► INDEX HSBC Equity Fund 1 HSBC India Opportunities Fund 29 HSBC Midcap Equity Fund 57 HSBC Progressive Themes Fund 85 HSBC Tax Saver Equity Fund 113 HSBC Dynamic Fund 141 HSBC Dividend Yield Fund 169 HSBC Emerging Markets Fund 197 HSBC Asia Pacific (Ex Japan) Dividend Yield Fund 225 HSBC Brazil Fund 253 HSBC Managed Solutions 281 HSBC Global Consumer Opportunities Fund 311 HSBC MIP 337 HSBC Income Fund 373 HSBC Floating Rate Fund 413 HSBC Ultra Short Term Bond Fund 443 HSBC Cash Fund 474 HSBC Gilt Fund 504 HSBC Flexi Debt Fund 532 HSBC Capital Protection Oriented Fund 562 HSBC Fixed Term Series 598
6 HSBC Equity Fund
HSBC Equity FundAn Open-ended Diversifi ed Equity Scheme
Abridged Annual Report 2014 - 2015
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HSBC Equity Fund 6
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
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6 HSBC Equity Fund
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
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HSBC Equity Fund 6
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
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6 HSBC Equity Fund
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Equity Fund (HEF) – an open-ended diversifi ed Equity SchemeHEF seeks to generate long-term capital growth from an actively managed portfolio of equity and equity related securities.
The net assets of HEF amounted to Rs. 660.85 crores as at March 31, 2015 as against Rs. 453.11 crores as at March 31, 2014. Around 98.81% of the net assets were invested in equities, 1.44% of the net assets were invested in reverse repos / CBLO and (- 0.25%) were in the net current assets as at March 31, 2015.
HEF remained invested in a diversifi ed portfolio across large capitalization stocks. The relative underweight in Healthcare resulted in underperformance against scheme benchmark for the period 2014-15.
Date of Inception : 10 December 2002 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Equity Fund – Growth 27.89 16.82 4.20 24.66
S&P BSE 200 (Scheme Benchmark) 31.72 16.65 5.41 19.74
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 18.38
Rs. 10,000, if invested in HEF, would have become 12,789 11,682 10,420 151,791
Rs. 10,000, if invested in S&P BSE 200, would have become
13,172 11,665 10,541 92,353
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 80,211
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
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HSBC Equity Fund 6
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
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6 HSBC Equity Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
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HSBC Equity Fund 6
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Equity Fund 7,123,056.75 1627 5,819,118.03 211
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
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6 HSBC Equity Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
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HSBC Equity Fund 6
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
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6 HSBC Equity Fund
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Equity Fund, (the
“Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC Equity Fund 6
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
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6 HSBC Equity Fund
Rs. in Lakhs
HSBC EQUITY FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 9,718.26 9,855.252 Reserves & Surplus2.1 Unit Premium Reserves (11,663.88) (15,203.70)2.2 Unrealised Appreciation Reserve 19,234.00 11,231.682.3 Other Reserves 48,780.52 39,394.993 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 766.34 1,109.59
TOTAL 66,835.24 46,387.81
ASSETS 0.00 0.001 Investments1.1 Listed Securities:1.1.1 Equity Shares 65,223.48 44,318.291.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 50.88 –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 65,274.36 44,318.29
2 Deposits 2.88 1.003 Other Current Assets3.1 Cash & Bank Balance 38.48 19.123.2 CBLO / Reverse Repo Lending 954.55 1,137.613.3 Others 564.97 911.794 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 66,835.24 46,387.81
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC Equity Fund 6
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC EQUITY FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 844.53 861.981.2 Interest 87.70 134.181.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments7,371.19 5,902.11
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 1.91 26.89
(A) 8,305.33 6,925.16
2 EXPENSES2.1 Management fees 847.10 706.632.2 Service tax on Management fees 104.68 87.342.3 Transfer agents fees and expenses 89.97 68.132.4 Custodian fees 7.24 7.062.5 Trusteeship fees 2.05 1.922.6 Commission to Agents 288.79 288.142.7 Marketing & Distribution expenses 113.42 52.022.8 Audit fees 4.45 6.662.9 Investor Education Expenses 12.37 9.502.10 Other operating expenses 20.70 27.832.11 Less: Expenses to be Reimbursed by the Investment Manager – –
(B) 1,490.77 1,255.23
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 6,814.56 5,669.93
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 6,814.56 5,669.93
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 8,002.32 1,709.88
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 14,816.88 7,379.81
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 8,002.32 1,709.887.3 Add / (Less): Equalisation 4,375.82 (15,032.74)7.4 Transfer from Reserve Fund 39,395.00 48,757.80
8 Total 50,585.37 39,394.99
9 Dividend Appropriation9.1 Income Distributed during the year 1,804.85 –
9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 48,780.52 39,394.99
Notes to Accounts - Annexure I
14
6 HSBC Equity Fund
Key Statistics for the year ended March 31, 2015
HSBC EQUITY FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.) :
Open
Regular Plan Growth Option 117.5732 100.1318
Regular Plan Dividend Option 26.7521 22.7836
Direct Plan - Growth Option 118.7803 100.4499
Direct Plan - Dividend Option 27.0305 22.8591
High
Regular Plan Growth Option 161.2553 117.6396
Regular Plan Dividend Option 33.7521 26.7672
Direct Plan - Growth Option 163.9672 118.8405
Direct Plan - Dividend Option 34.3602 27.0442
Low
Regular Plan Growth Option 117.1564 90.9956
Regular Plan Dividend Option 26.6572 20.7047
Direct Plan - Growth Option 118.3955 91.5430
Direct Plan - Dividend Option 26.9429 20.8322
End
Regular Plan Growth Option 150.8367 117.5732
Regular Plan Dividend Option 31.5714 26.7521
Direct Plan - Growth Option 153.4636 118.7803
Direct Plan - Dividend Option 32.1591 27.0305
2. Closing Assets Under Management (Rs. in Lakhs)
End 66,085 45,278
Average (AAuM)1 61,851 47,510
3. Gross income as % of AAuM2 13.43% 14.58%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Plan 2.58% 2.65%
Regular Plan Dividend Option 2.58% 2.65%
Direct Plan 1.86% 1.95%
Direct Plan - Dividend Option 1.86% 1.95%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.37% 1.49%
Regular Plan Dividend Option 1.37% 1.49%
Direct Plan 1.37% 1.49%
Direct Plan - Dividend Option 1.37% 1.49%
15
HSBC Equity Fund 6
HSBC EQUITY FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
5. Net Income as a percentage of AAuM3 11.02% 11.93%
6. Portfolio turnover ratio4 0.48 0.91
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option 2.50 –
Direct Plan - Dividend Option 2.50 –
Corporate
Regular Plan Dividend Option 2.50 –
Direct Plan - Dividend Option 2.50 –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 28.2917 16.8650
Direct Plan - Growth Option 29.1995 17.6906
Benchmark
S&P BSE200 31.7200 16.6967
b. Since Inception
Scheme
Regular Plan Growth Option 24.6573 24.3410
Direct Plan - Growth Option 17.3392 8.5983
Benchmark
S&P BSE200 19.7400 18.7170
1. AAuM = Average daily net assets.
2. Gross income = amount against (A) in the Revenue Account i.e. Income.
3. Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.
4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
6 HSBC Equity Fund
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC EQUITY FUND
1 Investments:
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 is NIL.
1.3. Investments in Associates and Group Companies:(Rupees)
Issuer Instrument Type
Amount Aggregate Investments
by all schemes
Amount Aggregate Investments
by all schemes
2015 2014
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
– 1,607,345,350 – 555,832,950
Equities 109,901,590 215,829,290 – –
Bharti Airtel Ltd. Equities – 12,741,680 20,120,275 76,306,283
Steel Authority of India Ltd.
Commercial Paper
– – – 1,243,550,000
Shriram Equipment Finance Co Ltd.
Commercial Paper
– – – 492,702,500
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2015 and March 31, 2014 and percentage to net assets are as under :
Company Name Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 2,070,137,793 31.33 1,146,109,304 25.31
– Depreciation 151,825,247 2.30 22,941,434 0.51
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 5,087,705 0.08 – –
– Depreciation – 0.00 – –
1.7. The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 3,518,821,198 and Rs. 2,960,565,771 respectively being 56.89% and 47.87% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) is Rs. 4,334,871,643 and Rs. 5,995,132,778 respectively being 91.24% and 126.19% of the average daily net assets.
1.8. Non-Traded securities in the portfolio of the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
17
HSBC Equity Fund 6
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
During the year 2014-15, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. Nil and clearing member charges on derivative transactions amounting to Rs. Nil.
During the year 2013-14, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 19, 200 and clearing member charges on derivative transactions amounting to Rs. Nil.
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 19.22 8.02 4,456,257 16.75
HSBC Inves tD i rec t Securities (India) Limited
Associate 2014-2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 2.26 5.83 4,129,159 10.61
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – 48,214 0.12
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage
paid by the fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 23.62 3.64 283,236 3.68
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 28.73 2.78 344,690 2.80
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
18
6 HSBC Equity Fund
The brokerage paid was at rates similar to those offered to other brokers / distributors
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description 2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
20,594,385.613 1,571,513.394 5,580,554.555 16,585,344.452 10
Regular Plan Dividend Option
77,351,789.447 7,219,550.779 17,275,158.499 67,296,181.727 10
Direct Plan - Growth Option
226,295.680 14,381,524.674 1,806,755.353 12,801,065.001 10
Direct Plan - Dividend Option
379,982.738 184,519.023 64,514.523 499,987.238 10
Description 2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
30,349,642.128 2,660,563.229 12,415,819.744 20,594,385.613 10
Regu la r P l an Dividend Option
101,946,741.042 1,309,815.487 25,904,767.082 77,351,789.447 10
Direct Plan - Growth Option
70,466.051 225,127.027 69,297.398 226,295.680 10
Direct P lan - Dividend Option
194,070.056 206,484.161 20,571.479 379,982.738 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 191,719 (2014: Rs. 2,689,085) represents Exit load (net of service tax) credited to the scheme.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
19
HSBC Equity Fund 6
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
6 HSBC Equity Fund
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC Equity Fund 6
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25
HSBC Equity Fund 6
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6 HSBC Equity Fund
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC Equity Fund 6
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC INDIA OPPORTUNITIES FUND 7
HSBC India Opportunities FundAn open-ended Flexi-cap Equity Scheme
Abridged Annual Report 2014 - 2015
1
HSBC INDIA OPPORTUNITIES FUND 7
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
7 HSBC INDIA OPPORTUNITIES FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC INDIA OPPORTUNITIES FUND 7
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
7 HSBC INDIA OPPORTUNITIES FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC India Opportunities Fund (HIOF) – an open-ended fl exi-cap Equity SchemeHIOF seeks to generate long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related securities. However, it could move a signifi cant portion of its assets towards fi xed income securities if the fund manager becomes negative on equity markets.
The net assets of HIOF amounted to Rs. 456.15 crores as at March 31, 2015 as compared to Rs. 177.60 crores as at March 31, 2014. Around 95.81% of the net assets were invested in equities, 4.64 % of the net assets were invested in reverse repos / CBLO and (-0.45%) were in the net current assets as at March 31, 2015.
HIOF outperformed its benchmark on a 1-year, 2-year basis and since its inception. Stock selections in sectors like Industrials, Materials, Financials, Technology, Energy, and Consumer Discretionary contributed to the outperformance during this period.
Date of Inception : 24 February 2004 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC India Opportunities Fund – Growth 45.06 27.93 0.21 18.38
S&P BSE 500 (Scheme Benchmark) 32.97 16.44 4.14 15.39
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 14.87
Rs. 10,000, if invested in HIOF, would have become 14,506 12,793 10,021 65,147
Rs. 10,000, if invested in S&P BSE 500, would have become
13,297 11,644 10,414 49,033
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 46,634
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and
5
HSBC INDIA OPPORTUNITIES FUND 7
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 Jun 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
6
7 HSBC INDIA OPPORTUNITIES FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC INDIA OPPORTUNITIES FUND 7
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC India Opportunities Fund 2,044,087.48 635 2,482,354.38 75
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
7 HSBC INDIA OPPORTUNITIES FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC INDIA OPPORTUNITIES FUND 7
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
7 HSBC INDIA OPPORTUNITIES FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC India Opportunities
Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC INDIA OPPORTUNITIES FUND 7
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
12
7 HSBC INDIA OPPORTUNITIES FUND
Rs. in Lakhs
HSBC INDIA OPPORTUNITIES FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 12,609.64 7,242.772 Reserves & Surplus2.1 Unit Premium Reserves (8,959.02) (9,926.70)2.2 Unrealised Appreciation Reserve 11,891.23 5,036.632.3 Other Reserves 30,454.98 15,403.483 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 686.05 563.99
TOTAL 46,682.88 18,320.17
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 43,709.64 17,491.411.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 43,709.64 17,491.41
2 Deposits 2.38 –3 Other Current Assets3.1 Cash & Bank Balance 510.81 12.793.2 CBLO / Reverse Repo Lending 2,114.51 548.513.3 Others 345.54 267.464 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 46,682.88 18,320.17
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC INDIA OPPORTUNITIES FUND 7
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC INDIA OPPORTUNITIES FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 298.11 284.251.2 Interest 88.44 49.141.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments3,260.25 2,100.49
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 1.57 18.99
(A) 3,648.37 2,452.872 EXPENSES2.1 Management fees 329.59 290.362.2 Service tax on Management fees 40.73 35.892.3 Transfer agents fees and expenses 46.54 26.112.4 Custodian fees 3.64 2.712.5 Trusteeship fees 1.12 0.742.6 Commission to Agents 456.25 125.512.7 Marketing & Distribution expenses – 8.432.8 Audit fees 3.07 2.612.9 Investor Education Expenses 6.35 3.642.10 Other operating expenses 11.67 10.262.11 Less: Expenses to be Reimbursed by the Investment Manager (53.15) –
(B) 845.81 506.263 NET REALISED GAINS / (LOSSES) FOR
THE YEAR (A - B = C) 2,802.56 1,946.61
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 2,802.56 1,946.61
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 6,854.60 2,493.22
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 9,657.16 4,439.83
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 6,854.60 2,493.227.3 Add / (Less): Equalisation 15,409.03 (7,571.15)7.4 Transfer from Reserve Fund 15,403.47 21,028.02
8 Total 33,615.06 15,403.48
9 Dividend Appropriation9.1 Income Distributed during the year 3,160.08 –9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 30,454.98 15,403.48
Notes to Accounts - Annexure I
14
7 HSBC INDIA OPPORTUNITIES FUND
Key Statistics for the year ended March 31, 2015
HSBC INDIA OPPORTUNITIES FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 44.6802 34.6079
Regular Plan Dividend Option 19.2581 14.9168
Direct Plan - Growth Option 45.1199 34.7042
Direct Plan - Dividend Option 19.4485 14.9589
High
Regular Plan Growth Option 69.0456 44.6802
Regular Plan Dividend Option 27.8387 19.2581
Direct Plan - Growth Option 70.1769 45.1199
Direct Plan - Dividend Option 28.3179 19.4485
Low
Regular Plan Growth Option 44.6538 31.9568
Regular Plan Dividend Option 19.2467 13.7741
Direct Plan - Growth Option 45.1070 32.1352
Direct Plan - Dividend Option 19.4429 13.8515
End
Regular Plan Growth Option 65.1082 44.6802
Regular Plan Dividend Option 23.6325 19.2581
Direct Plan - Growth Option 66.2199 45.1199
Direct Plan - Dividend Option 25.2658 19.4485
2. Closing Assets Under Management (Rs. in Lakhs)
End 45,615 17,756
Average (AAuM)1 31,733 18,217
3. Gross income as % of AAuM2 11.50% 13.46%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Plan 2.67% 2.78%
Regular Plan Dividend Option 2.67% 2.78%
Direct Plan 1.97% 2.08%
Direct Plan - Dividend Option 1.97% 2.08%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.04% 1.59%
Regular Plan Dividend Option 1.04% 1.59%
Direct Plan 1.04% 1.59%
Direct Plan - Dividend Option 1.04% 1.59%
15
HSBC INDIA OPPORTUNITIES FUND 7
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC INDIA OPPORTUNITIES FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
5. Net Income as a percentage of AAuM3 8.83% 10.69%
6. Portfolio turnover ratio4 0.41 0.84
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option 4.20 –
Direct Plan - Dividend Option 3.00 –
Corporate
Regular Plan Dividend Option 4.20 –
Direct Plan - Dividend Option 3.00 –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 45.7205 28.0042
Direct Plan - Growth Option 46.7643 28.9045
Benchmark
S&P BSE500 32.9700 16.4870
b. Since Inception
Scheme
Regular Plan Growth Option 18.3787 15.9689
Direct Plan - Growth Option 27.6871 14.1639
Benchmark
S&P BSE500 15.3900 13.7607
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue Account i.e. Income.3. Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AUM for the year.
16
7 HSBC INDIA OPPORTUNITIES FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC INDIA OPPORTUNITIES FUND1 Investments:
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 is NIL.
1.3. Investments in Associates and Group Companies:(Rupees)
Issuer Instrument Type
Amount Aggregate Investments
by all schemes
Amount Aggregate Investments
by all schemes
2015 2014
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
– 1,607,345,350 – 555,832,950
Equities 105,927,700 215,829,290 – –
Bharti Airtel Ltd. Equities – 12,741,680 12,842,030 76,306,283
Steel Authority of India Ltd.
Commercial Paper
– – – 1,243,550,000
Shriram Equipment Finance Co Ltd.
Commercial Paper
– – – 492,702,500
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of fi nancial years ended 2015 and 2014 are NIL.
1.5. The NPAs as on March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial Years March 31, 2015 and March 31, 2014 are as under :
Security Category Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 1,238,248,708 27.15 506,221,525 28.51
– Depreciation 49,125,417 1.08 2,558,061 0.14
1.7. The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) is Rs. 2,895,842,985 and Rs. 1,285,504,625 respectively being 91.26% and 40.51% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) is Rs.1,530,778,108 and Rs. 2,319,712,274 respectively being 84.03% and 127.34% of the average daily net assets.
1.8. Non-Traded securities in the portfolio as on March 31, 2015 and March 31, 2014 are Nil.
17
HSBC INDIA OPPORTUNITIES FUND 7
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2014-2015 168.02 46.55 9,807,628 24.59
HSBC InvestDirect Secur it ies ( India) Limited
Associate of the Investment
Manager
2014-2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the
Investment Manager
2013-2014
5.80 26.77 5,566,261 48.11
HSBC InvestDirect Secur i t ies ( Ind ia ) Limited
Associate of the Investment
Manager
2013-2014
– – 15,679 0.14
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 17.34 4.15 207,745 4.15
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 11.46 3.02 137,287 3.06
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
18
7 HSBC INDIA OPPORTUNITIES FUND
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
14,850,667.943 37,714,885.044 13,787,642.773 38,777,910.214 10
Regular Plan Dividend Option
57,375,331.605 51,110,664.977 21,844,915.483 86,641,081.099 10
Direct Plan - Growth Option
125,444.589 514,390.860 389,350.496 250,484.953 10
Direct Plan - Dividend Option
76,278.072 646,812.682 296,142.763 426,947.991 10
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
28,672,213.039 3,888,068.582 17,709,613.678 14,850,667.943 10
Regular Plan Dividend Option
76,009,239.085 2,217,961.655 20,851,869.135 57,375,331.605 10
Direct Plan - Growth Option
21,869.368 110,598.896 7,023.675 125,444.589 10
Direct Plan - Dividend Option
8,011.816 80,894.093 12,627.837 76,278.072 10
5 Previous years fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 156,738 (2014: Rs. 1,898,871) represents Exit load (net of service tax) credited to the scheme and AMC Recoverable on account of missed transactions.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
19
HSBC INDIA OPPORTUNITIES FUND 7
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
7 HSBC INDIA OPPORTUNITIES FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC INDIA OPPORTUNITIES FUND 7
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22
7 HSBC INDIA OPPORTUNITIES FUND
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HSBC INDIA OPPORTUNITIES FUND 7
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7 HSBC INDIA OPPORTUNITIES FUND
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25
HSBC INDIA OPPORTUNITIES FUND 7
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
19-S
ep-2
014
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n O
ffsh
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Ltd.
AG
M�
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inst
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n O
ffsh
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Ltd.
AG
M�
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and
Nat
ural
Gas
Cor
pora
tion
Ltd.
AG
M�
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rFo
r
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ep-2
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arat
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te P
etro
net L
imite
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For
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abul
ls H
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nanc
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26
7 HSBC INDIA OPPORTUNITIES FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
Shar
ehol
ders
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posa
ls
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abul
ls H
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g Fi
nanc
e Lt
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�N
one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC INDIA OPPORTUNITIES FUND 7
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Midcap Equity FundAn open-ended Diversifi ed Equity Scheme
Abridged Annual Report 2014 - 2015
HSBC MIDCAP EQUITY FUND
1
HSBC MIDCAP EQUITY FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC MIDCAP EQUITY FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC MIDCAP EQUITY FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC MIDCAP EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Midcap Equity Fund (HMEF) – an open-ended diversifi ed Equity Scheme*HMEF seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities primarily being midcap stocks. However, it could move a portion of its assets towards fi xed income securities if the fund manager becomes negative on the Indian equity markets.
The net assets of HMEF amounted to Rs. 359.12 crores as at March 31, 2015 as compared to Rs. 82.03 crores as at March 31, 2014. Around 99.55 % of the net assets were invested in equities, 1.25% of the net assets were invested in reverse repos / CBLO and (-0.80 %) were in the net current assets as at March 31, 2015.
HMEF has done well in terms of outperformance v/s benchmark due to stock selection across various sectors for the period 2014-15. The focus on reasonable growth oriented companies available at attractive valuations (PB/ROE) paid off. HMEF continues to be overweight in Auto Ancillary, Agro Chemicals, Capital Goods, Financials, Industrials and underweight in FMCG sector.
Date of Inception : 19 May 2005 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Midcap Equity Fund - Growth 66.69 28.40 -8.82 14.31
S&P BSE Midcap (Scheme Benchmark) 49.48 13.86 -4.30 12.72
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 15.83
Rs. 10,000, if invested in HMEF, would have become 16,669 12,840 9,118 37,456
Rs. 10,000, if invested in S&P BSE Midcap, would have become
14,948 11,386 9,570 32,618
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 42,674
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
*HSBC Small Cap Fund merged with HMEF with effect from April 26, 2014 and consequently ceases to exist.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
5
HSBC MIDCAP EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on
6
HSBC MIDCAP EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC MIDCAP EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Midcap Equity Fund 710,187.33 386 2,742,036.18 93
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
HSBC MIDCAP EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC MIDCAP EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
HSBC MIDCAP EQUITY FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Midcap Equity
Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC MIDCAP EQUITY FUND
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC MIDCAP EQUITY FUND
Rs. in Lakhs
HSBC MIDCAP EQUITY FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 11,796.72 4,957.912 Reserves & Surplus2.1 Unit Premium Reserves 2,971.69 (2,252.20)2.2 Unrealised Appreciation Reserve 8,939.14 1,362.052.3 Other Reserves 12,412.08 4,174.383 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 172.88 106.80
TOTAL 36,292.51 8,348.94
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 35,739.51 8,086.131.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares 12.69 –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 35,752.20 8,086.13
2 Deposits 3.59 –3 Other Current Assets3.1 Cash & Bank Balance 9.87 58.123.2 CBLO / Reverse Repo Lending 411.16 173.873.3 Others 115.69 30.824 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 36,292.51 8,348.94
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC MIDCAP EQUITY FUND
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC MIDCAP EQUITY FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 269.44 177.411.2 Interest 59.37 5.891.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale /
redemption of investments2,243.78 (1,534.62)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 5.01 1.36
(A) 2,577.60 (1,349.96)
2 EXPENSES2.1 Management fees 324.50 127.592.2 Service tax on Management fees 40.10 15.772.3 Transfer agents fees and expenses 35.88 10.762.4 Custodian fees 2.93 1.202.5 Trusteeship fees 0.75 0.302.6 Commission to Agents 262.27 49.902.7 Marketing & Distribution expenses – 1.182.8 Audit fees 2.39 1.212.9 Investor Education Expenses 4.82 1.492.10 Other operating expenses 3.90 12.382.11 Less: Expenses to be Reimbursed by the Investment Manager (40.36) (5.23)
(B) 637.18 216.55
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 1,940.42 (1,566.51)
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) – 2,291.92
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 1,940.42 725.41
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 7,577.10 1,362.05
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 9,517.52 2,087.46
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –
7.2 Less: Balance transfer to Unrealised Appreciation Reserve 7,577.10 1,362.05
7.3 Add / (Less): Equalisation 6,297.26 (1,193.26)7.4 Transfer from Reserve Fund 4,174.39 4,642.23
8 Total 12,412.07 4,174.39
9 Dividend Appropriation9.1 Income Distributed during the year – –9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward to Balance sheet 12,412.07 4,174.39
Notes to Accounts - Annexure I
14
HSBC MIDCAP EQUITY FUND
Key Statistics for the year ended March 31, 2015
HSBC MIDCAP EQUITY FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 22.3943 16.9866
Dividend Option 11.9724 9.0813
Direct Plan - Growth Option 22.6130 17.0314
Direct Plan - Dividend Option 12.0885 9.1048
High
Growth Option 39.3837 22.3943
Dividend Option 21.0551 11.9724
Direct Plan - Growth Option 40.0260 22.6130
Direct Plan - Dividend Option 21.3966 12.0885
Low
Growth Option 22.4640 13.5512
Dividend Option 12.0097 7.2447
Direct Plan - Growth Option 22.6838 13.6212
Direct Plan - Dividend Option 12.1264 7.2817
End
Growth Option 37.4445 22.3943
Dividend Option 20.0184 11.9724
Direct Plan - Growth Option 38.0836 22.6130
Direct Plan - Dividend Option 20.3576 12.0885
2. Closing Assets Under Management (Rs. in Lakhs)
End 35,912 8,242
Average (AAuM)1 24,106 7,435
3. Gross income as % of AAuM2 10.69% -18.16%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Plan 2.75% 2.91%
Direct Plan 2.01% 2.21%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.35% 1.72%
Direct Plan 1.35% 1.72%
5. Net Income as a percentage of AAuM3 8.05% -21.07%
15
HSBC MIDCAP EQUITY FUND
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC MIDCAP EQUITY FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
6. Portfolio turnover ratio4 0.34 0.64
7. Total Dividend per unit distributed during the year (planwise)
Retail
Dividend Option – –
Direct Plan - Dividend Option – –
Corporate
Dividend Option – –
Direct Plan - Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Growth Option 67.2055 28.4783
Direct Plan - Growth Option 68.4146 29.3915
Benchmark
S&P BSEMID CAP 49.4800 13.8967
b. Since Inception
Scheme
Growth Option 14.3107 9.5138
Direct Plan - Growth Option 31.2580 7.4221
Benchmark
S&P BSEMID CAP 12.7200 9.1895
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
16
HSBC MIDCAP EQUITY FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC MIDCAP EQUITY FUND1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL
1.3. Investments in Associates and Group Companies as of years ended March 31, 2015 are NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2015 and March 31, 2014 are as under :
Security Category Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 1,056,873,943 29.43 238,178,364 28.90
– Depreciation 162,959,718 4.54 101,973,744 12.37
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014 - 2015 (excluding accretion of discount) is Rs. 2,600,224,132 and Rs. 815,704,614 respectively being 107.87% and 33.84% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013 - 2014 (excluding accretion of discount) is Rs. 474,013,676 and Rs. 696,560,504 respectively being 63.75% and 93.69% of the average daily net assets.
1.8. Non-Traded securities: Aggregate fair value of non-traded (including private placement) investments as determined by
HSBC Asset Management (India) Private Limited under the procedures approved by the Board of Trustees as at March 31, 2015 are as follows:
March 31, 2015
Name of Scheme Company Name Fair Value (Rupees) % to Net Assets
HMEF Nirvikara Paper Mills Limited 1,269,109 0.04%
Non-Traded securities in the portfolio as on March 31, 2014 is Nil.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2014-2015 138.44 44.02 4,908,544 20.63
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager
2014-2015 – – – –
17
HSBC MIDCAP EQUITY FUND
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2013-2014 1.74 26.77 923,486 21.14
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager
2013-2014 – – 4,031 0.09
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor /AMC and its associates / related parties / group companies
Nature of Association /Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage
paid by the fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 4.20 1.32 50,380 1.33
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
(on accrual basis)
% of total brokerage
paid by the fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 1.55 1.32 18,595 1.33
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Transferred on account of merger
Redemption Closing Units Face Value
per unit (Rupees)
Growth Option
22,042,571.486 54,569,563.557 4,268,352.607 27,160,600.289 53,719,887.361 10
Dividend Option
27,426,201.574 31,283,357.558 3,544,019.851 15,528,102.938 46,725,476.045 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
18
HSBC MIDCAP EQUITY FUND
Description
2014-2015
Opening Units Subscription Transferred on account of merger
Redemption Closing Units Face Value
per unit (Rupees)
Direct Plan - Growth Option
85,136.205 20,071,240.508 36,973.808 2,796,317.127 17,397,033.394 10
Direct Plan - Dividend Option
25,235.144 980,490.612 19,595.316 900,524.756 124,796.316 10
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Growth Option 29,433,413.197 2,499,255.878 9,890,097.589 22,042,571.486 10
Dividend Option 35,498,219.471 725,397.190 8,797,415.087 27,426,201.574 10
Direct Plan - Growth Option
30,411.628 147,858.915 93,134.338 85,136.205 10
Direct Plan - Dividend Option
8,570.423 31,592.214 14,927.493 25,235.144 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other Income of Rs. 501,122 (2014: Rs. 135,909) represents Exit load (net of service tax) credited to the Scheme and Printing & Stationery balance of previous year written back.
9 Merger of HSBC Small Cap Fund (HSCF) with HSBC Midcap Equity Fund (HMEF)
Pursuant to SEBI approval vide its letter dated February 6, 2014 , HSBC Small Cap Fund (HSCF) was merged with HSBC Mid Cap Equity Fund (HMEF) as at the close of April 25, 2014, by virtue of which net assets of HSCF as at close of April 25, 2014 aggregating to Rs. 449.40 Lacs for Dividend Option, Rs 1,012.41 Lacs for Growth Option, Rs. 2.51 Lacs for Direct Plan Dividend Option and Rs. 8.86 Lacs for Direct Plan Growth Option, less tax deducted at source, if any, were merged with the Dividend Option, Growth Option, Direct Plan Dividend Option and Direct Plan Growth Option of HMEF respectively.
Accordingly, Unit holders of the respective Options of HSCF were allotted units based on net asset value per unit of respective Options of HMEF as on April 25, 2014.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
19
HSBC MIDCAP EQUITY FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC MIDCAP EQUITY FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC MIDCAP EQUITY FUND
Det
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HSBC MIDCAP EQUITY FUND
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26
HSBC MIDCAP EQUITY FUND
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hang
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ses
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ity &
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27
HSBC MIDCAP EQUITY FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Progressive Themes Fund
HSBC Progressive Themes FundAn open-ended Flexi-theme Equity Scheme
Abridged Annual Report 2014 - 2015
1
HSBC Progressive Themes Fund
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC Progressive Themes Fund
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC Progressive Themes Fund
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC Progressive Themes Fund
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Progressive Themes Fund (HPTF) – an open-ended fl exi-theme Equity SchemeHPTF seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities by investing primarily in sectors, areas and themes that play an important role in, and / or benefi t from, India’s progress, reform process and economic development.
The net assets of HPTF amounted to Rs. 145.82 crores as at March 31, 2015 as compared to Rs. 110.41 crores as at March 31, 2014. Around 99.17% of the net assets were invested in equities, 1.60% of the net assets were invested in reverse repos / CBLO and (-0.77%) were in the net current assets as at March 31, 2015.
HPTF is a theme based scheme. The focus being on Infrastructure considerably out-performed its benchmark during the year 2014-15.
Date of Inception : 23 February 2006 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Progressive Themes Fund – Growth 73.87 4.65 -10.58 7.26
S&P BSE 200 (Scheme Benchmark) 31.72 16.65 5.41 11.82
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 11.85
Rs. 10,000, if invested in HPTF, would have become 17,387 10,465 8,942 18,932
Rs. 10,000, if invested in S&P BSE 200, would have become
13,172 11,665 10,541 27,660
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 27,728
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Trustees’ ReportFor the year ended March 31, 2015
5
HSBC Progressive Themes Fund
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
6
HSBC Progressive Themes Fund
actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7
HSBC Progressive Themes Fund
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Progressive Themes Fund 652,307.03 331 5,679,432.36 393
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8
HSBC Progressive Themes Fund
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
9
HSBC Progressive Themes Fund
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
HSBC Progressive Themes Fund
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Progressive
Themes Fund, (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC Progressive Themes Fund
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet, Revenue Account dealt with by this report has been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC Progressive Themes Fund
Rs. in Lakhs
HSBC PROGRESSIVE THEMES FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 8,284.61 10,894.482 Reserves & Surplus2.1 Unit Premium Reserves (12,094.55) (14,443.44)2.2 Unrealised Appreciation Reserve 5,354.84 –2.3 Other Reserves 13,029.12 14,584.773 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 188.54 195.42
TOTAL 14,762.56 11,231.23
ASSETS –1 Investments1.1 Listed Securities:1.1.1 Equity Shares 14,462.19 11,030.421.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 14,462.19 11,030.422 Deposits 0.32 –3 Other Current Assets3.1 Cash & Bank Balance 4.63 4.413.2 CBLO / Reverse Repo Lending 232.98 102.813.3 Others 62.44 93.594 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 14,762.56 11,231.23
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC Progressive Themes Fund
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC PROGRESSIVE THEMES FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 227.26 344.651.2 Interest 16.64 11.191.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments1,927.68 (2,398.98)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.13 0.84
(A) 2,171.71 (2,042.30)
2 EXPENSES2.1 Management fees 246.09 172.982.2 Service tax on Management fees 30.41 21.382.3 Transfer agents fees and expenses 21.68 15.032.4 Custodian fees 1.70 1.872.5 Trusteeship fees 0.48 0.422.6 Commission to Agents 84.10 59.472.7 Marketing & Distribution expenses 16.47 20.452.8 Audit fees 0.98 1.622.9 Investor Education Expenses 2.89 2.092.10 Other operating expenses 4.57 6.902.11 Less: Expenses to be Reimbursed by the Investment
Manager– –
(B) 409.37 302.21
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 1,762.34 (2,344.51)
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) 426.26 2,810.02
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 2,188.60 465.50
6 Change in unrealised appreciation inthe value of investments and derivatives (F) (5,354.84) –
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) (3,166.24) 465.50
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 5,354.84 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – –7.3 Add / (Less): Equalisation (3,744.23) (3,140.73)
7.4 Transfer from Reserve Fund 14,584.75 17,259.99
8 Total 13,029.12 14,584.76
9 Dividend Appropriation9.1 Income Distributed during the year – –9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forwardto Balance Sheet 13,029.12 14,584.76
Notes to Accounts - Annexure I
14
HSBC Progressive Themes Fund
Key Statistics for the year ended March 31, 2015
HSBC PROGRESSIVE THEMES FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.8952 10.2116
Dividend Option 9.2675 8.6860
Direct Plan - Growth Option 11.0005 10.2383
Direct Plan - Dividend Option 9.3568 8.7084
High
Growth Option 19.5689 10.8952
Dividend Option 16.6452 9.2675
Direct Plan - Growth Option 19.8838 11.0005
Direct Plan - Dividend Option 16.9159 9.3568
Low
Growth Option 10.8871 7.2629
Dividend Option 9.2605 6.1778
Direct Plan - Growth Option 10.9925 7.3000
Direct Plan - Dividend Option 9.3499 6.2091
End
Growth Option 18.9292 10.8952
Dividend Option 16.1011 9.2675
Direct Plan - Growth Option 19.2475 11.0005
Direct Plan - Dividend Option 16.3734 9.3568
2. Closing Assets Under Management (Rs. in Lakhs)
End 14,582 11,036
Average (AAuM)1 14,443 10,469
3. Gross income as % of AAuM2 15.04% -19.51%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Plan 2.84% 2.89%
Direct Plan 2.12% 2.19%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.70% 1.65%
Direct Plan 1.70% 1.65%
5. Net Income as a percentage of AAuM3 12.20% -22.39%
6. Portfolio turnover ratio4 0.11 0.24
15
HSBC Progressive Themes Fund
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC PROGRESSIVE THEMES FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
7. Total Dividend per unit distributed during the year (planwise)
Retail
Dividend Option – –
Direct Plan - Dividend Option – –
Corporate
Dividend Option – –
Direct Plan - Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Growth Option 73.7389 4.6586
Direct Plan - Growth Option 74.9693 5.3947
Benchmark
S&P BSE200 31.7200 16.6967
b. Since Inception
Scheme
Growth Option 7.2606 1.0636
Direct Plan - Growth Option 21.3725 (9.5483)
Benchmark
S&P BSE200 11.8200 9.5592
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
16
HSBC Progressive Themes Fund
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC PROGRESSIVE THEMES FUND1 Investments:
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL
1.3. Investments in Associates and Group Companies as of years ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years and percentage to net assets are as under :
Company Name Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 694,242,425 47.61 211,874,667 19.20
– Depreciation 158,758,383 10.89 254,500,462 23.06
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 152,990,696 and Rs. 580,691,388 respectively being 10.59% and 40.21% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-2014 (excluding accretion of discount) is Rs. 247,066,449 and Rs. 484,724,745 respectively being 23.60% and 46.30% of the average daily net assets.
1.8. Non-Traded securities in the portfolio as on March 31, 2015 and March 31, 2014 is Nil
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates/related parties / group companies
Name of Sponsor /AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 0.01 0.13 835,614 10.83
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015 – – – –
17
HSBC Progressive Themes Fund
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 0.09 4.63 586,358 10.71
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – 10,687 0.20
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transaction of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 1.25 1.70 14,960 1.71
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transaction of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 1.72 2.35 20,643 2.40
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014 :
Description
2014 - 2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Growth Option 57,469,139.289 2,759,708.164 16,822,364.568 43,406,482.885 10
Dividend Option 51,231,421.043 2,639,985.600 14,705,318.171 39,166,088.472 10
Direct Plan - Growth Option
224,888.441 279,110.767 275,497.840 228,501.368 10
Direct Plan - Dividend Option
19,387.612 644,555.975 618,884.015 45,059.572 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
18
HSBC Progressive Themes Fund
Description
2013 - 2014
Opening Units Subscription Redemption Closing Units Face Value
per unit (Rupees)
Growth Option 74,154,312.625 363,981.803 17,049,155.139 57,469,139.289 10
Dividend Option 62,923,931.960 505,585.706 12,198,096.623 51,231,421.043 10
Direct Plan - Growth Option
13,105.277 255,828.419 44,045.255 224,888.441 10
Direct Plan - Dividend Option
12,268.093 12,122.647 5,003.128 19,387.612 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other Income of Rs. 13,440 (2014: Rs. 84,445) represents Exit load (net of service tax) credited to the Scheme.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
19
HSBC Progressive Themes Fund
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC Progressive Themes Fund
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC Progressive Themes Fund
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M)
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luti
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC Progressive Themes Fund
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Progressive Themes Fund
HSBC TAX SAVER EQUITY FUND
HSBC Tax Saver Equity FundAn open-ended Equity Linked Savings Scheme
Abridged Annual Report 2014 - 2015
1
HSBC TAX SAVER EQUITY FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC TAX SAVER EQUITY FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC TAX SAVER EQUITY FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC TAX SAVER EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Tax Saver Equity Fund (HTSF) - an open ended Equity linked Savings Scheme
HTSF seeks to provide long term capital appreciation by investing in a diversifi ed portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalization bias. The Fund may also invest in fi xed income securities.
The net assets of HTSF amounted to Rs. 189.70 crores as at March 31, 2015 compared to Rs 180.73 crores as at March 31, 2014. Around 99.27 % of the net assets were invested in equities, 1.16% of the net assets were invested in reverse repos / CBLO and (-0.43%) were in the net current assets as at March 31, 2015.
HTSF outperformed its benchmark during most of the time frames due to reasonable stock selection and the approach of creating a stable and quality portfolio. Going forward, the portfolio would be managed in a similar fashion of bottom up stock picking approach following our valuation - profi tability framework of price to book / ROE balanced by adequate risk management.
Date of Inception : 5 January 2007 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Tax Saver Equity Fund – Growth 39.09 22.52 11.90 12.70
S&P BSE 200 (Scheme Benchmark) 31.72 16.65 5.41 9.59
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 9.62
Rs. 10,000, if invested in HTSF, would have become 13,909 12,252 11,190 26,786
Rs. 10,000, if invested in S&P BSE 200, would have become
13,172 11,665 10,541 21,269
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 21,317
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
5
HSBC TAX SAVER EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
6
HSBC TAX SAVER EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC TAX SAVER EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Tax Saver Equity Fund 61,364.17 76 2,913,304.05 171
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
HSBC TAX SAVER EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC TAX SAVER EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
HSBC TAX SAVER EQUITY FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Tax Saver Equity
Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC TAX SAVER EQUITY FUND
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC TAX SAVER EQUITY FUND
Rs. in Lakhs
HSBC TAX SAVER EQUITY FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 7,746.99 9,631.012 Reserves & Surplus2.1 Unit Premium Reserves (3,115.93) (2,445.58)2.2 Unrealised Appreciation Reserve 5,684.51 4,580.002.3 Other Reserves 8,666.50 6,308.093 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 343.13 343.96
TOTAL 19,325.20 18,417.48
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 18,828.54 17,972.081.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 18,828.54 17,972.08
2 Deposits 0.21 –3 Other Current Assets3.1 Cash & Bank Balance 209.22 227.913.2 CBLO / Reverse Repo Lending 219.79 126.283.3 Others 67.44 91.214 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 19,325.20 18,417.48
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC TAX SAVER EQUITY FUND
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC TAX SAVER EQUITY FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 228.90 234.981.2 Interest 14.10 14.851.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 5,478.26 2,019.551.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – 0.00
(A) 5,721.26 2,269.38
2 EXPENSES2.1 Management fees 310.08 266.212.2 Service tax on Management fees 38.32 32.902.3 Transfer agents fees and expenses 28.99 24.592.4 Custodian fees 2.91 2.542.5 Trusteeship fees 0.79 0.692.6 Commission to Agents 150.11 157.932.7 Marketing & Distribution expenses 0.65 –2.8 Audit fees 1.28 2.662.9 Investor Education Expenses 3.92 3.402.10 Other operating expenses 6.10 10.552.11 Less: Expenses to be Reimbursed by the Investment Manager – (26.00)
(B) 543.15 475.48
3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 5,178.11 1,793.90
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 5,178.11 1,793.90
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 1,104.51 1,801.78
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 6,282.62 3,595.68
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 1,104.51 1,801.787.3 Add / (Less): Equalisation (1,637.26) (1,343.22)7.4 Transfer from Reserve Fund 6,308.08 5,857.41
8 Total 9,848.93 6,308.08
9 Dividend Appropriation9.1 Income Distributed during the year 1,182.43 –
9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 8,666.50 6,308.08
Notes to Accounts - Annexure I
14
HSBC TAX SAVER EQUITY FUND
Key Statistics for the year ended March 31, 2015
HSBC TAX SAVER EQUITY FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 19.3105 15.6680
Regular Plan Dividend Option 17.8100 14.4505
Direct Plan - Growth Option 19.5010 15.7114
Direct Plan - Dividend Option 17.9850 14.4900
High
Regular Plan Growth Option 28.5181 19.3105
Regular Plan Dividend Option 24.5173 17.8100
Direct Plan - Growth Option 28.9861 19.5010
Direct Plan - Dividend Option 24.9433 17.9850
Low
Regular Plan Growth Option 19.1048 13.6595
Regular Plan Dividend Option 17.6203 12.5980
Direct Plan - Growth Option 19.2959 13.7376
Direct Plan - Dividend Option 17.7958 12.6697
End
Regular Plan Growth Option 26.7780 19.3105
Regular Plan Dividend Option 20.6127 17.8100
Direct Plan - Growth Option 27.2337 19.5010
Direct Plan - Dividend Option 21.0259 17.9850
2. Closing Assets Under Management (Rs. in Lakhs)
End 18,970 18,073
Average (AAuM)1 19,617 17,021
3. Gross income as % of AAuM2 29.16% 13.33%
4. Expense Ratio:
a. Total Expense as % of AAuM (Inclusive of Service Tax on Management Fees) (planwise)
Regular Plan 2.77% 2.80%
Regular Plan Dividend Option 2.77% 2.80%
Direct Plan 2.07% 2.09%
Direct Plan - Dividend Option 2.07% 2.09%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.58% 1.56%
Regular Plan Dividend Option 1.58% 1.56%
Direct Plan 1.58% 1.56%
Direct Plan - Dividend Option 1.58% 1.56%
5. Net Income as a percentage of AAuM3 26.40% 10.54%
15
HSBC TAX SAVER EQUITY FUND
HSBC TAX SAVER EQUITY FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
6. Portfolio turnover ratio4 0.47 0.79
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option 4.00 –
Direct Plan - Dividend Option 4.00 –
Corporate
Regular Plan Dividend Option 4.00 –
Direct Plan - Dividend Option 4.00 –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 38.6707 22.5826
Direct Plan - Growth Option 39.6528 23.4492
Benchmark
S&P BSE200 31.7200 16.6967
b. Since Inception
Scheme
Regular Plan Growth Option 12.7003 9.5174
Direct Plan - Growth Option 23.5007 11.8803
Benchmark
S&P BSE200 9.5900 6.8183
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue Account i.e. Income.3. Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
HSBC TAX SAVER EQUITY FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC TAX SAVER EQUITY FUND
1 Investments:
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 is NIL.
1.3. Investments in Associates and Group Companies are as under :
(Rupees)
Issuer Instrument Type
Amount Aggregate Investments
by all schemes
Amount Aggregate Investments
by all schemes
2015 2014
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
– 1,607,345,350 – 555,832,950
Equities – 215,829,290
Bharti Airtel Ltd. Equities – 12,741,680 9,859,610 76,306,283
Steel Authority of India Ltd.
Commercial Paper
– – – 1,243,550,000
Shriram Equipment Finance Co Ltd.
Commercial Paper
– – – 492,702,500
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of the years ended 31 March, 2015 is NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year and their percentages to net assets are as under:
Company Name Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 630,457,909 33.23 478,762,105 26.49
– Depreciation 62,007,223 3.27 20,762,515 1.15
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) is Rs. 913,780,521 and Rs. 1,486,412,318 respectively being 46.58% and 75.77% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) is Rs. 1,351,963,079 and Rs. 1,726,612,915 respectively being 79.43% and 101.44% of the average daily net assets.
1.8. Non-Traded securities in the portfolio of the scheme as of the Years ended March 31, 2015 and March 31, 2014 are NIL
17
HSBC TAX SAVER EQUITY FUND
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor/AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015
0.65 9.06 366,421 2.66
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015
– – – –
Name of Sponsor/AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 0.50 5.60 307,232 2.37
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – 26,654 0.21
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs. ]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 2.45 1.02 29,392 1.03
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs. ]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 2.65 0.86 31,844 0.86
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
18
HSBC TAX SAVER EQUITY FUND
3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Growth Option
61,044,412.634 1,603,072.445 14,173,581.927 48,473,903.152 10
Dividend Option
34,916,628.096 691,059.881 7,105,904.529 28,501,783.448 10
Direct Plan - Growth Option
268,115.150 99,949.834 – 368,064.984 10
Direct Plan - Dividend Option
80,916.869 45,263.162 – 126,180.031 10
Description
2013-2014
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Growth Option
76,390,937.051 2,940,014.266 18,286,538.683 61,044,412.634 10
Dividend Option
44,168,772.227 1,282,537.730 10,534,681.861 34,916,628.096 10
Direct Plan - Growth Option
113,998.957 154,116.193 – 268,115.150 10
Direct Plan - Dividend Option
37,948.627 42,968.242 – 80,916.869 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of NIL (2014: Rs. 143 represents Recovery from CAMS towards error in redemption processing).
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
19
HSBC TAX SAVER EQUITY FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC TAX SAVER EQUITY FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC TAX SAVER EQUITY FUND
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HSBC TAX SAVER EQUITY FUND
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HSBC TAX SAVER EQUITY FUND
Mee
ting
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eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
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vest
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ny’s
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HSBC TAX SAVER EQUITY FUND
Mee
ting
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eCo
mpa
ny N
ame
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of
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ting
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M)
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luti
on N
umbe
rIn
vest
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ompa
ny’s
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one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC TAX SAVER EQUITY FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
1
HSBC DYNAMIC FUND 8
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
8 HSBC DYNAMIC FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC DYNAMIC FUND 8
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
8 HSBC DYNAMIC FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Dynamic Fund (HDF) - an open-ended SchemeHDF seeks to provide long term capital appreciation by allocating funds in equity and equity related instruments. It also has the fl exibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative.
The net assets of HDF amounted to Rs. 63.19 crores as at March 31, 2015 compared to Rs. 76.12 crores as at March 31, 2014. Around 69.33% of the net assets were invested in equities, 31.23% of the net assets were invested in reverse repos / CBLO and (-0.56%) were in net current assets as at March 31, 2015.
HDF has underperformed its benchmark over the period 2014-15 due to high cash balance. The scheme allocates capital across equity and debt securities dynamically. In a year when equity market was rising, thus becoming more expensive and debt market being cheap, the dynamic allocation to cash kept on rising through the year. An average cash balance of approx. 31% through the year was the main reason of underperformance.
Date of Inception : 24 September 2007 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Dynamic Fund - Growth 23.22 13.20 1.59 4.37
S&P BSE 200 (Scheme Benchmark) 31.72 16.65 5.41 7.38
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 7.49
Rs. 10,000, if invested in HDF, would have become 12,322 11,320 10,159 13,796
Rs. 10,000, if invested in S&P BSE 200, would have become
13,172 11,665 10,541 17,086
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 17,218
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance
5
HSBC DYNAMIC FUND 8
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
6
8 HSBC DYNAMIC FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC DYNAMIC FUND 8
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Dynamic Fund – – 2,545,103.96 97
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
8 HSBC DYNAMIC FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC DYNAMIC FUND 8
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
8 HSBC DYNAMIC FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Dynamic Fund
(the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian /others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC DYNAMIC FUND 8
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account, dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
8 HSBC DYNAMIC FUND
Rs. in Lakhs
HSBC DYNAMIC FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 4,575.82 6,816.142 Reserves & Surplus2.1 Unit Premium Reserves (3,971.45) (5,180.88)2.2 Unrealised Appreciation Reserve 1,027.23 1,506.612.3 Other Reserves 4,681.06 4,464.603 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 72.41 123.84
TOTAL 6,385.07 7,730.31
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 4,381.30 6,100.211.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 4,381.30 6,100.212 Deposits 2.81 –3 Other Current Assets3.1 Cash & Bank Balance 4.72 2.623.2 CBLO / Reverse Repo Lending 1,973.65 1,599.413.3 Others 22.59 28.074 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 6,385.07 7,730.31
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC DYNAMIC FUND 8
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC DYNAMIC FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 59.59 171.491.2 Interest 175.09 115.651.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments1,902.23 981.45
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 2.96 23.97
(A) 2,139.87 1,292.56
2 EXPENSES2.1 Management fees 112.69 166.192.2 Service tax on Management fees 13.93 20.542.3 Transfer agents fees and expenses 10.00 14.292.4 Custodian fees 0.58 1.472.5 Trusteeship fees 0.23 0.412.6 Commission to Agents 49.62 80.722.7 Marketing & Distribution expenses 6.93 –2.8 Audit fees 0.43 1.122.9 Investor Education Expenses 1.36 2.032.10 Other operating expenses 2.08 5.632.11 Less: Expenses to be Reimbursed by the Investment
Manager– –
(B) 197.85 292.40
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 1,942.02 1,000.17
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 1,942.02 1,000.17
6 Change in unrealised appreciation inthe value of investments and derivatives (F) (479.39) 142.28
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,462.63 1,142.44
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 479.39 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 142.287.3 Add / (Less): Equalisation (1,725.56) (3,858.74)
7.4 Transfer from Reserve Fund 4,464.60 7,323.18
8 Total 4,681.06 4,464.60
9 Dividend Appropriation9.1 Income Distributed during the year – –9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 4,681.06 4,464.60
Notes to Accounts - Annexure I
14
8 HSBC DYNAMIC FUND
Key Statistics for the year ended March 31, 2015
HSBC DYNAMIC FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 11.1594 9.7899
Regular Plan Dividend Option 11.1594 9.7899
Direct Plan - Growth Option 11.2637 9.8125
Direct Plan - Dividend Option 11.2637 9.8125
High
Regular Plan Growth Option 14.3952 11.1668
Regular Plan Dividend Option 14.3952 11.1668
Direct Plan - Growth Option 14.6241 11.2706
Direct Plan - Dividend Option 14.6241 11.2706
Low
Regular Plan Growth Option 11.1639 9.1227
Regular Plan Dividend Option 11.1639 9.1227
Direct Plan - Growth Option 11.2698 9.1689
Direct Plan - Dividend Option 11.2698 9.1689
End
Regular Plan Growth Option 13.7952 11.1594
Regular Plan Dividend Option 13.7952 11.1594
Direct Plan - Growth Option 14.0220 11.2637
Direct Plan - Dividend Option 14.0220 11.2637
2. Closing Assets Under Management (Rs. in Lakhs)
End 6,319 7,606
Average (AAuM)1 6,816 10,151
3. Gross income as % of AAuM2 31.39% 12.73%
4. Expense Ratio:
a. Total Expense as % of AAuM (Inclusive of Service Tax on Management Fees) (planwise)
Regular Plan 2.90% 2.88%
Regular Plan Dividend Option 2.90% 2.88%
Direct Plan 2.20% 2.20%
Direct Plan - Dividend Option 2.20% 2.20%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.65% 1.64%
Regular Plan Dividend Option 1.65% 1.64%
Direct Plan 1.65% 1.64%
Direct Plan - Dividend Option 1.65% 1.64%
15
HSBC DYNAMIC FUND 8
HSBC DYNAMIC FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
5. Net Income as a percentage of AAuM3 28.49% 9.85%
6. Portfolio turnover ratio4 0.56 0.83
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
Corporate
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 23.6195 13.2366
Direct Plan - Growth Option 24.4884 14.0308
Benchmark
S&PBSE200 31.7200 16.6967
b. Since Inception
Scheme
Regular Plan Growth Option 4.3709 1.6966
Direct Plan - Growth Option 13.0034 4.3599
Benchmark
S&PBSE200 7.3800 4.0420
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue Account i.e. Income.3. Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
8 HSBC DYNAMIC FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC DYNAMIC FUND
1 Investments:
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives amount as of years ended March 31, 2015 and March 31, 2014 is NIL.
1.3. Investments in Associates and Group Companies :(Rupees)
Issuer Instrument Type
Amount Aggregate Investments
by all schemes
Amount Aggregate Investments
by all schemes
2015 2014
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
– 1,607,345,350 – 555,832,950
Equities – 215,829,290 – –
Bharti Airtel Ltd. Equities 12,741,680 12,741,680 33,484,367 76,306,283
Steel Authority of India Ltd.
Commercial Paper
– – – 1,243,550,000
Shriram Equipment Finance Co Ltd.
Commercial Paper
– – – 492,702,500
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 is NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial Year and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 112,551,289 17.81 153,932,096 20.24
– Depreciation 9,828,555 1.56 3,270,760 0.43
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014 - 2015 (excluding accretion of discount) is Rs. 384,045,452 and Rs. 698,221,029 respectively being 56.34% and 102.43% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013 - 2014 (excluding accretion of discount) is Rs. 847,412,218 and Rs. 1,617,613,014 respectively being 83.48% and 159.35% of the average daily net assets.
1.8. Non-Traded securities in the portfolio of the scheme as of the Years ended March 31, 2015 and March 31, 2014 are NIL.
17
HSBC DYNAMIC FUND 8
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 2.38 61.44 1,791,466 39.06
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2014-2015 – – – –
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 1.84 16.64 4,344,043 51.90
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2013-2014 – – 4,527 0.05
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 9.17 8.47 109,942 8.47
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 35.33 14.33 424,370 14.35
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
18
8 HSBC DYNAMIC FUND
Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
39,091,052.981 1,155,359.730 15,505,212.396 24,741,200.315 10
Regular Plan Dividend Option
28,980,637.319 962,372.699 9,024,476.149 20,918,533.869 10
Direct Plan - Growth Option
85,429.725 32,268.401 21,627.714 96,070.412 10
Direct Plan - Dividend Option
4,285.323 93.940 1,984.911 2,394.352 10
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
79,606,995.946 8,055,856.308 48,571,799.273 39,091,052.981 10
Regular Plan Dividend Option
56,212,092.195 533,306.963 27,764,761.839 28,980,637.319 10
Direct Plan - Growth Option
6,205.078 86,323.250 7,098.603 85,429.725 10
Direct Plan - Dividend Option
2,270.830 2,789.356 774.863 4,285.323 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 296,562 (2014: Rs. 2,397,119) represents Exit load (net of service tax) credited to the scheme and Compensation for trade error.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
19
HSBC DYNAMIC FUND 8
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
8 HSBC DYNAMIC FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC DYNAMIC FUND 8
Det
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22
8 HSBC DYNAMIC FUND
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HSBC DYNAMIC FUND 8
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8 HSBC DYNAMIC FUND
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tain
25
HSBC DYNAMIC FUND 8
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
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ny’s
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ent
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mm
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26
8 HSBC DYNAMIC FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
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�N
one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC DYNAMIC FUND 8
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Dividend Yield Equity Fund(Formerly HSBC Unique Opportunities Fund)An open-ended Equity Scheme
Abridged Annual Report 2014 - 2015
HSBC DIVIDEND YIELD EQUITY FUND 9
1
HSBC DIVIDEND YIELD EQUITY FUND 9
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
9 HSBC DIVIDEND YIELD EQUITY FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC DIVIDEND YIELD EQUITY FUND 9
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
9 HSBC DIVIDEND YIELD EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Dividend Yield Equity Fund (HDYF) - an open ended Scheme*HDYF aims to provide long-term growth from a diversifi ed portfolio of equities and equity related instruments.
The net assets of HDYF amounted to Rs. 48.27 crores as at March 31, 2015 compared to Rs. 46.12 crores as at March 31, 2014. Around 97.95 % of the net assets were invested in equities, 2.44% of the net assets were invested in reverse repos / CBLO and (-0.39%) were in net current assets as at March 31, 2015.
During the period 2014-2015, HDYF was overweight on consumer discretionary and materials (domestic cyclicals) which helped the fund to outperform its benchmark.
Date of Inception : 21 March 2007 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Dividend Yield Equity Fund – Growth 33.35 17.03 4.82 6.63
S&P BSE 200 (Scheme Benchmark) 31.72 16.65 5.41 10.91
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 10.66
Rs. 10,000, if invested in HUOF, would have become 13,335 11,703 10,482 16,751
Rs. 10,000, if invested in S&P BSE 200, would have become
13,172 11,665 10,541 22,981
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 11,753 10,693 22,568
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparision purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
*HSBC Unique Opportunities Fund had undergone a change in its investment objective, investment strategy etc. and re-named as HSBC Dividend Yield Equity Fund. The changes being in the nature of fundamental attribute changes, the investors have been notifi ed of the same giving then an option to redeem from the Fund. The change was effective from July 18, 2014.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and
5
HSBC DIVIDEND YIELD EQUITY FUND 9
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
6
9 HSBC DIVIDEND YIELD EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC DIVIDEND YIELD EQUITY FUND 9
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Dividend Yield Equity Fund – – 2,616,350.22 95
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
9 HSBC DIVIDEND YIELD EQUITY FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC DIVIDEND YIELD EQUITY FUND 9
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
9 HSBC DIVIDEND YIELD EQUITY FUND
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Dividend Yield
Equity Fund (Formerly HSBC Unique Opportunities Fund), (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
11
HSBC DIVIDEND YIELD EQUITY FUND 9
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report has been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
9 HSBC DIVIDEND YIELD EQUITY FUND
Rs. in Lakhs
HSBC DIVIDEND YIELD EQUITY FUND(Formerly HSBC Unique Opportunities Fund)
As at March 31, 2015
As at March 31, 2014
LIABILITIES1 Unit Capital 2,881.21 3,666.092 Reserves & Surplus2.1 Unit Premium Reserves (3,724.15) (4,292.13)2.2 Unrealised Appreciation Reserve 1,604.41 1,285.152.3 Other Reserves 4,064.92 3,949.463 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 49.83 52.71
TOTAL 4,876.22 4,661.28
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 4,722.64 4,564.741.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 5.95 –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 4,728.59 4,564.74
2 Deposits 0.13 –3 Other Current Assets3.1 Cash & Bank Balance 7.59 1.633.2 CBLO / Reverse Repo Lending 117.94 75.653.3 Others 21.97 19.264 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 4,876.22 4,661.28
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC DIVIDEND YIELD EQUITY FUND 9
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC DIVIDEND YIELD EQUITY FUND(Formerly HSBC Unique Opportunities Fund)
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 83.99 98.691.2 Interest 6.52 11.241.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments1,099.57 259.76
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.01 0.04
(A) 1,190.09 369.732 EXPENSES2.1 Management fees 72.60 79.272.2 Service tax on Management fees 8.97 9.802.3 Transfer agents fees and expenses 7.28 6.682.4 Custodian fees 0.83 0.702.5 Trusteeship fees 0.16 0.192.6 Commission to Agents 34.75 33.42.7 Marketing & Distribution expenses 0.35 0.172.8 Audit fees 0.33 0.682.9 Investor Education Expenses 0.97 0.932.10 Other operating expenses 1.58 3.132.11 Less: Expenses to be Reimbursed by the Investment Manager – –
(B) 127.82 134.95
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 1,062.27 234.78
4 Change in Unrealised Depreciation invalue of investments and derivatives (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 1,062.27 234.78
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 319.26 510.67
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,381.53 745.45
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 319.26 510.677.3 Add / (Less): Equalisation (946.83) (1,168.80)7.4 Transfer from Reserve Fund 3,949.48 4,883.48
8 Total 4,064.92 3,949.47
9 Dividend Appropriation9.1 Income Distributed during the year – –9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 4,064.92 3,949.47
Notes to Accounts - Annexure I
14
9 HSBC DIVIDEND YIELD EQUITY FUND
Key Statistics for the year ended March 31, 2015
HSBC DIVIDEND YIELD EQUITY FUND(Formerly HSBC Unique Opportunities Fund)
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 12.5708 10.6718
Regular Plan Dividend Option 12.5708 10.6718
Direct Plan - Growth Option 12.6839 10.6923
Direct Plan - Dividend Option 12.6839 10.6923
High
Regular Plan Growth Option 17.6370 12.5708
Regular Plan Dividend Option 17.6370 12.5708
Direct Plan - Growth Option 17.9114 12.6839
Direct Plan - Dividend Option 17.9114 12.6839
Low
Regular Plan Growth Option 12.4895 9.3616
Regular Plan Dividend Option 12.4895 9.3616
Direct Plan - Growth Option 12.6057 9.4070
Direct Plan - Dividend Option 12.6057 9.4070
End
Regular Plan Growth Option 16.7511 12.5708
Regular Plan Dividend Option 16.7511 12.5708
Direct Plan - Growth Option 17.0215 12.6839
Direct Plan - Dividend Option 17.0215 12.6839
2. Closing Assets Under Management (Rs. in Lakhs)
End 4,827 4,609
Average (AAuM)1 4,866 4,643
3. Gross income as % of AAuM2 24.46% 7.96%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax onManagement fees) (planwise)
Regular Plan 2.63% 2.91%
Regular Plan Dividend Option 2.63% 2.91%
Direct Plan 1.88% 2.20%
Direct Plan - Dividend Option 1.88% 2.20%
b. Management Fee as % of AAuM (planwise)
Regular Plan 1.49% 1.71%
Regular Plan Dividend Option 1.49% 1.71%
Direct Plan 1.49% 1.71%
Direct Plan - Dividend Option 1.49% 1.71%
15
HSBC DIVIDEND YIELD EQUITY FUND 9
HSBC DIVIDEND YIELD EQUITY FUND(Formerly HSBC Unique Opportunities Fund)
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
5. Net Income as a percentage of AAuM3 21.83% 5.06%
6. Portfolio turnover ratio4 0.29 0.56
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
Corporate
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 33.2540 17.0759
Direct Plan - Growth Option 34.1977 17.9029
Benchmark
S&P BSE200 31.7200 16.6967
b. Since Inception
Scheme
Regular Plan Growth Option 6.6328 3.3067
Direct Plan - Growth Option 18.0814 6.1399
Benchmark
S&P BSE200 10.9100 8.2099
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue Account i.e. Income.3. Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
9 HSBC DIVIDEND YIELD EQUITY FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC DIVIDEND YIELD EQUITY FUND (FORMERLY HSBC UNIQUE OPPORTUNITIES FUND)
1 Investments:
1.1 It is confi rmed that Investments of the Schemes are registered in the name of the Trustees for the benefi ts of the Scheme’s Unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of years ended March 31, 2015 and March 31, 2014 is NIL
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of the years ended 31 March, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial Year and their percentages to net assets are as under:
Security Category Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Equity Shares
– Appreciation 162,168,496 33.60 134,340,015 29.13
– Depreciation 2,322,494 0.48 5,824,968 1.26
Non Convertible Debentures and Bonds Listed/Awaiting Listing
– Appreciation 595,261 0.12 – –
– Depreciation – – – –
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 142,069,394 and Rs. 267,567,281 respectively being 29.20% and 54.99% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-2014 (excluding accretion of discount) is Rs. 258,237,640 and Rs. 373,069,489 respectively being 55.62% and 80.36% of the average daily net assets.
1.8. Non-Traded securities in the portfolio as on March 31, 2015 and March 31, 2014 are Nil
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
During the year 2014-15, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid clearing member charges on derivative transactions amounting to Rs. Nil.
During the year 2013-14, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid clearing member charges on derivative transactions amounting to Rs. Nil.
17
HSBC DIVIDEND YIELD EQUITY FUND 9
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows:
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014 - 2015 0.55 35.58 334,773.30 10.47
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2014 - 2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013 - 2014 0.04 5.49 368,858 11.85
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2013 - 2014 – – 4,198 0.13
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014 - 2015 0.74 1.80 8,830 1.80
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage
paid by the fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013 - 2014 1.39 2.21 16,754 2.22
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
18
9 HSBC DIVIDEND YIELD EQUITY FUND
3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year ended March 31, 2015 and March 31, 2014:
Description
2014 - 2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
20,677,081.880 221,322.646 4,735,429.509 16,162,975.017 10
Regular Plan Dividend Option
15,976,599.298 345,203.084 3,685,932.339 12,635,870.043 10
Direct Plan - Growth Option
4,221.690 7,821.419 3,592.959 8,450.150 10
Direct Plan - Dividend Option
2,989.443 1,812.335 – 4,801.778 10
Description
2013 - 2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
27,842,762.493 110,672.073 7,276,352.686 20,677,081.880 10
Regular Plan Dividend Option
20,418,156.050 8,501.969 4,450,058.721 15,976,599.298 10
Direct Plan - Growth Option
797.516 4,561.300 1,137.126 4,221.690 10
Direct Plan - Dividend Option
997.530 3,984.230 1,992.317 2,989.443 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 632 (2014: Rs. 3,691) represents Exit load (net of service tax) credited to the scheme.
9 Change in Fundamental Attribute - HSBC Dividend Yield Equity Fund (Formerly HSBC Unique Opportunities Fund) (HDYEF)
During the year, the Scheme has changed its asset allocation and investment objective with effect from July 18, 2014 in accordance with regulation 18(15A) of SEBI Regulations. Accordingly, the name of the Scheme was changed from HSBC Unique Opportunities Fund to HSBC Dividend Yield Equity Fund. The Change in Fundamental Attribute of the Scheme was approved by the Board of Directors of the AMC and Board of Trustees of the Fund. The change was effected in line with the relevant provisions of SEBI (Mutual Funds) Regulations, 1996.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
19
HSBC DIVIDEND YIELD EQUITY FUND 9
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
9 HSBC DIVIDEND YIELD EQUITY FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC DIVIDEND YIELD EQUITY FUND 9
Det
ails
of t
he P
roxy
Vot
es e
xerc
ised
in G
ener
al M
eetin
gs o
f the
Lis
ted
Com
pani
es fo
r the
fi na
ncia
l yea
r end
ed 2
014-
15
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
Man
agem
ent
Prop
osal
s
5-M
ay-2
014
Sun
Phar
mac
eutic
al In
dust
ries
Lim
ited
Cou
rt C
onve
ned
Mee
ting
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rFo
r
6-M
ay-2
014
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arat
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Por
t Lim
ited
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16-M
ay-2
014
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el L
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vene
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For
21-M
ay-2
014
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dTre
e Li
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stal
Bal
lot
��
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r
14-J
un-2
014
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sys
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tain
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ank
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22
9 HSBC DIVIDEND YIELD EQUITY FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
17-J
ul-2
014
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sing
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elop
men
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ance
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23
HSBC DIVIDEND YIELD EQUITY FUND 9
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
30-J
ul-2
014
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24
9 HSBC DIVIDEND YIELD EQUITY FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
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014
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25
HSBC DIVIDEND YIELD EQUITY FUND 9
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
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26
9 HSBC DIVIDEND YIELD EQUITY FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
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27
HSBC DIVIDEND YIELD EQUITY FUND 9
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC EMERGING MARKETS FUND
HSBC Emerging Markets FundAn open-ended Scheme
Abridged Annual Report 2014 - 2015
1
HSBC EMERGING MARKETS FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC EMERGING MARKETS FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC EMERGING MARKETS FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC EMERGING MARKETS FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Emerging Markets Fund (HEMF) - an open-ended SchemeHEMF seeks to provide long term capital appreciation by investing in India and in the emerging markets, in equity and equity related instruments, share classes and units / securities issued by overseas mutual funds or unit trusts. The fund may also invest a limited proportion in debt and money market instruments.
The net assets of HEMF amounted to Rs. 10.79 crores as at March 31, 2015 compared to Rs. 14.47 crores as at March 31, 2014. Around 97.93% of the net assets were invested in HSBC GEM Equity Fund (overseas mutual fund), 2.93% of the net assets were invested in reverse repos / CBLO and (-0.86%) was in the net current assets as at March 31, 2015.
Despite of INR deprecation, the underlying fund under-performed its benchmark due to combination of allocation and stock selection.
Date of Inception : 17 March 2008 Simple Annualized (%) Compounded Annualized
(%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Emerging Markets Fund – Growth 4.55 3.94 4.55 1.91
MSCI Emerging Market Index (Scheme Benchmark) 7.64 0.81 1.77 2.18
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 9.43
Rs. 10,000, if invested in HMEF, would have become 10,455 10,394 10,455 11,426
Rs. 10,000, if invested in MSCI Emerging Market Index, would have become
10,764 10,081 10,177 11,641
Rs. 10,000, if invested in CNX Nifty, would have become
12,633 11,753 10,693 18,866
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
5
HSBC EMERGING MARKETS FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on
6
HSBC EMERGING MARKETS FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC EMERGING MARKETS FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Emerging Markets Fund 8,834.68 17 830,452.12 27
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
HSBC EMERGING MARKETS FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:* active folios# including against its authorized persons / distributors / employees etc.
9
HSBC EMERGING MARKETS FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
HSBC EMERGING MARKETS FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Emerging Markets
Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC EMERGING MARKETS FUND
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
12
HSBC EMERGING MARKETS FUND
Rs. in Lakhs
HSBC EMERGING MARKETS FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 956.67 1,332.582 Reserves & Surplus2.1 Unit Premium Reserves (466.42) (453.70)2.2 Unrealised Appreciation Reserve 127.60 111.202.3 Other Reserves 461.27 456.883 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 17.77 61.88
TOTAL 1,096.89 1,508.84
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities 1,056.79 1,411.91
Total Investments 1,056.79 1,411.91
2 Deposits 0.05 –3 Other Current Assets3.1 Cash & Bank Balance 0.07 0.733.2 CBLO / Reverse Repo Lending 31.57 7.243.3 Others 8.41 88.964 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 1,096.89 1,508.84
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC EMERGING MARKETS FUND
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC EMERGING MARKETS FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 26.56 51.911.2 Interest 1.85 4.791.3 Realised Gain / (Loss) on Foreign Exchange Transactions (1.09) 33.281.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments57.81 128.70
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.04 0.35
(A) 85.17 219.03
2 EXPENSES2.1 Management fees 11.55 16.342.2 Service tax on Management fees 1.43 2.022.3 Transfer agents fees and expenses 1.13 1.812.4 Custodian fees 1.70 1.972.5 Trusteeship fees 0.04 0.072.6 Commission to Agents 7.08 10.732.7 Marketing & Distribution expenses 0.04 0.022.8 Audit fees 0.20 0.212.9 Investor Education Expenses 0.25 0.362.10 Other operating expenses 0.69 1.822.11 Less: Expenses to be Reimbursed by the Investment Manager – (0.11)
(B) 24.11 35.25
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 61.06 183.78
4 Change in Unrealised Depreciation invalue of investments*** (D) 0.40 (0.40)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 61.46 183.37
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 16.40 (54.66)
7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 77.86 128.71
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 54.667.2 Less: Balance transfer to Unrealised Appreciation Reserve 16.40 –7.3 Add / (Less): Equalisation (40.23) (57.64)
7.4 Transfer from Reserve Fund 456.85 331.13
8 Total 478.08 456.86
9 Dividend Appropriation9.1 Income Distributed during the year 13.06 –9.2 Tax on income distributed during the year 3.75 –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 461.27 456.86
Notes to Accounts - Annexure I
14
HSBC EMERGING MARKETS FUND
Key Statistics for the year ended March 31, 2015
HSBC EMERGING MARKETS FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 10.8552 10.4742
Regular Plan Dividend Option 10.8552 10.4742
Direct Plan - Growth Option 10.9610 10.5035
Direct Plan - Dividend Option 10.9610 10.5035
High
Regular Plan Growth Option 12.3540 12.0770
Regular Plan Dividend Option 11.8196 12.0770
Direct Plan - Growth Option 12.5121 12.1574
Direct Plan - Dividend Option 11.9805 12.1574
Low
Regular Plan Growth Option 10.8735 9.5462
Regular Plan Dividend Option 10.4031 9.5462
Direct Plan - Growth Option 11.0338 9.5876
Direct Plan - Dividend Option 10.5657 9.5876
End
Regular Plan Growth Option 11.4242 10.8552
Regular Plan Dividend Option 10.9301 10.8552
Direct Plan - Growth Option 11.6174 10.9610
Direct Plan - Dividend Option 11.1241 10.9610
2. Closing Assets Under Management (Rs. in Lakhs)
End 1,079 1,447
Average (AAuM)1 1,242 1,801
3. Gross income as % of AAuM2 6.86% 12.16%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise5)
Regular Plan 1.97% 1.97%
Direct Plan 1.26% 1.26%
b. Management Fee as % of AAuM (planwise)
Regular Plan 0.93% 0.91%
Direct Plan 0.93% 0.91%
5. Net Income as a percentage of AAuM3 4.92% 10.20%
6. Portfolio turnover ratio4 0.02 0.44
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option 0.39 –
Direct Plan - Dividend Option 0.39 –
15
HSBC EMERGING MARKETS FUND
HSBC EMERGING MARKETS FUND Current
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Corporate
Regular Plan Dividend Option 0.37 –
Direct Plan - Dividend Option 0.37 –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 5.2417 3.9529
Direct Plan - Growth Option 5.9885 4.6853
Benchmark
MSCI Emerging Markets Index 7.6400 0.8137
b. Since Inception
Scheme
Regular Plan Growth Option 1.9090 1.3676
Direct Plan - Growth Option 1.2186 (2.4682)
Benchnmark
MSCI Emerging Markets Index 2.1800 1.2101
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The Total management fees and other expenses charged by the underlying fund along with the management
fee and recurring expenses charged by the domestic Mutual Fund is as follows:
Scheme TER charged by underlying Fund***
TER of the domestic Fund***
Total TER*** Maximum TER Cap as per circular***
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
HSBC Emerging Markets Fund 0.85% 0.85% 1.83% 1.84% 2.68% 2.69% 2.70% 2.70%
*** The TER excludes service Tax on Management fees.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
HSBC EMERGING MARKETS FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2015
HSBC EMERGING MARKETS FUND
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years end and their percentages to net assets are as under:
Security Category Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
2015 2014
Foreign Securities
– Appreciation 12,760,413 11.82 11,120,491 7.69
– Depreciation – – – –
Foreign Currency denominated Assets and Liabilities
– Appreciation – – – –
– Depreciation – – 40,470 0.03
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 2,657,297 and 45,589,542 respectively being 2.14% and 36.70% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-2014 (excluding accretion of discount) is Rs. 80,153,528 and 132,495,844 respectively being 44.50% and 73.56% of the average daily net assets.
1.8. Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor/AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 0.14 27.74 145,453.11 21.93
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015 – – – –
17
HSBC EMERGING MARKETS FUND
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 1.74 26.77 923,486 21.14
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – 4,031 0.09
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
8,527,601.590 224,546.887 2,521,884.427 6,230,264.050 10
Regular Plan Dividend Option
4,429,953.934 94,067.061 1,581,141.560 2,942,879.435 10
Direct Plan - Growth Option
362,603.162 32,825.832 5,285.090 390,143.904 10
Direct Plan - Dividend Option
5,611.314 98.692 2,335.414 3,374.592 10
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan Growth Option
11,313,428.246 7,389,196.572 10,175,023.228 8,527,601.590 10
Regular Plan Dividend Option
6,876,751.497 67,877.241 2,514,674.804 4,429,953.934 10
Direct Plan - Growth Option
58,219.214 331,350.058 26,966.110 362,603.162 10
Direct Plan - Dividend Option
1,802.309 8,828.999 5,019.994 5,611.314 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
18
HSBC EMERGING MARKETS FUND
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 4,338 (2014: 35,287) represents Exit load (net of service tax) credited to the scheme.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
19
HSBC EMERGING MARKETS FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC EMERGING MARKETS FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC EMERGING MARKETS FUND
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22
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HSBC EMERGING MARKETS FUND
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HSBC EMERGING MARKETS FUND
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ting
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eCo
mpa
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ame
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ting
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HSBC EMERGING MARKETS FUND
Mee
ting
Dat
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ny N
ame
Type
of
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ting
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M)
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luti
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC EMERGING MARKETS FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
HSBC Asia Pacifi c (Ex Japan) Dividend Yield FundAn open ended Fund of Funds Scheme
Abridged Annual Report 2014 - 2015
1
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund (HAPDF) – an open ended Fund of Funds SchemeHAPDF seeks to provide long term capital appreciation by investing predominantly in units of HSBC Global Investment Funds (HGIF) Asia Pacifi c Ex Japan Equity High Dividend Fund (HEHDF). The Scheme may, also invest a certain proportion of its corpus in money market instruments and / or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time. However, there is no assurance that the investment objective of the Scheme will be achieved.
The net assets of HADPF amounted to Rs. 30.18 crores as on March 31, 2015 as compared to 56.26 crores as at March 31, 2014. Around 98.39 % of the net assets were invested in HSBC Global Investment Funds (HGIF) Asia Pacifi c Ex Japan Equity High Dividend Fund (overseas mutual fund), 2.38% of the net assets were invested in reverse repos / CBLO and (-0.77%) were in the net current assets as at March 31, 2015.
HAPDF outperformed its scheme benchmark during the period 2014-15 mainly on account of depreciation of the INR vis-à-vis the USD and stock selection.
Date of Inception : 24 February 2014 Absolute (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
Since Inception
HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund – Growth 6.87 5.08
MSCI AC Asia Pacifi c ex Japan (Scheme Benchmark) 2.65 5.43
CNX Nifty (Standard Benchmark) 26.33 33.51
Rs. 10,000, if invested in HAPDF, would have become 10,687 10,559
Rs. 10,000, if invested in MSCI AC Asia Pacifi c ex Japan, would have become
10,265 10,598
Rs. 10,000, if invested in CNX Nifty, would have become 12,633 13,737
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices
5
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
6
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with
7
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Asia Pacifi c
(Ex Japan) Dividend Yield Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Abridged Balance Sheet as at March 31, 2015
Rs. in Lakhs
HSBC ASIA PACIFIC (EX JAPAN)DIVIDEND YIELD FUND
As at March 31, 2015
As at March 31, 2014
LIABILITIES1 Unit Capital 2,833.06 5,725.862 Reserves & Surplus2.1 Unit Premium Reserves (71.42) 0.002.2 Unrealised Appreciation Reserve 133.31 –2.3 Other Reserves 96.23 (99.89)3 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 51.77 15.53
TOTAL 3,042.95 5,641.50
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities 2,968.89 5,480.58
Total Investments 2,968.89 5,480.58
2 Deposits 0.15 –3 Other Current Assets3.1 Cash & Bank Balance 0.12 0.113.2 CBLO / Reverse Repo Lending 71.92 156.293.3 Others 1.87 4.524 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 3,042.95 5,641.50
Notes to Accounts - Annexure I
13
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC ASIA PACIFIC (EX JAPAN)DIVIDEND YIELD FUND
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 104.21 –1.2 Interest 6.34 11.251.3 Realised Gain / (Loss) on Foreign Exchange Transactions (7.08) 8.701.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments103.75 (0.04)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income
(A) 207.22 19.91
2 EXPENSES2.1 Management fees 32.65 3.832.2 Service tax on Management fees 4.04 0.472.3 Transfer agents fees and expenses 4.61 1.502.4 Custodian fees 2.63 0.372.5 Trusteeship fees 0.16 –2.6 Commission to Agents 37.04 4.022.7 Marketing & Distribution expenses 0.15 0.062.8 Audit fees 0.20 0.832.9 Investor Education Expenses 0.95 0.112.10 Other operating expenses 1.47 1.112.11 Less: Expenses to be Reimbursed by the Investment Manager (1.85) (2.76)
(B) 82.05 9.55
3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 125.17 10.37
4 Change in Unrealised Depreciation invalue of investments*** (D) 111.12 (111.12)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 236.29 (100.75)
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 133.31 –
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 369.60 (100.75)
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 133.31 –7.3 Add / (Less): Equalisation (40.16) 0.86
7.4 Transfer from Reserve Fund (99.90) –
8 Total 96.23 (99.90)
9 Dividend Appropriation9.1 Income Distributed during the year – –9.2 Tax on income distributed during the year – –10 Retained Surplus / (Defi cit) carried forward to
Balance Sheet 96.23 (99.90)
Notes to Accounts - Annexure I
14
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Key Statistics for the year ended March 31, 2015
HSBC ASIA PACIFIC (EX JAPAN)DIVIDEND YIELD FUND
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 9.8254 N.A.
Regular Plan Dividend Option 9.8254 N.A.
Direct Plan - Growth Option 9.8322 N.A.
Direct Plan - Dividend Option 9.8322 N.A.
High
Regular Plan Growth Option 11.1492 9.9754
Regular Plan Dividend Option 11.1492 9.9754
Direct Plan - Growth Option 11.1890 9.9764
Direct Plan - Dividend Option 11.1890 9.9764
Low
Regular Plan Growth Option 9.8520 9.5965
Regular Plan Dividend Option 9.8520 9.5965
Direct Plan - Growth Option 9.8592 9.6011
Direct Plan - Dividend Option 9.8592 9.6011
End
Regular Plan Growth Option 10.5578 9.8254
Regular Plan Dividend Option 10.5578 9.8254
Direct Plan - Growth Option 10.6396 9.8322
Direct Plan - Dividend Option 10.6396 9.8322
2. Closing Assets Under Management (Rs. in Lakhs)
End 3,018 5,626
Average (AAuM)1 4,732 5,625
3. Gross income as % of AAuM2 4.38% 3.59%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise5)
Regular Plan 1.74% 1.74%
Direct Plan 1.04% 1.04%
b. Management Fee as % of AAuM (planwise)
Regular Plan 0.69% 0.69%
Direct Plan 0.69% 0.69%
5. Net Income as a percentage of AAuM3 2.65% 1.87%
15
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
HSBC ASIA PACIFIC (EX JAPAN)DIVIDEND YIELD FUND
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
6. Portfolio turnover ratio4 0.02 –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
Corporate
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option 7.4541 N.A.
Direct Plan - Growth Option 8.2118 N.A.
Benchmark
MSCI AC Asia Pacifi c ex Japan 2.6500 N.A.
b. Since Inception
Scheme
Regular Plan Growth Option 5.0777 (1.7460)
Direct Plan - Growth Option 5.8204 (1.6780)
Benchnmark
MSCI AC Asia Pacifi c ex Japan 5.4332 2.5746
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue Account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The Total management fees and other expenses charged by the underlying fund along with the management
fee and recurring expenses charged by the domestic Mutual Fund is as follows:
Scheme TER charged by underlying Fund***
TER of the domestic Fund***
Total TER*** Maximum TER Cap as per circular***
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund
0.65% 0.65% 1.65% 1.64% 2.30% 2.29% 2.70% 2.70%
*** The TER excludes service Tax on Management fees.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years end and their percentages to net assets are as under:
Security Category Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
2015 2014
Foreign Securities
– Appreciation 13,331,133 4.42 – –
– Depreciation – – 11,112,136 1.98
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial period 2014-2015 (excluding accretion of discount) is Rs. 10,425,305 and 296,412,233 respectively being 2.20% and 62.64% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial period 2013-2014 (excluding accretion of discount) is Rs. 559,174,226 and Nil respectively being 1007.94% and 0.00% of the average daily net assets.
1.8. Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Commission paid to Sponsor/AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 0.72 26.79 3,196,955.85 92.05
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015 – – – –
17
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 54.62 93.94 – –
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – – –
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hong kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Regular Plan Growth Option
48,767,466.740 1,090,336.836 24,448,839.288 25,408,964.288 10
Regular Plan Dividend Option
7,368,233.150 77,232.671 4,632,807.904 2,812,657.917 10
Direct Plan - Growth Option
1,117,412.408 – 1,020,000.000 97,412.408 10
Direct Plan - Dividend Option
5,500.000 7,096.101 1,000.000 11,596.101 10
Description
2013-2014
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Regular Plan Growth Option
49,434,979.211 182,487.621 850,000.092 48,767,466.740 10
Regular Plan Dividend Option
7,286,076.401 112,156.749 30,000.000 7,368,233.150 10
Direct Plan - Growth Option
1,095,969.256 21,443.152 – 1,117,412.408 10
Direct Plan - Dividend Option
– 25,500.000 20,000.000 5,500.000 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
18
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income credited to the scheme is Nil.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
19
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
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HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
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HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
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luti
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vest
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ny’s
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HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
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ame
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ting
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC BRAZIL FUND#
HSBC Brazil FundAn Open ended Fund of Funds Scheme
Abridged Annual Report 2014 - 2015
1
HSBC BRAZIL FUND#
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC BRAZIL FUND#
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC BRAZIL FUND#
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC BRAZIL FUND#
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Brazil Fund (HBF) - an open ended Fund of Funds SchemeHBF seeks to provide long term capital appreciation by investing predominantly in units / shares of HSBC Global Investments Funds (HGIF) Brazil Equity Fund. The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a signifi cant part of its corpus. The scheme may also invest a certain proportion of its corpus in money market instruments and / or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time.
The net assets of HBF amounted to Rs. 36.23 crores as at March 31, 2015 compared to Rs. 94.05 crores as at March 31, 2014. Around 99.11 % of the net assets were invested in HSBC Brazil Equity Fund (overseas mutual fund), 3.63% of the net assets were invested in reverse repos / CBLO and (-2.74%) were in the net current assets as at March 31, 2015.
HBF outperformed its scheme benchmark during the period 2014-15 mainly on account of depreciation of the INR vis-à-vis the USD.
Date of Inception : 6 May 2011 Simple Annualized (%) Compounded Annualized
(%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Brazil Fund – Growth -28.85 -11.37 -2.50 -11.87
MSCI Brazil 10/40 Index (Scheme Benchmark) -29.37 -14.46 -14.53 -17.89
CNX Nifty (Standard Benchmark) 26.33 17.53 6.93 11.50
Rs. 10,000, if invested in HBF, would have become 7,115 8,863 9,750 6,104
Rs. 10,000, if invested in MSCI Brazil 10/40 Index, would have become
7,063 8,554 8,547 4,630
Rs. 10,000, if invested in CNX Nifty, would have become
12,633 11,753 10,693 15,300
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven
5
HSBC BRAZIL FUND#
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted
6
HSBC BRAZIL FUND#
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for
7
HSBC BRAZIL FUND#
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Brazil Fund – – 510,299.25 3
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call Centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
8
HSBC BRAZIL FUND#
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:* active folios# including against its authorized persons / distributors / employees etc.
9
HSBC BRAZIL FUND#
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
HSBC BRAZIL FUND#
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Brazil Fund (the
“Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net defi cit for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
11
HSBC BRAZIL FUND#
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account, where applicable, dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account, where applicable, dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC BRAZIL FUND#
Abridged Balance Sheet as at March 31, 2015
Rs. in Lakhs
HSBC BRAZIL FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 5,945.14 10,877.202 Reserves & Surplus2.1 Unit Premium Reserves (27.59) (29.59)2.2 Unrealised Appreciation Reserve – –2.3 Other Reserves (2,286.97) (1,446.19)3 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 108.41 222.61
TOTAL 3,738.99 9,624.03
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities 3,590.79 9,315.81
Total Investments 3,590.79 9,315.812 Deposits 0.25 –3 Other Current Assets3.1 Cash & Bank Balance 11.37 1.503.2 CBLO / Reverse Repo Lending 131.38 104.583.3 Others 5.20 202.144 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 3,738.99 9,624.03
Notes to Accounts - Annexure I
13
HSBC BRAZIL FUND#
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC BRAZIL FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 178.64 362.121.2 Interest 9.64 19.271.3 Realised Gain / (Loss) on Foreign Exchange Transactions (7.83) 11.951.4 Realised Gains / (Losses) on Interscheme sale of investments – -1.5 Realised Gains / (Losses) on External sale / redemption of
investments(600.68) (597.64)
1.6 Realised Gains / (Losses) on Derivative Transactions – -1.7 Other Income 0.29 2.41
(A) (419.94) (201.89)
2 EXPENSES2.1 Management fees 62.86 129.262.2 Service tax on Management fees 7.77 15.982.3 Transfer agents fees and expenses 5.20 10.342.4 Custodian fees 2.31 2.692.5 Trusteeship fees 0.23 0.532.6 Commission to Agents 47.77 90.922.7 Marketing & Distribution expenses 0.36 –2.8 Audit fees 0.24 1.382.9 Investor Education Expenses 1.33 2.652.10 Other operating expenses 2.20 6.142.11 Less: Expenses to be Reimbursed by the Investment Manager – –
(B) 130.27 259.88
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) (550.21) (461.78)
4 Change in Unrealised Depreciation in valueof investments*** (D) (895.35) (1,093.82)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] (1,445.56) (1,555.60)
6 Change in unrealised appreciation in thevalue of investments and derivatives (F) – –
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) (1,445.56) (1,555.60)
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – –7.3 Add / (Less): Equalisation 604.76 548.187.4 Transfer from Reserve Fund (1,446.17) (438.76)
8 Total (2,286.97) (1,446.17)
9 Dividend Appropriation9.1 Income Distributed during the year – –9.2 Tax on income distributed during the year – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet (2,286.97) (1,446.17)
Notes to Accounts - Annexure I
*** Includes Unrealised Depreciation in the value of Foreign Currency Transactions.
14
HSBC BRAZIL FUND#
Key Statistics for the year ended March 31, 2015
HSBC BRAZIL FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option 8.6430 9.7534
Regular Plan Dividend Option 8.6430 9.7534
Direct Plan - Growth Option 8.7244 9.7767
Direct Plan - Dividend Option 8.7244 9.7767
High
Regular Plan Growth Option 10.4125 10.1499
Regular Plan Dividend Option 10.4125 10.1499
Direct Plan - Growth Option 10.5421 10.2146
Direct Plan - Dividend Option 10.5421 10.2146
Low
Regular Plan Growth Option 5.7225 7.7129
Regular Plan Dividend Option 5.7225 7.7129
Direct Plan - Growth Option 5.8151 7.7833
Direct Plan - Dividend Option 5.8151 7.7833
End
Regular Plan Growth Option 6.1058 8.6430
Regular Plan Dividend Option 6.1058 8.6430
Direct Plan - Growth Option 6.2071 8.7244
Direct Plan - Dividend Option 6.2071 8.7244
2. Closing Assets Under Management (Rs. in Lakhs)
End 3,623 9,401
Average (AAuM)1 6,642 13,231
3. Gross income as % of AAuM2 -6.32% -1.53%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management Fees) (planwise5)
Regular Plan 1.96% 1.96%
Direct Plan 1.26% 1.26%
b. Management Fee as % of AAuM (planwise)
Regular Plan 0.95% 0.98%
Direct Plan 0.95% 0.98%
5. Net Income as a percentage of AAuM3 -8.28% -3.49%
6. Portfolio turnover ratio4 0.03 0.05
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
15
HSBC BRAZIL FUND#
HSBC BRAZIL FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Corporate
Regular Plan Dividend Option – –
Direct Plan - Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option (29.3555) (11.3981)
Direct Plan - Growth Option (28.8536) (10.8002)
Benchmark
MSCI Brazil 10/40 Index (29.3700) (14.4967)
b. Since Inception
Scheme
Regular Plan Growth Option (11.8708) (4.8977)
Direct Plan - Growth Option (19.2502) (10.5773)
Benchmark
MSCI Brazil 10/40 Index (17.8887) (13.3777)
1 AAuM = Average daily net assets.
2 Gross income = amount against (A) in the Revenue account i.e. Income.
3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.
4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
5. The Total management fees and other expenses charged by the underlying fund along with the management fee and recurring expenses charged by the domestic Mutual Fund is as follows:
Scheme TER charged by underlying Fund***
TER of the domestic Fund***
Total TER*** Maximum TER Cap as per circular***
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
HSBC Brazil Fund 0.85% 0.85% 1.85% 1.84% 2.70% 2.69% 2.70% 2.70%
*** The TER excludes service Tax on Management fees.
Key Statistics for the year ended March 31, 2015 (Contd...)
16
HSBC BRAZIL FUND#
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC BRAZIL FUND1 Investments:
1.1 It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.3 Investments in Associates and Group Companies as of years ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years end and their percentages to net assets are as under:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Foreign Securities
– Appreciation – – – –
– Depreciation 226,868,427 62.62 137,247,817 14.60
Foreign Currency denominated Assets and Liabilities
– Appreciation – – – –
– Depreciation – – 85,680.00 0.01
1.7 The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 17,870,400 and Rs. 440,684,127 respectively being 2.69% and 66.35% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-2014 (excluding accretion of discount) is Rs. 66,102,316 and Rs. 78,4501,593 respectively being 5.00% and 59.29% of the average daily net assets.
1.8. Non-Traded securities in the portfolio as on March 31, 2015 and March 31, 2014 are Nil
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows:
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 0.36 9.40 3,034,791.49 66.42
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015 – – – –
17
HSBC BRAZIL FUND#
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 2.29 21.52 6,539,913 74.51
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – 213,963 2.44
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hong kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Regular Plan Growth Option
73,318,595.921 2,609,221.991 32,616,094.869 43,311,723.043 10
Regular Plan Dividend Option
35,062,061.098 188,587.699 19,687,782.954 15,562,865.843 10
Direct Plan - Growth Option
355,667.229 367,282.038 169,700.380 553,248.887 10
Direct Plan - Dividend Option
35,704.569 29,151.976 41,251.251 23,605.294 10
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Regular Plan Growth Option
117,282,062.611 8,621,990.218 52,585,456.908 73,318,595.921 10
Regular Plan Dividend Option
72,060,624.981 476,739.659 37,475,303.542 35,062,061.098 10
Direct Plan - Growth Option
127,498.072 263,450.629 35,281.472 355,667.229 10
Direct Plan - Dividend Option
1,901.307 33,803.262 – 35,704.569 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
18
HSBC BRAZIL FUND#
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 29,102 (2014: Rs. 240,751) represents Exit load (net of service tax) credited to the scheme.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
19
HSBC BRAZIL FUND#
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC BRAZIL FUND#
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC BRAZIL FUND#
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26
HSBC BRAZIL FUND#
Mee
ting
Dat
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mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
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mm
enda
tion
Vote
(For
/A
gain
st /
A
bsta
in)
12
34
56
78
910
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ders
Pro
posa
ls
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014
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abul
ls H
ousin
g Fi
nanc
e Lt
d.A
GM
�N
one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC BRAZIL FUND#
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC MANAGED SOLUTIONS INDIA
HSBC Managed SolutionsAn open ended Fund of Funds Scheme
Abridged Annual Report 2014 - 2015
1
HSBC MANAGED SOLUTIONS
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC MANAGED SOLUTIONS
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC MANAGED SOLUTIONS
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC MANAGED SOLUTIONS
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Managed Solution (HMS) – an open ended Fund of Funds SchemeHMS seeks to provide long term total return primarily by seeking capital appreciation through an active asset allocation with diversifi cation commensurate with the risk profi le of investments by investing predominantly in units of equity mutual funds as well as in a basket of debt mutual funds gold exchange traded funds (ETFs) and other ETFs, offshore mutual funds and money market instruments. The scheme has three plans namely, HMS – Growth Plan, HMS – Moderate Plan and HMS – Conservative Plan.
The scheme was launched on April 09, 2014. The performance of HMS – Growth Plan is benchmarked against Composite Index constituting 80% of BSE 200 Index and 20% of CRISIL Composite Bond Index while the performance of HMS – Moderate Plan is benchmarked against CRICIL Balanced Fund Index. The performance of HMS – Conservative Plan is benchmarked against Composite Index constituting of 90% into CRISIL Composite Bond Index and 10% of BSE 200 Index. The performance data has not been provided since the scheme had not completed 1 year period as on March 31, 2015.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
5
HSBC MANAGED SOLUTIONS
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
6
HSBC MANAGED SOLUTIONS
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
7
HSBC MANAGED SOLUTIONS
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
8
HSBC MANAGED SOLUTIONS
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:* active folios# including against its authorized persons / distributors / employees etc.
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
9
HSBC MANAGED SOLUTIONS
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Managed Solutions
(the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the period April 09, 2014 to March 31, 2015, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the period April 09, 2014 to March 31, 2015.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
10
HSBC MANAGED SOLUTIONS
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
11
HSBC MANAGED SOLUTIONS
Rs. in Lakhs
MANAGED SOLUTIONS
INDIA –GROWTH#
MANAGED SOLUTIONS
INDIA –MODERATE#
MANAGED SOLUTIONS
INDIA –CONSERVATIVE#
As at March 31, 2015
LIABILITIES1 Unit Capital 9,931.35 19,605.37 25,893.942 Reserves & Surplus2.1 Unit Premium Reserves 910.60 1,769.77 (226.98)2.2 Unrealised Appreciation Reserve 1,686.36 2,561.94 3,335.792.3 Other Reserves 154.62 152.00 676.653 Loans & Borrowings – – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – –4.2 Other Current Liabilities & Provisions 53.63 362.61 238.07
TOTAL 12,736.56 24,451.69 29,917.47ASSETS
1 Investments1.1 Listed Securities:1.1.1 Equity Shares – – –1.1.2 Preference Shares – – –1.1.3 Equity Linked Debentures – – –1.1.4 Other Debentures & Bonds – – –1.1.5 Securitised Debt securities – – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – – –1.2.2 Preference Shares – – –1.2.3 Equity Linked Debentures – – –1.2.4 Other Debentures & Bonds – – –1.2.5 Securitised Debt securities – – –1.3 Unlisted Securities1.3.1 Equity Shares – – –1.3.2 Preference Shares – – –1.3.3 Equity Linked Debentures – – –1.3.4 Other Debentures & Bonds – – –1.3.5 Securitised Debt securities – – –1.4 Government Securities – – –1.5 Treasury Bills – – –1.6 Commercial Paper – – –1.7 Certifi cate of Deposits – – –1.8 Bill Rediscounting – – –1.9 Units of Domestic Mutual Fund 11,336.66 21,804.60 29,439.631.10 Foreign Securities 1,246.94 1,797.73 –
Total Investments 12,583.60 23,602.33 29,439.632 Deposits 0.27 0.71 1.013 Other Current Assets3.1 Cash & Bank Balance 2.10 2.80 0.073.2 CBLO / Reverse Repo Lending 117.78 801.12 473.433.3 Others 32.81 44.73 3.334 Deferred Revenue Expenditure – – –
(to the extent not written off)TOTAL 12,736.56 24,451.69 29,917.47
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial period.
Abridged Balance Sheet as at March 31, 2015
12
HSBC MANAGED SOLUTIONS
Rs. in Lakhs
MANAGED SOLUTIONS
INDIA –GROWTH#
MANAGED SOLUTIONS
INDIA –MODERATE#
MANAGED SOLUTIONS
INDIA –CONSERVATIVE#
Current period ended March 31, 2015
1 INCOME1.1 Dividend 12.93 16.18 –1.2 Interest 28.46 52.52 91.361.3 Realised Gain / (Loss) on Foreign Exchange Transactions (0.58) 2.36 –1.4 Realised Gains / (Losses) on Interscheme sale of investments – – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 150.54 176.85 851.831.6 Realised Gains / (Losses) on Derivative Transactions – – –1.7 Other Income – – –
(A) 191.35 247.91 943.19
2 EXPENSES2.1 Management fees – – 12.462.2 Service tax on Management fees – – 1.542.3 Transfer agents fees and expenses 8.03 13.84 25.572.4 Custodian fees 2.53 2.70 1.682.5 Trusteeship fees 0.26 0.45 0.792.6 Commission to Agents 104.96 168.91 171.602.7 Marketing & Distribution expenses 0.39 0.65 1.272.8 Audit fees 0.85 1.61 2.002.9 Investor Education Expenses 1.79 3.07 5.602.10 Other operating expenses 3.37 5.61 9.102.11 Less: Expenses to be Reimbursed by the Investment
Manager(61.65) (70.11) (6.19)
(B) 60.53 126.73 225.42
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 130.82 121.18 717.77
4 Change in Unrealised Depreciation invalue of investments*** (D) – – –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C+D)] 130.82 121.18 717.77
6 Change in unrealised appreciation inthe value of investments and derivatives (F) 1,686.36 2,561.94 3,335.79
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,817.18 2,683.12 4,053.56
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 1,686.36 2,561.94 3,335.797.3 Add / (Less): Equalisation 23.80 30.82 (41.12)7.4 Transfer from Reserve Fund – – –
8 Total 154.62 152.00 676.65
9 Dividend Appropriation9.1 Income Distributed during the year – – –9.2 Tax on income distributed during the year – – –
10 Retained Surplus / (Defi cit) carried forward to Balance sheet 154.62 152.00 676.65
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial period..
Abridged Revenue Account for the period ended March 31, 2015
13
HSBC MANAGED SOLUTIONS
Key Statistics for the period ended March 31, 2015
MANAGED SOLUTIONS
INDIA –GROWTH#
MANAGED SOLUTIONS
INDIA –MODERATE#
MANAGED SOLUTIONS
INDIA –CONSERVATIVE#
Current period ended March 31, 2015
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option N.A. N.A. N.A.
Regular Plan Dividend Option N.A. N.A. N.A.
Direct Plan - Growth Option N.A. N.A. N.A.
Direct Plan - Dividend Option N.A. N.A. N.A.
High
Regular Plan Growth Option 13.3614 12.6638 11.5267
Regular Plan Dividend Option 13.3614 12.6638 11.5267
Direct Plan - Growth Option 13.3919 12.6906 11.5511
Direct Plan - Dividend Option 13.3919 12.4545 –
Low
Regular Plan Growth Option 10.0007 10.0071 10.0189
Regular Plan Dividend Option 10.0007 10.0071 10.0189
Direct Plan - Growth Option 10.0013 10.0076 10.0195
Direct Plan - Dividend Option 10.0013 12.1582 –
End
Regular Plan Growth Option 12.7703 12.2870 11.4619
Regular Plan Dividend Option 12.7703 12.2870 11.4619
Direct Plan - Growth Option 12.8021 12.3153 11.4883
Direct Plan - Dividend Option 12.8021 12.3153 –
2. Closing Assets Under Management (Rs. in Lakhs)
End 12,683 23,882 29,671
Average (AAuM)1 9,743 16,698 30,391
3. Gross income as % of AAuM2 * 2.13% 1.61% 3.37%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees (planwise5)*
Regular Plan 0.68% 0.82% 0.81%
Direct Plan 0.41% 0.56% 0.54%
b. Management Fee as % of AAuM (planwise) *
Regular Plan 0.00% 0.00% 0.04%
Direct Plan 0.00% 0.00% 0.04%
5. Net Income as a percentage of AAuM3 * 1.46% 0.79% 2.57%
6. Portfolio turnover ratio4 0.19 0.22 0.60
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Plan Dividend Option – – –
Direct Plan - Dividend Option – – –
14
HSBC MANAGED SOLUTIONS
Key Statistics for the period ended March 31, 2015 (Contd...)
MANAGED SOLUTIONS
INDIA –GROWTH#
MANAGED SOLUTIONS
INDIA –MODERATE#
MANAGED SOLUTIONS
INDIA –CONSERVATIVE#
Current period ended March 31, 2015
Corporate
Regular Plan Dividend Option – – –
Direct Plan - Dividend Option – – –
8. Returns (%):
a. Last One YearScheme
Regular Plan Growth Option N.A. N.A. N.A.
Direct Plan - Growth Option N.A. N.A. N.A.
Benchmark
Composite Index constituting 80% of BSE 200 Index and 20% of CRISIL Composite Bond Index
N.A. N.A. N.A.
CRICIL Balanced Fund Index. N.A. N.A. N.A.
Composite Index constituting of 90% into CRISIL Composite Bond Index and 10% of BSE 200 Index.
N.A. N.A. N.A.
b. Since InceptionScheme
Regular Plan Growth Option 27.7030 22.8700 14.6190
Direct Plan - Growth Option 28.0210 23.1530 14.8830
Benchnmark
Composite Index constituting 80% of BSE 200 Index and 20% of CRISIL Composite Bond Index
27.9700 N.A. N.A.
CRICIL Balanced Fund Index. N.A. 22.1800 N.A.
Composite Index constituting of 90% into CRISIL Composite Bond Index and 10% of BSE 200 Index.
N.A. N.A. 15.2700
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5. The Total management fees and other expenses charged by the underlying fund along with the management fee and
recurring expenses charged by the domestic Mutual Fund is as follows:
Scheme TER charged by underlying Fund***
TER of the domestic Fund***
Total TER*** Maximum TER Cap as per circular***
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
HSBC Managed Solutions India - Growth
1.63% N.A 0.67% N.A 2.31% N.A 2.70% N.A
HSBC Managed Solution India - Conservative
0.83% N.A 0.80% N.A 1.63% N.A 2.70% N.A
HSBC Managed Solutions India - Moderate
1.37% N.A 0.82% N.A 2.20% N.A 2.70% N.A
* Indicates annualised value.*** The TER excludes service Tax on Management fees.
15
HSBC MANAGED SOLUTIONS
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC MANAGED SOLUTIONS INDIA-GROWTH#
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of period ended March 31, 2015 is NIL
1.3. Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the period ended March 31, 2015 is NIL.
1.5. NPA as at period ended March 31, 2015 is NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category 2015
Amount (Rupees)
Percentage to Net Assets
Units in Domestic Mutual Fund
– Appreciation 161,922,435 12.77
– Depreciation – –
Foreign Securities
– Appreciation 6,713,203 0.53
– Depreciation – –
1.7 The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial period 2014-2015 (excluding accretion of discount) is Rs. 1,255,088,569 and 180,418,235 respectively being 128.82% and 18.52% of the average daily net assets.
1.8. Non-Traded securities in the portfolios as at March 31, 2015 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the
Investment Manager
2014-2015 122.11 85.64 5,490,055 56.60
HSBC InvestDirect Securities (India) Limited
Associate of the
Investment Manager
2014-2015 – – – –
16
HSBC MANAGED SOLUTIONS
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage
paid by the fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 3.91 28.40 39,102 28.41
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the period ended March 31, 2015.
4 Unit Capital movement during the period ended March 31, 2015:
Description Opening Units
Subscription Redemption Closing Units Face Value per unit (Rupees)
2014-2015
Regular Plan Growth Option – 113,126,866.472 21,188,046.767 91,938,819.705 10
Regular Plan Dividend Option – 12,976,137.082 6,488,675.868 6,487,461.214 10
Direct Plan - Growth Option – 1,032,817.844 261,485.055 771,332.789 10
Direct Plan - Dividend Option
– 115,919.599 – 115,919.599 10
5 No contingent liabilities for the period ended March 31, 2015.
6 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
7 Other income credited to the Scheme is Nil.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
# Scheme launched during the current fi nancial period.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
17
HSBC MANAGED SOLUTIONS
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC MANAGED SOLUTIONS INDIA-MODERATE#
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of period ended March 31, 2015 is NIL
1.3. Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the period ended March 31, 2015 is NIL.
1.5. NPA as at period ended March 31, 2015 is NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category 2015
Amount (Rupees)
Percentage to Net Assets
Units in Domestic Mutual Fund
– Appreciation 246,742,040 10.33
– Depreciation – –
Foreign Securities
– Appreciation 9,451,574 0.40
– Depreciation – –
1.7 The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial period 2014-2015 (excluding accretion of discount) is Rs. 2,461,717,870 and 375,363,022 respectively being 147.43% and 22.48% of the average daily net assets.
1.8. Non -Traded securities in the portfolios as at March 31, 2015 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the
Investment Manager
2014-2015 265.62 91.71 9,050,993 60.27
HSBC InvestDirect Securities (India) Limited
Associate of the
Investment Manager
2014-2015 – – – –
18
HSBC MANAGED SOLUTIONS
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transactions of the fund
Brokerage paid [Rs.]
% of total brokerage
paid by the fund
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 4.49 24.91 44,848 24.91
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the period ended March 31, 2015.
4 Unit Capital movement during the period ended March 31, 2015.
Description Opening Units
Subscription Redemption Closing Units Face Value per unit (Rupees)
2014-2015
Regular Plan Growth Option – 216,574,226.228 43,677,155.107 172,897,071.121 10
Regular Plan Dividend Option – 39,927,010.411 16,877,247.646 23,049,762.765 10
Direct Plan - Growth Option – 82,195.098 28,502.667 53,692.431 10
Direct Plan - Dividend Option – 53,177.964 – 53,177.964 10
5 No contingent liabilities for the period ended March 31, 2015.
6 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
7 Other income credited to the Scheme is Nil.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
# Scheme launched during the current fi nancial period.
19
HSBC MANAGED SOLUTIONS
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC MANAGED SOLUTION INDIA-CONSERVATIVE#
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of period ended March 31, 2015 is NIL
1.3. Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the period ended March 31, 2015 is NIL.
1.5. NPA as at period ended March 31, 2015 is NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category 2015
Amount (Rupees)
Percentage to Net Assets
Units in Domestic Mutual Fund
– Appreciation 333,579,049 11.24
– Depreciation – –
1.7 The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial period 2014-2015 (excluding accretion of discount) is Rs. 4,353,552,671 and 1,828,351,181 respectively being 143.25% and 60.16% of the average daily net assets.
1.8. Non -Traded securities in the portfolios as at March 31, 2015 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the
Investment Manager
2014-2015 429.85 97.36 13,868,151 87.31
HSBC InvestDirect Securities (India) Limited
Associate of the
Investment Manager
2014-2015 – – – –
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hong kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
20
HSBC MANAGED SOLUTIONS
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
3 None of the Investors held more than 25% of the total net assets of the Scheme at the period ended March 31, 2015.
4 Unit Capital movement during the period ended March 31, 2015:
Description Opening Units
Subscription Redemption Closing Units Face Value per unit (Rupees)
2014-2015
Regular Plan Growth Option – 360,088,236.594 138,357,849.882 221,730,386.712 10
Regular Plan Dividend Option – 66,310,218.794 29,200,700.587 37,109,518.207 10
Direct Plan - Growth Option – 1,311,722.326 1,212,218.463 99,503.863 10
5 No contingent liabilities for the period ended March 31, 2015.
6 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
7 Other income credited to the Scheme is Nil.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
# Scheme launched during the current fi nancial period.
21
HSBC MANAGED SOLUTIONS
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
22
HSBC MANAGED SOLUTIONS
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
23
HSBC MANAGED SOLUTIONS
Det
ails
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014-
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24
HSBC MANAGED SOLUTIONS
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HSBC MANAGED SOLUTIONS
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28
HSBC MANAGED SOLUTIONS
Mee
ting
Dat
eCo
mpa
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ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
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tion
Vote
(For
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gain
st /
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bsta
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12
34
56
78
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posa
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�N
one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
HSBC MANAGED SOLUTIONS
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC GLOBAL CONSUMER OPPORTUNITIES FUND
HSBC Global Consumer Opportunities Fund –Benefi ting From China’s Growing Consumption PowerAn open ended Fund of Funds Scheme
Abridged Annual Report 2014 - 2015
1
HSBC Global Consumer Opportunities Fund
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC Global Consumer Opportunities Fund
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC Global Consumer Opportunities Fund
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC Global Consumer Opportunities Fund
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Global Consumer Opportunities Fund (HGCOF) - an open ended Fund of Funds SchemeHGCOF seeks to provide long term capital appreciation by investing predominantly in units of HSBC Global Investment Funds (HGIF) China Consumer Opportunities Fund (Underlying scheme). The Scheme may also invest a certain proportion of its corpus in money market instruments and / or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time.
The scheme was launched on February 02, 2015. The performance of the scheme is benchmarked against MSCI AC World Index. The performance data has not been provided since the scheme had not completed 1 year period as on March 31, 2015.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
5
HSBC Global Consumer Opportunities Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
6
HSBC Global Consumer Opportunities Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
7
HSBC Global Consumer Opportunities Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
8
HSBC Global Consumer Opportunities Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios# including against its authorized persons / distributors / employees etc.
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
9
HSBC Global Consumer Opportunities Fund
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Global Consumer
Opportunities Fund – Benefi ting from China’s Growing Consumption Power (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the period February 02, 2015 to March 31, 2015, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net defi cit for the period February 02, 2015 to March 31, 2015.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report
10
HSBC Global Consumer Opportunities Fund
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
11
HSBC Global Consumer Opportunities Fund
Rs. in Lakhs
HSBC GLOBAL CONSUMER OPPORTUNITIES FUND – BENEFITING FROM CHINA’S GROWING
CONSUMPTION POWER#
As at March 31, 2015
LIABILITIES1 Unit Capital 2,255.122 Reserves & Surplus2.1 Unit Premium Reserves –2.2 Unrealised Appreciation Reserve –2.3 Other Reserves (27.93)3 Loans & Borrowings –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits –4.2 Other Current Liabilities & Provisions 14.49
TOTAL 2,241.68
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares –1.1.2 Preference Shares –1.1.3 Equity Linked Debentures –1.1.4 Other Debentures & Bonds –1.1.5 Securitised Debt securities –1.2 Securities Awaited Listing:1.2.1 Equity Shares –1.2.2 Preference Shares –1.2.3 Equity Linked Debentures –1.2.4 Other Debentures & Bonds –1.2.5 Securitised Debt securities –1.3 Unlisted Securities1.3.1 Equity Shares –1.3.2 Preference Shares –1.3.3 Equity Linked Debentures –1.3.4 Other Debentures & Bonds –1.3.5 Securitised Debt securities –1.4 Government Securities –1.5 Treasury Bills –1.6 Commercial Paper –1.7 Certifi cate of Deposits –1.8 Bill Rediscounting –1.9 Units of Domestic Mutual Fund –1.10 Foreign Securities 2,217.44
Total Investments 2,217.442 Deposits 1.943 Other Current Assets3.1 Cash & Bank Balance 0.013.2 CBLO / Reverse Repo Lending 21.353.3 Others 0.944 Deferred Revenue Expenditure (to the extent not written off) –
TOTAL 2,241.68
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial period
Abridged Balance Sheet as at March 31, 2015
12
HSBC Global Consumer Opportunities Fund
Abridged Revenue Account for the period ended March 31, 2015
Rs. in Lakhs
HSBC GLOBAL CONSUMEROPPORTUNITIES FUND– BENEFITING FROMCHINA’S GROWING
CONSUMPTION POWER#
Current Period ended March 31, 2015
1 INCOME1.1 Dividend –1.2 Interest 4.391.3 Realised Gain / (Loss) on Foreign Exchange Transactions 11.641.4 Realised Gains / (Losses) on Interscheme sale of investments –1.5 Realised Gains / (Losses) on External sale / redemption of investments (1.42)1.6 Realised Gains / (Losses) on Derivative Transactions –1.7 Other Income –
(A) 14.612 EXPENSES2.1 Management fees 1.592.2 Service tax on Management fees 0.202.3 Transfer agents fees and expenses 0.322.4 Custodian fees 0.422.5 Trusteeship fees 0.012.6 Commission to Agents 1.722.7 Marketing & Distribution expenses 0.022.8 Audit fees 0.202.9 Investor Education Expenses 0.052.10 Other operating expenses 0.302.11 Less:Expenses to be Reimbursed by the Investment Manager (0.83)
(B) 4.00
3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 10.61
4 Change in Unrealised Depreciation in value of investments*** (D) (40.71)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] (30.10)
6 Change in unrealised appreciation in the value ofinvestments and derivatives (F) –
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) (30.10)
7.1 Add: Balance transfer from Unrealised Appreciation Reserve –7.2 Less: Balance transfer to Unrealised Appreciation Reserve –7.3 Add / (Less): Equalisation 2.177.4 Transfer from Reserve Fund –
8 Total (27.93)
9 Dividend Appropriation9.1 Income Distributed during the year –9.2 Tax on income distributed during the year –
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet (27.93)
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial period.*** Includes Unrealised Depreciation in the value of Foreign Currency Transactions.
13
HSBC Global Consumer Opportunities Fund
Key Statistics for the period ended March 31, 2015
HSBC GLOBAL CONSUMEROPPORTUNITIES FUND– BENEFITING FROMCHINA’S GROWING
CONSUMPTION POWER#
Current Period ended March 31, 2015
1. NAV per unit (Rs.):
Open
Regular Plan Growth Option N.A.
Regular Plan Dividend Option N.A.
Direct Plan - Growth Option N.A.
Direct Plan - Dividend Option N.A.
High
Regular Plan Growth Option 10.0273
Direct Plan - Growth Option 10.0289
Low
Regular Plan Growth Option 9.7780
Direct Plan - Growth Option 9.7810
End
Regular Plan Growth Option 9.8761
Direct Plan - Growth Option 9.8831
2. Closing Assets Under Management (Rs. in Lakhs)
End 2,227
Average (AAuM)1 2,298
3. Gross income as % of AAuM2 0.64%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise5)
Regular Plan 1.73%
Direct Plan 1.03%
b. Management Fee as % of AAuM (planwise)
Regular Plan 0.07%
Direct Plan 0.07%
5. Net Income as a percentage of AAuM3 0.46%
6. Portfolio turnover ratio4 0.07
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Plan Dividend Option –
Direct Plan - Dividend Option –
Corporate
Regular Plan Dividend Option –
Direct Plan - Dividend Option –
14
HSBC Global Consumer Opportunities Fund
HSBC GLOBAL CONSUMEROPPORTUNITIES FUND– BENEFITING FROMCHINA’S GROWING
CONSUMPTION POWER#
Current Period ended March 31, 2015
8. Returns (%):
a. Last One Year
Scheme
Regular Plan Growth Option N.A.
Direct Plan - Growth Option N.A.
Benchmark
MSCI AC World Index N.A.
b. Since Inception
Scheme
Regular Plan Growth Option (1.2390)
Direct Plan - Growth Option (1.1690)
Benchnmark
MSCI AC World Index (1.5900)
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The Total management fees and other expenses charged by the underlying fund along with the management
fee and recurring expenses charged by the domestic Mutual Fund is as follows:
Scheme TER charged by underlying Fund***
TER of the domestic Fund***
Total TER*** Maximum TER Cap as per circular***
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
HSBC Global Consumer O p p o r t u n i t i e s F u n d – Benefiting From China's Growing Consumption Power
0.70% N.A 1.64% N.A 2.34% N.A 2.70% N.A
*** The TER excludes service Tax on Management fees.
# Scheme launched during the current fi nancial period.
Key Statistics for the period ended March 31, 2015 (Contd...)
15
HSBC Global Consumer Opportunities Fund
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC GLOBAL CONSUMER OPPORTUNITIES FUND - BENEFITING FROM CHINA’S GROWING CONSUMPTION POWER#
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of period ended March 31, 2015 is NIL
1.3. Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the period ended March 31, 2015 is NIL.
1.5. NPA as at period ended March 31, 2015 is NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets.
Security Category Amount (Rupees) Percentage toNet Assets
2015
Foreign Securities
– Appreciation – –
– Depreciation 4,070,655 1.83
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial period 2014-2015 (excluding accretion of discount) is Rs. 242,750,428 and 16,793,325 respectively being 105.63% and 7.31% of the average daily net assets.
1.8. Non -Traded securities in the portfolios as at March 31, 2015 is NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 22.01 89.22 – –
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2014-2015 – – – –
The brokerage paid was at rates similar to those offered to other brokers / distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015.
16
HSBC Global Consumer Opportunities Fund
4 Unit Capital movement during the period ended March 31, 2015:
Description
2014-2015
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Regular Plan Growth Option
– 24,415,134.780 2,114,390.000 22,300,744.780 10
Direct Plan - Growth Option
– 250,472.037 – 250,472.037 10
Units held by the AMC (Seed Capital):
Name of the Scheme Plan / Option Units as at March 31, 2015
Units as at March 31, 2014
HSBC Global Consumer Opportunities Fund – Benefiting From China’s Growing Consumption Power
Direct P lan Growth Option
244,572.037 NA
5 No contingent liabilities for the period ended March 31, 2015.
6 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
7 Other income credited to the Scheme is Nil.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
# Scheme launched during the current fi nancial period.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
17
HSBC Global Consumer Opportunities Fund
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
18
HSBC Global Consumer Opportunities Fund
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
19
HSBC Global Consumer Opportunities Fund
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ or P
refe
renc
e sh
ares
.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s / A
dditi
onal
Dire
ctor
s an
d pr
omot
er re
late
d ac
tiviti
es.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
HSBC Global Consumer Opportunities Fund
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC MIP 11
HSBC MIPAn open-ended Fund with Regular & Savings Plans*
Abridged Annual Report 2014 - 2015*Monthly income is not assured and is subject tothe availability of distributable surplus.
1
HSBC MIP 11
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
11 HSBC MIP
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC MIP 11
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
11 HSBC MIP
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC MIP (HMIP) – an open-ended Fund(Monthly income is not assured and is subject to availability of distributable surplus.)
HMIP is an open-ended fund which seeks to generate reasonable returns through investments in Debt and Money Market Instruments. The secondary objective of the scheme is to invest in equity and equity related instruments to seek capital appreciation.
The scheme offers two plans: Regular Plan and Savings Plan. The Regular Plan can have up to 15% of the corpus invested in equities while the Savings Plan can have up to 25 % invested in equities. The net assets of HMIP – Regular Plan (HMIP – R) amounted to Rs. 93.47 crores as at March 31, 2015 as compared to Rs. 111.44 crores as at March 31, 2014. Around 82.79% of the net assets were invested in debt and money market instruments, 13.58% of the net assets were invested in equities and 3.63% were in net current assets as at March 31, 2015. The net assets of HMIP – Savings Plan (HMIP – S) amounted to Rs. 190.68 crores as at March 31, 2015 as compared to Rs. 186.36 crores as at March 31, 2014. Around 72.94% of the net assets were invested in debt and money market instruments, 23.56% of the net assets were invested in equities and 3.63% were in net current assets as at March 31, 2015.
MIP-R underperformed its benchmark due to lower duration view that the fund takes and larger movement in duration segment. Further, the underperformance of MIP-R was also due to lower exposure in equity.
MIP-S outperformed its benchmark due to higher duration calls in rates during the year as progressive reduction in infl ation and commodity prices, stability in government created conducive environment for rate cuts. Higher exposure in Equity also helped outperformance.
HMIP – Regular Plan
Date of Inception : 24 February 2004 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC MIP - Regular Plan - Growth 15.60 6.60 10.07 8.36
CRISIL MIP Blended Index (Scheme Benchmark) 16.42 6.42 9.09 7.93
CRISIL 1 Year T-Bill Index (Standard Benchmark) 8.74 5.78 8.37 5.74
CRISIL 10 Year Gilt Index (Standard Benchmark) 14.58 -0.79 11.31 5.10
Rs. 10,000, if invested in HMIP - R, would have become
11,560 10,660 11,007 24,387
Rs. 10,000, if invested in CRISIL MIP Blended Index, would have become
11,642 10,642 10,909 23,346
Rs. 10,000, if invested in CRISIL 1 Year T-Bill Index, would have become
10,874 10,578 10,837 18,585
Rs. 10,000, if invested in CRISIL 10 Year Gilt Index, would have become
11,458 9,921 11,131 17,381
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded
5
HSBC MIP 11
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
HMIP – Savings Plan
Date of Inception : 24 February 2004 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC MIP - Savings Plan - Growth 18.57 8.99 10.74 10.10
CRISIL MIP Blended Index (Scheme Benchmark) 16.42 6.42 9.09 7.93
CRISIL 1 Year T-Bill Index (Standard Benchmark) 8.74 5.78 8.37 5.74
CRISIL 10 Year Gilt Index (Standard Benchmark) 14.58 -0.79 11.31 5.10
Rs. 10,000, if invested in HMIP - S, would have become
11,857 10,899 11,074 29,112
Rs. 10,000, if invested in CRISIL MIP Blended Index, would have become
11,642 10,642 10,909 23,346
Rs. 10,000, if invested in CRISIL 1 Year T-Bill Index, would have become
10,874 10,578 10,837 18,585
Rs. 10,000, if invested in CRISIL 10 Year Gilt Index, would have become
11,458 9,921 11,131 17,381
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
6
11 HSBC MIP
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
7
HSBC MIP 11
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the
8
11 HSBC MIP
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC MIP - Regular Plan 483,981.93 795 304,962.62 14
HSBC MIP - Saving Plan 791,101.21 864 270,600.68 17
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
9
HSBC MIP 11
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
11 HSBC MIP
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
11
HSBC MIP 11
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC MIP Fund (the
“Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
12
11 HSBC MIP
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
13
HSBC MIP 11
Abridged Balance Sheet as at March 31, 2015
Rs. in Lakhs
HSBC MIP - REGULAR PLANAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 5,703.53 8,031.082 Reserves & Surplus2.1 Unit Premium Reserves 55.59 218.482.2 Unrealised Appreciation Reserve 531.01 524.812.3 Other Reserves 3,051.26 2,369.143 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 93.46 67.83
TOTAL 9,434.85 11,211.34
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 1,268.99 1,704.991.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 2,000.68 5,365.421.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities 5,272.97 963.531.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 464.38 2,829.751.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 9,007.02 10,863.692 Deposits 2.18 9.873 Other Current Assets3.1 Cash & Bank Balance 30.94 1.123.2 CBLO / Reverse Repo Lending 150.35 22.333.3 Others 244.36 314.334 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 9,434.85 11,211.34
Notes to Accounts - Annexure I
14
11 HSBC MIP
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC MIP - SAVINGS PLANAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 9,956.24 11,402.412 Reserves & Surplus2.1 Unit Premium Reserves 664.31 961.112.2 Unrealised Appreciation Reserve 1,559.77 1,059.582.3 Other Reserves 6,978.26 5,213.173 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 219.41 163.37
TOTAL 19,377.99 18,799.64
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares 4,489.60 4,956.021.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 3,144.29 7,116.171.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities 9,340.46 1,652.331.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 1,421.47 4,563.561.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 18,395.82 18,288.08
2 Deposits 5.49 –3 Other Current Assets3.1 Cash & Bank Balance 172.98 36.793.2 CBLO / Reverse Repo Lending 425.09 26.043.3 Others 378.61 448.734 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 19,377.99 18,799.64
Notes to Accounts - Annexure I
15
HSBC MIP 11
Rs. in Lakhs
HSBC MIP - REGULAR PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 15.42 37.971.2 Interest 670.70 1,174.111.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments805.11 (66.28)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.02 10.42
(A) 1,491.25 1,156.222 EXPENSES2.1 Management fees 114.88 223.862.2 Service tax on Management fees 14.20 27.672.3 Transfer agents fees and expenses 7.41 12.952.4 Custodian fees 0.42 0.912.5 Trusteeship fees 0.38 0.852.6 Commission to Agents 83.86 142.462.7 Marketing & Distribution expenses 1.08 0.642.8 Audit fees 0.63 1.642.9 Investor Education Expenses 1.85 3.172.10 Other operating expenses 3.77 8.672.11 Expenses to be Reimbursed by the Investment Manager – (14.30)
(B) 228.48 408.52
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 1,262.77 747.70
4 Change in Unrealised Depreciation invalue of investments (D) 44.00 (26.80)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 1,306.77 720.90
6 Change in Unrealised appreciation inthe value of investments (F) 6.20 187.89
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,312.97 908.79
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 6.20 187.897.3 Add / (Less): Equalisation (293.25) (1,184.47)7.4 Transfer from Reserve Fund 2,369.16 3,500.02
7.5 Transfer from Unit Premium Reserve – –
8 Total 3,382.68 3,036.45
9 Dividend Appropriation9.1 Income Distributed during the year (248.86) (523.95)9.2 Tax on income distributed during the year (82.57) (143.36)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 3,051.25 2,369.14
Notes to Accounts - Annexure I
Abridged Revenue Account for the year ended March 31, 2015
16
11 HSBC MIP
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC MIP - SAVINGS PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend 42.06 109.411.2 Interest 1,145.96 1,703.531.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments1,718.80 351.63
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.03 22.33
(A) 2,906.85 2,186.90
2 EXPENSES2.1 Management fees 192.48 359.432.2 Service tax on Management fees 23.78 44.432.3 Transfer agents fees and expenses 14.46 21.342.4 Custodian fees 0.85 1.622.5 Trusteeship fees 0.74 1.402.6 Commission to Agents 192.37 200.572.7 Marketing & Distribution expenses 6.96 8.722.8 Audit fees 1.28 2.742.9 Investor Education Expenses 3.60 5.242.10 Other operating expenses 6.85 13.702.11 Expenses to be Reimbursed by the Investment Manager – (12.75)
(B) 443.37 646.44
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 2,463.48 1,540.46
4 Change in Unrealised Depreciation invalue of investments (D) 64.49 (36.21)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 2,527.97 1,504.25
6 Change in Unrealised appreciation inthe value of investments (F) 500.18 543.22
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 3,028.15 2,047.47
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 500.18 543.227.3 Add / (Less): Equalisation (178.33) (3,123.95)7.4 Transfer from Reserve Fund 5,213.20 7,723.53
7.5 Transfer from Unit Premium Reserve – –
8 Total 7,562.84 6,103.83
9 Dividend Appropriation9.1 Income Distributed during the year (438.15) (699.70)9.2 Tax on income distributed during the year (146.42) (190.96)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 6,978.27 5,213.17
Notes to Accounts - Annexure I
17
HSBC MIP 11
Key Statistics for the year ended March 31, 2015
HSBC MIP - REGULAR PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 21.1288 19.7509
Monthly Dividend Option 11.1767 11.2060
Quarterly Dividend Option 11.4112 11.4663
Direct Plan - Growth Option 21.3058 19.8072
Direct Plan - Monthly Dividend Option – –
Direct Plan - Quarterly Dividend Option – –
High
Growth Option 24.5827 21.0971
Monthly Dividend Option 12.2671 11.6288
Quarterly Dividend Option 12.5492 11.9620
Direct Plan - Growth Option 24.9070 21.2729
Direct Plan - Monthly Dividend Option – 11.1174
Direct Plan - Quarterly Dividend Option – –
Low
Growth Option 21.0209 19.1241
Monthly Dividend Option 11.1197 10.6080
Quarterly Dividend Option 11.3529 10.8953
Direct Plan - Growth Option 21.1993 19.2191
Direct Plan - Monthly Dividend Option – 10.9079
Direct Plan - Quarterly Dividend Option – –
End5
Growth Option 24.3818 21.1288
Monthly Dividend Option 12.0058 11.1767
Quarterly Dividend Option 12.1955 11.4112
Direct Plan - Growth Option 24.7168 21.3058
Direct Plan - Monthly Dividend Option – –
Direct Plan - Quarterly Dividend Option – –
2. Closing Assets Under Management (Rs. in Lakhs)
End 9,347 11,144
Average (AAuM)1 9,240 15,846
3. Gross income as % of AAuM2 16.14% 7.30%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Growth Option 2.47% 2.58%
Direct Plan - Growth Option 1.94% 2.06%
18
11 HSBC MIP
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC MIP - REGULAR PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
b. Management Fee as % of AAuM (planwise)
Growth Option 1.24% 1.41%
Direct Plan - Growth Option 1.24% 1.41%
5. Net Income as a percentage of AAuM3 13.67% 4.72%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Monthly Dividend Option 0.6316 0.6097
Quarterly Dividend Option 0.6955 0.6390
Direct Plan - Monthly Dividend Option – 0.1013
Direct Plan - Quarterly Dividend Option – –
Corporate
Monthly Dividend Option 0.5954 0.5784
Quarterly Dividend Option 0.6556 0.6120
Direct Plan - Monthly Dividend Option – 0.0970
Direct Plan - Quarterly Dividend Option – –
8. Returns (%):
a. Last One Year
Scheme
Growth Option 15.5985 6.6025
Direct Plan - Growth Option 16.2125 7.1936
Benchmark
CRISIL MIP Blended Index 16.4235 6.4349
b. Since Inception
Scheme
Growth Option 8.3572 7.6694
Direct Plan - Growth Option 10.8362 6.7307
Benchnmark
CRISIL MIP Blended Index 7.9326 7.1246
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
19
HSBC MIP 11
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC MIP - SAVINGS PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 24.5876 22.4490
Monthly Dividend Option 12.4529 12.1235
Quarterly Dividend Option 12.4115 12.1257
Direct Plan - Growth Option 24.7675 22.5006
Direct Plan - Monthly Dividend Option 12.6961 12.1546
Direct Plan - Quarterly Dividend Option 12.8823 12.2505
High
Growth Option 29.5071 24.5358
Monthly Dividend Option 14.1197 12.6437
Quarterly Dividend Option 14.1594 12.7077
Direct Plan - Growth Option 29.8616 24.7143
Direct Plan - Monthly Dividend Option 14.8964 12.7338
Direct Plan - Quarterly Dividend Option 14.7968 12.8546
Low
Growth Option 24.4329 21.5800
Monthly Dividend Option 12.3746 11.4139
Quarterly Dividend Option 12.3334 11.4507
Direct Plan - Growth Option 24.6141 21.6770
Direct Plan - Monthly Dividend Option 12.6175 11.4691
Direct Plan - Quarterly Dividend Option 12.8026 11.5962
End5
Growth Option 29.1042 24.5876
Monthly Dividend Option 13.7738 12.4529
Quarterly Dividend Option 13.6843 12.4115
Direct Plan - Growth Option 29.4706 24.7675
Direct Plan - Monthly Dividend Option 14.6259 12.6961
Direct Plan - Quarterly Dividend Option 14.3110 12.8823
2. Closing Assets Under Management (Rs. in Lakhs)
End 19,068 18,636
Average (AAuM)1 17,976 26,185
3. Gross income as % of AAuM2 16.17% 8.35%
4. Expense Ratio:
a. Total Expense as % of AAuM (planwise)
Growth Option 2.47% 2.47%
Direct Plan - Growth Option 1.95% 1.97%
20
11 HSBC MIP
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC MIP - SAVINGS PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
b. Management Fee as % of AAuM (planwise)
Growth Option 1.07% 1.37%
Direct Plan - Growth Option 1.07% 1.37%
5. Net Income as a percentage of AAuM3 13.70% 5.88%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Monthly Dividend Option 0.6804 0.6097
Quarterly Dividend Option 0.7172 0.6390
Direct Plan - Monthly Dividend Option 0.3349 0.5084
Direct Plan - Quarterly Dividend Option 0.7245 0.4442
Corporate
Monthly Dividend Option 0.6414 0.5784
Quarterly Dividend Option 0.6758 0.6120
Direct Plan - Monthly Dividend Option 0.3174 0.4814
Direct Plan - Quarterly Dividend Option 0.6825 0.4254
8. Returns (%):
a. Last One Year
Scheme
Growth Option 18.5714 8.9944
Direct Plan - Growth Option 19.1918 9.5397
Benchmark
CRISIL MIP Blended Index 16.4235 6.4349
b. Since Inception
Scheme
Growth Option 10.0987 9.2981
Direct Plan - Growth Option 12.4832 7.2971
Benchnmark
CRISIL MIP Blended Index 7.9326 7.1246
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
21
HSBC MIP 11
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC MIP
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives in Regular Plan as at years ended March 31, 2015 and March 31, 2014 are NIL.
Open Positions of derivatives in Savings Plan as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Regular Plan as of fi nancial years March 31, 2015 and March 31, 2014 are NIL.
Open positions of Securities Borrowed and / or Lent by the Savings Plan as of fi nancial years March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs for Regular Plan as on March 31, 2015 and March 31, 2014 are NIL.
NPAs for Savings Plan as on March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years 2015 and 2014 and their percentage to net assets are as under :
Security Category REGULAR PLAN SAVINGS PLAN
Amount(Rs.)
Percentage to Net Assets (%)
Amount(Rs.)
Percentage to Net Assets (%)
2015
Equity Shares
– Appreciation 43,621,390 4.67 159,295,115 8.35
– Depreciation 10,939,982 1.17 35,269,856 1.85
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 3,944,330 0.42 4,689,576 0.25
– Depreciation 107,200 0.01 160,800 0.01
Government of India Securities
– Appreciation 16,562,817 1.77 27,215,543 1.43
– Depreciation 71,736 0.01 – –
Commercial Paper / Certifi cate of Deposit
– Appreciation 91,827 0.01 206,993 0.01
– Depreciation – – – –
22
11 HSBC MIP
Security Category REGULAR PLAN SAVINGS PLAN
Amount(Rs.)
Percentage to Net Assets (%)
Amount(Rs.)
Percentage to Net Assets (%)
2014
Equity Shares
– Appreciation 59,389,511 5.33 144,223,781 7.74
– Depreciation 8,162,567 0.73 40,632,343 2.18
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 422,064 0.04 689,898 0.04
– Depreciation 4,822,519 0.43 7,138,757 0.38
Government of India Securities
– Appreciation 465,058 0.04 782,081 0.04
– Depreciation 127,658 0.01 242,756 0.01
Commercial Paper / Certifi cate of Deposit
– Appreciation 916,790 0.08 1,827,357 0.10
– Depreciation – – – –
1.7. The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) are Rs. 2,217,723,093 and Rs. 2,492,004,338 respectively being 240.02% and 269.70% of the average daily net assets for Regular Plan and Rs. 4,559,380,309 and Rs. 4,786,257,487 respectively being 253.64% and 266.26% of the average daily net assets for Savings Plan.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) are Rs. 3,750,015,905 and Rs. 4,511,519,961 respectively being 236.66% and 284.72% of the average daily net assets for Regular Plan and Rs. 5,930,974,359 and Rs. 7,255,655,401 respectively being 226.50% and 277.09% of the average daily net assets for Savings Plan.
1.8. Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under :
Security Category REGULAR PLANAmount
(Rs.)Percentage to Net Assets (%)
Amount(Rs.)
Percentage to Net Assets (%)
2015 2014
Equities – – – –
Debt Instruments – – – –
Money Market Instruments – – 49,905,770 4.48
Total – – 49,905,770 4.48
Security Category SAVINGS PLANAmount
(Rs.)Percentage to Net Assets (%)
Amount(Rs.)
Percentage to Net Assets (%)
2015 2014
Equities – – – –
Debt Instruments – – – –
Money Market Instruments – – – –
Total – – – –
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
23
HSBC MIP 11
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rupees]
% of Total commission paid by the
Fund
Regular Plan
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager2014-2015 11.02 34.18 2,176,994 27.01
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager2014-2015 – – – –
Savings Plan
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager2014-2015 24.09 31.53 3,590,912 20.27
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager2014-2015 – – – –
Name of Sponsor /AMC and its associates /related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rupees]
% of Total commission paid by the
Fund
Regular Plan
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager2013-2014 8.82 20.71 6,281,007 45.97
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager2013-2014 – – 23,257 0.17
Savings Plan
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager2013-2014 21.37 33.51 9,287,870 49.06
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager2013-2014 – – 5,717 0.03
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
24
11 HSBC MIP
Brokerage paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association /Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transaction of the fund
Brokerage paid [Rs.]
% of total brokerage paid by the
fund
Regular Plan
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 1.29 1.10 15,459.49 5.76
Savings Plan
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2014-2015 3.94 1.86 47,280.21 7.19
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association /Nature of
relation
Period Covered
Value of Transactions
[Rs. In Crores]
% of total value of
transaction of the fund
"Brokerage paid
[Rs.]“(on accrual basis)“"
% of total brokerage
paid by the fund
Regular Plan
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 0.96 0.44 11,546 2.70
Savings Plan
HSBC Securities and Capital Market (India) Private Limited
Sponsor 2013-2014 2.14 0.60 25,682 2.07
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Schemes at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2014 and March 31, 2015.
REGULAR PLAN
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
2014-2015
Growth Option 21,364,211.069 8,935,136.745 10,330,035.910 19,969,311.904 10
Monthly Dividend Option
41,410,262.499 7,427,323.519 23,194,032.325 25,643,553.693 10
Quarterly Dividend Option
17,535,196.571 1,364,438.785 7,483,349.924 11,416,285.432 10
Direct Plan - Growth Option
1,102.368 19,330.230 14,325.776 6,106.822 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
25
HSBC MIP 11
REGULAR PLAN
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Direct Plan - Monthly Dividend Option
– – – – –
Direct Plan - Quarterly Dividend Option
– – – – –
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Growth Option 30,599,797.881 15,251,551.850 24,487,138.662 21,364,211.069 10
Monthly Dividend Option
85,184,893.885 5,590,854.544 49,365,485.930 41,410,262.499 10
Quarterly Dividend Option
30,107,808.250 1,277,319.049 13,849,930.728 17,535,196.571 10
Direct Plan - Growth Option
1,102.368 – – 1,102.368 10
Direct Plan - Monthly Dividend Option
– 1,598,553.821 1,598,553.821 – –
Direct Plan - Quarterly Dividend Option
– – – – –
SAVINGS PLAN
Description Opening Units Subscription Redemption Closing Units Face Value per Unit
(Rs.)
2014-2015
Growth Option 36,346,855.103 13,285,212.008 14,172,550.736 35,459,516.375 10
Monthly Dividend Option 47,169,592.410 21,038,519.557 22,107,198.756 46,100,913.211 10
Quarterly Dividend Option
29,972,252.663 3,584,810.938 15,801,747.341 17,755,316.260 10
Direct Plan - Growth Option
310,615.821 25,229.477 182,118.366 153,726.932 10
Direct Plan - Monthly Dividend Option
224,505.050 1,575,219.701 1,720,990.991 78,733.760 10
Direct Plan - Quarterly Dividend Option
241.638 13,921.387 – 14,163.025 10
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value per Unit
(Rs.)
Growth Option 57,181,395.711 18,492,745.290 39,327,285.898 36,346,855.103 10
Monthly Dividend Option 107,809,474.513 8,196,425.002 68,836,307.105 47,169,592.410 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
26
11 HSBC MIP
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value per Unit
(Rs.)
Quarterly Dividend Option
47,537,058.894 3,262,495.214 20,827,301.445 29,972,252.663 10
Direct Plan - Growth Option
253,338.899 201,592.190 144,315.268 310,615.821 10
Direct Plan - Monthly Dividend Option
31,718.984 203,143.415 10,357.349 224,505.050 10
Direct Plan - Quarterly Dividend Option
34,214.030 469.870 34,442.262 241.638 10
5 Prior year amounts have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for Regular Plan and Savings Plan for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other income of Rs. 1,887 in Regular Plan (2014: Rs.1,041,659) and Rs. 3,396 (2014: Rs. 2,233,284) in Savings Plan represents Exit Load (net of service tax) credited to the Scheme
9 Garnishee Notices :
An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings, by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “”stay”” against the demand.
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted ”stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
27
HSBC MIP 11
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
28
11 HSBC MIP
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
29
HSBC MIP 11HSBC MIP FUND
Det
ails
of t
he P
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in G
ener
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Lis
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014-
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ting
Dat
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of
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luti
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ny’s
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agem
ent
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mm
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tion
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34
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11 HSBC MIP
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ain,
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ceiv
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the
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end
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35
HSBC MIP 11
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
1
HSBC INCOME FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC INCOME FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC INCOME FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Income Fund (HIF) – an open-ended Income SchemeHIF seeks to generate reasonable income through a diversifi ed portfolio of fi xed income securities. The AMC’s view of interest rate trends and the nature of the plans will be refl ected in the type and maturities of securities in which the Short Term and Investment Plans are invested.
The Scheme has two plans – the Investment Plan and the Short Term Plan. The net assets of HSBC Income Fund – Investment Plan (HIF – IP) amounted to Rs. 104.89 crores as at March 31, 2015 as compared to Rs. 61.65 crores as at March 31, 2014. Around 95.44% of the net assets were invested in debt and money market instruments, 3.20% of the net assets were invested in reverse repos / CBLO and 1.36 % were in net current assets as at March 31, 2015. The net assets of HSBC Income Fund – Short Term Plan (HIF – STP) amounted to Rs. 1309.00 crores as at March 31, 2015 as compared to Rs. 727.27 crores as at March 31, 2014. Around 97.15% of the net assets were invested in debt and money market instruments, 0.79% of the net assets were invested in reverse repos / CBLO and 2.06% were in net current assets as at March 31, 2015.
HIF-IP outperformed its benchmark due to higher duration calls taken during the year. The stable government and low volatility in forex market created environment for foreign investors to invest in fi xed income segment which benefi tted the rates and spread scenario.
HIF-STP underperformed its scheme benchmark due to lower duration calls taken during the year. RBI restricted short end investment (upto 3 year) by Foreign Portfolio investors which affected short end levels.
HIF – IP
Date of Inception : 10 December 2002 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Income Fund - Investment Plan – Growth 14.88 1.85 11.19 7.30
CRISIL Composite Bond Fund Index (Scheme Benchmark)
14.60 4.34 9.27 6.42
CRISIL 10 Year Gilt Index (Standard Benchmark) 14.58 -0.79 11.31 5.78
Rs. 10,000, if invested in HIF - IP, would have become
11,488 10,185 11,119 23,801
Rs. 10,000, if invested in CRISIL Composite Bond Fund Index, would have become
11,460 10,434 10,927 21,505
Rs. 10,000, if invested in CRISIL 10 Year Gilt Index, would have become
11,458 9,921 11,131 19,971
HIF – STP
Date of Inception : 10 December 2002 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Income Fund - STP - Growth 9.95 7.23 9.26 7.05
CRISIL Short Term Bond Fund Index (Scheme Benchmark)
10.33 8.79 9.09 6.93
5
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Date of Inception : 10 December 2002 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
CRISIL 1 Year T-Bill Index (Standard Benchmark) 8.74 5.78 8.37 5.70
Rs. 10,000, if invested in HIF - ST, would have become
10,995 10,723 10,926 23,138
Rs. 10,000, if invested in CRISIL Short Term Bond Fund Index, would have become
11,033 10,879 10,909 22,828
Rs. 10,000, if invested in CRISIL 1 Year T-Bill Index, would have become
10,874 10,578 10,837 19,797
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions.
6
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
7
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
8
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Income Fund-Investment Plan 460,862.65 987 332,101.47 27
HSBC Income Fund- Short Term Plan 61,364.17 76 0.04 1
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
9
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
10
HSBC INCOME FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
11
HSBC INCOME FUND
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Income Fund
(the “Scheme”), which comprise the Balance Sheet as at March 31, 2015,the related Revenue Account and the Cash Flow, where applicable, for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance and cash fl ow, where applicable, of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, where applicable, of the cash fl ows for the year ended on that date.
12
HSBC INCOME FUND
Independent Auditors’ Report (Contd...)
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement, where applicable,dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement, where applicable, dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
13
HSBC INCOME FUND
Rs. in Lakhs
HSBC INCOME FUND – INVESTMENT PLANAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 4,587.95 3,248.832 Reserves & Surplus2.1 Unit Premium Reserves (236.00) (622.35)2.2 Unrealised Appreciation Reserve 335.11 4.112.3 Other Reserves 5,890.22 3,534.243 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 37.99 21.60
TOTAL 10,615.27 6,186.43
ASSETS1 Investments1.1 Listed Securities: – –1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 1,651.18 2,977.661.1.5 Securitised Debt securities 12.43 20.061.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities 7,880.74 1,827.141.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 464.38 1,021.831.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 10,008.73 5,846.692 Deposits 2.36 10.353 Other Current Assets3.1 Cash & Bank Balance 8.06 8.473.2 CBLO / Reverse Repo Lending 335.88 77.823.3 Others 260.24 243.104 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 10,615.27 6,186.43
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
14
HSBC INCOME FUND
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC INCOME FUND – SHORT TERM PLANAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 75,041.23 49,741.502 Reserves & Surplus2.1 Unit Premium Reserves 7,233.10 3,752.012.2 Unrealised Appreciation Reserve 777.98 51.932.3 Other Reserves 48,977.66 19,181.963 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 180.68 351.33
TOTAL 132,210.65 73,078.73
ASSETS1 Investments1.1 Listed Securities: – –1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 81,282.85 42,206.731.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds 2,030.66 –1.3.5 Securitised Debt securities – –1.4 Government Securities 13,167.21 –1.5 Treasury Bills – –1.6 Commercial Paper 12,154.75 2,289.961.7 Certifi cate of Deposits 18,518.28 25,860.811.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 127,153.75 70,357.502 Deposits 15.20 29.043 Other Current Assets3.1 Cash & Bank Balance 316.28 159.073.2 CBLO / Reverse Repo Lending 1,032.79 166.413.3 Others 3,692.63 2,366.714 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 132,210.65 73,078.73
Notes to Accounts - Annexure I
15
HSBC INCOME FUND
Rs. in Lakhs
HSBC INCOME FUND – INVESTMENT PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 811.43 878.881.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments220.12 (520.49)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – 5.78
(A) 1,031.55 364.17
2 EXPENSES2.1 Management fees 98.42 99.082.2 Service tax on Management fees 12.17 12.252.3 Transfer agents fees and expenses 6.05 5.992.4 Custodian fees 0.13 0.412.5 Trusteeship fees 0.12 0.072.6 Commission to Agents 37.36 83.742.7 Marketing & Distribution expenses 0.13 –2.8 Audit fees 0.31 0.202.9 Investor Education Expenses 1.94 2.082.10 Other operating expenses 1.67 1.522.11 Less: Expenses to be Reimbursed by the Investment Manager – (0.74)
(B) 158.30 204.603 NET REALISED GAINS / (LOSSES) FOR
THE YEAR (A - B = C) 873.25 159.57
4 Change in Unrealised Depreciation invalue of investments (D) 107.69 (93.76)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 980.94 65.81
6 Change in unrealised appreciation inthe value of investments (F) 331.00 (7.42)
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,311.95 58.39
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 7.427.2 Less: Balance transfer to Unrealised Appreciation Reserve 331.00 –7.3 Add / (Less): Equalisation 1,408.45 (816.33)7.4 Transfer from Reserve Fund 3,534.23 4,396.63
7.5 Transfer from Unit Premium Reserve – –
8 Total 5,923.63 3,646.11
9 Dividend Appropriation9.1 Income Distributed during the year (25.16) (86.97)9.2 Tax on income distributed during the year (8.25) (24.90)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 5,890.22 3,534.24
Notes to Accounts - Annexure I
Abridged Revenue Account for the year ended March 31, 2015
16
HSBC INCOME FUND
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC INCOME FUND – SHORT TERM PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 8,827.01 9,118.751.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments522.86 (656.80)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – 1.06
(A) 9,349.87 8,463.012 EXPENSES2.1 Management fees 283.53 406.822.2 Service tax on Management fees 35.02 50.282.3 Transfer agents fees and expenses 55.17 50.722.4 Custodian fees 5.48 7.172.5 Trusteeship fees 0.95 0.572.6 Commission to Agents 599.20 591.652.7 Marketing & Distribution expenses 9.33 12.012.8 Audit fees 3.89 1.902.9 Investor Education Expenses 19.74 20.352.10 Other operating expenses 12.96 9.342.11 Less: Expenses to be Reimbursed by the Investment Manager (13.36) –
(B) 1,011.91 1,150.813 NET REALISED GAINS / (LOSSES) FOR
THE YEAR (A - B = C) 8,337.96 7,312.20
4 Change in Unrealised Depreciation invalue of investments (D) 269.57 (264.83)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 8,607.53 7,047.37
6 Change in unrealised appreciation inthe value of investments (F) 726.04 (248.87)
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 9,333.58 6,798.50
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 248.877.2 Less: Balance transfer to Unrealised Appreciation Reserve 726.04 –7.3 Add / (Less): Equalisation 23,562.11 6,189.327.4 Transfer from Reserve Fund 19,181.96 9,489.23
7.5 Transfer from Unit Premium Reserve – –
8 Total 51,351.61 22,725.92
9 Dividend Appropriation9.1 Income Distributed during the year (1,766.26) (2,788.71)9.2 Tax on income distributed during the year (607.69) (755.25)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 48,977.66 19,181.96
Notes to Accounts - Annexure I
17
HSBC INCOME FUND
Key Statistics for the year ended March 31, 2015
HSBC INCOME FUND –INVESTMENT PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Growth Option 20.8029 20.3378
Regular Dividend Option – –
Regular Quarterly Dividend Option 10.7132 11.3637
Regular Weekly Dividend Option – –
Regular Monthly Dividend Option – –
Institutional Growth Option – –
Institutional Dividend Option – –
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option – –
Institutional Plus Weekly Dividend Option – –
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 21.0320 20.3949
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option – –
Direct Plan - Monthly Dividend Option – –
Direct Plan - Quarterly Dividend Option – –
High
Regular Growth Option 23.8122 21.3223
Regular Dividend Option – –
Regular Quarterly Dividend Option 11.6168 11.9141
Regular Weekly Dividend Option – –
Regular Monthly Dividend Option – –
Institutional Growth Option – 10.0000
Institutional Dividend Option – 10.0000
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option – –
Institutional Plus Weekly Dividend Option – –
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 24.2420 21.4215
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option – –
Direct Plan - Monthly Dividend Option – –
Direct Plan - Quarterly Dividend Option – –
18
HSBC INCOME FUND
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC INCOME FUND –INVESTMENT PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
Low
Regular Growth Option 20.6479 19.4048
Regular Dividend Option – –
Regular Quarterly Dividend Option 10.6334 10.6130
Regular Weekly Dividend Option – –
Regular Monthly Dividend Option – –
Institutional Growth Option – 10.0000
Institutional Dividend Option – 10.0000
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option – –
Institutional Plus Weekly Dividend Option – –
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 20.8783 19.5283
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option – –
Direct Plan - Monthly Dividend Option – –
Direct Plan - Quarterly Dividend Option – –
End5
Regular Growth Option 23.7966 20.8029
Regular Dividend Option – –
Regular Quarterly Dividend Option 11.3683 10.7132
Regular Weekly Dividend Option – –
Regular Monthly Dividend Option – –
Institutional Growth Option – –
Institutional Dividend Option – –
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option – –
Institutional Plus Weekly Dividend Option – –
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 24.2396 21.0320
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option – –
Direct Plan - Monthly Dividend Option – –
Direct Plan - Quarterly Dividend Option – –
19
HSBC INCOME FUND
HSBC INCOME FUND –INVESTMENT PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
2. Closing Assets Under Management (Rs. in Lakhs)
End 10,489 6,165
Average (AAuM)1 9,725 10,404
3. Gross income as % of AAuM2 10.61% 3.50%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Growth Option 1.97% 1.97%
Institutional Growth Option – –
Institutional Plus Growth Option – –
Direct Plan - Growth Option 1.22% 0.98%
b. Management Fee as % of AAuM (planwise)
Regular Growth Option 1.01% 0.95%
Institutional Growth Option – –
Institutional Plus Growth Option – –
Direct Plan - Growth Option 1.01% 0.95%
5. Net Income as a percentage of AAuM3 8.98% 1.53%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Weekly Dividend Option – –
Regular Quarterly Dividend Option 0.6311 0.7013
Regular Monthly Dividend Option – –
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Weekly Dividend Option – –
Direct Plan - Weekly Dividend Option – –
Direct Plan - Monthly Dividend Option – –
Corporate
Regular Weekly Dividend Option – –
Regular Quarterly Dividend Option 0.5947 0.6717
Regular Monthly Dividend Option – –
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Weekly Dividend Option – –
Direct Plan - Weekly Dividend Option – –
Direct Plan - Monthly Dividend Option – –
Key Statistics for the year ended March 31, 2015 (Contd...)
20
HSBC INCOME FUND
HSBC INCOME FUND –INVESTMENT PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 14.8840 1.8450
Institutional Growth Option N.A. N.A.
Institutional Plus Growth Option N.A. N.A.
Direct Plan - Growth Option 15.7481 2.6720
Benchmark
CRISIL Composite Bond Fund Index 14.5991 4.3172
b. Since Inception
Scheme
Regular Growth Option 7.2952 6.6524
Institutional Growth Option N.A. N.A.
Institutional Plus Growth Option N.A. N.A.
Direct Plan - Growth Option 8.9217 3.7052
Benchmark
CRISIL Composite Bond Fund Index 6.4151 5.7214
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
Key Statistics for the year ended March 31, 2015 (Contd...)
21
HSBC INCOME FUND
HSBC INCOME FUND –SHORT TERM PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Growth Option 21.0588 19.5968
Regular Dividend Option – 10.9993
Regular Quarterly Dividend Option – –
Regular Weekly Dividend Option 10.1987 10.2024
Regular Monthly Dividend Option – –
Institutional Growth Option 16.9067 15.6467
Institutional Dividend Option – 10.6388
Institutional Weekly Dividend Option 12.4826 11.5522
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option 12.2535 11.3291
Institutional Plus Weekly Dividend Option 10.0428 10.0164
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 21.2629 19.6364
Direct Plan - Dividend Option – 11.0004
Direct Plan - Weekly Dividend Option 10.2237 10.2032
Direct Plan - Monthly Dividend Option 11.0402 N.A.
Direct Plan - Quarterly Dividend Option – N.A.
High
Regular Growth Option 23.1336 21.0455
Regular Dividend Option – –
Regular Quarterly Dividend Option – –
Regular Weekly Dividend Option 10.2398 10.3313
Regular Monthly Dividend Option 11.2441 11.1843
Institutional Growth Option 17.9374 16.8953
Institutional Dividend Option – –
Institutional Weekly Dividend Option 13.3113 12.4741
Institutional Monthly Dividend Option 12.0951 11.4878
Institutional Plus Growth Option 13.5486 12.2451
Institutional Plus Weekly Dividend Option 10.2186 10.1429
Institutional Plus Monthly Dividend Option – 10.0000
Direct Plan - Growth Option 23.5578 21.2481
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option 10.2669 10.3329
Direct Plan - Monthly Dividend Option 11.5714 11.1925
Direct Plan - Quarterly Dividend Option – –
Key Statistics for the year ended March 31, 2015 (Contd...)
22
HSBC INCOME FUND
HSBC INCOME FUND –SHORT TERM PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
Low
Regular Growth Option 21.0429 19.6018
Regular Dividend Option – –
Regular Quarterly Dividend Option – –
Regular Weekly Dividend Option 10.1644 9.9771
Regular Monthly Dividend Option 10.9896 10.7871
Institutional Growth Option 16.8950 15.6747
Institutional Dividend Option – –
Institutional Weekly Dividend Option 12.4739 11.5729
Institutional Monthly Dividend Option 11.4876 10.6579
Institutional Plus Growth Option 12.2451 11.3494
Institutional Plus Weekly Dividend Option 10.0223 9.8006
Institutional Plus Monthly Dividend Option – 10.0000
Direct Plan - Growth Option 21.2485 19.6720
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option 10.1905 9.9874
Direct Plan - Monthly Dividend Option 11.0327 10.7989
Direct Plan - Quarterly Dividend Option – –
End5
Regular Growth Option 23.1336 21.0588
Regular Dividend Option – –
Regular Quarterly Dividend Option – –
Regular Weekly Dividend Option 10.2245 10.1987
Regular Monthly Dividend Option 11.1550 10.9979
Institutional Growth Option 10.0000 16.9067
Institutional Dividend Option – –
Institutional Weekly Dividend Option 13.3113 12.4826
Institutional Monthly Dividend Option 11.9946 11.4956
Institutional Plus Growth Option 13.5486 12.2535
Institutional Plus Weekly Dividend Option 10.2186 10.0428
Institutional Plus Monthly Dividend Option 10.0000 –
Direct Plan - Growth Option 23.5578 21.2629
Direct Plan - Dividend Option – –
Direct Plan - Weekly Dividend Option 10.2514 10.2237
Direct Plan - Monthly Dividend Option 11.2000 11.0402
Direct Plan - Quarterly Dividend Option – –
Key Statistics for the year ended March 31, 2015 (Contd...)
23
HSBC INCOME FUND
HSBC INCOME FUND –SHORT TERM PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
2. Closing Assets Under Management (Rs. in Lakhs)
End 130,900 72,727
Average (AAuM)1 98,691 101,742
3. Gross income as % of AAuM2 9.47% 8.32%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Growth Option 1.29% 1.30%
Institutional Growth Option 0.74% 0.75%
Institutional Plus Growth Option 0.64% 0.65%
Direct Plan - Growth Option 0.41% 0.54%
b. Management Fee as % of AAuM (planwise)
Regular Growth Option 0.29% 0.40%
Institutional Growth Option 0.29% 0.40%
Institutional Plus Growth Option 0.29% 0.40%
Direct Plan - Growth Option 0.29% 0.40%
5. Net Income as a percentage of AAuM3 8.45% 7.19%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Weekly Dividend Option 0.7366 0.5884
Regular Quarterly Dividend Option – –
Regular Monthly Dividend Option 0.6667 0.6248
Institutional Weekly Dividend Option 0.3703 –
Institutional Monthly Dividend Option 0.5042 –
Institutional Plus Weekly Dividend Option 0.6568 0.6066
Direct Plan - Weekly Dividend Option 0.7914 0.6326
Direct Plan - Monthly Dividend Option 0.7355 0.6625
Corporate
Regular Weekly Dividend Option 0.6937 0.5517
Regular Quarterly Dividend Option – –
Regular Monthly Dividend Option 0.6286 0.5920
Institutional Weekly Dividend Option 0.3433 –
Institutional Monthly Dividend Option 0.4716 –
Institutional Plus Weekly Dividend Option 0.6186 0.5684
Key Statistics for the year ended March 31, 2015 (Contd...)
24
HSBC INCOME FUND
HSBC INCOME FUND –SHORT TERM PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
Direct Plan - Weekly Dividend Option 0.7450 0.5929
Direct Plan - Monthly Dividend Option 0.6896 0.6274
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 9.9492 7.2303
Institutional Growth Option – 7.8215
Institutional Plus Growth Option 10.6665 7.9282
Direct Plan - Growth Option 10.8907 8.0500
Benchmark
CRISIL Short-Term Bond Fund Index 10.3271 8.7808
b. Since Inception
Scheme
Regular Growth Option 7.0492 6.7980
Institutional Growth Option – 4.5922
Institutional Plus Growth Option 5.0918 4.0416
Direct Plan - Growth Option 9.4251 8.2662
Benchmark
CRISIL Short-Term Bond Fund Index 6.9320 6.6371
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
Key Statistics for the year ended March 31, 2015 (Contd...)
25
HSBC INCOME FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC INCOME FUND
1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL
1.3. Investments in Associates and Group Companies:(Rupees)
Issuer Instrument Type
Amount Aggregate Investments
by all schemes
Amount Aggregate Investments
by all schemes
2015 2014
SHORT TERM PLAN
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
1,280,701,908 1,607,345,350 303,181,609 555,832,950
Equities – 215,829,290 – –
Bharti Airtel Ltd. Equities – 12,741,680 – 76,306,283
Steel Authority of India Ltd.
Commercial Paper
– – – 1,243,550,000
Shriram Equipment Finance Co Ltd.
Commercial Paper
– – – 492,702,500
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs for the Scheme for the years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years 2015 and 2014 and their percentages to net assets are as under :
Security Type 2015
INVESTMENT PLAN SHORT TERM PLAN
Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 6,152,810 0.59 57,835,683 0.44
– Depreciation – – 2,245,930 0.02
Certifi cate of Deposits
– Appreciation 91,827 0.01 2,037,600 0.02
– Depreciation – – – –
Asset Backed Securities
– Appreciation – – 6,050,640 0.05
– Depreciation 40,354 0.00~ 1,780 0.00~
Government of India Securities
– Appreciation 27,272,682 2.60 14,144,485 0.11
– Depreciation 5,854 0.00~ 23,030 0.00~
~ Indicates less than 0.01
26
HSBC INCOME FUND
Security Type 2014
INVESTMENT PLAN SHORT TERM PLAN
Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 115,305 0.02 7,233,573 0.10
– Depreciation 10,574,567 1.72 34,190,434 0.47
Certifi cate of Deposits
– Appreciation 411,394 0.07 5,648,608 0.08
– Depreciation – 0.00 455,397 0.01
Asset Backed Securities
– Appreciation – – – –
– Depreciation 96,818 0.02 – –
Government of India Securities
– Appreciation 166,829 0.03 – –
– Depreciation 419,959 0.07 – –
~ Indicates less than 0.01
1.7. The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) are Rs. 3,307,720,975 and Rs. 2,958,567,028 respectively being 340.13% and 304.23% of the average daily net assets for Investment Plan and Rs.29,508,686,206 and Rs. 24,218,867,854 respectively being 299.00% and 245.40% of the average daily net assets for Short Term Plan.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) are Rs. 3,352,599,512 and Rs. 3,537,242,887 respectively being 322.24% and 339.98% of the average daily net assets for Investment Plan and Rs.23,614,085,753 and Rs. 26,833,445,848 respectively being 232.10% and 263.74% of the average daily net assets for Short Term Plan.
1.8. Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets are as
under:
Security Category INVESTMENT PLAN
2015 2014
Fair Value (Rupees)
Percentage to Net Assets
Fair Value (Rupees)
Percentage to Net Assets
Debt Instruments – – – 0.00
Money market Instruments – – 9,981,154 1.62
Total – – 9,981,154 1.62
Security Category SHORT TERM PLAN
2015 2014
Fair Value (Rupees)
Percentage to Net Assets
Fair Value (Rupees)
Percentage to Net Assets
Debt Instruments 29,995,180 0.23 151,127,906 2.08
Money market Instruments 278,703,288 2.13 163,212,843 2.24
Total 308,698,468 2.36 314,340,749 4.32
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
27
HSBC INCOME FUND
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 As Amended
During the year 2014-15, The Hong Kong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection/bank charges are Nil for Short Term Plan and Investment Plan.
During the year 2013-14, The Hong Kong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection/bank charges amounting to Rs. 14,400 for the Investment and NIL for Short Term Plan.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid [Rupees]
% of Total commission paid by the
Fund
INVESTMENT PLAN
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 7.22 10.45 705,867.05 21.51
HSBC InvestDirect Securities (India) Limited Associate 2014-2015 – – – –
SHORT TERM PLAN
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 311.88 16.79 16,218,818.31 31.56
HSBC InvestDirect Securities (India) Limited Associate 2014-2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
INVESTMENT PLAN
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 18.12 22.92 1,887,298 18.85
HSBC InvestDirect Securities (India) Limited Associate 2013-2014 – – 6,891 0.07
SHORT TERM PLAN
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 484.45 52.83 28,126,764 51.51
HSBC InvestDirect Securities (India) Limited Associate 2013-2014 – – 5,192 0.01
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
28
HSBC INCOME FUND
3 None of the Investors held more than 25% of the total net assets of Investment Plan and Short Term as at the years ended on March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
INVESTMENT PLAN
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
2014-2015
Regular Dividend Option 5,885,622.963 1,093,271.357 3,472,775.526 3,506,118.794 10
Regular Growth Option 26,529,661.263 5,835,676.443 11,497,592.795 20,867,744.911 10
Direct Plan - Growth Option
72,978.016 25,009,175.543 3,576,509.708 21,505,643.851 10
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
2013-2014
Regular Dividend Option 19,394,182.657 4,321,548.694 17,830,108.388 5,885,622.963 10
Regular Growth Option 33,035,257.618 33,616,852.305 40,122,448.660 26,529,661.263 10
Direct Plan - Growth Option
270,964.576 54,344.680 252,331.240 72,978.016 10
SHORT TERM PLAN
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
2014-2015
Regular Dividend Option 172,931,086.527 269,458,115.152 224,646,306.551 217,742,895.128 10
Regular Growth Option 165,649,364.706 311,939,875.644 244,468,773.877 233,120,466.473 10
Regular Weekly Dividend Option
96,040,708.164 113,004,953.339 120,600,448.475 88,445,213.028 10
Institutional Dividend Option
574,716.029 – – 574,716.029 10
Institutional Growth Option
1,150,179.747 – 1,150,179.747 – 10
Institutional Weekly Dividend Option
599,442.020 – – 599,442.020 10
Institutional Plus Growth Option
20,431,475.616 – – 20,431,475.616 10
Institutional Plus Weekly Dividend Option
20,163,437.936 – – 20,163,437.936 10
Institutional Plus Monthly Dividend Option
– – – – –
Direct Plan - Growth Option 19,301,736.596 324,455,460.722 174,913,785.588 168,843,411.730 10
Direct Plan - Dividend Option 411,529.781 198,040.880 503,994.437 105,576.224 10
Direct Plan - Weekly Dividend Option
161,273.339 2,751,946.603 2,527,579.478 385,640.464 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
29
HSBC INCOME FUND
SHORT TERM PLAN
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
2013-2014
Regular Dividend Option 370,705,152.327 121,941,485.695 319,715,551.495 172,931,086.527 10
Regular Growth Option 62,296,842.748 278,038,211.224 174,685,689.266 165,649,364.706 10
Regular Weekly Dividend Option
229,344,801.286 140,614,152.923 273,918,246.045 96,040,708.164 10
Institutional Dividend Option
574,716.029 – – 574,716.029 10
Institutional Growth Option
1,150,179.747 – – 1,150,179.747 10
Institutional Weekly Dividend Option
599,442.020 – – 599,442.020 10
Institutional Plus Growth Option
187,486,390.279 – 167,054,914.663 20,431,475.616 10
Institutional Plus Weekly Dividend Option
20,163,437.936 – – 20,163,437.936 10
Institutional Plus Monthly Dividend Option
– – – – –
Direct Plan - Growth Option
17,929,537.776 24,629,333.385 23,257,134.565 19,301,736.596 10
Direct Plan - Dividend Option
286,992.438 369,748.973 245,211.630 411,529.781 10
Direct Plan - Weekly Dividend Option
108,286.444 11,487,365.067 11,434,378.172 161,273.339 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for Investment Plan and Short Term Plan for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other Income of Rs. 304 (2014: Rs. 578,425) in Investment Plan and Rs. 320 (2014: Rs. 105,952) in Short Term Plan represents Exit load (net of service tax) credited to the Scheme.
9 Garnishee Notices :
An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings, by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
30
HSBC INCOME FUND
fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted ”stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted ”stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
31
HSBC INCOME FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
32
HSBC INCOME FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
33
HSBC INCOME FUND
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34
HSBC INCOME FUND
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35
HSBC INCOME FUND
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Reso
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36
HSBC INCOME FUND
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luti
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vest
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ny’s
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mm
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tion
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(For
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gain
st /
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34
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37
HSBC INCOME FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
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ting
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Reso
luti
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rIn
vest
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ny’s
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38
HSBC INCOME FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
Reco
mm
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tion
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(For
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gain
st /
A
bsta
in)
12
34
56
78
910
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one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ o
r Pre
fere
nce
shar
es.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s /
Add
ition
al D
irect
ors
and
prom
oter
rela
ted
activ
ities
.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
39
HSBC INCOME FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Floating Rate Fund - Long Term PlanAn open-ended Income Scheme
Abridged Annual Report 2014 - 2015
HSBC FLOATING RATE FUND - LONG TERM PLAN
1
HSBC FLOATING RATE FUND - LONG TERM PLAN
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC FLOATING RATE FUND - LONG TERM PLAN
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC FLOATING RATE FUND - LONG TERM PLAN
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC FLOATING RATE FUND - LONG TERM PLAN
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Floating Rate Fund – Long Term Plan (HFRF – LTP) – an open-ended Income SchemeHFRF seeks to generate reasonable return with commensurate risk from a portfolio comprised of fl oating rate debt instruments and fi xed rate debt instruments swapped for fl oating rate returns. The scheme may also invest in fi xed rate money market and debt instruments.
The net assets of the HFRF - LTP amounted to Rs. 55.23 crores as at March 31, 2015 as compared to Rs. 112.48 crores as at March 31, 2014. Around 95.99% of the net assets were invested in money market instruments, 7.96% were invested in reverse repos / CBLO and (-3.95%) were in net current assets as at March 31, 2015.
HFRF-LTP underperformed the benchmark due to lower duration calls taken by fund and larger movement in duration segment. RBI restricted short end investment (upto 3 year) by Foreign Portfolio investors which affected short end levels.
Date of Inception : 16 November 2004 Simple Annualized (%) Compounded Annualized
(%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC FRF - LTP - Regular Plan – Growth 8.73 9.21 9.17 7.78
CRISIL Liquid Fund Index (Scheme Benchmark) 8.97 9.46 8.22 7.15
CRISIL 1 Year T-Bill Index (Standard Benchmark) 8.74 5.78 8.37 5.96
Rs. 10,000, if invested HFRF - LTP, would have become
10,873 10,921 10,917 21,761
Rs. 10,000, if invested in CRISIL Liquid Fund Index, would have become
10,897 10,946 10,822 20,485
Rs. 10,000, if invested in CRISIL 1 Year T-Bill Index, would have become
10,874 10,578 10,837 18,243
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance
5
HSBC FLOATING RATE FUND - LONG TERM PLAN
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI
6
HSBC FLOATING RATE FUND - LONG TERM PLAN
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC FLOATING RATE FUND - LONG TERM PLAN
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Floating Rate Fund - Long Term Plan
42,064.21 61 14,800.65 5
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
8
HSBC FLOATING RATE FUND - LONG TERM PLAN
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios# including against its authorized persons / distributors / employees etc.
9
HSBC FLOATING RATE FUND - LONG TERM PLAN
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
HSBC FLOATING RATE FUND - LONG TERM PLAN
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Floating Rate
Fund - Long Term Plan (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
11
HSBC FLOATING RATE FUND - LONG TERM PLAN
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC FLOATING RATE FUND - LONG TERM PLAN
Rs. in Lakhs
HSBC FLOATING RATE FUND – LONG TERM PLAN
As at March 31, 2015
As at March 31, 2014
LIABILITIES1 Unit Capital 3,874.66 8,827.332 Reserves & Surplus2.1 Unit Premium Reserves 178.40 570.862.2 Unrealised Appreciation Reserve 11.15 19.042.3 Other Reserves 1,651.43 1,830.833 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 27.08 64.14
TOTAL 5,742.72 11,312.20
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper 2,052.24 1,578.241.7 Certifi cate of Deposits 3,248.75 8,462.991.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 5,300.99 10,041.23
2 Deposits 0.81 1,203.983 Other Current Assets3.1 Cash & Bank Balance 0.55 9.673.2 CBLO / Reverse Repo Lending 439.78 54.313.3 Others 0.59 3.014 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 5,742.72 11,312.20
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC FLOATING RATE FUND - LONG TERM PLAN
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC FLOATING RATE FUND – LONG TERM PLAN
Current Year ended
March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 800.84 1,532.761.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments16.17 38.62
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 817.01 1,571.38
2 EXPENSES2.1 Management fees 22.90 57.792.2 Service tax on Management fees 2.83 7.142.3 Transfer agents fees and expenses 4.44 7.222.4 Custodian fees 0.52 1.172.5 Trusteeship fees 0.09 0.092.6 Commission to Agents 23.95 36.692.7 Marketing & Distribution expenses 0.08 0.372.8 Audit fees 0.20 0.292.9 Investor Education Expenses 1.78 3.342.10 Other operating expenses 2.24 1.762.11 Expenses to be Reimbursed by the Investment Manager – –
(B) 59.03 115.87
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 757.98 1,455.51
4 Change in Unrealised Depreciation invalue of investments (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 757.98 1,455.51
6 Change in unrealised appreciation inthe value of investments (F) (7.89) 16.52
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 750.09 1,472.03
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.89 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 16.527.3 Add / (Less): Equalisation (463.26) (1,824.69)7.4 Transfer from Reserve Fund 1,830.82 3,331.19
7.5 Transfer from Unit Premium Reserve – –
8 Total 2,125.54 2,962.00
9 Dividend Appropriation9.1 Income Distributed during the year (347.71) (860.06)9.2 Tax on income distributed during the year (126.40) (271.13)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 1,651.43 1,830.82
Notes to Accounts - Annexure I
14
HSBC FLOATING RATE FUND - LONG TERM PLAN
Key Statistics for the year ended March 31, 2015
HSBC FLOATING RATE FUND – LONG TERM PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):Open
Regular Growth Option 19.1583 17.6333Regular Daily Dividend Option – –Regular Weekly Dividend Option 10.0118 10.0110Regular Monthly Dividend Option 10.0064 10.0064Institutional Growth Option 20.0445 18.3376Institutional Daily Dividend Option 10.0323 –Institutional Weekly Dividend Option 11.2552 11.2390Institutional Fortnightly Dividend Option – –Institutional Monthly Dividend Option 10.4768 10.2196Direct Plan - Growth Option 20.1518 18.3444Direct Plan - Daily Dividend Option N.A. –Direct Plan - Weekly Dividend Option 11.2392 10.0083Direct Plan - Fortnightly Dividend Option – 11.2402Direct Plan - Monthly Dividend Option – 10.1840
HighRegular Growth Option 20.7141 19.1460Regular Daily Dividend Option – –Regular Weekly Dividend Option 10.0336 10.0375Regular Monthly Dividend Option 10.0720 10.0984Institutional Growth Option 21.7919 20.0309Institutional Daily Dividend Option 10.2070 10.0255Institutional Weekly Dividend Option 11.2756 11.2705Institutional Fortnightly Dividend Option – 10.0319Institutional Monthly Dividend Option 10.9979 10.6996Direct Plan - Growth Option 22.0293 20.1371Direct Plan - Daily Dividend Option 10.0385 –Direct Plan - Weekly Dividend Option 11.2664 11.2711Direct Plan - Fortnightly Dividend Option – 10.0459Direct Plan - Monthly Dividend Option 10.0807 10.2558
LowRegular Growth Option 19.1637 17.6536Regular Daily Dividend Option – –Regular Weekly Dividend Option 10.0042 9.9886Regular Monthly Dividend Option 10.0019 10.0055Institutional Growth Option 20.0508 18.3598Institutional Daily Dividend Option 10.0293 9.9792Institutional Weekly Dividend Option 11.2419 11.2109Institutional Fortnightly Dividend Option – 9.9912Institutional Monthly Dividend Option 10.4765 10.2319Direct Plan - Growth Option 20.1587 18.3666Direct Plan - Daily Dividend Option 10.0384 –Direct Plan - Weekly Dividend Option 11.2321 11.2152
15
HSBC FLOATING RATE FUND - LONG TERM PLAN
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FLOATING RATE FUND – LONG TERM PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Direct Plan - Fortnightly Dividend Option – 10.0014Direct Plan - Monthly Dividend Option 10.0029 10.1433
End5
Regular Growth Option 20.7141 19.1583
Regular Daily Dividend Option – –
Regular Weekly Dividend Option 10.0336 10.0118
Regular Monthly Dividend Option 10.0288 10.0064
Institutional Growth Option 21.7919 20.0445
Institutional Daily Dividend Option 10.2070 10.0323
Institutional Weekly Dividend Option 11.2756 11.2552
Institutional Fortnightly Dividend Option 10.0000 –
Institutional Monthly Dividend Option 10.9979 10.4768
Direct Plan - Growth Option 22.0293 20.1518
Direct Plan - Daily Dividend Option 10.0385 –
Direct Plan - Weekly Dividend Option 11.2664 11.2392
Direct Plan - Fortnightly Dividend Option 10.0000 –
Direct Plan - Monthly Dividend Option 10.0313 –
2. Closing Assets Under Management (Rs. in Lakhs)
End 5,523 11,248
Average (AAuM)1 8,900 16,707
3. Gross income as % of AAuM2 9.18% 9.41%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Growth Option 1.31% 1.31%
Institutional Growth Option 0.76% 0.68%
Direct Plan - Growth Option 0.21% 0.20%
b. Management Fee as % of AAuM (planwise)
Regular Growth Option 0.26% 0.35%
Institutional Growth Option 0.26% 0.35%
Direct Plan - Growth Option 0.26% 0.35%
5. Net Income as a percentage of AAuM3 8.52% 8.71%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Daily Dividend Option – 0.4929
Regular Weekly Dividend Option 0.5935 0.6587
Regular Monthly Dividend Option 0.5732 0.6555
Institutional Daily Dividend Option 0.5071 –
16
HSBC FLOATING RATE FUND - LONG TERM PLAN
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FLOATING RATE FUND – LONG TERM PLANCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Institutional Weekly Dividend Option 0.7120 0.7816
Institutional Fortnightly Dividend Option – 0.1149
Institutional Monthly Dividend Option 0.4429 0.5635
Direct Plan - Daily Dividend Option 0.3639 –
Direct Plan - Weekly Dividend Option 0.7589 0.8392
Direct Plan - Fortnightly Dividend Option – 0.2040
Direct Plan - Monthly Dividend Option 0.5752 0.4075
Corporate
Regular Daily Dividend Option – 0.4720
Regular Weekly Dividend Option 0.5595 0.6194
Regular Monthly Dividend Option 0.5407 0.6215
Institutional Daily Dividend Option 0.4800 –
Institutional Weekly Dividend Option 0.6712 0.7346
Institutional Fortnightly Dividend Option – 0.1053
Institutional Monthly Dividend Option 0.4242 0.5396
Direct Plan - Daily Dividend Option 0.3387 –
Direct Plan - Weekly Dividend Option 0.7153 0.7894
Direct Plan - Fortnightly Dividend Option – 0.1826
Direct Plan - Monthly Dividend Option 0.5414 0.3796
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 8.1349 8.5541
Institutional Growth Option 8.7313 9.2103
Direct Plan - Growth Option 9.3305 9.7574Benchmark
CRISIL Liquid Fund Index 8.9727 9.4613
b. Since Inception
Scheme
Regular Growth Option 7.2545 7.1616
Institutional Growth Option 7.7797 7.6793
Direct Plan - Growth Option 9.4391 9.5258Benchmark
CRISIL Liquid Fund Index 7.1543 6.9618
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day), and
not the last declared NAV.
17
HSBC FLOATING RATE FUND - LONG TERM PLAN
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FLOATING RATE FUND – LONG TERM PLAN1 Investments:
1.1. It is confi rmed that investments of the schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of year ended March 31, 2015 and year ended March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial Year and percentage to net assets are as follows:
Company Name Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Certifi cate of Deposits / Commercial Papers
– Appreciation 1,114,775 0.20 1,904,102 0.17
– Depreciation – – – –
1.7. The aggregate value of investments (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the year 2014-2015 (excluding accretion of discount) are Rs. 4,342,365,143 and Rs. 4,887,311,301 respectively being 487.92% and 549.15% of the average daily net assets.
The aggregate value of investments (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the year 2013-2014 (excluding accretion of discount) are Rs. 10,945,217,531 and Rs. 12,411,736,363 respectively being 655.13% and 742.91% of the average daily net assets.
1.8. Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under :
Security Category Fair Value Percentage to Net Assets
Fair Value Percentage to Net Assets
2014-2015 2013-2014
Money market Instruments 79,225,714 14.35 321,019,101 19.21
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties /group companies
Nature of Association /
Nature of Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commi-ssion paid [Rs.]
% of Total commi-
ssion paid by the Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment Manager
2014-2015 2.81 1.96 148,117 6.42
HSBC InvestDirect Securities (India) Limited
Associate of the Investment Manager
2014-2015 – – – –
18
HSBC FLOATING RATE FUND - LONG TERM PLAN
Name of Sponsor / AMC and its associate / related parties /group companies
Nature of Association /
Nature of Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment Manager
2013-2014 5.51 1.47 218,001 6.59
HSBC InvestDirect Securities (India) Limited
Associate of the Investment Manager
2013-2014 0 0 440 0.01
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 Large Holdings in the Scheme (i.e. in excess of 25% of the net assets) as at the years ended March 31, 2015 and March 31, 2014 are NIL
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Growth Option 2,195,912.821 – 471,865.721 1,724,047.100 10
Regular Daily Dividend Option
– – – – 10
Regular Weekly Dividend Option
2,749,543.776 – 1,375,668.537 1,373,875.239 10
Regular Monthly Dividend Option
2,923,989.859 – 1,411,967.376 1,512,022.483 10
Institutional Growth Option
14,878,305.845 22,348,788.585 25,880,595.225 11,346,499.205 10
Institutional Daily Dividend Option
12,101,886.971 28,088,531.016 39,029,122.291 1,161,295.696 10
Institutional Fortnightly Dividend Option
– – – – 10
Institutional Weekly Dividend Option
32,930,500.634 13,023,041.243 42,393,203.056 3,560,338.821 10
Institutional Monthly Dividend Option
1,133,087.666 658,752.394 1,435,104.608 356,735.452 10
Direct Plan - Growth Option
696,597.008 1,346,250.873 1,519,208.817 523,639.064 10
Direct Plan - Daily Dividend Option
– 789,449.487 189,271.306 600,178.181 10
Direct Plan - Weekly Dividend Option
18,663,488.079 43,369,961.343 45,449,074.702 16,584,374.720 10
Direct Plan - Fortnightly Dividend Option
– – 10
Direct Plan - Monthly Dividend Option
– 3,561.685 – 3,561.685 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
19
HSBC FLOATING RATE FUND - LONG TERM PLAN
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Growth Option 6,469,771.109 – 4,273,858.288 2,195,912.821 10
Regular Daily Dividend Option
– – – – 10
Regular Weekly Dividend Option
11,007,140.947 – 8,257,597.171 2,749,543.776 10
Regular Monthly Dividend Option
4,579,516.848 15,525.507 1,671,052.496 2,923,989.859 10
Institutional Growth Option
32,761,712.353 67,181,598.871 85,065,005.379 14,878,305.845 10
Institutional Daily Dividend Option
– 51,932,441.619 39,830,554.648 12,101,886.971 10
Institutional Fortnightly Dividend Option
– 2,958,669.938 2,958,669.938 – 10
Institutional Weekly Dividend Option
114,074,209.503 120,349,751.242 201,493,460.111 32,930,500.634 10
Institutional Monthly Dividend Option
1,945,183.690 2,170,933.262 2,983,029.286 1,133,087.666 10
Direct Plan - Growth Option
671,514.944 5,563,700.242 5,538,618.178 696,597.008 10
Direct Plan - Weekly Dividend Option
12,233,819.948 37,615,998.934 31,186,330.803 18,663,488.079 10
Direct Plan - Fortnightly Dividend Option
2,032.230 41.796 2,074.026 – 10
Direct Plan - Monthly Dividend Option
68,515.829 2,800.084 71,315.913 – 10
5 Prior year amounts have been re-grouped/ re-arranged where necessary.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Garnishee Notice from Income Tax Authorities
An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings, by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
20
HSBC FLOATING RATE FUND - LONG TERM PLAN
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
21
HSBC FLOATING RATE FUND - LONG TERM PLAN
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
22
HSBC FLOATING RATE FUND - LONG TERM PLAN
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
23
HSBC FLOATING RATE FUND - LONG TERM PLAN
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24
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apita
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hang
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tran
sfer
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ontr
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hang
es in
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te o
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ratio
n).
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Oth
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esol
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ratio
nale
sup
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votin
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ong
with
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cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC ULTRA SHORT TERM BOND FUND 12
HSBC Ultra Short Term Bond FundAn open-ended Debt Scheme
Abridged Annual Report 2014 - 2015
1
HSBC ULTRA SHORT TERM BOND FUND 12
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
12 HSBC ULTRA SHORT TERM BOND FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC ULTRA SHORT TERM BOND FUND 12
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
12 HSBC ULTRA SHORT TERM BOND FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Ultra Short Term Bond Fund (HUSBF) – an open ended Debt SchemeHUSBF seeks to provide liquidity and reasonable returns by investing primarily in a mix of short term debt and money market instruments.
The net assets of HUSBF amounted to Rs. 197.70 crores as at March 31, 2015 as compared to Rs. 153.71 crores as at March 31, 2014. Around 97.58% of the net assets were invested in debt and money market instruments, 5.30% were invested in reverse repos / CBLO and (-2.88%) were in net current assets as at March 31, 2015.
HUSTBF underperformed its scheme benchmark due to lower duration view that the fund takes and larger movement in duration segment. RBI restricted short end investment (upto 3 year) by Foreign Portfolio investors which affected short end levels.
Date of Inception : 17 October 2006 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
Since Inception
HSBC Ultra Short Term Bond Fund - Regular – Growth$ 9.04 9.04 8.96
Customised Benchmark Index Fund (Scheme Benchmark)* 9.11 8.60 9.01
CRISIL 1 Year T-Bill Index (Standard Benchmark) 8.74 5.78 7.45
Rs. 10,000, if invested in HUSTBF, would have become 10,904 10,904 21,584
Rs. 10,000, if invested in Customised Benchmark Index, would have become
10,911 10,860 21,676
Rs. 10,000, if invested in CRISIL 1 Year T-Bill Index, would have become
10,874 10,578 19,042
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
$Pursuant to SEBI circular dated Sept. 13, 2012, certain plans / options within the schemes have been discontinued to comply with a single plan structure. Since there was no continuous NAV history available for the surviving plan prior to 1 October 2012, returns since the said date have been considered for calculating performance ‘Since Inception’. The inception date of HSBC Ultra Short Term Bond Fund however is October 17, 2006.
*Composite index of CRISIL Liquid Fund Index (90%) and CRISIL Short Term Bond Fund Index (10%).
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices
5
HSBC ULTRA SHORT TERM BOND FUND 12
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian
6
12 HSBC ULTRA SHORT TERM BOND FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002
7
HSBC ULTRA SHORT TERM BOND FUND 12
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Ultra Short Term Bond Fund 0.03 1 68,290.00 7
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
8
12 HSBC ULTRA SHORT TERM BOND FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:* active folios# including against its authorized persons / distributors / employees etc.
9
HSBC ULTRA SHORT TERM BOND FUND 12
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
10
12 HSBC ULTRA SHORT TERM BOND FUND
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Ultra Short Term
Bond Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
11
HSBC ULTRA SHORT TERM BOND FUND 12
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustee of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
12 HSBC ULTRA SHORT TERM BOND FUND
Rs. in Lakhs
HSBC ULTRA SHORT TERM BOND FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 18,364.23 14,523.812 Reserves & Surplus2.1 Unit Premium Reserves (39.21) (49.91)2.2 Unrealised Appreciation Reserve 73.86 36.852.3 Other Reserves 2,097.96 860.373 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 67.15 424.84
TOTAL 20,563.99 15,795.96
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 5,632.35 1,000.021.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds 507.67 –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper 3,837.46 1,270.641.7 Certifi cate of Deposits 9,311.00 11,130.131.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 19,288.48 13,400.792 Deposits 5.10 1,300.003 Other Current Assets3.1 Cash & Bank Balance 5.11 374.953.2 CBLO / Reverse Repo Lending 1,047.17 672.793.3 Others 218.13 47.434 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 20,563.99 15,795.96
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC ULTRA SHORT TERM BOND FUND 12
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC ULTRA SHORT TERM BOND FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 2,134.55 686.411.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments68.27 11.29
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 13.52 –
(A) 2,216.34 697.70
2 EXPENSES2.1 Management fees 94.28 37.702.2 Service tax on Management fees 11.65 4.662.3 Transfer agents fees and expenses 10.24 3.072.4 Custodian fees 1.38 0.462.5 Trusteeship fees 0.24 0.05 2.6 Commission to Agents 106.94 22.812.7 Marketing & Distribution expenses 0.24 1.202.8 Audit fees 0.59 0.402.9 Investor Education Expenses 4.71 1.492.10 Other operating expenses 3.82 1.582.11 Expenses to be Reimbursed by the Investment Manager – (1.21)
(B) 234.09 72.20
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 1,982.25 625.50
4 Change in Unrealised Depreciation in value of investments (D) – –
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 1,982.25 625.50
6 Change in Unrealised appreciation in the valueof investments (F) 37.01 34.93
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 2,019.26 660.43
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 37.01 34.937.3 Add / (Less): Equalisation 391.11 459.067.4 Transfer from Reserve Fund 860.38 217.03
7.5 Transfer from Unit Premium Reserve – –
8 Total 3,233.74 1,301.59
9 Dividend Appropriation9.1 Income Distributed during the year (846.38) (345.13)9.2 Tax on income distributed during the year (289.40) (96.08)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 2,097.96 860.38
Notes to Accounts - Annexure I
14
12 HSBC ULTRA SHORT TERM BOND FUND
Key Statistics for the year ended March 31, 2015
HSBC ULTRA SHORT TERM BOND FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Growth Option 16.6623 15.3224
Regular Daily Dividend Option 10.0084 10.0083
Regular Weekly Dividend Option 10.0063 10.0393
Regular Monthly Dividend Option
Institutional Growth Option 11.3660 10.4003
Institutional Daily Dividend Option 10.0074 10.0077
Institutional Weekly Dividend Option 10.0271 10.0410
Institutional Monthly Dividend Option 10.1334 10.1454
Institutional Plus Growth Option – – !
Institutional Plus Daily Dividend Option 12.5044 11.3786
Institutional Plus Weekly Dividend Option 10.1699 10.1708
Institutional Plus Monthly Dividend Option – – !
Direct Plan - Growth Option 11.4279 10.4016
Direct Plan - Daily Dividend Option 10.0911 10.0119
Direct Plan - Weekly Dividend Option 10.0692 10.0413
Direct Plan - Monthly Dividend Option
High
Regular Growth Option 18.1078 16.6518
Regular Daily Dividend Option 10.0021 10.0021
Regular Weekly Dividend Option 10.0309 10.0688
Regular Monthly Dividend Option – –
Institutional Growth Option 12.3892 11.3586
Institutional Daily Dividend Option 10.0207 10.0009
Institutional Weekly Dividend Option 10.0614 10.0715
Institutional Monthly Dividend Option 10.2181 10.2611
Institutional Plus Growth Option – –
Institutional Plus Daily Dividend Option 13.7326 12.4955
Institutional Plus Weekly Dividend Option 10.2153 10.2019
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 12.5476 11.4199
Direct Plan - Daily Dividend Option 10.0840 10.0960
Direct Plan - Weekly Dividend Option 10.1133 10.0837
Direct Plan - Monthly Dividend Option 10.1953 –
15
HSBC ULTRA SHORT TERM BOND FUND 12
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC ULTRA SHORT TERM BOND FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Low
Regular Growth Option 16.6639 15.3583
Regular Daily Dividend Option 9.9934 9.9400
Regular Weekly Dividend Option 9.9934 9.9753
Regular Monthly Dividend Option – –
Institutional Growth Option 11.3673 10.4251
Institutional Daily Dividend Option 10.0009 9.9401
Institutional Weekly Dividend Option 10.0178 9.9782
Institutional Monthly Dividend Option 10.1287 10.1107
Institutional Plus Growth Option – –
Institutional Plus Daily Dividend Option 12.5064 11.4061
Institutional Plus Weekly Dividend Option 10.1648 10.1086
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 11.4297 10.4266
Direct Plan - Daily Dividend Option 10.0755 10.0058
Direct Plan - Weekly Dividend Option 10.0643 9.9798
Direct Plan - Monthly Dividend Option 10.0052 –
End5
Regular Growth Option 18.1078 16.6623
Regular Daily Dividend Option 10.0021 10.0084
Regular Weekly Dividend Option 10.0309 10.0063
Regular Monthly Dividend Option –
Institutional Growth Option 12.3892 11.3660
Institutional Daily Dividend Option 10.0207 10.0074
Institutional Weekly Dividend Option 10.0614 10.0271
Institutional Monthly Dividend Option 10.1576 10.1334
Institutional Plus Growth Option – –
Institutional Plus Daily Dividend Option 13.7326 12.5044
Institutional Plus Weekly Dividend Option 10.2153 10.1699
Institutional Plus Monthly Dividend Option – –
Direct Plan - Growth Option 12.5476 11.4279
Direct Plan - Daily Dividend Option 10.0840 10.0911
Direct Plan - Weekly Dividend Option 10.1133 10.0692
Direct Plan - Monthly Dividend Option 10.0000 –
16
12 HSBC ULTRA SHORT TERM BOND FUND
HSBC ULTRA SHORT TERM BOND FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
2. Closing Assets Under Management (Rs. in Lakhs)
End 19,770 15,371
Average (AAuM)1 23,529 7,450
3. Gross income as % of AAuM2 9.42% 9.37%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Growth Option 1.31% 1.32%
Institutional Growth Option 1.01% 0.89%
Institutional Plus Growth Option 0.26% 0.27%
Direct Plan - Growth Option 0.29% 0.33%
b. Management Fee as % of AAuM (planwise)
Regular Growth Option 0.40% 0.51%
Institutional Growth Option 0.40% 0.51%
Institutional Plus Growth Option 0.40% 0.51%
Direct Plan - Growth Option 0.40% 0.51%
5. Net Income as a percentage of AAuM3 8.42% 8.40%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Daily Dividend Option 0.6312 0.6682
Regular Weekly Dividend Option 0.6305 0.6942
Institutional Daily Dividend Option 0.6397 0.7084
Institutional Weekly Dividend Option 0.6478 0.7188
Institutional Monthly Dividend Option 0.6413 0.7223
Institutional Plus Daily Dividend Option – –
Institutional Plus Weekly Dividend Option 0.7082 0.7636
Institutional Plus Monthly Dividend Option – –
Direct Plan - Daily Dividend Option 0.7147 0.6856
Direct Plan - Weekly Dividend Option 0.6997 0.7302
Direct Plan - Monthly Dividend Option 0.1522 –
Corporate
Regular Daily Dividend Option 0.5953 0.6259
Regular Weekly Dividend Option 0.5942 0.6516
Institutional Daily Dividend Option 0.6033 0.6632
Institutional Weekly Dividend Option 0.6105 0.6741
Key Statistics for the year ended March 31, 2015 (Contd...)
17
HSBC ULTRA SHORT TERM BOND FUND 12
HSBC ULTRA SHORT TERM BOND FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Institutional Monthly Dividend Option 0.6048 0.6833
Institutional Plus Daily Dividend Option – –
Institutional Plus Weekly Dividend Option 0.6674 0.7164
Institutional Plus Monthly Dividend Option – –
Direct Plan - Daily Dividend Option 0.6740 0.6491
Direct Plan - Weekly Dividend Option 0.6593 0.6845
Direct Plan - Monthly Dividend Option 0.1457 –
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 8.7126 8.5009
Institutional Growth Option 9.0394 9.0378
Institutional Plus Growth Option – –
Direct Plan - Growth Option 9.8345 9.6206
Benchmark
CRISIL Composite Index ^^ 9.1081 8.6030
b. Since Inception
Scheme
Regular Growth Option 7.2728 7.0823
Institutional Growth Option 2.5655 1.7321
Institutional Plus Growth Option – –
Direct Plan - Growth Option 9.8296 9.8249
Benchmark
CRISIL Composite Index ^^ 9.0146 8.1777
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
! No Units Outstnding as at March 31, 2014.
^^ Composite Index of CRISIL Liquid Fund Index (90%) and CRISIL Short Term Bond Fund Index (10%).
18
12 HSBC ULTRA SHORT TERM BOND FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC ULTRA SHORT TERM BOND FUND
1 Investments:
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of year ended March 31, 2015 is NIL. Open Positions of derivatives as of year ended March 31, 2014 is NIL.
1.3. Investments in Associates and Group Companies as of years ended March 31, 2015 and March 31, 2014 is NIL.
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of fi nancial years ended 2015 and 2014 are NIL.
1.5. NPAs as on March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2015 and March 31, 2014 are as under :
Company Name Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Certifi cate of Deposit/Commercial Paper
– Appreciation 2,892,516 0.15 3,368,791 0.22
– Depreciation – – – –
Non Convertible Debentures and Bonds Listed/Awaiting Listing
– Appreciation 4,203,844 0.21 316,150 0.02
– Depreciation 219,400 0.01 – –
Privately Placed Non Convertible Debentures / Bonds
– Appreciation 509,400 0.03 – –
– Depreciation – – – –
1.7. The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) are Rs. 8,946,792,567 and Rs. 8,507,969,870 respectively being 380.24% and 361.59% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) are Rs. 4,722,715,370 and Rs. 3,888,897,110 respectively being 633.95% and 522.02% of the average daily net assets.
1.8. Non-Traded securities in the portfolio :
Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under :
Security Category Fair Value (Rupees)
% to Net Assets
Fair Value (Rupees)
% to Net Assets
2015 2014
Money market Instruments 168,354,641 8.52% 108,738,098 7.07%
Total 168,354,641 8.52% 108,738,098 7.07%
19
HSBC ULTRA SHORT TERM BOND FUND 12
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor/AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 530.50 64.88 5,458,404 56.03
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 190.36 66.20 685,012 37.33
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – 563 0.03
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per Unit (Rs.)
Regular Growth Option 1,405,768.554 – 282,768.201 1,123,000.353 10
Regular Daily Dividend Option 8,624,423.992 – 1,900,801.462 6,723,622.530 10
Regular Weekly Dividend Option 3,907,588.618 – 1,370,240.041 2,537,348.577 10
Institutional Growth Option 50,175,627.657 308,111,394.278 276,552,918.565 81,734,103.370 10
Institutional Daily Dividend Option
52,749,341.869 271,955,165.101 265,006,704.301 59,697,802.669 10
Institutional Weekly Dividend Option
16,834,135.345 91,679,638.225 94,769,148.036 13,744,625.534 10
Institutional Monthly Dividend Option
6,593,554.661 67,431,035.375 60,636,495.261 13,388,094.775 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
20
12 HSBC ULTRA SHORT TERM BOND FUND
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per Unit (Rs.)
Inst itutional Plus Growth Option
– – – – –
Institutional Plus Daily Dividend Option
200,543.261 – – 200,543.261 10
Institutional Plus Weekly Dividend Option
459,743.404 – – 459,743.404 10
Institutional Plus Monthly Dividend Option
– – – – 10
Direct Plan - Growth Option 3,018,205.091 9,203,564.99 10,622,087.76 1,599,682.319 10
Direct Plan - Daily Dividend Option
1,013,691.156 5,182,144.00 4,033,844.301 2,161,990.857 10
Direct Plan - Weekly Dividend Option
255,465.010 98,145.58 81,873.50 271,737.092 10
Direct Plan - Monthly Dividend Option
– – – –
Description
2013-2014
Opening Units Subscription Redemption Closing Units Face Value per Unit (Rs.)
Regular Growth Option 2,436,001.458 0.000 1,030,232.904 1,405,768.554 10
Regular Daily Dividend Option 15,390,605.713 0.000 6,766,181.721 8,624,423.992 10
Regular Weekly Dividend Option 6,645,619.910 0.000 2,738,031.292 3,907,588.618 10
Institutional Growth Option 7,082,404.822 96,722,173.398 53,628,950.563 50,175,627.657 10
Institutional Daily Dividend Option
5,271,465.429 119,928,894.674 72,451,018.234 52,749,341.869 10
Institutional Weekly Dividend Option
3,516,678.792 28,051,043.465 14,733,586.912 16,834,135.345 10
Institutional Monthly Dividend Option
812,072.786 15,211,105.152 9,429,623.277 6,593,554.661 10
Institutional Plus Growth Option – – – – –
Institutional Plus Daily Dividend Option
200,543.261 – – 200,543.261 10
Institutional Plus Weekly Dividend Option
2,475,971.582 0.000 2,016,228.18 459,743.404 10
Institutional Plus Monthly Dividend Option
– – – – 10
Direct Plan - Growth Option 964.41 3,502,936.42 485,695.73 3,018,205.091 10
Direct Plan - Daily Dividend Option 156,334.81 1,410,995.77 553,639.420 1,013,691.156 10
Direct Plan - Weekly Dividend Option 22,508.55 303,254.88 70,298.42 255,465.010 10
Direct Plan - Monthly Dividend Option
– – – –
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
21
HSBC ULTRA SHORT TERM BOND FUND 12
5 Prior year amounts have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other Income of Rs. 1,351,612 (2014: NIL) represents Compensation paid by AMC to the Fund on account of incorrect allocation of CCIL.
9 Garnishee Notices :
An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings, by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted ”stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted ”stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
22
12 HSBC ULTRA SHORT TERM BOND FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
23
HSBC ULTRA SHORT TERM BOND FUND 12
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
24
12 HSBC ULTRA SHORT TERM BOND FUND
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25
HSBC ULTRA SHORT TERM BOND FUND 12
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26
12 HSBC ULTRA SHORT TERM BOND FUND
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ting
Dat
eCo
mpa
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Type
of
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ting
(AG
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EG
M)
Reso
luti
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agem
ent
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mm
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tion
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27
HSBC ULTRA SHORT TERM BOND FUND 12
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eCo
mpa
ny N
ame
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of
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ting
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M /
EG
M)
Reso
luti
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rIn
vest
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mm
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tion
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12
34
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28
12 HSBC ULTRA SHORT TERM BOND FUND
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
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umbe
rIn
vest
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ny’s
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tion
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29
HSBC ULTRA SHORT TERM BOND FUND 12
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
ee c
ompa
ny’s
Man
agem
ent
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mm
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tion
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/A
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st /
A
bsta
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12
34
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78
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one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ o
r Pre
fere
nce
shar
es.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s /
Add
ition
al D
irect
ors
and
prom
oter
rela
ted
activ
ities
.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
30
12 HSBC ULTRA SHORT TERM BOND FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
1
HSBC Cash Fund
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC Cash Fund
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC Cash Fund
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC Cash Fund
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Cash Fund (HCF) – an open-ended Liquid Scheme*HCF aims to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities.
The net assets of HCF amounted to Rs. 1386.08 crores as at March 31, 2015 as compared to Rs. 1394.74 crores as at March 31, 2014. The entire net asset remains invested in debt and money market instruments including reverse repos / CBLO as at March 31, 2015.
HCF performed in line with its benchmark for a year due to conservative investments in line with the internal group guidelines and the focus being on accruals and credits.
Date of Inception : 4 December 2002 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks Last 7 Days as on 31 March 2015
Last 15 Days as on 31 March 2015
Last 30 Days as on 31 March 2015
April ‘14 - March
‘15
April ‘13 - March
‘14
Since Inception
HSBC Cash Fund - Growth 10.53 9.39 8.84 8.95 9.42 8.98
CRISIL Liquid Fund Index (Scheme Benchmark)
13.63 10.39 9.58 8.97 9.46 8.82
CRISIL 91 Day T-Bill Index (Standard Benchmark)
12.87 10.21 9.12 8.84 8.55 8.40
Rs. 10,000, if invested in HCF, would have become
10,020 10,039 10,073 10,895 10,942 13,948
Rs. 10,000, if invested in CRISIL Liquid Fund Index, would have become
10,026 10,043 10,079 10,897 10,946 13,869
Rs. 10,000, if invested in CRISIL 91 Day T-Bill Index, would have become
10,025 10,042 10,075 10,884 10,855 13,664
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
* Pursuant to SEBI circular dated Sept. 13, 2012, certain plans / options within the schemes have been discontinued to comply with a single plan structure. Since there was no continuous NAV history available for the surviving plan prior to 19 May 2011, returns since the said date have been considered for calculating performance. The inception date of HSBC Cash Fund however is December 04, 2002.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices
5
HSBC Cash Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian
6
HSBC Cash Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002
7
HSBC Cash Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Cash Fund – – 57,871.97 14
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
8
HSBC Cash Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:* active folios# including against its authorized persons / distributors / employees etc.
9
HSBC Cash Fund
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
HSBC Cash Fund
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Cash Fund (the
“Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
11
HSBC Cash Fund
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement, dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities,where applicable,as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
12
HSBC Cash Fund
Rs. in Lakhs
HSBC CASH FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 115,848.92 122,593.782 Reserves & Surplus2.1 Unit Premium Reserves 1,776.74 1,740.812.2 Unrealised Appreciation Reserve 48.59 18.682.3 Other Reserves 20,954.53 15,120.833 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 5,390.26 18,245.35
TOTAL 144,019.04 157,719.45
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills 4,932.97 7,423.921.6 Commercial Paper 61,765.54 27,244.361.7 Certifi cate of Deposits 49,957.37 81,048.031.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 116,655.88 115,716.31
2 Deposits 15,056.23 40,001.003 Other Current Assets3.1 Cash & Bank Balance 314.40 144.373.2 CBLO / Reverse Repo Lending 9,471.56 1,574.723.3 Others 2,520.97 283.054 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 144,019.04 157,719.45
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC Cash Fund
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC CASH FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 23,512.39 17,441.791.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments25.00 25.75
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.10 0.22
(A) 23,537.49 17,467.76
2 EXPENSES2.1 Management fees 37.82 –2.2 Service tax on Management fees 4.68 –2.3 Transfer agents fees and expenses 57.21 43.732.4 Custodian fees 6.52 5.142.5 Trusteeship fees 1.96 1.082.6 Commission to Agents 74.68 92.272.7 Marketing & Distribution expenses 2.15 2.192.8 Audit fees 4.98 4.622.9 Investor Education Expenses 54.33 38.062.10 Other operating expenses 20.96 19.172.11 Expenses to be Reimbursed by the Investment Manager (4.70) (90.41)
(B) 260.59 115.85
3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 23,276.90 17,351.91
4 Change in Unrealised Depreciation invalue of investments (D) (3.37) (1.85)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 23,273.53 17,350.06
6 Change in Unrealised appreciation inthe value of investments (F) 29.90 17.90
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 23,303.43 17,367.97
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –
7.2 Less: Balance transfer to Unrealised Appreciation Reserve 29.90 17.90
7.3 Add / (Less): Equalisation (5,817.30) 8,272.12
7.4 Transfer from Reserve Fund 15,120.84 99.65
7.5 Transfer from Unit Premium Reserve – –
8 Total 32,577.07 25,721.84
9 Dividend Appropriation9.1 Income Distributed during the year (8,351.83) (7,958.31)9.2 Tax on income distributed during the year (3,270.71) (2,642.69)10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 20,954.53 15,120.84
Notes to Accounts - Annexure I
14
HSBC Cash Fund
Key Statistics for the year ended March 31, 2015
HSBC CASH FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Regular Growth Option 1,985.7907 1,832.4527
Regular Daily Dividend Option 1,020.0973 1,020.0185
Regular Weekly Dividend Option 1,002.3480 1,002.3966
Institutional Growth Option 2,036.2810 1,866.8709
Institutional Daily Dividend Option 1,098.0366 1,086.0890
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option 1,279.8467 1,169.7318
Institutional Plus Daily Dividend Option 1,001.4233 1,001.3459
Institutional Plus Weekly Dividend Option 1,111.4480 1,111.3623
Institutional Plus Monthly Dividend Option 1,000.9211 1,000.7958
Direct Plan - Growth Option 1,279.9925 1,169.7357
Direct Plan - Daily Dividend Option 1,001.4241 1,001.3457
Direct Plan - Weekly Dividend Option 1,111.4621 1,111.3632
Direct Plan - Monthly Dividend Option 1,000.8667 N.A.
High
Regular Growth Option 2,144.7901 1,984.2385
Regular Daily Dividend Option 1,019.3000 1,019.3000
Regular Weekly Dividend Option 1,003.4059 1,003.8159
Institutional Growth Option 2,213.6653 2,034.5807
Institutional Daily Dividend Option 1,097.9635 1,097.1197
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option 1,394.5179 1,278.7433
Institutional Plus Daily Dividend Option 1,000.5600 1,000.5600
Institutional Plus Weekly Dividend Option 1,112.7323 1,113.2171
Institutional Plus Monthly Dividend Option 1,007.6644 1,010.7483
Direct Plan - Growth Option 1,395.7229 1,278.8880
Direct Plan - Daily Dividend Option 1,000.5600 1,000.5600
Direct Plan - Weekly Dividend Option 1,112.7280 1,113.2216
Direct Plan - Monthly Dividend Option 1,007.6786 1,008.9963
Low
Regular Growth Option 1,986.3080 1,832.8752
Regular Daily Dividend Option 1,019.3000 1,017.0751
Regular Weekly Dividend Option 1,001.7629 1,000.6227
Institutional Growth Option 2,036.8478 1,867.3306
Institutional Daily Dividend Option 1,097.1979 1,086.3483
Institutional Weekly Dividend Option – –
Institutional Monthly Dividend Option – –
15
HSBC Cash Fund
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC CASH FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Institutional Plus Growth Option 1,280.2145 1,170.0418
Institutional Plus Daily Dividend Option 1,000.5600 998.9353
Institutional Plus Weekly Dividend Option 1,110.7372 1,109.4241
Institutional Plus Monthly Dividend Option 1,000.2840 1,000.4834
Direct Plan - Growth Option 1,280.3607 1,170.0418
Direct Plan - Daily Dividend Option 1,000.5600 998.9356
Direct Plan - Weekly Dividend Option 1,110.7409 1,109.4268
Direct Plan - Monthly Dividend Option 1,000.2307 1,000.0000
End
Regular Growth Option 2,144.7901 1,985.7907
Regular Daily Dividend Option 1,019.3000 1,020.0973
Regular Weekly Dividend Option 1,003.4059 1,002.3480
Institutional Growth Option 2,213.6653 2,036.2810
Institutional Daily Dividend Option 1,097.9635 1,098.0366
Institutional Weekly Dividend Option 1,000.0000 –
Institutional Monthly Dividend Option – –
Institutional Plus Growth Option 1,394.5179 1,279.8467
Institutional Plus Daily Dividend Option 1,000.5600 1,001.4233
Institutional Plus Weekly Dividend Option 1,112.7323 1,111.4480
Institutional Plus Monthly Dividend Option 1,001.8485 1,000.9211
Direct Plan - Growth Option 1,395.7229 1,279.9925
Direct Plan - Daily Dividend Option 1,000.5600 1,001.4241
Direct Plan - Weekly Dividend Option 1,112.7280 1,111.4621
Direct Plan - Monthly Dividend Option 1,001.8039 1,000.8667
2. Closing Assets Under Management (Rs. in Lakhs)
End 138,608 139,474
Average (AAuM)1 271,654 190,295
3. Gross income as % of AAuM2 8.66% 9.18%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Plan 1.00% 1.00%Institutional Plan 0.35% 0.35%Institutional Plus Plan 0.12% 0.04%Direct Plan 0.05% 0.03%
b. Management Fee as % of AAuM (planwise)
Regular Plan 0.01% 0.00%
Institutional Plan 0.01% 0.00%
Institutional Plus Plan 0.01% 0.00%
Direct Plan 0.01% 0.00%
5. Net Income as a percentage of AAuM3 8.57% 9.12%
6. Portfolio turnover ratio4 – –
16
HSBC Cash Fund
HSBC CASH FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
7. Total Dividend per unit distributed during the year (planwise)
Retail
Regular Daily Dividend Option 59.7476 63.7781
Regular Weekly Dividend Option 58.6677 62.8257
Institutional Daily Dividend Option 69.1099 64.9057
Institutional Plus Daily Dividend Option 65.3310 70.0957
Institutional Plus Weekly Dividend Option 72.4467 77.8469
Institutional Plus Monthly Dividend Option 64.1781 70.2989
Direct Plan - Daily Dividend Option 65.8968 70.1844
Direct Plan - Weekly Dividend Option 73.0214 77.9366
Direct Plan - Monthly Dividend Option 64.7149 45.0764
Corporate
Regular Daily Dividend Option 56.3692 61.0817
Regular Weekly Dividend Option 55.3148 60.1694
Institutional Daily Dividend Option 65.1994 62.1615
Institutional Plus Daily Dividend Option 61.6368 67.1321
Institutional Plus Weekly Dividend Option 68.3063 74.5556
Institutional Plus Monthly Dividend Option 60.5428 67.3268
Direct Plan - Daily Dividend Option 62.1687 67.2171
Direct Plan - Weekly Dividend Option 68.8470 74.6415
Direct Plan - Monthly Dividend Option 61.0471 43.1706
8. Returns (%):a. Last One Year
Scheme
Regular Growth Option 8.0006 8.3712
Institutional Growth Option 9.0780 9.0780
Institutional Plus Growth Option 8.9530 9.4161
Direct Plan - Growth Option 9.0349 9.4286Benchmark
CRISIL Liquid Fund Index 8.9727 9.4613b. Since Inception
Scheme
Regular Growth Option 6.3847 6.2436
Institutional Growth Option 3.1166 6.5431
Institutional Plus Growth Option 6.7281 2.5427
Direct Plan - Growth Option 9.1942 9.3219Benchmark
CRISIL Liquid Fund Index 8.8167 8.7613
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.
Key Statistics for the year ended March 31, 2015 (Contd...)
17
HSBC Cash Fund
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC CASH FUND
1 Investments:-
1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 end is NIL.
1.3. Investments in Associates and Group Companies:(Rupees)
Issuer Instrument Type
Amount Aggregate Investments
by all schemes
Amount Aggregate Investments
by all schemes
2015 2014
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
– 1,607,345,350 – 555,832,950
Equities – 215,829,290
Bharti Airtel Ltd. Equities – 12,741,680 – 76,306,283
Steel Authority of India Ltd.
Commercial Paper
– – 1,243,550,000 1,243,550,000
Shriram Equipment Finance Co Ltd.
Commercial Paper
– – 492,702,500 492,702,500
1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of fi nancial years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as on March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years March 31, 2015 and March 31, 2014 are as under:
Security Category Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Certifi cates of Deposit/Commercial Paper
– Appreciation 4,865,228 0.04 1,997,166 0.01
– Depreciation 6,585 0.00~ 128,715 0.00~
Government of India Securities
– Appreciation – – – –
– Depreciation 521,714 0.00~ 185,124 2.48
~ Indicates less than 0.01
1.7. The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) are Rs. 221,353,601,536 and Rs. 223,025,661,703 respectively being 814.84% and 820.99% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) are Rs. 164,379,504,252 and Rs. 158,919,151,021 respectively being 863.82% and 835.12% of the average daily net assets.
18
HSBC Cash Fund
1.8. Non-Traded securities in the portfolio:
Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under
Security Category Amount (Rs.) Percentage to Net Assets
Amount (Rs.) Percentage to Net Assets
2015 2014
Money market Instruments 8,270,179,305 59.67 10,586,567,433 75.90
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor/AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2014-2015 996.54 1.15 2,481,899 34.78
HSBC InvestDirect Securit ies ( India) Limited
Associate of the Investment
Manager
2014-2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rs.]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2013-2014 1,009.56 2.09 2,095,639 24.44
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager
2013-2014 – – 4,810 0.06
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 Details of investors holding units in the scheme over 25% of the NAV as on March 31, 2015:
Scheme Name Number of investors Percentage holdings
HSBC Cash Fund 1 27.55%
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
19
HSBC Cash Fund
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units
Face Value
per unit (Rupees)
Regular Growth Option 28,247.568 – 7,539.374 20,708.194 1,000Regular Daily Dividend Option
238,134.568 – 73,188.551 164,946.017 1,000
Regular Weekly Dividend Option
92,222.081 – 1,266.820 90,955.261 1,000
Institutional Growth Option 3,205.025 – – 3,205.025 1,000Institutional Daily Dividend Option
8,401.287 – 45.571 8,355.716 1,000
Institutional Weekly Dividend Option
– – – – 1,000
Institutional Monthly Dividend Option
– – – – 1,000
Institutional Plus Growth Option
4,852,963.240 65,434,031.302 68,181,406.487 2,105,588.055 1,000
Institutional Plus Daily Dividend Option
4,464,806.457 66,866,065.687 67,040,322.012 4,290,550.132 1,000
Institutional Plus Weekly Dividend Option
113,527.190 447,263.941 367,284.569 193,506.562 1,000
Institutional Plus Monthly Dividend Option
115,924.467 382,073.825 218,068.265 279,930.027 1,000
Direct Plan - Growth Option 971,038.973 322,062,605.982 319,519,244.273 3,514,400.682 1,000Direct Plan - Daily Dividend Option
1,367,167.040 282,440,028.655 282,903,674.998 903,520.697 1,000
Direct Plan - Weekly Dividend Option
55.413 5,660.407 5,704.466 11.354 1,000
Direct Plan - Monthly Dividend Option
3,684.789 20,664.161 15,134.962 9,213.988 1,000
Description
2013-2014
Opening Units Subscription Redemption Closing Units
Face Value per unit (Rupees)
Regular Growth Option 44,874.909 – 16,627.341 28,247.568 1,000Regular Daily Dividend Option 287,454.818 – 49,320.250 238,134.568 1,000Regular Weekly Dividend Option
143,127.000 – 50,904.919 92,222.081 1,000
Institutional Growth Option 3,205.025 – 3,205.025 1,000Institutional Daily Dividend Option
8,676.515 – 275.228 8,401.287 1,000
Institutional Weekly Dividend Option
– – – – 1,000
Institutional Monthly Dividend Option
– – – – 1,000
Institutional Plus Growth Option
304,502.712 49,925,334.362 45,376,873.834 4,852,963.240 1,000
Institutional Plus Daily Dividend Option
2,089,629.026 129,633,386.427 127,258,208.996 4,464,806.457 1,000
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
20
HSBC Cash Fund
Description
2013-2014
Opening Units Subscription Redemption Closing Units
Face Value per unit (Rupees)
Institutional Plus Weekly Dividend Option
296,441.025 356,912.566 539,826.401 113,527.190 1,000
Institutional Plus Monthly Dividend Option
131,532.673 246,995.058 262,603.264 115,924.467 1,000
Direct Plan - Growth Option 300,784.943 126,571,885.154 125,901,631.124 971,038.973 1,000Direct Plan - Daily Dividend Option
862,991.501 131,118,497.514 130,614,321.975 1,367,167.040 1,000
Direct Plan - Weekly Dividend Option
27,040.690 26,658.302 53,643.579 55.413 1,000
Direct Plan - Monthly Dividend Option
– 29,267.378 25,582.589 3,684.789 1,000
Units held by the AMC (Seed Capital):
Name of the Scheme Plan / Option Units as at March 31, 2015
Units as at March 31, 2014
HSBC Cash Fund Direct Plan - Growth Option 227,022.932 121,517.811
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other Income of Rs. 10479/- (2014: Rs. 22,193/-) represents compensation on unutilized amount.
9 Garnishee Notice from Income Tax Authorities An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings,
by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
21
HSBC Cash Fund
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
22
HSBC Cash Fund
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
23
HSBC Cash Fund
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ o
r Pre
fere
nce
shar
es.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s /
Add
ition
al D
irect
ors
and
prom
oter
rela
ted
activ
ities
.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
HSBC Cash Fund
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
1
HSBC GILT FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC GILT FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC GILT FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC GILT FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Gilt Fund (HGF) – an open-ended Gilt SchemeHGF seeks to generate reasonable returns through investments in Government Securities of various maturities. The AMC’s view of interest rate trends will be refl ected in the maturities of securities in which the scheme is invested.
The net assets of HGF amounted to Rs. 3.32 crores as at March 31, 2015 as compared to Rs. 2.64 crores as at March 31, 2014. Around 89.28% of the net assets were invested government securities, 8.55% were invested in reverse repos / CBLO and 2.17 % were in net current assets as at March 31, 2015.
HGF outperformed its benchmark due to higher duration calls taken during the year. The stable government and low volatility in forex market created environment for foreign investors to invest in fi xed income segment which benefi tted the rates and spread scenario.
Date of Inception : 5 December 2003 Simple Annualized (%) Compounded Annualized
(%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Gilt Fund – Growth 16.35 1.99 12.37 5.31
I-Sec Composite Bond Fund Index (Scheme Benchmark)
15.68 3.95 11.71 7.27
CRISIL 10 Year Gilt Index (Standard Benchmark) 14.58 -0.79 11.31 5.08
Rs. 10,000, if invested in HGF, would have become 11,635 10,199 11,237 17,970
Rs. 10,000, if invested in I-Sec Composite Bond Fund Index, would have become
11,568 10,395 11,171 22,146
Rs. 10,000, if invested in CRISIL 10 Year Gilt Index, would have become
11,458 9,921 11,131 17,524
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and
5
HSBC GILT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
6
HSBC GILT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
7
HSBC GILT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
SchemeUnclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Gilt Fund 7,395.57 2 – –
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
8
HSBC GILT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios
# including against its authorized persons / distributors / employees etc.
9
HSBC GILT FUND
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
HSBC GILT FUND
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Gilt Fund (the
“Scheme”), which comprise the Balance Sheet as at March 31, 2015 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We
conducted our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015; and
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.
Emphasis of Matter7. We draw attention to Note 21 – Schedule 8 to the fi nancial statements regarding the requirement for
maintenance of an average Asset under Management of Rs. 20 crores in accordance with the SEBI Circular Cir/ IMD/ DF/ 15 /2014 dated June 20, 2014. Our opinion is not qualifi ed in respect of this matter.
Independent Auditors’ Report
11
HSBC GILT FUND
Independent Auditors’ Report (Contd...)
Report on Other Legal and Regulatory Requirement8. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
9. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015
12
HSBC GILT FUND
Rs. in Lakhs
HSBC GILT FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 191.42 176.122 Reserves & Surplus2.1 Unit Premium Reserves 46.89 48.272.2 Unrealised Appreciation Reserve 11.79 –2.3 Other Reserves 82.14 39.383 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 0.98 0.99
TOTAL 333.22 264.76
ASSETS1 Investments1.1 Listed Securities: – –1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities 296.67 182.621.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 296.67 182.62
2 Deposits 0.06 0.593 Other Current Assets3.1 Cash & Bank Balance 0.63 0.683.2 CBLO / Reverse Repo Lending 28.40 75.273.3 Others 7.46 5.604 Deferred Revenue Expenditure – –
(to the extent not written off)
TOTAL 333.22 264.76
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC GILT FUND
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC GILT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 23.44 22.761.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 9.02 (15.04)1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – 0.02
(A) 32.46 7.74
2 EXPENSES2.1 Management fees 1.30 1.232.2 Service tax on Management fees 0.16 0.152.3 Transfer agents fees and expenses 0.21 0.162.4 Custodian fees – 0.00~2.5 Trusteeship fees – 0.00~2.6 Commission to Agents 1.26 0.992.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 0.06 0.062.10 Other operating expenses 0.51 0.282.11 Less: Expenses to be Reimbursed by the Investment Manager (0.67) (0.17)
(B) 3.03 2.90
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 29.43 4.84
4 Change in Unrealised Depreciation in value ofinvestments (D) 0.35 0.31
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 29.78 5.15
6 Change in Unrealised appreciation in the valueof investments (F) 11.79 –
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 41.58 5.15
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 11.79 –7.3 Add / (Less): Equalisation 13.36 25.117.4 Transfer from Reserve Fund 39.37 9.547.5 Transfer from Unit Premium Reserve – –
8 Total 82.52 39.80
9 Dividend Appropriation9.1 Income Distributed during the year (0.28) (0.37)9.2 Tax on income distributed during the year (0.10) (0.05)
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 82.14 39.38
Notes to Accounts - Annexure I
~ indicates less than 0.01
14
HSBC GILT FUND
Key Statistics for the year ended March 31, 2015
HSBC GILT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):Open
Growth Option 15.5459 15.1621Dividend Option 13.7088 13.3705Weekly Dividend Option 9.7361 9.9928Monthly Dividend Option N.A. –Direct Plan - Growth Option 15.6482 15.1841Direct Plan - Dividend Option – –Direct Plan - Weekly Dividend Option – –Direct Plan - Monthly Dividend Option N.A. –
HighGrowth Option 18.0022 15.9852Dividend Option – 14.0963Weekly Dividend Option 10.1588 10.1249Monthly Dividend Option 15.8749 –Direct Plan - Growth Option 18.2046 16.0230Direct Plan - Dividend Option – 15.6888Direct Plan - Weekly Dividend Option – 10.0603Direct Plan - Monthly Dividend Option – –
LowGrowth Option 15.3940 14.5809Dividend Option – 12.8579Weekly Dividend Option 9.6410 9.1317Monthly Dividend Option 13.5749 –Direct Plan - Growth Option 15.4968 14.6320Direct Plan - Dividend Option – 15.1754Direct Plan - Weekly Dividend Option – 9.8559Direct Plan - Monthly Dividend Option – –
End5
Growth Option 17.9679 15.5459Dividend Option – 13.7088Weekly Dividend Option 10.0145 9.7361Monthly Dividend Option 15.8446 –Direct Plan - Growth Option 18.1766 15.6482Direct Plan - Dividend Option – –Direct Plan - Weekly Dividend Option 10.0000 –Direct Plan - Monthly Dividend Option 10.0000 –
2. Closing Assets Under Management (Rs. in Lakhs)End 332 264Average (AAuM)1 288 277
3. Gross income as % of AAuM2 11.27% 2.80%
4. Expense Ratio: a. Total Expense as % of AAuM (including service tax on
management fees) (Planwise)Growth Option 1.06% 1.05%
15
HSBC GILT FUND
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC GILT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Dividend Option 1.06% 1.05%Weekly Dividend Option 1.06% 1.05%Monthly Dividend Option 1.06% –Direct Plan - Growth Option 0.56% 0.55%Direct Plan - Dividend Option 0.56% –Direct Plan - Weekly Dividend Option 0.56% 0.55%Direct Plan - Monthly Dividend Option 0.56% –
b. Management Fee as % of AAuM (Planwise)Growth Option 0.45% 0.44%Dividend Option 0.45% 0.44%Weekly Dividend Option 0.45% 0.44%Monthly Dividend Option 0.45% –Direct Plan - Growth Option 0.45% 0.44%Direct Plan - Dividend Option 0.45% –Direct Plan - Weekly Dividend Option 0.45% –Direct Plan - Monthly Dividend Option 0.45% –
5. Net Income as a percentage of AAuM3 10.22% 1.75%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)Retail
Weekly Dividend Option 0.8729 0.4476Direct Plan - Weekly Dividend Option – 0.0468
CorporateWeekly Dividend Option 0.8152 0.3814Direct Plan - Weekly Dividend Option – 0.0399
8. Returns (%):a. Last One Year
SchemeGrowth Option 16.3475 1.9943Direct Plan - Growth Option 16.9292 2.5166BenchmarkI-Sec Composite Index 15.6821 3.9054
Since InceptionSchemeGrowth Option 5.3101 4.3040Direct Plan - Growth Option 9.5712 4.0413BenchmarkI-Sec Composite Index 7.2702 6.4959
1. AAuM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day), and
not the last declared NAV.
16
HSBC GILT FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC GILT FUND1 Investments: 1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the
benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years end and their percentages to net assets are as under:
Security Category Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
2015 2014
Government of India Securities
– Appreciation 1,178,700 3.55 1,188 0.00~
– Depreciation – 0.00~ 36,311 0.1377
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) are Rs. 82,917,184 and Rs. 73,628,446 respectively being 287.61% and 255.39% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) are Rs. 112,384,923 and Rs. 104,295,237 respectively being 405.94% and 376.72% of the average daily net assets.
1.8. Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor /AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2014-2015 0.31 26.80 39,757.80 34.51
HSBC InvestDirect Securities (India) Limited
Associate 2014-2015 – – – –
17
HSBC GILT FUND
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate 2013-2014 2.72 62.95 32,642 33.78
HSBC InvestDirect Securities (India) Limited
Associate 2013-2014 – – – –
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units
Subscription Redemption Closing Units Face Value per unit (Rupees)
Growth Option 1,274,693.840 541,363.675 387,490.613 1,428,566.902 10
Dividend Option 448,872.509 5,406.223 26,760.626 427,518.106 10
Weekly Dividend Option 30,846.078 2,805.679 – 33,651.757 10
Direct Plan - Growth Option 6,753.973 45,781.144 28,056.569 24,478.548 10
Direct Plan - Weekly Dividend Option
– – – – 10
Description
2013-2014
Opening Units
Subscription Redemption Closing Units Face Value per unit (Rupees)
Growth Option 929,165.878 1,516,449.358 1,170,921.396 1,274,693.840 10
Dividend Option 531,932.957 1,329,212.240 1,412,272.688 448,872.509 10
Weekly Dividend Option 75,352.097 3,436.528 47,942.547 30,846.078 10
Direct Plan - Growth Option
8,522.373 24,012.255 25,780.655 6,753.973 10
Direct Plan - Weekly Dividend Option
– 55,055.903 55,055.903 – 10
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
18
HSBC GILT FUND
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Garnishee Notices :
An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings, by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted ”stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
9 Less than 20 crore Schemes:
SEBI vide circular number Cir/ IMD/ DF/ 15 /2014 dated June 20, 2014 has mandated AMCs to maintain a minimum Average AUM of INR 20 crores in each of their debt oriented schemes. As per the circular, the AMCs have time upto December 19, 2015 to comply with this requirement failing which the Scheme will be wound up in accordance with provisions of Regulation 39(2)(c) of the SEBI (Mutual Fund) Regulations, 1996. HSBC Gilt Fund is not meeting the provisions of this circular as on March 31, 2015. The management is keen to shore up the AUM as the HSBC Gilt Fund is one of the unique product propositions from the HSBC MF stable. Accordingly, necessary focus in terms of target investor segment, distributor appeal, etc. have been initiated by the management. Based on the results of the targeted approach, the management will review the status as on September 30, 2015. Post this review, necessary action will be taken by the management to comply with the provisions of this circular.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
19
HSBC GILT FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
20
HSBC GILT FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
21
HSBC GILT FUND
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ o
r Pre
fere
nce
shar
es.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s /
Add
ition
al D
irect
ors
and
prom
oter
rela
ted
activ
ities
.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
27
HSBC GILT FUND
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC FLEXI DEBT FUND
HSBC Flexi Debt FundAn open-ended Debt Scheme
Abridged Annual Report 2014 - 2015
1
HSBC FLEXI DEBT FUND
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC FLEXI DEBT FUND
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC FLEXI DEBT FUND
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
HSBC FLEXI DEBT FUND
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Flexi Debt Fund (HFDF) – an open ended Debt SchemeHFDF seeks to deliver returns in the form of interest income and capital gains, along with high liquidity, commensurate with the current view on the markets and the interest rate cycle, through active investment in debt and money market instruments.
The net assets of HFDF amounted to Rs. 559.77 crores as at March 31, 2015 as compared to Rs.540.42 crores as at March 31, 2014. Around 98.13% of the net assets were invested in debt and money market instruments, 0.48% were invested in reverse repos / CBLO and 1.39% were in the net current assets as at March 31, 2015.
HFDF performed in line with the its benchmark due to higher duration calls in rates during the year as progressive reduction in infl ation and commodity prices, stability in government created conducive environment for rate cuts. The stable government and low volatility in forex market created environment for foreign investors to invest in fi xed income segment which benefi tted the rates and spread scenario.
Date of Inception : 5 October 2007 Simple Annualized (%) Compounded Annualized (%)
Scheme Name & Benchmarks April ‘14 - March ‘15
April ‘13 - March ‘14
April ‘12 - March ‘13
Since Inception
HSBC Flexi Debt Fund - Ret – Growth 14.56 3.69 11.26 9.18
CRISIL Composite Bond Fund Index (Scheme Benchmark)
14.60 4.34 9.27 7.58
CRISIL 10 Year Gilt Index (Standard Benchmark) 14.58 -0.79 11.31 6.66
Rs. 10,000, if invested in HFDF, would have become 11,456 10,369 11,126 19,314
Rs. 10,000, if invested in CRISIL Composite Bond Fund Index, would have become
11,460 10,434 10,927 17,294
Rs. 10,000, if invested in CRISIL 10 Year Gilt Index, would have become
11,458 9,921 11,131 16,210
Past performance may or may not be sustained in future. Returns data as on March 31, 2015. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance
5
HSBC FLEXI DEBT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI
6
HSBC FLEXI DEBT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for
7
HSBC FLEXI DEBT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2015:
Scheme
Unclaimed Dividends Unclaimed Redemptions
Amount (Rs)
No. of Investors
Amount (Rs)
No. of Investors
HSBC Flexi Debt Fund 47.77 2 132,501.85 1
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
8
HSBC FLEXI DEBT FUND
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:* active folios# including against its authorized persons / distributors / employees etc.
9
HSBC FLEXI DEBT FUND
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
10
HSBC FLEXI DEBT FUND
Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Flexi Debt Fund
(the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
11
HSBC FLEXI DEBT FUND
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
12
HSBC FLEXI DEBT FUND
Rs. in Lakhs
HSBC FLEXI DEBT FUNDAs at
March 31, 2015As at
March 31, 2014
LIABILITIES
1 Unit Capital 31,030.40 34,546.76
2 Reserves & Surplus2.1 Unit Premium Reserves 2,646.33 2,191.002.2 Unrealised Appreciation Reserve 1,280.17 58.162.3 Other Reserves 21,334.22 17,245.943 Loans & Borrowings – –
4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 118.82 295.97
TOTAL 56,409.94 54,337.83
ASSETS1 Investments1.1 Listed Securities: – –1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 4,695.96 25,937.051.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities 45,961.71 8,559.041.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 4,264.42 17,985.741.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 54,922.09 52,481.832 Deposits 16.27 66.163 Other Current Assets3.1 Cash & Bank Balance 13.42 5.253.2 CBLO / Reverse Repo Lending 271.05 94.913.3 Others 1,187.11 1,689.67
TOTAL 56,409.94 54,337.83Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
13
HSBC FLEXI DEBT FUND
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC FLEXI DEBT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 4,137.82 8,898.031.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of
investments1,134.23 (4,805.31)
1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.01 3.87
(A) 5,272.06 4,096.59
2 EXPENSES2.1 Management fees 300.34 590.992.2 Service tax on Management fees 37.13 73.052.3 Transfer agents fees and expenses 22.26 44.492.4 Custodian fees 0.70 4.122.5 Trusteeship fees 0.61 0.682.6 Commission to Agents 357.78 949.692.7 Marketing & Distribution expenses 0.59 1.662.8 Audit fees 1.67 1.412.9 Investor Education Expenses 9.86 21.022.10 Other operating expenses 6.56 7.792.11 Less: Expenses to be Reimbursed by the Investment Manager (38.52) –
(B) 698.98 1,694.90
3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A - B = C) 4,573.08 2,401.69
4 Change in Unrealised Depreciationin value of investments (D) 659.74 (573.76)
5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C + D)] 5,232.82 1,827.93
6 Change in unrealised appreciation in the value ofinvestments (F) 1,222.01 (98.73)
7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 6,454.84 1,729.20
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 98.737.2 Less: Balance transfer to Unrealised Appreciation Reserve 1,222.01 –7.3 Add / (Less): Equalisation (761.25) (1,189.46)
7.4 Transfer from Reserve Fund 17,245.94 17,720.27
7.5 Transfer from Unit Premium Reserve – –
8 Total 21,717.51 18,358.74
9 Dividend Appropriation9.1 Income Distributed during the year (285.60) (874.30)9.2 Tax on income distributed during the year (97.69) (238.50)10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 21,334.22 17,245.94
Notes to Accounts - Annexure I
14
HSBC FLEXI DEBT FUND
Key Statistics for the year ended March 31, 2015
HSBC FLEXI DEBT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
1. NAV per unit (Rs.):
OpenRegular Plan - Growth Option 16.5344 15.9387
Regular Plan - Fortnightly Dividend Option 10.8766 10.7422
Regular Plan - Monthly Dividend Option 10.4554 10.3235
Regular Plan - Quarterly Dividend Option 11.3803 11.8526
Regular Plan - Half Yearly Dividend Option 11.6926 11.2716
Growth Option **** 16.8883 16.2393
Fortnightly Dividend Option **** 10.1042 10.0451
Monthly Dividend Option **** 10.5917 10.5732
Quarterly Dividend Option **** 11.3127 11.7590
Half Yearly Dividend Option **** 11.0077 10.5850
Direct Plan - Growth Option 17.0615 10.6297
Direct Plan - Fortnightly Dividend Option 10.0000 10.1531
Direct Plan - Monthly Dividend Option 10.7214 16.2765
Direct Plan - Quarterly Dividend Option 11.4404 11.7912
Direct Plan - Half Yearly Dividend Option 10.7112 10.6143
HighRegular Plan - Growth Option 18.8718 16.6673Regular Plan - Fortnightly Dividend Option 12.1450 11.1136Regular Plan - Monthly Dividend Option 11.9334 10.7269Regular Plan - Quarterly Dividend Option 12.2616 12.3945Regular Plan - Half Yearly Dividend Option 13.3451 11.7869Growth Option **** 19.3203 16.9888Fortnightly Dividend Option **** 11.2653 10.3899Monthly Dividend Option **** 10.8758 10.9739Quarterly Dividend Option **** 12.2134 12.3015Half Yearly Dividend Option **** 12.5929 11.0733Direct Plan - Growth Option 19.6545 17.0550Direct Plan - Fortnightly Dividend Option 10.1869 10.5076Direct Plan - Monthly Dividend Option 11.0144 11.0403Direct Plan - Quarterly Dividend Option 12.4483 12.3551Direct Plan - Half Yearly Dividend Option 11.9009 11.1220
LowRegular Plan - Growth Option 16.4672 15.4727
Regular Plan - Fortnightly Dividend Option 10.8324 10.1785
Regular Plan - Monthly Dividend Option 10.4129 9.7843
Regular Plan - Quarterly Dividend Option 11.3341 11.2658
Regular Plan - Half Yearly Dividend Option 11.6450 10.9421
Growth Option **** 16.8201 15.7801
Fortnightly Dividend Option **** 10.0635 9.5174
Monthly Dividend Option **** 10.4706 10.0109
Quarterly Dividend Option **** 11.2670 11.1921
15
HSBC FLEXI DEBT FUND
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FLEXI DEBT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Half Yearly Dividend Option **** 10.9633 10.2855Direct Plan - Growth Option 16.9940 15.8687Direct Plan - Fortnightly Dividend Option 10.0319 9.6559Direct Plan - Monthly Dividend Option 10.6008 10.1222Direct Plan - Quarterly Dividend Option 11.3952 11.2612Direct Plan - Half Yearly Dividend Option 10.6689 10.2296
End5
Regular Plan - Growth Option 18.8438 16.5344
Regular Plan - Fortnightly Dividend Option 12.1270 10.8766Regular Plan - Monthly Dividend Option 11.9157 10.4554Regular Plan - Quarterly Dividend Option 11.9924 11.3803Regular Plan - Half Yearly Dividend Option 13.3253 11.6926Growth Option **** 19.2952 16.8883Fortnightly Dividend Option **** 11.1156 10.1042Monthly Dividend Option **** 10.5973 10.5917Quarterly Dividend Option **** 11.9465 11.3127Half Yearly Dividend Option **** 12.0645 11.0077Direct Plan - Growth Option 19.6398 17.0615Direct Plan - Fortnightly Dividend Option 10.1268 10.0000Direct Plan - Monthly Dividend Option 10.7337 10.7214Direct Plan - Quarterly Dividend Option 12.1881 11.4404Direct Plan - Half Yearly Dividend Option 11.4103 10.7112
2. Closing Assets Under Management (Rs. in Lakhs)
End 55,977 54,042
Average (AAuM)1 49,323 105,078
3. Gross income as % of AAuM2 10.69% 3.90%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise)
Regular Plan - Growth Option 1.92% 1.90%
Growth Option **** 1.67% 1.65%
Direct Plan - Growth Option 0.92% 0.87%
b. Management Fee as % of AAuM (planwise)
Regular Plan - Growth Option 0.61% 0.56%
Growth Option **** 0.61% 0.56%
Direct Plan - Growth Option 0.61% 0.56%
5. Net Income as a percentage of AAuM3 9.27% 2.29%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the year (planwise)
RetailRegular Plan - Fortnightly Dividend Option 0.1887 0.2251Regular Plan - Monthly Dividend Option – 0.2031
16
HSBC FLEXI DEBT FUND
HSBC FLEXI DEBT FUNDCurrent
Year ended March 31, 2015
Previous Year ended
March 31, 2014
Regular Plan - Quarterly Dividend Option 0.6955 0.7013Fortnightly Dividend Option **** 0.4540 0.2823
Monthly Dividend Option **** 1.0551 0.3211
Quarterly Dividend Option **** 0.6955 0.7013
Half Yearly Dividend Option **** 0.3702 –
Direct Plan - Fortnightly Dividend Option 0.1014 0.2197
Direct Plan - Monthly Dividend Option 1.1243 0.3299
Direct Plan - Quarterly Dividend Option 0.6955 0.7013
Direct Plan - Half Yearly Dividend Option 0.6601 0.3117
CorporateRegular Plan - Fortnightly Dividend Option 0.1807 0.1981
Regular Plan - Monthly Dividend Option – 0.1884
Regular Plan - Quarterly Dividend Option 0.6556 0.6717
Fortnightly Dividend Option **** 0.4274 0.2534
Monthly Dividend Option **** 0.9903 0.2997
Quarterly Dividend Option **** 0.6556 0.6717
Half Yearly Dividend Option **** 0.3433 –
Direct Plan - Fortnightly Dividend Option 0.0941 0.1920
Direct Plan - Monthly Dividend Option 1.0555 0.3072
Direct Plan - Quarterly Dividend Option 0.6556 0.6717
Direct Plan - Half Yearly Dividend Option 0.6216 0.2985
8. Returns (%):
a. Last One YearSchemeRegular Plan - Growth Option 14.2768 3.4293Growth Option **** 14.5622 3.6875Direct Plan - Growth Option 15.4241 4.5093BenchmarkCRISIL Composite Bond Fund Index 14.5991 4.3172
b. Since InceptionSchemeRegular Plan - Growth Option 8.8370 8.0258Growth Option **** 9.1819 8.3792Direct Plan - Growth Option 9.3765 4.6538BenchmarkCRISIL Composite Bond Fund Index 7.5843 6.5428
1. AAUM = Average daily net assets.2. Gross income = amount against (A) in the Revenue account i.e. Income.3. Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the year.4. Portfolio Turnover = Lower of sales or purchase divided by the Average AUM for the year.5. The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
**** Earlier known as Institutional Plan..
Key Statistics for the year ended March 31, 2015 (Contd...)
17
HSBC FLEXI DEBT FUND
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FLEXI DEBT FUND1 Investments:
1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2. Open Positions of derivatives as a % to Net Assets as of years ended March 31, 2015 and March 31, 2014 are NIL.
1.3. Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2015 and March 31, 2014 are NIL.
1.5. NPAs as at years ended March 31, 2015 and March 31, 2014 are NIL.
1.6. Aggregate Unrealised Gain / Loss as at the end of the fi nancial years and percentages to net assets are as under :
Security Category Amount (Rupees)
Percentage to Net Assets
Amount (Rupees)
Percentage to Net Assets
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 4,983,065 0.09 2,927,225 0.05
– Depreciation 548,200 0.01 68,900,964 1.27
Non Convertible Debentures and Bonds Privately Placed
– Appreciation – – – –
– Depreciation – – – –
Certifi cate of Deposit
– Appreciation 620,978 0.01 5,235,263 0.10
– Depreciation – – – –
Government of India Securities
– Appreciation 122,974,826 2.20 2,045,089 0.04
– Depreciation 13,589 0.00~ 1,464,589 0.03
~ Indicates less than 0.01
1.7. The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-15 (excluding accretion of discount) are Rs. 19,888,851,005 and Rs. 19,969,149,419 respectively being 403.24% and 404.87% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2013-14 (excluding accretion of discount) are Rs. 52,960,634,052 and Rs. 54,532,561,866 respectively being 504.01% and 518.97% of the average daily net assets.
1.8. Non-Traded securities in the portfolio:
Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under :
Security Category Fair Value (Rupees)
Percentage to Net Assets
Fair Value (Rupees)
Percentage to Net Assets
2015 2014
Debt Instruments – – – –
Money Market Instruments – – 89,830,386 1.66
Total – – 89,830,386 1.66
18
HSBC FLEXI DEBT FUND
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.
Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2014-2015 45.35 11.39 7,864,964.87 26.55
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager
2014-2015 – – – –
Name of Sponsor / AMC and its associate / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid [Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager
2013-2014 297.38 27.97 31,556,246 34.05
HSBC InvestDirect Securities (India) Limited
Associate of the Investment
Manager
2013-2014 – – 23,251 0.03
~ Indicates less than 0.01
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the years ended March 31, 2015 and March 31, 2014:
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan - Growth Option
17,400,322.826 – 5,172,322.275 12,228,000.551 10
Regular Plan - Monthly Dividend Option
14,034,728.338 – 10,781,196.700 3,253,531.638 10
Regular Plan - Fortnightly Dividend Option
5,780,275.849 – 5,050,408.611 729,867.238 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
19
HSBC FLEXI DEBT FUND
Description
2014-2015
Opening Units Subscription Redemption Closing Units Face Value per unit (Rupees)
Regular Plan - Quarterly Dividend Option
6,734,755.485 – 3,568,395.881 3,166,359.604 10
Regular Plan - Half Yearly Dividend Option
46,259.494 – 44,584.175 1,675.319 10
Growth Option **** 227,945,265.685 74,728,676.968 170,809,011.583 131,864,931.070 10
Monthly Dividend Option ****
20,013,165.871 18,570,508.282 19,402,980.868 19,180,693.285 10
Fortnightly Dividend Option ****
4,410,738.752 10,218,152.913 9,835,195.593 4,793,696.072 10
Quarterly Dividend Option ****
19,627,458.474 1,918,682.610 5,921,836.043 15,624,305.041 10
Half Yearly Dividend Option ****
41,286.386 440,782.579 31,926.434 450,142.531 10
Direct Plan - Growth Option
29,248,013.813 116,128,978.811 28,186,807.458 117,190,185.166 10
Direct Plan - Fortnightly Dividend Option
– 2,472,147.300 693,070.244 1,779,077.056 10
Direct Plan - Quarterly Dividend Option
63,067.626 3,619.838 58,674.961 8,012.503 10
Direct Plan - Monthly Dividend Option
109,363.326 19,191.189 108,631.971 19,922.544 10
Direct Plan - Half Yearly Dividend Option
12,856.737 774.226 – 13,630.963 10
Description
2013-2014
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Regular Plan - Growth Option
65,550,202.718 – 48,149,879.892 17,400,322.826 10
Regular Plan - Monthly Dividend Option
67,912,782.802 – 53,878,054.464 14,034,728.338 10
Regular Plan - Fortnightly Dividend Option
16,150,700.868 – 10,370,425.019 5,780,275.849 10
Regular Plan - Quarterly Dividend Option
25,435,688.203 – 18,700,932.718 6,734,755.485 10
Regular Plan - Half Yearly Dividend Option
874,336.267 – 828,076.773 46,259.494 10
Growth Option **** 212,292,099.227 491,625,691.718 475,972,525.260 227,945,265.685 10
Monthly Dividend Option ****
101,601,051.426 66,083,490.823 147,671,376.378 20,013,165.871 10
Fortnightly Dividend Option ****
34,411,242.042 18,380,618.830 48,381,122.120 4,410,738.752 10
Quarterly Dividend Option ****
35,941,878.775 18,439,493.351 34,753,913.652 19,627,458.474 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
20
HSBC FLEXI DEBT FUND
Description
2013-2014
Opening Units Subscription Redemption Closing UnitsFace Value
per unit (Rupees)
Half Yearly Dividend Option ****
3,719,886.542 131,534.539 3,810,134.695 41,286.386 10
Direct Plan - Growth Option 22,230,898.287 31,587,272.973 24,570,157.447 29,248,013.813 10
Direct Plan - Fortnightly Dividend Option
154,753.120 10,241,538.107 10,396,291.227 – 10
Direct Plan - Quarterly Dividend Option
8,545.110 117,524.960 63,002.444 63,067.626 10
Direct Plan - Monthly Dividend Option
108,228.854 33,183,915.848 33,182,781.376 109,363.326 10
Direct Plan - Half Yearly Dividend Option
12,479.863 376.874 – 12,856.737 10
**** Earlier known as Institutional Plan.
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.
6 No contingent liabilities for the years ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Other Income of Rs. 1,298 (2014: Rs. 276,161) represents Exit load (net of service tax) credited to the scheme.
9 Garnishee Notice from Income Tax Authorities An Income tax demand of Rs. 32.58 crores was purported to be recovered under garnishee proceedings,
by Income Tax Authorities in respect of investments made in Pass through Certifi cates (PTC) by some of the debt schemes (including matured schemes) of HSBC Mutual Fund (HSBC MF), for A.Y. 2009-2010. The said demand, impacting various players in the industry, raised originally on the trusts sponsored by IL&FS Trust Company Ltd., (Appellants) was sought to be also recovered u/s 177(3) of the Income Tax Act, from HSBC MF. Against the demand an appeal was fi led by the Appellant with the fi rst Appellate Authority [CIT(A)] who granted part relief to the Appellant. Against the order granting part relief, the Appellant as well as the Income-Tax Department has fi led an appeal before second Appellate Authority [Income-tax Appellate Tribunal (ITAT)]. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to AY 2009-2010, HSBC MF has received a demand notice from the Income Tax Authorities for the A.Y. 2010-2011 for Rs. 6.95 crores. The Appellate had fi led an appeal with the CIT(A) who disposed of the same by passing an order granting part relief on similar lines of AY 2009-2010. The Appellant fi led an appeal before the to ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand.
Similar to the above, the assessment for the A.Y. 2007-2008 has also been reopened by the Income Tax Authorities and demand has been made of Rs. 2.04 Crores on the trust sponsored by IL&FS Trust Company Ltd. The Appellant fi led an appeal with CIT(A) who gave a part relief. The Appellant then fi led an appeal before ITAT against the CIT(A) order. The matter is pending before ITAT. The ITAT had granted “stay” against the demand. It is to be noted that HSBC MF has not received any demand notice from the Income Tax authorities for this assessment year.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
21
HSBC FLEXI DEBT FUND
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
22
HSBC FLEXI DEBT FUND
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
23
HSBC FLEXI DEBT FUND
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For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ o
r Pre
fere
nce
shar
es.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s /
Add
ition
al D
irect
ors
and
prom
oter
rela
ted
activ
ities
.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Capital Protection Oriented Fund 10
HSBC Capital Protection Oriented FundA close-ended Income Scheme
Abridged Annual Report 2014 - 2015
1
HSBC Capital Protection Oriented Fund 10
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
10 HSBC Capital Protection Oriented Fund
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
3
HSBC Capital Protection Oriented Fund 10
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
4
10 HSBC Capital Protection Oriented Fund
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Capital Protection Oriented Fund – a close ended Capital Protection Oriented SchemeThe Scheme seeks protection of capital by investing a portion of the portfolio in high quality debt securities and money market instruments and also to provide capital appreciation by investing in equities through NIFTY (Index) Call Options.
During the year, the scheme launched two plans namely, HSBC Capital Protection Oriented Fund – Series II – Plan I and HSBC Capital Protection Oriented Fund – Series II – Plan II having tenure of 1195 days and 1173 days respectively. HSBC Capital Oriented Protection Fund – Series II – Plan I was launched on March 17, 2015 and HSBC Capital Protection Oriented Fund – Series II – Plan II was launched on April 6, 2015.
The performances of the schemes are benchmarked against CRISIL MIP Blended Index. Being close ended schemes, the performance of the scheme is not provided.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
5
HSBC Capital Protection Oriented Fund 10
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
6
10 HSBC Capital Protection Oriented Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
7
HSBC Capital Protection Oriented Fund 10
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
8
10 HSBC Capital Protection Oriented Fund
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios# including against its authorized persons / distributors / employees etc.
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
9
HSBC Capital Protection Oriented Fund 10
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund – HSBC Capital Protection
Oriented Fund – Series I – Plan I (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
10
10 HSBC Capital Protection Oriented Fund
Independent Auditors’ Report (Contd...)
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities, where applicable, as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
11
HSBC Capital Protection Oriented Fund 10
Independent Auditors’ Report (Contd...)
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund – HSBC Capital Protection
Oriented Fund – Series II – Plan I (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the period March 17, 2015 to March 31, 2015, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the period March 17, 2015 to March 31, 2015; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the period March 17, 2015 to March 31, 2015.
12
10 HSBC Capital Protection Oriented Fund
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
13
HSBC Capital Protection Oriented Fund 10
Rs. in Lakhs
HSBC CAPITAL PROTECTIONORIENTED FUND – SERIES I – PLAN I
As at March 31, 2015
As at March 31, 2014
LIABILITIES1 Unit Capital 8,877.52 8,877.522 Reserves & Surplus2.1 Unit Premium Reserves – –2.2 Unrealised Appreciation Reserve 1,172.64 283.832.3 Other Reserves 994.93 383.633 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 23.16 22.05
TOTAL 11,068.25 9,567.03
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 6,864.81 7,363.181.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds 500.03 501.641.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 618.20 37.871.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 7,983.04 7,902.692 Deposits 0.59 –3 Other Current Assets3.1 Cash & Bank Balance 0.10 45.163.2 CBLO / Reverse Repo Lending 614.81 63.803.3 Others 2,469.71 1,555.384 Deferred Revenue Expenditure
(to the extent not written off)– –
TOTAL 11,068.25 9,567.03
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
14
10 HSBC Capital Protection Oriented Fund
Rs. in Lakhs
HSBC CAPITAL PROTECTION ORIENTED FUND – SERIES II – PLAN I#
As at March 31, 2015
LIABILITIES1 Unit Capital 6,967.572 Reserves & Surplus2.1 Unit Premium Reserves –2.2 Unrealised Appreciation Reserve 98.262.3 Other Reserves 10.293 Loans & Borrowings –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits –4.2 Other Current Liabilities & Provisions 1.46
TOTAL 7,077.58
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares –1.1.2 Preference Shares –1.1.3 Equity Linked Debentures –1.1.4 Other Debentures & Bonds 5,884.851.1.5 Securitised Debt securities –1.2 Securities Awaited Listing:1.2.1 Equity Shares –1.2.2 Preference Shares –1.2.3 Equity Linked Debentures –1.2.4 Other Debentures & Bonds –1.2.5 Securitised Debt securities –1.3 Unlisted Securities1.3.1 Equity Shares –1.3.2 Preference Shares –1.3.3 Equity Linked Debentures –1.3.4 Other Debentures & Bonds –1.3.5 Securitised Debt securities –1.4 Government Securities –1.5 Treasury Bills –1.6 Commercial Paper –1.7 Certifi cate of Deposits –1.8 Bill Rediscounting –1.9 Units of Domestic Mutual Fund –1.10 Foreign Securities –
Total Investments 5,884.852 Deposits –3 Other Current Assets3.1 Cash & Bank Balance 2.663.2 CBLO / Reverse Repo Lending 31.693.3 Others 1,158.384 Deferred Revenue Expenditure
(to the extent not written off)–
TOTAL 7,077.58
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial year
Abridged Balance Sheet as at March 31, 2015 (Contd...)
15
HSBC Capital Protection Oriented Fund 10
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC CAPITAL PROTECTIONORIENTED FUND – SERIES I – PLAN I
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 799.26 683.461.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments (14.88) –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 784.38 683.46
2 EXPENSES2.1 Management fees 97.95 72.222.2 Service tax on Management fees 12.10 8.932.3 Transfer agents fees and expenses 2.48 1.882.4 Custodian fees 0.98 0.772.5 Trusteeship fees – –2.6 Commission to Agents 74.05 61.232.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 2.11 1.642.10 Other operating expenses 0.15 0.382.11 Less : Expenses to be Reimbursed by the Investment Manager – (0.31)
(B) 190.02 146.94
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 594.36 536.52
4 Change in Unrealised Depreciation invalue of investments (D) 16.93 (152.89)
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 611.29 383.63
6 Change in unrealised appreciation in thevalue of investments (F) 888.81 283.83
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,500.10 667.46
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 888.81 283.837.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 383.64 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 994.93 383.63
9 Dividend Appropriation9.1 Income Distributed during the period – –9.2 Tax on income distributed during the period – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 994.93 383.63
Notes to Accounts - Annexure I
16
10 HSBC Capital Protection Oriented Fund
Abridged Revenue Account for the period ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC CAPITAL PROTECTION
ORIENTED FUND – SERIES II – PLAN I#
Current Period ended March 31, 2015
1 INCOME1.1 Dividend –1.2 Interest 11.501.3 Realised Gain / (Loss) on Foreign Exchange Transactions –1.4 Realised Gains / (Losses) on Interscheme sale of investments –1.5 Realised Gains / (Losses) on External sale / redemption of investments (0.01)1.6 Realised Gains / (Losses) on Derivative Transactions –1.7 Other Income –
(A) 11.492 EXPENSES2.1 Management fees 0.402.2 Service tax on Management fees 0.052.3 Transfer agents fees and expenses 0.132.4 Custodian fees 0.012.5 Trusteeship fees –2.6 Commission to Agents 0.522.7 Marketing & Distribution expenses –2.8 Audit fees 0.202.9 Investor Education Expenses 0.022.10 Other operating expenses 0.492.11 Less : Expenses to be Reimbursed by the Investment Manager (0.62)
(B) 1.20
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 10.29
4 Change in Unrealised Depreciation invalue of investments (D) –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 10.29
6 Change in unrealised appreciation in thevalue of investments (F) 98.26
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 108.55
7.1 Add: Balance transfer from Unrealised Appreciation Reserve –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 98.267.3 Add / (Less): Equalisation –7.4 Transfer from Reserve Fund –7.5 Transfer from Unit Premium Reserve –
8 TOTAL 10.29
9 Dividend Appropriation9.1 Income Distributed during the period –9.2 Tax on income distributed during the period –10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 10.29
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial year.
17
HSBC Capital Protection Oriented Fund 10
Key Statistics for the year ended March 31, 2015
HSBC CAPITAL PROTECTIONORIENTED FUND – SERIES I – PLAN I
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
OpenGrowth Option 10.7514 N.A.Dividend Option 10.7514 N.A.Direct Plan - Growth Option 10.8190 N.A.Direct Plan - Dividend Option – N.A.
HighGrowth Option 12.8401 10.7462Dividend Option 12.8401 10.7462Direct Plan - Growth Option 13.0046 10.8132Direct Plan - Dividend Option – –
LowGrowth Option 10.7062 9.8696Dividend Option 10.7062 9.8696Direct Plan - Growth Option 10.7769 9.8893Direct Plan - Dividend Option – –
End5
Growth Option 12.4405 10.7514Dividend Option 12.4405 10.7514Direct Plan - Growth Option 12.6067 10.8190Direct Plan - Dividend Option 10.0000 –
2. Closing Assets Under Management (Rs. in Lakhs)End 11,045 9,545Average (AAuM)1 10,548 9,145
3. Gross income as % of AAuM2 * 7.44% 8.37%
4. Expense Ratio: a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 1.81% 1.80%Direct Plan - Growth Option 1.11% 1.10%
b. Management Fee as % of AAuM (planwise) *Regular Growth Option 0.93% 0.88%Direct Plan - Growth Option 0.93% 0.88%
5. Net Income as a percentage of AAuM3 * 5.63% 6.57%
6. Portfolio turnover ratio4 0.12 –
7. Total Dividend per unit distributed during the period (planwise)
RetailRegular Dividend Option – N.ADirect Plan - Dividend Option – N.A
18
10 HSBC Capital Protection Oriented Fund
HSBC CAPITAL PROTECTIONORIENTED FUND – SERIES I – PLAN I
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
CorporateRegular Dividend Option – N.ADirect Plan - Dividend Option – N.A
8. Returns (%): a. Last One Year Scheme
Regular Growth Option 15.6998 N.ADirect Plan - Growth Option 16.5120 N.A
BenchmarkCRISIL Short-Term Bond Fund Index 16.4500 N.A
b. Since Inception Scheme
Regular Growth Option 12.2265 7.5576Direct Plan - Growth Option 13.0159 8.2345
BenchmarkCRISIL Short-Term Bond Fund Index 9.8800 8.0044
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
19
HSBC Capital Protection Oriented Fund 10
Key Statistics for the period ended March 31, 2015 (Contd...)
HSBC CAPITAL PROTECTION ORIENTED
FUND – SERIES II – PLAN I#
Current Period endedMarch 31, 2015
1. NAV per unit (Rs.):
OpenGrowth Option N.A.Dividend Option N.A.Direct Plan - Growth Option N.A.Direct Plan - Dividend Option N.A.
HighGrowth Option 10.1605Dividend Option 10.1605Direct Plan - Growth Option –Direct Plan - Dividend Option –
LowGrowth Option 10.1558Dividend Option 10.1558Direct Plan - Growth Option –Direct Plan - Dividend Option –
End5
Growth Option 10.1558Dividend Option 10.1558Direct Plan - Growth Option 10.0000Direct Plan - Dividend Option 10.0000
2. Closing Assets Under Management (Rs. in Lakhs)End 7,076Average (AAuM)1 7,009
3. Gross income as % of AAuM2 * 0.16%
4. Expense Ratio: a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 1.04%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.01%
5. Net Income as a percentage of AAuM3 * 0.15%
6. Portfolio turnover ratio4 –
7. Total Dividend per unit distributed during the period (planwise)
RetailRegular Dividend Option –Direct Plan - Dividend Option –
CorporateRegular Dividend Option –Direct Plan - Dividend Option –
20
10 HSBC Capital Protection Oriented Fund
Key Statistics for the period ended March 31, 2015 (Contd...)
HSBC CAPITAL PROTECTION ORIENTED
FUND – SERIES II – PLAN I#
Current Period endedMarch 31, 2015
8. Returns (%):
a. Last One Year Scheme
Regular Growth Option N.ADirect Plan - Growth Option N.A
BenchmarkCRISIL Short-Term Bond Fund Index N.A
b. Since Inception
SchemeRegular Growth Option 1.5580Direct Plan - Growth Option –
BenchmarkCRISIL Short-Term Bond Fund Index 0.6400
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value.# Scheme launched during the current fi nancial year.
21
HSBC Capital Protection Oriented Fund 10
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC CAPITAL PROTECTION ORIENTED FUND – SERIES I – PLAN I
1 Investments:-
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year ended March 31, 2015 and period ended March 31, 2014 is NIL
Hedging Positions through Options as on March 31, 2015
Scheme Name Underlying Number of contracts
Option Price when purchased
Current Price
NIL
Total Exposure through options as a percentage of net assets : NIL
For the year ended March 31, 2015 specify the following for hedging transactions through options which have already been exercised / expired :
Total Number of contracts entered into : NIL
Gross Notional Value of contracts : NIL
Net Profi t / Loss on all contracts (premium paid treated as loss) : NIL
Hedging Positions through Options as on March 31, 2014
Scheme Name Underlying Number of contracts
Option Price when purchased
Current Price
NIL
Total Exposure through options as a percentage of net assets : NIL
For the period ended March 31, 2014 specify the following for hedging transactions through options which have already been exercised / expired :
Total Number of contracts entered into : NIL
Gross Notional Value of contracts : NIL
Net Profi t / Loss on all contracts (premium paid treated as loss) : NIL
Other than Hedging Positions through Options as on March 31, 2015
Scheme Name
Underlying Call / put Number of contracts
Option Price when purchased
Current Price
HCPOF SRI PI Nifty Index Call Option 1496 946.25 2513.95
Total Exposure through options as a percentage of net assets : 17.03%
For the year ended March 31, 2015 following details specifi ed with regard to non-hedging transactions through options which have already been exercised / expired : NIL
Total Number of contracts entered into : 1496 Gross Notional Value of contracts : Rs. 70,779,500/-
Net Profi t/Loss on all contracts (premium paid treated as loss) : NIL
Other than Hedging Positions through Options as on March 31, 2014
Scheme Name
Underlying Call / put Number of contracts
Option Price when purchased
Current Price
HCPOF SRI PI Nifty Index Call Option 1496 946.25 1325.70
Total Exposure through options as a percentage of net assets : 10.39%
22
10 HSBC Capital Protection Oriented Fund
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
For the period ended March 31, 2014 following details specifi ed with regard to non-hedging transactions through options which have already been exercised / expired : NIL
Total Number of contracts entered into : 1496
Gross Notional Value of contracts : Rs. 70,779,500/-
Net Profi t / Loss on all contracts (premium paid treated as loss) : NIL
1.3 Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year ended March 31, 2015 and period ended March 31, 2014 are NIL.
1.5 NPAs as at year ended March 31, 2015 and period ended March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 150,250 0.01 – –
– Depreciation 12,664,422 1.15 14,368,002 1.51
Privately Placed Non Convertible Debentures / Bonds
– Appreciation – – – –
– Depreciation 1,077,265 0.10 916,150 0.10
Certifi cate of Deposit
– Appreciation – – – –
– Depreciation 3,783 0.00~ 4,561 0.00~
Derivatives (Options)
– Appreciation 117,263,960 10.62 28,382,860 2.97
– Depreciation – – – –
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 127,242,532 and Rs. 123,990,800 respectively being 12.06% and 11.75% of the average daily net assets.
The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) are Rs. 876,212,502 being 98.81% of the average daily net assets.
1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.)
Percentage to Net Assets (%)
2015 2014
Money Market Instruments 349,782,734 31.67 – –
Total 349,782,734 31.67 – –
23
HSBC Capital Protection Oriented Fund 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment Manager
2014-2015 4.35 50.79 6,076,794 89.93
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment Manager
2013-2014 90.80 97.18 4,933,276 89.21
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year ended March 31, 2015 and period ended March 31, 2014.
4 Unit Capital movement during the year ended March 31, 2015 and period ended March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Growth Option 83,605,660.321 – – 83,605,660.321 10
Dividend Option 4,550,697.931 – – 4,550,697.931 10
Direct Plan - Growth Option
618,870.409 – – 618,870.409 10
Direct Plan - Dividend Option
– – – – 10
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Growth Option – 83,605,660.321 – 83,605,660.321 10
Dividend Option – 4,550,697.931 – 4,550,697.931 10
Direct Plan - Growth Option
– 618,870.409 – 618,870.409 10
Direct Plan - Dividend Option
– – – – 10
24
10 HSBC Capital Protection Oriented Fund
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate
6 No contingent liabilities for the year ended March 31, 2015 and period ended March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
25
HSBC Capital Protection Oriented Fund 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC CAPITAL PROTECTION ORIENTED FUND – SERIES II – PLAN I#
1 Investments:-
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of period ended March 31, 2015 is NIL
Hedging Positions through Options as on March 31, 2015
Scheme Name Underlying Number of contracts
Option Price when purchased
Current Price
NIL
Total Exposure through options as a percentage of net assets : NIL
For the period ended March 31, 2015 specify the following for hedging transactions through options which have already been exercised / expired :
Total Number of contracts entered into : NIL
Gross Notional Value of contracts : NIL
Net Profi t / Loss on all contracts (premium paid treated as loss) : NIL
Other than Hedging Positions through Options as on March 31, 2015:
Scheme Name
Underlying Call / put Number of contracts
Option Price when purchased
Current Price
HCPOF SII PI Nifty Index Call Option 864 2192.05 2402.10
Total Exposure through options as a percentage of net assets : 14.66%
For the Period ended March 31, 2015 following details specifi ed with regard to non-hedging transactions through options which have already been exercised / expired : NIL
Total Number of contracts entered into : 864
Gross Notional Value of contracts : Rs. 94,696,560/-
Net Profi t/Loss on all contracts (premium paid treated as loss) : NIL
1.3 Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the period ended March 31, 2015 is NIL.
1.5 NPA as at period ended March 31, 2015 is NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
2015
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 898,666 0.13
– Depreciation 146,860 0.02
Derivatives (Options)
– Appreciation 9,074,160 1.28
– Depreciation – –
26
10 HSBC Capital Protection Oriented Fund
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
1.7 The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2014-2015 (excluding accretion of discount) is Rs. 587,734,737 being 83.85% of the average daily net assets.
1.8 Non -Traded securities in the portfolios as at March 31, 2015 is NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of the Investment
Manager2014-2015 69.67 99.99 – –
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid PCM charges amounting to Rs. 38,558 for HCPOF SII PI.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the period ended March 31, 2015.
4 Unit Capital movement during the period ended March 31, 2015:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Growth Option – 68,645,883.086 – 68,645,883.086 10
Dividend Option – 1,029,852.818 – 1,029,852.818 10
5 As these are the fi rst fi nancial statements of the Scheme since the date of launch, there are no prior period comparatives.
6 No contingent liabilities for the period ended March 31, 2015.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
# Scheme launched during the current fi nancial year
27
HSBC Capital Protection Oriented Fund 10
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
28
10 HSBC Capital Protection Oriented Fund
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
29
HSBC Capital Protection Oriented Fund 10
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10 HSBC Capital Protection Oriented Fund
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10 HSBC Capital Protection Oriented Fund
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HSBC Capital Protection Oriented Fund 10
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eCo
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10 HSBC Capital Protection Oriented Fund
Mee
ting
Dat
eCo
mpa
ny N
ame
Type
of
Mee
ting
(AG
M /
EG
M)
Reso
luti
on N
umbe
rIn
vest
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ompa
ny’s
Man
agem
ent
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mm
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tion
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one
For
Cate
gory
:
1 A
ltera
tion
in M
emor
andu
m o
f Ass
ocia
tion
of th
e co
mpa
ny c
onta
inin
g M
ain,
Anc
illar
y an
d O
ther
obj
ects
of t
he c
ompa
ny.
2 Re
ceiv
e, c
onsid
er a
nd a
dopt
the
Aud
ited
Bala
nce
Shee
t as
at
year
end
the
Pro
fit a
nd L
oss
Acc
ount
for
the
yea
r en
ded
on t
hat
date
and
the
Rep
orts
of
the
Dire
ctor
s an
d th
e A
udito
rs th
ereo
n.
3 D
ecla
ratio
n of
div
iden
d on
Ord
inar
y (E
quity
) Sha
res
and
/ o
r Pre
fere
nce
shar
es.
4 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Dire
ctor
s /
Add
ition
al D
irect
ors
and
prom
oter
rela
ted
activ
ities
.
5 A
ppoi
ntm
ent,
Re-a
ppoi
ntm
ent a
nd R
emov
al o
f Aud
itors
and
thei
r fix
ing
thei
r Rem
uner
atio
n.
6 St
ock
Opt
ion
plan
s an
d ot
her m
anag
emen
t com
pens
atio
n m
atte
rs.
7 Re
stru
ctur
ing
of S
hare
cap
ital (
incl
udin
g st
ock
split
s, c
onso
lidat
ion,
redu
ctio
n, e
tc o
f sha
re c
apita
l).
8 C
hang
es in
cap
ital s
truc
ture
incl
udin
g in
crea
ses
and
decr
ease
s of
Equ
ity &
pre
ferr
ed s
tock
/ w
arra
nt is
suan
ces.
9 C
orpo
rate
rest
ruct
urin
g m
atte
rs (i
nclu
ding
mer
gers
, acq
uisit
ions
, tak
eove
rs, s
ell-o
ffs.
tran
sfer
of c
ontr
ol, c
hang
es in
sta
te o
f inc
orpo
ratio
n).
10
Oth
er R
esol
utio
ns.
Not
e
The
deta
iled
ratio
nale
sup
port
ing
the
votin
g de
cisio
n al
ong
with
Aud
itors
cer
tific
atio
n ha
s be
en s
ubm
itted
to
the
Trus
tees
and
has
also
bee
n di
sclo
sed
on o
ur w
ebsit
e as
par
t of
A
nnua
l Rep
ort.
35
HSBC Capital Protection Oriented Fund 10
Statutory Details & DisclaimersAll returns have been sourced from Mutual Funds India Explorer software unless otherwise stated. With regard to equity schemes (including the equity component of MIPs), Fund performance is calculated on a total return basis (i.e. it includes dividends re-invested) while the benchmark is calculated on a price return basis (i.e. it does not consider dividends re-invested). This document has been prepared by HSBC Asset Management (India) Private Ltd (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be reliable but which it has not independently verifi ed and HSBC, the third party makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this document. Investors should seek fi nancial advice regarding the appropriateness of investing in any securities or investment strategies that may have been discussed or recommended in this report and should understand that the views regarding future prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Investors should not invest in the Scheme solely based on the information provided in this document and should read the Combined Scheme Information Document and Statement of Additional Information of the HSBC Mutual Fund for details. This document does not constitute an offering document.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Asset Management (India) Private Ltd.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
HSBC Fixed Term SeriesA close-ended Income Scheme
Abridged Annual Report 2014 - 2015
HSBC FTP Series
1
HSBC FTP Series
Dear Investor,
Warm greetings from HSBC Global Asset Management, India.
It gives me immense pleasure to write to you again. And as always, let me start by expressing my gratitude to you for your continued faith in the company.
2014-15 was another very successful year for us.
HSBC Global Asset Management, India was adjudged the Best Pension Fund Manager of the year at the Asia Asset Management Awards held in Hong Kong
This came on the back of another major achievement - we were designated as the Best Money Market Fund Provider for Asia by Treasury Management International, one of the leading publications for treasurers
Also, in March this year, HSBC Global Asset Management, India was awarded one of the largest provident fund mandates in India for a record third term
I am sure you are equally pleased to see our efforts being recognised at various forums. These awards are a strong testament to the path we have chosen.
This was also the year in which we introduced HSBC Managed Solutions, a fi rst of its kind active asset allocation based solution in India.
As you know, I have been and continue to be of the fi rm view that asset allocation offers the best opportunity to balance risk and reward. While diversifi cation does not eliminate the risk of experiencing investment losses, combining different asset classes optimally can produce a more appealing risk and return trade-off. It is this belief that led us to introduce such a capability in India.
I am very happy to share that the launch of HSBC Managed Solutions in April 2014 is HSBC Global Asset Management, India’s biggest launch since 2007 (Source: HSBC Global Asset Management, India). I would encourage you to fi nd out more about HSBC Managed Solutions while planning your investments if you have not already done so.
Market Outlook
As we come to the end of the fi rst half of the calendar year 2015, we look at a stock market that has been fl at to mildly positive. The long term reforms as proposed in the annual Budget were not immediately perceived by the market as constructive. Many bills that are crucial for reform implementation, such as, the Goods and Services Tax and Land Acquisition are yet to be passed.
The RBI has reduced benchmark rates to indicate an accommodative monetary policy. However, the aggressive tone of the policies has not sent positive vibes for the bond markets as well. The uncertainty regarding the monsoon has also created some unease. Corporate earnings have been muted both for the fi nancial year ending in March 2015, as well as the fi rst quarter of the current fi nancial year ending June 2015. Forward estimates, though unadjusted for now in most analysts’ spreadsheets, are likely to be revised downward. Also, from a historical perspective, the equity market is slightly expensive compared to its fi fteen year average. With earnings likely to be downgraded further, it points to further volatility in the near term.
2
HSBC FTP Series
Investors should keep in mind that the economy, in our view, would likely recover only by the end of FY2016 and more importantly in a meaningful way in FY2017. The reforms push, driven by signifi cant government capex is likely to start showing up in revenues in construction oriented sectors. The resultant fi llip to the economy may then lead to greater demand and hopefully into the economic revival that we are expecting in the next year. That said, the fi rst signs of recovery, whether in the level of orders received by capital goods companies or the uptick in heavy commercial vehicle volumes, give us the confi dence that the economy is slowly but surely on the path of recovery.
In closing please accept, once again, my sincere thanks for choosing us as your partner. And I look forward to a long and mutually benefi cial relationship.
Yours sincerely,
Puneet Chaddha
Chief Executive Offi cer
HSBC Asset Management (India) Private Limited
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HSBC FTP Series
SPONSORHSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai - 400 001.
TRUSTEEBoard of TrusteesOffi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 16, Veer Nariman Road, Fort, Mumbai 400 001.
CUSTODIANStandard Chartered Bank (SCB)Corp. & Regd. Offi ce: Crescenzo, Securities Services, 3rd Floor, C - 38/39, G - Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051.
AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028.
LEGAL ADVISORSBharucha & PartnersBharucha & Partners, Hague Building, Sprott Road, Ballard Estate, Mumbai - 400 001.
REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)No. 4, Nehru Nagar West, Kalapatti Main Road, Civil Aerodrome Post, Coimbatore - 641 014.
BOARD OF TRUSTEESMr. N. P. Gidwani - Chairman
Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMr. Glenn Berry
BOARD OF DIRECTORSMs. Kishori J. Udeshi - Chairperson
Mr. S. P. MustafaMr. Dinesh MittalMr. Puneet Chaddha - Chief Executive Offi cer
Mr. Ravi Menon
Note - Ms. Naina Lal Kidwai resigned from the Board of Directors with effect from March 17, 2015 and Mr. Ravi Menon was appointed as a Director with effect from April 24, 2015.
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HSBC FTP Series
Trustees’ ReportFor the year ended March 31, 2015
The Trustees present the thirteenth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2015.
1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES
a) Operations and Performance of the Schemes
HSBC Fixed Term Series – a close ended Income SchemeThe Scheme seeks to generate returns by investing in a portfolio of fi xed income instruments which mature on or before the maturity date of the plans under the Scheme.
Details of Scheme launched during the period:
Name of Scheme Date of Launch
HSBC Fixed term Series 102 April 28, 2014
Details of Schemes rolled-over during the period :
Scheme Name Date of roll-over
HSBC Fixed term Series 91 August 05, 2014
HSBC Fixed term Series 94 August 26, 2014
HSBC Fixed term Series 96 September 05, 2014
HSBC Fixed term Series 98 October 21, 2014
Being close ended fi xed maturity plans, the performance of these Schemes are not provided.
b) Market Overview & Outlook(as furnished by HSBC Asset Management (India) Pvt. Ltd.)
EQUITY OUTLOOKEquity markets saw the best year after FY10 and delivered impressive returns for the fi scal, with benchmark indices recording all-time highs during the year. BSE Sensex gained 24.9% while the broader market indices fared even better with CNX Midcap gaining 51% during the year. The surge in equity markets was driven by the decisive majority for the BJP led NDA coalition and the expectations of a reform focused governance from them. Fall in global oil and commodity prices had a positive impact on infl ation, current account, and other key macro indicators with India being a net importer of crude oil. We also saw the start of the rate easing cycle by the RBI on the back of data points.
Indices Returns (April 1, 2014 to March 31, 2015) 1 Year (%)
BSE Sensex 24.9
NSE CNX Nifty 26.7
S&P BSE 100 28.3
S&P BSE 200 31.9
S&P BSE 500 33.2
NSE CNX Midcap 51.0
Source: Bloomberg
Our view on the key aspects related to equity markets are presented below;
Macro: India remains one of the fastest growing economies in the world. We have witnessed improvement in all macro parameters. The bottom of GDP growth, Industrial growth, and capital formation and the peaks of current account defi cit, fi scal defi cit, infl ation, and interest rates are behind us. Key near to medium term
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HSBC FTP Series
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
risk to our call is the fall-out of the ‘known-unknown’ from Greece crisis, Monsoons, Parliamentary log jam and US Fed rate hike.
Infl ation: One of the major successes of the last year has been containment of the infl ation. Consumer Price Index (CPI) is lower by over 500bps from last year and has been source of many positive policy decisions. Wholesale price Index (WPI) has been in defl ation for the last 7 consecutive months. It is largely due to lower crude and commodity prices but also due to weak demand and lack of pricing power.
Interest rates: Interest rates have come down by 75 bps (Policy rate) as compared to peak of last year. Further cuts in the policy rates will depend upon data.
Valuations: Market index BSE Sensex is trading at 16.1x on FY16e and 13.7x on FY17e earnings*. With a rebound in GDP, corporate earnings are bound to recover and revert to mean profi tability.. However, the pace of the corporate earnings recovery may only be gradual and we expect FY16 to be a transitional year on this front. Further, reform initiatives by the government and continuation of the monetary easing cycle by the RBI could help to accelerate the process of revival in domestic growth.
* Data as on 25 June 2015; Source: Bloomberg
DEBT OUTLOOKFixed Income in Financial Year 2015 was a story of slow buildup on lower infl ation path. In the month of May, the new government came in, strong willed government, astute RBI and lower oil prices combined forces over next nine months to bring down infl ation.
CPI continued to ease out to provide comfort for series of rate cuts. Government on its part played role in bringing down food component of infl ation due to lower increase in rural wages, minimum support price and crackdown on hoarding and restrictive trade practices. Early decision to abandon Agricultural Produce Marketing Committee also helped to keep food prices in check.
Oil prices continued to move down as the demand supply equation became skewed towards excess supply in Mid-2014. Further, the pressure from oil producing gulf countries to maintain their market share put substantial pressure on oil prices. The shale gas producers, who are higher cost producers shut down partially their new capital expenditures which provided stability to the prices at about half of the level where the year began.
RBI continued to intervene in the Forex market to build up reserves and control appreciation of INR. The currency maintained stability through couple of emerging market volatility elements in 2014, where Russian Rouble as well as Turkish Lira was under pressure. Moreover, the foreign exchange fl ows which were attracted due to lower volatile currency helped build up the forex reserves to about USD 325 bn which will help RBI defend INR level in case of volatility.
Stability in the currency, forex fl ows and prospects of growth under the new governing regime coupled with lower CPI helped build a case for rate cut. Market pre-empeted most of the rate cuts by RBI and thus on actual instance reactions remained muted. Spreads for corporate bonds substantially narrowed given the FPI limits were available only in corporate bonds and not in G-sec in the later part of the year. This lead to excess demand form FPI in quasi sovereign names in the markets.
For most part expectation of Federal Reserve creating a prospect for art hike and pressure due to Greece default remained present with different intensity. That created additional volatility in the markets due to on off scenarios. Federal Reserve removed the word “patience” from its guidance which brought the rate hike within prospect of couple of quarters. Though market ignored the same for long time in FY 2015, the prospect of these instances will haunt the market in next fi nancial year.
Prospects of the rate hike in US may create volatility in fi xed income market though the yield differential route and withdrawal of funds from emerging markets by global funds route. Greece exit from Euro or possible default may affect the markets again through risk off measures in market leading to withdrawal from emerging market.
In the coming year apart from the global factors, following domestic factors will play a key role in fi xed income markets:
� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.
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HSBC FTP Series
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 15-16.
� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy.
� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve. We expect prudence in government spending and prospect of spending on infrastructure to pick up which will crowd in private investment as well.
� Current Account Defi cit: Current Account Defi cit determines how the pressure on currency works and effective management of forex reserves.
� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.
2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY
a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).
The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.
HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.
b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with
the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.
The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.
c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t
of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the schemes fl oated there under are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.
d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited
company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 16, V. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide its letter No. MFD/BC/163/2002 dated May 27, 2002. The paid-up equity share capital of the AMC is Rs. 61.59 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.
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HSBC FTP Series
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (Refer Section 1).
4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.
5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.
6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 197 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 8 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Centre number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call centre service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.
On the distribution front, the number of empanelled distributors was 463 as on March 31, 2015. During the year, the AMC initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 42.
7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2014- March 2015 are as follows:
Total Number of Folios: 1,88,184*
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
I A Non receipt of Dividend on Units
0 13 8 4 0 0 0 1 0 0 0
I B Interest on delayed payment of Dividend
0 0 0 0 0 0 0 0 0 0 0
I C Non receipt of Redemption Proceeds
6 33 24 14 0 0 0 1 0 0 0
I D Interest on delayed payment of Redemption
0 0 0 0 0 0 0 0 0 0 0
II A Non receipt of Statement of Account/Unit Certifi cate
0 2 2 0 0 0 0 0 0 0 0
II B Discrepancy in Statement of Account
0 1 1 0 0 0 0 0 0 0 0
II C Data corrections in Investor details**
0 79 78 0 0 0 0 1 0 0 0
II D Non receipt of Annual Report/Abridged Summary
0 0 0 0 0 0 0 0 0 0 0
8
HSBC FTP Series
Trustees’ ReportFor the year ended March 31, 2015 (Contd...)
Com-plaintCode
Type of complaint#
(a) No. ofcomplaintspendingat the
beginningof theyear
(b) No. of com-plaints
receivedduring
theyear#
Action on (a) and (b)
Resolved Non Actiona-
ble*
Pending
Within 30
days
30 - 60 days
60 - 180 days
Beyond 180 days
0 - 3 months
3 - 6 months
6 - 9 months
9 - 12 months
III A Wrong switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III B Unauthorized switch between Schemes
0 0 0 0 0 0 0 0 0 0 0
III C Deviation from Scheme attributes
0 1 1 0 0 0 0 0 0 0 0
III D Wrong or excess charges/load
0 0 0 0 0 0 0 0 0 0 0
III E Non updation of changes viz. address, PAN, bank details, nomination, etc
1 14 15 0 0 0 0 0 0 0 0
IV Others 1 18 14 4 1 0 0 0 0 0 0
Total 8 161 143 22 1 0 0 3 0 0 0
Note:
* active folios# including against its authorized persons / distributors / employees etc.
8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of
the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.
b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.
c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the Trust Deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.
9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.
The Trustees look forward to the continued support of everyone.
For and on behalf of the Board of Trustees of HSBC Mutual Fund
Sd/-
Dilip J. Thakkar
Trustee
MumbaiJuly 16, 2015.
9
HSBC FTP Series
Independent Auditors’ Report
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
91 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
10
HSBC FTP Series
Independent Auditors’ Report (Contd...)
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
11
HSBC FTP Series
Independent Auditors’ Report (Contd...)
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
94 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
12
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
13
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
95 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
14
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
15
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
96 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
16
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
17
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
98 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
18
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
19
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
105 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
20
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities, where applicable, as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
21
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
106 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
22
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities, where applicable, as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
23
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
107 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian/others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
24
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities, where applicable, as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
25
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
109 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
Independent Auditors’ Report (Contd...)
26
HSBC FTP Series
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
27
HSBC FTP Series
To the Board of Trustees of
HSBC Mutual Fund
Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Fixed Term Series
102 (the “Scheme”), which comprise the Balance Sheet as at March 31, 2015, the related Revenue Account and the Cash Flow Statement for the period April 28, 2014 to March 31, 2015, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.
Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset
Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted
our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2015 by correspondence with the custodian / others and registrar and transfer agent, respectively. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Trustee and the Management, as well as evaluating the overall presentation of the fi nancial statements.
5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the
accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2015;
(b) in the case of the Revenue Account, of the net surplus for the period April 28, 2014 to March 31, 2015; and
(c) in the case of the Cash Flow Statement, of the cash fl ows for the year period April 28, 2014 to March 31, 2015.
Independent Auditors’ Report (Contd...)
28
HSBC FTP Series
Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; and
(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.
8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account, and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.
9. In our opinion, the methods used to value non-traded securities as at March 31, 2015, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds as mentioned in the Eighth Schedule of the Regulations issued by the Securities and Exchange Board of India, are fair and reasonable.
For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants
Sd/-
Vivek PrasadPartnerMembership Number: 104941
Place : MumbaiDate : July 16, 2015.
Independent Auditors’ Report (Contd...)
29
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 91As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 9,570.07 19,207.302 Reserves & Surplus2.1 Unit Premium Reserves (884.53) –2.2 Unrealised Appreciation Reserve 77.40 7.802.3 Other Reserves 2,386.31 1,193.173 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 17.17 32.41
TOTAL 11,166.42 20,440.68
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 10,523.93 –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – 20,367.771.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 10,523.93 20,367.77
2 Deposits 0.15 –3 Other Current Assets3.1 Cash & Bank Balance 0.03 0.053.2 CBLO / Reverse Repo Lending 83.43 72.733.3 Others 558.88 0.134 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 11,166.42 20,440.68
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015
30
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 94As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 7,833.36 26,394.492 Reserves & Surplus2.1 Unit Premium Reserves (1,967.56) –2.2 Unrealised Appreciation Reserve 64.59 140.112.3 Other Reserves 3,262.74 1,681.963 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 19.48 25.99
TOTAL 9,212.61 28,242.55
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 8,754.98 3,157.071.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – 24,831.441.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 8,754.98 27,988.51
2 Deposits 0.06 –3 Other Current Assets3.1 Cash & Bank Balance 0.11 0.053.2 CBLO / Reverse Repo Lending 114.88 58.183.3 Others 342.58 195.814 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 9,212.61 28,242.55
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015 (Contd...)
31
HSBC FTP Series
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 95As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 8,517.33 8,517.332 Reserves & Surplus2.1 Unit Premium Reserves – –2.2 Unrealised Appreciation Reserve 209.17 190.792.3 Other Reserves 1,302.15 465.873 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 68.62 10.82
TOTAL 10,097.27 9,184.81
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 8,199.84 8,553.241.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 1,151.47 206.641.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 9,351.31 8,759.88
2 Deposits 0.29 –3 Other Current Assets3.1 Cash & Bank Balance 0.06 0.063.2 CBLO / Reverse Repo Lending 277.31 64.573.3 Others 468.30 360.304 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 10,097.27 9,184.81
Notes to Accounts - Annexure I
32
HSBC FTP Series
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 96As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 4,122.48 13,903.062 Reserves & Surplus2.1 Unit Premium Reserves (1,025.04) –2.2 Unrealised Appreciation Reserve 36.73 67.822.3 Other Reserves 1,682.17 838.843 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 6.15 13.47
TOTAL 4,822.49 14,823.19
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 4,564.33 –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – 14,783.671.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 4,564.33 14,783.67
2 Deposits 0.09 –3 Other Current Assets3.1 Cash & Bank Balance 0.18 0.033.2 CBLO / Reverse Repo Lending 97.94 39.413.3 Others 159.95 0.084 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 4,822.49 14,823.19
Notes to Accounts - Annexure I
33
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 98As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 4,659.26 15,725.792 Reserves & Surplus2.1 Unit Premium Reserves (981.70) –2.2 Unrealised Appreciation Reserve 27.00 7.582.3 Other Reserves 1,587.71 605.913 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 8.58 15.40
TOTAL 5,300.85 16,354.68
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 3,021.03 2,988.501.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities 2,015.17 –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – 13,196.321.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 5,036.20 16,184.82
2 Deposits 0.13 –3 Other Current Assets3.1 Cash & Bank Balance 0.03 0.043.2 CBLO / Reverse Repo Lending 71.48 47.543.3 Others 193.01 122.284 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 5,300.85 16,354.68
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015 (Contd...)
34
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 105As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 26,078.07 26,078.072 Reserves & Surplus2.1 Unit Premium Reserves – –2.2 Unrealised Appreciation Reserve – 65.562.3 Other Reserves 2,769.32 326.293 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 4,965.58 13.09
TOTAL 33,812.97 26,483.01
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 10,483.38 10,243.581.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 22,374.04 16,018.781.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 32,857.42 26,262.36
2 Deposits 0.06 –3 Other Current Assets3.1 Cash & Bank Balance 0.02 0.073.2 CBLO / Reverse Repo Lending 69.84 104.433.3 Others 885.63 116.154 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 33,812.97 26,483.01
Notes to Accounts - Annexure I
Abridged Balance Sheet as at March 31, 2015 (Contd...)
35
HSBC FTP Series
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 106As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 12,157.89 12,157.892 Reserves & Surplus2.1 Unit Premium Reserves – –2.2 Unrealised Appreciation Reserve 0.16 32.542.3 Other Reserves 1,243.34 114.523 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 12.27 4.48
TOTAL 13,413.66 12,309.43
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 3,559.46 3,464.931.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 9,538.04 8,763.171.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 13,097.50 12,228.10
2 Deposits 0.05 –3 Other Current Assets3.1 Cash & Bank Balance 0.02 0.053.2 CBLO / Reverse Repo Lending 46.12 58.873.3 Others 269.97 22.414 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 13,413.66 12,309.43
Notes to Accounts - Annexure I
36
HSBC FTP Series
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 107As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 15,070.13 15,070.132 Reserves & Surplus2.1 Unit Premium Reserves – –2.2 Unrealised Appreciation Reserve – 35.802.3 Other Reserves 1,473.58 76.173 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 15.14 3.42
TOTAL 16,558.85 15,185.52
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 5,900.36 5,908.601.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits 9,986.96 9,168.851.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –
Total Investments 15,887.32 15,077.45
2 Deposits 0.04 –3 Other Current Assets3.1 Cash & Bank Balance 0.01 0.043.2 CBLO / Reverse Repo Lending 30.64 57.753.3 Others 640.84 50.284 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 16,558.85 15,185.52
Notes to Accounts - Annexure I
37
HSBC FTP Series
Abridged Balance Sheet as at March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 109As at
March 31, 2015As at
March 31, 2014
LIABILITIES1 Unit Capital 31,098.05 31,098.052 Reserves & Surplus2.1 Unit Premium Reserves – – 2.2 Unrealised Appreciation Reserve 0.59 19.452.3 Other Reserves 2,819.21 45.973 Loans & Borrowings – – 4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – 4.2 Other Current Liabilities & Provisions 26.49 1.84
TOTAL 33,944.34 31,165.31
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares – – 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits 33,656.59 31,059.291.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –
Total Investments 33,656.59 31,059.29
2 Deposits 0.09 – 3 Other Current Assets3.1 Cash & Bank Balance 0.05 0.073.2 CBLO / Reverse Repo Lending 287.54 105.573.3 Others 0.07 0.384 Deferred Revenue Expenditure (to the extent not written off) – –
TOTAL 33,944.34 31,165.31
Notes to Accounts - Annexure I
38
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 102#
As at March 31, 2015
LIABILITIES1 Unit Capital 8,599.28 2 Reserves & Surplus2.1 Unit Premium Reserves –2.2 Unrealised Appreciation Reserve –2.3 Other Reserves 677.68 3 Loans & Borrowings –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits –4.2 Other Current Liabilities & Provisions 7.41
TOTAL 9,284.37
ASSETS1 Investments1.1 Listed Securities:1.1.1 Equity Shares –1.1.2 Preference Shares –1.1.3 Equity Linked Debentures –1.1.4 Other Debentures & Bonds –1.1.5 Securitised Debt securities –1.2 Securities Awaited Listing:1.2.1 Equity Shares –1.2.2 Preference Shares –1.2.3 Equity Linked Debentures –1.2.4 Other Debentures & Bonds –1.2.5 Securitised Debt securities –1.3 Unlisted Securities1.3.1 Equity Shares –1.3.2 Preference Shares –1.3.3 Equity Linked Debentures –1.3.4 Other Debentures & Bonds –1.3.5 Securitised Debt securities –1.4 Government Securities –1.5 Treasury Bills –1.6 Commercial Paper –1.7 Certifi cate of Deposits 9,261.22 1.8 Bill Rediscounting –1.9 Units of Domestic Mutual Fund –1.10 Foreign Securities –
Total Investments 9,261.22
2 Deposits 0.05 3 Other Current Assets3.1 Cash & Bank Balance 0.01 3.2 CBLO / Reverse Repo Lending 23.08 3.3 Others 0.01 4 Deferred Revenue Expenditure (to the extent not written off) –
TOTAL 9,284.37
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial year.
Abridged Balance Sheet as at March 31, 2015 (Contd...)
39
HSBC FTP Series
Abridged Revenue Account for the year ended March 31, 2015
Rs. in Lakhs
HSBC FIXED TERM SERIES 91
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 1,293.28 1,245.701.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments (0.10) –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.01 –
(A) 1,293.19 1,245.702 EXPENSES2.1 Management fees 45.41 27.952.2 Service tax on Management fees 5.61 3.452.3 Transfer agents fees and expenses 1.72 1.482.4 Custodian fees 0.89 0.552.5 Trusteeship fees – –2.6 Commission to Agents 8.43 15.882.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 2.85 2.622.10 Other operating expenses 0.10 0.402.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 65.21 52.53
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 1,227.98 1,193.17
4 Change in Unrealised Depreciation invalue of investments (D) – –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 1,227.98 1,193.17
6 Change in unrealised appreciation in thevalue of investments (F) 69.59 7.80
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,297.57 1,200.97
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 69.59 7.807.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 1,193.18 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 2,421.16 1,193.17
9 Dividend Appropriation9.1 Income Distributed during the period 27.16 –9.2 Tax on income distributed during the period 7.69 –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 2,386.31 1,193.17
Notes to Accounts - Annexure I
40
HSBC FTP Series
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 94
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 1,614.91 1,729.621.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 40.15 –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.03 –
(A) 1,655.09 1,729.62
2 EXPENSES2.1 Management fees 36.49 22.902.2 Service tax on Management fees 4.51 2.832.3 Transfer agents fees and expenses 2.01 2.052.4 Custodian fees 0.89 0.542.5 Trusteeship fees 0.11 –2.6 Commission to Agents 10.04 15.352.7 Marketing & Distribution expenses 0.07 –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 3.38 3.362.10 Other operating expenses 0.09 0.432.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 57.79 47.66
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 1,597.30 1,681.96
4 Change in Unrealised Depreciation invalue of investments (D) – –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 1,597.30 1,681.96
6 Change in unrealised appreciation in thevalue of investments (F) (75.53) 140.11
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,521.77 1,822.07
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 75.53 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 140.117.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 1,681.94 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 3,279.24 1,681.96
9 Dividend Appropriation9.1 Income Distributed during the period 12.60 –9.2 Tax on income distributed during the period 3.90 –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 3,262.74 1,681.96
Notes to Accounts - Annexure I
41
HSBC FTP Series
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 95
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 860.00 484.621.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 10.43 –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 870.43 484.622 EXPENSES2.1 Management fees 17.22 8.932.2 Service tax on Management fees 2.13 1.102.3 Transfer agents fees and expenses 1.13 0.662.4 Custodian fees 0.40 0.202.5 Trusteeship fees – –2.6 Commission to Agents 11.03 6.392.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 1.92 1.052.10 Other operating expenses 0.11 0.212.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 34.14 18.74
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 836.29 465.88
4 Change in Unrealised Depreciation invalue of investments (D) 0.01 -0.01
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 836.30 465.87
6 Change in unrealised appreciation in thevalue of investments (F) 18.38 190.79
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 854.68 656.66
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 18.38 190.797.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 465.85 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 1,302.15 465.87
9 Dividend Appropriation9.1 Income Distributed during the period – –9.2 Tax on income distributed during the period – –
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 1,302.15 465.87
Notes to Accounts - Annexure I
42
HSBC FTP Series
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 96
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 878.22 862.791.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments (0.04) –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.01 –
(A) 878.19 862.79
2 EXPENSES2.1 Management fees 15.63 11.582.2 Service tax on Management fees 1.93 1.432.3 Transfer agents fees and expenses 1.10 0.942.4 Custodian fees 1.24 0.352.5 Trusteeship fees 0.11 –2.6 Commission to Agents 8.91 7.552.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 1.83 1.662.10 Other operating expenses 0.05 0.242.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 31.00 23.95
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 847.19 838.84
4 Change in Unrealised Depreciation invalue of investments (D) – –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 847.19 838.84
6 Change in unrealised appreciation in thevalue of investments (F) (31.08) 67.82
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 816.11 906.66
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 31.08 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 67.827.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 838.83 –7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 1,686.02 838.84
9 Dividend Appropriation9.1 Income Distributed during the period 3.00 –9.2 Tax on income distributed during the period 0.85 –
10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 1,682.17 838.84
Notes to Accounts - Annexure I
43
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 98
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 995.45 652.281.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 18.98 –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.01 –
(A) 1,014.44 652.282 EXPENSES2.1 Management fees 22.17 11.652.2 Service tax on Management fees 2.74 1.442.3 Transfer agents fees and expenses 1.39 0.902.4 Custodian fees 0.88 0.302.5 Trusteeship fees – –2.6 Commission to Agents 15.02 9.672.7 Marketing & Distribution expenses 0.07 –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 2.32 1.462.10 Other operating expenses 0.05 0.322.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 44.84 25.94
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 969.60 626.34
4 Change in Unrealised Depreciation invalue of investments (D) 20.43 -20.43
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 990.03 605.91
6 Change in unrealised appreciation in thevalue of investments (F) 19.42 7.58
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,009.45 613.49
7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –7.2 Less: Balance transfer to Unrealised Appreciation Reserve 19.42 7.587.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 605.92 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 1,595.95 605.91
9 Dividend Appropriation9.1 Income Distributed during the period 5.98 –9.2 Tax on income distributed during the period 2.26 –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 1,587.71 605.91
Notes to Accounts - Annexure I
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
44
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 105
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 2,493.72 339.531.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 52.96 –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 2,546.68 339.53
2 EXPENSES2.1 Management fees 48.79 6.362.2 Service tax on Management fees 6.04 0.792.3 Transfer agents fees and expenses 3.23 0.492.4 Custodian fees 1.54 0.112.5 Trusteeship fees – –2.6 Commission to Agents 37.21 4.082.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 5.53 0.702.10 Other operating expenses 0.18 0.512.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 102.72 13.24
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 2,443.96 326.29
4 Change in Unrealised Depreciation invalue of investments (D) (0.94) –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 2,443.02 326.29
6 Change in unrealised appreciation in thevalue of investments (F) (65.56) 65.56
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 2,377.46 391.85
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 65.56 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 65.567.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 326.30 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 2,769.32 326.29
9 Dividend Appropriation9.1 Income Distributed during the period – –9.2 Tax on income distributed during the period – –10 Retained Surplus / (Defi cit) carried forward to
Balance Sheet 2,769.32 326.29
Notes to Accounts - Annexure I
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
45
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 106
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 1,162.14 108.871.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments 19.13 10.241.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 1,181.27 119.112 EXPENSES2.1 Management fees 24.84 1.812.2 Service tax on Management fees 3.07 0.222.3 Transfer agents fees and expenses 1.53 0.232.4 Custodian fees 1.13 0.042.5 Trusteeship fees – –2.6 Commission to Agents 18.36 1.592.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 2.57 0.232.10 Other operating expenses 0.17 0.272.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 51.87 4.59
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 1,129.40 114.52
4 Change in Unrealised Depreciation invalue of investments (D) (0.58) –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 1,128.82 114.52
6 Change in unrealised appreciation in thevalue of investments (F) (32.38) 32.54
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,096.44 147.06
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 32.38 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 32.547.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 114.52 –7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 1,243.34 114.52
9 Dividend Appropriation9.1 Income Distributed during the period – –9.2 Tax on income distributed during the period – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 1,243.34 114.52
Notes to Accounts - Annexure I
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
46
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 107
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 1,462.92 79.591.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments (0.06) –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 1,462.86 79.59
2 EXPENSES2.1 Management fees 30.54 1.132.2 Service tax on Management fees 3.78 0.142.3 Transfer agents fees and expenses 1.89 0.142.4 Custodian fees 1.26 0.022.5 Trusteeship fees – –2.6 Commission to Agents 23.34 1.232.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 3.17 0.172.10 Other operating expenses 0.18 0.392.11 Less : Expenses to be Reimbursed by the Investment Manager – –
(B) 64.36 3.42
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 1,398.50 76.17
4 Change in Unrealised Depreciation invalue of investments (D) (1.09) –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 1,397.41 76.17
6 Change in unrealised appreciation in thevalue of investments (F) (35.80) 35.80
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 1,361.61 111.97
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 35.80 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 35.807.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 76.17 –7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 1,473.58 76.17
9 Dividend Appropriation9.1 Income Distributed during the period – –9.2 Tax on income distributed during the period – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 1,473.58 76.17
Notes to Accounts - Annexure I
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
47
HSBC FTP Series
Abridged Revenue Account for the year ended March 31, 2015 (Contd...)
Rs. in Lakhs
HSBC FIXED TERM SERIES 109
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1 INCOME1.1 Dividend – –1.2 Interest 2,871.53 47.581.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of investments (0.08) –1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income – –
(A) 2,871.45 47.582 EXPENSES2.1 Management fees 48.02 0.262.2 Service tax on Management fees 5.94 0.032.3 Transfer agents fees and expenses 3.78 0.292.4 Custodian fees 1.58 0.022.5 Trusteeship fees – –2.6 Commission to Agents 32.00 0.512.7 Marketing & Distribution expenses – –2.8 Audit fees 0.20 0.202.9 Investor Education Expenses 6.51 0.102.10 Other operating expenses 0.19 0.432.11 Less : Expenses to be Reimbursed by the Investment Manager – (0.23)
(B) 98.22 1.61
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 2,773.23 45.97
4 Change in Unrealised Depreciation invalue of investments (D) – –
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 2,773.23 45.97
6 Change in unrealised appreciation in thevalue of investments (F) (18.86) 19.45
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 2,754.37 65.42
7.1 Add: Balance transfer from Unrealised Appreciation Reserve 18.86 –7.2 Less: Balance transfer to Unrealised Appreciation Reserve – 19.457.3 Add / (Less): Equalisation – –7.4 Transfer from Reserve Fund 45.98 –
7.5 Transfer from Unit Premium Reserve – –
8 TOTAL 2,819.21 45.97
9 Dividend appropriation
9.1 Income Distributed during the period – –9.2 Tax on income distributed during the period – –
10 Retained Surplus / (Defi cit) carried forward toBalance Sheet 2,819.21 45.97
Notes to Accounts - Annexure I
48
HSBC FTP Series
Rs. in Lakhs
HSBC FIXED TERM SERIES 102#
Current Period ended
March 31, 2015
1 INCOME1.1 Dividend –1.2 Interest 706.94 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions –1.4 Realised Gains / (Losses) on Interscheme sale of investments –1.5 Realised Gains / (Losses) on External sale / redemption of investments (0.06)1.6 Realised Gains / (Losses) on Derivative Transactions –1.7 Other Income –
(A) 706.88
2 EXPENSES2.1 Management fees 12.78 2.2 Service tax on Management fees 1.58 2.3 Transfer agents fees and expenses 0.92 2.4 Custodian fees 0.37 2.5 Trusteeship fees –2.6 Commission to Agents 10.84 2.7 Marketing & Distribution expenses –2.8 Audit fees 0.20 2.9 Investor Education Expenses 1.60 2.10 Other operating expenses 0.14 2.11 Less : Expenses to be Reimbursed by the Investment Manager –
(B) 28.43
3 NET REALISED GAINS / (LOSSES)FOR THE PERIOD (A - B = C) 678.45
4 Change in Unrealised Depreciation invalue of investments (D) (0.77)
5 NET GAINS / (LOSSES) FOR THE PERIOD [E = (C + D)] 677.68
6 Change in unrealised appreciation in thevalue of investments (F) –
7 NET SURPLUS / (DEFICIT) FOR THE PERIOD (E + F = G) 677.68
7.1 Add: Balance transfer from Unrealised Appreciation Reserve –7.2 Less: Balance transfer to Unrealised Appreciation Reserve –7.3 Add / (Less): Equalisation –7.4 Transfer from Reserve Fund –
7.5 Transfer from Unit Premium Reserve –
8 TOTAL 677.68
9 Dividend Appropriation9.1 Income Distributed during the period –9.2 Tax on income distributed during the period –10 Retained Surplus / (Defi cit) carried forward to Balance Sheet 677.68
Notes to Accounts - Annexure I# Scheme launched during the current fi nancial year.
Abridged Revenue Account for the period ended March 31, 2015 (Contd...)
49
HSBC FTP Series
Key Statistics For the year ended March 31, 2015
HSBC FIXED TERM SERIES 91Current
Year ended March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.6249 N.A.
Dividend Option 10.6249 N.A.
Direct Plan - Growth Option 10.6467 N.A.
Direct Plan - Dividend Option 10.6467 N.A.
High
Growth Option 11.6631 10.6175
Dividend Option 10.9357 10.6175
Direct Plan - Growth Option 11.7228 10.6391
Direct Plan - Dividend Option 10.9697 10.6391
Low
Growth Option 10.6269 9.9478
Dividend Option 9.9857 9.9478
Direct Plan - Growth Option 10.6489 9.9494
Direct Plan - Dividend Option 10.6489 9.9494
End5
Growth Option 11.6631 10.6249
Dividend Option 10.6607 10.6249
Direct Plan - Growth Option 11.7228 10.6467
Direct Plan - Dividend Option 10.0000 10.6467
2. Closing Assets Under Management (Rs. in Lakhs)
End 11,149 20,408
Average (AAuM)1 14,237 19,784
3. Gross income as % of AAuM2 * 9.08% 9.50%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.46% 0.41%
Direct Plan - Growth Option 0.13% 0.10%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.32% 0.21%
Direct Plan - Growth Option 0.32% 0.21%
5. Net Income as a percentage of AAuM3 * 8.63% 9.10%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option 0.7328 N.A
Direct Plan - Dividend Option 0.7595 N.A
Corporate
Regular Dividend Option 0.7018 N.A
Direct Plan - Dividend Option 0.7274 N.A
50
HSBC FTP Series
HSBC FIXED TERM SERIES 91Current
Year ended March 31, 2015
Previous Period ended
March 31, 2014
8. Returns (%):
a. Last One Year Scheme
Regular Growth Option 9.8044 N.A
Direct Plan - Growth Option 10.1402 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception Scheme
Regular Growth Option 9.7091 6.2174
Direct Plan - Growth Option 10.0470 6.4356
Benchmark
CRISIL Short-Term Bond Fund Index 10.5300 6.9590
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
51
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 94
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.6855 N.A.
Dividend Option 10.6855 N.A.
Direct Plan - Growth Option 10.7026 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 11.7305 10.6781
Dividend Option 11.0536 10.6781
Direct Plan - Growth Option 11.7895 10.6949
Direct Plan - Dividend Option – –
Low
Growth Option 10.6867 10.0131
Dividend Option 10.0000 10.0131
Direct Plan - Growth Option 10.7040 10.0133
Direct Plan - Dividend Option – –
End5
Growth Option 11.7305 10.6855
Dividend Option 10.6089 10.6855
Direct Plan - Growth Option 11.7895 10.7026
Direct Plan - Dividend Option 10.0000 –
2. Closing Assets Under Management (Rs. in Lakhs)
End 9,193 28,217
Average (AAuM)1 16,912 27,403
3. Gross income as % of AAuM2 * 9.79% 10.28%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.41% 0.36%
Direct Plan - Growth Option 0.10% 0.10%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.22% 0.14%
Direct Plan - Growth Option 0.22% 0.14%
5. Net Income as a percentage of AAuM3 * 9.44% 10.00%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option 0.8247 N.A
Direct Plan - Dividend Option – N.A
52
HSBC FTP Series
HSBC FIXED TERM SERIES 94
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option 0.7899 N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year Scheme
Regular Growth Option 9.8211 N.A
Direct Plan - Growth Option 10.1969 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception Scheme
Regular Growth Option 10.4150 6.8060
Direct Plan - Growth Option 10.7594 6.9774
Benchmark
CRISIL Short-Term Bond Fund Index 11.1800 7.4321
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
53
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 95
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.7709 N.A.
Dividend Option 10.7709 N.A.
Direct Plan - Growth Option 10.7875 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 11.7743 10.7632
Dividend Option 11.7743 10.7632
Direct Plan - Growth Option 11.8231 10.7795
Direct Plan - Dividend Option – –
Low
Growth Option 10.7675 9.9981
Dividend Option 10.7675 9.9981
Direct Plan - Growth Option 10.7842 9.9983
Direct Plan - Dividend Option – –
End5
Growth Option 11.7743 10.7709
Dividend Option 11.7743 10.7709
Direct Plan - Growth Option 11.8231 10.7875
Direct Plan - Dividend Option – –
2. Closing Assets Under Management (Rs. in Lakhs)
End 10,029 9,174
Average (AAuM)1 9,605 8,904
3. Gross income as % of AAuM2 * 9.06% 9.20%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.36% 0.36%
Direct Plan - Growth Option 0.10% 0.10%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.18% 0.17%
Direct Plan - Growth Option 0.18% 0.17%
5. Net Income as a percentage of AAuM3 * 8.71% 8.84%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
54
HSBC FTP Series
HSBC FIXED TERM SERIES 95
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 9.4019 N.A
Direct Plan - Growth Option 9.6866 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 10.8256 7.6043
Direct Plan - Growth Option 11.1145 7.7697
Benchmark
CRISIL Short-Term Bond Fund Index 11.1300 7.1127
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
55
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 96
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.6480 N.A.
Dividend Option 10.6480 N.A.
Direct Plan - Growth Option 10.6639 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 11.6762 10.6407
Dividend Option 11.0428 10.6407
Direct Plan - Growth Option 11.7337 10.6564
Direct Plan - Dividend Option – –
Low
Growth Option 10.6504 10.0626
Dividend Option 10.0000 10.0626
Direct Plan - Growth Option 10.6665 10.0629
Direct Plan - Dividend Option – –
End5
Growth Option 11.6762 10.6480
Dividend Option 10.5740 10.6480
Direct Plan - Growth Option 11.7337 10.6639
Direct Plan - Dividend Option – –
2. Closing Assets Under Management (Rs. in Lakhs)
End 4,816 14,810
Average (AAuM)1 9,167 14,420
3. Gross income as % of AAuM2 * 9.58% 10.40%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.41% 0.36%
Direct Plan - Growth Option 0.10% 0.10%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.17% 0.14%
Direct Plan - Growth Option 0.17% 0.14%
5. Net Income as a percentage of AAuM3 * 9.24% 10.11%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option 0.8126 N.A
Direct Plan - Dividend Option – N.A
56
HSBC FTP Series
HSBC FIXED TERM SERIES 96
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option 0.7782 N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 9.6846 N.A
Direct Plan - Growth Option 10.0603 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 10.3561 6.4424
Direct Plan - Growth Option 10.7013 6.6018
Benchmark
CRISIL Short-Term Bond Fund Index 10.9200 6.6106
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
57
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 98
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.3901 N.A.
Dividend Option 10.3901 N.A.
Direct Plan - Growth Option 10.4020 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 11.3655 10.3830
Dividend Option 10.8870 10.3830
Direct Plan - Growth Option 11.4145 10.3946
Direct Plan - Dividend Option – –
Low
Growth Option 10.3909 10.0174
Dividend Option 10.0000 10.0174
Direct Plan - Growth Option 10.4030 10.0178
Direct Plan - Dividend Option – –
End5
Growth Option 11.3655 10.3901
Dividend Option 10.4350 10.3901
Direct Plan - Growth Option 11.4145 10.4020
Direct Plan - Dividend Option 10.0000 –
2. Closing Assets Under Management (Rs. in Lakhs)
End 5,292 16,339
Average (AAuM)1 11,615 16,002
3. Gross income as % of AAuM2 * 8.73% 8.96%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.39% 0.36%
Direct Plan - Growth Option 0.11% 0.11%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.19% 0.16%
Direct Plan - Growth Option 0.19% 0.16%
5. Net Income as a percentage of AAuM3 * 8.35% 8.61%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option 0.6472 N.A
Direct Plan - Dividend Option – N.A
58
HSBC FTP Series
HSBC FIXED TERM SERIES 98
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option 0.6002 N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 9.4310 N.A
Direct Plan - Growth Option 9.7767 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 9.2151 3.8622
Direct Plan - Growth Option 9.5392 3.9817
Benchmark
CRISIL Short-Term Bond Fund Index 10.1300 4.1998
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
59
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 105
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.1491 N.A.
Dividend Option 10.1491 N.A.
Direct Plan - Growth Option 10.1539 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 11.0513 10.1422
Dividend Option 11.0513 10.1422
Direct Plan - Growth Option 11.0953 10.1466
Direct Plan - Dividend Option – –
Low
Growth Option 10.1495 9.9997
Dividend Option 10.1495 9.9997
Direct Plan - Growth Option 10.1545 10.0001
Direct Plan - Dividend Option – –
End5
Growth Option 11.0513 10.1491
Dividend Option 11.0513 10.1491
Direct Plan - Growth Option 11.0953 10.1539
Direct Plan - Dividend Option 10.0000 –
2. Closing Assets Under Management (Rs. in Lakhs)
End 28,847 26,470
Average (AAuM)1 27,656 26,233
3. Gross income as % of AAuM2 * 9.21% 9.64%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.46% 0.46%
Direct Plan - Growth Option 0.11% 0.11%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.18% 0.18%
Direct Plan - Growth Option 0.18% 0.18%
5. Net Income as a percentage of AAuM3 * 8.84% 9.27%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
60
HSBC FTP Series
HSBC FIXED TERM SERIES 105
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 8.9341 N.A
Direct Plan - Growth Option 9.3159 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 9.2365 1.4352
Direct Plan - Growth Option 9.6208 1.4832
Benchmark
CRISIL Short-Term Bond Fund Index 10.5400 1.4512
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
61
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 106
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.1209 N.A.
Dividend Option 10.1209 N.A.
Direct Plan - Growth Option 10.1238 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 11.0225 10.1140
Dividend Option 11.0225 10.1140
Direct Plan - Growth Option 11.0587 10.1166
Direct Plan - Dividend Option – –
Low
Growth Option 10.1220 10.0024
Dividend Option 10.1220 10.0024
Direct Plan - Growth Option 10.1250 10.0029
Direct Plan - Dividend Option – –
End5
Growth Option 11.0225 10.1209
Dividend Option 11.0225 10.1209
Direct Plan - Growth Option 11.0587 10.1238
Direct Plan - Dividend Option – –
2. Closing Assets Under Management (Rs. in Lakhs)
End 13,401 12,305
Average (AAuM)1 12,855 12,225
3. Gross income as % of AAuM2 * 9.19% 10.46%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.41% 0.41%
Direct Plan - Growth Option 0.11% 0.11%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.19% 0.16%
Direct Plan - Growth Option 0.19% 0.16%
5. Net Income as a percentage of AAuM3 * 8.79% 10.06%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
62
HSBC FTP Series
HSBC FIXED TERM SERIES 106
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 8.9083 N.A
Direct Plan - Growth Option 9.2347 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 9.3537 1.1461
Direct Plan - Growth Option 9.6848 1.1742
Benchmark
CRISIL Short-Term Bond Fund Index 10.6800 1.1127
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
63
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 107
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.0743 N.A.
Dividend Option 10.0743 N.A.
Direct Plan - Growth Option 10.0760 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 10.9777 10.0674
Dividend Option 10.9777 10.0674
Direct Plan - Growth Option 11.0125 10.0688
Direct Plan - Dividend Option – –
Low
Growth Option 10.0745 10.0065
Dividend Option 10.0745 10.0065
Direct Plan - Growth Option 10.0764 10.0068
Direct Plan - Dividend Option – –
End5
Growth Option 10.9777 10.0743
Dividend Option 10.9777 10.0743
Direct Plan - Growth Option 11.0125 10.0760
Direct Plan - Dividend Option – –
2. Closing Assets Under Management (Rs. in Lakhs)
End 16,544 15,182
Average (AAuM)1 15,867 15,125
3. Gross income as % of AAuM2 * 9.22% 9.60%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.41% 0.41%
Direct Plan - Growth Option 0.11% 0.11%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.19% 0.14%
Direct Plan - Growth Option 0.19% 0.14%
5. Net Income as a percentage of AAuM3 * 8.81% 9.19%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
64
HSBC FTP Series
HSBC FIXED TERM SERIES 107
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 9.0146 N.A
Direct Plan - Growth Option 9.3412 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 9.2715 0.6740
Direct Plan - Growth Option 9.6007 0.6912
Benchmark
CRISIL Short-Term Bond Fund Index 10.5400 0.6424
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
65
HSBC FTP Series
Key Statistics for the year ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 109
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
1. NAV per unit (Rs.):
Open
Growth Option 10.0210 N.A.
Dividend Option 10.0210 N.A.
Direct Plan - Growth Option 10.0214 N.A.
Direct Plan - Dividend Option – N.A.
High
Growth Option 10.9008 10.0143
Dividend Option 10.9008 10.0143
Direct Plan - Growth Option 10.9283 10.0145
Direct Plan - Dividend Option – –
Low
Growth Option 10.0191 10.0143
Dividend Option 10.0191 10.0143
Direct Plan - Growth Option 10.0197 10.0145
Direct Plan - Dividend Option – –
End5
Growth Option 10.9008 10.0210
Dividend Option 10.9008 10.0210
Direct Plan - Growth Option 10.9283 10.0214
Direct Plan - Dividend Option 10.0000 –
2. Closing Assets Under Management (Rs. in Lakhs)
End 33,918 31,163
Average (AAuM)1 32,546 31,138
3. Gross income as % of AAuM2 * 8.82% 9.30%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.36% 0.36%
Direct Plan - Growth Option 0.11% 0.11%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.15% 0.05%
Direct Plan - Growth Option 0.15% 0.05%
5. Net Income as a percentage of AAuM3 * 8.52% 8.98%
6. Portfolio turnover ratio4 – –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
66
HSBC FTP Series
HSBC FIXED TERM SERIES 109
Current Year ended
March 31, 2015
Previous Period ended
March 31, 2014
Corporate
Regular Dividend Option – N.A
Direct Plan - Dividend Option – N.A
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option 8.8487 N.A
Direct Plan - Growth Option 9.1181 N.A
Benchmark
CRISIL Short-Term Bond Fund Index 10.3252 N.A
b. Since Inception
Scheme
Regular Growth Option 8.8810 0.1364
Direct Plan - Growth Option 9.1520 0.1407
Benchmark
CRISIL Short-Term Bond Fund Index 10.4100 0.1411
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value
Key Statistics for the year ended March 31, 2015 (Contd...)
67
HSBC FTP Series
Key Statistics for the period ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 102#
Current Period endedMarch 31, 2015
1. NAV per unit (Rs.):
Open
Growth Option N.A.
Dividend Option N.A.
Direct Plan - Growth Option N.A.
Direct Plan - Dividend Option N.A.
High
Growth Option 10.7879
Dividend Option 10.7879
Direct Plan - Growth Option 10.8121
Direct Plan - Dividend Option –
Low
Growth Option 10.0182
Dividend Option 10.0182
Direct Plan - Growth Option 10.0186
Direct Plan - Dividend Option –
End5
Growth Option 10.7879
Dividend Option 10.7879
Direct Plan - Growth Option 10.8121
Direct Plan - Dividend Option 10.0000
2. Closing Assets Under Management (Rs. in Lakhs)
End 9,277
Average (AAuM)1 8,940
3. Gross income as % of AAuM2 * 8.83%
4. Expense Ratio:
a. Total Expense as % of AAuM (including service tax on Management fees) (planwise) *
Regular Growth Option 0.36%
Direct Plan - Growth Option 0.11%
b. Management Fee as % of AAuM (planwise) *
Regular Growth Option 0.16%
Direct Plan - Growth Option 0.16%
5. Net Income as a percentage of AAuM3 * 8.47%
6. Portfolio turnover ratio4 –
7. Total Dividend per unit distributed during the period (planwise)
Retail
Regular Dividend Option –
Direct Plan - Dividend Option –
68
HSBC FTP Series
Key Statistics for the period ended March 31, 2015 (Contd...)
HSBC FIXED TERM SERIES 102#
Current Period endedMarch 31, 2015
Corporate
Regular Dividend Option –
Direct Plan - Dividend Option –
8. Returns (%):
a. Last One Year
Scheme
Regular Growth Option N.A
Direct Plan - Growth Option N.A
Benchmark
CRISIL Short-Term Bond Fund Index N.A
b. Since Inception
Scheme
Regular Growth Option 7.8790
Direct Plan - Growth Option 8.1210
Benchmark
CRISIL Short-Term Bond Fund Index 9.2000
1 AAuM = Average daily net assets.2 Gross income = amount against (A) in the Revenue account i.e. Income.3 Net income = amount against (C) in the Revenue account i.e. Net Realised Gains / (Losses) for the period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the period.5 The net asset value disclosed represents the computed NAV on March 31, 2014 (Non-business Day),
and not the last declared NAV.
* Indicates annualised value# Scheme launched during the current fi nancial year.
69
HSBC FTP Series
Notes to Accounts - Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 91
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies;
(Rupees)
Issuer Instrument Type Amount (Rs.) Aggregate Investments by all schemes
2015
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
95,171,334 1,607,345,350
Equities – 215,829,290
Bharti Airtel Ltd. Equities – 12,741,680
Steel Authority of India Ltd. Commercial Paper – –
Shriram Equipment Finance Co. Ltd.
Commercial Paper – –
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 780,136 0.04
– Depreciation – – – –
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 7,739,572 0.69 – –
– Depreciation – – – –
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 1,044,664,000 and Rs. 2,100,000,000 respectively being 73.38% and 147.50% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) are Rs. 1,913,198,663 being 96.70 % of the average daily net assets.
1.8 Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
70
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 2.63 19.76 4,703,510 93.49
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2014-2015 – – – –
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 167.68 82.09 1,534,316 69.13
HSBC InvestDirect Securities (India) Limited
Associate of Investment Manager
2013-2014 – – 301 0.01
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 185,198,156.484 – 91,524,139.498 93,674,016.986 10
Dividend Option 3,187,563.377 – 1,902,085.771 1,285,477.606 10
Direct Plan - Growth Option
3,187,241.341 – 2,446,000.000 741,241.341 10
Direct Plan - Dividend Option
500,000.000 – 500,000.000 – 10
71
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 185,198,156.484 – 185,198,156.484 10
Dividend Option – 3,187,563.377 – 3,187,563.377 10
Direct Plan - Growth Option
– 3,187,241.341 – 3,187,241.341 10
Direct Plan - Dividend Option
– 500,000.000 – 500,000.000 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Rollover of Schemes:
The AMC rolled over the following close ended schemes after requisite approvals from SEBI. The details of rollover are as under:
Scheme Name Existing Maturity date Revised Maturity date
HFTS91 04-Aug-14 29-Sep-16
HSBC Asset Management (India) Private Limited had published a notice in newspapers for the Scheme proposing a rollover. The notice explained the rationale for proposed rollover and also time lines with in which written consents were to be submitted by the Investors for rolling over his units.
The details of Units on the date of maturity of the Scheme and units rolled over were as follows:
Scheme Units on Maturity date Rolled over units
HFTS91 192072961.2 95700735.93
All the investors who did not consent for rollover in writing were redeemed and pay outs were made.
The Rollover of schemes resulted in material change in unit capital, investment activities by AMC etc. Hence previous fi gures are strictly not comparable.
9 Other income of Rs. 1333 represents excess liability written back no longer required..
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
72
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 94
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies;
(Rupees)
Issuer Instrument Type Amount (Rs.) Aggregate Investments by all schemes
2015
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
82,174,014 1,607,345,350
Equities – 215,829,290
Bharti Airtel Ltd. Equities – 12,741,680
Steel Authority of India Ltd. Commercial Paper – –
Shriram Equipment Finance Co. Ltd.
Commercial Paper – –
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 6,458,534 0.70 3,731,211 0.13
– Depreciation – – – –
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 10,280,081 0.36
– Depreciation – – – –
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 1,114,268,741 and Rs. 3,139,000,000 respectively being 65.89% and 185.61% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the financial period 2013-2014 (excluding accretion of discount) are Rs. 2,634,355,169 being 96.13 % of the average daily net assets.
1.8 Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
73
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 0.86 17.86 4,064,491 96.07
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 188.83 70.04 1,358,248 81.82
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 188,178,109.126 – 117,306,534.729 70,871,574.397 10
Dividend Option 1,559,322.547 – 1,542,822.547 16,500.000 10
Direct Plan - Growth Option
74,207,500.471 – 66,762,000.000 7,445,500.471 10
Direct Plan - Dividend Option
– – – – 10
74
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 188,178,109.126 – 188,178,109.126 10
Dividend Option – 1,559,322.547 – 1,559,322.547 10
Direct Plan - Growth Option
– 74,207,500.471 – 74,207,500.471 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Rollover of Schemes:
The AMC rolled over the following close ended schemes after requisite approvals from SEBI. The details of rollover are as under:
Scheme Name Existing Maturity date Revised Maturity date
HFTS94 25-Aug-14 26-Oct-16
HSBC Asset Management (India) Private Limited had published a notice in newspapers for the Scheme proposing a rollover. The notice explained the rationale for proposed rollover and also time lines with in which written consents were to be submitted by the Investors for rolling over his units.
The details of Units on the date of maturity of the scheme and units rolled over were as follows:
Scheme Units on Maturity date Rolled over units
HFTS94 263,944,932.144 78,333,574.868
All the investors who did not consent for rollover in writing were redeemed and pay outs were made.
The Rollover of schemes resulted in material change in unit capital, investment activities by AMC etc. Hence previous fi gures are strictly not comparable.
9 Other income of Rs. 3106 represents Excess liability written back as no longer required.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
75
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 95
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 20,864,502 2.08 19,078,603 2.08
– Depreciation – – – –
Certifi cate of Deposit / Commercial Paper
– Appreciation 52,068 0.01 – –
– Depreciation 38 0.00~ 1,238 0.00~
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 212,405,591 and Rs. 171,995,400 respectively being 22.11% and 17.91% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) are Rs. 849876342 being 95.44% of the average daily net assets.
1.8. Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Money Market Instruments
65,919,980 6.57 20,663,828 2.25
Total 65,919,980 6.57 20,663,828 2.25
76
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 3.47 50.27 925,253 91.67
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 85.09 94.97 707,243 75.43
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 843,762,006.970 – – 843,762,006.970 10
Dividend Option 5,280,183.210 – – 5,280,183.210 10
Direct Plan - Growth Option
2,690,938.200 – – 2,690,938.200 10
Direct Plan - Dividend Option
– – – – 10
77
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 843,762,006.970 – 843,762,006.970 10
Dividend Option – 5,280,183.210 – 5,280,183.210 10
Direct Plan - Growth Option
– 2,690,938.200 – 2,690,938.200 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
78
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 96
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies;
(Rupees)
Issuer Instrument Type Amount (Rs.) Aggregate Investments by all schemes
2015
Shriram Transport Finance Company Ltd.
Corporate Bonds / Debentures
42,684,978 1,607,345,350
Equities – 215,829,290
Bharti Airtel Ltd. Equities – 12,741,680
Steel Authority of India Ltd. Commercial Paper – –
Shriram Equipment Finance Co. Ltd.
Commercial Paper – –
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 3,673,429 0.76 – –
– Depreciation – – – –
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 6,781,571 0.46
– Depreciation – – – –
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 450,165,618 and Rs. 1,535,500,000 respectively being 49.11% and 167.51% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) are Rs.1,386,170,280 being 96.13 % of the average daily net assets.
1.8 Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
79
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 0.53 17.12 2,358,043 95.22
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 97.26 68.24 589,076 73.43
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 102,457,387.642 – 66,353,947.209 36,103,440.433 10
Dividend Option 369,321.999 – 361,321.999 8,000.000 10
Direct Plan - Growth Option
36,203,925.450 – 31,090,550.884 5,113,374.566 10
Direct Plan - Dividend Option
– – – – 10
80
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 102,457,387.642 – 102,457,387.642 10
Dividend Option – 369,321.999 – 369,321.999 10
Direct Plan - Growth Option
– 36,203,925.450 – 36,203,925.450 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 Rollover of Schemes:
The AMC rolled over the following close ended Schemes after requisite approvals from SEBI. The details of rollover are as under:
Scheme Name Existing Maturity date Revised Maturity date
HFTS96 04-Sep-14 26-Oct-16
HSBC Asset Management (India) Private Limited had published a notice in newspapers for the Scheme proposing a rollover. The notice explained the rationale for proposed rollover and also time lines with in which written consents were to be submitted by the Investors for rolling over his units.
The details of Units on the date of maturity of the scheme and units rolled over were as follows:
Scheme Units on Maturity date Rolled over units
HFTS96 139030635.1 40774815
All the investors who did not consent for rollover in writing were redeemed and pay outs were made.
The Rollover of schemes resulted in material change in unit capital, investment activities by AMC etc. Hence previous fi gures are strictly not comparable.
9 Other income of Rs. 1415 represents excess liability written back no longer required.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
81
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 98
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 1,187,094 0.22 758,100 0.05
– Depreciation – – – –
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 2,043,400 0.13
– Depreciation – – – –
Government of India Securities
– Appreciation 1,513,400 0.29 – –
– Depreciation – – – –
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 1,495,053,013 and Rs. 2,682,000,000 respectively being 128.72% and 230.91% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) are Rs. 1,567,564,376 being 97.96 % of the average daily net assets.
1.8 Non -Traded securities in the portfolios as at March 31, 2015 and March 31, 2014 are NIL.
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 1.29 31.03 3,127,542 96.24
82
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 156.08 98.52 627,381 77.00
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 156,156,762.928 – 110,051,789.084 46,104,973.844 10
Dividend Option 923,500.000 – 573,500.000 350,000.000 10
Direct Plan - Growth Option
177,650.888 – 40,000.000 137,650.888 10
Direct Plan - Dividend Option
– – – – 10
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 156,156,762.928 – 156,156,762.928 10
Dividend Option – 923,500.000 – 923,500.000 10
Direct Plan - Growth Option
– 177,650.888 – 177,650.888 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
83
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
8 Rollover of Schemes:
The AMC rolled over the following close ended schemes after requisite approvals from SEBI. The details of rollover are as under:
Scheme Name Existing Maturity date Revised Maturity date
HFTS98 20-Oct-14 26-Oct-16
HSBC Asset Management (India) Private Limited had published a notice in newspapers for the Scheme proposing a rollover. The notice explained the rationale for proposed rollover and also time lines with in which written consents were to be submitted by the Investors for rolling over his units.
The details of Units on the date of maturity of the Scheme and units rolled over were as follows:
Scheme Units on Maturity date Rolled over units
HFTS98 157,257,913.816 46,592,624.732
All the investors who did not consent for rollover in writing were redeemed and pay outs were made.
The Rollover of schemes resulted in material change in unit capital, investment activities by AMC etc. Hence previous fi gures are strictly not comparable.
9 Other income of Rs. 1352 represents excess liability written back no longer required.
10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
84
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
HSBC FIXED TERM SERIES 102#
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of period ended March 31, 2015 is NIL.
1.3 Investments in Associates and Group Companies as of period ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the period ended March 31, 2015 is NIL.
1.5 NPAs as at period ended March 31, 2015 is NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial period and percentage to net assets:
Security Category Amount (Rs.) Percentage to Net Assets (%)
2015
Certifi cates of Deposit / Commercial Paper
– Appreciation – –
– Depreciation 76,660 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased during the financial year 2014-2015 (excluding accretion of discount) is Rs. 856,739,848 being 95.83% of the average daily net assets.
1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
2015
Money Market Instruments 926,121,981 99.83
Total 926,121,981 99.83
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 83.35 93.93 883,184 85.47
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
85
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the period ended March 31, 2015
3 None of the Investors held more than 25% of the total net assets of the Scheme at the period ended March 31, 2015.
4 Unit Capital movement during the period ended March 31, 2015:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 84,995,668.308 – 84,995,668.308 10
Dividend Option – 543,410.145 – 543,410.145 10
Direct Plan - Growth Option
– 453,728.352 – 453,728.352 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 As these are the fi rst fi nancial statements of the Scheme since the date of launch, there are no prior period comparatives.
7 No contingent liabilities for the period ended March 31, 2015.
8 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
# Scheme launched during the current fi nancial year.
86
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 105
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial years end and their percentages to net assets are as under:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 54,412 0.00~ 1,047,705 0.04
– Depreciation 72,770 0.00~ – –
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 5,508,735 0.21
– Depreciation 75,226 0.00~ – –
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 2,122,818,920 and Rs. 1,633,677,500 respectively being 76.76% and 59.07% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) are Rs. 2,598,936,840 being 99.07 % of the average daily net assets.
1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Money Market Instruments
3,285,742,507 113.90 – –
Total 3,285,742,507 113.90 – –
87
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 3.49 40.58 3,118,680 91.07
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 192.18 73.66 – –
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 196,431,734.063 – – 196,431,734.063 10
Dividend Option 1,278,679.328 – – 1,278,679.328 10
Direct Plan - Growth Option
63,070,299.730 – – 63,070,299.730 10
Direct Plan - Dividend Option
– – – – 10
88
HSBC FTP Series
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 196,431,734.063 – 196,431,734.063 10
Dividend Option – 1,278,679.328 – 1,278,679.328 10
Direct Plan - Growth Option
– 63,070,299.730 – 63,070,299.730 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
89
HSBC FTP Series
HSBC FIXED TERM SERIES 106
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies as of year / period ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial years end and their percentages to net assets are as under:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 18,350 0.00~ 611,875 0.05
– Depreciation 2,830 0.00~ – –
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 2,641,850 0.21
– Depreciation 57,621 0.00~ – –
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 919,364,857 and Rs. 921,374,091 respectively being 71.52% and 71.67% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during fi nancial period 2013-2014 (excluding accretion of discount) is Rs. 1,441,440,791 and Rs. 230,418,750 respectively being 117.90% and 18.85% of the average daily net assets.
1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Money Market Instruments
1,309,750,008 97.73 – –
Total 1,309,750,008 97.73 – –
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
90
HSBC FTP Series
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 0.56 8.00 1,543,588 91.47
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 116.00 94.63 – –
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value per unit
(Rs.)
Growth Option 118,914,782.784 – – 118,914,782.784 10
Dividend Option 1,569,092.562 – – 1,569,092.562 10
Direct Plan - Growth Option
1,095,000.000 – – 1,095,000.000 10
Direct Plan - Dividend Option
– – – – 10
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
91
HSBC FTP Series
2013-2014
Description Opening Units
Subscription Redemption Closing Units Face Value per unit (Rs.)
Growth Option – 118,914,782.784 – 118,914,782.784 10
Dividend Option – 1,569,092.562 – 1,569,092.562 10
Direct Plan - Growth Option
– 1,095,000.000 – 1,095,000.000 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
92
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
HSBC FIXED TERM SERIES 107
1 Investments: 1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the
benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial year / period end and their percentages to net assets are as under:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Non Convertible Debentures and Bonds Listed / Awaiting Listing
– Appreciation 22,838 0.00~ 743,300 0.05
– Depreciation 103,620 0.01 – –
Certifi cates of Deposit / Commercial Paper
– Appreciation – – 2,836,998 0.19
– Depreciation 27,973 0.00~ – –
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased and sold (including matured) during the fi nancial year 2014-2015 (excluding accretion of discount) is Rs. 995,388,186 and Rs. 997,500,000 respectively being 62.73% and 62.87% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during financial period 2013-2014 (excluding accretion of discount) is Rs. 1,500,952,688 being 99.23% of the average daily net assets.
1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Money Market Instruments
1,588,731,783 96.03 – –
Total 1,588,731,783 96.03 – –
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business
received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 2.97 77.87 1,946,976 91.39
93
HSBC FTP Series
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 114.46 95.67 – –
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Growth Option 149,613,222.486 – – 149,613,222.486 10
Dividend Option 777,591.591 – – 777,591.591 10
Direct Plan - Growth Option
310,525.697 – – 310,525.697 10
Direct Plan - Dividend Option
– – – – 10
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value per unit (Rs.)
Growth Option – 149,613,222.486 – 149,613,222.486 10
Dividend Option – 777,591.591 – 777,591.591 10
Direct Plan - Growth Option
– 310,525.697 – 310,525.697 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
94
HSBC FTP Series
HSBC FIXED TERM SERIES 109
1 Investments:
1.1 It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.
1.2 Open Positions of derivatives as of year / period ended March 31, 2015 and March 31, 2014 is NIL.
1.3 Investments in Associates and Group Companies as of year ended March 31, 2015 is NIL.
1.4 Open positions of Securities Borrowed and / or Lent by the Scheme as of the year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.5 NPAs as at year / period ended March 31, 2015 and March 31, 2014 are NIL.
1.6 Aggregate Unrealised Gain / Loss as at the end of the fi nancial year / period and their percentages to net assets are as under:
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Certifi cates of Deposit / Commercial Paper
– Appreciation 63,908 0.00~ 2,415,397 0.08
– Depreciation 5,265 0.00~ 470,580 0.02
~ Indicates less than 0.01
1.7 The aggregate value of investment securities (excluding CBLO and Reverse Repos) purchased during the financial year 2014-2015 (excluding accretion of discount) is Rs. 3,359,702,939 and Rs. 3,384,000,000 respectively being 103.23% and 103.98% of the average daily net assets.
The aggregate value of investments securities (excluding CBLO and Reverse Repos) purchased during the fi nancial period 2013-2014 (excluding accretion of discount) is Rs. 3,099,866,384 being 99.55% of the average daily net assets.
1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :
Security Category Amount (Rs.) Percentage to Net Assets (%)
Amount (Rs.) Percentage to Net Assets (%)
2015 2014
Money Market Instruments
122,824,023 3.62 122,824,023 3.94
Total 122,824,023 3.62 122,824,023 3.94
2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended
Commission paid to Sponsor / AMC and its associates / related parties / group companies
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2014-2015 3.15 25.07 2,723,736 90.89
Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
95
HSBC FTP Series
Name of Sponsor / AMC and its associates / related parties / group companies
Nature of Association / Nature of
Relation
Period Covered
Business Given [Rs. In Crores]
% of Total Business received by the Fund
Commission paid
[Rupees]
% of Total commission paid by the
Fund
The Hongkong and Shanghai Banking Corporation Limited
Associate of Investment Manager
2013-2014 240.60 77.37 – –
The brokerage paid was at rates similar to those offered to other distributors.
Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.
3 None of the Investors held more than 25% of the total net assets of the Scheme at the year / period ended March 31, 2015 and March 31, 2014.
4 Unit Capital movement during the year / period ended March 31, 2015 and March 31, 2014:
2014-2015
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option 247,819,742.154 – – 247,819,742.154 10
Dividend Option 589,877.197 – – 589,877.197 10
Direct Plan - Growth Option
62,570,860.474 5,000,000,000 – 67,570,860.474 10
Direct Plan - Dividend Option
– – – – 10
2013-2014
Description Opening Units Subscription Redemption Closing Units Face Value
per unit (Rs.)
Growth Option – 247,819,742.154 - 247,819,742.154 10
Dividend Option – 589,877.197 - 589,877.197 10
Direct Plan - Growth Option
– 62,570,860.474 - 62,570,860.474 10
Direct Plan - Dividend Option
– – – – 10
5 Previous year fi gures have been re-grouped / re-arranged where necessary.
6 No contingent liabilities for the year / period ended March 31, 2015 and March 31, 2014.
7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.
8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meetings held on July 15, 2015 and July 16, 2015 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.
Notes to Accounts - Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2015
96
HSBC FTP Series
INTRODUCTIONThe purpose of this document is to state the voting policy and procedures of HSBC Asset Management (India) Private Limited (“AMIN”), in connection with various company proposals on behalf of all the schemes of HSBC Mutual Fund (“the Fund”).
The power to vote on proposals presented to shareholders through the proxy solicitation process is considered by AMIN to be important, recognizing that certain material proposals, if implemented, may have a substantial impact on the market valuation of portfolio stocks. Further, we believe that high standards of corporate governance help companies to deliver sustainable returns to the shareholders.
PROXY VOTING POLICIESA. Corporate governance matters including changes in the state of incorporation, merger and
other corporate restructuring and anti takeover provisions For all such material proposals, a careful review is undertaken by AMIN’s Investment team wherein the
fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Based on the review, AMIN exercises a vote either in favour or against the management’s recommendation.
B. Changes to the capital structure, including preferred stock issuances Such proposals relate to the approval of change in the capital structure of the company i.e. approval of
increase or decrease in the authorized share capital of the company. Shareholders are the principal providers of the capital which companies need to grow and fl ourish. Companies should focus on the interests of existing shareholders as they contemplate changes to their capital structure. Existing shareholders should have a pre-emptive right to participate in signifi cant capital increases. AMIN will generally support the proposals where it believes that such proposal will enhance the rights of the common shareholders or will oppose such proposals where it believes that such proposal will adversely affect the rights of the common shareholders.
C. Stock option plans and other management compensation plans Proposals relating to the stock option plans, performance share plans or other compensation plans are
evaluated on case by case basis but AMIN generally votes against such proposals if the plan provides unreasonable or excessive compensation or the management of the company can materially alter the plan without shareholders’ approval.
D. Social and corporate responsibility issues In case of proposals addressing social and corporate responsibility issues or other similar issues, AMIN
will generally vote in a manner which is most likely to protect and promote the economic value of the underlying securities held under the schemes of the fund. Such issues are evaluated on case by case basis.
E. Board of Directors AMIN generally supports the management’s recommendation with respect to appointment of directors
of the company that strengthens the independence of the board of directors. The Board should provide clear leadership and oversight of companies. AMIN favours the separation of the roles of Chairman and Chief Executive and believes that the company complies with the requirements of Clause 49 of the Listing Agreement on corporate governance with respect to composition of Board. Discharge of directors is considered as a routine matter unless there are signifi cant concerns about the conduct of an individual director or the protection of shareholder interests. Boards should establish committees to consider remuneration and audit issues.
F. Other matters i) Confl ict of interest including investments in Group companies In the event, a proposal giving rise to a material confl ict of interest such as investments in group
companies of AMIN or matters pertaining to the investments in the companies that have subscribed to the schemes of HSBC Mutual Fund or any other similar matters, the fund manager will consult AMIN Chief Executive Offi cer (“CEO”) and Local Compliance Offi cer (“LCO”) and, if deemed necessary by the AMIN CEO or LCO, an advise of the Chairman of the Board of Trustees will be obtained with respect to voting.
Voting Policy and Procedures
97
HSBC FTP Series
ii) Board remuneration Executive remuneration should be determined by a remuneration committee comprising a majority
of non-executive directors, the Chairman of committee being an independent director. Remuneration should be set at the level required to reward and motivate company management. Companies should avoid excessive payments to departing directors.
iii) Shareholders Rights Shareholders need suffi cient information to exercise their votes. This should be provided in a timely
manner. AMIN may vote against resolutions where insuffi cient information has been provided to allow an informed vote. Resolutions for shareholder approval should not ‘bundle’ together separate matters.
iv) Audit and accounts AMIN will generally support the re-election of external or statutory auditors unless there are concerns
about their independence or commitment to protecting shareholder interests. Approval of the annual accounts is normally a routine matter, unless concerns have been raised about the accounts presented. It is sometimes an opportunity to express broader concerns about the company’s governance or information available to shareholders.
v) Voting in banking stocks AMIN will not exercise voting rights in the stocks of the banking companies in India in accordance
with the RBI approval letter dated May 23, 2008. However, in case of any changes / amendments to the RBI regulations applicable for foreign banks, the voting policy shall be reviewed and notifi ed to the Board of Directors and Board of Trustees.
vi) Non-contentious matters AMIN generally supports the management’s recommendation for general non-contentious matters
such as resolutions relating to the administrative arrangements of a company unless these would be detrimental to the rights of minority shareholders.
DECISION MAKING PROCESSAMIN will generally exercise a vote in accordance with the fund manager’s or sector analyst’s recommendations. The recommendation will be based on the principles set out in the voting policy as above. However, based on the evaluation of certain proposals and on the relevant circumstances, a member of the AMIN’s Investment department i.e. a fund manager or the sector analyst, may attend the meeting in person to cast the votes.
Subject to these guidelines, AMIN may generally vote in favour of the company proposals although this does not preclude AMIN from voting against management on specifi c occasions wherein the fund manager may be of the opinion that the proposal is not likely to enhance the economic value or cause indeterminate and unnecessary expense to shareholders. Further, AMIN may abstain from voting in case of certain proposals where suffi cient information is not provided by the management or other similar reasons.
AUTHORISATIONAny decision of the Fund Manager to vote on any proposal shall require approval from the Head of Equities and any decision of the Head of Equities to vote on any proposal shall require approval from the Chief Investment Offi cer. In the absence of the Chief Investment Offi cer, the approval shall be accorded by the Chief Executive Offi cer.
ADMINISTRATION AND RECORD KEEPINGSubject to the above policy, voting with respect to all the proposals will be evaluated by AMIN’s Investment department who will electronically cast the vote on the custody web interface (currently proxy edge) or cast the vote in person on AMIN’s behalf i.e. For / Against / Abstain, based on their review along with a rationale for casting the votes and the same would be intimated to the AMIN’s Operations department in writing.
Record of actual exercise of votes in the meeting i.e. For / Against / Abstain on the management’s proposals along with the fund manager’s recommendation, whether attended or not, will be maintained by the AMIN’s Operations department. The details of the votes in the prescribed format will be disclosed periodically in accordance with the requirements of SEBI (Mutual Fund) Regulations and guidelines issued from time to time.
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