to call for the details of transactions              protected, held and administered by proper persons and
    in securities by the key personnel of the AMC in their own                     by a proper number of such persons.
    names or on behalf of the AMC and report the same to SEBI
    as and when called for.                                                   l    The Trustees shall ensure that all service providers hold
                                                                                   appropriate registrations from SEBI or the concerned
l   The Trustees are required to review quarterly, all transactions                regulatory authority.
    carried out between the Fund, the AMC and its associates.
                                                                              l    The Trustees shall arrange for test checks of service
l   The Trustees are required to review quarterly the net worth of                 contracts.
    the AMC and in case of any shortfall ensure that the AMC
    makes up for the shortfall as per clause (f) of sub-regulation            l    The Trustees shall immediately report to SEBI any special
    (1) of Regulation 21 of SEBI (Mutual Funds) Regulations,                       developments in the Mutual Fund.
    1996.




4                                                                                                                     HSBC Mututal Fund
                                                                                                       Statement of Additional Information


B.   Specific Due Diligence:                                                The supervisory role of the Trustees will be discharged by reviewing
                                                                            the information and the operations of the Fund based on the reports
The Trustees shall:
                                                                            submitted at the meetings of the Trustees, by reviewing the reports
     l    Obtain internal / concurrent audit reports at regular intervals   submitted by the Internal Auditor and the bi-monthly and half yearly
          from independent auditors appointed by the Trustees.              compliance reports. Presently the Board of Trustees are required to
                                                                            hold a meeting at least once in 2 calendar months and at least 6 such
     l    Obtain compliance certificates at regular intervals from
                                                                            meetings are required to be held every year. During the period from
          the AMC.
                                                                            February 2002 up to April 2009, the Board of Trustees met 44 times.
     l    Hold meetings of Trustees frequently and ensure that at
                                                                            No amendment to the Trust Deed shall be carried out without prior
          least 6 such meetings shall be held in each year.
                                                                            approval of SEBI and Unitholders' approval / consent will be obtained
     l    Consider the reports of the independent auditor and               where it affects the interests of Unitholders as per the procedure /
          compliance reports of the AMC at the meeting of the               provisions laid down in the Regulations
          Trustees for appropriate action.
                                                                            The Trustees may require or give verification of identity or other
     l    Maintain records of the decisions of the Trustees at their        details regarding any subscription or related information from / of
          meetings and of the minutes of the meetings.                      the Unitholders as may be required under any law, which may result
     l    Prescribe and adhere to the code of ethics by the Trustees,       in delay in dealing with the applications, Units, benefits, distribution,
          the AMC and its personnel.                                        etc.

     l    Communicate in writing to the AMC of the deficiencies             TRUSTEESHIP FEES
          and check on the rectification of deficiencies.                   Pursuant to the Trust Deed constituting the Fund, the Fund is
l    The Trustees shall maintain high standards of integrity and            authorised to pay the Independent Trustees a fee for their services
     fairness in all their dealings and in the conduct of their business.   for meetings of the Board of Trustees / Committee meetings attended
                                                                            by such Trustees, as may be mutually agreed between the Sponsor
l    The Trustees shall render at all times high standards of service,      and the Board of Trustees from time to time, subject to the SEBI
     exercise due diligence, ensure proper care and exercise                Regulations.
     independent professional judgement.
l    The independent Trustees shall pay specific attention to the           D. Asset Management Company
     following as may be applicable, namely:                                HSBC Asset Management (India) Private Limited (the Investment
                                                                            Manager or the AMC) is a private limited company incorporated
     l    The Investment Management Agreement and the
                                                                            under the Companies Act, 1956 on December 12, 2001 having its
          compensation paid under the Agreement.
                                                                            Registered Office at 314, D. N. Road, Fort, Mumbai 400 001. HSBC
     l    Service contracts with affiliates - whether the AMC has           Asset Management (India) Private Limited has been appointed as
          charged higher fees than outside contractors for the same         the Asset Management Company of the HSBC Mutual Fund by the
          services.                                                         Trustee vide Investment Management Agreement (IMA) dated
                                                                            February 7, 2002 and executed between the Trustees and the AMC.
     l    Selection of the AMC's independent directors.
                                                                            SEBI approved the AMC to act as the Investment Manager of the
     l    Securities transactions involving affiliates to the extent        Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002.
          such transactions are permitted.
                                                                            The paid-up equity share capital of the AMC is Rs. 9 crores. HSBC
     l    Selecting and nominating individuals to fill independent          Securities and Capital Markets (India) Private Limited holds 100%
          directors' vacancies.                                             of the paid-up equity share capital of the AMC.
     l    Code of ethics must be designed to prevent fraudulent,            The AMC will manage the schemes of the Fund as mentioned in the
          deceptive or manipulative practices by insiders in                Combined Scheme Information Document / Scheme Information
          connection with personal securities transactions.                 Documents / Offer Documents, in accordance with the provisions
     l    The reasonableness of fees paid to Sponsors, AMC and              of IMA, the Trust Deed, the SEBI Regulations and the objectives
          any others for services provided.                                 of the Scheme.

     l    Principal underwriting contracts and renewals.                    The AMC has renewed its Certificate of Registration as Portfolio
                                                                            Manager under the SEBI (Portfolio Managers) Regulations, 1993
     l    Any service contracts with the associates of the AMC.             vide registration no. INP000001322 with effect from 16 September,
     l    Notwithstanding anything contained in sub-regulations             2008 and is valid till 15 September, 2011.
          (1) to (25) of Regulation 18 of the SEBI (Mutual Funds)           In accordance with the SEBI Regulations, an asset management
          Regulations, 1996, the Trustees shall not be held liable for      company, subject to certain conditions, is also permitted to undertake
          acts done in good faith if they have exercised adequate           activities in the nature of portfolio management services, management
          due diligence honestly.                                           and advisory services to offshore funds, pension funds, provident
     l    The Regulations provide that the meetings of the Trustees         funds, venture capital funds, management of insurance funds,
          shall be held at least once in every 2 calendar months and        financial consultancy and exchange of research on commercial
          at least 6 such meetings shall be held every year. Further,       basis and such other activities as may be permitted by SEBI from
          as per the Regulations, for the purposes of constituting the      time to time. Subject to these activities being assessed as desirable
          quorum for the meetings of the Trustees, at least one             and economically viable, the AMC may undertake any or all of these
          Independent Trustee or Director should be present during          activities after satisfying itself that there is no potential conflict of
          such meetings.                                                    interest.


HSBC Mututal Fund                                                                                                                                  5
Statement of Additional Information


DETAILS OF AMC DIRECTORS:
Name                          Age      Qualification                       Brief Experience
Naina Lal Kidwai              52       MBA - Harvard Business              She is the Chairman of the Board of Directors and Group General
                                       School, BA, Delhi University        Manager & Country Head - The Hongkong and Shanghai Banking
                                                                           Corporation Limited, India. She is also a director on the Board of
                                                                           various companies and trustee of various charitable institutions /
                                                                           trust.
Ayaz Ebrahim                  45       B.Sc. (Hons.) in Accountancy &      He is the Chief Executive Officer, Asia Pacific, Halbis Capital
                                       Finance, University of East         Management (HK) Limited, Hong Kong from 2005. He is also a
                                       Anglia, UK                          director on the Board of various companies.
S. P. Mustafa                 59       BA Honors - St. Stephens College, He is a fellow member of the Institute of Chartered Accountants
                                       Chartered Accountant, FCA,        of England and Wales. He is an Executive with Hasham
                                       England and Wales                 Investment & Trading Company Private Limited in Bangalore.
                                                                         He is also a Director on the Board of other company.
Vithal Palekar                73       Bachelor of Science,                He is a fellow member of the Institute of Chartered Accountant
                                       Bachelor of Laws,                   and is in practice from 2000. He is a Partner with a firm of
                                       Chartered Accountant                Chartered Accountants in India. He is also a director on the
                                                                           Board of various companies and trustee of charitable institutions /
                                                                           trust.
Kishori J. Udeshi             65       M.A. (Economics)                    Ms. Udeshi is currently Chairman of The Banking Codes and
                                                                           Standards Board of India, set up by the RBI. She is a director on
                                                                           the Board of the Government of India's Security Printing & Minting
                                                                           Corporation of India Ltd. and Haldyn Glass Gujarat Limited. She
                                                                           moved on to a professional career in central banking and became
                                                                           the first woman to be appointed as Deputy Governor of the Reserve
                                                                           Bank of India.
Vikramaaditya                 38       PGDM, B. Tech.                      He is the Chief Executive Officer of HSBC Asset Management
                                                                           (India) Private Limited from July 2008.
Ms. Naina Lal Kidwai, Mr. Ayaz Ebrahim and Mr. Vikramaaditya are associated with the Sponsor. Mr. Vithal Palekar, Ms. Kishori J. Udeshi
and Mr. S. P. Mustafa are independent Directors. Thus, 3 out of the 6 Directors are independent Directors.


Powers, Duties, Obligations and Responsibilities                           l    Opening and operating bank accounts in the name and on
of the Asset Management Company:                                                behalf of each scheme in relation to the investments made by
The powers, duties and responsibilities of the AMC shall be governed            the Mutual Fund.
by the Regulations and the Investment Management Agreement.                l    Fixing record dates or book closure periods for the purpose of
The AMC, in the course of managing the affairs of the Mutual Fund,              effecting transfer of Units and determining eligibility for
has the powers, inter alia for following duties and responsibilites:            dividends, bonus, rights, privileges, preferences, reservations
l    Floating Scheme of the Mutual Fund after approval of the same              or other entitlements or accretions.
     by the Trustees and investing and managing the funds mobilised        l    Providing information to SEBI and the Unitholders as required
     under various Schemes, in accordance with the provisions of                under the Regulations or as otherwise required by SEBI.
     the Trust Deed and the Regulations.
                                                                           l    Receiving, holding in trust, or as agent or nominee of the
l    Evaluating investment opportunities for further investments by
                                                                                Trustees, improving, developing, using, selling, transferring,
     the Mutual Fund.
                                                                                exchanging, assigning, dealing, trading in and managing all
l    Evaluating and issuing orders and instructions with respect to             assets and all accretions thereto and endeavouring to earn
     the acquisition and disposition of investments and risk positions /        adequate returns on them for and on behalf of the Trust.
     exposures.
                                                                           l    Fixing sales and re-purchase prices, and calculating Net Asset
l    Issuing and ensuring due compliance of instructions to the                 Value for Units, consistent with the Regulations.
     custodian and the Mutual Fund's brokers, agents including
     registrars and transfer agents.                                       l    Setting up an effective establishment for servicing of Unitholders
                                                                                under the various Scheme and also to protect the interest of the
l    Issuing, selling, repurchasing and cancelling the Units as per             Unitholders.
     the terms of the respective Scheme of the Mutual Fund.
                                                                           l    Generally doing all acts, deeds, matters and things which are
l    Managing the Mutual Fund Scheme independently of other
                                                                                necessary for any object, purpose or in relation to the Mutual
     activities and taking adequate steps to ensure that the interests
                                                                                Fund in any manner or in relation to any scheme of the Mutual
     of Unitholders are not being compromised with those of any
                                                                                Fund.
     other Scheme or any of its other activities.



6                                                                                                                       HSBC Mututal Fund
                                                                                                   Statement of Additional Information


Duties and Responsibilities                                                  by the AMC and be disclosed in the half yearly / annual
l   The AMC shall take all reasonable steps and exercise due                 accounts of the respective Scheme with justification for such
    diligence to ensure that the investment of funds pertaining to           investment provided that the latter investment has been made
    any Scheme is not contrary to the provisions of the SEBI                 within 1 year of the date of the former investment calculated
    Regulations and the Trust Deed.                                          on either side.
l   The AMC shall exercise due diligence and care in all its             l   The AMC shall file with the Trustees and SEBI
    investment decisions as would be exercised by other persons              l    Detailed bio-data of all its directors along with their interest
    engaged in the same business.                                                 in other companies within 15 days of their appointment;
                                                                                  and any change in the interest of directors every 6 months.
l   The AMC shall be responsible for the acts of commissions or
    omissions by its employees or the persons whose services have            l    A quarterly report to the Trustees giving details and
    been procured by the AMC.                                                     adequate justification about the purchase and sale of
                                                                                  securities of the group companies of the Sponsor or the
l   The AMC shall submit to the Trustees quarterly reports of each
                                                                                  AMC as the case may be, by the Mutual Fund during the
    year on its activities and the compliance with the SEBI
                                                                                  quarter.
    Regulations.
                                                                             l    Each director of the AMC shall file the details of his
l   The Trustees at the request of the AMC may terminate the                      transactions of dealing in securities with the Trustees on
    assignment of the AMC at any time provided that such                          a quarterly basis in accordance with guidelines issued by
    termination shall become effective only after the Trustees have               SEBI from time to time.
    accepted the termination of assignment and communicated
    their decision in writing to the AMC.                                l   The AMC shall not appoint any person as key personnel who
                                                                             has been found guilty of any economic offence or involved in
l   Notwithstanding anything contained in any contract or                    violation of securities laws.
    agreement of termination, the AMC or its directors or other
    officers shall not be absolved of liability to the Mutual Fund       l   The AMC shall appoint registrars and share transfer agents
    for their acts of commissions or omissions, while holding such           who are registered with SEBI. Provided if the work relating to
    position or office.                                                      the transfer of Units is processed in-house, the charges at
                                                                             competitive market rates may be debited to the Scheme and for
l   The AMC shall not through any broker associated with the                 rates higher than the competitive market rates, prior approval
    Sponsor, purchase or sell securities, which is average of 5% or          of the Trustees shall be obtained and reasons for charging
    more of the aggregate purchases and sales of securities made             higher rates shall be disclosed in the annual accounts.
    by the Mutual Fund in all its Scheme. Provided that for these
    purposes, aggregate purchase and sale of securities shall exclude    l   The AMC shall abide by the Code of Conduct as specified in
    sale and distribution of Units issued by the Mutual Fund.                the Fifth Schedule of the SEBI Regulations.
    Provided further that the aforesaid limit of 5% shall apply for      l   The AMC shall
    a block of any 3 months.                                                 l    Not act as a trustee of any mutual fund
l   The AMC shall not purchase and sell through any broker (other            l    Not undertake any other business activities except activities
    than a broker associated with the Sponsor) which is average                   in the nature of portfolio management services,
    of 5% or more of the aggregate purchases and sale of securities               management and advisory services to offshore funds,
    made by the Mutual Fund in all its Scheme, unless the AMC                     pension funds, provident funds, venture capital funds,
    has recorded in writing the justification for exceeding the limit             management of insurance funds, financial consultancy
    of 5% and reports of all such investments are sent to the                     and exchange of research on commercial basis if any of
    Trustees on a quarterly basis. Provided that the aforesaid limit              such activities are not in conflict with the activities of the
    shall apply for a block of 3 months.                                          Mutual Fund without the prior approval of the Trustees
l   The AMC shall not utilise the services of the Sponsor or any                  and SEBI. Provided that the AMC may itself or through
    of its associates, employees or their relatives, for the purpose              its subsidiaries undertake such activities if it satisfies
    of any securities' transactions and distribution and sale of                  SEBI that the key personnel of the AMC, the systems,
    securities, provided that the AMC may utilise such services if                back office, bank and securities accounts are segregated
    disclosure to that effect is made to the Unitholders and the                  activity-wise and there exists systems to prohibit access
    brokerage or commission paid is also disclosed in the half                    to inside information of various activities. Provided further
    yearly annual accounts of the Mutual Fund.                                    that the AMC shall meet capital adequacy requirements,
                                                                                  if any, separately for each such activity and obtain separate
l   The AMC shall file with the Trustees the details of transactions              approval, if necessary under the relevant regulations.
    in securities by key personnel of the AMC in their own name
    or on behalf of the AMC and shall also report to SEBI, as and            l    Not invest in any of its Scheme unless full disclosure of
    when required by SEBI.                                                        its intention to invest has been made in the respective
                                                                                  Offer Document / Combined Scheme Information
l   In case the AMC enters into any securities' transaction with any              Document.
    of its associates a report to that effect shall be sent to the           l    Not be entitled to charge any fees on its investment in that
    Trustees at their next meeting.                                               Scheme.
l   In case any company has invested more than 5% of the net asset           l    Not acquire any of the assets out of the Trust funds, which
    value of a Scheme, the investment made by that Scheme or by                   involves the assumption of any liability which is unlimited
    any other Scheme of the same Mutual Fund in that company                      or which may result in encumbrance of the Scheme
    or its subsidiaries shall be brought to the notice of the Trustees            property in any way.


HSBC Mututal Fund                                                                                                                               7
Statement of Additional Information


l   The independent Directors of the AMC shall pay specific                    be) of the Asset Management Company shall ensure that the
    attention to the following as may be applicable, namely:                   Mutual Fund complies with all the provisions of these
                                                                               regulations and the guidelines or circulars issued in relation
l   The Investment Management Agreement and the compensation
                                                                               thereto from time to time and that the investments made by the
    paid under the Agreement.
                                                                               Fund Managers are in the interest of the unitholders and shall
l   Service contracts with affiliates - whether the AMC has charged            also be responsible for the overall risk management function
    higher fees than outside contractors for the same services.                of the Mutual Fund.
l   Securities transactions involving affiliates to the extent such       Asset Management Fees
    transactions are permitted.                                           In the terms of the Investment Management Agreement and the
l   Code of ethics must be designed to prevent fraudulent, deceptive      Regulations, the AMC is entitled to an investment management and
    or manipulative practices by insiders in connection with personal     advisory fee at the rate of 1.25% per annum of the weekly average
    securities transactions.                                              net assets outstanding in each accounting year for the Scheme
                                                                          concerned, as long as the net assets do not exceed Rs. 100 crores
l   The reasonableness of fees paid to Sponsors, AMC and any              (Rupees One Hundred Crores Only) and 1.00% of the excess amount
    others for services provided.                                         over Rs. 100 crores (Rupees One Hundred Crores Only), where net
l   Principal underwriting contracts and renewals.                        assets so calculated exceed Rs. 100 crores (Rupees One Hundred
                                                                          Crores). For Scheme launched on a no load basis, the AMC is
l   Any service contracts with the associates of the AMC.
                                                                          entitled to collect an additional management fee not exceeding 1%
l   The Chief Executive Officer (whatever his designation may             of the weekly average net assets outstanding in each financial year.


E. Key Employees of the AMC and relevant experience:
Name                 Designation                 Age      Qualification           Brief Experience
Vikramaaditya        Chief Executive Officer 38           PGDM, B. Tech.          Over 15 years of experience in areas of business strategy,
                                                                                  product development, sales and client services / delivery.
                                                                                  l  HSBC Asset Management (India) Private Limited
                                                                                     Chief Executive Officer from July 2008 onwards
                                                                                  l  HSBC, India
                                                                                     SVP and Head - India, HSBC Securities Services
                                                                                     from April 2004 to July 2008
                                                                                     Manager, Product Development, Payments & Cash
                                                                                     Management from January 2001 to April 2004
                                                                                     Product Manager, Payments & Cash Management
                                                                                     from October 1998 - December 2000
                                                                                  l  Citibank N.A.
                                                                                     Various Roles within Global Transaction Services in
                                                                                     Product Management, Sales and Operations from
                                                                                     May 1994 to October 1998.
S. Venkatesh Iyer    Senior Vice President       43       Chartered Accountant    Over 18 years experience in Operations, Finance,
                     & Chief Operating                                            Customer Service, etc.
                     Officer                                                      l HSBC Asset Management (India) Private Limited
                                                                                    Chief Operating Officer from August 2004 to date
                                                                                  l Prudential ICICI Asset Management Company
                                                                                    Associate Vice President - Operations from July
                                                                                    2004 to August 2004
                                                                                  l Sundaram Asset Management Co. Ltd.
                                                                                    Vice President - Operations, from August 2003
                                                                                    to July 2004
                                                                                  l Quintant Services Limited
                                                                                    Lead Consultant from May 2003 to July 2003
                                                                                  l Capital Group International Inc.
                                                                                    Consultant, from December 1999 to May 2003
                                                                                  l Birla SunLife Asset Management Company
                                                                                    Limited
                                                                                    Controller Operations, June 1996 to November 1999
                                                                                  l Ernst & Young, Accounting Firm, Kuwait
                                                                                    Audit Officer from December 1991 to
                                                                                    September 1995




8                                                                                                                    HSBC Mututal Fund
                                                                                      Statement of Additional Information


Name              Designation             Age   Qualification         Brief Experience

O. V. Ravi        Vice President &        41    B.L., ACS             Over 16 years of experience in Legal, Secretarial and
                  Head of Compliance                                  Compliance
                                                                      l HSBC Asset Management (India) Private Limited
                                                                        Vice President & Head of Compliance from September
                                                                        2007 to present
                                                                      l NV Advisory Services Private Limited
                                                                        Chief Compliance Officer from September 2005 to
                                                                        September 2007
                                                                      l Reliance Capital Asset Management Limited
                                                                        Head - Legal & Compliance from November 2003 to
                                                                        September 2005
                                                                      l Mphasis BFL Limited
                                                                        Head - Legal & Company Secretary from June 2002 to
                                                                        October 2003
                                                                      l Novell Software Development Limited
                                                                        Company Secretary from January 2001 to June 2002
                                                                      l Kakatiya Textiles Limited
                                                                        Secretarial Officer from January 1998 to September
                                                                        2000
                                                                      l Lanco Industries Limited
                                                                        Secretarial Officer from January 1994 to December 1997
Suyash            Vice President & Head   30    PGDM, BA (Hons.)      Over 8 years experience in research and fund management.
Choudhary         of Fund Management -          Economics             l HSBC Asset Management (India) Private Limited
                  Fixed Income                                          Head of Fund Management - Fixed Income from
                                                                        December 2008 to present
                                                                        Fund Manager from February 2008 to December 2008
                                                                      l Standard Chartered AMC
                                                                        Fund Manager from November 2002 to January 2008
                                                                        Manager - Pension Funds from November 2001 to
                                                                        October 2002
                                                                      l DB Consulting Group Asia Pacific
                                                                        Research Associate from May 2000 to October 2001
Jitendra Sriram   Vice President &        37    B.E. (Elect.), Post Over 14 years experience in Equity Research. This
                  Head of Fund                  Graduate Diploma in involved analysing various sectors and companies and
                  Management - Equities         Business Management presenting investment ideas to fund managers.
                                                                    l  HSBC Asset Management (India) Private Limited
                                                                       Head of Fund Management - Equities from February
                                                                       2009 to present
                                                                       Fund Manager from May 2006 to February 2009
                                                                    l  Deutsche Equities India Private Limited
                                                                       Vice President from August 2002 to April 2006
                                                                    l  HSBC Securities and Capital Markets (India) Private
                                                                       Limited
                                                                       Deputy Head of Research from March 1997 to August
                                                                       2002
                                                                    l  ITC Classic Share & Stock Broking
                                                                       Analyst from June 1995 to March 1997
R. Srinivasan     Vice President &        35    B.Com., AICWA         Over 14 years experience in Operations and Finance
                  Head of Operations                                  l HSBC Asset Management (India) Private Limited
                                                                        Head of Operations from August 2006 to present
                                                                      l Tata Consultancy Services Limited
                                                                        Associate Consultant - Asset Management and
                                                                        Securities Back Office - BPO from November 2004
                                                                        to July 2006




HSBC Mututal Fund                                                                                                           9
Statement of Additional Information


Name              Designation             Age   Qualification         Brief Experience

                                                                      l   Principal PNB Asset Management Company Private
                                                                          Limited
                                                                          Assistant Vice President - Operations and Finance from
                                                                          January 2004 to November 2004
                                                                          Assistant Vice President - Operations from February
                                                                          2002 to January 2004
                                                                      l   DSP Merrill Lynch Fund Managers Limited
                                                                          Assistant Vice President - Operations from January 2002
                                                                          to February 2002
                                                                          Manager - Operations from April 1998 to December
                                                                          2001
                                                                      l   SBI Capital Markets Limited
                                                                          Accounts Executive - Finance from April 1995 to
                                                                          April 1998
Vipul Gupta       Senior Vice President   40    MBA (FMS Delhi);      Over 16 years of experience in areas of sales and
                  & Head of Sales &             B.E. (Mech.)          distribution
                  Distribution                                        l   HSBC Asset Management (India) Private Limited
                                                                          Head of Sales & Distribution from August 2008 onwards
                                                                      l   HSBC, Middle East
                                                                          Senior Vice President, NRI Services - Middle East
                                                                          from May 2004 - July 2008
                                                                      l   HSBC, India
                                                                          Manager Hyderabad, from May 2002 - April 2004
                                                                          Kolkata: Manager Shakespeare Sarani from April
                                                                          2000 - May 2002
                                                                          Kolkata: Sales Manager, Personal Banking from
                                                                          April 1999 to March 2000
                                                                          Chennai: Assistant Manager Sales - Personal
                                                                          Banking from June 1995 to March 1999
                                                                      l   Coats Viyella India Limited
                                                                          Assistant Branch Manager from June 1992 to May 1995
Kishore           Vice President &        31    ACS, Inter CWA,       Over 11 years of experience in areas of finance, accounting,
Balachandran      Head of Finance               B.Com.                secretarial and strategy.
                                                                      l  HSBC Asset Management (India) Private Limited
                                                                         Head of Finance from August 2008 onwards
                                                                      l  HSBC Bank, Personal Financial Services (India)
                                                                         VP - Strategic Business Analysis and Development
                                                                         from April 2006 - July 2008
                                                                      l  HSBC Operations and Processing Enterprise
                                                                         (India) Private Limited
                                                                         Manager - Finance & Company Secretary from
                                                                         November 2003 - March 2006
                                                                      l  HSBC Professional Services (India) Private Limited
                                                                         Compliance Officer from February 2003 to October
                                                                         2003
                                                                      l  HSBC Bank, India
                                                                         Banking Executive from August 2000 - February 2003
                                                                      l  Balaji Distilleries Limited
                                                                         Assistant Company Secretary from April 1999 to
                                                                         August 2000
                                                                      l  Balaji Hotels & Enterprise Limited
                                                                         Assistant Company Secretary from October 1998 to
                                                                         March 1999
                                                                      l  Balaji Industrial Corporation Limited
                                                                         Secretarial Officer from June 1997 to September 1998
Deepali Naair     Vice President &        37    B.A., Masters of      Over 16 years experience in Sales & Marketing, Brand
                  Head of Marketing             Management            Management and Strategic Planning
                                                Studies (Marketing)   l HSBC Asset Management (India) Private Limited
                                                                        Head of Marketing from April 2008 to present
                                                                        Head of Marketing & Product Development from April
                                                                        2006 to March 2008


10                                                                                                       HSBC Mututal Fund
                                                                            Statement of Additional Information


Name            Designation        Age   Qualification     Brief Experience

                                                           l   Marico Limited
                                                               Marketing Manager from October 2002 to March 2005
                                                           l   FCB ULKA Advertising Private Limited
                                                               Consultant - Strategic Planning from September 1998 to
                                                               October 2002
                                                           l   BPL Mobile Communications Limited
                                                               Manager - Marketing from September 1995 to August
                                                               1998
                                                           l   Tata Motors Limited
                                                               Senior Officer - Sales & Marketing from May 1993 to
                                                               September 1995
Shwaita Vaish   Vice President &   32    Post Graduate     Over 10 years experience in Product Development & Sales.
                Head - Product           Diploma in        l HSBC Asset Management (India) Private Limited
                Strategy &               Business            Head Product Strategy & Development from April 2008
                Development              Management          to present
                                                             VP - Product Development from Aug. 2005 till March
                                                             2008
                                                           l ICICI Prudential Asset Management
                                                             Manager - Product Development from January 2004 -
                                                             July 2005
                                                             Asst. Manager - Sales from June 2002 - December 2003
                                                           l GROZ Net Industrties
                                                             Executive - Sales & Marketing from Oct. 1997 -
                                                             May 2000
Tony Jose       Vice President,    29    Post Graduate     Over 6 years of experience in Human Resources
                Human Resources          Diploma in        l HSBC Asset Management (India) Private Limited
                                         Personnel           Vice President & Head of Human Resources from July
                                         Management &        2008 onwards
                                         Industrial        l Deloitte Consulting India Pvt. Ltd.
                                         Relations, B.A.     Manager - Talent Development from May 2002 to
                                                             July 2008
Dhimant Shah    Vice President &   41    B.Com., CA        Over 16 years experience in Equity Research. This involved
                Fund Manager                               analysing various sectors and companies and presenting
                                                           investment ideas to fund managers.
                                                           l  HSBC Asset Management (India) Private Limited
                                                              Fund Manager from March 2007 to present
                                                           l  Reliance Asset Management Co. Limited
                                                              Vice President / Portfolio Manager from October 2005
                                                              to February 2007
                                                           l  ASK Raymond James Securities Pvt. Limited
                                                              Portfolio Manager from September 2003 to September
                                                              2005
                                                           l  IL&FS Asset Management Co. Limited
                                                              Senior Analyst from April 1997 to August 2003
Palak Mehta     Vice President,    36    Bachelor of       Over 9 years of experience in Dealing in Equity Markets
                Dealing                  Commerce          l HSBC Asset Management (India) Private Limited
                                                             Dealer since September 2008 onwards
                                                           l DSP Merrill Lynch Limited - Strategic Investment
                                                             Group Dept.
                                                             AVP - Dealing from September 2006 - September 2008
                                                           l DSP Merrill Lynch Limited - Global Private Client Dept.
                                                             Senior Specialist - Dealing from October 2004 -
                                                             September 2006
                                                           l Kotak Securities
                                                             Dealer from April 2003 - September 2004
                                                           l Stanford Trading Company
                                                             Dealer from March 2001 - March 2003
                                                           l HDFC Securities
                                                             Dealer from January 2000 - February 2001


HSBC Mututal Fund                                                                                                 11
Statement of Additional Information


Name              Designation         Age   Qualification          Brief Experience

Nilang Mehta,     Vice President &    32    M.Com., Chartered      Over 9 years experience in fund management and credit
CFA               Fund Manager              Accountant             research
                                                                   l  HSBC Asset Management (India) Pvt. Ltd.
                                                                      Fund Manager from October 2007 to present
                                                                      Assistant Fund Manager from July 2004 to October
                                                                      2007
                                                                   l  Alliance Capital Asset Management (India) Pvt. Ltd.
                                                                      Senior Manager - Fixed Income from April 2003 to July
                                                                      2004
                                                                   l  IDBI Principal Asset Management (India) Pvt. Ltd.
                                                                      Investment Analyst from April 2001 to April 2003
                                                                   l  Bank of America - Global Capital Markets
                                                                      Industrial Trainee from August 1998 to August 1999
Gaurav Mehrotra Associate             28    Post Graduate          Over 4 years experience in research.
                Vice President,             Diploma in Business    l HSBC Asset Management (India) Private Limited
                Investment                  Management,              AVP, Investment Management from September 2007 to present
                Management                  Bachelor of            l JPMorgan Services India Private Limited
                                            Engineering              Equity Research from August 2005 to Sep. 2007
                                                                   l Tata Consultancy Services Limited
                                                                     Business Analyst from June 2004 to July 2005
Niren Parekh      Associate Vice      28    Post Graduate          Over 4 years experience in research.
                  President,                Diploma in Business    l HSBC Asset Management (India) Private Limited
                  Investment                Management               Assistant Fund Manager from September 2007 to
                  Management                Chartered Accountant     present
                                                                   l Motilal Oswal Securities Limited
                                                                     Analyst from October 2005 to September 2007
                                                                   l SBI Capital Markets
                                                                     Management Trainee from May 2005 to September 2005
Amaresh Mishra    Associate           29    Post Graduate        Over 4 years experience in Equities & Sales.
                  Vice President,           Diploma in           l HSBC Asset Management (India) Private Limited
                  Investment                Business Management,   Associate Vice President, Investment Management
                  Management                Bachelor of            from April 2008 to present
                                            Engineering            Associate Vice President - Equities from October
                                            (Chemical)             2007 - March 2008
                                                                   Associate Vice President - Sales and Distribution
                                                                   from March 2005 - September 2007
                                                                 l Centre for Science and Environment
                                                                   Trainee Researcher from July 2001 - July 2002
Aditya Khemani    Associate Vice      28    PGDBM,                 Over 4 years experience in Research.
                  President &               B.Com. (Hons.)         l HSBC Asset Management (India) Private Limited
                  Assistant Fund                                     Assistant Fund Manager, Equities from February 2009
                  Manager, Equities                                  to present
                                                                     Associate Vice President - Investment Management from
                                                                     October 2007 to February 2009
                                                                   l SBI Funds Management India Private Limited
                                                                     Senior Manager - Equity Research from March 07 - Sep. 07
                                                                   l Prudential ICICI Asset Management Company
                                                                     India Private Limited
                                                                     Assistant Manager - Equity Research from Dec. 05 - Feb. 07
                                                                   l Morgan Stanley Advantage Services Private Limited
                                                                     Research Associate from May 05 - Nov. 05
Kedar Karnik      Associate Vice      28    M.M.S. (Finance),      Over 4 years experience in research and credit rating
                  President &               B.E.                   l HSBC Asset Management (India) Private Limited
                  Assistant Fund                                     Assistant Fund Manager, Fixed Income from December
                  Manager,                                           2008 to present
                  Fixed Income                                       Associate Vice President & Credit Analyst from July
                                                                     2008 to December 2008
                                                                   l CRISIL Ltd.
                                                                     Manager - Financial Sector Ratings from September
                                                                     2005 to July 2008



12                                                                                                    HSBC Mututal Fund
                                                                                                   Statement of Additional Information


Name                  Designation                 Age     Qualification           Brief Experience
                                                                                  l   ICICI Bank Ltd.
                                                                                      Management Trainee from May 2005 to September
                                                                                      2005
Siddharth Taterh      Vice President,             29      B.E. (Comp),            Over 5 years of experience in Risk
                      Risk Management                     PGDM in Finance/        l HSBC Asset Management (India) Private Limited
                                                          System, FRM               Head of Risk Management since November
                                                                                    2008 onwards
                                                                                  l Morgan Stanley Advantage Services Private Limited
                                                                                    Manager, Prime Brokerage Risk Management
                                                                                    from November 2006 to November 2008
                                                                                  l American Express India Private Limited
                                                                                    Assistant Manager, Risk Management from
                                                                                    September 2004 to November 2006
                                                                                  l HCL Technologies Ltd.
                                                                                    Assistant Manager from May 2003 to
                                                                                    September 2004
Sanjay Shah           Vice President,             34      B. Com,                 Over 9 years of experience in research and risk
                      & Fund Manager,                     A. C. A.,               l HSBC Asset Management (India) Private Limited
                      Fixed Income                        P. G. D. M.               Vice President & Fund Manager, Fixed Income since
                                                                                    December 2008 onwards
                                                                                  l FIL Fund Management Private Limited
                                                                                    Credit Analyst from September 2008 to
                                                                                    December 2008
                                                                                  l Lehman Brothers Structured Financial Services
                                                                                    Private Limited
                                                                                    Vice President, Convertible Products from September
                                                                                    2006 to September 2008
                                                                                  l Rabo India Finance Private Limited
                                                                                    Senior Manager - Credit Risk from July 2004 to
                                                                                    September 2006
                                                                                  l ICICI Bank Limited
                                                                                    Manager, Credit Risk from January 2003 to June 2004
                                                                                  l SBI Funds Management Private Limited
                                                                                    Chief Manager, Debt Funds from June 1999 to
                                                                                    January 2003
Presently the AMC has one dedicated equity dealer and a total of eleven employees in the investment management department.
Presently all the key personnel are based in the corporate office of the AMC.

PROCEDURE FOLLOWED FOR INVESTMENT                                         It is the responsibility of the AMC to ensure that the investments
DECISIONS                                                                 are made as per the internal / Regulatory guidelines, Scheme
                                                                          investment objectives and in the best interest of the Unitholders of
The Fund Managers of the Scheme are responsible for making buy /          the Scheme. The Fund may follow internal guidelines as approved
sell decisions in respect of the securities in the Scheme's portfolio     by the Board of the AMC and the Trustees from time to time.
and to develop a well diversified portfolio that minimizes liquidity      Internal guidelines shall be subject to change and may be amended
and credit risk. The investment decisions are made on a daily basis       from time to time in the best interest of the Unitholders. The
keeping in view the market conditions and all relevant aspects.           amendments will be approved by the Board of the AMC and the
                                                                          Trustees of the Mutual Fund.
The Board of the AMC has constituted an Investment Management
Committee that meets at periodic intervals. The Investment                The Heads of Fund Management - Equities & Fixed Income present
Management Committee, at its meetings, reviews investments,               to the Board of the AMC and the Trustees periodically, the
including investments in unrated debt instruments. The approval of        performance of the Schemes. The performance of the Scheme will
unrated debt instruments is based on parameters laid down by the          be reviewed by the Boards with reference to the appropriate
Board of the AMC and the Trustees. The details of such investments        benchmarks.
are communicated by the AMC to the Trustees in their periodical           The performance of the schemes shall be benchmarked against the
reports along with a disclosure regarding how the parameters have         respective Benchmark Index mentioned in the Combined Scheme
been complied with. Such reportings shall be in the manner prescribed     Information Document read with the addendums issued from time
by SEBI from time to time. The Committee also reviews the                 to time. However, the Schemes performance may not be strictly
performance of the Scheme and general market outlook and                  comparable with the performance of the Index due to the inherent
formulates the broad investment strategy at their meetings.               differences in the construction of the portfolios. The Boards may



HSBC Mututal Fund                                                                                                                          13
Statement of Additional Information


review the benchmark selection process from time to time, and               2. Registrar & Transfer Agents
make suitable changes as to use of the benchmark, or related to             Computer Age Management Services (P) Ltd. (CAMS), Spencer
composition of the benchmark, whenever it deems necessary.                  Plaza, Phase II, S49A, 172, Anna Salai, Chennai 600 002 has been
The Heads of Fund Management - Equities & Fixed Income will                 appointed as Registrar, Transfer Agents and dividend paying agent.
bring to the notice of the AMC Board, specific factors if any, which        The Registrar is registered with SEBI under the SEBI (Registrars
are impacting the performance of the Scheme. The Board on                   to an Issue and Share Transfer Agents) Regulations, 1993 vide
consideration of all relevant factors may, if necessary, give appropriate   registration number INR000002813. As Registrars to the Scheme,
directions to the AMC. Similarly, the performance of the Scheme             CAMS will handle communications with investors, perform data
will be submitted to the Trustees. The Heads of Fund Management             entry services and despatch account statements. The Board of AMC
- Equities & Fixed Income will explain to the Trustees, the details         and Trustees have ensured that the Registrar has adequate capacity
on the Schemes' performance vis-à-vis the benchmark returns.                to discharge responsibilities with regard to processing of applications
The AMC will keep a record of all investment decisions.                     and dispatching account statements / unit certificates to unitholders
                                                                            within the time limit prescribed in the Regulations and also have
F. Service providers                                                        sufficient capacity to handle investor complaints.
1. Custodian
                                                                            3. Statutory Auditor
JP Morgan Chase Bank, Mafatlal Centre, 9th Floor, Nariman Point,
Mumbai - 400 021 has been appointed as Custodian / Global                   Price Waterhouse, Chartered Accountants, 252, Veer Savarkar Marg,
Custodian of the Scheme of HSBC Mutual Fund. The Custodian has              Shivaji Park, Dadar (West), Mumbai - 400 028 shall be the Auditors
been registered with SEBI under the SEBI (Custodians of Securities)         for the Schemes of HSBC Mutual Fund. The Trustees have the right
Regulations, 1996, and has been awarded registration number                 to change the Auditors.
IN/CUS/014 dated November 10, 1998. The Mutual Fund has entered
into a Custody Agreement dated July 4, 2002, with the Custodian,
                                                                            4. Legal Counsel
and the salient features of the said Agreement are to:                      Bharucha & Partners, 4th Floor, Cecil Court, Mahakavi Bhushan
                                                                            Marg, Colaba, Mumbai - 400 039 has been appointed as the Legal
l    Provide post-trading and custodial services to the Mutual Fund         Advisor for the Schemes of HSBC Mutual Fund.
l    Ensure benefits due on the holdings are received
                                                                            5. Fund Accountant
l    Provide detailed information and other reports as required by          JP Morgan Chase Bank, Mafatlal Centre, 9th Floor, Nariman Point,
     the AMC                                                                Mumbai - 400 021 has been appointed as the Fund Accountant for
l    Maintain confidentiality of the transactions                           Scheme. The Fund Accountant provides fund accounting, NAV
                                                                            calculation and other related services. The Fund Accountant is
l    Be responsible for the loss or damage to the assets belonging
                                                                            entitled to remuneration for its services in accordance with the terms
     to the Scheme due to negligence on its part or on the part of
     its approved agents                                                    of the Fund Administration Agreement. The Trustees / AMC have
                                                                            the right to change the Fund Accountant, if necessary.
l    Segregate assets of each Scheme
                                                                            6. Collecting Bankers
The Custodian shall not assign, transfer, hypothecate, pledge, lend,
use or otherwise dispose any assets or property, except pursuant to         The collecting bankers for transactions on an on-going basis will be
instruction from the Trustees / AMC or under the express provisions         The Hongkong and Shanghai Banking Corporation Limited, 56/60,
of the Custody Agreement.                                                   M.G. Road, Mumbai - 400 001 (SEBI registration no. INBI00000027)
                                                                            and such other banks registered with SEBI as collecting bankers as
The Custodian will be entitled to remuneration for its services in          may be decided by the AMC from time to time. Applications on an
accordance with the terms of the Custody Agreement. The Trustees            on-going basis will be accepted at the Collection Centres designated
have the right to change the Custodian, if necessary.                       by the AMC.




14                                                                                                                       HSBC Mututal Fund
                                                                                                                                                  Statement of Additional Information


II. CONDENSED FINANCIAL INFORMATION
Condensed Financial Information as of 31 March, 2009
HISTORICAL PER UNIT STATISTICS                                 HSBC-Advantage India Fund+                          HSBC-Midcap Equity Fund*                   HSBC-Ultra Short Term Bond Fund+
                                                   01-Apr-08      01-Apr-07 01-Apr-06 23-Feb-06       01-Apr-08     01-Apr-07 01-Apr-06 19-May-05         01-Apr-08       01-Apr-07       17-Oct-06
                                                   31-Mar-09      31-Mar-08 31-Mar-07 31-Mar-06       31-Mar-09     31-Mar-08 31-Mar-07 31-Mar-06         31-Mar-09       31-Mar-08       31-Mar-07
NAV at the beginning of the Year/Period (Rs.)
Dividend Option                                     13.3555        11.7374     11.2925     10.0000     13.6463        13.8256     17.3721     10.0000         NA              NA              NA
Growth Option                                       14.5446        11.7374     11.2935     10.0000     20.6339        18.1774     18.6362     10.0000         NA              NA              NA
Regular Option - Dividend                              NA            NA          NA          NA           NA             NA          NA          NA         10.0122         10.0122         10.0000
Regular Option - Growth                                NA            NA          NA          NA           NA             NA         NA          NA          11.2274         10.3595         10.0000
Regular Option - Weekly Dividend                       NA            NA          NA          NA           NA             NA          NA          NA         10.0340         10.0460         10.0000
Regular Option - Fortnightly Dividend                  NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Regular Option - Half Yearly Dividend                  NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Monthly Option - Dividend                              NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Quarterly Option - Dividend                            NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Institutional Option - Dividend                        NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Institutional Option - Growth                          NA            NA          NA          NA           NA            NA          NA          NA          11.2519         10.3666         10.0000
Institutional Option - Daily Dividend                  NA            NA          NA          NA           NA            NA          NA          NA          10.0125         10.0125         10.0000
Institutional Option - Weekly Dividend                 NA            NA          NA          NA           NA             NA          NA          NA         10.0348         10.0469         10.0000
Institutional Option - Monthly Dividend                NA            NA           NA         NA           NA             NA          NA          NA         10.0834         10.1046            NA
Institutional Option - Fortnightly Dividend            NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Institutional Option - Quarterly Dividend              NA            NA           NA          NA          NA             NA          NA          NA            NA              NA              NA
Institutional Plus Option - Growth                    NA             NA          NA          NA           NA            NA          NA          NA          11.2737         10.3713         10.0000
Institutional Plus Option - Daily Dividend            NA             NA          NA          NA           NA            NA          NA          NA          10.0126         10.0126         10.0000
Institutional Plus Option - Weekly Dividend            NA            NA          NA          NA           NA             NA          NA         NA          10.0353         10.0474         10.0000
Institutional Plus Option - Monthly Dividend           NA            NA          NA          NA           NA             NA          NA          NA         10.2678         10.1050         10.0000
Net Income Per unit (Rs.)                           (4.6598)       5.9353       1.6208      0.1336     (8.0859)        5.6183      6.0230      2.7270        2.6779          1.5446          0.5478
Dividends Paid out (Rs. per unit) #
Regular Option - Dividend                             1.11          1.81          -          -            -            2.29         3.69        0.93         1.10            0.69             0.30
Regular Option - Weekly Dividend                      NA            NA           NA         NA           NA            NA           NA          NA           1.12            0.96             0.23
Regular Option - Fortnightly Dividend                 NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Regular Option - Half Yearly Dividend                 NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Monthly Option - Dividend                             NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Quarterly Option - Dividend                           NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Institutional Option - Dividend                       NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Institutional Option - Daily Dividend                 NA            NA           NA         NA           NA            NA           NA          NA           1.89            0.87             0.35
Institutional Option - Weekly Dividend                NA            NA           NA         NA           NA            NA           NA          NA           1.61            0.94             0.33
Institutional Option - Monthly Dividend               NA            NA           NA         NA           NA            NA           NA          NA           1.15            1.26             0.87
Institutional Option - Fortnightly Dividend           NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Institutional Option - Quarterly Dividend             NA            NA           NA         NA           NA            NA           NA          NA           NA              NA               NA
Institutional Plus Option - Daily Dividend            NA            NA           NA         NA           NA            NA           NA          NA           7.01            1.69             0.50
Institutional Plus Option - Weekly Dividend           NA            NA           NA         NA           NA            NA           NA          NA           4.88            1.57             1.46
Institutional Plus Option - Monthly Dividend          NA            NA           NA         NA           NA            NA           NA          NA           1.20            1.57             1.29
Transfer to Reserves (Rs. In crores)                    -             -           -        204.35         -              -            -        223.08          -               -             10.57
NAV at the End of the Year/Period (Rs.)
Dividend Option                                      7.0792        13.3555     11.7374     11.2925       6.6851       13.6463     13.8256     17.3721         NA               NA              NA
Growth Option                                        8.3228        14.5446     11.7374     11.2935      10.1084       20.6339     18.1774     18.6362         NA               NA              NA
Regular Option - Dividend                             NA             NA          NA           NA          NA            NA          NA          NA          10.0122         10.0122         10.0122
Regular Option - Growth                               NA             NA          NA           NA          NA            NA          NA          NA          12.1193         11.2274         10.3595
Regular Option - Weekly Dividend                      NA             NA          NA           NA          NA            NA          NA          NA          10.0418         10.0340         10.0460
Regular Option - Fortnightly Dividend                  NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Regular Option - Half Yearly Dividend                  NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Monthly Option - Dividend                              NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Quarterly Option - Dividend                            NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Institutional Option - Dividend                        NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Institutional Option - Growth                         NA             NA          NA          NA           NA            NA          NA          NA          12.1702         11.2519         10.3666
Institutional Option - Daily Dividend                 NA             NA          NA          NA           NA            NA          NA          NA          10.0125         10.0125         10.0125
Institutional Option - Weekly Dividend                NA             NA          NA           NA          NA            NA          NA          NA          10.0432         10.0348         10.0469
Institutional Option - Monthly Dividend               NA             NA          NA           NA          NA            NA          NA          NA          10.1476         10.0834         10.1046
Institutional Option - Fortnightly Dividend            NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Institutional Option - Quarterly Dividend              NA            NA           NA          NA           NA           NA          NA          NA            NA               NA              NA
Institutional Plus Option - Growth                    NA             NA          NA          NA           NA            NA          NA          NA          12.2294         11.2737         10.3713
Institutional Plus Option - Daily Dividend            NA             NA          NA          NA           NA            NA          NA          NA          10.0506         10.0126         10.0126
Institutional Plus Option - Weekly Dividend           NA             NA          NA          NA           NA            NA          NA          NA          10.0447         10.0353         10.0474
Institutional Plus Option - Monthly Dividend          NA             NA          NA          NA           NA            NA          NA          NA          10.3369         10.2678         10.1050
Net Assets at End of Year/Period (Rs. In Crores)     357.55         712.31     1,157.77    1,741.27      93.67         235.60      293.14      502.40        984.19         2,742.77        1,251.18
Ratio of Recurring Expenses to Average
Daily Net Assets (%) (Annualised)                    2.52%          2.59%       2.72%       1.75%        2.40%         2.32%        2.30%      2.26%         0.46%           0.40%           0.42%
Date of Allotment                                  23 Feb 06      23 Feb 06   23 Feb 06   23 Feb 06    19 May 05     19 May 05    19 May 05 19 May 05      17 Oct 06       17 Oct 06       17 Oct 06
Annualised Returns (Since inception)                (5.75)%        19.52%      15.74%      12.93%        0.28%        28.73%       37.82%     86.38%         8.14%           8.28%           3.60%
Benchmark Returns (Since inception)                 (3.64)%        21.68%      19.60%      10.41%       (2.40)%       26.88%       31.19%     64.72%         7.87%           7.24%           2.93%
Benchmark Index                                    BSE 200         BSE 200     BSE 200     BSE 200    BSE Midcap    BSE Midcap   BSE Midcap BSE Midcap   CRISIL Liquid   CRISIL Liquid   CRISIL Liquid
                                                                                                                                                          Fund Index      Fund Index      Fund Index



HSBC Mututal Fund                                                                                                                                                                                      15
Statement of Additional Information


HISTORICAL PER UNIT STATISTICS                         HSBC-Tax Saver Equity Fund+       HSBC-Unique Opportunities Fund+       HSBC-Fixed Term            HSBC-Dynamic              HSBC-Flexi Debt
                                                                                                                                  Series-30+                  Fund+                   Fund +^^^^
                                                   01-Apr-08   01-Apr-07    05-Jan-07   01-Apr-08   01-Apr-07   21-Mar-07   01-Apr-08 11-Jun-07        01-Apr-08 24-Sep-07       01-Apr-08 05-Oct-07
                                                   31-Mar-09   31-Mar-08    31-Mar-07   31-Mar-09   31-Mar-08   31-Mar-07   31-Mar-09 31-Mar-08        31-Mar-09 31-Mar-08       31-Mar-09 31-Mar-08
NAV at the beginning of the Year/Period (Rs.)
Dividend Option                                     10.5427      9.4098      10.0000     10.7715     10.2051     10.0000        NA            NA         9.6659       10.0000        NA            NA
Growth Option                                       10.5427      9.4098      10.0000     10.7715     10.2051     10.0000        NA            NA         9.6659       10.0000        NA            NA
Regular Option - Dividend                             NA           NA          NA          NA          NA          NA        10.4450       10.0000         NA            NA       10.0065       10.0000
Regular Option - Growth                               NA           NA          NA          NA          NA          NA        10.9311       10.0000         NA            NA       10.4155       10.0000
Regular Option - Weekly Dividend                       NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Regular Option - Fortnightly Dividend                 NA          NA           NA          NA          NA          NA          NA            NA           NA             NA       10.0315       10.0000
Regular Option - Half Yearly Dividend                 NA           NA          NA          NA          NA          NA          NA             NA           NA            NA       10.0000          NA
Monthly Option - Dividend                              NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Quarterly Option - Dividend                            NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Option - Dividend                        NA          NA          NA           NA         NA          NA        10.4346       10.0000         NA            NA          NA            NA
Institutional Option - Growth                         NA          NA           NA          NA          NA          NA        10.9311       10.0000         NA            NA       10.4333       10.0000
Institutional Option - Daily Dividend                  NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Option - Weekly Dividend                 NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Option - Monthly Dividend                NA          NA          NA           NA         NA          NA          NA            NA            NA            NA       10.0706       10.0000
Institutional Option - Fortnightly Dividend           NA          NA           NA          NA          NA          NA          NA            NA           NA            NA        10.0302       10.0000
Institutional Option - Quarterly Dividend              NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Growth                     NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Daily Dividend             NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Weekly Dividend            NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Monthly Dividend           NA          NA          NA           NA          NA          NA          NA            NA           NA            NA          NA            NA
Net Income Per unit (Rs.)                           (2.4153)     0.4806       0.0711     (6.6034)     2.8173      0.0970      1.0487        0.8213      (4.3741)       0.7479      0.2845        0.3981
Dividends Paid out (Rs. per unit) #
Regular Option - Dividend                              -           -            -           -           -           -         1.09           0.49          -             -         NA            NA
Regular Option - Weekly Dividend                      NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Regular Option - Fortnightly Dividend                 NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         0.24          0.24
Regular Option - Half Yearly Dividend                 NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Monthly Option - Dividend                             NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         0.39          0.19
Quarterly Option - Dividend                           NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         0.12          NA
Institutional Option - Dividend                       NA          NA           NA          NA          NA          NA          -!            0.49         NA            NA         NA            NA
Institutional Option - Daily Dividend                 NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Institutional Option - Weekly Dividend                NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Institutional Option - Monthly Dividend               NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         0.35          3.13
Institutional Option - Fortnightly Dividend           NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         0.70          0.32
Institutional Option - Quarterly Dividend             NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         0.19          NA
Institutional Plus Option - Daily Dividend            NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Institutional Plus Option - Weekly Dividend           NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Institutional Plus Option - Monthly Dividend          NA          NA           NA          NA          NA          NA         NA             NA           NA            NA         NA            NA
Transfer to Reserves (Rs. In crores)                   -           -            -           -           -           -           -              -           -             -           -             -
NAV at the End of the Year/Period (Rs.)
Dividend Option                                      7.3692     10.5427       9.4098      5.6683     10.7715     10.2051       NA            NA         6.3088        9.6659        NA            NA
Growth Option                                        7.3692     10.5427       9.4098      5.6683     10.7715     10.2051       NA            NA         6.3088        9.6659        NA            NA
Regular Option - Dividend                              NA         NA            NA          NA         NA          NA        10.0762       10.4450        NA            NA          NA          10.0065
Regular Option - Growth                                NA         NA            NA          NA         NA          NA        11.6034       10.9311        NA            NA        11.6483       10.4155
Regular Option - Weekly Dividend                       NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Regular Option - Fortnightly Dividend                  NA         NA            NA          NA         NA          NA          NA            NA          NA             NA        10.3662       10.0315
Regular Option - Half Yearly Dividend                  NA         NA            NA          NA         NA          NA          NA            NA           NA            NA        9.8005          NA
Monthly Option - Dividend                              NA         NA            NA          NA         NA          NA          NA            NA           NA            NA        10.2553         NA
Quarterly Option - Dividend                            NA         NA            NA          NA         NA          NA          NA            NA           NA            NA        10.7885         NA
Institutional Option - Dividend                        NA         NA            NA          NA         NA          NA           -!         10.4346        NA            NA          NA            NA
Institutional Option - Growth                          NA         NA           NA          NA          NA          NA        11.6034       10.9311        NA            NA        11.7088       10.4333
Institutional Option - Daily Dividend                  NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Institutional Option - Weekly Dividend                 NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Institutional Option - Monthly Dividend                NA         NA            NA          NA         NA          NA          NA            NA           NA            NA        10.5214       10.0706
Institutional Option - Fortnightly Dividend           NA          NA           NA          NA          NA          NA          NA            NA          NA             NA        9.7535        10.0302
Institutional Option - Quarterly Dividend              NA         NA            NA          NA         NA          NA          NA            NA           NA            NA        10.6734         NA
Institutional Plus Option - Growth                     NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Daily Dividend             NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Weekly Dividend            NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Institutional Plus Option - Monthly Dividend           NA         NA            NA          NA         NA          NA          NA            NA           NA            NA          NA            NA
Net Assets at End of Year/Period (Rs. In Crores)     180.58      228.53       179.38      219.50     520.38      650.24       87.08         105.31      234.13        405.28       316.84        235.33
Ratio of Recurring Expenses to Average
Daily Net Assets (%) (Annualised)                    2.38%        2.35%       2.17%        3.84%      3.17%       1.88%      1.18%           1.16%       2.33%         2.14%       1.53%          0.79%
Date of Allotment                                  05 Jan 07    05 Jan 07   05 Jan 07   21 Mar 07   21 Mar 07   21 Mar 07   11 Jun 07      11 Jun 07   24 Sep 07     24 Sep 07   05 Oct 07     05 Oct 07
Annualised Returns (Since inception)               (12.76)%       4.37%      (5.90)%     (24.39)%     7.48%       2.05%       8.59%          9.31%     (26.18)%       (3.34)%     10.86%          4.16%
Benchmark Returns (Since inception)                (15.54)%      12.90%      (6.42)%     (13.74)%    24.70%       1.12%       9.08%          6.55%     (32.50)%       (6.68)%      7.18%          3.30%
Benchmark Index                                                  BSE 200                            BSE 200                     CRISIL Short-Term              BSE 200               CRISIL Composite
                                                                                                                                 Bond Fund Index                                      Bond Fund Index



16                                                                                                                                                                       HSBC Mututal Fund
                                                                                                                                                       Statement of Additional Information


HISTORICAL PER UNIT STATISTICS                        HSBC-Fixed Term            HSBC-Fixed Term            HSBC-Small Cap            HSBC-Fixed Term            HSBC-Fixed Term             HSBC-Fixed Term
                                                         Series-41+                 Series-42+                   Fund+                   Series-44+                 Series-45+                  Series-46+
                                                   01-Apr-08 20-Dec-07        01-Apr-08 08-Feb-08        01-Apr-08 24-Mar-08        01-Apr-08 19-Mar-08        01-Apr-08 28-Mar-08        01-Apr-08 28-Mar-08
                                                   31-Mar-09 31-Mar-08        31-Mar-09 31-Mar-08        31-Mar-09 31-Mar-08        31-Mar-09 31-Mar-08        31-Mar-09 31-Mar-08        31-Mar-09 31-Mar-08
NAV at the beginning of the Year/Period (Rs.)
Dividend Option                                        NA             NA          NA            NA        10.1334       10.0000         NA            NA           NA            NA            NA            NA
Growth Option                                          NA             NA          NA            NA        10.1334       10.0000         NA            NA           NA            NA            NA            NA
Regular Option - Dividend                           10.2514        10.0000        -!            -!          NA            NA         10.0444       10.0000      10.0287       10.0000       10.0100       10.0000
Regular Option - Growth                             10.2514        10.0000     10.0927       10.0000         NA           NA         10.0444       10.0000      10.0287       10.0000       10.0100       10.0000
Regular Option - Weekly Dividend                       NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Regular Option - Fortnightly Dividend                  NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Regular Option - Half Yearly Dividend                  NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Monthly Option - Dividend                              NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Quarterly Option - Dividend                            NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Option - Dividend                     10.2620        10.0000        -!            -!           NA           NA            -!            -!           -!            -!         10.0104       10.0000
Institutional Option - Growth                       10.2620        10.0000     10.0927       10.0000         NA           NA         10.0462       10.0000      10.0292       10.0000       10.0104       10.0000
Institutional Option - Daily Dividend                  NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Option - Weekly Dividend                 NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Option - Monthly Dividend                NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Option - Fortnightly Dividend            NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Option - Quarterly Dividend              NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Plus Option - Growth                     NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Plus Option - Daily Dividend             NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Plus Option - Weekly Dividend            NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Institutional Plus Option - Monthly Dividend           NA             NA          NA            NA           NA           NA            NA            NA           NA            NA            NA            NA
Net Income Per unit (Rs.)                            1.3417         0.2600      0.9365        0.1392      (3.9649)      0.0405        1.1662        0.0459       1.1218        0.0291        0.9595        0.0100
Dividends Paid out (Rs. per unit) #
Regular Option - Dividend                            1.01            -           -              -            -             -          0.85            -          0.75            -           0.77           -
Regular Option - Weekly Dividend                     NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Regular Option - Fortnightly Dividend                NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Regular Option - Half Yearly Dividend                NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Monthly Option - Dividend                            NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Quarterly Option - Dividend                          NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Option - Dividend                      1.05            -           -              -           NA            NA            -             -            -             -           0.81           -
Institutional Option - Daily Dividend                NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Option - Weekly Dividend               NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Option - Monthly Dividend              NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Option - Fortnightly Dividend          NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Option - Quarterly Dividend            NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Plus Option - Daily Dividend           NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Plus Option - Weekly Dividend          NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Institutional Plus Option - Monthly Dividend         NA             NA          NA             NA           NA            NA          NA             NA          NA             NA           NA            NA
Transfer to Reserves (Rs. In crores)                   -             -           -              -            -             -            -             -            -             -             -            -
NAV at the End of the Year/Period (Rs.)
Dividend Option                                       NA             NA          NA            NA         4.8404        10.1334        NA            NA           NA            NA            NA            NA
Growth Option                                         NA             NA          NA            NA         4.8404        10.1334        NA            NA           NA            NA            NA            NA
Regular Option - Dividend                           10.0648        10.2514        -!            -!          NA            NA         10.0282       10.0444      10.0294       10.0287       10.0385       10.0100
Regular Option - Growth                             11.1842        10.2514     10.9618       10.0927        NA            NA         10.9516       10.0444      10.8420       10.0287       10.8717       10.0100
Regular Option - Weekly Dividend                      NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Regular Option - Fortnightly Dividend                 NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Regular Option - Half Yearly Dividend                 NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Monthly Option - Dividend                             NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Quarterly Option - Dividend                           NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Option - Dividend                     10.0681        10.2620        -!            -!          NA            NA            -!            -!           -!            -!         10.0399       10.0104
Institutional Option - Growth                       11.2335        10.2620     10.9618       10.0927        NA            NA         11.0085       10.0462      10.8859       10.0292       10.9151       10.0104
Institutional Option - Daily Dividend                 NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Option - Weekly Dividend                NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Option - Monthly Dividend               NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Option - Fortnightly Dividend           NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Option - Quarterly Dividend             NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Plus Option - Growth                    NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Plus Option - Daily Dividend            NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Plus Option - Weekly Dividend           NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Institutional Plus Option - Monthly Dividend          NA             NA          NA            NA           NA            NA           NA            NA           NA            NA            NA            NA
Net Assets at End of Year/Period (Rs. In Crores)     36.08          58.84       685.10        630.78       35.50         85.97        99.52         133.71       19.98         28.27         248.71       257.02
Ratio of Recurring Expenses to Average
Daily Net Assets (%) (Annualised)                    0.23%          0.22%       0.22%          0.22%        5.19%          1.72%      0.20%         0.17%        0.30%         0.20%         0.44%         0.34%
Date of Allotment                                  20 Dec 07      20 Dec 07   08 Feb 08      08 Feb 08   24 Mar 08      24 Mar 08   19 Mar 08 19 Mar 08        28 Mar 08     28 Mar 08     28 Mar 08 28 Mar 08
Annualised Returns (Since inception)                 9.14%          2.51%      8.37%           0.93%      (50.93)%         1.33%      9.20%         0.44%        8.35%         0.29%         8.64%         0.10%
Benchmark Returns (Since inception)                  8.46%          1.98%      8.63%           1.02%      (52.61)%        12.83%      8.88%         0.35%        8.83%         0.09%         8.83%         0.09%
Benchmark Index                                    CRISIL Liquid Fund Index   CRISIL Liquid Fund Index          BSE Smallcap        CRISIL Liquid Fund Index   CRISIL Liquid Fund Index   CRISIL Liquid Fund Index



HSBC Mututal Fund                                                                                                                                                                                                   17
Statement of Additional Information


HISTORICAL PER UNIT STATISTICS                      HSBC-Fixed Term Series-49+        HSBC-Emerging Markets Fund+              HSBC-Fixed Term   HSBC-Fixed Term HSBC-Fixed Term HSBC-Fixed Term
                                                                                                                                  Series-50+        Series-52+      Series-53+      Series-54+
                                                   01-Apr-08             28-Mar-08     01-Apr-08            17-Mar-08             29-Apr-08        06-May-08        29-May-08       12-Jun-08
                                                   31-Mar-09             31-Mar-08     31-Mar-09            31-Mar-08             31-Mar-09        31-Mar-09        31-Mar-09       31-Mar-09
NAV at the beginning of the Year/Period (Rs.)
Dividend Option                                        NA                    NA          10.0301              10.0000                  NA               NA               NA              NA
Growth Option                                          NA                    NA          10.0301              10.0000                  NA               NA               NA              NA
Regular Option - Dividend                           10.0100               10.0000           NA                  NA                     -!            10.0000          10.0000         10.0000
Regular Option - Growth                             10.0100               10.0000           NA                  NA                  10.0000          10.0000          10.0000         10.0000
Regular Option - Weekly Dividend                       NA                    NA             NA                  NA                     NA               NA               NA              NA
Regular Option - Fortnightly Dividend                  NA                    NA             NA                  NA                     NA               NA               NA              NA
Regular Option - Half Yearly Dividend                  NA                    NA             NA                  NA                     NA               NA               NA              NA
Monthly Option - Dividend                              NA                    NA             NA                  NA                     NA               NA               NA              NA
Quarterly Option - Dividend                            NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Option - Dividend                        -!                    -!             NA                  NA                     -!            10.0000             -!           10.0000
Institutional Option - Growth                       10.0100               10.0000           NA                  NA                  10.0000          10.0000          10.0000         10.0000
Institutional Option - Daily Dividend                  NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Option - Weekly Dividend                 NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Option - Monthly Dividend                NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Option - Fortnightly Dividend            NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Option - Quarterly Dividend              NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Plus Option - Growth                     NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Plus Option - Daily Dividend             NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Plus Option - Weekly Dividend            NA                    NA             NA                  NA                     NA               NA               NA              NA
Institutional Plus Option - Monthly Dividend           NA                    NA             NA                  NA                     NA               NA               NA              NA
Net Income Per unit (Rs.)                            0.9398                0.0096        (0.0913)             0.0640                 0.8449           0.9167           0.9143          0.8498
Dividends Paid out (Rs. per unit) #
Regular Option - Dividend                              -                     -              -                    -                    -               0.74             0.59            0.65
Regular Option - Weekly Dividend                      NA                    NA             NA                   NA                   NA               NA               NA              NA
Regular Option - Fortnightly Dividend                 NA                    NA             NA                   NA                   NA               NA               NA              NA
Regular Option - Half Yearly Dividend                 NA                    NA             NA                   NA                   NA               NA               NA              NA
Monthly Option - Dividend                             NA                    NA             NA                   NA                   NA               NA               NA              NA
Quarterly Option - Dividend                           NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Option - Dividend                        -                     -             NA                   NA                    -               0.79             NA              0.66
Institutional Option - Daily Dividend                 NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Option - Weekly Dividend                NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Option - Monthly Dividend               NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Option - Fortnightly Dividend           NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Option - Quarterly Dividend             NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Plus Option - Daily Dividend            NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Plus Option - Weekly Dividend           NA                    NA             NA                   NA                   NA               NA               NA              NA
Institutional Plus Option - Monthly Dividend          NA                    NA             NA                   NA                   NA               NA               NA              NA
Transfer to Reserves (Rs. In crores)                   -                     -              -                    -                    -                 -                -               -
NAV at the End of the Year/Period (Rs.)
Dividend Option                                       NA                    NA           6.2553               10.0301                 NA               NA               NA              NA
Growth Option                                         NA                    NA           6.2554               10.0301                 NA               NA               NA              NA
Regular Option - Dividend                           10.9494               10.0100          NA                   NA                     -!            10.0677          10.1022         10.0525
Regular Option - Growth                             10.9494               10.0100          NA                   NA                  10.8332          10.7536          10.7199         10.7039
Regular Option - Weekly Dividend                      NA                    NA             NA                   NA                    NA               NA               NA              NA
Regular Option - Fortnightly Dividend                 NA                    NA             NA                   NA                    NA               NA               NA              NA
Regular Option - Half Yearly Dividend                 NA                    NA             NA                   NA                    NA               NA               NA              NA
Monthly Option - Dividend                             NA                    NA             NA                   NA                    NA               NA               NA              NA
Quarterly Option - Dividend                           NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Option - Dividend                        -!                    -!            NA                   NA                     -!            10.0697             -!           10.0615
Institutional Option - Growth                       10.9494               10.0100          NA                   NA                  10.8332          10.7925          10.7560         10.7643
Institutional Option - Daily Dividend                 NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Option - Weekly Dividend                NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Option - Monthly Dividend               NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Option - Fortnightly Dividend           NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Option - Quarterly Dividend             NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Plus Option - Growth                    NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Plus Option - Daily Dividend            NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Plus Option - Weekly Dividend           NA                    NA             NA                   NA                    NA               NA               NA              NA
Institutional Plus Option - Monthly Dividend          NA                    NA             NA                   NA                    NA               NA               NA              NA
Net Assets at End of Year/Period (Rs. In Crores)     361.50                330.51         84.59               102.57                 478.01           221.15           138.62          174.72
Ratio of Recurring Expenses to Average
Daily Net Assets (%) (Annualised)                    0.25%                   0.20%         0.75%               0.28%                 0.25%           0.46%            0.51%           0.66%
Date of Allotment                                  28 Mar 08              28 Mar 08     17 Mar 08            17 Mar 08             29 Apr 08       06 May 08        29 May 08        12 Jun 08
Annualised Returns (Since inception)                 9.41%                   0.10%       (36.35)%              0.30%                 8.33%           7.54%            7.20%           7.04%
Benchmark Returns (Since inception)                  8.83%                   0.09%      (34.58)%           5.12%/5.15%              8.04%            7.80%            7.41%           7.16%
Benchmark Index                                          CRISIL Liquid Fund Index     MSCI Emerging     BSE200 / MSCI            CRISIL Liquid    CRISIL Liquid    CRISIL Liquid   CRISIL Liquid
                                                                                      Markets Index   Emerging Markets Index      Fund Index       Fund Index       Fund Index      Fund Index




18                                                                                                                                                                   HSBC Mututal Fund
                                                                                                                                                             Statement of Additional Information


HISTORICAL PER UNIT STATISTICS                   HSBC-Fixed Term          HSBC-Fixed Term           HSBC-Fixed Term          HSBC-Fixed Term          HSBC-Fixed Term           HSBC-Fixed Term         HSBC-Fixed Term
                                                    Series-56+               Series-57+                Series-59+               Series-61+               Series-62+                Series-63+              Series-66+
                                                    07-Aug-08                22-Aug-08                  15 Jul 08                29-Jul-08               26 Aug 08                 09-Sep-08               03 Oct 08
                                                    31-Mar-09                31-Mar-09                 31-Mar-09                31-Mar-09                31-Mar-09                 31-Mar-09               31-Mar-09
NAV at the beginning of the Year/Period (Rs.)
Dividend Option                                             NA                       NA                       NA                       NA                       NA                       NA                      NA
Growth Option                                               NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Dividend                                10.0000                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000
Regular Option - Growth                                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000
Regular Option - Weekly Dividend                            NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Fortnightly Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Half Yearly Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Monthly Option - Dividend                                   NA                       NA                       NA                       NA                       NA                       NA                      NA
Quarterly Option - Dividend                                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Dividend                          10.0000                     -!                    10.0000                  10.0000                     -!                       -!                        -
Institutional Option - Growth                            10.0000                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000                  10.0000
Institutional Option - Daily Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Weekly Dividend                      NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Monthly Dividend                     NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Fortnightly Dividend                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Quarterly Dividend                   NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Growth                          NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Daily Dividend                  NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Weekly Dividend                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Monthly Dividend                NA                       NA                       NA                       NA                       NA                       NA                      NA
Net Income Per unit (Rs.)                                 0.7363                   0.6510                   0.8255                   0.7823                   0.6573                   0.5420                  0.4921
Dividends Paid out (Rs. per unit) #
Regular Option - Dividend                                  0.52                     0.54                     0.63                     0.59                     0.75                     0.44                     0.46
Regular Option - Weekly Dividend                            NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Fortnightly Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Half Yearly Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Monthly Option - Dividend                                   NA                       NA                       NA                       NA                       NA                       NA                      NA
Quarterly Option - Dividend                                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Dividend                            0.52                      NA                      0.65                     0.63                      NA                       NA                      NA
Institutional Option - Daily Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Weekly Dividend                      NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Monthly Dividend                     NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Fortnightly Dividend                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Quarterly Dividend                   NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Daily Dividend                  NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Weekly Dividend                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Monthly Dividend                NA                       NA                       NA                       NA                       NA                       NA                      NA
Transfer to Reserves (Rs. In crores)                         -                        -                        -                        -                        -                        -                        -
NAV at the End of the Year/Period (Rs.)
Dividend Option                                             NA                       NA                       NA                       NA                       NA                       NA                      NA
Growth Option                                               NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Dividend                                10.1279                  10.0482                  10.0644                  10.0753                  10.0554                  10.0888                  10.1051
Regular Option - Growth                                  10.6740                  10.6105                  10.7121                  10.7000                  10.6388                  10.5440                  10.5506
Regular Option - Weekly Dividend                            NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Fortnightly Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Regular Option - Half Yearly Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Monthly Option - Dividend                                   NA                       NA                       NA                       NA                       NA                       NA                      NA
Quarterly Option - Dividend                                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Dividend                          10.1483                     -!                    10.0681                  10.0842                     -!                       -!                      NA
Institutional Option - Growth                            10.7365                  10.6590                  10.7695                  10.7506                  10.6604                  10.5824                  10.5506
Institutional Option - Daily Dividend                       NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Weekly Dividend                      NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Monthly Dividend                     NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Fortnightly Dividend                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Option - Quarterly Dividend                   NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Growth                          NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Daily Dividend                  NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Weekly Dividend                 NA                       NA                       NA                       NA                       NA                       NA                      NA
Institutional Plus Option - Monthly Dividend                NA                       NA                       NA                       NA                       NA                       NA                      NA
Net Assets at End of Year/Period (Rs. In Crores)          121.40                    59.01                   339.37                    91.53                   442.16                    95.03                   65.80
Ratio of Recurring Expenses to Average
Daily Net Assets (%) (Annualised)                         0.54%                    0.45%                    0.37%                    0.44%                    0.73%                    0.39%                    1.02%
Date of Allotment                                       07 Aug 08                22 Aug 08                15 Jul 08                29 Jul 08                26 Aug 08                09 Sep 08                03 Oct 08
Annualised Returns (Since inception)                      6.74%                    6.11%                    7.12%                    7.00%                    6.39%                    5.44%                    5.51%
Benchmark Returns (Since inception)                       5.94%                    5.56%                    6.55%                    6.19%                    5.53%                    5.13%                    6.79%
Benchmark Index                                  CRISIL Liquid Fund Index CRISIL Liquid Fund Index CRISIL Liquid Fund Index CRISIL Liquid Fund Index CRISIL Liquid Fund Index CRISIL Liquid Fund Index CRISIL Short-Term Bond
                                                                                                                                                                                                             Fund Index



HSBC Mututal Fund                                                                                                                                                                                                         19
Statement of Additional Information


Notes :
1)   # The dividend paid out is calculated based on the total amount of dividend declared during the period including distribution tax wherever
     applicable divided by the number of units as on the last day of the relevant period.
2)   ^ HSBC Cash Fund - Institutional Plus Options were launched on 02 June, 2004 and the HSBC Cash Fund - Regular Option - Weekly
     Dividend was launched on 20 April, 2005
3)   ^^^^ HSBC Flexi Debt Fund - Institutional - Fortnightly Dividend Option, Regular - Fortnightly Dividend Option and Regular - Quarterly
     Dividend were launched on October 10, 2007, October 17, 2007 and April 10, 2008 respectively.
4)   HSBC Income Fund - Short Term Plan - Institutional, HSBC Income Fund - Investment Plan - Institutional and HSBC Gilt Fund -
     Long Term Plan were wound up with effect from 1 July 2004, 30 December 2004 and 31 January 2005 respectively hence historic per
     unit statistics have not been provided.
5)   * The HSBC-MidCap Equity Fund was launched on May 19, 2005 and ratio of Recurring Expenses to Average Daily Net Assets
     (Annualized ) is calculated w.e.f May 3, 2005.
6)   + HSBC- Advantage India Fund, HSBC Fixed Term Series 21, HSBC Ultra Short Term Bond Fund, HSBC Fixed Term Series 22, HSBC
     Fixed Term Series 23, HSBC Fixed Term Series 24, HSBC Fixed Term Series 25, HSBC Fixed Term Series 27, HSBC Tax Saver Equity
     Fund, HSBC Unique Opportunities Fund, HSBC Fixed Term Series 28, HSBC Fixed Term Series 30, HSBC Fixed Term Series 32, HSBC
     Fixed Term Series 33 , HSBC Fixed Term Series 34,HSBC Fixed Term Series 35, HSBC Fixed Term Series 36, HSBC Dynamic Fund,
     HSBC Flexi Debt Fund, HSBC Fixed Term Series 37, HSBC Interval Fund - Plan I, HSBC Interval Fund - Plan II , HSBC Fixed Term
     Series 41, HSBC Fixed Term Series 42, HSBC Interval Fund - Plan III, HSBC Small Cap Fund, HSBC Emerging Market Fund, HSBC
     Fixed Term Series 44, HSBC Fixed Term Series 45, HSBC Fixed Term Series 46, HSBC Fixed Term Series 47, HSBC Fixed Term
     Series 48, HSBC Fixed Term Series 49, HSBC Fixed Term Series 50, HSBC Fixed Term Series 51,HSBC Fixed Term Series 52, HSBC
     Fixed Term Series 53 and HSBC Fixed Term Series 54 were launched on February 23, 2006, January 02, 2007, October 17,2006, January
     23, 2007, March 02 ,2007, March 16, 2007, March 23, 2007, March 29, 2007, January 05, 2007, March 21, 2007, May 22, 2007, June
     11, 2007, July 06, 2007, September 04, 2007, September 27, 2007, September 14, 2007, October 04, 2007, September 24, 2007, October
     08, 2007, October 18, 2007, November 22, 2007, December 11, 2007, December 20, 2007, February 08, 2008, March 19, 2008, March
     24, 2008, March 17, 2008, March 19, 2008, March 28, 2008, March 28, 2008, March 26, 2008, April 07, 2008, March 28, 2008, April
     29, 2008, April 24, 2008, May 06, 2008, May 29, 2008 and June 16, 2008 respectively.
     Ratio of Recurring Expenses to Average Daily Net Assets (Annualized ) is calculated w.e.f December 15, 2005, March 4,2006, January
     10, 2006, February 17,2006, March 29,2006 , January 02, 2006, June 27,2006, August 28,2006, September 26,2006, October 13,2006,
     January 17,2007, February 22,2007, March 14,2007, March 13,2007, March 23,2007, March 26,2007, November 24,2006, February
     08,2007, May 16,2007 and May 16,2007 respectively.
7)   HSBC Fixed Term Series VII, Fixed Term Series VIII, Fixed Term Series III, Fixed Term Series IV, Fixed Term Series 13, Fixed Term
     Series I, Fixed Term Series IX, Fixed Term Series 14, Fixed Term Series V, Fixed Term Series II, Fixed Term Series VI, Fixed Term
     Series 26, Fixed Term Series 15, Fixed Term Series 31, Fixed Term Series 29, Fixed Term Plan Series 34, Fixed Term Plan Series
     21, Fixed Term Plan Series 23, Fixed Term Plan Series 27, Fixed Term Plan Series 22, Fixed Term Plan Series 25 and Fixed Term
     Plan Series 28 was closed on May 23, 2006, June 22, 2006, September 07, 2006, April 02, 2007, April 04, 2007, June 04, 2007, July
     02, 2007, August 30, 2007, September 05, 2007, September 09, 2007, September 19, 2007, September 26, 2007, October 03, 2007,
     October 04, 2007, November 21, 2007, March 27, 2008, April 02, 2008, April 02, 2008, April 02, 2008, April 22, 2008, April 23, 2008
     and May 26, 2008 respectively.
8)   ^^^^ HSBC Flexi Debt Fund Regular Quarterly Dividend Option was launched on April 10, 2008.




20                                                                                                                    HSBC Mututal Fund
                                                                                                            Statement of Additional Information


III. HOW TO APPLY?                                                             responsible for any loss, damage caused to the Transmitter directly
                                                                               or indirectly, as a result of the Transmitter sending or purporting to
l    The Application Form for the sale of Units of the Scheme will             send such fax / electronic transactions including where a fax /
     be available at the Investor Service Centres / Designated                 electronic transaction sent / purported to be sent is not processed on
     Collection Centres / Distributors and also on our website at              account of the fact that it was not received by the Recipient. The
     www.assetmanagement.hsbc.com/in.                                          Transmitter acknowledges that fax / electronic transaction is not a
                                                                               secure means of giving instructions / transaction requests and that
l    Payment should be made by cheque or bank draft drawn on any
                                                                               the Transmitter is aware of the risks involved including those arising
     bank which is situated at and is a member of the Banker’s
                                                                               out of such transmission being inaccurate, imperfect, ineffective,
     Clearing House located at the place where the application is
                                                                               illegible, having a lack of quality or clarity, garbled, altered, distorted,
     submitted or in a manner acceptable to the AMC, which is
                                                                               not timely etc. and that the Transmitter’s request to the Recipient
     evidenced by receipt of credit in Bank Account of the Fund.
                                                                               to act on any fax / electronic transaction is for the Transmitter’s
l    The cheque(s) for the amount of subscription should be MICR-              convenience and the Recipient shall not be obliged or bound to act
     encoded in case of investments in HSBC Cash Fund, HSBC                    on the same. The Transmitter authorizes the Recipient to accept and
     Floating Rate Fund (Long Term Plan and Short Term Plan) and               act on any fax / electronic transaction which the Recipient believes
     HSBC Ultra Short Term Bond Fund.                                          in good faith to be given by the Transmitter and the Recipient shall
                                                                               be entitled to treat any such fax / electronic transaction as if the same
l    Outstation cheques will not be accepted and applications                  was given to the Recipient under the Transmitter’s original signature.
     accompanied by such cheques are liable to be rejected. However,           The Transmitter agrees that security procedures adopted by the
     outstation cheques are acceptable in case of SIP applications.            Recipient may include signature verification, telephone callbacks or
     The first instalment of SIP should however be payable at the              a combination of the same. Callbacks may be recorded by tape
     location where the application is tendered.                               recording device and the Transmitter consents to such recording and
l    No cash, money orders and postal orders will be accepted.                 agrees to co-operate with the Recipient to enable confirmation of
                                                                               such fax / electronic transaction requests. The Transmitter further
l    Post-dated cheques will not be accepted.                                  accepts that the fax / electronic transaction shall not be considered
                                                                               until time stamped appropriately as a valid transaction request in the
l    Bank charges for demand drafts will be borne by the AMC and
                                                                               Scheme in line with the SEBI Regulations. In consideration of the
     will be limited to the bank charges as per table below. The
                                                                               Recipient from time to time accepting and at its sole discretion
     AMC will not entertain any request for refund of demand draft
                                                                               (including but not limited to the AMC extending / discontinuing
     charges.
                                                                               such facilities from time to time) acting on any fax / electronic
    Amount                      DD Charges                                     transaction request received / purporting to be received from the
                                                                               Transmitter, the Transmitter agrees to indemnify and keep
    Up to Rs. 10,000            At actuals, subject to a maximum               indemnified the AMC, Directors, employees, agents, representatives
                                of Rs. 65/-                                    of the AMC, HSBC Mutual Fund and Trustees (indemnified parties)
    Above Rs. 10,000            At Rs. 3.5 per Rs. 1,000/- Minimum             from and against all actions, claims, demands, liabilities, obligations,
                                Rs. 65/- and Maximum Rs. 12,500/-              losses, damages, costs (including without limitation, interest and
                                                                               legal fees) and expenses of whatever nature (whether actual or
However, such Demand Draft charges would be reimbursed only                    contingent) directly or indirectly suffered or incurred sustained by
when the investor is not residing in any of the locations where the            or threatened against the indemnified parties whatsoever arising
AMC or CAMS have official points of acceptance.                                from or in connection with or any way relating to the indemnified
l    Applications should be made in adherence to the minimum                   parties in good faith accepting and acting on fax / electronic
     amount requirements as mentioned in the Combined Scheme                   transaction requests including relying upon such fax / electronic
     Information Document.                                                     transaction requests purporting to come from the Transmitter even
                                                                               though it may not come from the Transmitter. The AMC reserves
l    All cheques and bank drafts must be drawn in the name of the              the right to discontinue the above mentioned facilities at any point
     Scheme / Plan or their abbreviations e.g. “HSBC Equity Fund”              in time.
     or “HEF” and crossed “Account Payee only”. A separate cheque
     or bank draft must accompany each Application.                            On-line investment facility may also be available to the
                                                                               investors in future. Please visit our website at
l    The Application Forms together with the cheque / demand                   www.assetmanagement.hsbc.com/in. Applications not complete in
     draft can be tendered at any of the Designated Collection                 any respect are liable to be rejected.
     Centres.
                                                                               In order to protect the interest of investors from fraudulent encashment
l    Any discrepancy in the application on account of address or               of cheques, cheques specify the name of the Unitholder and the bank
     residence status, the application will be rejected and the money          name and account number where payments are to be credited. SEBI
     will be refunded upon confirmation from CVL.                              Regulations make it mandatory for an investor to mention the details
The AMC, Mutual Fund, Registrar or any other agent or representative           of his / her / its bank account. It is important for applicants to
of the AMC, Mutual Fund, Registrar (“Recipient”) may accept                    mention their bank name, bank account number, branch address,
certain transactions via facsimile or through any electronic mode              account type in their applications for subscription or repurchase of
(“fax / electronic transactions”), subject to the investor fulfilling          Units. Applications without this information shall be rejected.
certain terms and conditions as stipulated by the AMC from time                Necessary supporting documents required with the Forms are to be
to time. Acceptance of fax / electronic transactions will be as permitted      submitted by the investor. The investor is mandatorily required to
by SEBI or other regulatory authorities from time to time and will             provide a copy of the PAN Card. As per SEBI circular no. MRD/
be solely at the risk of the transmitter of the fax / electronic transaction   DoP/MF Cir - 08/2008 dated April 3, 2008 and circular no. MRD/
(“Transmitter”) and the Recipient shall not in any way be liable or            DoP/Cir-20/2008 dated June 30, 2008 investors residing in the state


HSBC Mututal Fund                                                                                                                                      21
Statement of Additional Information


of Sikkim and Central Government, State Government and the                   The Mutual Fund needs to use intermediaries such as post office,
officials appointed by the courts e.g. Official liquidator, Court receiver   local and international couriers, banks and other intermediaries for
etc. (under the category of Government) respectively are exempted            correspondence with the investor and for making payments to the
from the mandatory requirement of PAN for their investments in               investor by cheques, drafts, warrants, through ECS etc. The investor
Mutual Funds. However, this would be subject to verification of the          expressly agrees and authorizes the Mutual Fund to correspond with
veracity of the claim of the investors by collecting sufficient              the investor or make payments to the investor through intermediaries
documentary evidence. The AMC reserves the right to ask for the              including but not limited to post office, local and international
necessary documentation to the satisfaction of the Mutual Fund.              couriers and banks. The investor clearly understands the mutual
The PAN requirements will be applicable to all joint applicants as           fund uses such intermediaries for the convenience of the investor
well as the Guardian, in case of applications by a Minor. Applications       and such intermediaries are agents of the investor and not the mutual
without this information will be rejected as per the presently               fund. The Fund is not responsible for delayed receipt or non-receipt
applicable regulations. It is also to be noted that furnishing an            of any correspondence or payment through such intermediaries.
incorrect PAN or not furnishing these details could invite a penalty
of Rs. 10,000, as per the provisions of the Income Tax Act, 1961.            PREVENTION OF MONEY LAUNDERING AND
Dividend reinvestment, if any, of Rs. 50,000 or more, qualifies as           KNOW YOUR CUSTOMER (KYC)
purchase of units. Further, no entry / exit load shall be charged for        With effect from February 1, 2008, any investors (whether new or
unit(s) allotted under bonus / dividend reinvestment option. In case         additional purchase) investing Rs. 50,000/- or more in mutual funds
of non-receipt of PAN details from the investors / Unit holders (in          is required to comply with Know Your Client (KYC) norms under
case the application / units are held in joint names, each of the            the Prevention of Money Laundering Act, 2002. This will be
investors / unitholders), the dividend will be compulsorily paid out         applicable for investments from individual investors including joint
to the Unit holders and not reinvested.                                      holding / institutional customers / other non-institutional investors
                                                                             / investments through power of attorney holders / investments of
An application made may be accepted or rejected in the sole and              minor through guardian.
absolute discretion of the Trustees. The Trustees may reject any
application for purchase of Units, if in the opinion of the Trustees,        The KYC requirements can be completed by filling up the prescribed
increasing the size of any or all of the Scheme’s Unit capital is not        form and submitting the same along with the other requisite details /
in the general interest of the Unitholders, or the Trustees for any          proof (attested true copies of supporting documents relating to proof
other reason believe it would be in the best interest of the Scheme          of identity and address or verification with the original) to a designated
or its Unitholders to accept / reject such an application. Provided          Point of Service (PoS) of CDSL Ventures Limited (CVL). Any
always that the Trustees’ rights will be subject to applicable SEBI          subsequent change to Address, Pin Code, Country, Nationality,
Regulations, if any.                                                         Occupation, Income details, Date of Birth, Proof of Identity need
                                                                             to be communicated to CVL ONLY. For details of the
The AMC shall have the right to set-off dividend amounts, redemption         process and list of PoS, please visit our website
amounts or any other amounts that may be payable to an investor              www.assetmanagement.hsbc.com/in. In case investor has completed
under the Scheme:                                                            the KYC Compliance process, without submitting a copy of PAN
(i)   against redemption proceeds already paid by the AMC in respect         Card, he/she must forthwith provide a copy of PAN Card along with
      of units created without realizing the subscription amounts,           the copy of KYC compliance acknowledgement to CVL.
      and/or                                                                 In view of this, each investor (including joint unit holder) who
(ii) against any excess payments made (and, in the case of payments          wishes to invest an amount of Rs. 50,000/- or more need to submit
     by cheque, whether encashed or not) to such investor, under             a copy of the acknowledgement of KYC / printout of KYC status
     the Scheme or under any other scheme of the Mutual Fund                 (status can be downloaded from CVL website (www.cvlindia.com)
     managed by the AMC in the same folio or any other folio of              using the PAN number) along with the application form for investing
     such investor in the Mutual Fund.                                       in the schemes of Mutual Fund.




22                                                                                                                          HSBC Mututal Fund
                                                                                                  Statement of Additional Information


IV. RIGHTS OF UNITHOLDERS OF THE SCHEME
1.   Unitholders of the Scheme have a proportionate right in the         9.   The Trustees shall obtain the consent of the Unitholders:
     beneficial ownership of the assets of the Scheme and in case
                                                                              l   Whenever required to do so by SEBI, in the interest of the
     of Dividend sub-option(s), wherever applicable, to the dividend
                                                                                  Unitholders
     declared, if any, by the Fund under the Scheme.
                                                                              l   Whenever required to do so on a requisition made by
2.   When the Mutual Fund declares a dividend under the Scheme,
     the dividend warrants shall be despatched within 30 days of the              three-fourths of the Unitholders of the Scheme
     declaration of the dividend. Account Statement reflecting the            l   When the Trustees decide to wind-up or prematurely
     new or additional subscription as well as Redemption / Switch                redeem the Units.
     of Units shall be dispatched to the Unit holder, as soon as
     possible, but not later than 30 days from date of receipt of        10. The Trustees shall ensure that no change in the fundamental
     request from the unitholder. Provided if a Unit holder so desires       attributes of any Scheme or the Trust or fees and expenses
     the Mutual Fund shall issue a Unit certificate (non-transferable)       payable or any other change which would modify the Scheme
     within 30 days of the receipt of request for the certificate.           and affect the interests of Unitholders is carried out unless:

3.   The Fund shall despatch the redemption proceeds to the                   l   A written communication about the proposed change is
     Unitholders within 10 Business Days from the date of acceptance              sent to each Unitholder and
     of the request for the same. In the event of failure to despatch         l   An advertisement is given in one English daily newspaper
     the redemption proceeds within the above time, interest @ 15%                having nationwide circulation as well as in newspaper
     per annum or such rate as may be specified by SEBI, would                    published in the language of the region where the Head
     be paid to the unitholders for the period of delay.                          Office of the Mutual Fund is situated and
4.   The Trustees are bound to make such disclosures to the
                                                                              l   Unitholders are given an option to exit at the prevailing
     Unitholders as are essential in order to keep them informed
                                                                                  Net Asset Value without any exit load.
     about any information known to Trustees which may have an
     adverse bearing on their investments.                               11. Subject to the Regulations and the guidelines issued by SEBI,
                                                                             the consent of the Unitholders of the Scheme will be obtained
5.   The appointment of the AMC for the Fund can be terminated
     by a majority of the Trustees or by 75% of the Unitholders of           through voting by mail or by way of a postal ballot or such
                                                                             other means as may be approved by SEBI. Detailed modalities
     any one or more of the Scheme of the Fund and any change
     in the appointment of the AMC shall be subject to the prior             of the same, including the principles for entitlement of votes
                                                                             for each Unitholder will be finalised in consultation with and
     approval of SEBI and the Unitholders of the respective Schemes.
                                                                             after obtaining the approval of SEBI and the Trustees. In
6.   The Trustees are obliged to convene a meeting on a requisition          specific circumstances, where the approval of unitholders is
     of 75% of the Unitholders of a Scheme.                                  sought on any matter, the same shall be obtained by way of a
7.   75% of the Unitholders of a Scheme can pass a resolution to             postal ballot or such other means as may be approved by SEBI..
     wind up the Scheme.                                                 12. The Annual Report containing accounts of the AMC
8.   Unitholders have the right to inspect all the documents listed          would be displayed on the website of the AMC (i.e.
     under “Documents Available for Inspection” in the respective            www.assetmanagement.hsbc.com/in). Unitholders, if they so
     Offer Document / Combined Scheme Information Document.                  desire, may request for the Annual Report of the AMC.




HSBC Mututal Fund                                                                                                                         23
Statement of Additional Information


V. INVESTMENT VALUATION NORMS FOR SECURITIES AND OTHER ASSETS
The valuation of the investment in the units / securities issued by          However, the AMC reserves the right to choose the price for
overseas mutual funds or unit trusts will be based on the NAV of             valuation of ADRs / GDRs which may be different from the
the overseas mutual funds or unit trusts on the date of valuation            procedure given above depending upon the prevailing
converted into Indian rupees. The NAV of the overseas mutual                 circumstances, the intention being to provide fair valuation to
funds / unit trusts available may be more than 24 hour old depending         the investors of the Scheme. Such valuation procedure shall be
upon the time zone differences and laws applicable to overseas               ratified by the Trustees of the Fund.
mutual fund.
                                                                             The AMC shall use the rates released by Reuters (rate as on
The Fund shall value its investments according to the valuation              the date of portfolio valuation) for the purpose of conversion
norms, as specified in the Eighth Schedule of the Regulations, or            of the last traded price for the purpose of portfolio valuation.
such norms as may be prescribed by SEBI from time to time. The               The AMC retains the right to use the average of TT buy and
broad valuation norms are detailed below:                                    sell USD / INR rates as released by banks / rates released by
                                                                             other sources as the AMC may deem reasonable in the absence
Traded Securities
                                                                             of appropriate release from Reuters. In case such quotes are not
l    Traded securities shall be valued at the last quoted closing            available on any day, the foreign exchange rates as available
     price on the Stock Exchange.                                            for the immediately preceding day may be used. The AMC also
                                                                             reserves the right to choose appropriate rates for conversion of
l    When the securities are traded on more than one recognised
                                                                             the last traded price for the purpose of valuation, depending
     stock exchange, the securities shall be valued at the official
                                                                             upon the prevailing circumstances, the intention being to provide
     closing price on the stock exchange where the security is
                                                                             fair valuation to the investors of the Scheme.
     principally traded. It would be left to the AMC to select the
     appropriate stock exchange, and the AMC shall record the           l    When a security (other than debt securities) is not traded on any
     reasons for the selection and change if any in writing. There           stock exchange on a particular valuation day, the value at
     should, however, be no objection for all scrips being valued at         which it was traded on the selected stock exchange, as the case
     the prices quoted on the stock exchange where a majority of             maybe, on the earliest previous day maybe used provided such
     the investments are principally traded.                                 date is not more than 30 days prior to valuation date.
l    When on a particular valuation day, a security has not been        l    When a debt security (other than Government Securities) is not
     traded on the principal stock exchange; the value at which it           traded on any stock exchange on a particular valuation day, the
     is traded on another stock exchange will be used.                       value at which it was traded on the principal stock exchange
                                                                             or any other stock exchange, as the case may be, on the earliest
     Trades in ADRs / GDRs shall be accounted for on the day
                                                                             previous day may be used, provided such date is not more than
     following the trade on the relevant stock exchanges where such
                                                                             15 days prior to the valuation date.
     ADRs / GDRs are listed viz. New York Stock Exchange,
     NASDAQ, London Stock Exchange (LSE), Luxembourg Stock              l    When a debt security (other than Government Securities) is
     Exchange etc. The valuation of such investments shall be done           purchased by way of private placement, the value at which it
     at the last traded price of the previous day on the relevant            was bought may be used for a period of 15 days beginning from
     exchange where the ADR / GDR is listed and traded. For                  the date of purchase.
     instance, in case of GDR listed on LSE, the last traded price
     on LSE shall be used for the purpose of valuation. In case of
                                                                        Thinly Traded Securities
     GDRs listed on more than one foreign stock exchange, the           Thinly Traded Equity / Equity Related Securities
     scheme shall use the last traded price on LSE, in the absence      Thinly traded securities as defined in the Regulations shall be
     of which last traded price on Luxembourg stock exchange shall      valued in the manner as specified in the guidelines issued by SEBI,
     be used. If the GDR was not traded on Luxembourg stock             as follows:
     exchange too, the last traded price on such other stock exchange
     as the AMC may deem appropriate shall be used for portfolio        When trading in an equity / equity related security (such as convertible
     valuation, the intention being to provide fair valuation to the    debentures, equity warrants, etc.) in a month is both less than
     investors of the Scheme. In case of an ADR listed on more than     Rs. 5 lacs (Rupees Five Lakhs Only) and the total volume is less
                                                                        than 50,000 (Fifty Thousand Only) shares, it shall be considered as
     one stock exchange the last traded price on NYSE shall be used
                                                                        a thinly traded security and valued accordingly.
     for valuation. If the ADR is not traded on NYSE, the last traded
     price on NASDAQ shall be used for valuation and if the ADR         For example, if the volume of trade is 100,000 and value is
     is not traded on NASDAQ too, the last traded price on such         Rs. 400,000, the share does not qualify as thinly traded. Also if the
     other stock exchange as the AMC may deem appropriate shall         volume traded is 40,000, but the value of trades is Rs. 600,000, the
     be used for portfolio valuation, the intention being to provide    share does not qualify as thinly traded. In order to determine whether
     fair valuation to the investors of the Scheme.                     a security is thinly traded or not, the volumes traded in all recognized
                                                                        stock exchanges in India may be taken into account.
     In the absence of prices on any exchange on the concerned
     valuation date, the price prevailing at the close of business on   Where a stock exchange identifies the "thinly traded" securities by
     the previous date of trade in such ADR/GDR shall be used for       applying the above parameters for the preceding calendar month
     valuation provided that such previous date is not more than 30     and publishes / provides the required information along with the
     days prior to the date of valuation.                               daily quotations, the same can be used by the Mutual Fund.




24                                                                                                                    HSBC Mututal Fund
                                                                                                     Statement of Additional Information


If the share is not listed on the stock exchanges which provide such      To determine if a security accounts for more than 5% of the total
information, then it will be obligatory on the part of the mutual fund    assets of the Scheme, it should be valued by the procedure above
to make its own analysis in line with the above criteria to check         and the proportion which it bears to the total net assets of the
whether such securities are thinly traded which would then be             Scheme to which it belongs would be compared on the date of
valued accordingly.                                                       valuation.
In case trading in an equity security is suspended upto 30 days, then     Non-Traded / Thinly Traded Debt Securities of
the last traded price would be considered for valuation of that           Upto 182 Days to Maturity
security. If an equity security is suspended for more than 30 days,       As the money market securities are valued on the basis of amortisation
then the AMC / Trustees will decide the valuation norms to be             (cost plus accrued interest till the beginning of the day plus the
followed and such norms would be documented and recorded.                 difference between the redemption value and the cost spread
Thinly Traded Debt Securities                                             uniformly over the remaining maturity period of the instruments)
Thinly traded securities as defined in the Regulations shall be           a similar process should be adopted for non-traded debt securities
valued in the manner as specified in the guidelines issued by SEBI,       with residual maturity of upto 182 days, in the absence of any other
as follows:                                                               standard benchmarks in the market. Debt securities purchased with
                                                                          residual maturity of upto 182 days are to be valued at cost (including
l    A debt security (other than Government Securities) shall be          accrued interest till the beginning of the day) plus the difference
     considered as a thinly traded security if on the valuation date,     between the redemption value (inclusive of interest) and cost spread
     there are no individual trades in that security in marketable lots   uniformly over the remaining maturity period of the instrument. In
     (currently Rs. 5 crores) on the principal stock exchange or any      case of a debt security with maturity greater than 182 days at the
     other stock exchange.                                                time of purchase, the last valuation price plus accrued interest
l    A thinly traded debt security as defined above would be valued       should be used instead of purchase cost. All other non-traded Non-
     as per the norms set for non-traded debt security.                   Government debt instruments shall be valued using the method
                                                                          suggested below.
Non-Traded Securities
                                                                          Non-Traded / Thinly Traded Debt Securities of
When a security (other than Government Securities) is not traded          Over 182 Days to Maturity
on any stock exchange for a period of 30 days prior to the valuation
date, the scrip must be treated as a ‘non-traded’ security.               For the purpose of valuation, all non-traded debt securities would
                                                                          be classified into “investment grade” and “non-investment grade”
Valuation of Non-Traded / Thinly Traded Securities                        securities based on their credit ratings. The non-investment grade
Non-traded / thinly traded securities shall be valued “in good faith”     securities would further be classified as “performing” and “non-
by the AMC on the basis of the valuation principles laid down             performing” assets.
below:                                                                    l    All non-government investment grade debt securities, classified
Non-traded / Thinly Traded Equity Securities                                   as not traded, shall be valued on yield to maturity basis as
                                                                               described below.
Based on the latest available Balance Sheet, net worth shall be
calculated as follows:                                                    l    All non-government non-investment grade performing debt
                                                                               securities would be valued at a discount of 25% to the face
Net Worth per share = [share capital reserves (excluding revaluation           value.
reserves) - miscellaneous expenditure and debit balance in P&L A/c]
divided by number of paid up shares.                                      l    All non-government non-investment grade non-performing debt
                                                                               securities would be valued based on the provisioning norms.
l    Average capitalisation rate (P/E ratio) for the industry based
                                                                          The approach in valuation of non-traded debt securities is based on
     upon either BSE or NSE data (which should be followed
                                                                          the concept of using spreads over the benchmark rate to arrive at
     consistently and changes, if any noted with proper justification
                                                                          the yields for pricing the non-traded security.
     thereof) shall be taken and discounted by 75% i.e. only 25%
     of the industry average P/E shall be taken as capitalisation rate    The yields for pricing the non-traded debt security would be arrived
     (P/E ratio). Earnings per share of the latest audited annual         at using the process as defined below:
     accounts will be considered for this purpose.
                                                                          Step A
l    The value as per the net worth value per share and the capital       A risk free benchmark yield is built using the government securities
     earning value calculated as above shall be averaged and further      (GoI Securities) as the base. GoI Securities are used as the benchmarks
     discounted by 10% for ill-liquidity so as to arrive at the fair      as they are traded regularly, free of credit risk and traded across
     value per share.                                                     different maturity spectrums every week.
l    In case the EPS is negative, EPS value for that year shall be        Step B
     taken as zero for arriving at capitalised earning.
                                                                          A matrix of spreads (based on the credit risk) are built for marking
l    In case where the latest balance sheet of the company is not         up the benchmark yields. The matrix is built based on traded corporate
     available within 9 months from the close of the year, unless the     paper on the wholesale debt segment of an appropriate stock exchange
     accounting year is changed, the shares of such companies shall       and the primary market issuances. The matrix is restricted only to
     be valued at zero.                                                   investment grade corporate paper.
l    In case an individual security accounts for more than 5% of the      Step C
     total assets of the Scheme, an independent valuer shall be
                                                                          The yields as calculated above are marked-up / marked-down for
     appointed for the valuation of the said security.
                                                                          illiquidity risk.


HSBC Mututal Fund                                                                                                                             25
Statement of Additional Information


Step D                                                                          to the benchmark date will be considered for computing the
                                                                                average YTM for such rating category;
The yields so arrived are used to price the portfolio.
                                                                           l    If the matrix cannot be populated using any or all of the above
Methodology                                                                     steps, then credit spreads from trades on appropriate stock
                                                                                exchange of the relevant rating category over the AAA trades
Construction of Risk Free Benchmark                                             will be used to populate the matrix;
Using Government of India dated securities, the benchmark shall be         l    In each rating category, all outliers will be removed for
constructed as below:                                                           smoothening the YTM matrix;
Government of India dated securities will be grouped into the              l    Spreads will be obtained by deducting the YTM in each duration
following duration buckets viz., 0.5-1 years, 1-2 years, 2-3 years,             category from the respective YTM of the GoI securities;
3-4 years, 4-5 years, 5-6 years and 6 years and the volume weighted        l    In the event of lack of trades in the secondary market and the
yield would be computed for each bucket.                                        primary market the gaps in the matrix would be filled by
These duration buckets may be changed to reflect the market value               extrapolation. If the spreads cannot be extrapolated for the
more closely by any agency suggested by AMFI giving benchmark                   reason of practicality, carrying the spreads from the last matrix
yield / matrix of spreads over benchmark yield. Accordingly, there              will fill the gaps in the matrix.
will be a benchmark YTM for each duration bucket.
                                                                           Mark-up / Mark-down Yield
The benchmark as calculated above will be set at least weekly, and         The Yields calculated would be marked-up / marked-down to account
in the event of any significant movement of prices of Government           for the ill-liquidity risk, promoter background, finance company
securities on account of any event impacting interest rates on any         risk and the issuer class risk. As the level of ill-liquidity risk would
day such as change in the RBI policies, the benchmark will be reset        be higher for non-rated securities the marking process for rated and
to reflect any change in the market conditions.                            non-rated securities would be differentiated as follows:
Note: The concept of duration over tenor has been chosen in order          Adjustments for Securities rated by External
to capture the reinvestment risk. It is intended to gradually move         Rating Agencies
towards a methodology that incorporates the continuous curve
                                                                           The Yields so derived out of the above methodology could be
approach for valuation of such securities. However, in view of the
                                                                           adjusted to account for risk mentioned above by an appropriate
current lack of liquidity in the corporate bond markets, a continuous
                                                                           discount or premium as may be required. The range of the markups
curve approach to valuation would be necessarily based on limited
                                                                           for both discount as well as premium is given below:
data points, and this would result in out of line valuations. As an
interim methodology therefore it is proposed that the Duration             Premium
Bucket approach be adopted and continuously tracked in order to
                                                                           A Discretionary premium of up to -50 Basis Points for securities
fine-tune the duration buckets on a periodic basis. Over the next few
                                                                           having duration of up to 2 years and up to -25 Basis Points for
years it is expected that with the deepening of the secondary market
                                                                           securities having duration higher than 2 years will be permitted to
trading, it would be possible to make a gradual move from the
                                                                           be provided for the above mentioned types of risks. The rationale
Duration Bucket approach towards a continuous curve approach.
                                                                           for the above discount structure is to take cognizance of the differential
Building a Matrix of Spreads for Marking-up the Benchmark                  interest rate risk of the securities. This structure will be reviewed
Yield                                                                      periodically.

Mark-up for credit risk over the risk free benchmark YTM as                Discount
calculated in step A, will be determined using the trades of corporate     SEBI has revised the discretionary discount limits as below:
debentures / bonds of different ratings. All trades on appropriate
                                                                           Category                     Discretionary discount over
stock exchange during the fortnight prior to the benchmark date will
                                                                                                        benchmark yield in basis points
be used in building the corporate YTM and spread matrices. Initially
these matrices will be built only for corporate securities of investment   Rated Instruments with       Discretionary Discount of up to +500
grade. The matrices are dynamic and the spreads will be computed           duration up to 2 years
every week. The matrix will be built for all duration buckets for
which the benchmark GoI matrix is built to effectively link the            Rated Instruments with       Discretionary Discount of up to +400
corporate matrix with the GoI securities matrix. Accordingly:              duration over 2 years
l    All traded paper (with minimum traded value of Rs. 1 crore)           Adjustments for Internally Rated Securities
     (Rupees One Crore Only) will be classified by their ratings and
                                                                           To value an unrated security, the fund manager has to assign an
     grouped into 7 duration buckets; for rated securities, the most
                                                                           internal credit rating, which will be used for valuation. Since unrated
     conservative publicly available rating will be used;
                                                                           instruments tend to be more illiquid than rated securities, the yields
l    For each rating category, average volume weighted yield will          would be mandatorily marked up by adding +50 basis point for
     be obtained both from trades on the appropriate stock exchange        securities having a duration of up to two years and +25 basis point
     and from the primary market issuances;                                for securities having duration of higher than two years to account
l    Where there are no secondary trades on the appropriate stock          for the illiquidity risk.
     exchange in a particular rating category and no primary market        The yields derived from the above methodology could be adjusted
     issuances during the fortnight under consideration, then trades       to account for risk mentioned above. SEBI has revised the
     on appropriate stock exchange during the 30 days period prior         discretionary discount limits as below:


26                                                                                                                        HSBC Mututal Fund
                                                                                                     Statement of Additional Information


Category                    Discretionary discount over                   redemption value and the cost spread uniformly over the remaining
                            benchmark yield in basis points               maturity period of the instruments.
Unrated Instruments         Discretionary Discount of up to +450          Valuation of “Repo”
with duration up to         over and above the mandatory                  Where instruments have been bought on ‘repo’ basis, the instrument
2 years                     Discount of +50                               must be valued at the resale price after deduction of applicable
Unrated Instruments         Discretionary Discount of up to +375          interest up to date of resale. Where an instrument has been sold on
with duration over 2        over and above the mandatory Discount         a ‘repo’ basis, adjustment must be made for the difference between
years                       of +25                                        the repurchase price (after deduction of applicable interest up to date
                                                                          of repurchase) and the value of the instrument. If the repurchase
The benchmark yield / matrix of spreads over benchmark yield              price exceeds the value, the depreciation must be provided for and
obtained from any agency suggested by AMFI as a provider of               if the repurchase price is lower than the value, credit must be taken
benchmark yield / matrix of spreads over benchmark yield to mutual        for the appreciation.
funds, must be applied for valuation of securities on the day on
which the benchmark yield / matrix of spreads over benchmark              Valuation of unlisted equity shares
yield is released by the aforesaid agency.                                Unlisted equity shares of a company shall be valued "in good faith"
                                                                          on the basis of the valuation principles laid down below:
Valuation of securities with Put / Call options
                                                                          l    Based on the latest available audited balance sheet, net worth
The option embedded securities would be valued as follows:
                                                                               shall be calculated as lower of the following:
Securities with Call option                                               l    Net worth per share = [share capital plus free reserves (excluding
The securities with call option shall be valued at the lower of the            revaluation reserves) minus Miscellaneous expenditure not
value as obtained by valuing the security to final maturity and                written off or deferred revenue expenditure, intangible assets
valuing the security to call option.                                           and accumulated losses] divided by Number of Paid up Shares.
In case there are multiple call options, the lowest value obtained by     l    After taking into account the outstanding warrants and options,
valuing to the various call dates and valuing to the is to be taken
                                                                               Net worth per share shall again be calculated and shall be =
as the value of the instrument.
                                                                               [share capital plus consideration on exercise of Option / Warrants
Securities with Put option                                                     received / receivable by the Company plus free
The securities with put option shall be valued at the higher of the            reserves(excluding revaluation reserves) minus Miscellaneous
value as obtained by valuing the security to final maturity and                expenditure not written off or deferred revenue expenditure,
valuing the security to put option.                                            intangible assets and accumulated losses] divided by {Number
In case there are multiple put options, the highest value obtained by          of Paid up Shares plus Number of Shares that would be obtained
valuing to the various put dates and valuing to the is to be taken as          on conversion / exercise of Outstanding Warrants and Options}
the value of the instruments.                                             l    The lower of the above shall be used for calculation of net
Securities with both Put and Call option on the                                worth per share and for further calculation to arrive at the fair
same day                                                                       value per share as stated below.
The securities with both Put and Call option on the same day would        l    Average capitalisation rate (P/E ratio) for the industry based
be deemed to mature on the Put / Call day and would be valued                  upon either BSE or NSE data (which shall be followed
accordingly.                                                                   consistently and changes, if any, noted with proper justification
Government Securities                                                          thereof) shall be taken and discounted by 75% i.e. only 25%
                                                                               of the Industry average P/E shall be taken as capitalisation rate
Government securities will be valued as per the prices for Government          (P/E ratio). Earnings per share of the latest audited annual
Securities released by an agency suggested by AMFI for the sake                accounts will be considered for this purpose.
of uniformity in calculation of NAVs.
                                                                          l    The value as per the net worth value per share and the capital
Illiquid Securities                                                            earning value calculated as above shall be averaged and further
l    All funds shall disclose as on March 31 and September 30 the              discounted by 15% for illiquidity so as to arrive at the fair value
     scheme-wise total illiquid securities in value and percentage of          per share.
     the net assets while making disclosures of half yearly portfolios
     to the Unitholders. In the list of investments, an asterisk mark     The above methodology for valuation shall be subject to the following
     shall also be given against all such investments, which are          conditions:
     recognised as illiquid securities.                                   l    All calculations as aforesaid shall be based on audited accounts.
l    The Mutual Fund is not allowed to transfer illiquid securities       l    In case where the latest balance sheet of the company is not
     among its Scheme.                                                         available within 9 months from the close of the year, unless the
Fixed Income and Money Market Securities                                       accounting year is changed, the shares of such companies shall
Debt instruments shall generally be valued on a yield to maturity              be valued at zero.
basis on the basis of the capitalisation factor for comparable traded     l    If the net worth of the company is negative, the share would
securities and with an appropriate discount for a lower liquidity.             be marked down to zero.
While investments in call money, bills purchased under rediscounting
                                                                          l    In case the EPS is negative, EPS value for that year shall be
scheme and short term deposits with banks shall be valued at cost
                                                                               taken as zero for arriving at capitalised earning.
plus accrual; other money market instruments shall be valued at the
yield at which they are currently traded. For this purpose, instruments   l    In case an individual security accounts for more than 5% of the
not traded for a period of 7 days will be valued at cost plus interest         total assets of the Scheme, an independent valuer shall be
accrued till the beginning of the day plus the difference between the          appointed for the valuation of the said security. To determine


HSBC Mututal Fund                                                                                                                             27
Statement of Additional Information


     if a security accounts for more than 5% of the total assets of       Expenses and Incomes Accrued
     the Scheme, it should be valued in accordance with the procedure     All expenses and incomes accrued up to the valuation date shall be
     as mentioned above on the date of valuation.                         considered for computation of NAV. For this purpose, major expenses
At the discretion of the AMC and with the approval of the Trustees,       like management fees and other periodic expenses would be accrued
an unlisted equity share may be valued at a price lower than the          on a day to day basis. The minor expenses and income will be
value derived using the aforesaid methodology.                            accrued on a periodic basis, provided the non-daily accrual does not
                                                                          affect the NAV calculations by more than 1%.
Valua Valuation of of convertible debentures and
bonds                                                                     Changes in securities and in number of Units
In respect of convertible debentures and bonds, the non-convertible       Any changes in securities and in the number of Units will be
and convertible components shall be valued separately. The                recorded in the books not later than the first valuation date following
nonconvertible component shall be valued on the same basis as             the date of transaction. If this is not possible, given the frequency
would be applicable to a debt instrument. The convertible component       of NAV disclosure, the recording may be delayed up to a period of
shall be valued on the same basis as would be applicable to an equity     7 days following the date of the transaction, provided as a result of
instrument. If, after conversion the resultant equity instrument would    such non-recording, the NAV calculation shall not be affected by
be traded pari passu with an existing instrument which is traded, the     more than 1%.
value of the latter instrument can be adopted after an appropriate
                                                                          In case the NAV of the Scheme differs by more than 1%, due to non-
discount for the non-tradability of the instrument during the period
                                                                          recording of transactions, the investors or Scheme as the case may
preceding the conversion. While valuing such instruments, the fact
                                                                          be, shall be paid the difference in amount as follows:-
whether the conversion is optional will also be factored in.
                                                                          l    If the investors are allotted units at a price higher than NAV
Valuation of warrants                                                          or are given a price lower than NAV at the time of sale of their
In respect of warrants to subscribe for shares attached to instruments,        Units, they shall be paid the difference in amount by the
the warrants shall be valued at the value of the share which would             Scheme.
be obtained on exercise of the warrant as reduced by the amount           l    If the investors are charged lower NAV at the time of purchase
which would be payable on exercise of the warrant. A discount                  of their Units or are given higher NAV at the time of sale of
similar to the discount to be determined in respect of convertible             their Units, the AMC shall pay the difference in amount to the
debentures (as referred in valuation of convertible debentures and             Scheme. The AMC may recover the difference from the
bonds above) shall be deducted to account for the period which must            investors.
elapse before the warrant can be exercised;
                                                                          The valuation guidelines as outlined above are as per prevailing
Valuation of Derivative Products                                          Regulations and are subject to change from time to time in conformity
l    The traded derivatives shall be valued at market price in            with changes made by SEBI.
     conformity with the stipulations of sub clauses (i) to (v) of
     clause 1 of the Eighth Schedule to the Regulations as amended
     from time to time.




28                                                                                                                     HSBC Mututal Fund
                                                                                                     Statement of Additional Information


VI. ACCOUNTING POLICIES AND STANDARDS
In accordance with the Regulations, the AMC will follow the                    repurchased, after considering the equalisation as above, the
accounting policies and standards, as detailed below:                          difference between the purchase price and face value of the
                                                                               Unit, if positive, shall be debited to reserves and, if negative,
l   The AMC, for the Scheme and its Plan(s), shall keep and
                                                                               shall be credited to reserves, the face value being debited to the
    maintain proper books of account, records and documents, so
                                                                               Capital Account.
    as to explain its transactions and to disclose at any point of time
    the financial position of the Scheme and, in particular, give a       l    The cost of investments acquired or purchased shall include
    true and fair view of the state of affairs of the Fund.                    brokerage, stamp charges and any charge customarily included
                                                                               in the broker’s bought note. In respect of privately placed debt
l   For the purposes of the financial statements, the Scheme and
                                                                               instruments any front-end discount offered shall be reduced
    its Plan(s) shall mark all investments to market and carry
                                                                               from the cost of the investment.
    investments in the balance sheet at market value. However,
    since the unrealised gain arising out of appreciation on              l    Underwriting commission shall be recognised as revenue only
    investments cannot be distributed, provision shall be made for             when there is no devolvement on the Scheme and its Plans.
    exclusion of this item when arriving at distributable income.              Where there is devolvement on the Scheme and the Plans
                                                                               thereunder, the full underwriting commission received and not
l   In respect of all interest-bearing investments, income shall be
                                                                               merely the portion applicable to the devolvement shall be
    accrued on a day to day basis as it is earned. Therefore, when
                                                                               reduced from the cost of the investment.
    such investments are purchased, interest paid for the period
    from the last interest due date up to the date of purchase should     l    Bonus shares to which the Scheme and the Plans thereunder
    not be treated as a cost of purchase but shall be debited to               becomes entitled shall be recognized only when the original
    Interest Recoverable Account. Similarly, interest received at              shares on which the bonus entitlement accrues are traded on
    the time of sale for the period from the last interest due date            the stock exchange on an ex-bonus basis. Similarly, rights
    up to the date of sale must not be treated as an addition to sale          entitlements shall be recognized only when the original shares
    value but shall be credited to Interest Recoverable Account.               on which the right entitlement accrues are traded on the stock
                                                                               exchange on an ex-right basis.
l   In determining the holding cost of investments and the gains
    or loss on sale of investments, the “average cost” method shall       l    Dividend income earned by the Scheme and its Plans shall be
    be followed for each security.                                             recognized, not on the date the dividend is declared, but on the
                                                                               date the share is quoted on an ex-dividend basis. For investments,
l   Transactions for purchase or sale of investments shall be
                                                                               which are not quoted on the stock exchange, dividend income
    recognised as of the trade date and not as of the settlement date,
                                                                               would be recognized on the date of declaration of dividend /
    so that the effect of all investments traded during a financial
                                                                               information about dividend / receipt of dividend proceeds.
    year are recorded and reflected in the financial statements for
    that year. Where investment transactions take place outside the       The accounting policies and standards outlined above are as per the
    stock market, for example, acquisition through private                existing Regulations and are subject to change as per changes in the
    placement or purchases or sales through private treaty, the           Regulations.
    transaction would be recorded, in the event of a purchase, as
    of the date on which the Scheme obtains an enforceable
                                                                          Guidelines for Identification and Provisioning for
    obligation to pay the price or, in the event of a sale, when the      Non-Performing Assets (Debt Securities)
    Scheme obtains an enforceable right to collect the proceeds of        Definition of a Non-Performing Asset (NPA)
    sale or an enforceable obligation to deliver the instruments          An ‘asset’ shall be classified as non-performing, if the interest and /
    sold.                                                                 or principal amount have not been received or remained outstanding
l   Where income receivable on investments has accrued but has            for 1 quarter from the day such income / instalment has fallen due.
    not been received for a period specified in the guidelines issued     Effective date for classification and provisioning of NPAs
    by SEBI, provision shall be made by debit to the revenue
    account the income so accrued in the manner specified by              The definition of NPA may be applied after a quarter past due date
    guidelines issued by SEBI.                                            of the interest. For e.g. if the due date for interest is 30.06.2001, it
                                                                          will be classified as NPA from 01.10.2001.
l   When Units are sold in the Scheme and its Plans, an appropriate
    part of the sale proceeds shall be credited to an Equalisation        Treatment of income accrued on the NPA and further accruals
    Account and when Units are repurchased an appropriate amount          After the expiry of the 1st quarter from the date the income has
    shall be debited to Equalisation Account. The net balance on          fallen due, there will be no further interest accrual on the asset i.e.
    this account shall be credited or debited to the Revenue Account.     if for example, the due date for interest falls on 30.06.2001 and if
    The balance on the Equalisation Account debited or credited           the interest is not received, accrual will continue till 30.09.2001
    to the Revenue Account shall not decrease or increase the net         after which there will be no further accrual of income. In short,
    income of the Fund but is only an adjustment to the distributable     taking the above example, from the beginning of the 2nd quarter
    surplus. It shall therefore be reflected in the Revenue Account       there will be no further accrual on income.
    only after the net income of the Fund is determined.
                                                                          On classification of the asset as NPA from a quarter past due date
l   When Units are sold, after considering the equalisation as            of interest, all interest accrued and recognised in the books of
    above, the difference between the sale price and the face value       accounts of the Fund till the date, should be provided for. For e.g.
    of the Unit, if positive, shall be credited to reserves and if        if interest income falls due on 30.06.2001, accrual will continue till
    negative, shall be debited to reserve, the face value being           30.09.2001 even if the income as on 30.06.2001 has not been
    credited to Capital Account. Similarly, when the Units are            received. Further, no accrual will be done from 01.10.2001 onwards.


HSBC Mututal Fund                                                                                                                             29
Statement of Additional Information


Full provision will also be made for interest accrued and outstanding      l    In case the company has fully cleared all the arrears of interest,
as on 30.06.2001.                                                               the interest not credited on accrual basis would be credited at
                                                                                the time of receipt.
Provision for NPAs - Debt Securities
                                                                           l    The provision made for the principal amount can be written
Both secured and unsecured investments once they are recognised
                                                                                back in the following manner: -
as NPAs call for provisioning in the same manner.
                                                                                l    100% of the asset provided for in the books will be written
The value of the asset must be provided in the following manner or
                                                                                     back at the end of the 2nd calendar quarter where the
earlier at the discretion of the Fund. The Fund will not have discretion
                                                                                     provision of principal was made due to the interest defaults
to extend the period of provisioning. The provisioning against the
                                                                                     only.
principal amount or instalments should be made at the following
rates irrespective of whether the principal is due for repayment or             l    50% of the asset provided for in the books will be written
not.                                                                                 back at the end of the 2nd calendar quarter and 25% after
                                                                                     every subsequent quarter where both instalments and
10% of the book value of the asset should be provided for after 6
                                                                                     interest were in default earlier.
months past due date of interest i.e. 3 months from the date of
classification of the asset as NPA.                                        l    An asset is reclassified, as ‘standard asset’ only when both
                                                                                overdue interest and overdue instalments are paid in full and
20% of the book value of the asset should be provided for after 9
                                                                                there is satisfactory performance for a subsequent period of 6
months past due date of interest i.e. 6 months from the date of
                                                                                months.
classification of the asset as NPA.
                                                                           Receipt of past dues
Another 20% of the book value of the assets should be provided for
after 12 months past due date of interest i.e. 9 months from the date      When the Fund has received income / principal amount after their
of classification of the asset as NPA.                                     classifications as NPAs:
Another 25% of the book value of the assets should be provided for         l    For the next 2 quarters, income should be recognised on cash
after 15 months past due date of interest i.e. 12 months from the date          basis and thereafter on accrual basis. The asset will be continued
of classification of the asset as NPA.                                          to be classified as NPA for these two quarters.
The balance 25% of the book value of the asset should be provided          l    During this period of two quarters although the asset is classified
for after 18 months past due date of the interest i.e. 15 months from           as NPA no provision needs to be made for the principal if the
the date of classification of the assets as NPA.                                same is not due and outstanding.
Book value for the purpose of provisioning for NPAs shall be taken         l    If part payment is received towards principal, the asset continues
as a value determined as per the prescribed valuation method.                   to be classified as NPA and provisions are continued as per the
                                                                                norms set at ‘Provision for NPAs - Debt Securities’ above. Any
This can be explained by an illustration:
                                                                                excess provision will be written back.
Let us consider that interest income is due on a half yearly basis and
                                                                           Classification of Deep Discount Bonds as NPAs
the due date falls on 30.06.2002 and the interest is not received till
1st quarter after due date i.e. 30.09.2002. This provisioning will be      Investments in Deep Discount Bonds can be classified as NPAs, if
done in following phased manner:                                           any two of the following conditions are satisfied:
    10% provision    01.01.2003        6 months past due date of           l    If the rating of the Bond comes down to grade ‘BB’ or below.
                                       interest i.e. 3 months from
                                                                           l    If the company is defaulting in their commitments in respect
                                       the date of classification of
                                                                                of other assets, if available.
                                       asset as NPA (01.10.2002)
                                                                           l    Full net worth erosion.
    20% provision    01.04.2003
                                                                           Provision should be made as per the norms set at ‘Provision for
    20% provision    01.07.2003                                            NPAs - Debt Securities’ above as soon as the asset is classified as
                                                                           NPA.
    25% provision    01.10.2003
                                                                           Full provision can be made if the rating comes down to grade ‘D’.
    25% provision    01.01.2004
                                                                           Reschedulement of an asset
Thus, 1 1/2 years past the due date of income or 1 1/4 year from
the date of classification of the ‘asset’ as an NPA, the ‘asset’ will      In case any company defaults either interest or principal amount and
be fully provided for. If any instalment is fallen due, during the         the Fund has accepted a Reschedulement of the schedule of payments,
period of interest default, the amount of provision should be              then the following practice may be adhered to:
instalment amount or above provision amount, whichever is higher.          l    In case it is a first reschedulement and only interest is in
Reclassification of assets                                                      default, the status of the asset namely, ‘NPA’ may be continued
                                                                                and existing provisions should not be written back. This practice
Upon reclassification of assets as ‘performing assets’:                         should be continued for two quarters of regular servicing of the
l     In case a company has fully cleared all the arrears of interest,          debt. Thereafter, this is classified as ‘performing asset’ and the
      the interest provisions can be written back in full.                      interest provided may be written back.
l     The asset will be reclassified as performing on clearance of all     l    If the reschedulement is done due to default in interest and
      interest arrears and if the debt is regularly serviced over the           principal amount, the asset should be continued as non-
      next two quarters.                                                        performing for a period of 4 quarters, even though the asset is



30                                                                                                                       HSBC Mututal Fund
                                                                                                  Statement of Additional Information


    continued to be serviced during these 4 quarters regularly.        The total amount of provisions made against the NPAs shall be
    Thereafter, this can be classified as ‘performing asset’ and all   disclosed in addition to the total quantum of NPAs and their proportion
    the interest provided till such date should be written back.       of the assets of the Mutual Fund Scheme. In the list of investments
                                                                       an asterisk mark shall be given against such investments which are
l   If the reschedulement is done for a second / third time or
                                                                       recognised as NPAs. Where the date of redemption of an investment
    thereafter, the characteristic of NPA should be continued for 8
                                                                       has lapsed, the amount not redeemed shall be shown as ‘Sundry
    quarters of regular servicing of the debt. The provision should
                                                                       Debtors’ and not investment provided that where an investment is
    be written back only after it is reclassified as ‘performing
                                                                       redeemable by instalments that will be shown as an investment until
    asset’.
                                                                       all instalments have become overdue.
Disclosure in the Half Yearly Portfolio Reports
The Mutual Fund shall make scripwise disclosures of NPAs on half
yearly basis along with the half yearly portfolio disclosure.




HSBC Mututal Fund                                                                                                                          31
Statement of Additional Information


VII. TAX & LEGAL & GENERAL INFORMATION

A. TAXATION ON INVESTING IN MUTUAL                                       For Partnership firms, Indian Companies and other residents: Long
FUNDS                                                                    term capital gains will be subjected to the income tax at the rate of
                                                                         20% (plus surcharge) or 10% (plus surcharge) as the case may be.
As per the taxation laws in force*, tax benefits that are available
to the investors investing in the Units of the Schemes are stated        For non-residents and foreign companies: Long-term capital gains
herein below. The information so stated is based on the Mutual           will be subjected to the income tax at the rate of 20% (plus surcharge).
Fund's understanding of such tax laws in force as of the date of this    However, no benefit of Cost Inflation Indexation is available.
Document, which have been vetted by the tax consultants                  For Non-resident Indians : Under section 115E of the Act for non-
* The vote on account presented in the Parliament in February 2009       resident Indians, income by way of long-term capital gains in respect
does not have any changes since Finance Act, 2008                        of Units is chargeable at the rate of 10% (plus surcharge). However,
                                                                         no benefit of Cost Inflation Indexation is available.
The following information is provided for only general
information purposes. In view of the individual nature of tax            Non-resident Indians may opt for computation of long-term capital
benefits, each investor is advised to consult with his or her own        gains as per section 112, if it is more beneficial.
tax consultant with respect to the specific tax implications arising     For Overseas Financial Organizations, including Overseas Corporate
out of their participation in the scheme.                                Bodies fulfilling conditions laid down under section 115AB (Offshore
The following benefits may accrue to the Unitholders with effect         Funds).
from the financial year commencing from April 1, 2008 (unless            Under section 115AB of the Act, long term capital gains in respect
otherwise stated):                                                       of units held for a period of more than 12 months will be chargeable
A. INCOME TAX                                                            at the rate of 10% (plus surcharge). Such gains would be calculated
                                                                         without indexation of cost of acquisition.
1. Exemption u/s. 10(35):
Under the provisions of Section 10(35) of the Act income received        For Foreign Institutional Investors (“FIIs”): Under section 115AD
in respect of the units of a mutual fund specified u/s. 10(23D) will     of the Act, long term capital gains in respect of units held for more
be exempt from income tax in the hands of all unitholders. In view       than 12 months would be taxed at the rate of 10% plus surcharge.
of this position, no tax needs to be deducted at source from such        Such gains would be calculated without indexation of cost of
distribution by the fund. However, by virtue of the proviso to section   acquisition.
10(35), this exemption does not apply to income arising on “transfer”    Tax on long term capital gains in all the above cases will be further
of units of a mutual fund.                                               increased by the Education Cess (“EC”) calculated @ 2% on tax
                                                                         plus surcharge and Secondary and Higher Secondary Cess calculated
2. Long Term Capital Gains
                                                                         @ 1% on tax plus surcharge as per the FB.
i.    On units of equity oriented funds:
                                                                         3. Short Term Capital Gains
Section 10(38) exempts long term capital gains arising from the
transfer of units of an equity oriented fund provided the transaction    i.    On units of equity oriented funds:
of sale is entered into on or after the date on which the securities     Section 111A provides that the short term capital gains arising from
transaction tax is made applicable and such transaction is chargeable    the transfer of units of an equity oriented fund will be taxed at 15%
to the securities transaction tax.                                       (plus applicable surcharge) provided the transaction of sale is entered
However such long term capital gains arising to a company shall be       into on or after the date on which the securities transaction tax is
taken into account in computing the book profit and income tax           made applicable and such transaction is chargeable to the securities
payable under section 115JB.                                             transaction tax.

ii.   On units of funds other than the equity oriented funds:            ii.   On units of funds other than equity oriented funds:

For Individuals and Hindu Undivided Families (“HUF”s): Long-             Short Term Capital Gains in respect of Units held for a period of
term capital gains in respect of units held for a period of more than    not more than 12 months is added to the total income. Total income
12 months will be chargeable u/s.112 at the rate of 20% (plus            including short-term capital gains is chargeable to tax as per the
surcharge), as applicable. Capital gains would be computed after         relevant slab rates. The maximum tax rates applicable to different
reducing the aggregate of cost of acquisition (as adjusted by cost       categories of assesses are as follows:
inflation index notified by the Central Government) and expenditure      Resident Individuals and HUF          30% plus surcharge, as applicable.
incurred wholly and exclusively in connection with transfer.             Partnership Firms                     30% plus surcharge
An assessee will have an option to apply concessional rate of tax        Indian companies                      30% plus surcharge
of 10% (plus surcharge) provided the long term capital gains are         Non Resident Indians                  30% plus surcharge
computed without substituting indexed cost in place of cost of           Foreign Companies                     40% plus surcharge
acquisition.                                                             Overseas Financial Organisations      30% plus surcharge
Further, in the case of Individuals and HUFs, being resident, where      FIIs                                  30% plus surcharge
taxable income as reduced by long-term capital gains, is below the       Tax on short term capital gains in all the above cases will be further
basic exemption limit, the long-term capital gains will be reduced       increased by the EC calculated @ 2% on tax plus surcharge and
to the extent of the shortfall and only the balance long-term capital    Secondary and Higher Secondary Cess calculated @ 1% on tax plus
gains will be subjected to income tax at 20% (plus surcharge) or         surcharge as per the FB.
10% (plus surcharge) as the case may be.



32                                                                                                                     HSBC Mututal Fund
                                                                                                         Statement of Additional Information


4. Capital Loss                                                                    As per circular no. 728 dated October 1995 by CBDT, in the
Section 94(7) disallows any capital loss, arising to a unitholder if               case of a remittance to a country with which a Double Taxation
he acquires units of a mutual fund within a period of three months                 Avoidance Agreement (DTAA) is in force, tax should be
prior to the record date fixed for declaration of dividend or distribution         deducted at the rate provided in the Finance Act of the relevant
of income and sells or transfers such units within a period of nine                year or at the rate provided in DTAA whichever is more
months from such record date, to the extent of dividend or income                  beneficial to the assessee.
received or receivable on such units.                                              In order for the unitholder to obtain the benefit of a lower rate
Section 94(8) provides that if a person buys or acquires units (“the               under the DTAA, the unitholder would be required to provide
original units”) of a mutual fund within a period of three months                  the fund with a certificate obtained from his Assessing Officer
prior to the record date fixed for allotment of bonus units and sells              stating his eligibility for the lower rate.
the original units within nine months from the date of allotment of          6. Investments By Charitable And Religious Trusts
bonus units then the loss arising on such sale or transfer shall be
                                                                             Units of Mutual Fund Schemes referred to in clause 23D of section
ignored. Further, such loss shall be deemed to be the cost of
                                                                             10 of the Act constitute an eligible avenue for investment by charitable
acquisition or purchase of the bonus units.
                                                                             or religious trusts per rule 17C of the Income Tax Rules, 1962, read
5. Tax Deduction At Source On Capital Gains                                  with clause (xii) of sub-section (5) of section 11 of the Income Tax
(i)   No tax is required to be deducted at source on capital gains           Act, 1961.
      arising to any resident unit holder.                                   B. WEALTH TAX
(ii) Under section 195 of Act, tax shall be deducted at source in            Units held under the Schemes of Mutual Fund are not treated as
     respect of capital gains as under:                                      assets within the meaning of section 2(ea) of the Wealth Tax Act,
                                                                             1957 and are, therefore, not liable to Wealth-Tax.
      a.   In case of a non-resident other than a company -
      l    Long term capital gains    nil                                    C. GIFT TAX
           on units of equity                                                If units of Mutual Fund Scheme are gifted, no gift tax shall be
           oriented funds                                                    payable either by the donor or the donee as the Gift Tax has been
                                                                             abolished.
      l    Long term capital gains    20% plus        surcharge
           on units of funds other                                           Notes:
           than equity oriented funds
                                                                             (i)   All tax benefits will be available to the Sole Unitholder or the
      l    Short term capital gains   15% plus        surcharge                    first named holder in case the Units are held in the names of
           on units of equity                                                      more than one person, as the case may be.
           oriented funds
                                                                             (ii) HSBC AMC also confirms that the Income Tax/Wealth Tax/
      l    Short term capital gains   30% plus        surcharge                   Capital Gains Tax and investment by NRIs/FIIs/OCBs are
           on units of funds other                                                subject to relevant requirements under the Income Tax, FEMA
           than equity oriented funds                                             and RBI Directions.
      b.   In case of a foreign company -
                                                                             (iii) As per Section 54ED capital gains arising before April 1, 2006
      l    Long term capital gains    nil                                          from a transfer of a long term capital asset being listed securities
           on units of equity                                                      or units of UTI/mutual funds, shall be exempt from tax, if such
           oriented funds                                                          capital gains are invested in equity shares by way of a public
      l    Long term capital gains    20% plus        surcharge                    issue. The section provides for a lock-in period of one year and
           on units of funds other                                                 if the newly acquired shares are sold or transferred during the
           than equity oriented funds                                              period, the capital gains earlier claimed exempt, would become
      l    Short term capital gains   15% plus        surcharge                    taxable in the year of sale of the newly acquired shares.
           on units of equity                                                (iv) With effect from June 1, 2006 an investor who sells units of
           oriented funds                                                         an equity oriented fund to the mutual fund will have to pay
      l    Short term capital gains   40% plus        surcharge                   0.25% of the sale price of the units as securities transaction tax
           on units of funds other                                                which tax would be collected by the prescribed person in case
           than equity oriented funds                                             of every mutual fund.
Tax Deducted At Source on short term and long term capital gains             (v) The FA has introduced section 36(1)(xv) which will grant a
in all the above cases will be further increased by the EC calculated            deduction in respect of the securities transaction tax paid by
@ 2% on tax plus surcharge and Secondary and Higher Secondary                    a person if the income arising from sale of units of equity
Cess calculated @ 1% on tax plus surcharge as per the FB.                        oriented funds is chargeable under the head “Profits and gains
                                                                                 of business or profession”.
(iii) Under section 196B of the Act tax at 10% plus surcharge and
      EC calculated @ 2% on tax plus surcharge and Secondary and             (vi) Section 80C provides that an individual or HUF shall get a
      Higher Secondary Cess calculated @ 1% on tax plus surcharge                 deduction, in respect of a contribution to any units of any
      as per the FB shall be deducted at source from long term capital            Mutual Funds notified under clause 10(23D) of section 10 or
      gains on units other than the units of equity-oriented mutual               from the Administrator or the specified company under any
      funds earned by Overseas Financial Organisation.                            plan formulated in accordance with such scheme as the Central
                                                                                  Government may, by notification in the Official Gazette, specify
(iv) Under Section 196D of the Act, no deduction shall be made                    in this behalf and in respect of any contribution by an individual
     from any income by way of capital gains, in respect of transfer              to any pension fund set up by the Mutual Fund notified under
     of securities referred to in Section 115AD of the Act.


HSBC Mututal Fund                                                                                                                                  33
Statement of Additional Information


     clause (23D) of section 10 or by the Administrator or the              single / joint / surviving Unitholders can subsequently write to the
     specified company, as the Central Government may, by                   ISC requesting for a Nomination Form in order to nominate any
     notification in the Official Gazette, specify in this behalf, out      person to receive the Units upon his / her / their death, subject to
     of his income chargeable to tax provided the aggregate sum             completion of necessary formalities. Further, if either the Mutual
     does not exceed one lakh rupees.                                       Fund or the AMC incur any loss whatsoever arising out of any
                                                                            litigation or harm that it may suffer in relation to the nomination,
(vii) In terms of Section 115R of the Act, as amended from time to
                                                                            they will be entitled to be indemnified absolutely from the deceased
      time, applicable dividend distribution tax (DDT) will be applied
                                                                            Unitholders’ estate. Upon the demise of the Unitholder, the Units
      at the time of dividend distribution in eligible schemes. Investors
                                                                            would be transmitted in favour of the Nominee subject to the
      may please note that distribution tax shall be paid by the
                                                                            Nominee executing suitable indemnities in favour of the Mutual
      scheme at the rates applicable to an income scheme (under the
                                                                            Fund and the AMC and necessary documentation to the satisfaction
      Income-tax Act), as this scheme is classified as an income
                                                                            of the Mutual Fund.
      scheme under the SEBI Regulations. In case the scheme has
      to bear higher distribution tax as applicable to liquid funds, the    Investors / Unitholders are advised to read the instructions carefully
      additional distribution tax shall be paid by the scheme /             before nominating.
      recovered from the investors.                                         The Mutual Fund can call for such documents from the Nominee
                                                                            as deemed necessary.
B. LEGAL INFORMATION
                                                                            2. Transfer & Transmission of Units
1. Nomination Facility
                                                                            As the Scheme stands ready to redeem Units on a continuous basis
The AMC will provide an option to the Unitholder to nominate the            as laid down herein, the transfer facility is found redundant. Units
persons in whom all the Units held by the Unitholder shall vest in          of the Scheme shall therefore be non transferable. However, if a
the event of his death. Where the Units are held by more than one           transferee becomes a holder of Units by operation of law including
person jointly, all the joint Unitholders may together nominate a           upon enforcement of a pledge, then the Trustees shall, subject to
person by signing the nomination form indicating the name of the            production of such evidence, which in their opinion is sufficient,
person in whom all the rights in the Units shall vest in the event of       proceed to effect the transfer within 30 days from the date of
death of all the joint Unitholders.                                         lodgement if the intended transferee is otherwise eligible to hold the
The investors/Unitholders are requested to note that a maximum of           Units. A person becoming entitled to hold the Units in consequence
three nominees can be registered for a Folio. In case of multiple           of the death, insolvency, or winding up of the sole holder or the
nominees, the ‘Share / Ratio’ of nomination has to be clearly specified     survivors of joint holders, upon producing evidence and
in the nomination form / request letter. If the ‘Share / Ratio’ of          documentation to the satisfaction of the Fund and upon executing
nomination is not explicitly stated, then the nomination shall be           suitable indemnities in favour of the Fund and the AMC, shall be
treated at ‘Equal Share/Ratio’.                                             registered as a Unitholder. It may be noted that the nominee / legal
                                                                            heir is required to provide a copy of his / her PAN card as well as
The nomination can be made only by individuals applying for /               fulfil the Know Your Customer (KYC) requirements which is a pre-
holding Units on their own behalf singly or jointly. Non-individuals        requisite for the transmission process.
including society, trust, body corporate, partnership firm, Karta of
Hindu Undivided Family, holder of Power of Attorney cannot                  In case of HSBC Tax Saver Equity Fund (HTSF), unitholders should,
nominate.                                                                   however, note that in the event of death of the Unitholder, the legal
                                                                            heir, subject to production of requisite documentary evidence, will
A minor can be nominated and in that event, the name and address            be able to redeem the investment only after the completion of one
of the Guardian of the minor Nominee shall be provided by the               year or anytime thereafter, from the date of allotment of Units to the
Unitholder.                                                                 deceased Unitholder. Units issued under HTSF can be transferred,
The Nominee shall not be a society, trust (other than a religious or        assigned or pledged after a period of 3 years from the date of
charitable trust), body corporate, partnership firm, Karta of Hindu         allotment.
Undivided Family, holder of Power of Attorney. A non-resident               3. Pledge
Indian can be a Nominee subject to the exchange controls in force
                                                                            If in conformity with the guidelines and notifications issued by
from time to time. Nomination can also be made in favour of the
                                                                            SEBI / Government of India / any other regulatory body from time
Central Government, State Government, Local Authority, any person
                                                                            to time, Units under the Scheme may be offered as security by way
designated by virtue of his office or a religious or charitable trust.
                                                                            of a pledge / charge in favour of scheduled banks, financial
Nomination in respect of the Units stands rescinded upon the                institutions, non-banking finance companies (NBFCs), or any other
transmission of Units.                                                      body. In case of HSBC Tax Saver Equity Fund, unitholders should,
                                                                            however, note that the Units issued under the Scheme can be pledged
Transmission of Units in favour of a Nominee, shall be a valid
                                                                            only after a period of 3 years from the date of allotment.
discharge by the Mutual Fund / AMC / Trustees against the legal
heirs of the Unitholder(s).                                                 The AMC and / or the ISC will note and record such pledged Units.
                                                                            A standard form for this purpose is available on request from any
The cancellation of Nomination can be made only by those individuals
                                                                            ISC. Disbursement of such loans will be at the entire discretion of
who hold Units on their own behalf singly or jointly and who made
                                                                            the bank / financial institution / NBFC or any other body concerned
the original nomination.
                                                                            and the Mutual Fund assumes no responsibility thereof. The Pledgor
On cancellation of the nomination, the nomination shall stand               will not be able to redeem / switch Units that are pledged until the
rescinded and the Mutual Fund / AMC / Trustees shall not be under           entity to which the Units are pledged provides written authorisation
any obligation to transmit the Units in favour of the Nominee.              to the Mutual Fund that the pledge / lien charge may be removed.
                                                                            As long as Units are pledged, the pledgee will have complete
The nomination facility extended under the Scheme is in accordance
                                                                            authority to redeem such Units.
with SEBI regulations and subject to other applicable laws. The


34                                                                                                                       HSBC Mututal Fund
                                                                                                       Statement of Additional Information


The distributions in the nature of dividends which are paid out on          l    On the happening of any event, which in the opinion of the
pledged units shall be made in favour of the investor.                           Trustees, requires the Scheme to be wound up
4. Applications under Power of Attorney / Body                              l    If seventy five per cent (75%) of the Unitholders of the Scheme
   Corporate / Registered Society / Trust / Partnership                          pass a resolution that the Scheme be wound up
The original Power of Attorney or a duly notarised copy of the              l    If SEBI so directs in the interest of the Unitholders.
Power of Attorney shall be required to be submitted where                   Where the Scheme is so wound up, the Trustees shall give notice
applications are made under a Power of Attorney.                            of the circumstances leading to the winding up of the Scheme to:
A company, body corporate, eligible institutions, registered society,       l    SEBI and
trusts, partnership or other eligible non-individuals who apply in the
                                                                            l    In two daily newspapers having a circulation all over India and
Scheme should furnish a certified copy of resolution or authority to
                                                                                 in one vernacular newspaper with circulation in Mumbai.
make the application as the case may be and a certified copy of the
Memorandum and Articles of Association and / or bye-laws and /              On and from the date of the publication of notice of winding up, the
or Trust Deed and / or Partnership Deed and certificate of registration     Trustees or the AMC, as the case may be, shall:
or any other document as the case may be. In case of a Trust / Fund,
                                                                            l    Cease to carry on any business activities in respect of the
it shall submit a certified true copy of the resolution from the
                                                                                 Scheme so wound up
Trustee(s) authorising such purchases. The officials should sign the
application under their official designation and furnish a list of          l    Cease to create or cancel Units in the Scheme
authorised signatories. All communications and payments shall be            l    Cease to issue or redeem Units in the Scheme
made to the First Applicant only.
                                                                            7. Procedure and Manner of Winding up
5. Joint Applicants                                                         The Trustees shall call a meeting of the Unitholders of the relevant
In the event an account has more than one registered owner, the first-      Scheme to approve by simple majority of the Unitholders present
named holder (as determined by reference to the original Application        and voting at the meeting, resolution for authorising the Trustees or
Form) shall receive all Account Statements, notices and                     any other person to take steps for the winding up of the Scheme.
correspondence with respect to the account, as well as the proceeds
of any redemption requests or dividends or other distributions. In          The Trustees or the person authorised as above, shall dispose of the
addition, such Unitholder shall have voting rights associated with          assets of the Scheme concerned in the best interest of the Unitholders
such Units, as per the applicable guidelines. Applicants can specify        of the Scheme.
the mode of holding in the Application Form as ‘Jointly’ or ‘Anyone         The proceeds of sale realised in pursuance of the above, shall be first
or Survivor’. In the case of holding specified as ‘Jointly’, all            utilised towards discharge of such liabilities as are due and payable
transactions / instructions would have to be signed by all joint            under the Scheme, and after meeting the expenses connected with
holders. However, in cases of holding specified as ‘Anyone or               such winding up, the balance shall be paid to the Unitholders in
Survivor’, any one of the Unitholders will have the power to make           proportion to their respective interest in the assets of the Scheme,
transaction requests / provide instructions, without it being necessary     as on the date the decision for winding up was taken.
for all the Unitholders to sign. However, in all cases, all distributions
                                                                            On completion of the winding up, the Trustees shall forward to
will be made to the first-named holder only.
                                                                            SEBI and the Unitholders, a report on the winding up, detailing the
In case of death / insolvency of any one or more of the persons             circumstances leading to the winding up, the steps taken for disposal
named in the register of Unitholders as the joint holders of any            of the assets of the Scheme before winding up, expenses of the
Units, the AMC shall not be bound to recognise any person(s) other          Scheme for winding up, net assets available for distribution to the
than the remaining holders. In all such cases, redemption proceeds          Unitholders and a certificate from the auditors of the Fund.
shall be paid to the first named of such remaining Unitholders.
                                                                            Notwithstanding anything contained herein above, the provisions of
6. Duration of the Scheme / Plan                                            the Regulations in respect of disclosures of half-yearly reports and
                                                                            Annual Reports shall continue to be applicable, until winding up is
In case of open-ended schemes, the duration of the schemes will be
                                                                            completed or the Scheme cease to exist.
perpetual and in case of close-ended schemes the duration of the
schemes will be for a fixed term as mentioned in the respective Offer       After the receipt of the report referred to above, if SEBI is satisfied
Document / Combined Scheme Information Document. However,                   that all measures for winding up of the Scheme have been complied
in case of HSBC Unique Opportunities Fund (HUOF) and HSBC                   with, the Scheme shall cease to exist.
Small Cap Fund (HSCF), the duration of the schemes is three years
from the date of allotment of Units. The schemes will be automatically      8. Unclaimed Redemption / Dividend Amount
converted into an open ended equity schemes at the end of three             The unclaimed redemption amounts and dividend amounts may be
years from the date of allotment of units under the respective              deployed by the mutual fund in call money market or money market
schemes. Upon conversion, the duration of the schemes shall be              instruments and the investors who claim these amounts during a
perpetual.                                                                  period of 3 years from the due date shall be paid at the prevailing
                                                                            net asset value. After a period of 3 years, this amount may be
The AMC, the Fund and the Trustees reserve the right to make such
                                                                            transferred to a pool account and the investors can claim the amount
changes / alterations to all or any of the Scheme (including the
                                                                            at the NAV prevailing at the end of the third year. The income earned
charging of fees and expenses) offered under the respective Offer
                                                                            on such funds will be used for the purpose of investor education.
Document / Combined Scheme Information Document to the extent
                                                                            The AMC will make continuous efforts to remind the investors
permitted by the applicable Regulations. However, in terms of the
                                                                            through letters to take their unclaimed amounts. Further, the
Regulations a scheme may be wound up after repaying the amount
                                                                            investment management fee charged by the AMC for managing
due to the Unitholders:
                                                                            unclaimed amounts shall not exceed 50 basis points.



HSBC Mututal Fund                                                                                                                               35
Statement of Additional Information


9. Sus pension of Sale / Repurchase / Switch of                            to redemptions, market forces or for any other reason, whichever
Units                                                                      is later. The suspension will not however affect Dividend reinvestment
The Mutual Fund at its sole discretion reserves the right to withdraw      options, Systematic Investment Plans, SIP Plus, Systematic Transfer
sale and / or repurchase and / or switch of the Units in the Scheme        Plans or other standing instructions which have been entered into
(including any one of the Plan of any of the Scheme) temporarily           by the investors at any time prior to the date from which the
or indefinitely, if in the opinion of the AMC, the general market          suspension takes effect. The Trustees/ AMC also reserve the right
conditions are not favourable and / or suitable investment                 to review the amount, frequency and methodology by which the
opportunities are not available for deployment of funds. However,          suspension of further sale of units will be enforced. All decisions
the suspension of sale / repurchase / switch either temporarily or         of the Trustees/ AMC will take effect prospectively and be
indefinitely will be with the approval of the Trustees.                    communicated to the investors from time to time by arranging to
                                                                           display a notice in the Investor Service Centres and issuing
The sale / repurchase / switch of the Units may be suspended under
                                                                           advertisements in 2 newspapers, at least 1 day prior to the decision
the following conditions:
                                                                           taking effect. All decisions of the Trustees/ AMC will be made in
l     When one or more stock exchanges or markets, which provide           the interest of the investors and will be subject to the SEBI
      basis for valuation for a substantial portion of the assets of the   Regulations.
      Scheme is closed otherwise than for ordinary holidays.
l     When, as a result of political, economic or monetary events or       HEMF: The Trustees/ AMC reserve the right to temporarily suspend
      any circumstances outside the control of the Trustees and the        subscriptions, switches into the Scheme, if the asset under
      AMC, the disposal of the assets of the Scheme is not reasonable,     management of the Scheme exceed the maximum permissible limit
      or would not reasonably be practicable without being detrimental     as mentioned under the heading on "Policy on Offshore Investments
      to the interests of the Unitholders.                                 by the Scheme(s) and the Plan(s) thereunder" of this Combined
l     In the event of breakdown in the means of communication used         Scheme Information Document.
      for the valuation of investments of the Scheme, without which        10. Requirements of Know Your Customer (KYC)
      the value of the securities of the Scheme cannot be accurately       under Prevention of Money Laundering Act (PMLA)
      calculated.                                                          The investors are requested to refer "Prevention of Money Laundering
l     During periods of extreme volatility of markets, which in the        and Know Your Customer (KYC)" of the document, for details
      opinion of the AMC are prejudicial to the interests of the           pertaining to requirements of KYC and PMLA.
      Unitholders of the Scheme.
l     In case of natural calamities, strikes, riots and bandhs.            11. Freezing / Seizure of Accounts
l     In the event of any force majeure or disaster that affects the       Investors may note that under the following circumstances the
      normal functioning of the AMC, ISC or the Registrar.                 Trustee / AMC may at its sole discretion (and without being
l     If so directed by SEBI.                                              responsible and/or liable in any manner whatsoever) freeze / seize
                                                                           a Unit holder's account (or deal with the same in the manner the
In the above eventualities, the time limits indicated above, for
                                                                           Trustee / AMC is directed and/or ordered) under the Scheme(s):
processing of requests for purchase, switch and redemption of Units
will not be applicable. Further, an order to purchase Units is not         l    Under any requirement of any law or regulations for the time
binding on and may be rejected by the Trustees, the AMC or their                being in force.
respective agents, until it has been confirmed in writing by the AMC
or its agents and payment has been received.                               l    Under the direction and/or order (including interim orders) of
                                                                                any regulatory/statutory authority or any judicial authority or
Suspension or restriction of repurchase / redemption facility under             any quasi-judicial authority or such other competent authority
any Scheme / Plan of the Mutual Fund shall be made applicable only              having the powers to give direction and/or order.
after the approval from the Board of Directors of the AMC and the
Trustees. The approval from the AMC Board and the Trustees                 C. GENERAL INFORMATION
giving details of circumstances and justification for the proposed
action shall also be informed to SEBI in advance.                          1. Inter-Scheme Transfer of Investments
                                                                           l    Transfer of investments from one Scheme to another Scheme
HMEF: The Trustees/ AMC reserve the right to temporarily suspend                in the Mutual Fund shall be permitted provided:
subscriptions, switches into the Scheme, if the asset under
management of the Scheme exceeds Rs. 700 crores. However, as it            l    Such transfers are done at the prevailing market price for
may not be possible to ensure that the assets under management                  quoted instruments on spot basis;
does not exceed Rs. 700 crores at the point of time of subscription,       l    The securities so transferred shall be in conformity with the
any excess amounts collected in the Scheme would be retained until              investment objective of the transferee Scheme and
the suspension of subscriptions, switches into the Scheme takes
effect. The suspension will be for a minimum period of 1 month or          l    Inter-Scheme transfers shall be done in accordance with the
until the assets under management fall below Rs. 700 crores, due                SEBI (Mutual Fund) Regulations.




36                                                                                                                      HSBC Mututal Fund
                                                                                                     Statement of Additional Information


2.    Associate Transactions
                                            INVESTMENT IN ASSOCIATE COMPANIES
 During the period 1st April 2005 to 30th April 2009, HSBC Mutual Fund had invested in the following associate companies of the Sponsor
                                                                                                                        (Rs. in crores)
 Name of the Investing Scheme                                      Name of the Associate             Particulars              Amount of
                                                                                                                              Investment
 HSBC Equity Fund                                                         HSBC                      Fixed Deposit                 28.00
 HSBC Cash Fund                                                           HSBC                      Fixed Deposit                302.00
 HSBC Ultra Short Term Bond Fund                                          HSBC                      Fixed Deposit                163.00
 HSBC Taxsaver Equity Fund                                                HSBC                      Fixed Deposit                 13.60
 HSBC MIP Regular Plan                                                    HSBC                      Fixed Deposit                 0.82
 HSBC MIP Savings Plan                                                    HSBC                      Fixed Deposit                 0.98
 HSBC India Opportunities Fund                                            HSBC                      Fixed Deposit                 20.80
 HSBC Floating Rate Fund Long Term Plan                                   HSBC                      Fixed Deposit                 35.00
 HSBC Advantage India Fund                                                HSBC                      Fixed Deposit                 36.00
 HSBC Midcap Equity Fund                                                  HSBC                      Fixed Deposit                 12.00
 HSBC Unique Opportunities Fund                                           HSBC                      Fixed Deposit                 31.60
 HSBC Small Cap Equity Fund                                               HSBC                      Fixed Deposit                 1.10
 HSBC Dynamic Fund                                                        HSBC                      Fixed Deposit                 9.00
The above investments were considered sound. Before making the investments, the AMC evaluated the same on merits and on arm’s length
basis and in accordance with the objectives of the Scheme.

Underwriting Obligations with respect to issues of                        Limited during the half-year ended September 30, 2006. The fund
Associate Companies                                                       was allotted 12,34,275 shares @ Rs. 60 per share. HSBC Securities
The AMC has till date, not entered into any underwriting contracts        and Capital Markets (India) Pvt. Ltd., the Sponsor was the book
in respect of any public issue made by any of its associate companies.    running lead manager / co-book running lead manager in these
                                                                          issues. However these were subscribed through merchant bankers /
Subscriptions in issues lead managed by the                               brokers other than the Sponsor.
Sponsor or any of its Associates
                                                                          Dealing with Associate Companies
The Mutual Fund subscribed to the public issue of Maruti Udyog
Limited during the half year ended September 30, 2003. The Fund           The AMC has utilised the services of its associate, The Hongkong
was allotted 62300 shares @ Rs. 125.00 per share. The Schemes of          and Shanghai Banking Corporation Limited as the Collecting Banker
HSBC MF subscribed to public issues of Biocon Ltd. (allotted              and for procuring Unit subscriptions for Scheme of the Fund. The
75000 shares @ Rs. 315 per share) and Gas Authority of India              Collecting Banker’s fees and commissions payable are at similar
Limited (allotted 849520 shares @ Rs. 195 per share) during the           rates offered to other collecting bankers and distributors by the
half year ended March 31, 2004. The Schemes of HSBC Mutual                Scheme.
Fund subscribed to the public issue of National Thermal Power             The Hongkong and Shanghai Banking Corporation Limited and
Corporation Limited (allotted 2627100 shares @ Rs. 62 per share)          HSBC Primary Dealership (India) Private Ltd. are on the panel of
and Jet Airways India Limited (allotted 63,623 shares @ Rs. 1100          selected counterparties with which the Mutual Fund places money
per share) during the half year ended March 31, 2005. The Schemes         in fixed deposits and / or enters into transactions for purchase / sale
of HSBC Mutual Fund subscribed to the public issue of Gujarat             of debt instruments.
State Petronet Limited (allotted 5,89,025 shares @ Rs. 23 per share)      These associates were counterparties to the Mutual Fund with respect
and Bank of Baroda (allotted 2,05,848 shares @ Rs. 230 per share)         to purchase / sale of the abovementioned instruments. The AMC has
during the half-year ended March 31, 2006. The Schemes of HSBC            utilised the services of the Sponsor for purchase / sale of securities
Mutual Fund subscribed to the public issue of Reliance Petroleum          on behalf of the Mutual Fund.




HSBC Mututal Fund                                                                                                                             37
Statement of Additional Information



                              DEALING WITH ASSOCIATE COMPANIES (PERIOD 01/04/06 TO 30/04/2009)
 HSBC Mutual Fund has utilised the services of the following associates for the purpose of securities transactions (aggregate
 purchase and sale) & Deals with associates as counterparty:
                                                                                                               (Rs. in crores)
 Name of the                   Particulars                   HEF                   HIF                HCF                   HIIF               HGF                  HMIP              HIOF
 Associate                                                                    IP           ST                          IP          ST          ST            R             S
 The Hongkong and             Fixed Deposit               28.00               –             –         302.00           –           –            –            0.82        0.98         20.80
 Shanghai Banking             Discounted Instruments      75.57             0.98          67.47       500.47           –           –            –             –            –            –
 Corporation Limited          Government Securities         –               66.64           –            –             –           –          12.26         21.64        26.66          –
                              PSU/PFI Bonds/Corporate Debt –                  –           29.53        14.97           –           –            –            0.56        6.79           –
                              Treasury Bills                –                 –            4.75         9.49           –           –            –              –           –            –
                              Interest Rate Swaps           –                 –             –         225.00           –           –            –             –            –            –
 HSBC Primary Dealership      Government Securities            –              –            –            –              –           –           –             –           10.43          –
 (India) Private Limited
 HSBC Securities and          Equity Shares                  702.08           –            –            –              –           –           –            10.95        26.87        241.14
 Capital Markets (India)
 Private Limited (Sponsor)
 Investment in Shares of      Equity Shares                    –              –            –            –              –           –           –             –             –           3.60
 Voltas Limited (Associate)
 HSBC Asset Management
 (I) Pvt Ltd                  PSU/PFI Bonds/Corporate Debt     –              –            –            –              –           –            –            –             –            –


 Name of the Associate              Particulars                     HFRF          HMEF HFTS HFTS HAIF HTSEF HUOF HUSBF HDF                                       HFDF HSCF HFTS
                                                               LT      ST                         I    II                                                                               50
 The Hongkong and Shanghai          Fixed Deposit          35.00       –          12.00         –      –       36.00        13.60 31.60 163.00 9.00                –           1.10      –
 Banking Corporation Limited        Discounted Instruments 87.93       –          9.68          –      –         –          1.82 0.98 845.30 –                     –            –      65.87
                                    Government Securities    –         –            –           –      –         –            –     –     –     –                18.00          –        –
                                    PSU/PFI Bonds/
                                    Corporate Debt           –        14.97         –           –      –         –           –          –     75.01     –        24.65          –        –
                                    Treasury Bills           –          –           –           –      –         –           –          –
                                    Interest Rate Swaps      –        25.00         –           –      –         –           –          –     275       –            –          –        –
 HSBC Primary Dealership            Government Securities       –      –            –           –      –         –           –          –      –        –            –          –        –
 (India) Private Limited
 HSBC Securities and Capital     Equity Shares                  –      –          110.14        –      –       369.45 58.82 175.75             –      155.20         –         6.06      –
 Markets (India) Private Limited
 (sponsor)
 Investment in Shares of            Equity Shares               –      –          52.40         –      –       21.78         –         5.69    –        –            –          –        –
 Voltas Limited (Associate)
 HSBC Asset Management              PSU/PFI Bonds/
 (I) Pvt Ltd                        Corporate Debt              –      –            –           –      –         –           –          –      –        –            –          –        –




38                                                                                                                                                          HSBC Mututal Fund
                                                                                                             Statement of Additional Information


 Name of the Associate           Particulars              HINF HFTS HFTS HFTS HFTS HFTS HFTS HFTS HFTS HINF HTSEF HFTS HFTS
                                                           II   52   37   44   51   58   63   66   68    I         53   54
 The Hongkong and Shanghai       Fixed Deposit            –          –     –      –     –     –        –      –          –      –      –          –     –
 Banking Corporation Limited     Discounted Instruments 78.99      22.76 111.03 47.11 20.31 63.69    18.38   1.96       1.48   3.46   1.48        –     –
                                 Government Securities    –          –     –      –     –     –        –      –          –      –      –          –     –
                                 PSU/PFI Bonds/
                                 Corporate Debt           –         –        –   –      –        –    –       –          –      –      –          –     –
                                 Treasury Bills           –         –        –   –      –        –    –       –          –      –      –          –     –
                                 Interest Rate Swaps      –         –        –   –      –        –    –       –          –      –      –          –     –
 HSBC Primary Dealership         Government Securities     –        –        –   –      –        –    –       –          –      –      –          –     –
 (India) Private Limited
 HSBC Securities and Capital     Equity Shares             –        –        –   –      –        –    –       –          –      –      –          –     –
 Markets (India) Private Limited
 (sponsor)
 Investment in Shares of         Equity Shares             –        –        –   –      –        –    –       –          –      –      –          –     –
 Voltas Limited (Associate)
 HSBC Asset Management           PSU/PFI Bonds/
 (I) Pvt Ltd                     Corporate Debt            –        –        –   –      –        –    –       –          –      –      –          –     –



 Name of the Associate           Particulars               HFTS         HFTS     HFTS       HFTS     HFTS         HFTS         HFTS     HFTS          HFTS
                                                            46           56       59         24       30           61           41       45            49
 The Hongkong and Shanghai       Fixed Deposit                 –         –        –          –         –            –           –           –          –
 Banking Corporation Limited     Discounted Instruments        –         –        –          –         –            –           –          2.97        –
                                 Government Securities         –         –        –          –         –            –           –           –          –
                                 PSU/PFI Bonds/
                                 Corporate Debt                –         –        –          –         –            –           –            –        45.08
                                 Treasury Bills                –         –        –          –         –            –           –            –          –
                                 Interest Rate Swaps           –         –        –          –         –            –           –            –
 HSBC Primary Dealership         Government Securities         –         –        –          –         –            –           –            –         –
 (India) Private Limited
 HSBC Securities and Capital     Equity Shares                 –         –        –          –         –            –           –            –         –
 Markets (India) Private Limited
 (sponsor)
 Investment in Shares of         Equity Shares                 –         –        –          –         –            –           –            –         –
 Voltas Limited (Associate)
 HSBC Asset Management           PSU/PFI Bonds/
 (I) Pvt Ltd                     Corporate Debt                –         –        –          –         –            –          2.72          –         –
HEF : HSBC Equity Fund, HIF-IP : HSBC Income Fund - Investment Plan, HIF-ST : HSBC Income Fund - Short Term Plan, HCF : HSBC Cash
Fund, HIF-IP : HSBC Income Fund - Investment Plan - Institutional, HIF-ST : HSBC Income Fund - Short Term Plan - Institutional, HGF : HSBC
Gilt Fund, HIOF : HSBC India Opportunities Fund, HMIP-R : HSBC MIP - Regular, HMIP-S : HSBC MIP - Savings, HFRF-LT : HSBC Floating
Rate Fund - Long Term Plan, HFRF-ST : HSBC Floating Rate Fund - Short Term Plan, HMEF : HSBC Midcap Equity Fund, HAIF : HSBC
Advantage India Fund, HTSEF : HSBC Tax Saver Equity Fund, HUSBF : HSBC Ultra Short Term Bond Fund, HUOF : HSBC Unique Opportunities
Fund, HFTS : HSBC Fixed Term Series, HDF : HSBC Dynamic Fund, HFDF : HSBC Flexi Debt Fund, HSCF : HSBC Small Cap Equity Fund
and HEMF : HSBC Emerging Markets Fund.

Note: Schemes of HSBC Mutual Fund had subscribed to the issue of Cholamandalam Investment & Finance Company Limited lead managed
by HSBC Limited to the tune of Rs. 25.00 Crores




HSBC Mututal Fund                                                                                                                                           39
Statement of Additional Information


              AMOUNT PAID BY HSBC MUTUAL FUND TO ASSOCIATE COMPANIES April 1, 2005 - April 30, 2009
                                                                                                (Rs. in lacs)
 Name of the Associate              Particulars         HEF                HIF                    HCF       HGF           HMIP                    HIOF            HFRF      HMEF
                                                                  HIF IP         HIF ST                              HMIP R HMIP S                          HFRF LT HFRF ST
 HSBC Securities and Capital       Brokerage on
 Markets (India) Private Limited   Equity Deals        93.36           –            –               –        –             1.63         3.59     43.08             –             –       17.72
 The Hongkong and Shanghai         Commision on
 Banking Corporation Limited       Distribution of
                                   units              1,818.62    75.39            33.21         349.57     1.33         46.67         49.76    1,119.47         51.78         163.04    800.26
 The Hongkong and Shanghai         Collection /
 Banking Corporation Limited       Bank Charges         5.48       3.10            0.19           2.51      0.01         14.48         14.85     2.75             0.25          0.21      3.22
 The Hongkong and Shanghai         Settlement
 Banking Corporation Limited       Charges                                                                               44.35#
 HSBC Securities and Capital       Brokerage on
 Markets (India) Private Limited   Debt Deals
 HSBC Asset Management (India) Investment
 Private Limited               Management &
                               Advisory Fee           4,563.48    102.80         127.46          2,172.48   19.24        290.23        405.53   2,336.08        439.67         564.11 1,410.45
 The Hongkong and Shanghai         Interest on
 Banking Corporation Limited **    borrowings for
                                   redemptions/
                                   switch-outs           –             –            –             3.80      1.23            –           0.37       –              8.27           –         –
 The Hongkong and Shanghai         Clearing
 Banking Corporation Limited       Member Fees
                                   for F&O Trades      40.79           –            –               –        –             0.40         1.12     27.29             –             –        6.55
 ** : Interest of Rs.516.44 lacs on borrowings has been borne by HSBC AMC
 # : Charges paid by all the schemes of HSBC Mutual Fund towards settlment of Government Securities transactions through the constituent SGL account.




 Name of the Associate              Particulars        HAIF      HTSEF HUOF HUSBF                   HDF HFDF HSCF HEMF                                                 HFTS
                                                                                                                                          I       II       III          IV           V    VI
 HSBC Securities and Capital        Brokerage on
 Markets (India) Private Limited    Equity Deals        65.24    11.58     29.23           –        15.06    –      0.75          –      –        –         –            –           –     –
 The Hongkong and Shanghai          Commision on
 Banking Corporation Limited        Distribution of
                                    units             2,151.76   44.34 623.96 263.85                434.06 40.90 26.04 305.65            –        –        0.12          –       20.25   50.87
 The Hongkong and Shanghai          Collection /
 Banking Corporation Limited        Bank Charges        1.66      0.09      0.01          0.43       0.10    –      0.02        0.04     –        –         –            –           –     –
 The Hongkong and Shanghai          Settlement
 Banking Corporation Limited        Charges
 HSBC Securities and Capital        Brokerage on
 Markets (India) Private Limited    Debt Deals           –         –         –             –            –    –       –            –      –        –         –            –           –     –
 HSBC Asset Management (India)      Investment
 Private Limited                    Management &
                                    Advisory Fee      3,443.11 501.82 1,235.51 2,076.35 679.82 102.60 94.73                     5.89    72.61   43.54      6.58        95.89     87.10   74.02
 The Hongkong and Shanghai          Interest on
 Banking Corporation Limited **     borrowings for
                                    redemptions/
                                    switch-outs         0.22       –         –          433.06          –    –       –            –      –        –         –            –           –     –
 The Hongkong and Shanghai          Clearing
 Banking Corporation Limited        Member Fees for
                                    F&O Trades         29.62      1.17     14.26           –        18.08    –      0.20          –      –        –         –            –           –     –




40                                                                                                                                                              HSBC Mututal Fund
                                                                                                             Statement of Additional Information


 Name of the Associate             Particulars                                                      HFTS
                                                      VII    VIII   XIII   IX     14    15     21     22       23    24    25     26      27     28
 HSBC Securities and Capital     Brokerage on
 Markets (India) Private Limited Equity Deals
 The Hongkong and Shanghai         Commision on
 Banking Corporation Limited        Distribution of
                                   units              0.62   0.06    –      –     –      –     –      –        –     –      –     0.92    –      –
 The Hongkong and Shanghai         Collection /
 Banking Corporation Limited       Bank Charges        –      –      –      –     –      –     –      –        –     –     0.00    –      –      –
 The Hongkong and Shanghai         Settlement
 Banking Corporation Limited       Charges                                                          44.35#
 HSBC Securities and Capital     Brokerage on
 Markets (India) Private Limited Debt Deals            –      –      –      –     –      –     –      –        –     –      –      –      –      –
 HSBC Asset Management             Investment
 (India) Private Limited           Management &
                                    Advisory Fee      9.18   7.99   48.04 124.06 49.88 58.88 95.47 111.38 92.31 223.97 168.32 2.87       46.87 118.27
 The Hongkong and Shanghai      Interest on
 Banking Corporation Limited ** borrowings for
                                redemptions/
                                switch-outs            –      –      –      –     –      –     –      –        –    3.54    –      –      –      –
 The Hongkong and Shanghai         Clearing
 Banking Corporation Limited       Member Fees
                                   for F&O Trades      –      –      –      –     –      –     –      –        –     –      –      –      –      –



 Name of the Associate             Particulars                                                 HFTS
                                                  29 30     31   32 33 34 35             36 37 41 42             44 45     46 47 48 49
 HSBC Securities and Capital     Brokerage on
 Markets (India) Private Limited Equity Deals     –    –    –     –     –     –     –     –     –     –     –    –    –     –    –     –     –
 The Hongkong and Shanghai       Commision on
 Banking Corporation Limited     Distribution of
                                 units           3.07 7.53 1.43 1.47 20.37 0.62 – 0.58 20.35 2.34 56.18 –             –     – 0.19 0.94 –
 The Hongkong and Shanghai       Collection /
 Banking Corporation Limited     Bank Charges
 The Hongkong and Shanghai       Settlement
 Banking Corporation Limited     Charges                                                     44.35#
 HSBC Securities and Capital     Brokerage on
 Markets (India) Private Limited Debt Deals       –    –    –     –     –     –     –     –     –     –     –    –    –     –    –     –     –
 HSBC Asset Management           Investment
 (India) Private Limited         Management &
                                 Advisory Fee 14.71 83.59 56.66 19.64 95.92 51.54 54.17 32.80 60.16 10.36 82.42 7.11 4.11 92.28 3.46 35.86 81.94
 The Hongkong and Shanghai       Interest on
 Banking Corporation Limited ** borrowings for
                                 redemptions/
                                 switch-outs       – 7.58 –       –     –     –     –     –     – 5.51 –        2.39 0.11 8.19 –       –     –
 The Hongkong and Shanghai       Clearing
 Banking Corporation Limited     Member Fees
                                 for F&O
                                 Trades           –    –    –     –     –     –     –     –     –     –     –    –    –     –    –     –     –




HSBC Mututal Fund                                                                                                                                    41
Statement of Additional Information


     AMOUNT PAID BY HSBC MUTUAL FUND TO ASSOCIATE COMPANIES April 1, 2005 - April 30, 2009 (Contd....)

 Name of the Associate             Particulars                                         HFTS
                                                      50       51      52      53       54      55       56       57      58      59
 HSBC Securities and Capital     Brokerage on
 Markets (India) Private Limited Equity Deals         –        –       –        –       –        –        –       –       –       –
 The Hongkong and Shanghai       Commision on
 Banking Corporation Limited     Distribution of
                                 units                –       0.19     –        –       –       0.55      –       –      0.34     –
 The Hongkong and Shanghai       Collection /
 Banking Corporation Limited     Bank Charges         –        –       –        –       –        –        –       –       –       –
 The Hongkong and Shanghai       Settlement
 Banking Corporation Limited     Charges                                                       44.35#
 HSBC Securities and Capital     Brokerage on
 Markets (India) Private Limited Debt Deals           –        –       –        –       –        –        –       –       –       –
 HSBC Asset Management           Investment
 (India) Private Limited         Management &
                                 Advisory Fee       38.76     30.01   53.24   46.81    20.04   14.91    11.81    2.54    42.98   22.02
 The Hongkong and Shanghai       Interest on
 Banking Corporation Limited** borrowings for
                                 redemptions/
                                 switch-outs         0.06      –      48.66   113.16   79.37     –      15.34    0.03     –      88.75
 The Hongkong and Shanghai       Clearing
 Banking Corporation Limited     Member Fees
                                 for F&O Trades       –        –       –        –       –        –        –       –       –       –


 Name of the Associate             Particulars                                         HFTS                              HINF
                                                                       60      61       62      63       68        I      II      III
 HSBC Securities and Capital    Brokerage on
 Markets (India) Private LimitedEquity Deals
 The Hongkong and Shanghai      Commision on
 Banking Corporation Limited    Distribution of units                 0.31      –      0.88      –       0.74    0.51    1.02    0.22
 The Hongkong and Shanghai      Collection /
 Banking Corporation Limited    Bank Charges                           –        –       –        –        –       –       –       –
 The Hongkong and Shanghai      Settlement
 Banking Corporation Limited    Charges                                                                 44.35#
 HSBC Securities and Capital    Brokerage on
 Markets (India) Private LimitedDebt Deals                             –        –       –        –        –       –       –       –
 HSBC Asset Management          Investment
 (India) Private Limited        Management &
                                Advisory Fee                          12.67   46.07    11.16    4.32     0.85    14.23   32.05   0.62
 The Hongkong and Shanghai      Interest on borrowings for
 Banking Corporation Limited ** redemptions/switch-outs                –       7.32     –        –        –      3.18     –       –
 The Hongkong and Shanghai         Clearing Member Fees for
 Banking Corporation Limited       F&O Trades                          –        –       –        –        –       –       –       –




42                                                                                                                 HSBC Mututal Fund
                                                                                                               Statement of Additional Information


    Name of the Associate             Particulars                                            HFTS                                    HINF
                                                                       60           61         62       63          68        I        II       III
    HSBC Securities and Capital    Brokerage on
    Markets (India) Private LimitedEquity Deals
    The Hongkong and Shanghai      Commision on
    Banking Corporation Limited    Distribution of units              0.31          –         0.88       –          0.74    0.51      1.02      0.22
    The Hongkong and Shanghai      Collection /
    Banking Corporation Limited    Bank Charges                            –        –          –         –           –        –        –         –
    The Hongkong and Shanghai      Settlement
    Banking Corporation Limited    Charges                                                                         44.35#
    HSBC Securities and Capital    Brokerage on
    Markets (India) Private LimitedDebt Deals                              –        –          –         –           –        –        –         –
    HSBC Asset Management          Investment
    (India) Private Limited        Management &
                                   Advisory Fee                       12.67        46.07      11.16     4.32        0.85    14.23     32.05     0.62
    The Hongkong and Shanghai      Interest on borrowings for
    Banking Corporation Limited ** redemptions/switch-outs                 –       7.32        –         –           –      3.18       –         –
    The Hongkong and Shanghai         Clearing Member Fees for
    Banking Corporation Limited       F&O Trades                           –        –          –         –           –        –        –         –
** : Interest of Rs.516.44 lacs on borrowings has been borne by HSBC AMC
# : Charges paid by all the schemes of HSBC Mutual Fund towards settlment of Government Securities transactions through the constituent SGL
account.
HEF : HSBC Equity Fund, HIF-IP : HSBC Income Fund - Investment Plan, HIF-ST : HSBC Income Fund - Short Term Plan, HCF : HSBC Cash Fund,
HIF-IP : HSBC Income Fund - Investment Plan - Institutional, HIF-ST : HSBC Income Fund - Short Term Plan - Institutional, HGF : HSBC Gilt Fund,
HIOF : HSBC India Opportunities Fund, HMIP-R : HSBC MIP - Regular, HMIP-S : HSBC MIP - Savings, HFRF-LT : HSBC Floating Rate Fund - Long
Term Plan, HFRF-ST : HSBC Floating Rate Fund - Short Term Plan, HMEF : HSBC Midcap Equity Fund, HAIF : HSBC Advantage India Fund, HUSBF :
HSBC Ultra Short Term Bond Fund, HTSF : HSBC Tax Saver Equity Fund, HUOF : HSBC Unique Opportunities Fund, HFTS : HSBC Fixed Term
Series, HDF : HSBC Dynamic Fund, HFDF : HSBC Flexi Debt Fund, HSCF : HSBC Small Cap Equity Fund, HEMF : HSBC Emerging Markets Fund,
HINF-I : HSBC Interval Fund-Plan I and HINF-II : HSBC Interval Fund-Plan II


The AMC has used the designated branches of The Hongkong and                   l        Any security issued by way of private placement by an associate
Shanghai Banking Corporation Limited as Collecting Centres /                            or group company of the Sponsor
Investor Service Centres and Collecting / Distributing Agents. The
                                                                               l        The listed securities of group companies of the Sponsor which
percentage of brokerage paid to associate broker was in line with
                                                                                        is in excess of 25% of the net assets.
the norms relating to brokerage payment for transactions of the
Mutual Fund.                                                                   The AMC may avail the services of the Sponsor and / or its associates
                                                                               for usage of premises as Investor Service Centres and / or to act as
The AMC may from time to time, for the purpose of conducting its
                                                                               collection and distribution agents. The Sponsor / associates shall be
normal business, use the services (including brokerage services and
                                                                               paid a fee based on the quality of services rendered. These fees shall
securities transactions) of the Sponsor, its subsidiaries, associates of
                                                                               be debited to the Scheme, subject to SEBI Regulations.
the Sponsor and employees or relatives. The subsidiaries of the
Sponsor on the date of this Document are:                                      3. Underwriting
l      HSBC Asset Management (India) Private Limited                           Subject to SEBI Regulations, the Scheme may enter into underwriting
                                                                               agreements after the Mutual Fund obtains the necessary registration
The AMC may utilise the services of the Sponsor, group companies               in terms of the Securities and Exchange Board of India (Underwriters)
and any other subsidiary or associate company of the Sponsor                   Regulations, 1993 and the Securities and Exchange Board of India
established or to be established at a later date, in case such a               (Underwriters) Rules, 1993 authorising it to carry on activities as
company (including employees or relatives) is in a position to                 underwriters. The capital adequacy norms for the purpose of
provide the requisite services to the AMC. The AMC will conduct                underwriting shall be the net assets of the Scheme and the
its business with the aforesaid companies (including employees or              underwriting obligation of the Scheme shall not at any time exceed
relatives) on commercial terms and on arm's length basis and at                the total Net Asset Value of the Scheme. For the purposes of the
mutually agreed terms and conditions to the extent permitted under             Regulations, the underwriting obligation will be deemed as if
the SEBI Regulations, after evaluation of the competitiveness of the           investments are made in such securities.
pricing offered by the Sponsor, associate companies (including
employees or relatives) and the services to be provided by them.               4. Securities / Stock Lending by the Mutual Fund
                                                                               Subject to the Regulations and the applicable guidelines, the
Associate transactions, if carried out, will be as per the SEBI
                                                                               Scheme(s) and the Plan(s) thereunder may, if the Trustees permit,
Regulations and the limits prescribed thereunder. The Scheme shall
                                                                               engage in securities / stock lending. Securities / stock lending means
not make any investment in:
                                                                               the lending of securities / stocks to another person or entity for a
l      Any unlisted security of an associate or group company of the           fixed period of time, at a negotiated compensation. The borrower
       Sponsor



HSBC Mututal Fund                                                                                                                                      43
Statement of Additional Information


will return the securities / stock lent on expiry of the stipulated          l    purchase
period. Please refer to risks attached with securities lending mentioned     l    redemption
in Combined Scheme Information Document. The Scheme(s), under                l    switch
normal circumstances, shall not have exposure of more than 50%
of its net assets in securities / stock lending. The Scheme(s) may also      l    static data changes viz. address change, change of bank mandate
not lend more than 50% of its net assets to any one intermediary to               etc.
whom securities / stocks will be lent. Securities / Stock Lending            The Unitholder will be asked for the PIN before the request is
could be considered for the purpose of generating additional income          accepted. In the interest of the Unitholder, the ISC reserves the right
to unit holders on the longer term holdings of the Scheme. The AMC           to ask for a fax confirmation of the request and any other additional
shall report to the Trustees on a quarterly basis as to the level of         information about the account of the Unitholder. The PIN should
lending in terms of value, volume and the names of the intermediaries        never be disclosed to any person or written down where any other
and the earnings / losses arising out of the transactions, the value         person may discover it. All transactions conducted with use of this
of collateral security offered etc.                                          PIN will be the responsibility of the Unitholder and the Unitholder
5. Borrowing by the Mutual Fund                                              will abide by the record of the transactions generated. The Mutual
                                                                             Fund and the ISC / Registrar shall not accept any responsibility for
Under the Regulations, the Fund is allowed to borrow to meet its
                                                                             the unauthorised use of the PIN.
temporary liquidity needs for the purpose of repurchase / redemption
of Units or payment of interest or dividend to the Unitholders.              9. Policy on Offshore Investments by the Scheme
Further, as per the Regulations, the Fund shall not borrow more than            and the Plans thereunder
20% of the Net Assets of the Scheme and the duration of such
borrowing shall not exceed a period of 6 months. The Fund may                SEBI Regulations permit mutual funds to invest in certain securities /
raise such borrowings after approval by the Trustees from its Sponsor /      instruments viz. ADRs / GDRs issued by Indian or Foreign
associates / group companies / commercial banks in India or any              companies, Equity of overseas companies listed on recognized stock
other entity at market related rates prevailing at the time and applicable   exchanges overseas, Initial Public Offer (IPO) and Follow on public
to similar borrowings. The security for such borrowings, if required,        offerings (FPO) for listing at recognized stock exchanges overseas,
will be as determined by the Trustees. Such borrowings, if raised,           Foreign debt securities in the countries with fully convertible
may result in a cost, which would be dealt with in consultation with         currencies, with rating not below investment grade by accredited/
the Trustees.                                                                registered credit rating agencies, Money market instruments rated
                                                                             not below investment grade, Repos - only as pure investment avenues,
6. Master Account / Folio                                                    where the counterparty is rated not below investment grade; however
As an investor friendly measure, unless otherwise requested by the           repos should not involve any borrowing of funds by mutual funds,
Unitholder, one Master / Folio Number may be assigned for one                Government securities where the countries are rated not below
investor investing in different Scheme(s) of the Mutual Fund. In             investment grade, Derivatives traded on recognized stock exchanges
such a case, one consolidated Account Statement will be provided.            overseas only for hedging and portfolio balancing with underlying
The number of Units allotted to a Unitholder or repurchased by a             as securities, Short term deposits with banks overseas where the
Unitholder will be reflected in his / her account and a Statement to         issuer is rated not below investment grade, Units/securities issued
this effect will be issued to the Unitholder. The AMC reserves the           by overseas mutual funds registered with overseas regulators and
right to assign the existing Master Account / Folio number against           investing in approved securities or Real Estate Investment Units/
multiple applications and / or subsequent purchases under a new              securities issued by overseas mutual funds registered with overseas
application form by an existing Unitholder, with identical mode of           regulators and investing in approved securities or Real Estate
holding and address.                                                         Investment Trusts (REITs) listed in recognized stock exchanges
7. Fractional Units                                                          overseas or unlisted overseas securities (not exceeding 10% of their
Since a request for redemption or purchase is generally made in              net assets) subject to the terms and conditions prescribed, subject
rupee amounts and not in terms of number of Units of the Scheme,             to maximum of US$ 300 million. This would be revised in terms
an investor may be left with fractional Units. Fractional Units will         of SEBI approvals / guidelines from time to time. All the provisions
be computed and accounted for up to three decimal places for the             of SEBI/IMD/CIR No.7/104753/07 dated 26 September, 2007 will
Scheme. However, fractional Units will in no way affect the investor's       be adhered to including appointment of dedicated fund manager for
ability to redeem the Units, either in part or in full, standing to the      investment in foreign securities.
Unitholder's credit.                                                         It is the Investment Manager's belief that foreign securities offer
                                                                             new investment and portfolio diversification opportunities into multi-
8. Personal Identification Number (PIN)
                                                                             market and multi-currency products. The Fund would look to invest
The PIN facility may be made available to the Unitholders.                   in foreign securities in order to diversify the portfolio in terms of
Unitholders will be required to indicate their desire to avail of this       variety of instruments held and enhance returns by taking advantage
facility and also indicate their bank account number, name of the            of market movements in global markets, which may or may not be
bank and branch in the application for purchasing Units at a future          in sync with the Indian markets. Investment in foreign securities
date. A Form together with detailed terms and conditions will be
                                                                             would only be looked at if they provide a return, liquidity, ease of
mailed to such Unitholders subject to which usage of the PIN will
                                                                             settlement and valuation, transaction costs better than equivalent
be permitted. On receipt of the Form duly signed, the PIN will be
                                                                             local investments. Further, if the Fund Manager becomes cautious
mailed to each Unitholder.
                                                                             or negative on the Indian markets for a reasonably long period of
Unitholders may use the PIN to carry out one or more of the                  time, would he consider investing in such securities. The Fund will
following types of transactions (as may be enabled by the Mutual             look to identify and capture profitable opportunities as and when
Fund) by calling the ISCs / Call centre only:                                they arise. However, such investments also entail additional risks.
                                                                             Such investment opportunities may be pursued by the Investment



44                                                                                                                        HSBC Mututal Fund
                                                                                                      Statement of Additional Information


Manager provided they are considered appropriate in terms of the           by the investor, failing which the Fund / Trustee / AMC may at its
overall investment objectives of the Scheme. The Scheme may then,          sole discretion reject such transaction request. Further, any requests
if necessary, seek permission from SEBI and RBI to invest abroad           for purchase / redemption / switch or other transactions must be
in accordance with the investment objectives of the Scheme and in          unconditional. The Fund / Trustee / AMC shall not be bound to take
accordance with any guidelines issued by SEBI / RBI from time to           cognizance of any conditions placed on the transaction request and
time.                                                                      may at its sole discretion, reject such transaction request, or process
Since the Scheme would invest only partially in foreign securities,        the same as if the condition were not mentioned.
there may not be readily available and widely accepted benchmarks          14. Acts done in good faith
to measure performance of the Scheme. To manage risks associated           Any act, thing or deed done in good faith in pursuance of or with
with foreign currency, the Fund may use derivatives for efficient          reference to the information provided in the application or other
portfolio management including hedging and in accordance with              communications received from the investor / unit holder will
conditions as may be stipulated by SEBI / RBI from time to time.           constitute good and full discharge of the obligation of the Fund,
Offshore investments will be made subject to any / all approvals and       Trustee and the AMC.
conditions thereof as may be stipulated by SEBI / RBI being fulfilled      In cases of copies of the documents / other details such as list of
and provided such investments do not result in expenses to the Fund        authorized signatories, that are submitted by a limited company,
in excess of the ceiling, if any, on expenses prescribed by SEBI for       body corporate, registered society, trust or partnership, if the same
offshore investment, and if no such ceiling is prescribed by SEBI,         are not specifically authenticated to be certified true copies but are
the expenses to the Scheme(s) shall be limited to the level which,         attached to the application form and / or submitted to the Fund, the
in the opinion of the Trustees, is reasonable and consistent with          onus for authentication of the documents so submitted shall be on
costs and expenses attendant to international investing. The Fund          such investors and the AMC / Fund will accept and act on these in
may, where necessary, appoint other intermediaries of repute as            good faith wherever the documents are not expressly authenticated.
advisors, sub-custodians, etc. for managing and administering such         Submission of these documents / details by such investors shall be
investments. The appointment of such intermediaries shall be in            full and final proof of the corporate investor's authority to invest and
accordance with the applicable requirements of SEBI and within the         the AMC/Fund shall not be liable under any circumstances for any
permissible ceilings of expenses. The fees and expenses would              defects in the documents so submitted.
illustratively include, besides the investment management fees,            In cases where there is a change in the name of such investor, such
custody fees and costs, fees of appointed advisors and sub-managers,       a change will be effected by the AMC / Fund only upon receiving
transaction costs and overseas regulatory costs.                           the duly certified copy of the revised Certificate of Incorporation
10. Power to make Rules                                                    issued by the relevant Registrar of Companies / registering authority.
                                                                           In cases where the changed PAN Number reflecting the name change
Subject to the Regulations and other applicable laws, the Trustees         is not submitted, such transactions accompanied by duly certified
may from time to time, prescribe such terms and make such rules            copy of the revised Certificate of Incorporation with a copy of the
for the purpose of giving effect to the Scheme and the Plans thereunder    Old PAN Card and confirmation of application made for new PAN
with power to the AMC to add to, alter or amend all or any of the          Card will be required as a documentary proof.
terms and rules that may be framed from time to time.
                                                                           15. Lien
11. Power to remove Difficulties
                                                                           The fund will have a first and paramount right of lien/set-off with
If any difficulty arises in giving effect to the provisions of
                                                                           respect to every unit / dividend under any scheme of the Fund for
the Scheme and the Plans thereunder, the Trustees may, subject to
                                                                           any money that may be owed by the unit holder, to it.
the Regulations and other applicable laws, take any action not
inconsistent with such provisions, which appears to be necessary,
desirable or expedient, for the purpose of removing such
                                                                           16. Units with Depository
difficulty.                                                                Units of the Plan may, if decided by the AMC, be held with a
                                                                           Depository. Under such circumstances, Units will be transferable in
12. Scheme to be binding on the Unitholders                                accordance with the provisions of Depositories Act, 1996 and the
Subject to the Regulations, the Trustees may from time to time, add        Securities and Exchange Board of India (Depositories and
or otherwise vary or alter all or any of the features of plans and terms   Participants) Regulations, 1996 as may be amended from time to
of the Scheme after obtaining the prior permission of SEBI and the         time.
Unitholders (where necessary), and the same shall be binding on all
the Unitholders of the Scheme and the Plans thereunder and any             17. Electronic Payouts
person or persons claiming through or under them, shall do so as           Electronic Clearing Service (ECS) / Electronic payout / EFT / NEFT
if each Unitholder or such person expressly had agreed that such           / SEFT / RTGS / Wired Transfer are facilities offered by RBI, for
features and terms shall be so binding.                                    facilitating better customer service by direct credit of dividend/
                                                                           redemption to an investor's bank account through electronic credit.
13. Unambiguous and Unconditional requests                                 This helps in avoiding loss of dividend/redemption warrant in transit
Any application for redemption, purchase or exchange or any other          or fraudulent encashment. To facilitate the above electronic credits
instruction must be correct, complete, clear and unambiguous in all        and minimise errors, HSBC AMC may validate the investors' Bank
respects and should conform to the prescribed procedure/                   Account numbers with the respective banks and/or populate necessary
documentation requirements, failing which the Trustee / AMC reserve        IFSC/MICR codes through publicly available sources or through its
the right to reject the same and in such a case the Trustee / AMC          banks. The Mutual Fund will endeavour to arrange such facility for
will not be responsible for any consequence therefrom. The Investor        payment of dividend/redemption proceeds to the Unit holders.
shall ensure that any overwriting or correction shall be countersigned     However, this facility is optional for the investors. It may be




HSBC Mututal Fund                                                                                                                              45
Statement of Additional Information


specifically noted that there is no commitment from the Mutual              to this material must first satisfy themselves that they are not subject
Fund that this facility will be made available to the Unit holders for      to any local requirements, which restrict or prohibit them from
payment of dividend/ redemption proceeds. While the Mutual Fund             doing so.
will endeavour to arrange the facility, provision of this facility will
                                                                            Information other than that relating specifically to HSBC Asset
be dependent on various factors including sufficient demand for the
                                                                            Management (India) Private Limited, HSBC Mutual Fund and its
facility from Unit holders at any centre, as required by the authorities.
                                                                            products, is for information purposes only and should not be relied
In places where such a facility is not available or if the facility is
discontinued by the Scheme for any reason, the AMC shall despatch           upon as a basis for investment decisions. HSBC Asset Management
to the Unit holders the dividend proceeds within 30 days of the             (India) Private Limited shall not be responsible, nor be held liable,
declaration of the dividend and the redemption proceeds within 10           for any information contained in any website linked from the said
Business Days.                                                              Website.
                                                                            The AMC makes no representations whatsoever about any such
18. Client Information                                                      website which the user may access through the said Website. A link
The Mutual Fund shall presume that the identity of the investor and         to a non-HSBC website does not mean that the AMC endorses or
the information disclosed by him is true and correct. It will also be       accepts any responsibility for the content, or the use, of such website.
presumed that the funds invested by the investor in the Schemes of          It is the responsibility of the user to take precautions to ensure that
the Mutual Fund come from legitimate sources / manner and the               whatever is selected for use is free of such items as viruses and other
investor is duly entitled to invest the said funds.                         items of a destructive nature.
The Mutual Fund will not, in any way, be responsible for correctness        The investors are requested to read the Terms and Conditions given
of the information provided by the investor to the Mutual Fund, as          on the said Website carefully before using the Website. By using the
to his identity or any other information, and also his sources of           said Website, the investor will be deemed to have agreed that the
income. The Mutual Fund is not under any obligation to carry out            Terms and Conditions specified apply to the use of the investor of
any investigation / inquiry as to the identity of the investor and the      the said Website, any information obtained from the site, and our
sources of the moneys invested by the investor into the schemes of          products and services. If the investor does not agree to the specified
the Mutual Fund. The Fund shall not undertake any such investigation/       Terms, the investor may not use the said Website or download any
inquiry since it does not possess adequate resources to undertake           content from it.
such activity.
                                                                            20. Web transactions Facility
Where the funds invested are for the benefit of a person (beneficiary)
                                                                            In the new era of liberalisation and modernisation, the Fund wishes
other than the person in whose name the units are issued and
                                                                            to take optimum advantage of the modern techniques of
registered, the Mutual Fund shall assume that the investor holding
                                                                            communication and transactions to serve its investors in a more
the Units in his name is legally authorized / entitled to invest the
                                                                            efficient manner.
said funds in the Units of the Mutual Fund, for the benefit of the
beneficiaries.                                                              As a step towards the same, the Fund may introduce in future certain
Units of the Schemes are not offered, nor is the Fund managed or            online transactions, including subscription and redemption /
intended to serve, as a vehicle for frequent trading that seeks to take     repurchase of the Units of the Fund or any other transaction such
                                                                            as change in address, change in bank details, change in mode of
advantage of short-term fluctuations in the securities market. This
                                                                            payment etc., as may be specified by the Mutual Fund from time
type of trading activity, often referred to as "market timing", could
                                                                            to time. Online transactions will save cost & time of the investor
result in actual or potential harm to the Unit Holders. Accordingly,
                                                                            and will also enable the Fund to serve its clients in a faster and
the Mutual Fund (MF) at its sole discretion may reject any purchase
                                                                            efficient way.
or exchange of Units that the MF reasonably believes may represent
a pattern of market timing activity involving the Schemes of the MF.        However investors intending to take benefit of the web-based
The AMC may share investors' personal information with the                  transaction facility should note that the investor shall use this service
following third parties:                                                    at his own risk. The Fund, the AMC, the Trustee, along with its
                                                                            directors, employees and representatives shall not be liable for any
l   Registrar, Banks and / or authorised external third parties who         damages or injuries arising out of or in connection with the use of
    are involved in transaction processing, despatches, etc. of             the website or its non-use including, without limitation, non-
    investors' investment in any scheme;                                    availability or failure of performance, loss or corruption of data, loss
l   Distributors through whom applications of investors are received        of or damage to property (including profit and goodwill), work
    for the Schemes; or                                                     stoppage, computer failure or malfunctioning, or interruption of
l   Any other organisations for compliance with any legal or                business; error, omission, interruption, deletion, defect, delay in
    regulatory requirements or to verify the identity of investors for      operation or transmission, computer virus, communication line
    complying with anti-money laundering requirements.                      failure, unauthorised access or use of information.
                                                                            The Fund shall not be liable for any misuse of data placed on the
19. Website                                                                 Internet, by third parties "hacking" or unauthorized accessing of the
The website of HSBC Mutual Fund (the said Website) is intended              server. The Fund will not be liable for any failure to act upon
solely for the use of Resident Indians, Non Resident Indians, Persons       electronic instructions or to provide any facility for any cause that
of Indian Origin and Foreign Institutional Investors registered with        is beyond the control of the Fund.
Securities and Exchange Board of India. It should not be regarded
as a solicitation for business in any jurisdiction other than India. In     21. Transaction by Distributor
particular the information is not for distribution and does not             With a view to facilitate ease of transacting, the AMC has tied up
constitute an offer to sell or the solicitation of an offer to buy          with certain existing distributors to report transactions on the web
securities in any jurisdiction where such activity is prohibited. Any       on behalf of their clients on the terms and conditions to be mutually
persons resident outside India who nevertheless intend to respond           agreed between the client and the distributor.



46                                                                                                                         HSBC Mututal Fund
                                                                                                       Statement of Additional Information


22. Brokers                                                                23. Documents Available for Inspection
The Fund intends to utilize the services of select financial               The following documents will be available for inspection at the
intermediaries for distribution and may pay brokerage depending            office of the Mutual Fund at 314, D. N. Road, Fort, Mumbai 400 001
upon the efficiency and other factors as may be decided by the             during business hours on any day (excluding Saturdays, Sundays
AMC. The Investment manager is the sole authority to select such           and public holidays):
financial intermediary/intermediaries who would distribute the
product. Further, the AMC may appoint one or more exclusive                l        Memorandum and Articles of Association of the AMC
distributors, at its discretion, based on the parameters decided by the    l        Investment Management Agreement
AMC.                                                                       l        Trust Deed and amendments thereto, if any
                                                                           l        Mutual Fund Registration Certificate
The Fund may use the services of associate brokers or take the sale
of its units into account when allocating brokerage. However, the          l        Agreement between the Mutual Fund and the Custodian
brokerage paid to Associate Brokers shall be at the same rate offered      l        Agreement with Registrar and Share Transfer Agents
to any other broker who procures subscription.                             l        Consent of Auditors to act in the said capacity
The AMC may from time to time have various contests / loyalty              l        Consent of Legal Advisors to act in the said capacity
programmes in order to motivate its distributors. This could be in         l        Securities and Exchange Board of India (Mutual Funds)
the form of additional compensation to the distributors or could                    Regulations, 1996 and amendments from time to time thereto.
entail gifts / vouchers or various other privileges. The level of          l        Indian Trusts Act, 1882.
compensation in the above forms could vary from time to time and
                                                                           24. Investor Grievances Redressal Mechanism
a number of factors could determine the same viz. qualifying
distributor sales, assets and redemption rates, quality of the             Investor grievances are normally received at the Corporate Office
distributors' relationship with HSBC Mutual Fund. The AMC may              of the AMC or at the Investor Service Centres or directly by the
also publicise its various loyalty programmes as may be launched           Registrar. All grievances are generally forwarded to the Registrar
from time to time. Further, the AMC could also provide training in         for their necessary action. The complaints are closely followed up
order to keep the distributors abreast about the new developments          with the Registrar to ensure timely redressal and prompt investor
in the securities market and facilitate educating distributors and         service.
unitholders about Schemes of HSBC Mutual Fund.
Given below is the status of complaints received from April 1, 2006 to May 12, 2009:

                                        HSBC Mutual Fund - Consolidated Report for all schemes
 Name of Complaint / Queries               Opening       Total Queries /                  Queries resolved within                   Pending
                                           Balance        Complaints
                                                                           24 Hrs.          48 Hrs.       72 Hrs. Above 72 Hrs.
                                                                               T+0            T+1           T+2         > T+2
 Complaints Received from SEBI                 0                57             21               3            2            31           0
 Correction in Investor Details                0               4379            4064            83            95           137          0
 Non Allotment of Units                        0                 0              0               0            0             0           0
 Non receipt of Account Statement              0               405             352             25            9            21           0
 Non receipt of Dividend Warrant               0                76              46              5            5            20           0
 Non receipt of Redemption Warrant             0                76             50               2            1            23           0
 Total                                         0               5006            4512            115          110           251          0

Investor Services                                                          the Fund will endeavour to add further Investor Service Centres
The Fund believes in providing the investor with superior services         and / or sales offices in other cities. The AMC reserves the right to
to make the investor's experience in dealing with the Fund an              designate from time to time, internet sites as official points of
efficient and satisfactory one. In order to achieve these goals, the       acceptance of transactions.
Fund endeavours to continuously establish and upgrade systems to           Each ISC of the AMC provides investors with requisite information
handle transactions efficiently and resolve any investor grievances        and help in processing transactions in the Scheme of the Mutual
promptly.                                                                  Fund. Adequate training will be imparted to personnel managing the
Ease of Transactions                                                       Investor Service Centres, with a view to early resolution of queries.
The Fund intends to make every transaction for the investor a simple       Process transactions in a timely manner
and convenient one. The Fund provides the following services:              Under the Regulations, the Fund / the Registrar / the AMC shall
Investor Service Centres in major metros                                   despatch to the Unitholders, the dividend proceeds within 30 days
                                                                           of the date of declaration of dividend and the redemption proceeds
The Fund presently has Investor Service Centres in 14 cities. In           within 10 Business Days from the date of acceptance of the request
addition to this, the Fund presently has a tie up with the Registrar       for redemption or repurchase proceeds, as the case may be. In the
who has set up Investor Service Centres in various cities. The details     event of failure to despatch the redemption proceeds within the
of Investor Service Centres are given in the inside back cover of the      above time, interest @ 15% per annum or such rate as may be
Combined Scheme Information Document. Over a period of time,



HSBC Mututal Fund                                                                                                                            47
Statement of Additional Information


specified by SEBI, would be paid to the unitholders for the period      contacted at the Corporate Office of the AMC. The address and
of delay.                                                               phone numbers are:
Under normal circumstances, the Fund will endeavor to despatch          314, D. N. Road, Fort, Mumbai 400 001.
the redemption proceeds within 3 business days (in case of equity       Tel.: (91) (22) 66668819. Fax : (91) (22) 40029600
schemes except HEMF), 7 business days (in case of HEMF) & 1             E-mail: hsbcmf@hsbc.co.in
Business Day (in case of debt schemes) from the date of receiving       Notwithstanding anything contained in this Statement of
a valid redemption request in respect of the Scheme at the Investor     Additional Information, the provisions of the SEBI (Mutual
Service Centres.                                                        Funds) Regulations, 1996 and the guidelines thereunder shall be
Ordinarily, non-monetary transactions or requests will be processed     applicable.
(with the exception of issue of Unit certificates) within 7 Business
Days under the Scheme.
Investors should note that completion of monetary / non-monetary        For and on behalf of the Board of Directors of
transactions within the respective number of Business Day(s) as         HSBC Asset Management (India) Private Limited
indicated above, would be done on "best efforts" basis and completion
of all such transactions are subject to the time limits as prescribed
under the Regulations.                                                  Sd/-
Problem Resolution                                                      Vikramaaditya
The Fund will follow-up with the Investor Service Centres and the       Chief Executive Officer
Registrar on complaints and enquiries received from investors with
an endeavour to resolve them promptly.
For this purpose, Ms. Lata Krishnamohan / Mr. Vivek Kamat are           Place: Mumbai
currently designated as the Investor Relations Officer. They can be     Date: 20 May 2009




48                                                                                                               HSBC Mututal Fund
INVESTOR SERVICE CENTRES AND OFFICIAL POINTS OF ACCEPTANCE FOR TRANSACTIONS

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

                         CAMS INVESTOR SERVICE CENTRES, CAMS TRANSACTION POINTS
                            AND CAMS COLLECTION CENTRES TEL.: 1800-200-2267
CAMS (Investor Service Centres) :
l   Ahmedabad l Bangalore l Bhubaneswar l Coimbatore l Cochin l Chandigarh l Chennai l New Delhi l Durgapur l Goa
l   Hyderabad l Indore l Jaipur l Kanpur l Kolkata l Lucknow l Ludhiana l Mangalore l Mumbai l Madurai l Nagpur l Pune
l   Patna l Surat l Vadodara l Visakhapatnam l Vijayawada
CAMS (Transaction Points) :
l Ajmer l Akola l Aligarh l Allahabad l Alwar l Amaravati l Ambala l Amritsar l Anand l Ananthpur l Avngul l Ankleshwar
l Asansol l Aurangabad l Bagalkot l Balasore l Bareilly l Belgaum l Berhampur l Bhagalpur l Bhatinda l Bhavnagar l Bhilai
l Bhilwara l Bhopal l Bhuj l Bikaner l Bilaspur l Bokaro l Burdwan l Calicut l Chandrapur l Cuttack l Darbhanga l Davenegere

l Dehradun l Deoghar l Dhanbad l Dhule l Erode l Faizabad l Faridhabad l Ghaziabad l Gorakhpur l Gulbarga l Guntur l Gurgoan

l Guwahati l Gwalior l Haldwani l Hazaribagh l Himatnagar l Hissar l Hosur l Hubli l Itarsi l Jabalpur l Jalandhar l Jalgaon

l Jammu l Jamnagar l Jamshedpur l Jhansi l Jodhpur l Junagadh l Kadapa l Kakinada l Kalyani l Kannur l Karimnagar l

Karur l Kestopur l Kharagpur l Kolhapur l Kollam l Kota l Kottayam l Kurnool l Latur l Malda l Manipal l Margao l Mathura
l Meerut l Mehsana l Moga l Moradabad l Morbi l Muzzafarpur l Mysore l Namakkal l Nanded l Nasik l Navsari l Nellore

l Nizamabad l Palakkad l Palanpur l Panipat l Patiala l Pondicherry l Porbander l Rae Bareily l Raichur l Raipur l Rajahmundry

l Rajapalayam l Rajkot l Ranchi l Ratlam l Ratnagiri l Rohtak l Roorkee l Ropar l Rourkela l Sagar l Saharanpur l Salem              l

Sambalpur l Satara l Satna l Shimla l Shimoga l Siliguri l Solapur l Sri Ganganagar l Srikakulam l Surendranagar l Thiruppur
l Tirunelveli l Tirupathi l Trichur l Trichy l Trivandrum l Tuticorin l Udaipur l Valsad l Vapi l Varanasi l Vashi l Vellore l Veraval

l Warangal l Wardha l Yamuna Nagar


CAMS (Collection Centres) :
l   Bharuch   l   Bhusawal   l   Howrah   l   Jalna   l   Karnal   l   Kolkata   l   Mapusa   l   Mumbai   l   Nandiad   l   Sangli   l   Unjha
HSBC Asset Management (India) Private Limited
Registered Office
314, D. N. Road, Fort, Mumbai 400 001.
Tel.: (91) (22) 66668819. Fax : (91) (22) 40029600
E-mail : hsbcmf@hsbc.co.in Website : (www.assetmanagement.hsbc.com/in)
                                                                            graphics
                                                                         alok

								
To top