Combined Scheme Information Document - HSBC · PDF file2 Combined Scheme Information Document...

Combined Scheme Information Document

SMS INVEST to 56767 Toll free: 1800 200 2434 Visit: www.assetmanagement.hsbc.com/in

The particulars of the Scheme(s) have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds)

Regulations 1996, as amended till date, and fi led with Securities and Exchange Board of India (SEBI), along with a Due Diligence

Certifi cate from the AMC. The units being offered for public subscription have not been approved or recommended by SEBI nor

has SEBI certifi ed the accuracy or adequacy of the Combined Scheme Information Document.

The Combined Scheme Information Document sets forth concisely the information about the scheme(s) that a prospective investor ought to know before investing. Before investing, investors should also ascertain about any further changes to this Combined Scheme Information Document after the date of this Document from the Mutual Fund / Investor Service Centres / Website / Distributors or Brokers. Investors in the Scheme(s) are not being offered any guaranteed / assured returns. Investors are advised to consult their Legal /Tax and other Professional Advisors in regard to tax/legal implications relating to their investments in the Scheme(s) before making decision to invest in or redeem the Units.

The investors are advised to refer to the Statement of Additional Information (SAI) for details of HSBC Mutual Fund, Tax and

Legal issues and general information on www.assetmanagement.hsbc.com/in.

SAI is incorporated by reference (is legally a part of the Combined Scheme Information Document. For a free copy of the current

SAI, please contact your nearest Investor Service Centre or log on to www.assetmanagement.hsbc.com/in.

The Combined Scheme Information Document should be read in conjunction with the SAI and not in isolation.

This Combined Scheme Information Document is dated October 10, 2016.

Continuous offer of Units of the Scheme(s) at NAV based prices

Sponsor:

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

Trustee:

Board of Trustees16, V. N. Road, Fort,Mumbai 400 001, India

Asset Management Company:

HSBC Asset Management (India) Private LimitedRegd. & Corp. Offi ce: 16, V. N. Road, Fort,Mumbai 400 001, India

Refer next page for Product Labelling �

2 Combined Scheme Information Document (SID)

PRODUCT LABELING:To provide investors an easy understanding of the kind of product / scheme they are investing in and its suitability to them, the product labeling for the following schemes is as under:

Scheme Name Riskometer

HSBC Equity Fund (HEF)(An open-ended diversifi ed Equity Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities

Investors understand that their principal will be at Moderately High risk

HSBC India Opportunities Fund (HIOF)(An open-ended fl exi-cap Equity Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities across market capitalizations Investors understand that their principal will be at Moderately High risk

HSBC Midcap Equity Fund (HMEF)(An open-ended diversifi ed Equity Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in predominantly mid cap equity and equity related securities Investors understand that their principal will be at Moderately High risk

HSBC Infrastructure Equity Fund (HIEF)(An open-ended Equity Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities, primarily in themes that play an important role in India’s economic development Investors understand that their principal will be at High risk

HSBC Dynamic Fund (HDF)(An open-ended Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities and in debt instruments when view on equity markets is negative Investors understand that their principal will be at Moderately High risk

HSBC Emerging Markets Fund (HEMF)An open-ended SchemeThis product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities of Emerging economies Investors understand that their principal will be at High risk

HSBC Tax Saver Equity Fund (HTSF)(An open-ended Equity Linked Savings Scheme (ELSS))This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities with no capitalisation bias. Investors understand that their principal will be at Moderately High risk

HSBC Dividend Yield Equity Fund (HDYEF)(An open-ended Equity Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities


HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund (HAPDF) (An open ended fund of funds scheme)This product is suitable for investors who are seeking*:

To create wealth over long-term Investment in equity and equity related securities of Asia Pacifi c countries (excluding Japan) through fund of funds route Investors understand that their principal will be at High risk

HSBC Brazil Fund (HBF) (An open-ended Fund of Funds Scheme)This product is suitable for investors who are seeking*:

To create wealth over long term Investment in equity and equity related securities through feeder route in Brazilian markets Investors understand that their principal will be at High risk

HSBC Monthly Income Plan (HMIP) (An open-ended Fund) Monthly Income is not assured and is subject to the availability of distributable surplusThis product is suitable for investors who are seeking*:

Regular income over medium term Investment in fi xed income (debt and money market instruments) as well as equity and equity related securities


* Investors should consult their fi nancial advisers if in doubt about whether the product is suitable for them.

HSBC Mutual Fund 3

Scheme Name Riskometer

HSBC Ultra Short Term Bond Fund (HUSBF)(An open-ended Debt Scheme)This product is suitable for investors who are seeking*:

Liquidity over short term Investment in Debt / Money Market Instruments

Investors understand that their principal will be at Moderately Low risk

HSBC Flexi Debt Fund (HFDF)(An open-ended Debt Scheme)This product is suitable for investors who are seeking*:

Regular income over long term Investment in Debt / Money Market Instruments

Investors understand that their principal will be at Moderate risk

HSBC Global Consumer Opportunities Fund– Benefi ting from China’s Growing Consumption Power(An open-ended Fund of Funds Scheme)This product is suitable for investors who are seeking*:

To create wealth over the long-term. Investment in equity and equity related securities around the world focusing on growing consumer behaviour of China through feeder route.

Investors understand that their principal will be at High risk

HSBC Managed Solutions (HMS)(An open ended Fund of Funds Scheme)

Managed Solutions India – GrowthThis product is suitable for investors who are seeking*:

To create wealth over the long-term. Investing predominantly in units of equity mutual funds as well as in a basket of debt mutual funds, gold & exchange traded funds, offshore mutual funds and money market instruments;

Investors understand that their principal will be at

Moderately High risk


Managed Solutions India – ModerateThis product is suitable for investors who are seeking*:

To create wealth and provide income over the long-term; Investments in a basket of debt mutual funds, equity mutual funds, gold & exchange traded funds, offshore mutual funds and money market instruments;

Investors understand that their principal will be at

Moderately High risk


Managed Solutions India – ConservativeThis product is suitable for investors who are seeking*:

To provide income over the long-term; Investing predominantly in units of debt mutual funds as well as in a basket of equity mutual funds, gold & other exchange traded funds and money market instruments;


HSBC Income Fund (HIF) - Investment Plan

(An open-ended Income Scheme)This product is suitable for investors who are seeking*:

Regular income over long term Investment in diversifi ed portfolio of fi xed income securities


HSBC Income Fund (HIF) - Short Term Plan

(An open-ended Income Scheme)This product is suitable for investors who are seeking*:

Regular income over medium term Investment in diversifi ed portfolio of fi xed income securities

Investors understand that their principal will be at Moderately Low risk

HSBC Cash Fund (HCF)(An open-ended Liquid Scheme)HSBC Income Fund Short Term PlanThis product is suitable for investors who are seeking*:

Overnight liquidity over short term Investment in Money Market Instruments Investors understand that their principal will be at Low risk

* Investors should consult their fi nancial advisers if in doubt about whether the product is suitable for them.


Highlights / Summary of the Schemes .............................. 4

SECTION I

Introduction ......................................................................... 15

Risk Factors ......................................................................... 15

Standard Risk Factors .................................................... 15

Scheme Specifi c Risk Factors ........................................ 15

Requirement of Minimum Investors in the Schemes ....... 23

Special Considerations ........................................................ 23

Defi nitions ............................................................................ 25

Due Diligence Certifi cate .................................................... 28

SECTION II

Information about the Schemes ......................................... 29

A. Type of the Scheme ........................................................ 29

B. Investment Objective ..................................................... 29

C. Asset Allocation of the Scheme ..................................... 29

D. Where will the Scheme Invest? ...................................... 29

E. Change in Investment Pattern ........................................ 42

F. Investment Strategies ..................................................... 49

F. Product Differentiation .................................................. 63

G. Fundamental Attributes .................................................. 67

H. Benchmark Index ........................................................... 67

I. Fund Manager(s) ............................................................ 69

J. Investment Restrictions .................................................. 71

K. Schemes Performance .................................................... 73

L. Scheme Portfolio Holdings ............................................ 77

M. Portfolio Turnover ......................................................... 81

N. Investment by Directors, Fund Managers and Key Managerial Personnel of the AMC in Schemes of HSBC Mutual Fund ...................................................... 81

SECTION III

Units and Offer .................................................................... 82

Ongoing Offer Details ......................................................... 82

Plans / Options offered ................................................... 82

Dividend Distribution Policy ......................................... 84

Who can invest? ............................................................. 85

Who cannot invest .......................................................... 85

How to apply? ................................................................ 86

Listing ............................................................................ 86

Sales, Repurchases and Switches of Units ..................... 89

Cut off timings for Redemptions / Subscriptions........... 90

Where can the applications for Purchase / Redemptions be submitted? .......................................... 91

Minimum Amount for Purchase / Additional Purchase / Redemption .................................................. 92

Minimum balance to be maintained and consequences of non maintenance ................................ 93

Product Add ons ............................................................ 93

Account Statements ...................................................... 95

Dividends and Distributions .......................................... 96

Redemption / Repurchase proceeds .............................. 96

Delay in payment of Redemption / Repurchase proceeds ..................................................... 97

Duration of the Schemes / Winding up .......................... 97

Periodic Disclosures ............................................................ 97

NAV Information .......................................................... 97

Portfolio / Financial Results .......................................... 98

Annual Report ............................................................... 98

Associate Transactions ................................................... 98

Taxation ......................................................................... 98

Investor Services ........................................................... 99

Computation of NAV .......................................................... 99

Fractional Units .............................................................. 99

Policy on computation of NAV in case of foreign securities ....................................................... 99

SECTION IV

Fees and Expenses ............................................................... 100

NFO Expenses ............................................................... 100

Annual Scheme Recurring Expenses ............................. 100

Service Tax ..................................................................... 101

Load Structure ............................................................... 101

Deduction of Transaction Charge for Investments through Distributors / Agents ....................................... 102

Procedure for Direct Applications ................................. 102

SECTION V

Unitholders’ Rights ............................................................. 103

SECTION VI

Penalties and Pending Litigations ................................. 103

TABLE OF CONTENTS

Page No. Page No.

HSBC Mutual Fund 5

HIGHLIGHTS / SUMMARY OF THE SCHEMES

Name of the Scheme HSBC EQUITY FUND (HEF) HSBC INDIA OPPORTUNITIES FUND (HIOF)

Type of Scheme An open-ended diversifi ed equity Scheme An open-ended fl exi-cap equity Scheme

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

To seek long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. The fund 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.

Liquidity Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavour to despatch redemption proceeds within 3 Business Days.

Benchmark Index S&P BSE 200 S&P BSE 500

Transparency / NAV Disclosure

The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.

As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme’s portfolio would be available on the Fund’s website, and published by the Mutual Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the head offi ce of the mutual fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.

Loads (including SIP / STP where applicable)

Entry Load and Exit Load : NIL;

Minimum Application Amount(Lumpsum)

Rs. 10,000/- per application and in multiples of Re. 1/- thereafter

Minimum Additional investment

Rs 1,000/- per application and in multiples of Re. 1/- thereafter

Minimum Application Amount (SIP)

Minimum Investment Amount - Rs. 1000 (monthly) or Rs. 3000 (quarterly);Minimum no. of installments - 12 (monthly) or 4 (quarterly);Minimum aggregate investment - Rs. 12,000.

Minimum Redemption Amount

Rs 1000/- and in multiples of Re. 1/- thereafter

Plan / Options Options : i) Growth ii) DividendA Direct Plan (with the above Options) is also available for investors who subscribe to Units directly with the Fund.Plans and Options thereunder will have a common portfolio.

Sub Options Dividend Payout Option and Dividend Reinvestment Option

Dividend Declaration of dividend and its frequency will inter alia depend upon the distributable surplus. Dividend may be declared from time to time at the discretion of the Trustees.

Name of the Scheme HSBC MIDCAP EQUITY FUND (HMEF) HSBC INFRASTRUCTURE EQUITY FUND (HIEF)

Type of Scheme An open-ended diversifi ed equity Scheme An open-ended equity Scheme

Investment Objective 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.

To generate long term capital appreciation from an actively managed portfolio of equity and equity related securities by investing predominantly in equity and equity related securities of companies engaged in or expected to benefi t from growth and development of Infrastructure in India.


Name of the Scheme HSBC MIDCAP EQUITY FUND (HMEF) HSBC INFRASTRUCTURE EQUITY FUND (HIEF)


Benchmark Index S&P BSE MidCap Index S&P BSE 200


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.

As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme portfolio would be available on the Fund’s website, and published by the Mutual Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the head offi ce of the mutual fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.

Loads (including SIP / STP where applicable)

Entry Load and Exit Load: NIL



Minimum Additional Investment



Minimum Investment Amount - Rs. 1,000 (monthly) or Rs. 3,000 (quarterly);

Minimum no. of installments - 12 (monthly) or 4 (quarterly);

Minimum aggregate investment - Rs. 12,000.



Plan / Options Options : i) Growth ii) Dividend

A Direct Plan (with the above Options) is also available for investors who subscribe to Units directly with the Fund.

Plans and Options thereunder will have a common portfolio.

Sub Options i) Dividend Payout ii) Dividend Reinvestment


Name of the Scheme HSBC DYNAMIC FUND (HDF) HSBC EMERGING MARKETS FUND (HEMF)

Type of Scheme An open-ended Scheme An open-ended Scheme

Investment Objective 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.

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.


Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavour to despatch redemption proceeds within 7 Business Days.

Benchmark Index S&P BSE 200 MSCI Emerging Market Index

HSBC Mutual Fund 7

Name of the Scheme HSBC DYNAMIC FUND (HDF) HSBC EMERGING MARKETS FUND (HEMF)


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme/ Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) latest by 10.00 am on the next Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.


Loads (Including SIP / STP where applicable)

Entry Load and Exit Load: NIL




Rs 1,000/- and in multiples of Re. 1/- thereafter


Minimum Investment Amount - Rs. 1,000 (monthly) or Rs. 3,000 (quarterly);Minimum no. of installments - 12 (monthly) or 4 (quarterly);Minimum aggregate investment - Rs. 12,000.




Sub Options i) Dividend Payout ii) Dividend Reinvestment


Name of the Scheme HSBC TAX SAVER EQUITY FUND (HTSF)HSBC DIVIDEND YIELD EQUITY

FUND (HDYEF)

Type of Scheme An open-ended Equity Linked Savings Scheme (ELSS) An open ended equity Scheme

Investment Objective 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 Scheme aims to generate dividend yield and capital appreciation by primarily investing into equities and equity related securities of domestic Indian companies.


Name of the Scheme HSBC TAX SAVER EQUITY FUND (HTSF)HSBC DIVIDEND YIELD EQUITY

FUND (HDYEF)

Liquidity Being an open ended Scheme, Units may be purchased or redeemed (after a lock in period of 3 years from the date of allotment) on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavour to despatch redemption proceeds within 3 Business Days. The Units purchased under the Scheme shall have a lock in period of three years from the date of allotment of Units. Accordingly, the Units can be redeemed (i.e. sold back to the Fund) on every Business Day, at the Applicable NAV (hereinafter defi ned), on expiry of lock in period of three years from the date of allotment. Redemption requests can be made for an amount of Rs. 500 or more. Subject to the lock in period stated above, Redemption could also be made for the total number of units standing to the credit of investor at the time of closure of account. It may, however, be noted that in the event of death of the Unitholder, the legal heir, subject to production of requisite documentary evidence, will be able to redeem the investment only after the completion of one year or anytime thereafter, from the date of allotment of Units to the deceased Unitholder.

Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavour to despatch redemption proceeds within 3 Business Days.

Benchmark Index S&P BSE 200 S&P BSE 200


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme portfolio would be available on the Fund’s website, and published by the Mutual Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the head offi ce of the mutual fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.


Entry Load and Exit Load : NIL Entry Load and Exit Load: NIL

Minimum Application Amount (Lumpsum)

Rs. 500/- per application Rs. 10,000/- per application and in multiples of Re. 1/- thereafter


Rs. 500/- per application and in multiples of Rs. 500/- thereafter



Minimum Investment Amount - Rs. 500 (monthly) or Rs. 1500 (quarterly);Minimum no. of installments - 12 (monthly) or 4 (quarterly);Minimum aggregate investment - Rs. 6,000.Units allotted therein shall be locked-in for a period of three years, from the date of allotment.

Minimum Investment Amount - Rs. 1,000 (monthly) or Rs. 3000 (quarterly);Minimum no. of installments - 12 (monthly) or 4 (quarterly);Minimum aggregate investment - Rs. 12,000.


Rs 500/- and in multiples of Re. 1/- thereafter Rs 1,000/- and in multiples of Re. 1/- thereafter


Sub Options Dividend Payout i) Dividend Payout ii) Dividend Reinvestment


Declaration of dividend and its frequency will inter alia depend upon the distributable surplus. Dividend may be declared from time to time at the discretion of the Trustees.

HSBC Mutual Fund 9

Name of the Scheme HSBC MONTHLY INCOME

PLAN

HSBC INCOME FUND

INVESTMENT PLAN (HIF-IP) SHORT TERM PLAN (HIF-ST)

Type of Scheme An open ended Fund. Monthly income is not assured and is subject to the availability of distributable surplus.

An open-ended income Scheme

Investment Objective To seek generation of 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.

To provide a 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.

Liquidity Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavour to despatch redemption proceeds within 1 Business Day.

Benchmark Index CRISIL MIP Blended Index CRISIL Composite Bond Fund Index

CRISIL Short Term Bond Fund Index


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme portfolio would be available on the Fund's website, and published by the Mutual Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the head offi ce of the mutual fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.


Entry Load and Exit Load: Nil Entry Load and Exit Load: Nil Entry Load and Exit Load: Nil


Growth Option : Rs. 10,000/- per application and in multiples of Re. 1/- thereafter.

Dividend Options :Monthly Dividend Option : Rs. 25,000/- per application and in multiples of Re. 1/- thereafter.

Quarterly Dividend Option : Rs. 10,000/- per application and in multiples of Re. 1/- thereafter.



Rs. 1,000/- per application & in multiples of Re. 1/- thereafter



Minimum Investment Amount - Rs. 1,000/- (monthly) or Rs. 3,000/- (quarterly);Minimum no. of installments - 12 (monthly) or 4 (quarterly);Minimum aggregate investment - Rs. 12,000.


Rs. 1,000 & in multiples of Re. 1/- thereafter

Plan / Options Options: i) Growth ii) DividendA Direct Plan is also available (with the above Options) for investors who subscribe to Units directly with the Fund. Plans and Options thereunder will have a common portfolio.

Options : i) Growth ii) DividendA Direct Plan (with the above Options) is also available for investors who subscribe to Units directly with the Fund. Plans and Options thereunder will have a common portfolio.


Name of the Scheme HSBC MONTHLY INCOME

PLAN

HSBC INCOME FUND

INVESTMENT PLAN (HIF-IP) SHORT TERM PLAN (HIF-ST)

Sub Options i) Monthly Dividend (Payout and Reinvestment)

ii) Quarterly Dividend (Payout and Re-investment)

Quarterly Dividend (Payout & Re-investment)

Monthly Dividend, Quarterly Dividend (Payout & Reinvestment), Weekly, Dividend Reinvestment

Dividend Monthly, Quarterly or at such intervals as may be decided by the Trustees. An investor in Monthly, Quarterly Dividend can opt for payout / reinvestment.Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.

Quarterly or at such intervals as may be decided by the Trustees. An investor in Quarterly Dividend can opt for payout / reinvestment.Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.

Weekly, Monthly and Quarterly or at such intervals as may be decided by the Trustees. Weekly dividend will be reinvested whereas an investor in Monthly and Quarterly Dividend can opt for payout / reinvestment.Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.

Name of the Scheme HSBC ULTRA SHORT TERM

BOND FUND (HUSBF)

HSBC CASH FUND (HCF)

Type of Scheme An open ended debt Scheme An open ended liquid Scheme

Investment Objective Seeks to provide liquidity and reasonable returns by investing primarily in a mix of short term debt and money market instruments.

Aims to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities. However, there can be no assurance that the Scheme’s objective can be realized.


Benchmark Index CRISIL Liquid Fund Index - 90%CRISIL Short Term Bond Fund Index - 10%

CRISIL Liquid Fund Index


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID.As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme portfolio would be available on the Fund’s website, and published by the Mutual Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the head offi ce of the mutual fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.


Entry Load and Exit Load - NIL Entry Load and Exit Load: Nil

Minimum Application Amount (lumpsum)



Rs. 1,000/- (monthly) or Rs. 3,000/- (quarterly);Minimum no. of installments - 12 (monthly)or 4 (quarterly);

Minimum Investment Amount - Rs. 2,00,000 (daily), Rs. 1000/- (monthly) or Rs. 3,000/- (quarterly);Minimum no. of installments - 20 (daily), 12 (monthly) or 4 (quarterly);


Rs 1,000/- per application & in multiples of Re. 1/- thereafter


Rs 1,000/- & in multiples of Re. 1/- thereafter

Plan / Options Options : i) Growth and ii) DividendA Direct Plan (with the above Options) is also available for investors who subscribe to Units directly with the Fund.Plans and Options thereunder will have a common portfolio.

HSBC Mutual Fund 11

Name of the Scheme HSBC ULTRA SHORT TERM

BOND FUND (HUSBF)

HSBC CASH FUND (HCF)

Sub Options i) Daily Dividend Reinvestmentii) Weekly Dividend Reinvestmentiii) Monthly Dividend (Payout & Reinvestment)

i) Daily Dividend Reinvestmentii) Weekly Dividend Reinvestment and Payoutiii) Monthly Dividend (Payout & Reinvestment)

Dividend Daily, Weekly, & Monthly Dividend or at such intervals as may be decided by the Trustees. Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.

Daily, Weekly, & Monthly Dividend or at such intervals as may be decided by the Trustees. Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.

Name of the Scheme HSBC FLEXI DEBT FUND (HFDF)HSBC ASIA PACIFIC (EX JAPAN)

DIVIDEND YIELD FUND (HAPDF)

Type of Scheme An open-ended debt Scheme An open ended fund of funds Scheme

Investment Objective 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.

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.


Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, despatch redemption proceeds within 10 Business Days from date of acceptance of redemption request, while it will endeavour to dispatch the same within 7 business days.

Benchmark Index CRISIL Composite Bond Fund Index MSCI AC Asia Pacifi c ex-Japan The Fund reserves the right to change the benchmark for evaluation of the performance of the Scheme from time to time, subject to SEBI Regulations and other prevailing guidelines, if any.


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) by 9.00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this Combined SID. As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme portfolio would be available on the Fund’s website, and published by the Mutual Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the head offi ce of the mutual fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.

Loads (Including SIP /STP where applicable)

Entry Load and Exit Load: Nil





Minimum additional investment



Rs 1,000 & in multiples of Re. 1/- thereafter

Plan / Options Options: i) Growth ii) DividendA Direct Plan (with the above Options) is also available for investors who subscribe to Units directly with the Fund.Plans and Options thereunder will have a common portfolio.


Name of the Scheme HSBC FLEXI DEBT FUND (HFDF)HSBC ASIA PACIFIC (EX JAPAN)

DIVIDEND YIELD FUND (HAPDF)

Sub Options i) Fortnightly Dividend (Reinvestment)ii) Monthly (Payout & Reinvestment)iii) Quarterly (Payout & Reinvestment)iv) Half Yearly Dividend (Payout & Reinvestment)Fortnightly Dividend will be reinvested whereas investors in Monthly, Quarterly & Half Yearly Dividend can opt for Payout / Reinvestment.

i) Dividend Payoutii) Dividend Reinvestment

Dividend Fortnightly, Monthly, Quarterly & Half Yearly Dividend or at such intervals as may be decided by the Trustees.Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.

Declaration of dividend and its frequency will inter alia depend upon the distributable surplus. Dividend may be declared from time to time at the discretion of the Trustees.

Name of the Scheme HSBC BRAZIL FUND (HBF)

HSBC GLOBAL CONSUMER OPPORTUNITIES FUND (HGCOF) –

Benefi ting from China’s Growing Consumption Power

Type of Scheme An open ended fund of funds Scheme An open ended Fund of Funds scheme

Investment Objective To provide long term capital appreciation by investing predominantly in units / shares of HSBC Global Investment 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.

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.

Liquidity Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavour to dispatch redemption proceeds within 7 Business Days.

Being an open ended Scheme, Units may be purchased or redeemed on every Business Day at NAV based prices, subject to provisions of exit load, if any. The Fund will dispatch redemption proceeds within 10 Business Days.

Benchmark Index MSCI Brazil 10/40 Index MSCI AC World Index


The AMC will calculate and disclose the NAVs of the Scheme at the close of every Business Day. NAV of the Scheme / Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in two daily newspapers. The AMC shall update the NAVs on the website of the Fund www.assetmanagement.hsbc.com/in and of the Association of Mutual Funds in India - AMFI (www.amfi india.com) latest by 10.00 a.m. on the next Business Day. In case of any delay, the reasons for such delay would be explained to AMFI in writing. If the NAVs are not available before commencement of Business Hours on the following day due to any reason, the Fund shall issue a press release giving reasons and explaining when the Fund would be able to publish the NAVs. The NAV of the Scheme will be determined on every Business Day, except under special circumstances specifi ed in this SID.As presently required by the SEBI (MF) Regulations, the AMC will disclose the monthly portfolio of the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. Also a complete statement of the Scheme portfolio would be published by the Fund as an advertisement in one English daily circulating in the whole of India and in a newspaper published in the language of the region where the Head Offi ce of the Fund is situated, within 1 month from the close of each half year (i.e. 31 March and 30 September) or mailed to the Unitholders.

The AMC will calculate and disclose the NAV at the close of every Business Day except in special circumstances described under ‘Suspension of Sale and Redemption of Units’ in the Statement of Additional Information (SAI). The NAVs will be released for publication in at least two daily newspapers having circulation all over India and updated on AMC’s website at www.assetmanagement.hsbc.com/in and on AMFI website at www.amfi india.com. The NAV of the Plans under the Scheme shall be made available at all Investor Service Centres of the AMC. The AMC will disclose the monthly portfolio (alongwith ISIN) of the each Plan under the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. The AMC shall disclose/publish the full portfolio of the Scheme on a half-yearly basis as per the SEBI Regulations. The AMC will issue an advertisement disclosing hosting of un-audited fi nancial results of the Plans under the Scheme on its website on a half yearly basis and shall disclose the annual results of the Plans under the Scheme on its website as per the SEBI Regulations.

Loads (Including SIP /STP where applicable)


HSBC Mutual Fund 13

Name of the Scheme HSBC BRAZIL FUND (HBF)

HSBC GLOBAL CONSUMER OPPORTUNITIES FUND (HGCOF) –

Benefi ting from China’s Growing Consumption Power



Rs. 5,000/- per application & in multiples of Re. 1/- thereafter. Minimum application amount is applicable for switch-ins as well.






Rs 1,000 & in multiples of Re. 1/- thereafter, or 100 units

Plan / Options Options: i) Growth ii) Dividend Options: i) Growth

A Direct Plan (with the above Options) is also available for investors who subscribe to Units directly with the Fund.Plans and Options thereunder will have a common portfolio.

Sub Options i) Dividend Payoutii) Dividend Reinvestment

–

Name of the Scheme: HSBC MANAGED SOLUTIONS

Name of the Plan Managed Solutions India – Growth Managed Solutions India – Moderate Managed Solutions India – Conservative

Type of Scheme An open-ended fund of funds Scheme

An open ended fund of funds scheme An open ended fund of funds Scheme

Investment Objective The objective of the Plan is 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 in a basket of debt, equity, gold exchange traded funds (ETFs) and other ETFs, units of offshore mutual funds and money market instruments.

The objective of the fund is to provide long term total return aimed at capital appreciation and providing income through an active asset allocation with diversifi cation commensurate with the risk profi le of investments by investing in a basket of debt, equity, gold ETFs and other ETFs, units of offshore mutual funds and money market instruments.

The objective of the Plan is to provide long term total return aimed at providing income through an active asset allocation with diversifi cation commensurate with the risk profi le of investments by investing in a basket of debt, equity, gold ETFs and other ETFs and money market instruments.

The investments into Underlying schemes by each Plan under the Scheme would be based on the investment objective, asset allocation pattern and / risk profi le of such Plans under the Scheme. However, there is no assurance that the investment objective of the Plans under the Scheme will be achieved.

Liquidity The Plans under the Scheme will offer for purchase / switch-in and redemption / switch-out of units at NAV based prices on every Business Day on an ongoing basis. Under normal circumstances, the Mutual Fund shall dispatch the redemption proceeds within 10 business days from the date of acceptance of the redemption request.

Benchmark Index Composite Index constituting 80% of BSE 200 Index and 20% of CRISIL Composite Bond Index

CRISIL Balanced Fund Index Composite Index constituting of 90% into CRISIL Composite Bond Index and 10% of BSE 200 Index

The Fund reserves the right to change the benchmark for evaluation of the performance of the Plans under the Scheme from time to time, subject to SEBI Regulations and other prevailing guidelines if any.


The AMC will calculate and disclose the NAV at the close of every Business Day except in special circumstances described under ‘Suspension of Sale and Redemption of Units’ in the Statement of Additional Information (SAI). The NAVs will be released for publication in at least two daily newspapers having circulation all over India and updated on AMC’s website at www.assetmanagement.hsbc.com/in and on AMFI website at www.amfi india.com. The NAV of the Plans under the Scheme shall be made available at all Investor Service Centres of the AMC. The AMC will disclose the monthly portfolio (alongwith ISIN) of the each Plan under the Scheme as on the last day of the month on its website on or before the tenth day of the succeeding month. The AMC shall disclose / publish the full portfolio of the Scheme on a half-yearly basis as per the SEBI Regulations. The AMC will issue an advertisement disclosing hosting of un-audited fi nancial results of the Plans under the Scheme on its website on a half yearly basis and shall disclose the annual results of the Plans under the Scheme on its website as per the SEBI Regulations.


Name of the Scheme: HSBC MANAGED SOLUTIONS

Name of the Plan Managed Solutions India – Growth Managed Solutions India – Moderate Managed Solutions India – Conservative




Rs. 5,000 per application & in multiples of Re. 1/- thereafter. Minimum application amount is applicable for switch-ins as well.


Minimum Investment Amount – Rs. 1000 (monthly) or Rs. 3000 (quarterly);Minimum no. of installments – 12 (monthly) or 4 (quarterly);Minimum aggregate investment – Rs. 12,000.


Rs 1,000 per application & in multiples of Re. 1/- thereafter


Rs 1,000 & in multiples of Re. 1/- thereafter, or 100 units

Plan / Options Options: i) Growth ii) Dividend Each of the Plans will also offer a Direct Plan (with the above Options) for investment applications which are not routed through a distributor. All the Scheme features of the Direct Plan will be the same as Regular Plan except for a lower expense ratio as detailed in Section IV: Fees and Expenses - B. Annual Scheme Recurring Expenses. Brokerage / Commission paid to distributors and distribution expenses will not be charged under the Direct Plan. Both the Regular and Direct Plans alongwith the Options thereunder will have a common portfolio.

Sub Options i) Dividend Payout and ii) Dividend Reinvestment


Notes:1) Entry / Exit Load: In terms of SEBI circular no. SEBI/IMD/CIR No.4/ 168230/09 dated June 30, 2009, no entry load will be charged by the

schemes to investors effective August 1, 2009. Upfront commission shall be paid directly by the investor to the AMFI registered Distributors based on the investor’s assessment of various factors including the service rendered by the distributors. No exit load (if any) will be charged for units allotted under bonus / dividend reinvestment option.

2) Pursuant to SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012 and Gazette Notifi cation dated September 26, 2012, in order to comply with the single plan structure amongst all the Schemes, it has been decided to discontinue acceptance of fresh purchases / additional purchases /switch-ins under Regular & Institutional Plan of HCF, Regular & Institutional Plus Plan under HUSTBF, Regular Plan under HFDF, Institutional & Institutional Plus Plan under HIF - STP & Institutional Plan under HIF - IP effective from October 1, 2012. All the discontinued Plans will continue to exist till the existing investors remain invested in the Plan(s). Only redemptions and switch-outs will be permitted in the discontinued Plans. Any additional investments or switch-in requests received in the name of the discontinued Plans will be processed under the available single Plan.

3) HSBC Small Cap Fund has merged with HSBC Midcap Equity Fund & ceased to exist with effect from April 26, 2014. Kindly refer Notice dated March 14, 2014 on www.assetmanagement.hsbc.com/in for details on the merger. Hence, details of HSBC Small Cap Fund are not a part of this document.

4) HSBC Unique Opportunities Fund has been repositioned as HSBC Dividend Yield Equity Fund with effect from July 18, 2014. Kindly refer to Notice dated May 26, 2014 available on “http://www.assetmanagement.hsbc.com/in”

5) HSBC Progressive Themes Fund has been repositioned as HSBC Infrastructure Equity Fund with effect from October 14, 2015. Kindly refer to Notice-cum-Addendum dated August 6, 2015 and Corrigendum to Notice-cum-Addendum dated September 7, 2015 available on “http://www.assetmanagement.hsbc.com/in”

6) In accordance with SEBI circular dated February 25, 2016, HSBC Cash Fund has four separate plans for the limited purpose of deploying the unclaimed redemption and dividend amounts into this scheme. These plans are not available for regular investments / switches by investors. The investment objective, asset allocation pattern, investment strategy, risk factors and portfolio of these Plans will be same as other existing plans of HSBC Cash Fund. These plans will only have a growth option. Further, the Total Expense Ratio of these four plans will be capped at 50 bps and there will be no exit load charged, as required under the aforesaid circular. The list of names and address of Unitholders in whose folios there are unclaimed amounts along with the process of claiming such unclaimed amounts are available on our website http://www.assetmanagement.hsbc.com/in.

7) In accordance with SEBI circular no. Cir/ IMD/ DF/ 15 /2014 dated June 20, 2014 regarding minimum assets under management, HSBC Gilt Fund has been wound up with effect from December 1, 2015.

8) HSBC Floating Rate Fund - Long Term Plan has been merged with HSBC Ultra Short Term Bond Fund effective from May 25, 2016. Please refer to the Notice published on April 18, 2016 available on www.assetmanagement.hsbc.com/in for more details.

9) HSBC MIP - Regular Plan has been merged with HSBC MIP - Savings Plan (renamed as HSBC Monthly Income Plan) effective from October 8, 2016. Please refer to the Notice published on August 29, 2016 available on www.assetmanagement.hsbc.com/in for more details.

HSBC Mutual Fund 15

A. RISK FACTORS

Standard Risk Factors: � Mutual funds and securities investments are subject to market

risks and there is no assurance or guarantee that the objectives of the Scheme(s) will be achieved.

� Investment in Mutual Fund Units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal

� As the price / value / interest rates of the securities in which the Scheme(s) invests fl uctuates, the value of your investment in the Schemes may go up or down depending on the various factors and forces affecting the capital markets and money markets.

� Past performance of the Sponsor / AMC / Mutual Fund does not guarantee future performance of the Schemes.

� HEF, HIOF, HMEF, HIEF, HMIP, HIF, HUSBF, HCF, HTSF, HDYEF, HDF, HFDF, HEMF, HBF, HAPDF, HGCOF and HMS are the name(s) of the Scheme(s) and do not in any manner indicate either the quality of the Scheme(s) or their future prospects and returns.

� The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme(s) beyond the initial contribution of Rs. 1,00,000/- (Rupees One Lakh only) made by it towards setting up the Fund. The associates of the Sponsor are not responsible or liable for any loss or shortfall resulting from the operation of the Scheme(s).

� The present Scheme(s) are not guaranteed or assured return scheme(s).

� Mutual funds being vehicles of securities investments are subject to market and other risks and there can be no guarantee against loss resulting from investing in the Scheme(s). The various factors which impact the value of the Schemes’ investments include, but are not limited to, fl uctuations in the bond markets, fl uctuations in interest rates, prevailing political and economic environment, changes in government policy, factors specifi c to the issuer of the securities, tax laws, liquidity of the underlying instruments, settlement periods, trading volumes etc.

� Investment decisions made by the AMC may not always be profi table.

Scheme Specifi c Risk Factors

Risk factors associated with investing in Equity or

Equity related Securities (applicable in case of HEF,

HIOF, HMEF, HIEF, HMIP, HDF, HTSF, HDYEF and

HEMF):

� Subject to the stated investment objective of the Scheme(s), the Scheme(s) propose to invest in equity and equity related securities. Equity instruments by nature are volatile and prone to price fl uctuations on a daily basis due to both macro and micro factors. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of these investments. Different segments of fi nancial markets have different settlement periods and such periods may be extended signifi cantly by unforeseen circumstances. The inability of the Scheme(s) to make intended securities’ purchases due to settlement problems could cause the Scheme(s) to miss certain investment opportunities. In the view of the Fund Manager, investing in Mid and Small Cap stocks are riskier than investing in Large Cap Stocks.

� To the extent the assets of the Scheme are invested in overseas fi nancial assets, there may be risks associated with currency movements, restrictions on repatriation and transaction procedures in overseas market. Further, the repatriation of capital to India may also be hampered by changes in regulations or political circumstances as well as the application to it of other restrictions on investment. In addition, country risks would include events such as introduction of extraordinary exchange controls, economic

deterioration, bi-lateral confl ict leading to immobilization of the overseas fi nancial assets and the prevalent tax laws of the respective jurisdiction for execution of trades or otherwise.

� As the Fund will invest in securities which are denominated in foreign currencies (e.g. US Dollars), fl uctuations in the exchange rates of these foreign currencies may have an impact on the income and value of the fund. The investment manager in India may hedge the currency risk based on his view on the forex markets.

� As the portfolio will invest in stocks of different countries, the portfolio shall be exposed to the political, economic and social risks with respect to each country. However, the investment manager shall ensure that his exposure to each country is limited so that the portfolio is not exposed to one country. Investments in various economies will also diversify and reduce this risk.

� The fund will be exposed to settlement risk, as different countries have different settlement periods

� The Scheme(s) may also use various derivative products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders’ interest.

Risk factors applicable to HDYEF

Though the investments would be in companies having a track record of dividend payments, the performance of the Scheme would interalia depend on the ability of these companies to sustain dividends in future. Such stocks may be less liquid in terms of trading volumes in the stock markets and commensurately the liquidity risk could be higher. There could be time periods when securities of this nature may underperform relative to other stocks in the market. This could impact performance. The Scheme retains the fl exibility to hold from time to time relatively more concentrated investments in a few sectors as compared to plain diversifi ed equity funds. This may make the Scheme vulnerable to factors that may affect these sectors in specifi c and may be subject to a greater level of market risk leading to increased volatility in the Scheme’s NAV.

Risk factors applicable to HMEF

� Medium capitalisation stocks have the potential to experience greater volatility and may be less liquid than larger capitalisation stocks. Thus, relative to larger, more liquid stocks, investing in medium capitalization stocks, involves potentially greater volatility and risk. The biggest risk of equity investing is that returns can fl uctuate and investors can lose money.

� The Scheme seeks to generate returns by investing in stocks of Medium Cap Companies that have strong or improving fundamentals, high growth potential or are under-priced relative to their intrinsic value. This may or may not happen. However, as with all equity investing, there is the risk that a company will not achieve its expected earnings results, or that an unexpected change in the market or within the company will occur, both of which may adversely affect investment results.

Risk factors applicable to HBF

� The Scheme will be investing predominantly in units / shares of HGIF Brazil Equity Fund. Hence HBF’s performance may depend upon the performance of this underlying scheme. Any change in the investment policy or the fundamental attributes of the underlying scheme will affect the performance of HBF.

� Investments in HGIF Brazil Equity Fund, which is an equity fund, will have all the risks associated with investments in equity and the offshore markets.

� If HGIF Brazil Equity Fund declares any day as a non-business day, AMC will also declare that day as a non business day. However, if this information is received by the AMC from underlying scheme later in the day and HBF has already accepted transactions, such transactions will be processed on the next business day.

SECTION I - INTRODUCTION


� The portfolio disclosure of HBF will be largely limited to the investments made by the Scheme.

� Currency Risk: As the underlying scheme will invest in securities which are denominated in foreign currencies (e.g. US Dollars), fl uctuations in the exchange rates of these foreign currencies may have an impact on the income and value of the Scheme. The assets in which the underlying scheme is invested and the income from the assets will or may be quoted in currencies which are different from the underlying scheme’s base currency. The performance of the underlying scheme will therefore be affected by movements in the exchange rate between the currencies in which the assets are held and the underlying scheme’s base currency and hence there can be the prospect of additional loss or the prospect of additional gain to the investors greater than the usual risks of investment. The performance of the underlying scheme may also be affected by changes in exchange control regulations.

� Country Risk: As the portfolio will invest primarily in a well diversifi ed portfolio of investments in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other regulated Market of Brazil, as well as those companies which carry out a preponderant part of their business activities in Brazil, the portfolio shall be exposed to the political, economic and social risks with respect to Brazil.

� Hedging Risk : The investment manager to the underlying scheme is permitted, but not obliged, to use hedging techniques to attempt to offset market and currency risks. There is no guarantee that hedging techniques will achieve the desired result.

� Liquidity Risk: : Investors should be aware that the investments of the underlying scheme being primarily in the Brazilian market, its stocks may be negatively impacted by low liquidity, poor transparency and greater fi nancial risks. Investments in products relating to Brazilian market may also become illiquid which may constrain the ability of the investment manager to the underlying scheme to realize some or all of the portfolio. Securities, which are not quoted on the stock exchanges, are inherently illiquid in nature and carry a larger amount of liquidity risk, in comparison to securities that are listed on the exchanges.

� Settlement Risks: HBF will be exposed to settlement risk, as Brazil may have different settlement periods and the procedures may be different.

� Sector Concentration Risk: The portfolio may have a high concentration in natural resources sector. Because these investments are limited to narrow segment of the economy, the performance of HBF could be sensitive to movements in these sectors.

� Stock Risk: The underlying scheme is exposed to equity markets for all or part of its total assets. The value of these assets can therefore rise or fall and investors may not get back all of their investment.

� Emerging Market Risk: Brazil, being an emerging market, investors are advised to consider carefully the special risks of investing in emerging market securities. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade. Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. The risk also exists that an emergency situation may as a result of which trading of securities may cease or may be substantially curtailed and prices for a sub-fund’s securities in such markets may not be readily available.

� Swing Pricing Risk: There are trading and associated transaction costs involved when there are signifi cant infl ows into or signifi cant outfl ows from the underlying scheme. The dealing charges incurred as a result of such signifi cant fl ows fall not

only on those investors who have just transacted but on all the investors in the underlying scheme thereby diluting the value of their existing shareholders’ holding. Introduction of Swing Pricing aims to protect the interest of the existing investors from some of the performance dilution that they may suffer as a result of signifi cant infl ows and outfl ows from the underlying scheme. It is a process whereby the NAV of the underlying scheme is swung or adjusted when a predetermined net capital activity threshold (or swing threshold) is exceeded. Thus, if Net subscriptions (Total subscriptions - Total redemptions) are above the swing threshold, the NAV per share is swung up by the swing factor. Conversely, if Net redemptions (Total redemptions - Total subscriptions) are above the swing threshold, the NAV per share is swung down by the swing factor. The swing threshold has been set at a level by the underlying scheme which it believes best manages the objective of protecting their existing shareholders from NAV dilution by capturing a signifi cant percentage of the gross amount of deals on any fund whilst maintaining a reasonable level of fund volatility by not swinging the NAV all the time.

Adjusted NAV Calculation: Subscription Example -

� Using the following swing pricing criteria: � The swinging threshold is 0.5% of the underlying scheme’s

Net Assets � The swing factor on the offer (net subscriptions above the

threshold) is 1.0% � The swing factor on the bid (net redemptions below the

threshold) is 0.5% � Assume the following fund data :

Total net assets (US$)

Net subscriptions (US$)

No. of shares

US$ 100,000,000 US$ 600,000 1,000,000

� Net subscriptions = US$600,000 � The swinging threshold = Total Net Assets x 0.5% =

US$100,000,000 x 0.5% = US$500,000 � As the net infl ows exceed the swinging threshold, the NAV per

share has to be adjusted � Unadjusted NAV per share = Total Net Assets / No. of shares =

US$100,000,000/1,000,000 = US$100.00 � Adjusted NAV per share = NAV per share x (1 + swing factor) =

US$100.00 x (1+ 0.01) = US$101.00 � The NAV is adjusted upwards as net subscriptions have exceeded

the swinging threshold. � Therefore, all investors (including the local Scheme) redeeming

or subscribing into the underlying scheme will deal at the adjusted price of US$101.00 per share. Thus, investors of the underlying scheme (including the local scheme) may be positively or negatively impacted by application of the swing price factor by the underlying scheme, depending upon whether they are subscribing / redeeming on the date of application of swing price factor.

Risk factors applicable to HEMF

� The Scheme will be investing predominantly in units / shares of HSBC Global Investment Funds (HGIF) - Global Emerging Markets Equity Fund (HSBC GEM Fund). Hence HEMF’s performance may depend upon the performance of this underlying scheme. Any change in the investment policy or the fundamental attributes of the underlying scheme will affect the performance of HEMF.

� If HSBC GEM Fund declares any day as a non-business day, AMC will also declare that day as a non business day. However, if this information is received by the AMC from underlying scheme later in the day and HEMF has already accepted transactions, such transactions will be processed on the next business day.

HSBC Mutual Fund 17

� As the underlying scheme will invest in emerging markets, investors are advised to consider carefully the special risks of investing in emerging market securities. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade. Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. The risk also exists that an emergency situation may arise as a result of which trading of securities may cease or may be substantially curtailed and prices for the underlying scheme’s securities in such markets may not be readily available.

� Swing Pricing Risk: HEMF, HAPDF and Underlying schemes of HMS, being overseas investing schemes, are also exposed to ‘Swing Pricing Risk’ as stated above under section on ‘Risk factors applicable to HBF’.

Risk factors applicable to HAPDF & HGCOF

� Investments in the Underlying scheme, which also consist of equity funds, will have all the risks associated with investments in equity and the offshore markets.

� The portfolio disclosure of the Scheme will be largely limited to the investments made by the Scheme.

� The investor will be exposed to the risk of the global markets and currency risk arising out of the investment in the Underlying scheme in securities which are denominated in foreign currencies (eg US Dollars). The investor will also be prone to delays in redemption if the global market is closed.

� This being a fund of funds Scheme, the investors should note that the expenses to be borne by the investor include the recurring expenses of the Underlying scheme in which Fund of Funds Scheme makes investments subject to the maximum limits prescribed under sub-regulation 6 & 6A of Regulation 52 of the SEBI Regulations.

� If the Underlying scheme declares a non-business day, the AMC will also declare it a non-business day. If this information is received later in the day and the local feeder fund has already accepted transaction, such transactions will be processed at the NAV of the next business day. This may impact liquidity of investors of local scheme.

� Liquidity risk of underlying instruments: There could be liquidity risk on account of illiquid underlying holdings � To maintain liquidity at the feeder fund level, the AMC will

invest upto 5% in Money Market instruments (including CBLO & reverse repo in government securities) and units of domestic mutual funds to provide from a liquidity perspective.

� According to regulations, the AMC can make the redemption in T+10 days, though the market practice for Equity Funds is T+3 days.

� Restructuring / Rescheduling Risk: There could be cases of restructuring / re-scheduling of particular debt / money market instruments held in the portfolio which could result in the maturity of these instruments going beyond the original maturity date of the instrument. In such cases the fund manager may be constrained to sell these instruments in the market at realizable value and pass on the loss / impact to investors under the Scheme.

� Risks associated with Investing in Foreign Securities – Investments in such securities entails additional risks. Such investment opportunities may be pursued by the AMC provided they are considered appropriate in terms of the overall investment objectives of the Scheme. To manage risks associated with foreign currency and interest rate exposure, the Underlying scheme may use derivatives for effi cient portfolio management including hedging and in accordance with conditions as may be stipulated

by SEBI / RBI from time to time. To the extent that the assets of the Scheme will be invested in foreign securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment. Changes to the investment objectives or strategies of the Underlying scheme into which the Scheme invest or any change in the regulations in the country where such Underlying scheme is domiciled may affect the performance of the Scheme which invest into such schemes.

Risks associated with investing in derivatives, securitized

debt, short selling and securities lending

The Scheme will not take any exposure to the above mentioned securities or participate in short selling or securities lending. However the Underlying scheme may take exposure to the above mentioned securities. Refer risk factors associated with the same below for Underlying scheme.

Risk Factors associated with investments in Money Market instruments � Investments in money market instruments would involve a

moderate credit risk i.e. risk of an issuer’s liability to meet the principal payments.

� Money market instruments may also be subject to price volatility due to factors such as changes in interest rates, general level of market liquidity and market perception of credit worthiness of the issuer of such instruments.

� The NAV of the Scheme’s Units, to the extent that the corpus of the Scheme is invested in money market instruments, will be affected by the changes in the level of interest rates. When interest rates in the market rise, the value of a portfolio of money market instruments can be expected to decline.

Risk Factors of Underlying scheme (HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund)The Underlying scheme having exposure to equity and equity related securities will be subject to the following risks which may in turn affect the performance of the Scheme. There can be no assurance that the Underlying scheme will achieve its investment objectives and past performance should not be seen as a guide to future returns.

Risks associated with Underlying scheme investing in Equity & Equity related securities � Equity instruments by nature are volatile and prone to price

fl uctuations on a daily basis due to both macro and micro factors. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of these investments. Different segments of fi nancial markets have different settlement periods and such periods may be extended signifi cantly by unforeseen circumstances. The inability of the Scheme to make intended securities’ purchases due to settlement problems could cause the Scheme to miss certain investment opportunities. In the view of the Fund Manager, investing in mid and small cap stocks are riskier than investing in large cap stocks.

� Market / Investment Risk: Many of the Asian markets are emerging markets. Investing in emerging markets involves a greater risk of loss than investing in more developed markets due to, among other factors, greater political, tax, economic, foreign exchange, liquidity, market volatility (such as interest rate and price volatility) and regulatory risks.

� Currency Risk: Investors investing in this fund will be exposed to currency risk as Indian investors will invest in INR in India and the fund will invest in USD in the Underlying scheme. The Underlying scheme in-turn may take exposure in multiple currencies (such as USD, HKD and EURO). As the Underlying scheme will invest in securities which are denominated in foreign currencies (e.g. US Dollars), fl uctuations in the exchange rates of these foreign currencies may have an impact on the income and value of the Scheme. The assets in which the Underlying


scheme is invested and the income from the assets will or may be quoted in currencies which are different from the Underlying scheme’s base currency. The performance of the Underlying scheme will therefore be affected by movements in the exchange rate between the currencies in which the assets are held and the Underlying scheme’s base currency and hence there can be the prospect of additional loss or the prospect of additional gain to the investors greater than the usual risks of investment. The performance of the Underlying scheme may also be affected by changes in exchange control regulations.

The investment manager to the Underlying scheme is permitted, but not obliged, to use hedging techniques to attempt to offset market and currency risks. There is no guarantee that hedging techniques will achieve the desired result. Being on open-ended Scheme, the investors can enter and exit at any time. Since each investor’s horizon is different, investor who wish to hedge could undertake it at their end.

� Credit Risk: As the feeder fund can only invest in money market instruments, the credit risk is minimal. The investment in money market instruments are only from a cash management perspective.

� Communication Risk: This product will require greater coordination between HSBC Asset Management India Operations and HSBC Global Operations team. A robust communication and escalation model will be put in place which is periodically, revisited (quarterly) to account for changes in people / process / systems.

� Swing Pricing Risk: HAPDF is also exposed to ‘Swing Pricing Risk’ as stated above under section on ‘Risk factors applicable to HBF’.

� Liquidity Risk: Investors should be aware that the investments of the Underlying scheme could be negatively impacted by low liquidity and poor transparency of some of the exchanges where the investments are made. Investments may also become illiquid which may constrain the ability of the investment manager of the Underlying scheme to realize some or all of the portfolio. Securities, which are not quoted on the stock exchanges, are inherently illiquid in nature and carry a larger amount of liquidity risk, in comparison to securities that are listed on the exchanges.

� Country Risk: As the underlying portfolio could invest in stocks of different countries, the portfolio shall be exposed to the social, economic, political and settlement risks with respect to each country.

� Settlement Risks: The Scheme will be exposed to settlement risk, as different foreign markets may have different settlement periods and the procedures may be different.

� Stock risk: The Underlying scheme is exposed to equity markets for all or part of its total assets. The value of these assets can therefore rise or fall and investors may not get back all of their investment.

� Emerging Market Risk: As the Underlying scheme could invest in emerging markets, investors are advised to consider carefully the special risks of investing in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other regulated market of emerging market countries, as well as those companies which carry out a preponderant part of their business activities in emerging market countries. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade. Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. The risk also exists that an emergency situation may as a result of which trading of securities may cease or may be substantially curtailed and prices for a sub-fund’s

securities in such markets may not be readily available. � NAV Alignment Risk: The cut off timing of NAV is aligned to

the Underlying scheme’s NAV. HSBC Asset Management India only declares NAV, after receiving the NAV of the Underlying scheme.

Risk factors for Underlying scheme of HGCOF viz.

HGIF China Consumer Opportunities Fund

The risk factors mentioned above for the Underlying scheme of HAPDY are also applicable to Underlying scheme of HGCOF, namely Credit Risk, Communication Risk, Swing Pricing Risk, Liquidity Risk, Settlement Risk, Sector Concentration Risk, Stock Risk and NAV Alignment Risk. Kindly refer these risk factors. The other risk factors to the Underlying scheme of HGCOF are : � Market Risk: The Underlying scheme’s investments are subject

to the risks inherent in all investments in Securities i.e. the value of holdings may fall as well as rise. As the Underlying scheme invests primarily in equities, investors are exposed to stock market fl uctuations and the fi nancial performance of the companies held in the Underlying scheme’s portfolio.

� Currency Risk: As the Underlying scheme will invest in securities which are denominated in foreign currencies (e.g. US Dollars), fl uctuations in the exchange rates of these foreign currencies may have an impact on the income and value of the Scheme. The assets in which the Underlying scheme is invested and the income from the assets will or may be quoted in currencies which are different from the Underlying scheme’s base currency. The performance of the Underlying scheme will therefore be affected by movements in the exchange rate between the currencies in which the assets are held and the Underlying scheme’s base currency and hence there can be the prospect of additional loss or the prospect of additional gain to the investors greater than the usual risks of investment. The performance of the Underlying scheme may also be affected by changes in exchange control regulations.

The investment manager to the Underlying scheme is permitted, but not obliged, to use hedging techniques to attempt to offset market and currency risks. There is no guarantee that hedging techniques will achieve the desired result.

� Chinese Consumers: The Underlying scheme may have a high concentration in companies with signifi cant revenues in the luxury and consumer sectors that have appeal to Chinese consumers; a decrease in purchasing power of the Chinese consumers may negatively impact the value of the assets of the underlying fund.

� Country Risk: As the portfolio will invest primarily in a well diversifi ed portfolio of investments in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other regulated market of China, as well as those companies which carry out a preponderant part of their business activities in China, the portfolio shall be exposed to the political, economic and social risks with respect to China.

� Emerging Market Risk: China, being an emerging market, investors are advised to consider carefully the special risks of investing in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other regulated market of China, as well as those companies which carry out a preponderant part of their business activities in China. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade. Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. The risk also exists that an emergency

HSBC Mutual Fund 19

situation may as a result of which trading of securities may cease or may be substantially curtailed and prices for a sub-fund’s securities in such markets may not be readily available.

� Legal, Tax and regulatory Risk: The Underlying scheme could be exposed to changes in legal, tax and regulatory regime which may adversely affect it and the investors. Such changes could also have retrospective effect and could lead to additional taxation imposed on the Scheme which was not contemplated either when investments were made, valued or disposed off.

� Investments in Derivatives : The Underlying scheme may use derivative instruments like stock index futures, option on stocks, stock indices, interest rate swaps or other derivative instruments as permitted under the Regulations and guidelines.

� As and when the Underlying scheme trade in the derivatives market, there are risk factors and issues concerning the use of derivatives that investors should understand. Derivative products are specialised instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counter party”) to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices. Even a small price movement in the underlying security could have a large impact on their value. Also, the market for derivative instruments is nascent in India.

� Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identifi cation and execution of the strategies to be perused by the fund manager involve uncertainty and decision of fund manager(s) may not always be profi table. No assurance can be given that the fund manager(s) will be able to identify or execute such strategies.

� The risks associated with the use of derivatives are different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments.

� Investments in securitized debt by the Underlying scheme: Securitised debt papers carry credit risk of the Obligors and are dependent on the servicing of the PTC / Contributions etc. However these are offset suitably by appropriate pool selection as well as credit enhancements specifi ed by Rating Agencies. In cases where the underlying facilities are linked to benchmark rates, the securitised debt papers may be adversely impacted by adverse movements in benchmark rates. However this risk is mitigated to an extent by appropriate credit enhancement specifi ed by rating agencies. Securitised debt papers also carry the risks of prepayment by the obligors. In case of prepayments of securities debt papers, it may result in reduced actual duration as compared to the expected duration of the paper at the time of purchase, which may adversely impact the portfolio yield.

The risks associated with the underlying assets can be described as under

Credit card receivables are unsecured. Automobile / vehicle loan receivables are usually secured by the underlying automobile / vehicle and sometimes by a guarantor. Mortgages are secured by the underlying property. Personal loans are usually unsecured. Corporate loans could be unsecured or secured by a charge on fi xed assets / receivables of the company or a letter of comfort from the parent company or a guarantee from a bank / fi nancial institution. As a rule of thumb, underlying assets which are secured by a physical asset / guarantor are perceived to be less risky than those which are unsecured. By virtue of this, the risk and therefore the yield in descending order of

magnitude would be credit card receivables, personal loans, vehicle / automobile loans, mortgages and corporate loans assuming the same rating.

• Short selling and securities lending activity by the Underlying scheme � Short Selling Risk: The risk associated with upward

movement in market price of security sold short may result in loss. The losses on short position may be unlimited as there is no upper limit on rise in price of a security.

� Securities Lending: The risks in lending portfolio securities, as with other extensions of credit, consist of the failure of another party, in this case the approved intermediary, to comply with the terms of agreement entered into between the lender of securities i.e. the Underlying scheme and the approved intermediary. Such failure to comply can result in the possible loss of rights in the collateral put up by the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefi ts accruing to the lender from the securities deposited with the approved intermediary. The Underlying scheme may not be able to sell such lent securities and this can lead to temporary illiquidity.

Risk factors applicable to HMS

� All the risk factors pertaining to HAPDF as mentioned above will be applicable to HMS.

� Further, the following risk factors will also apply to HMS : � Operational Risk - Given that the FOF structure will involve

splitting each subscription and redemption at FOF level into multiple subscription and redemptions into the respective funds; there is enhanced operational risk.

� The Plans under the Scheme will invest in a combination of equity funds, debt fund, gold ETFs and other ETFs, offshore mutual fund schemes and money market instruments hence, the performance of the Plans would depend upon the performance of Underlying schemes.

� Investments in Underlying Debt schemes will have all the risks associated with the debt markets including interest rate risk, duration risk, credit risk and reinvestment risk.

� Risk associated with investing in foreign securities, derivatives, unrated, securitized debt, short selling and securities lending - The Scheme will not have any exposure to derivative instruments, securitized debt or unrated instruments and shall not undertake any short selling or securities lending. However, the Underlying schemes may take exposure to the above mentioned securities. The offshore Underlying schemes of HSBC shall not take any exposure to unrated securities, their investments in derivatives shall be for the purposes of hedging and portfolio rebalancing only and investments in unlisted securities shall be limited to 10% of its net assets. The domestic Underlying schemes of HSBC and other than HSBC shall take exposure to the above mentioned securities as per the limits provided (if any) in the Scheme Information Document of the respective Underlying schemes and applicable SEBI Regulations from time to time. For risk associated with the same refer risk factors provided below for Underlying scheme.

� Risk factors associated with investing in Gold Exchange Traded Funds – � Risk of passive investment: The Underlying scheme may be

affected by a general price decline in the gold prices. The Scheme ultimately invests in gold as an asset class regardless of such investment merit. The AMC does not attempt to take defensive positions in declining markets.

� Tracking error risk: The performance of the Underlying scheme may not be commensurate with the performance of the benchmark on any given day or over any given period. Such variation, referred to as tracking error may impact the performance of the Scheme.

� Trading in units on the exchange may be halted because of market conditions or for reasons that in view of exchange


authorities or SEBI, trading in units of the Scheme is not advisable. In addition, trading in units is subject to trading halts caused by extraordinary market volatility and pursuant to exchange and SEBI ‘circuit fi lter’ rules. There can be no assurance that the requirements of exchange necessary to maintain the listing of the units will continue to be met or will remain unchanged.

� The units may trade above or below their NAV. The NAV of the Scheme will fl uctuate with changes in the market value of holdings. The trading prices will fl uctuate in accordance with changes in their NAV as well as market supply and demand. However, given that units can be created and redeemed in Creation Units, it is expected that large discounts or premiums to the NAV will not sustain due to arbitrage opportunity available.

� Gold Exchange Traded Fund is relatively new product and their value could decrease if unanticipated operational or trading problems arise.

� An investment in the Scheme may be adversely affected by competition from other methods of investing in gold.

� The Trustee, in the general interest of the unit holders of the Scheme offered under this SID and keeping in view of the unforeseen circumstances / unusual market conditions, may limit the total number of Units which can be redeemed on any Business Day.

� Any change in the rates of taxation would affect the investor � Returns from Gold as an asset class may underperform

returns from general securities market or different asset classes other than gold. Different types of securities tend to go through cycles of underperformance and outperformance in comparison to the general securities markets.

Risk Factors of the Underlying schemes of HMS

The Underlying schemes having exposure to equity and equity related securities and / or fi xed income securities will be subject to the following risks which may in turn affect the performance of the Plans under the Scheme. There can be no assurance that the Underlying scheme will achieve its investment objectives and past performance should not be seen as a guide to future returns.

Risk associated with investments in Equity & Equity related securities by the Underlying schemes of HMS � Equity instruments by nature are volatile and prone to price

fl uctuations on a daily basis due to both macro and micro factors. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of these investments. Different segments of fi nancial markets have different settlement periods and such periods may be extended signifi cantly by unforeseen circumstances. The inability of the Scheme(s) to make intended securities’ purchases due to settlement problems could cause the Scheme(s) to miss certain investment opportunities. In the view of the Fund Manager, investing in mid and small cap stocks are riskier than investing in large cap Stocks.

� Market Risk: The Underlying scheme’s investments are subject to the risks inherent in all investments in Securities i.e. the value of holdings may fall as well as rise. As the Underlying scheme invests primarily in equities, investors are exposed to stock market fl uctuations and the fi nancial performance of the companies held in the Underlying scheme’s portfolio.

� Currency Risk: As the Underlying scheme could invest in securities which are denominated in foreign currencies (e.g. US Dollars), fl uctuations in the exchange rates of these foreign currencies may have an impact on the income and value of the Scheme. The assets in which the Underlying scheme is invested and the income from the assets will or may be quoted in currencies which are different from the Underlying scheme’s base currency. The performance of the Underlying scheme will therefore be affected by movements in the exchange rate between the currencies in which the assets are held and the Underlying scheme’s base currency and hence there can be the prospect of

additional loss or the prospect of additional gain to the investors greater than the usual risks of investment. The performance of the Underlying scheme may also be affected by changes in exchange control regulations.

The investment manager to the Underlying scheme is permitted, but not obliged, to use hedging techniques to attempt to offset market and currency risks. There is no guarantee that hedging techniques will achieve the desired result.

� Credit Risk: As the feeder fund will invest in money market instruments, the credit risk is minimal. The investment in money market instruments are only from a cash management perspective.

� Swing Pricing Risk: As the Underlying scheme could invest in offshore securities, there could be an element of swing pricing risk which is explained below. Refer ‘Swing Pricing Risk’ under ‘Risk factors applicable to HBF’.

� Liquidity Risk: Investors should be aware that the investments of the Underlying scheme could be negatively impacted by low liquidity and poor transparency of some of the exchanges where the investments are made. Investments may also become illiquid which may constrain the ability of the investment manager of the Underlying scheme to realize some or all of the portfolio. Securities, which are not quoted on the stock exchanges, are inherently illiquid in nature and carry a larger amount of liquidity risk, in comparison to securities that are listed on the exchanges.

� Country Risk: As the underlying portfolio could invest in stocks of different countries, the portfolio shall be exposed to the social, economic, political and settlement risks with respect to each country.

� Sector Concentration Risk: The underlying portfolio may have high concentration in a particular sector. The performance of the Scheme could be sensitive to movements in these sectors.

� Emerging Market Risk: As the Underlying Scheme could invest in emerging markets, investors are advised to consider carefully the special risks of investing in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other regulated market of emerging market countries, as well as those companies which carry out a preponderant part of their business activities in emerging market countries. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade. Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. The risk also exists that an emergency situation may as a result of which trading of securities may cease or may be substantially curtailed and prices for a sub-fund’s securities in such markets may not be readily available.

� Legal, tax and regulatory Risk: The Underlying scheme could be exposed to changes in legal, tax and regulatory regime which may adversely affect it and the investors. Such changes could also have retrospective effect and could lead to additional taxation imposed on the Scheme which was not contemplated either when investments were made, valued or disposed off.

� NAV Alignment Risk: The cut off timing of NAV is aligned to the Underlying scheme’s NAV. HSBC Asset Management India only declares NAV, after receiving the NAV of the Underlying scheme.

� Risk associated with Underlying scheme investing more than 15% in Indian Securities: In case the India exposure of the Underlying scheme goes beyond 15% for more than 3 months then fresh subscription into the Scheme will not be accepted. If the India exposure continues to be above 15% for more than 12 months then the Scheme will be wound up after duly informing

HSBC Mutual Fund 21

the Unit holders and providing them with a 30 day period to exit the Scheme at prevailing NAV without any exit load.

Investments in Debt Instruments by the Underlying schemes of HMS The Underlying scheme(s) proposes to invest in debt and related instruments and the risk factors pertinent to the same are: � Price-Risk or Interest Rate Risk: As with all debt securities,

changes in interest rates may affect the NAV of the Scheme(s) as the prices of securities increase as interest rates decline and decrease as interest rates rise. Prices of long-term securities generally fl uctuate more in response to interest rate changes than do short-term securities. Indian debt markets can be volatile leading to the possibility of price movements up or down in fi xed income securities and thereby to possible movements in the NAV.

� In the case of fl oating rate instruments, an additional risk could be due to the change in the spreads of fl oating rate instruments. If the spreads on fl oating rate papers rise, then there could be a price loss on these instruments. Secondly in the case of fi xed rate instruments that have been swapped for fl oating rates, any adverse movement in the fi xed rate yields vis-à-vis swap rates could result in losses. However, fl oating rate debt instruments which have periodical interest rate reset, carry a lower interest rate risk as compared to fi xed rate debt instruments. In a falling interest rate scenario the returns on fl oating rate debt instruments may not be better than those on fi xed rate debt instruments.

� Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuation yield-to-maturity (YTM). The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity risk is today characteristic of the Indian fi xed income market.

� Credit Risk: Credit risk or default risk refers to the risk that an issuer of a fi xed income security may default (i.e. will be unable to make timely principal and interest payments on the security). Because of this risk, corporate debentures are sold at a yield above those offered on Government Securities, which are sovereign obligations. Normally, the value of a fi xed income security will fl uctuate depending upon the changes in the perceived level of credit risk as well as any actual event of default. The greater the credit risk, the greater the yield required for someone to be compensated for the increased risk.

� Reinvestment Risk: This risk refers to the interest rate levels at which cash fl ows received from the securities in the Scheme(s) are reinvested. The additional income from reinvestment is the “interest on interest” component. The risk is that the rate at which interim cash fl ows can be reinvested may be lower than that originally assumed.

� Duration Risk: Duration is a risk measure used to measure the bond / security price changes to potential changes in interest rates. Duration of portfolio x the expected changes in rates = the expected value change in the portfolio. Duration is more scientifi c measure of risk compared to average maturity of the portfolio. The higher the duration of the portfolio, the greater the changes in value (i.e. higher risk) to movement in interest rates. Modifi ed duration is the duration of a bond / security given its current yield to maturity, put/ call feature, and an expected level of future interest rates.

� Different types of securities in which the Scheme(s) would invest as given in the Combined SID carry different levels and types of risk. Accordingly the Scheme’s risk may increase or decrease depending upon its investment pattern. E.g. corporate bonds carry a higher amount of risk than Government Securities. Further even among corporate bonds, bonds which are AAA rated are comparatively less risky than bonds which are AA rated.

� Prepayment Risk: The risk associated with the early unscheduled return of principal on a fi xed-income security. The early unscheduled return of principal may result in reinvestment risk.

� Risk of investments in unrated instruments: Investments in the unrated instruments shall be subject liquidity risk, credit risk, market risk, interest rate risk, reinvestment risk etc. Also, as the unrated instruments are not being rated by the Credit Rating Agencies, there is no external credit risk assessment available for such instruments, hence, the investor will be exposed to risk associated with investments in un-rated instruments.

Risk factor associated with legal, tax and regulatory risk

The Schemes could be exposed to changes in legal, tax and regulatory regime which may adversely affect it and / or the investors. Such changes could also have retrospective effect and could lead to additional taxation imposed on the Schemes which was not contemplated either when investments were made, valued or disposed off.

Risk factors associated with investing in Fixed

Income Securities

Subject to the stated investment objective, the Scheme(s) propose to invest in debt and related instruments and the risk factors pertinent to the same are : � Price-Risk or Interest Rate Risk: As with all debt securities,

changes in interest rates may affect the NAV of the Scheme(s) as the prices of securities increase as interest rates decline and decrease as interest rates rise. Prices of long-term securities generally fl uctuate more in response to interest rate changes than do short-term securities. Indian debt markets can be volatile leading to the possibility of price movements up or down in fi xed income securities and thereby to possible movements in the NAV.

� In the case of fl oating rate instruments, an additional risk could be due to the change in the spreads of fl oating rate instruments. If the spreads on fl oating rate papers rise, then there could be a price loss on these instruments. Secondly in the case of fi xed rate instruments that have been swapped for fl oating rates, any adverse movement in the fi xed rate yields vis-à-vis swap rates could result in losses. However, fl oating rate debt instruments which have periodical interest rate reset, carry a lower interest rate risk as compared to fi xed rate debt instruments. In a falling interest rate scenario the returns on fl oating rate debt instruments may not be better than those on fi xed rate debt instruments.

� Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuation yield-to-maturity (YTM). The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity risk is today characteristic of the Indian fi xed income market. HSBC monitor liquidity risk on an ongoing basis from both assets and liability side. The stress testing of the liquid and money market funds, as per SEBI guidelines is carried out on monthly basis and also for other funds on an ongoing basis.

� Credit Risk: Credit risk or default risk refers to the risk that an issuer of a fi xed income security may default (i.e. will be unable to make timely principal and interest payments on the security). Because of this risk, corporate debentures are sold at a yield above those offered on Government Securities, which are sovereign obligations. Normally, the value of a fi xed income security will fl uctuate depending upon the changes in the perceived level of credit risk as well as any actual event of default. The greater the credit risk, the greater the yield required for someone to be compensated for the increased risk.

� Reinvestment Risk: This risk refers to the interest rate levels at which cash fl ows received from the securities in the Scheme(s) are reinvested. The additional income from reinvestment is the “interest on interest” component. The risk is that the rate at which interim cash fl ows can be reinvested may be lower than that originally assumed.

� Duration Risk: Duration is a risk measure used to measure the bond / security price changes to potential changes in interest rates. Duration of portfolio x the expected changes in rates = the expected value change in the portfolio. Duration is more


scientifi c measure of risk compared to average maturity of the portfolio. The higher the duration of the portfolio, the greater the changes in value (i.e. higher risk) to movement in interest rates. Modifi ed duration is the duration of a bond / security given its current yield to maturity, put / call feature, and an expected level of future interest rates.

� Benchmark Risk: The fl oating rate segment of the domestic debt market is not very developed. Currently, majority of the issuance of fl oating rate papers is linked to NSE MIBOR. As the fl oating rate segment develops further, more benchmark rates for fl oating papers may be available in future. The fewer number of benchmark rates could result in limited diversifi cation of the benchmark risk.

� Different types of securities in which the Scheme(s) would invest as given in the Combined SID carry different levels and types of risk. Accordingly the Scheme’s risk may increase or decrease depending upon its investment pattern. E.g. corporate bonds carry a higher amount of risk than Government Securities. Further even among corporate bonds, bonds which are AAA rated are comparatively less risky than bonds which are AA rated.

� Prepayment Risk: The risk associated with the early unscheduled return of principal on a fi xed-income security. The early unscheduled return of principal may result in reinvestment risk.

� Short Selling Risk: The risk associated with upward movement in market price of security sold short may result in loss. The losses on short position may be unlimited as there is no upper limit on rise in price of a security.

Risks associated with investing in Foreign Securities

� Foreign Securities: It is the AMC’s belief that investment in foreign securities offers new investment and portfolio diversifi cation opportunities into multi-market and multi-currency products. However, such investments also entail additional risks. Such investment opportunities may be pursued by the AMC provided they are considered appropriate in terms of the overall investment objectives of the Scheme(s). Since the Scheme(s) would invest only partially in foreign securities, there may not be readily available and widely accepted benchmarks to measure performance of the Scheme(s). To manage risks associated with foreign currency and interest rate exposure, the Fund may use derivatives for effi cient portfolio management including hedging and in accordance with conditions as may be stipulated by SEBI / RBI from time to time.

� Offshore investments will be made subject to any / all approvals, conditions thereof as may be stipulated by SEBI / RBI and provided such investments do not result in expenses to the Fund in excess of the ceiling on expenses prescribed by and consistent with costs and expenses attendant to international investing. The Fund may, where necessary, appoint other intermediaries of repute as advisors, custodian / sub-custodians etc. for managing and administering such investments. The appointment of such intermediaries shall be in accordance with the applicable requirements of SEBI and within the permissible ceiling of expenses. The fees and expenses would illustratively include, besides the investment management fees, custody fees and costs, fees of appointed advisors and sub-managers, transaction costs and overseas regulatory costs.

� To the extent that the assets of the Scheme(s) will be invested in foreign securities denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment.

� Changes to the investment objectives or strategies of the underlying scheme(s) into which the Scheme(s) invest or any change in the regulations in the country where such underlying scheme(s) is domiciled may affect the performance of the Scheme(s) which invest into such schemes.

Risks associated with investing in Derivatives

� The Fund / Underlying Schemes may use derivative instruments like stock index futures, option on stocks, stock indices, interest rate swaps, forward rate agreements or other derivative instruments as permitted under the Regulations and guidelines.

� As and when the Scheme(s) trade in the derivatives market, there are risk factors and issues concerning the use of derivatives that investors should understand. Derivative products are specialised instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counter party”) to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices. Thus, derivatives are highly leveraged instruments. Even a small price movement in the underlying security could have a large impact on their value. Also, the market for derivative instruments is nascent in India.

� Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manger to identify such opportunities. Identifi cation and execution of the strategies to be perused by the fund manager involve uncertainty and decision of fund manager(s) may not always be profi table. No assurance can be given that the fund manager(s) will be able to identify or execute such strategies.

� The risks associated with the use of derivatives are different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments.

Risks associated with investing in securitised debt

Securitised Debt: Securitised debt papers carry credit risk of the Obligors and are dependent on the servicing of the PTC / Contributions etc. However these are offset suitably by appropriate pool selection as well as credit enhancements specifi ed by Rating Agencies. In cases where the underlying facilities are linked to benchmark rates, the securitised debt papers may be adversely impacted by adverse movements in benchmark rates. However this risk is mitigated to an extent by appropriate credit enhancement specifi ed by rating agencies. Securitised debt papers also carry the risks of prepayment by the obligors. In case of prepayments of securities debt papers, it may result in reduced actual duration as compared to the expected duration of the paper at the time of purchase, which may adversely impact the portfolio yield. These papers also carry risk associated with the collection agent who is responsible for collection of receivables and depositing them. The Investment team evaluates the risks associated with such investments before making an investment decision.The underlying assets in the case of investment in securitised debt could be mortgages or other assets like credit card receivables, automobile / vehicle / personal / commercial / corporate loans and any other receivables / loans / debt.The risks associated with the underlying assets can be described as under:Credit card receivables are unsecured. Automobile / vehicle loan receivables are usually secured by the underlying automobile / vehicle and sometimes by a guarantor. Mortgages are secured by the underlying property. Personal loans are usually unsecured. Corporate loans could be unsecured or secured by a charge on fi xed assets / receivables of the company or a letter of comfort from the parent company or a guarantee from a bank / fi nancial institution. As a rule of thumb, underlying assets which are secured by a physical asset / guarantor are perceived to be less risky than those which are unsecured. By virtue of this, the risk

HSBC Mutual Fund 23

and therefore the yield in descending order of magnitude would be credit card receivables, personal loans, vehicle / automobile loans, mortgages and corporate loans assuming the same rating.

Risk associated with short selling and securities

lending by schemes / its Underlying schemes

Short Selling Risk: The risk associated with upward movement in market price of security sold short may result in loss. The losses on short position may be unlimited as there is upper limit on rise in price of a security. � Securities Lending: The risks in lending portfolio securities, as

with other extensions of credit, consist of the failure of another party, in this case the approved intermediary, to comply with the terms of agreement entered into between the lender of securities i.e. the Scheme(s) and the approved intermediary. Such failure to comply can result in the possible loss of rights in the collateral put up by the borrower of the securities, the inability of the approved intermediary to return the securities deposited by the lender and the possible loss of any corporate benefi ts accruing to the lender from the securities deposited with the approved intermediary. The Mutual Fund may not be able to sell such lent securities and this can lead to temporary illiquidity.

Risks associated with transaction in Units through

Stock Exchange mechanism

� In respect of transactions in Units of the Scheme(s) routed through the BSE StAR MF platform or any other recognised stock exchange platform as intimated by the AMC, allotment and redemption of Units on any Business Day will depend upon the order processing/settlement by BSE, or such other exchange and their respective clearing corporations on which the Fund has no control. Further, transactions conducted through the stock exchange mechanism shall be governed by the operating guidelines and directives issued by BSE or such other recognised exchange in this regard.

Risk Mitigation Factors for HAPDF, HGCOF and HMS � Market risk: Investment approach supported by comprehensive

research. � Currency risk: Investment Manager of Underlying scheme could

use (there is no obligation) derivatives to hedge currency. � Country risk: Investment universe is carefully selected to include

high quality businesses. � Swing Pricing risk: The NAV of the Underlying scheme is

adjusted to protect the interest of existing investors so that large infl ows and outfl ows from new investors don’t impact existing investors of the Underlying scheme.

� Liquidity risk: Robust process for periodic monitoring of liquidity.

� Legal / Tax / Regulatory risk: This risk is dependent upon a future event and will be clearly communicated to the investor.

� Emerging market risks and risks associated with foreign investments: The Fund will, where necessary, appoint intermediaries of repute as advisors, custodian / sub-custodians etc. for managing and administering foreign investments.

� Sector Concentration Risk (applicable to HMS): Investment across market capitalization spectrum and industries / sectors.

B. REQUIREMENT OF MINIMUM INVESTORS IN

THE SCHEMES / PLANS OF MUTUAL FUNDS

The Scheme / Plan (s) shall have a minimum of 20 investors and no single investor shall account for more than 25% of the corpus of the Scheme / Plan(s). However, if such limit is breached during the NFO of the Scheme, the Fund will endeavour to ensure that within a period of three months or the end of the succeeding calendar quarter from the close of the NFO of the Scheme, whichever is earlier, the Scheme complies with these two conditions. In case the Scheme / Plan(s) does not have a minimum of 20 investors in the stipulated period, the provisions of Regulation 39(2)(c) of the SEBI (MF) Regulations would become applicable automatically without any reference from SEBI and accordingly the Scheme / Plan(s)

shall be wound up and the units would be redeemed at applicable NAV. The two conditions mentioned above shall also be complied within each subsequent calendar quarter thereafter, on an average basis, as specifi ed by SEBI. If there is a breach of the 25% limit by any investor over the quarter, a rebalancing period of one month would be allowed and thereafter the investor who is in breach of the rule shall be given 15 days notice to redeem his exposure over the 25 % limit. Failure on the part of the said investor to redeem his exposure over the 25 % limit within the aforesaid 15 days would lead to automatic redemption by the Mutual Fund on the applicable Net Asset Value on the 15th day of the notice period. The Fund shall adhere to the requirements prescribed by SEBI from time to time in this regard.

C. SPECIAL CONSIDERATIONS

� From time to time and subject to the Regulations, the Sponsor, their affi liates, associates, subsidiaries, the Mutual Fund and the AMC may invest directly or indirectly in the Scheme(s). These entities may acquire a substantial portion of the Scheme(s)’ Units and collectively constitute a major investor in the Scheme(s). Accordingly, redemption of Units held by such entities may have an adverse impact on the Scheme(s) because the timing of such redemption may impact the ability of other Unitholders to redeem their Units.

� As the liquidity of the Scheme(s) investments could, at times, be restricted by trading volumes and settlement periods, the time taken by the Fund for redemption of Units may be signifi cant in the event of an inordinately large number of redemption requests or of a restructuring of the Scheme(s)’ portfolio. In view of this, the Trustees have the right, in their sole discretion to limit redemptions (including suspending redemption) under certain circumstances, as described under the section titled “Right to Limit Redemptions”.

� Redemptions due to change in the fundamental attributes of the Scheme(s) or due to any other reasons may entail tax consequences. The Trustees, the Mutual Fund, the AMC, their directors or their employees shall not be liable for any tax consequences that may arise.

� The Scheme(s) at times may receive large number of redemption requests which may have an adverse impact on the performance of the Scheme(s) and may also affect all the unit holders as the fund manager needs to liquidate securities to meet the redemptions post which the portfolio is likely to be less liquid.

� The tax benefi ts described in this Combined SID are as available under the present taxation laws and are available subject to conditions. The information given is included for general purpose only and is based on advice received by the AMC regarding the law and practice in force in India and the investors should be aware that the relevant fi scal rules or their interpretation may change. As is the case with any investment, there can be no guarantee that the tax position or the proposed tax position prevailing at the time of an investment in the Scheme(s) will endure indefi nitely. In view of the individual nature of tax consequences, each investor is advised to consult his / her own professional tax advisor.

� Neither this Combined SID nor the Units of the Scheme(s) have been registered in any jurisdiction. The distribution of this Combined SID in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this Combined SID are required to inform themselves about, and to observe, any such restrictions.

� Prospective investors should review / study this Combined SID carefully and in its entirety and shall not construe the contents hereof or regard the summaries contained herein as advice relating to legal, taxation, or fi nancial / investment matters and are advised to consult their own professional advisor(s) as to the legal, tax, fi nancial or any other requirements or restrictions relating to the subscription, gifting, acquisition, holding, disposal (sale, switch or redemption or conversion into money) of Units and to the treatment of income (if any), capitalisation, capital gains, any distribution, and other tax consequences relevant to


their subscription, acquisition, holding, capitalisation, disposal (sale, transfer, switch or conversion into money) of Units within their jurisdiction of nationality, residence, incorporation, domicile etc. or under the laws of any jurisdiction to which they or any managed funds to be used to purchase / gift Units are subject, and also to determine possible legal, tax, fi nancial or other consequences of subscribing / gifting, purchasing or holding Units before making an application for Units.

� The Mutual Fund / the AMC have not authorised any person to give any information or make any representations, either oral or written, not stated in this Combined SID in connection with issue of Units under the Scheme(s). Prospective investors are advised not to rely upon any information or representations not incorporated in this Combined SID as the same have not been authorised by the Fund or the AMC. Any subscription, purchase or sale made by any person on the basis of statements or representations which are not contained in this Combined SID or which are inconsistent with the information contained herein shall be solely at the risk of the investor.

� To the best of the knowledge and belief of the Trustees and the AMC, information contained in this Combined SID is in accordance with the SEBI regulations and the facts stated herein are correct and this Combined SID does not omit anything likely to have an impact on the importance of such information.

� In accordance with the SEBI Regulations, an AMC subject to certain conditions, is permitted to undertake activities in the nature of portfolio management services and management and advisory services to pooled assets including offshore funds, insurance funds, pension funds, provident funds, if any of such activities are not in confl ict with the activities of the mutual fund. Subject to these activities being assessed as desirable and economically viable, the AMC may undertake any or all of these activities after satisfying itself that there is no potential confl ict of interest. With regard to the above provision, the AMC confi rms that there is no confl ict of interest between its Mutual Fund and Portfolio Management Services business.

� Compliance under FATCA India has executed an Inter-Governmental Agreement (IGA)

with the U.S. and the Fund intends to take any measures that may be required to ensure compliance under the terms of the IGA and local implementing regulations. In order to comply with its FATCA obligations, the Fund will be required to obtain certain information from its investors so as to ascertain their U.S. tax status. If the investor is a specifi ed U.S. person, U.S. owned non-U.S. entity, non-participating FFI (“NPFFI”) or does not provide the requisite documentation, the Fund may need to report information on these investors to the appropriate tax authority, as far as legally permitted. If an investor or an intermediary through which it holds its interest in the Fund either fails to provide the Fund its agents or authorised representatives with any correct, complete and accurate information that may be required for the Fund to comply with FATCA or is a NPFFI, the investor may be subject to withholding on amounts otherwise distributable to the investor, may be compelled to sell its interest in the Fund or, in certain situations, the investor’s interest in the Fund may be sold involuntarily. The Fund may at its discretion enter into any supplemental agreement without the consent of investors to provide for any measures that the Fund deems appropriate or necessary to comply with FATCA, subject to this being legally permitted under the IGA or the Indian laws and regulations. Other countries are in the process of adopting tax legislation concerning the reporting of information. The Fund also intends to comply with such other similar tax legislation that may apply to the Fund although the exact parameters of such requirements are not yet fully known. FATCA is globally applicable from July 1, 2014 and in order to comply with FATCA obligations, the Fund will, seek additional information from investors while accepting applications, in order to ascertain their U.S. tax status. The Fund will not accept applications which are not accompanied with information / documentation required to establish the U.S. tax status of investors. Investors are therefore requested to ensure that the details provided under Section

“Confi rmation under Foreign Account Tax Compliance Act (FATCA) for determining US person status” of the application form are complete and accurate to avoid rejection of the application (updated forms are available with ISCs or on Fund’s website – www.assetmanagement.hsbc.com/in).

Investors should consult their own tax advisors regarding the FATCA requirements with respect to their own situation. In the event of any confl ict or inconsistency between any of these Terms and Conditions and those in any other service, product, business relationship, account or agreement between investor and HSBC, these terms shall prevail, to the extent permissible by applicable local law. If all or any part of the provisions of these Terms and Conditions become illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair the legality, validity or enforceability of such provision in any other jurisdictions or the remainder of these Terms and Conditions in that jurisdiction. These Terms and Conditions shall continue to apply notwithstanding the death, bankruptcy or incapacity of the investor, the closure of any investor account, the termination of HSBC’s provision of the Services to the investor or the redemption of the investor’s investment in the Fund.

Common Reporting Standards

India has joined the Multilateral Competent Authority Agreement (MCAA) on automatic exchange of fi nancial information in Tax Matters, commonly known as Common Reporting Standards (‘CRS’). All countries which are signatories to the MCAA are obliged to exchange a wide range of fi nancial information after collecting the same from fi nancial institutions in their jurisdiction. In accordance with Income Tax Act read with SEBI Circular nos. CIR/MIRSD/2/2015 dated August 26, 2015 and CIR/MIRSD/3/2015 dated September 10, 2015 regarding implementation of CRS requirements, it shall be mandatory for all new investors to provide details and declaration pertaining to CRS in the application form, failing which the AMC shall have authority to reject the application.

Compliance with Volcker Rule

The Volcker Rule is a part of the U.S. Dodd Frank Act which prohibits U.S. banks from proprietary trading and restricts investment in hedge funds and private equity by commercial banks and their affi liates. HSBC Holdings plc, is a U.S. regulated bank holding company and any entity (company, fund, trust, partnership etc.) located anywhere in the world, that is directly or indirectly controlled by the parent company is subject to the Volcker Rule. The Volcker Rule is effective from July 21, 2015.As part of HSBC’s Volcker Conformance obligations, the Fund is required to implement a Compliance Programme to ensure on-going compliance with the Volcker Rule and the AMC must ensure that no HSBC affi liate (fund or business entity) invests in the Fund unless it has implemented necessary controls to ensure that the ownership limits, in line with the Volcker Rule, can be met. Hence, the Fund may not be able to accept subscriptions from HSBC group entities into the schemes of the Fund, aggregating to more than 4.9% of the voting rights of a scheme or more than 19.9% of the assets under management of any scheme. In the event of the aggregate investment by HSBC group entities crossing the above limits, the Fund will have the discretion to reject any subscription/switch applications received or redeem any excess exposure by the group entities in the Fund, to be in compliance with the Volcker Rule.

Interpretation

For all purposes of this Combined SID, except as otherwise expressly provided or unless the context otherwise requires: � The terms defi ned in this Combined SID include the plural as

well as the singular. � Pronouns having a masculine or feminine gender shall be

deemed to include the other. � All references to “US$” refer to United States Dollars and “Rs.”

or “r” refer to Indian Rupees. A “crore” means “ten million” and a “lakh” means a “hundred thousand”.

� The contents of the Combined SID are applicable to all the Scheme(s) covered under this Combined SID, unless specifi ed otherwise.

HSBC Mutual Fund 25

D. DEFINITIONS

In this Combined SID, the following words and expressions shall have the meaning specifi ed herein, unless the context otherwise requires:

ADRs and GDRs ADRs are negotiable certifi cates issued to represent a specifi ed number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars.GDRs are negotiable certifi cates held in the bank of one country representing a specifi c number of shares of a stock traded on an exchange of another country.

Asset Management Company or AMC or Investment Manager

HSBC Asset Management (India) Private Limited, incorporated under the provisions of the Companies Act, 1956, and approved by SEBI to act as Investment Manager for the Schemes of the Mutual Fund.

Applicable NAV The Net Asset Value applicable for purchases / redemptions / switches etc., based on the Business Day and relevant cut-off times on which the application is accepted at an Investor Service Centre.

Benefi cial Owner Benefi cial owner as defi ned in the Depositories Act 1996 (22 of 1996) means a person whose name is recorded as such with a depository.

Business Day A day other than (1) Saturday and Sunday and / or (2) a day on which The Bombay Stock Exchange Limited and / or National Stock Exchange of India Limited and / or Reserve Bank of India and / or banks in Mumbai are closed and / or (3) a day on which there is no RBI clearing / settlement of securities and / or (4) ) a day on which the sale and / or redemption and / or switches of Units is suspended by the Trustees / AMC and / or (5) a book closure period as may be announced by the Trustees / AMC and / or (6) a day on which normal business cannot be transacted due to storms, fl oods, bandhs, strikes or such other events as the AMC may determine from time to time and / or (7) A day on which the sale and repurchase of the units of the overseas mutual fund, where the Scheme has a substantial investment, is suspended or closed and / or (8) a day on which any other overseas exchanges / overseas banks where the Scheme has a substantial investment are closed (Point nos. 7 and 8 specifi cally applicable to fund of funds scheme)The AMC reserves the right to change the defi nition of Business Day(s).Provided that :1) days when the banks in any location where the AMC’s Investor Service Centres are

located, are closed due to a local holiday, such days will be treated as non Business Days at such centres for the purposes of accepting fresh subscriptions. However, if the Investor Service Centre in such locations is open on such local holidays, then redemption and switch requests will be accepted at those centres, provided it is a Business Day for the Scheme on an overall basis.

2) If the underlying scheme(s) declare any day as a non-Business Day, the AMC will also declare that day as a non-Business Day for the relevant Schemes. However, if this information is received by the AMC from the underlying scheme(s) later in the day and the relevant Schemes have already accepted transactions, such transactions will be processed on the next business day. Notwithstanding the above, the AMC may declare any day as a Business Day / Non Business Day.

Consolidated Account Statement / CAS Consolidated Account Statement is a statement containing details relating to all the transactions across all mutual funds based on common PAN, viz. purchase, redemption, switch, dividend pay-out, dividend reinvestment, Systematic Investment Plan, Systematic Withdrawal Plan, Systematic Transfer Plan and bonus transactions, etc.

Custodian Standard Chartered Bank (SCB), registered under the SEBI (Custodian of Securities) Regulations, 1996, currently acting as Custodian to the Scheme(s) or any other custodian approved by the Trustees.

Call Option Call option is a fi nancial contract between two parties, the buyer and the seller of the option. The call allows the buyer the right (but not the obligation) to buy a fi nancial instrument (the underlying instrument) from the seller of the option at a certain time for a certain price (the strike price). The seller assumes the corresponding obligations.

Combined SID This document issued by the Mutual Fund, offering units of the Scheme (s) of the Mutual Fund, for subscription.

Designated Collection Centre Such centres as may be designated by the AMC for collection of subscriptions and / or redemptions and / or switches in the Scheme(s).

Direct Plan Direct Plan is a plan available for investors who purchase/subscribe units in a scheme directly with the Fund i.e. investments / applications not routed through the Distributor

Depository Depository as defi ned in the Depositories Act, 1996Depository Participant / DP Depository Participant’ means a person registered as such under subsection (1A) of

section 12 of the Securities and Exchange Board of India Act, 1992.Depository Records Depository Records as defi ned in the Depositories Act 1996 (22 of 1996) includes the

records maintained in the form of books or stored in a computer or in such other form as may be determined by the said Act from time to time.


Derivatives A fi nancial instrument, traded on or off an exchange, the price of which is directly dependent upon (i.e., "derived from") the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement (e.g., the movement over time of the Consumer Price Index or freight rates) etc. is known as a derivative. Derivatives involve the trading of rights or obligations based on the underlying product, but do not directly transfer property.

Designated Collection Centre Such centres as may be designated by the AMC for collection of subscriptions and / or redemptions and / or switches in the Scheme.

Distributor Such persons / fi rms / companies / corporates as may be appointed by the AMC to distribute / sell / market the Schemes of the Fund.

Dividend Income distributed by Scheme on the Units, where applicable.Equity related securities Convertible Debentures, Equity Warrants, Convertible Preference Shares, Foreign

Currency Convertible Bonds (FCCBs), Equity Mutual Funds etc. are considered equity related securities.

Foreign Institutional Investor / FII Foreign Institutional Investor, registered with SEBI under Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 as amended from time to time.

Foreign Portfolio Investor / FPI An entity registered with designated depository participant under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014 as amended from time to time.

Floating Rate Instruments Floating rate instruments are debt / money market instruments issued by Central / State Governments, Corporates, PSUs etc. with interest rates that are reset periodically. The periodicity of interest reset could be daily, monthly, annually or any other periodicity that may be mutually agreed between the issuer and the Fund.

Foreign Securities ADRs / GDRs issued by Indian or Foreign companies, Equity of overseas companies listed on recognized stock exchanges overseas, Initial public offer (IPO) and Follow on public offerings (FPO) for listing at recognized stock exchanges overseas, Foreign debt securities in the countries with fully convertible currencies, with rating not below investment grade by accredited / registered credit rating agencies, Money market instruments rated not below investment grade, Repos - only as pure investment avenues, where the counter party is rated not below investment grade; also repos should not however, involve any borrowing of funds by mutual funds, Government securities where the countries are rated not below investment grade, Derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities, Short term deposits with banks overseas where the issuer is rated not below investment grade, Units/securities issued by overseas mutual funds registered with overseas regulators and investing in approved securities or Real Estate Investment Units / securities issued by overseas mutual funds registered with overseas regulators and investing in approved securities or Real Estate Investment Trusts (REITs) listed in recognized stock exchanges overseas or unlisted overseas securities (not exceeding 10% of their net assets) or such other security / instrument as stipulated by SEBI / RBI / other Regulatory Authority from time to time.

Fund or Mutual Fund HSBC Mutual Fund, a trust set up under the provisions of the Indian Trusts Act, 1882 and registered with SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 vide Registration No. MF/046/02/5 dated May 27, 2002.

Fund of Funds / FOF A mutual fund scheme that invests primarily in other schemes of the same mutual fund or any other mutual fund.

HEF HSBC Equity FundHBF HSBC Brazil FundHIOF HSBC India Opportunities FundHMEF HSBC Midcap Equity FundHIEF HSBC Infrastructure Equity FundHMIP HSBC Monthly Income Plan (an open ended Fund. Monthly income is not assured and

is subject to the availability of distributable surplus)HUSBF HSBC Ultra Short Term Bond FundHCF HSBC Cash FundHDYEF HSBC Dividend Yield Equity FundHDF HSBC Dynamic FundHFDF HSBC Flexi Debt FundHEMF HSBC Emerging Markets FundHGIF HSBC Global Investment FundsHAPDF HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund

HSBC Mutual Fund 27

HIF - ST HSBC Income Fund - Short Term PlanHIF - IP HSBC Income Fund - Investment PlanHGCOF HSBC Global Consumer Opportunities Fund – Benefi ting from China’s Growing

Consumption PowerHMS HSBC Managed SolutionsHMS – Growth Managed Solutions India – GrowthHMS – Moderate Managed Solutions India – ModerateHMS – Conservative Managed Solutions India - ConservativeHSCI or Sponsor or Settlor HSBC Securities and Capital Markets (India) Private Limited, a company incorporated

under the provisions of the Companies Act, 1956.HTSF HSBC Tax Saver Equity Fund, including the Options contained herein, the Scheme

launched as an Equity Linked Savings Scheme under Section 80C of the Income Tax Act, 1961 and as per Notifi cations dated 3 November 2005 and 13 December 2005 issued by the Department of Economic Affairs, Ministry of Finance, Government of India or such other scheme as the Central Government may, by notifi cation in the Offi cial Gazette, specify under section 80C of the Income Tax Act, 1961. Investors in the Scheme are entitled to deductions of the amount invested in Units of the Scheme, subject to a maximum of Rs. 1,00,000, under and in terms of Section 80C (2) (xiii) of the Income Tax Act, 1961.

Instruments Commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity upto one year, call or notice money, certifi cate of deposit, usance bills, Collateralized Borrowing and Lending Obligations (CBLOs) and any other like instruments as specifi ed by the Reserve Bank of India from time to time.

Investment Management Agreement The Agreement dated February 7, 2002 entered into between the Trustees of the Mutual Fund and HSBC Asset Management (India) Private Limited as amended from time to time.

Investor Service Centres or ISC Such offi ces as are designated as Investor Service Centres by the AMC from time to time.Load In case of repurchase / switch out of a Unit, the sum of money deducted from the

applicable NAV on the repurchase / switch out (Exit Load) and in the case of sale / switch in of a Unit, a sum of money to be paid by the prospective investor on the sale / switch in of a Unit in addition to the applicable NAV (Entry Load).

Midcap companies Midcap companies are generally those companies whose market capitalization (a) does not exceed the capitalization of the largest constituent and (b) is not less than the market capitalization of the smallest constituent of S&P BSE MID CAP Index

Money Market Instruments Commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity upto one year, call or notice money, certifi cate of deposit, usance bills, Collateralized Borrowing and Lending Obligations (CBLOs) and any other like instruments as specifi ed by the Reserve Bank of India from time to time.

NAV Net Asset Value of the Units of the Scheme(s), Plan(s) (including Option(s) if any, therein) calculated in the manner provided in this Combined SID or as may be prescribed by the Regulations from time to time.

NRI Non-Resident IndianRBI Reserve Bank of India, established under the Reserve Bank of India Act, 1934, as

amended from time to time.Registrar Computer Age Management Services (P) Ltd. (CAMS), registered under the SEBI

(Registrars to an Issue and Share Transfer Agents) Regulations, 1993, currently acting as Registrar to the Scheme(s) or any other registrar appointed by the AMC from time to time.

Repo / Reverse repo Sale / Purchase of Government Securities as may be allowed by RBI from time to time with simultaneous agreement to repurchase / resell them at a later date.

Repurchase / Redemption Repurchase / redemption of Units of the Scheme(s).

Sale / Subscription Sale / subscription of Units of the Scheme(s).Scheme(s) HSBC Equity Fund, HSBC India Opportunities Fund, HSBC Midcap Equity Fund,

HSBC Infrastructure Equity Fund, HSBC Monthly Income Plan, HSBC Income Fund, HSBC Ultra Short Term Bond Fund, HSBC Cash Fund, HSBC Tax Saver Equity Fund, HSBC Dividend Yield Equity Fund, HSBC Dynamic Fund, HSBC Flexi Debt Fund, HSBC Emerging Markets Fund, HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund, HSBC Brazil Fund, HSBC Global Consumer Opportunities Fund – Benefi ting from China’s Growing Consumption Power and HSBC Managed Solutions (including, as the context permits, the Plans / Options / Sub-options)

SEBI Securities and Exchange Board of India established under Securities and Exchange Board of India Act, 1992, as amended from time to time.


SEBI Regulations or Regulations Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time, including by way of circulars or notifi cations issued by SEBI, the Government of India or RBI.

SIP Systematic Investment PlanSEP Systematic Encashment PlanSTP Systematic Transfer PlanStatement of Additional Information / SAI The document issued by HSBC Mutual Fund containing details of HSBC Mutual Fund,

its constitution, and certain tax, legal and general information. SAI is legallya part of the Scheme Information Document.

Switch Sale of a Unit(s) in one Scheme(s) / Plan(s) / Option(s) against purchase of a Unit(s) in another Scheme(s) / Plan(s) / Option(s).

Stock Exchange Platform for Mutual Funds Mutual Fund Service System (MFSS) of NSE and / or BSE Stock Exchange Platform for Allotment and Repurchase’ of Mutual Fund (BSE StAR MF) of BSE. The transactions carried out on the above platform(s) shall be subject to such guidelines and directives as may be issued by the respective stock exchanges and also, SEBI (Mutual Funds) Regulations, 1996 and circulars / guidelines issued thereunder from time to time.

Trustees The Board of Trustees of HSBC Mutual Fund and approved by SEBI to act as the Trustees of the Schemes of the Fund or any other Trustee as may be appointed from time to time by the Sponsor and as approved by SEBI.

Trust Deed The Trust Deed dated 7 February, 2002 made by and between the Sponsor and the Trustees establishing HSBC Mutual Fund, as amended from time to time.

Trust Fund Amounts settled / contributed by the Sponsor towards the corpus of the HSBC Mutual Fund and additions / accretions thereto.

Unit The interest of an investor which consists of one undivided share in the net assets of the Scheme(s).

Unitholder or Investor A holder of Units in the Scheme(s) of HSBC Mutual Fund offered under this Combined SID.

Underlying scheme(s) HSBC GEM Fund (into which HEMF predominantly invests), HGIF Brazil Equity Fund (into which HBF predominantly invests), HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund – HEHDF (into which HAPDF predominantly invests), HGIF China Consumer Opportunities Fund (into which HGCOF invests) and the mutual fund schemes into which HSBC Managed Solutions intends to invest into.

E. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY

Due Diligence Certifi cate

It is confi rmed that:i) The Combined SID forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and

directives issued by SEBI from time to time.ii) All legal requirements connected with the launching of the Scheme (s) as also the guidelines, instructions, etc., issued by the

Government and any other competent authority in this behalf, have been duly complied with.iii) The disclosures made in the Combined SID are true, fair and adequate to enable the investors to make a well informed decision

regarding investment in the proposed Scheme (s).iv) The intermediaries named in the Combined SID and Statement of Additional Information are registered with SEBI and their registration

is valid. For HSBC Asset Management (India) Private Limited (Investment Manager to HSBC Mutual Fund)

Sd/- Nisha Sanjeev

Compliance Offi cerPlace : MumbaiDate : October 10, 2016

HSBC Mutual Fund 29

HSBC EQUITY FUND

A. TYPE OF THE SCHEME

An open-ended diversifi ed equity Scheme

B. INVESTMENT OBJECTIVE

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

C. ASSET ALLOCATION OF THE SCHEME

Under normal circumstances, it is anticipated that the asset allocation of the Scheme will be as follows:

Instruments Indicative Allocation(% of net assets)

Risk Profi le

Minimum MaximumEquities & Equity related securities

65% 100% High

Debt securities & Money Market instruments (including cash & cash equivalents)

0% 35% Low to medium

If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 30% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs issued by Indian Companies and foreign securities in line with SEBI stipulation, it is the intention of the Investment Manager that such investments will not, normally exceed 30% of the assets of the Scheme.

The Scheme shall have derivative exposure as per the SEBI regulations issued from time to time.

The Scheme may review the above pattern of investments based on views on the equity markets and asset liability management needs. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.

Investors may note that securities which provide higher returns, typically display higher volatility. Accordingly, the investment portfolio of the Scheme would refl ect moderate to high volatility in its equity and equity related investments and low to moderate volatility in its debt and money market investments.

D. WHERE WILL THE SCHEME INVEST?

The corpus of the Scheme will be invested primarily in equity and equity related securities. The Scheme may invest its corpus in debt and money market instruments, to manage its liquidity requirements. Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Equity and equity related securities including convertible bonds

and debentures and warrants carrying the right to obtain equity shares.

� ADRs / GDRs issued by the Indian companies, subject to the guidelines issued by the Reserve Bank of India and Securities and Exchange Board of India.

� Derivative Instruments as may be permitted by SEBI / RBI. � Foreign Securities as may be permitted by SEBI / RBI � Securities issued / guaranteed by the Central, State and local

governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills)

� Indian Depository Receipts (IDR) issued by foreign companies, subject to the guidelines issued by the Reserve Bank of India and Securities and Exchange Board of India.

� Debt obligations of domestic government agencies and statutory bodies, which may or may not carry a Central / State Government guarantee

� Corporate debt (of both public and private sector undertakings) � Debt obligations of banks (both public and private sector) and

fi nancial institutions � Money market instruments permitted by SEBI and / or RBI,

having residual maturities of up to 1 year � Certifi cate of Deposits (CDs) � Commercial Paper (CPs) � Bills of Exchange / Promissory Notes � Securitised Debt � CBLO & reverse repos � Floating rate debt instruments � Repurchase and reverse repurchase obligations in securities � The non-convertible part of convertible securities � Any other domestic fi xed income securities � Pass through, Pay through or other Participation Certifi cates

representing interest in a pool of assets including receivables � Any other instruments as may be permitted by RBI / SEBI / such

other Regulatory Authorities from time to timeThe Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through New Fund Offer (NFOs), secondary market operations and private placement, rights offers or negotiated deals.

The Scheme may participate in securities lending as permitted under the Regulations.

HSBC INDIA OPPORTUNITIES FUND


An open-ended fl exi-cap equity Scheme






Risk Profi le


65% 100% High

Debt instruments & Money Market instruments (including Cash & Cash equivalents)


If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 30% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs issued by Indian Companies and foreign

SECTION II - INFORMATION ABOUT THE SCHEMES


securities in line with SEBI stipulation, it is the intention of the Investment Manager that such investments will not, normally exceed 30% of the assets of the Scheme. The Scheme shall have derivative exposure as per the SEBI regulations issued from time to time.The Scheme may review the above pattern of investments based on views on the equity and debt markets and asset liability management needs and the portfolio shall be reviewed and rebalanced on a regular basis. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.Investors may note that securities which provide higher returns typically display higher volatility. Accordingly, the investment portfolio of the Scheme would refl ect moderate to high volatility in its equity and equity related investments and low to moderate volatility in its debt and money market investments.


The corpus of the Scheme will be invested in equity, equity related and various fi xed income securities. The Scheme will actively move its assets between equity and fi xed income securities depending on its view on these markets. The Scheme will endeavour to invest in large cap companies as well as identify mid cap stocks, which have the potential to become blue chip large cap stocks over time. The investment style is to seek aggressive growth by focusing on mid cap companies in addition to investments in large cap stocks.Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Equity and equity related securities including convertible bonds



� Foreign Securities as may be permitted by SEBI / RBI � Derivative Instruments as may be permitted by SEBI / RBI . � Securities issued / guaranteed by the Central, State and local








other Regulatory Authorities from time to time.The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular

no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through New Fund Offers (NFOs), secondary market operations and private placement, rights offers or negotiated deals.


HSBC MIDCAP EQUITY FUND




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.




RiskProfi le

Minimum MaximumEquities & equity related securities of companies whose market capitalization (a) does not exceed the capitalization of the largest constituent and (b) is not less than the market capitalization of the smallest constituent of S&P BSE MID CAP Index

65% 100% High

Other equities & equity related securities

0% 35% High

Debt and money market instruments (including cash and money at call)

0% 35% Low to Medium

Under normal circumstances, the Scheme shall invest at least 65% of the net assets under the Scheme in equity and equity related securities which fall within the defi nition of midcap companies. The Scheme may review the above pattern of investments based on views on the equity and debt markets and asset liability management needs. The portfolio of the Scheme shall be reviewed on half yearly basis against the stated defi nition of Midcap Stock/Companies and necessary rebalancing, if any required, will be carried out within 90 days of the half yearly review. However, at all times the portfolio will adhere to the overall investment objective of the Scheme

Midcap stocks will comprise equity stocks of companies whose market capitalization (a) does not exceed the capitalization of the largest constituent and (b) is not less than the market capitalization of the smallest constituent of S&P BSE MID CAP Index


If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 30% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs issued by Indian Companies and foreign securities in line with SEBI stipulation, it is the intention of the

HSBC Mutual Fund 31

Investment Manager that such investments will not, normally exceed 30% of the assets of the Scheme. Securitized debt, while relatively illiquid compared to other debt investments provides a higher yield pickup. Hence only if the Fund Manager becomes cautious or negative on the Indian equity markets for a reasonably long period of time would he consider investing in such instruments to improve the yield to the fund and investors as opposed to putting the monies in reverse repo and short term money market instruments. No investments shall be made in foreign securitized debt.For investments in ADRs / GDRs, the Fund Manager would consider the premium / discount to the underlying stock and the possibility of the discount narrowing or the premium expanding, liquidity management of the portfolio, secondary and primary offerings of ADRs / GDRs.



The corpus of the Scheme will be primarily invested in midcap equity and equity related securities. The Scheme can also invest in small cap equity and equity related securities and various fi xed income securities. The Scheme can actively move its assets between equity and fi xed income securities depending on its view on these markets.

Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Equity and equity related securities including convertible bonds



� Stock index futures and such other derivative instruments permitted by SEBI / RBI.

� Securities issued / guaranteed by the Central, State and local governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills).






representing interest in a pool of assets including receivables � Any other instruments as may be permitted by SEBI from time

to time.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011 and SEBI circular No. CIR/IMD/DF/23/2012 dated November 15, 2012. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations and private placement, rights offers or negotiated deals.


HSBC INFRASTRUCTURE EQUITY FUND


An open-ended equity Scheme.


To generate long term capital appreciation from an actively managed portfolio of equity and equity related securities by investing predominantly in equity and equity related securities of companies engaged in or expected to benefi t from growth and development of Infrastructure in India.




Risk Profi le

Minimum MaximumEquities & Equity related securities of companies operating in Infrastructure Sector*

65% 100% High

Equity and equity related instruments of other than Infrastructure Sector*

0% 35% High

Debt instruments & Money Market instruments (including Cash & money at call)


* The fund will seek to invest, though not limited to, in the following sectors that are benefi ciaries of the infrastructure growth and economic reforms expected in the country in the coming years viz Banking/Financial Services(Excluding Retail banks, being largely retail lending institutions); Capital Goods; Energy; Materials; Transportation; Utilities; Port & Logistics; Cement & Construction; Infrastructure Asset owners and Turnkey or services providers in infrastructure or any business benefi ting from infrastructure investment.

The Scheme may review the above pattern of investments based on views on the equity and debt markets and asset liability management needs and the portfolio shall be reviewed and rebalanced on a regular basis. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.


If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 30% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs issued by Indian Companies and foreign securities in line with SEBI stipulation, it is the intention


of the Investment Manager that such investments will not, normally exceed 30% of the assets of the Scheme.For investments in ADRs / GDRs, the Fund Manager would consider the premium / discount to the underlying stock and the possibility of the discount narrowing or the premium expanding, liquidity management of the portfolio, secondary and primary offerings of ADRs / GDRs.Securitized debt, while relatively illiquid compared to other debt investments provides a higher yield pickup. Hence only if the Fund Manager becomes cautious or negative on the Indian equity markets for a reasonably long period of time would he consider investing in such instruments to improve the yield to the fund and investors as opposed to putting the monies in reverse repo and short term money market instruments. No investments shall be made in foreign securitized debt.The Scheme shall have derivative exposure as per the SEBI regulations issued from time to time.


The corpus of the Scheme will be primarily invested in stocks of those sectors identifi ed by the Fund Manager as playing a pivotal role in India’s economic development. These could include consumption, infrastructure, outsourcing and global competitiveness. The fund will attempt to take a medium term view when investing in such opportunities and will endeavour to run a more concentrated portfolio on a limited number of such opportunities. The Scheme can actively move its assets between equity and fi xed income securities depending on its view on these markets.Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Equity and equity related securities including convertible bonds



� Foreign securities as may be permitted by SEBI / RBI. � Stock index futures and such other derivative instruments

permitted by SEBI / RBI. � Securities issued / guaranteed by the Central, State and local






having residual maturities of up to 1 year � Certifi cate of Deposits (CDs) � Commercial Paper (CPs) � Bills of Exchange / Promissory Notes � Securitised Debt � CBLO & reverse repos � Floating Rate Instruments � Repurchase and reverse repurchase obligations in securities � The non-convertible part of convertible securities � Any other domestic fi xed income securities � Pass through, Pay through or other Participation Certifi cates


other Regulatory Authorities from time to time.The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular

no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations and private placement, rights offers or negotiated deals.The Scheme may participate in securities lending as permitted under the Regulations.Note: HSBC Progressive Themes Fund has been repositioned as HSBC Infrastructure Equity Fund with effect from October 14, 2015.

HSBC TAX SAVER EQUITY FUND


An open-ended Equity Linked Savings SchemeThe Scheme was launched as an Equity Linked Savings Scheme as per the Notifi cations dated 3 November 2005 and 13 December 2005 issued by the Department of Economic Affairs, Ministry of Finance Government of India or such other scheme as the Central Government may, by notifi cation in the Offi cial Gazette, specify under section 80C of the Income Tax Act, 1961. Investors in the Scheme are entitled to deductions of the amount invested in Units of the Scheme, subject to a maximum of Rs. 1,00,000, under and in terms of Section 80C (2) (xiii) of the Income Tax Act, 1961.


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




Risk Profi le


80% 100% High

Debt, Money Market instruments and Cash


The Scheme may review the above pattern of investments based on views on the equity and debt markets and asset liability management needs and the portfolio shall be reviewed and rebalanced on a regular basis. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.Investors may note that securities which provide higher returns, typically display higher volatility. Accordingly, the investment portfolio of the Scheme would refl ect moderate to high volatility in its equity and equity related investments and low to moderate volatility in its debt and money market investments.If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 20% of the corpus of the Scheme and if the Scheme decides to invest in ADRs/GDRs issued by Indian Companies, it is the intention of the Investment Manager that such investments will not, normally exceed 20% of the assets of the Scheme.For investments in ADRs / GDRs, the Fund Manager would consider the premium / discount to the underlying stock and the possibility of the discount narrowing or the premium expanding, liquidity management of the portfolio, secondary and primary offerings of ADRs / GDRs.If the Scheme decides to invest in foreign securities, it is the intention of the Investment Manager that such investments will not normally exceed 20% of the corpus of the Scheme.

HSBC Mutual Fund 33

The exposure to derivative instruments shall be as per the SEBI and applicable Guidelines issued from time to time.


i) The corpus of the Scheme will be invested primarily in equity shares and in equity related securities including, but not limited to, Cumulative Convertible Preference Shares, Fully Convertible Debentures and Bonds of corporates etc. Investments may also be made in partly convertible issue of Debentures and Bonds including those issued on rights basis subject to the condition that, as far as possible, the non-convertible portion of debentures so acquired or subscribed will be disinvested within 12 months.

ii) The Scheme shall invest at least 80% of the net assets under the Scheme in equity and equity related securities. The Scheme shall strive to invest their funds in the manner stated above within a period of six months from the date of closure of the plan in every year. In exceptional circumstances, this requirement may be dispensed with by the Scheme, in order to protect the interests of the unitholders.

iii) Pending investment of the funds in the above manner, the funds may be invested in short-term money market instruments and other liquid instruments or both. The Scheme after 3 years from the date of allotment of Units could hold investments in short term money market instruments or other liquid instruments or both only up to 20% of its net assets.

iv) The Scheme may invest in any other instruments as may be permitted by RBI / SEBI / such other regulatory authorities from time to time.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The AMC may, from time to time, at its absolute discretion, alter, modify or delete any of the above restrictions on investments subject to, however, such modifi cations, changes, alterations, deletions being in conformity with the Regulations and the guidelines governing the Equity Linked Savings Scheme, from time to time.

The Scheme will actively move its assets between equity and debt securities depending on its view on these markets.


HSBC DIVIDEND YIELD EQUITY FUND


An open ended equity Scheme.






Risk Profi le

Minimum MaximumDividend yield focused equity and equity related instruments

65% 100% High

Other equity or equity related instruments

0% 35% High

Debt and money market Instruments


“Dividend Yield” means Dividend Yield greater than the Dividend

Yield of the Nifty last released / published by NSE. Dividend yield for the scheme will be calculated as under -

Dividend Yield = Annual Dividend (latest available) / Current Stock Price.

If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 35% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs issued by Indian Companies, it is the intention of the Investment Manager that such investments will not, normally exceed 50% of the assets of the Scheme.


For investments in ADRs / GDRs, the Fund Manager would consider the premium / discount to the underlying stock and the possibility of the discount narrowing or the premium expanding, liquidity management of the portfolio, secondary and primary offerings of ADRs / GDRs.

The exposure to derivative instruments shall be as per the SEBI regulations issued from time to time.The Scheme may review the above pattern of investments based on views on the equity and debt markets and asset liability management needs and the portfolio shall be reviewed and rebalanced on a regular basis. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.


The corpus of the Scheme will be primarily invested in equity and equity related instruments. The Scheme can also invest in various fi xed income securities. The Scheme can actively move its assets between equity and fi xed income securities depending on its view on these markets. The assets that fund can invest in : � Equity and equity related instruments (both domestic and

foreign) including convertible bonds and debentures and warrants carrying the right to obtain equity shares.


� Units issued by Mutual Funds / Exchange Traded Funds (both domestic and foreign).

� Derivative instruments permitted by SEBI / RBI. � Indian Depository Receipts (IDR) issued by foreign companies,

subject to the guidelines issued by the Reserve Bank of India and Securities and Exchange Board of India.


� Debt obligations of domestic government agencies and statutory bodies, which may or may not carry a Central / State Government guarantee.

� Corporate debt (of both public and private sector undertakings). � Debt obligations of banks (both public and private sector) and

fi nancial institutions. � Money market instruments. � Certifi cate of Deposits (CDs). � Commercial Papers (CPs). � Bills of Exchange / Promissory Notes. � Securitised Debt. � CBLO & reverse repos. � Floating rate debt instruments. � Repurchase and reverse repurchase obligations in securities. � The non-convertible part of convertible securities.


� Any other domestic fi xed income securities. � Pass through, Pay through or other Participation Certifi cates

representing interest in a pool of assets including receivables. � Any other instruments as may be permitted by SEBI from time

to time.The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations and private placement, rights offers or negotiated deals.


Note: HSBC Unique Opportunities Fund has been repositioned as HSBC Dividend Yield Equity Fund with effect from July 18, 2014.

HSBC DYNAMIC FUND


An open-ended Scheme.


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.




Risk Profi le

Minimum MaximumEquity and equity related instruments

0% 100% High

Debt and money market instruments


If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 30% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs and foreign securities in line with SEBI stipulation, it is the intention of the Investment Manager that such investments will not, normally exceed 50% of the assets of the Scheme. No investments shall be made in foreign securitised debt.

Investors may note that securities that provide higher returns typically display higher volatility. Accordingly, the investment portfolio of the Scheme would refl ect moderate to high volatility in its equity and equity related investments and low to moderate volatility in its debt and money market investments.


The net notional exposure to derivative in HDF shall not be more than 75% of the net assets. Investments in derivatives would be in accordance with the SEBI Regulations.


The corpus of the Scheme will be invested in equity and equity related securities and debt securities including money market

instruments. The Scheme can actively move its assets between equity and fi xed income securities depending on its view on these markets. The assets that the fund can invest in are : � Equity and equity related securities (both domestic and foreign)

including convertible bonds and debentures and warrants carrying the right to obtain equity shares.

� ADRs / GDRs, subject to the guidelines issued by the SEBI / RBI. � Units issued by Mutual Funds / Exchange Traded Funds (both

domestic and foreign). � Derivative instruments permitted by SEBI / RBI. � Securities issued / guaranteed by the Central, State and local

governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills).



� Corporate debt (of both public and private sector undertakings). � Debt obligations of banks (both public and private sector) and

fi nancial institutions. � Money market instruments � Certifi cate of Deposits (CDs). � Commercial Papers (CPs). � Bills of Exchange / Promissory Notes. � Securitised Debt. � Floating rate debt instruments. � Repurchase and reverse repurchase obligations in securities. � The non-convertible part of convertible securities. � Any other domestic fi xed income instrument. � Pass through, Pay through or other Participation Certifi cates

representing interest in a pool of assets including receivables. � Any other instruments as may be permitted by RBI / SEBI / such

other Regulatory Authorities from time to time.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations and private placement, rights offers or negotiated deals.

The Scheme may participate in stock lending as permitted under the Regulations.

HSBC MONTHLY INCOME PLAN


An open ended fund. Monthly income is not assured and is subject to the availability of distributable surplus.


To seek generation of 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.



HSBC Mutual Fund 35


Risk Profi le

Minimum MaximumDebt Instruments and Money Market Instruments (including cash, money at call and reverse repos)


Equities and Equity related instruments

0% 25% Medium to High

If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 50% of the corpus of the Scheme and if the Scheme decides to invest in ADRs / GDRs issued by Indian Companies and foreign securities in line with SEBI stipulation, it is the intention of the Investment Manager that such investments will not, normally exceed 25% of the assets of the Scheme.


It is expected that the modifi ed duration of the portion of the portfolio invested in debt and money market instrument will be in the range of 6 months - 8 years. However, this can undergo a change in case the market conditions warrant and according to the fund manager’s view. The Scheme may review the above pattern of investments based on views on the debt and equity markets and asset liability management needs and the portfolio shall be reviewed and rebalanced on a regular basis. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.


The corpus of the Scheme will be invested in various debt and money market instruments. The Scheme may also invest in equity and equity related instruments. The Scheme will actively move its assets between equity and fi xed income securities depending on its view on these markets.

Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Securities issued / guaranteed by the Central, State and local





having residual maturities of up to 1 year � ADRs / GDRs issued by Indian Companies. � Indian Depository Receipts (IDR) issued by foreign companies,

subject to the guidelines issued by the Reserve Bank of India and Securities and Exchange Board of India.

� Foreign Securities as may be permitted by SEBI / RBI � Certifi cate of Deposits (CDs) � Commercial Paper (CPs) � Bills of Exchange / Promissory Notes � Securitised Debt � CBLO & reverse repos � Floating rate debt instruments � Repurchase and reverse repurchase obligations in securities � The non-convertible part of convertible securities � Any other domestic fi xed income securities

� Equity and equity related securities including convertible bonds and debentures and warrants carrying the right to obtain equity shares.

� Derivatives Instruments as may be permitted by SEBI / RBI. � Pass through, Pay through or other Participation Certifi cates


other Regulatory Authorities from time to time.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through New Fund Offers (NFOs), secondary market operations and private placement, rights offers or negotiated deals.


HSBC INCOME FUND




To provide a 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.


Short Term Plan (ST)

Under normal circumstances, it is anticipated that the asset allocation of the Plan will be as follows:


Risk Profi le

Minimum MaximumDebt and Money Market Instruments with duration of upto 3 years


Debt Instruments with duration of greater than 3 years


If the Plan decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 50% of the corpus of the Plan and if the Plan decides to invest in foreign securities, it is the intention of the Investment Manager that such investments will not, normally exceed 25% of the assets of the Plan.

The Plan shall under normal circumstances not have exposure of more than 50% of its net assets in derivative instruments. Investments in derivatives would be in accordance with the SEBI Regulations.

The Plan will endeavour to invest in shorter duration instruments in line with the investment objective. Investments will be in money market instruments and debt instruments depending on prevailing interest rates and a view of the market. The portfolio duration will undergo a change according to the expected movement in interest rates. Liquidity conditions and other macro-economic factors affecting interest rates shall be taken into account for varying the portfolio duration. Under normal circumstances, if the interest rates move down, the duration of the portfolio shall be increased and vice versa.


It is expected that the modifi ed duration for the Short Term Plan could range between 1-3 years depending on interest rate views. However, this can undergo a change in case the market conditions warrant and according to the fund manager’s view.The Plan may review the above pattern of investments based on views on interest rates and asset liability management needs. However, at all times the portfolio will adhere to the overall investment objectives of the Scheme.The Plan may participate in securities lending as permitted under the Regulations.

Investment Plan (IP)

Under normal circumstances, it is anticipated that the asset allocation of the Plan will be as follows:


Risk Profi le

Minimum MaximumDebt Instruments with residual maturity / average maturity greater than 182 days


Money Market and debt instruments (including cash, money at call) with residual maturity / average maturity less than 183 days and fl oating rate instruments where the reset tenor is one year or less


If the Plan decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not, normally exceed 50% of the corpus of the Plan and if the Plan decides to invest in foreign debt securities, it is the intention of the Investment Manager that such investments will not, normally exceed 25% of the assets of the Plan.

The Plan shall under normal circumstances not have exposure of more than 50% of its net assets in derivative instruments. Investments in derivatives would be in accordance with the SEBI Regulations.

The portfolio duration will undergo a change according to the expected movement in interest rates. Liquidity conditions and other macro-economic factors affecting interest rates shall be taken into account for varying the portfolio duration. Under normal circumstances, if the interest rates move down, the duration of the portfolio shall be increased and vice versa. It is expected that the modifi ed duration for the Investment Plan will be in a range of 6 months - 8 years depending on the interest rate view. However, this can undergo a change in case the market conditions warrant and according to the fund manager’s view.

The Plan may review the above pattern of investments based on views on interest rates and asset liability management needs. However, at all times the portfolio will adhere to the overall investment objectives of the Scheme.

The Plan may participate in securities lending as permitted under the Regulations.


The corpus of the Scheme will be invested primarily in a range of debt and money market instruments.The Short Term Plan will invest predominantly in debt and money market instruments where interest rate risk is low. The Investment Plan aims to provide investors with income, with appropriate liquidity, and therefore will invest in a mix of debt and money market instruments, over varying maturities.Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities:

� Securities issued / guaranteed by the Central, State and local governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills)..



fi nancial institutions. � Money market instruments permitted by SEBI and / or RBI, having

residual maturities of up to 1 year. � Certifi cate of Deposits (CDs). � Commercial Paper (CPs). � Bills of Exchange / Promissory Notes. � Securitised Debt. � CBLO & reverse repos. � Repurchase and reverse repurchase obligations in securities. � Derivatives. � The non-convertible part of convertible securities. � Any other domestic fi xed income securities. � Foreign Securities as may be permitted by SEBI / RBI. � Investments in overseas mutual funds or unit trusts which invest

in the permitted foreign debt securities or the permitted foreign government securities or which are rated and registered with overseas regulators.

� Any international fi xed income securities, as may be permitted from time to time.

� Pass through, Pay through or other Participation Certificates representing interest in a pool of assets including receivables.

� Any other instruments as may be permitted by RBI / SEBI / such other Regulatory Authorities from time to time.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through New Fund Offers (NFOs), secondary market operations and private placement, rights offers or negotiated deals.

HSBC ULTRA SHORT TERM BOND FUND


An open ended debt Scheme


The investment objective is to provide liquidity and reasonable returns by investing primarily in a mix of short term debt and money market instruments.




Risk Profi le

Minimum MaximumMoney Market & Debt instruments with maturity / average maturity / interest rate reset not greater that 1 year

70% 100% Low

Debt instruments with maturity greater than 1 year


HSBC Mutual Fund 37

If the Scheme decides to invest in foreign securities, it is the intention of the Investment Manager that such investments will not, normally exceed 30% of the assets of the Scheme. However, the AMC with a view to protecting the interests of the investors, may increase exposure in foreign securities as deemed fi t from time to time.


The portfolio duration will undergo a change according to the expected movement in interest rates. Liquidity conditions and other macro-economic factors affecting interest rates shall be taken into account for varying the portfolio duration. Under normal circumstances, if the interest rates move down, the duration of the portfolio shall be increased and vice versa.

The Scheme may review the above pattern of investments based on views on the debt markets and asset liability management needs and the portfolio shall be reviewed and rebalanced on a regular basis. However, at all times the portfolio will adhere to the overall investment objective of the Scheme.

Securitised debt, while relatively illiquid compared to other debt investments provides a higher yield pickup. Hence only if the Fund Manager becomes cautious or negative on the Indian markets for a reasonably long period of time would he consider investing in such instruments to improve the yield to the fund and investors as opposed to putting the monies in reverse repo and short term money market instruments upto 50% of net assets of the Scheme. No investments shall be made in foreign securitised debt.


The corpus of the Scheme will be invested primarily in a range of highly liquid short-term debt and money market instruments.Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Securities issued / guaranteed by the Central, State and local




development fi nancial institutions � Money market instruments permitted by SEBI and / or RBI, having

residual maturities of up to 1 year � Certifi cate of Deposits (CDs) � Commercial Papers (CPs) � Bills of Exchange / Promissory Notes � Securitised Debt � CBLO & reverse repos � Repurchase and reverse repurchase obligations in securities � Derivatives � The non-convertible part of convertible securities � Any other domestic fi xed income securities � Any foreign debt security with highest rating in countries with

fully convertible currencies � Investments in overseas mutual funds or unit trusts which invest

in the permitted foreign debt securities or the permitted foreign government securities or which are rated and registered with overseas regulators

� Any international fi xed income securities, as may be permitted from time to time

� Pass through, Pay through or other Participation Certificates representing interest in a pool of assets including receivables

� Any other instruments as may be permitted by RBI / SEBI /such

other Regulatory Authorities from time to time.The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations, and private placement, rights offers or negotiated deals.

HSBC CASH FUND


An open-ended liquid Scheme


The investment objective is to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities. However there can be no assurance that the Scheme objective can be realised.




Risk Profi le

Minimum MaximumDebt Instruments with residual maturity / average maturity upto 91 days


Money Market instruments (including cash and money at call) with residual maturity / average maturity upto 91 days


If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 30% of the corpus of the Scheme and if the Scheme decides to invest in foreign debt securities, it is the intention of the Investment Manager that such investments will not, normally exceed 25% of the assets of the Scheme.

The Scheme shall under normal circumstances not have exposure of more than 50% of its net assets in derivative instruments. Investments in derivatives would be in accordance with the SEBI Regulations.

Pursuant to SEBI Circular no. SEBI/IMD/CIR No. 13/ 150975/ 09 dated January 19, 2009, the portfolio of the Scheme will adhere to the following conditions :

(i) The Liquid Schemes / Plans shall make investment in/ purchase debt and money market securities with maturity of upto 91 days only.

(ii) In case of securities with put and call options (daily or otherwise) the residual maturity shall not be greater than 91 days.

Explanation :a) In case of securities where the principal is to be repaid in a single

payout, the maturity of the securities shall mean residual maturity. In case the principal is to be repaid in more than one payout, then the maturity of the securities shall be calculated on the basis of weighted average maturity of security.

b) In case the maturity of the security falls on a non-business day then settlement of securities will take place on the next business day.

c) inter-scheme transfers of securities held in other schemes having maturity of upto 91 days only shall be permitted in the Scheme.

It is expected that the modifi ed duration of instruments for the Scheme will be upto 91 days.


The Scheme may review the above pattern of investments based on views on interest rates and asset liability management needs. However, at all times the portfolio will adhere to the overall investment objectives of the Scheme.The Scheme may participate in securities lending as permitted under the Regulations.


The corpus of the Scheme will be invested primarily in a range of highly liquid short-term debt and money market instruments.Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities: � Securities issued / guaranteed by the Central, State and local





residual maturities of up to 1 year � Certifi cate of Deposits (CDs) � Commercial Paper (CPs) � Bank Fixed Deposits as permitted by SEBI � Bills of Exchange / Promissory Notes � Securitised Debt � CBLO & reverse repos � Repurchase and reverse repurchase obligations in securities � Derivatives � The non-convertible part of convertible securities � Any other domestic fi xed income securities � Any foreign debt security with highest rating in countries with






The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through New Fund Offers (NFOs), secondary market operations, and private placement, rights offers or negotiated deals.

HSBC FLEXI DEBT FUND


An open-ended debt Scheme


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.




Risk Profi le

Minimum MaximumDebt and money market instruments


If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 50% of the corpus of the Scheme and if the Scheme decides to invest in foreign securities in line with SEBI stipulation, it is the intention of the Investment Manager that such investments will not, normally exceed 30% of the assets of the Scheme. No investments shall be made in foreign securitised debt.

The net notional exposure to derivative shall not be more than 75% of the net assets. Investments in derivatives would be in accordance with the SEBI Regulations.


The corpus of the Scheme will be invested in debt and money market instruments where interest rate risk is low to medium. Subject to the Regulations and other prevailing laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following instruments: � Securities issued / guaranteed by the Central, State and local





residual maturities of up to 1 year � Certifi cate of Deposits (CDs) � Commercial Paper (CPs) � Bank Fixed Deposits as permitted by SEBI � Bills of Exchange / Promissory Notes � Securitised Debt � Floating rate instruments � Repurchase and reverse repurchase obligations in securities � Derivative instruments permitted by SEBI / RBI. � The non-convertible part of convertible securities � Any other domestic fi xed income securities � Any foreign debt security with highest rating in countries with






The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular

HSBC Mutual Fund 39

no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations, and private placement, rights offers or negotiated deals. The Scheme may participate in securities lending as permitted under the Regulations.

HSBC EMERGING MARKETS FUND


An open-ended Scheme


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.




Risk Profi le

Minimum MaximumUnits / securities issued by overseas mutual funds or unit trusts of emerging markets*


Domestic Debt, Money Market instruments (including CBLO & reverse repo) and units of domestic mutual funds.


* Currently HSBC GEM Equity Fund is envisaged to be used for investing in the emerging markets however, HEMF could use any other global fund of HSBC Group to invest in emerging markets.If the Scheme decides to invest in securitised debt, it is the intention of the Investment Manager that such investments will not normally exceed 10% of the corpus of the Scheme. HEMF will not invest into an underlying global scheme which invests more than 10% of their net assets in unlisted equity shares or equity related instruments.



The corpus of the Scheme will be primarily invested in equity and equity related securities. The Scheme can also invest in various fi xed income securities. The Scheme can actively move its assets between equity and fi xed income securities depending on its view on these markets. The fund may invest upto 100% of its corpus in overseas securities including in units / securities issued by overseas mutual funds or unit trusts.

The assets that the Scheme can invest in : � Equity and equity related securities including convertible bonds


� Equity of overseas companies listed on recognized stock exchanges overseas

� Foreign Debt Securities in the countries with fully convertible currencies, short term as well as long term debt instruments with

highest rating (foreign currency credit rating) by accredited /registered credit rating agencies, say A-1/AAA by Standard & Poor, P-1/AAA by Moody’s, F1/AAA by Fitch IBCA, etc.

� Government Securities where the countries are AAA rated.

� Units / Securities issued by overseas mutual funds or unit trusts, which invest in the aforesaid securities or are rated as mentioned above and are registered with overseas regulators.

� Overseas Exchange Traded Funds

� Foreign Securities as may be permitted by SEBI / RBI



� Corporate debt (of both public and private sector undertakings).

� Debt obligations of banks (both public and private sector) and fi nancial institutions.

� Money market instruments

� Certifi cate of Deposits (CDs).

� Commercial Papers (CPs).

� Bills of Exchange / Promissory Notes.

� Securitised Debt.

� Floating rate debt instruments.

� Collateralised Lending and Borrowing Obligations (CBLO)

� Repurchase and reverse repurchase obligations in securities.

� The non-convertible part of convertible securities.

� Any other domestic fi xed income securities.

� Pass through, Pay through or other Participation Certificates representing interest in a pool of assets including receivables.

� Any other instruments as may be permitted by SEBI / RBI / other Regulatory Authority from time to time.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity.

The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations and private placement, rights offers or negotiated deals.

The Scheme may participate in stock lending as permitted under the Regulations.

HSBC BRAZIL FUND


An open-ended fund of funds Scheme.


The primary investment objective of the Scheme is to provide long term capital appreciation by investing predominantly in units / shares of 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.

There can be no assurance that the investment objective of the Scheme will be realized.





Risk Profi le

Minimum Maximum

Units / shares of HGIF Brazil Equity Fund


Money Market instruments (including CBLO & reverse repo) and / or units of liquid mutual fund schemes

0% 5% Low to Medium

Investment in units / shares of overseas mutual fund schemes other than HGIF Brazil Equity Fund, will be considered as a change in the fundamental attribute of the Scheme and all applicable provisions under the SEBI (Mutual Funds) Regulations, 1996 read with any amendments thereto, would be complied with, including giving an option to investors for a period of 30 days, to exit at the prevailing NAV of the Scheme, without being charged any exit load.

HBF will not invest in the underlying scheme(s) which invest more than 10% of their net assets in unlisted equity shares or equity related instruments.

HGIF Brazil Equity Fund and / or the other underlying overseas mutual fund schemes where the Scheme will invest shall be compliant with all provisions of SEBI Circular SEBI/IMD/CIR No7/104753/07 dated September 26, 2007.


The Scheme will invest predominantly in units / shares of 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.

Money market instruments (money market instruments include commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity up to one year, call or notice money, certifi cate of deposit, usance bills, and any other like instrument as specifi ed by the Reserve Bank of India from time to time) and / or units of domestic mutual funds.

The Scheme shall not participate in repo in corporate debt securities until it complies with the requirements as stated under SEBI circular no. CIR/IMD/DF/19/2011 dated November 11, 2011. The Scheme may invest in any other instrument as may be permitted by SEBI / RBI/ other Regulatory Authority from time to time.

The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated.

The Scheme may also enter into repurchase and reverse repurchase obligations in all securities held by it as per the guidelines and regulations applicable to such transactions.

Portfolio re-balancing : In the event of the asset allocation falling outside the range as indicated above for short term and defensive considerations, the Fund Manager will endeavour to review and rebalance the same within 30 calendar days.

HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND

YIELD FUND


An Open ended Fund of Funds Scheme.


The primary investment objective of the Scheme is 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. 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.




Risk Profi le

Minimum Maximum

Units issued by HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund


Money Market instruments (including CBLO & reverse repo in government securities) and units of domestic mutual funds

0% 5% Low to Medium

Under normal circumstances, 95-100% of the AUM will be invested into (HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund). The cumulative exposure through units of the Underlying scheme, money market instruments and units of domestic mutual funds shall not exceed 100% of the net assets of the Scheme.

The Scheme will not invest in derivatives, securitised debts or unrated instruments. However, the Underlying scheme may have exposure to these securities and may also undertake short selling and securities lending.

The Underlying scheme shall be compliant with the provisions of SEBI Circular SEBI/IMD/CIR No7/104753/07 dated September 26, 2007 including for investments in derivatives or unlisted instruments.


The corpus of the Scheme will be predominantly invested in the units of 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.

Money market instruments (money market instruments include commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity up to one year, call or notice money, certificate of deposit, , and any other like instrument as specifi ed by the Reserve Bank of India from time to time) and / or units of domestic mutual funds. The Scheme shall not participate in repos in corporate debt securities.

The Scheme may invest in any other instrument as may be permitted by SEBI / RBI / other Regulatory Authority from time to time. The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated. The Scheme may also enter into repurchase and reverse repurchase obligations in government securities and Treasury bills (which qualify for repo transactions as per the SEBI regulations in this regard issued from time to time) held by it.

Portfolio re-balancing :Any changes in the investment pattern will be for short term and defensive considerations and the Fund Manager will rebalance the portfolio within 30 days from date of deviation.

HSBC Mutual Fund 41

HSBC GLOBAL CONSUMER OPPORTUNITIES

FUND – Benefi ting from China’s Growing

Consumption Power


An open-ended Fund of Funds scheme.


The primary investment objective of the Scheme is to provide long term capital appreciation by investing predominantly in units of HSBC Global Investment Funds (HGIF) China Consumer Opportunities Fund. 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.

There can be no assurance that the investment objective of the Scheme will be realized.




Risk Profi le

Minimum Maximum

Units issued by HGIF China Consumer Opportunities Fund


Money Market instruments (including CBLO & reverse repo) and units of domestic mutual funds

0% 5% Low to Medium

Under normal circumstances, 95-100% of the AUM will be invested into HGIF China Consumer Opportunities Fund.

The Scheme will not invest in derivatives, securitised debts or unrated instruments. However, the Underlying scheme may have exposure to derivatives and securitised debt and may also undertake short selling, securities lending.


The Underlying scheme will invest the remaining net assets, if any, largely in money market instruments, for the purpose of liquidity.


The Scheme will invest predominantly in units of HGIF China Consumer Opportunities Fund. 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.

Money market instruments (money market instruments include commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity up to one year, call or notice money, certifi cate of deposit, and any other like instrument as specifi ed by the Reserve Bank of India from time to time) and / or units of domestic mutual funds. The Scheme shall not participate in repos in corporate debt securities.

The Scheme may invest in any other instrument as may be permitted by SEBI / RBI / other Regulatory Authority from time to time. The securities mentioned above could be listed, unlisted, privately placed, secured or unsecured. The Scheme may also enter into repurchase and reverse repurchase obligations in government securities and Treasury bills (which qualify for repo transactions as per the SEBI regulations in this regard issued from time to time) held by it.

PORTFOLIO RE-BALANCING

Any changes in the investment pattern will be for short term and defensive considerations and the Fund Manager will rebalance the portfolio within 30 days from the date of deviation.

Change in Investment Pattern (Applicable to all

Schemes)

Subject to the Regulations, the asset allocation pattern indicated above for the Scheme(s) may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understood that the percentages stated above are only indicative and not absolute and that they can vary substantially depending upon the perception of the Investment Manager, the intention being at all times to seek to protect the interests of the Unitholders, and meet the objective of the Scheme(s). Such changes in the investment pattern will be for short term and defensive considerations.

Provided further and subject to the above, any change in the asset allocation affecting the investment profi le of the Scheme(s) shall be effected in accordance with the provisions of sub regulation (15A) of Regulation 18 of the Regulations, as detailed in this Combined SID.

Securities / Stock Lending by the Mutual Fund

(Applicable to all Schemes)

Subject to the Regulations and the applicable guidelines, the Scheme(s) and the Plan(s) there under may, if the Trustees permit, engage in securities / stock lending. Securities / stock lending means the lending of securities / stocks to another person or entity for a fi xed period of time, at a negotiated compensation. The borrower will return the securities / stock lent on expiry of the stipulated period. Please refer to risks attached with securities lending. Each Scheme, under normal circumstances, shall not have exposure of more than 50% of its net assets in securities / stock lending. The Scheme(s) may also not lend more than 50% of its net assets to any one intermediary to whom securities / stocks will be lent. Securities / Stock Lending could be considered for the purpose of generating additional income to unit holders on the longer term holdings of the Scheme. The AMC shall report to the Trustees on a quarterly basis as to the level of lending in terms of value, volume and the names of the intermediaries and the earnings / losses arising out of the transactions, the value of collateral security offered etc.

Special Considerations

The Scheme(s) may also use various derivative products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders’ interest.

Trading in Derivatives

SEBI has permitted all mutual funds to participate in derivatives trading subject to observance of guidelines issued by it in this behalf. Pursuant to this, mutual funds may use various derivative products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders’ interest.

Accordingly, the Fund may use derivative instruments like stock index futures, options on stocks, stock indices, interest rate swaps, forward rate agreements or such other derivative instruments as may be introduced from time to time as permitted under the Regulations and guidelines.

i) RisksRisk associated with Interest Rate Swaps and Forward Rate Agreements is the movement in interest rates inverse to the position taken. Whereas, risk associated with Index Futures, Stock Futures, Index Options and Stock Options is the movement in market prices inverse to the position taken (along with the time decay in the prices of the Options in case of Index Options and Stock Options).


Investments in derivatives shall adhere to the restrictions as specifi ed by SEBI vide circulars / guidelines issued from time to time.

ii) Scheme specifi c exposure to DerivativesHEF, HIOF, HMEF, HIEF, HMIP, HUSBF, HTSF & HDYEF shall have derivative exposure as per the SEBI Guidelines issued from time to time. In case of HIF and HCF, the Scheme(s) shall under normal circumstances not have exposure of more than 50% of its net assets in derivative instruments. The net notional exposure to derivative in HDF and HFDF shall not be more than 75% of the net assets. These limits will be reviewed by the AMC, from time to time.

iii) The position limits are as under:Position limit for Mutual Fund in index options contracts � The Mutual Fund position limit in all index options contracts on

a particular underlying index shall be Rs. 500 crore or 15% of the total open interest of the market in index options, whichever is higher, per Stock Exchange.

� This limit would be applicable on open positions in all options contracts on a particular underlying index.

Position limit for Mutual Fund in index futures contracts: � The Mutual Fund position limit in all index futures contracts on

a particular underlying index shall be Rs. 500 crore or 15% of the total open interest of the market in index futures, whichever is higher, per Stock Exchange.

� This limit would be applicable on open positions in all futures contracts on a particular underlying index.

Additional position limit for hedging:In addition to the position limits in index options and index futures contracts above, the Mutual Fund may take exposure in equity index derivatives subject to the following limits:

� Short positions in index derivatives (short futures, short calls and long puts) shall not exceed (in notional value) the Mutual Fund’s holding of stocks.

� Long positions in index derivatives (long futures, long calls and short puts) shall not exceed (in notional value) the Mutual Fund’s holding of cash, government securities, T-Bills and similar instruments.

Position limit for Mutual Fund for stock based derivative contractsThe Mutual Fund position limit in a derivative contract on a particular underlying stock, i.e. stock option contracts and stock futures contracts is defi ned in the following manner:

� For stocks having applicable market-wise position limit (MWPL) of Rs. 500 crores or more, the combined futures and options position limit shall be 20% of applicable MWPL or Rs. 300 crores, whichever is lower and within which stock futures position cannot exceed 10% of applicable MWPL or Rs. 150 crores, whichever is lower.

� For stocks having applicable market-wise position limit (MWPL) less than Rs. 500 crores, the combined futures and options position limit would be 20% of applicable MWPL and futures position cannot exceed 20% of applicable MWPL or Rs. 50 crore which ever is lower.

Position limit for each scheme of a Mutual FundThe scheme-wise position limit / disclosure requirements shall be: � For stock option and stock futures contracts, the gross open

position across all derivative contracts on a particular underlying stock of a scheme of a mutual fund shall not exceed the higher of:

1% of the free fl oat market capitalisation (in terms of number of shares) or 5% of the open interest in the derivative contracts on a particular underlying stock (in terms of number of contracts).

� This position limits shall be applicable on the combined position in all derivative contracts on an underlying stock at a Stock Exchange.

For index based contracts, the Mutual Fund shall disclose the total open interest held by its scheme or all schemes put together in a particular underlying index, if such open interest equals to or exceeds 15% of the open interest of all derivative contracts on that underlying index.

As and when SEBI notifi es amended limits in position limits for exchange traded derivative contracts in future, the aforesaid position limits, to the extent relevant, shall be read as if they were substituted with the SEBI amended limits.

The following information provides a basic idea as to the nature of the derivative instruments proposed to be used by the Fund and the benefi ts and risks attached therewith. Please note that the examples have been given for illustration purposes only.

Interest Rate Swaps (IRS) and Forward Rate

Agreements (FRA)

Benefi tsCertain segments of the Bond markets in India are not very liquid. Investors run the risk of illiquidity in such markets. Investing for short-term periods for liquidity purposes has its own risks. Investors can benefi t if the Fund remains in call market for the liquidity and at the same time take advantage of fi xed rate by entering into a swap. It adds certainty to the returns without sacrifi cing liquidity.

IRSAn IRS is an agreement between two parties (counter parties) to exchange, on particular dates in the future, one series of cash fl ows (fi xed interest) for another series of cashfl ows (variable or fl oating interest) in the same currency and on the same principal for an agreed period of time. The exchange of cashfl ows need not occur on the same date. As fl oating rate instruments tend to be relatively less liquid, swapping a fi xed rate instrument into fl oating returns can help in improving the liquidity of the fund.

FRAA FRA is an agreement between two counter parties to pay or to receive the difference between an agreed fi xed rate (the FRA rate) and the interest rate prevailing on a stipulated future date, based on a notional amount, for an agreed period. In short, in a FRA, interest rate is fi xed now for a future period. The special feature of FRAs is that the only payment is the difference between the FRA rate and the reference rate and hence are single settlement contracts. As in the case of IRS, notional amounts are not exchanged.

Basic Structure of a SwapAssume that the Scheme has a Rs. 20 crore fl oating rate investment linked to MIBOR (Mumbai Inter Bank Offered Rate). Hence, the Scheme is currently running an interest rate risk and stands to lose if the interest rate moves down. To hedge this interest rate risk, the Scheme can enter into a 6 month MIBOR swap. Through this swap, the Scheme will receive a fi xed predetermined rate (assume 12%) and pays the “benchmark rate” (MIBOR), which is fi xed by the National Stock Exchange (NSE) or any other agency such as Reuters. This swap would effectively lock-in the rate of 12% for the next 6 months, eliminating the daily interest rate risk. This is usually routed through an intermediary who runs a book and matches deals between various counterparties.

The steps will be as follows : � Assuming the swap is for Rs. 20 crores from June 1, 2001 to

December 1, 2001. The Scheme is a fi xed rate receiver at 12% and the counterparty is a fl oating rate receiver at the overnight rate on a compounded basis (say NSE MIBOR).

� On 1 June, 2001 the Scheme and the counterparty will exchange only a contract of having entered this swap. This documentation would be as per International Securities Dealers Association (ISDA).

HSBC Mutual Fund 43

� On a daily basis, the benchmark rate fi xed by NSE will be tracked.

� On December 1, 2001 the following will be calculated :

� The Scheme is entitled to receive interest on Rs. 20 crores at 12% for 184 days i.e. Rs. 1.21 crores, (this amount is known at the time the swap was concluded) and will pay the compounded benchmark rate.

� The counterparty is entitled to receive daily compounded call rate for 184 days & pay 12% fi xed.

� On December 1, 2001, if the total interest on the daily overnight compounded benchmark rate is higher than Rs. 1.21 crores, the Scheme will pay the difference to the counter party. If the daily compounded benchmark rate is lower, then the counterparty will pay the Scheme the difference.

� Effectively the Scheme earns interest at the rate of 12% p.a. for 6 months without lending money for 6 months fi xed, while the counterparty pays interest @ 12% p.a. for 6 months on Rs. 20 crore, without borrowing for 6 months fi xed.

RisksInterest Rate Swaps and Forward Rate Agreements have its own drawbacks like credit risk, settlement risk and interest rate risks. However, these risks are substantially reduced as the amount involved is interest streams and not principal.

Index FuturesBenefi ts � Investment in stock index futures can give exposure to the index

without directly buying the individual stocks. Appreciation in index stocks can be effectively captured through investment in Stock Index Futures.

� The Fund can sell futures to hedge against market movements effectively without actually selling the stocks it holds.

The stock index futures are instruments designed to give exposure to the equity market indices. The Bombay Stock Exchange and the National Stock Exchange have started trading in index futures of 1, 2 and 3 month maturities. The pricing of an index future is the function of the underlying index and interest rates.

Illustration

Spot Index: 10701 month Nifty Future Price on day 1: 1075Fund buys 100 lotsEach lot has a nominal value equivalent to 200 Units of the underlying index

Situation 1Let us say that on the date of settlement, the future price = closing spot price = 1085Profi ts for the Fund = (1085-1075) x 100 lots x 200 = Rs. 200,000

Situation 2Let us say that on the date of settlement, the future price = Closing spot price = 1070

Loss for the Fund = (1070-1075) x 100 lots x 200 = (Rs. 100,000)The net impact for the Fund will be in terms of the difference between the closing price of the index and cost price (ignoring margins for the sake of simplicity). Thus, it is clear from the example that the profi t or loss for the Fund will be the difference of the closing price (which can be higher or lower than the purchase price) and the purchase price. The risks associated with index futures (based on notional value) are similar to the one with equity investments. Additional risks could be on account of illiquidity and hence mispricing of the future at the time of purchase.

Buying Options

Benefi ts of buying a call option

Buying a call option on a stock or index gives the owner the right, but not the obligation, to buy the underlying stock / index at the designated strike price. Here the downside risks are limited to the premium paid to purchase the option.

Illustration

If the Fund buys a 1 month call option on Hindustan Lever at a strike of Rs. 190, the current market price being say Rs. 191. The Fund will have to pay a premium of say Rs. 15 to buy this call. If the stock price goes below Rs. 190 during the tenure of the call, the Fund avoids the loss it would have incurred had it straightaway bought the stock instead of the call option. The Fund gives up the premium of Rs. 15 that has to be paid in order to protect the Fund from this probable downside. If the stock goes above Rs. 190, it can exercise its right and own Hindustan Lever at a cost price of Rs. 190, thereby participating in the upside of the stock.

Benefi ts of buying a put optionBuying a put option on a stock originally held by the buyer gives him / her the right, but not the obligation, to sell the underlying stock at the designated strike price. Here the downside risks are limited to the premium paid to purchase the option.

Illustration

If the Fund owns Hindustan Lever and also buys a three-month put option on Hindustan Lever at a strike of Rs. 190, the current market price being say Rs. 191. The Fund will have to pay a premium of say Rs. 12 to buy this put.

If the stock price goes below Rs. 190 during the tenure of the put, the Fund can still exercise the put and sell the stock at Rs. 190, avoiding therefore any downside on the stock below Rs. 190. The Fund gives up the fi xed premium of Rs. 12 that has to be paid in order to protect the Fund from this probable downside. If the stock goes above Rs. 190, say to Rs. 220, it will not exercise its option. The Fund will participate in the upside of the stock, since it can now sell the stock at the prevailing market price of Rs. 220.

Writing OptionsBenefi ts of writing an option with underlying stock holding (Covered call writing)Covered call writing is a strategy where a writer (say the Fund) will hold a particular stock, and sell in the market a call option on the stock. Here the buyer of the call option now has the right to buy this stock from the writer (the Fund) at a particular price which is fi xed by the contract (the strike price). The writer receives a premium for selling a call, but if the call option is exercised, he has to sell the underlying stock at the strike price. This is advantageous if the strike price is the level at which the writer wants to exit his holding / book profi ts. The writer effectively gains a fi xed premium in exchange for the probable opportunity loss that comes from giving up any upside if the stock goes up beyond the strike price.

Illustration

Let us take for example Infosys Technologies, where the Fund holds stock, the current market price being Rs. 3600. The Fund Manager holds the view that the stock should be sold when it reaches Rs. 3700. Currently the 1 month 3700 calls can be sold at say Rs. 50. Selling this call gives the call owner the right to buy from the Fund, Infosys at Rs. 3700.Now the Fund by buying / holding the stock and selling the call is effectively agreeing to sell Infosys at Rs. 3700 when it crosses this price. So the Fund is giving up any possible upside beyond Rs. 3700. However, the returns for the Fund are higher than what it would have got if it just held the stock and decided to sell it at Rs. 3700. This is because the Fund by writing the covered call gets an additional Rs. 150 per share of Infosys. In case the price is below Rs. 3700 during the tenure of the call, then it will not be exercised and the Fund will continue to hold the shares. Even in this case the returns are higher than if the Fund had just held the stock waiting to sell it at Rs. 3700.


Benefi ts of writing put options with adequate cash holdingWriting put options with adequate cash holdings is a strategy where the writer (say, the Fund) will have an amount of cash and will sell put options on a stock. This will give the buyer of this put option the right to sell stock to the writer (the Fund) at a pre-designated price (the strike price). This strategy gives the put writer a premium, but if the put is exercised, he has to buy the underlying stock at the designated strike price. In this case the writer will have to accept any downside if the stock goes below the exercise price. The writer effectively gains a fi xed premium in exchange for giving up the opportunity to buy the stock at levels below the strike price. This is advantageous if the strike price is the level at which the writer wants to buy the stock.

Illustration

Let us take for example, that the Fund wants to buy Infosys Technologies at Rs. 3500, the current price being Rs. 3600. Currently the three-month puts can be sold at say Rs. 100. Writing this put gives the put owner the right to sell to the Fund, Infosys at Rs. 3500.Now the Fund by holding cash and selling the put is agreeing to buy Infosys at Rs. 3500 when it goes below this price. The Fund will take on itself any downside if the price goes below Rs. 3500. But the returns for the Fund are higher than what it would have got if it just waited till the price reached this level and bought the stock at Rs. 3500, as per its original view. This is because the Fund by writing the put gets an additional Rs. 100 per share of Infosys. In case the price stays above Rs. 3500 during the tenure of the put, then it will not be exercised and the Fund will continue to hold cash. Even in this case the returns are higher than if the Fund had just held cash waiting to buy Infosys at Rs. 3500.The derivative strategy used could be directional views or arbitrage opportunities available. Identifi cation and execution of the strategies to be pursued by the Fund Manager(s) involve uncertainty and decision of Fund Manager(s) may not always be profi table.

Valuation of Derivative Products

� The traded derivatives shall be valued at market price in conformity with the stipulations of sub clauses (i) to (v) of clause 1 of the Eighth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended from time to time.

� The valuation of untraded derivatives shall be done in accordance with the valuation method for untraded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time.

Guidelines for investments in securitized debt

a) How the risk profile of securitized debt fits into the risk appetite of the Scheme(s)?

Objective of debt portion of the Schemes / Plans is to invest in high quality debt instruments like gilts, corporate bonds and money market instruments which would give accrual as well as capital appreciation over the period. Tenor of investments would depend on interest rate conditions and Fund Manager’s view.

The Schemes / Plans may invest in securitized debt provided there are suitable opportunities available from time to time. Primarily the reasons for making such investments are: � To increase the yield of the portfolio; � Provide access to good quality highly rated debt; � Diversifi cation to multiple asset classes to spread out risk; � Securitized debt can give access to exposures to various asset

backed receivables like mortgage loans, auto loans, commercial vehicle loans etc which may not be directly available.

Hence, investing in good quality rated securitized debt would fi t the risk profi le of the Schemes / Plans, as it can give high yield and capital appreciation. The twin concerns for securitized debt (single loan / asset pool PTCs) would be credit and liquidity risks. For consideration of investment, the securitized debt would be of high rating (at the time of investment) and of maturity within the

risk limits framed for the scheme.

b) Policy relating to originators based on nature of originator, track record, NPA’s, losses in earlier securitized debt, etc

Credit quality of an originator will be evaluated on number of parameters. The focus of the analysis encompasses signifi cant credit events in terms of default risk as well as variation in credit quality over time. The parameters evaluated would include (but not be limited to): � Track record of historical Pass Through Certifi cates issued

by Originator; � Willingness to pay, through credit enhancement facilities and

ability to pay; � Business Risk Assessment including Economic Setting as well

as Industry Analysis in terms of the competitive dynamics of the market in which the company / issuer operates;

� Originator reputation and quality of management; � Detailed Financial Analysis of the issuer and rating of issuer;

and

c) Risk mitigation strategies for investments with each kind of originator

Apart from analysis of asset pool characteristics, an analysis on the strength of the originator would be carried out. This analysis would be in accordance with the internal credit approval process which follows a multi-pronged approach on analysis and approval of any credit. A combination of qualitative and quantitative factors would be considered for assessment and a credit score would be arrived on the same basis. Additionally for securitized debt, factors such as size, reach, loan pool concentrations, historical collection effi ciency metrics and track record would also be considered. For investment by the Scheme, internal risk limits on allowable exposure to asset backed securities would be put. Additionally, there would be exposure limits based on asset pools (such as housing, automobile, two wheelers, personal loans) which would negate concentration risk and overexposure of a particular asset class.

d) The level of diversifi cation with respect to the underlying assets, and risk mitigation measures for less diversified investments

For each originator’s pass through certifi cates under consideration, risk measures such as asset type, pool structure, historical default rates, credit enhancements, average loan ticket size, geographical concentrations, collection effi ciencies, pool seasoning and rating is considered. Analysis would focus on three areas:

i. Analysis of underlying collateral: � Fixed / fl oating rate pricing, special pricing structures such

as teaser rates, if any, provisos for lender to change rates; � Geographic / demographic diversifi cation of assets; � Portfolio Seasoning; � Specifi c Default - Recovery drivers for each asset class.

ii. Analysis of ABS structure: � Senior / subordinate tranches structure; � Over collateralization; � Cash Collateral and operation of the same in terms of

separate account under control of SPV trustees; � Guarantee or Corporate Undertaking.

iii. Analysis of entities involved; � Servicer; � Originator; � Guarantor.

e) Minimum retention period of the debt by originator prior to securitization

Though no minimum retention period is specifi ed as such, pool seasoning, credit enhancements like cash collateral etc. and extant interest of the originator would be analyzed so that originator bears

HSBC Mutual Fund 45

adequate extent of pool risk and for estimating pool quality.f) Minimum retention percentage by originator of debts to be

securitized No minimum retention percentage is specified. Retention

percentages which form as support tranche held by the originator is given importance while analyzing the strength of the security and securitized structure.

g) The mechanism to tackle confl ict of interest when the mutual fund invests in securitized debt of an originator and the originator in turn makes investments in that particular scheme of the fund

As and when such investments are made, mechanism would be put in place cause review of transactions and take necessary steps to avoid confl ict, or to rectify it.

h) In general the resources and mechanism of individual risk assessment with the AMC for monitoring investment in securitized debt

The AMC has an internal credit risk assessment team which assesses credit risk of issuers. There is a credit committee, which assesses credits and has members of risk team as well. The risk team monitors the credit exposures of approved issuers. The AMC/ Trustee may review and modify the above provisions from time to time as deemed fi t subject to regulations.

HSBC MANAGED SOLUTIONS


An Open ended Fund of Funds Scheme.


Managed Solutions India – GrowthThe objective of the Plan is 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 in a basket of debt, equity, gold ETFs and other ETFs, units of offshore mutual funds and money market instruments.

Managed Solutions India – ConservativeThe objective of the Plan is to provide long term total return aimed at providing income through an active asset allocation with diversifi cation commensurate with the risk profi le of investments by investing in a basket of debt, equity, gold ETFs and other ETFs and money market instruments.

Managed Solutions India – ModerateThe objective of the Plan is to provide long term total return aimed at capital appreciation and providing income through an active asset allocation with diversifi cation commensurate with the risk profi le of investments by investing in a basket of debt, equity, gold ETFs and other ETFs, units of offshore mutual funds and money market instruments.

The investments into Underlying schemes by each Plan under the Scheme would be based on the investment objective, asset allocation pattern and risk profi le of such Plans under the Scheme.

However, there is no assurance that the investment objective of the Plans under the Scheme will be achieved.


Under normal circumstances, the asset allocation of the Plans under the Scheme will be as follows:

Plan Type of Security Indicative Allocation(% of net assets)

Risk Profi le

Minimum Maximum

Managed Solutions India – Growth

Equity Schemes (Units of Domestic Equity and Offshore Equity)

55% 90% High

Debt Schemes 10% 30% Low to Medium

Gold and Other Exchange Traded Funds


Money Market Schemes / Liquid Funds (including upto 5% in Money Market Instruments)


Managed Solutions India – Moderate

Equity Schemes (Units of Domestic Equity and Offshore Equity)

30% 70% High






Managed Solutions India – Conservative

Equity Schemes (Units of Domestic Equity)

0% 15% High






The investment by each Plan under the Scheme into the Underlying scheme(s) will not exceed 20% of the net assets of the Underlying scheme(s).

The Scheme will not invest in derivatives, securitised debts or unrated instruments. However, the Underlying scheme may have exposure to these securities and may also undertake short selling, securities lending. The Scheme and the Underlying scheme will not invest in credit default swaps.



Exposure to Indian equities by the overseas Underlying scheme will be limited to 15% of the Underlying scheme’s net assets. If this limit is breached then a period of 3 months will be allowed (during which the breach continues) for the Underlying scheme to re-balance its exposure to Indian equities. In case the breach continues beyond the re-balancing period of 3 months then the Scheme will stop accepting fresh subscriptions for the next 9 months. In case this breach continues beyond the period of 12 months, since the initial breach, then the Scheme will be wound up after informing the Unit holders and providing them with a 30 day period to exit the Scheme at prevailing NAV without any exit load.

Change in Investment Pattern and Portfolio re-balancing

Subject to the Regulations, the asset allocation pattern indicated above for the Plans under the Scheme may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors.

It must be clearly understood that the percentages stated above are only indicative and not absolute and that they can vary substantially depending upon the perception of the Investment Manager, the intention being at all times to seek to protect the interests of the Unit holders, and meet the objective of the Plans under the Scheme. Such changes in the investment pattern will be for short term and defensive considerations and the Fund Manager will rebalance the portfolio within 30 days from the date of deviation.

In the event of such portfolio rebalancing, the Scheme will ensure that any purchase/redemption in the Underlying scheme(s) will not exceed 5% of the net assets of such Underlying scheme(s) on a single day.

Information about Underlying schemes

Each Plan under the Scheme will invest predominantly in the existing and / or prospective schemes of HSBC Mutual Fund, units of offshore equity oriented funds managed by HSBC Global Asset Management, gold ETFs and other ETFs of third parties until such time that the Fund doesn’t have such offering.

The Fund manager would select the Underlying schemes basis the investment objective, asset allocation pattern and risk profi le of each of the Plans under the Scheme. The current indicative list of the Underlying schemes of HSBC that may be considered for investments by each of the Plans under the Scheme are as follows:

Equity Schemes Debt Schemes Overseas SchemesHSBC Equity Fund

HSBC Income Fund - Short Term Plan

HGIF Global Emerging Markets Equity Fund

HSBC India Opportunities Fund

HSBC Income Fund - Investment Plan

HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund

HSBC Midcap Equity Fund

HSBC Flexi Debt Fund


HSBC Cash Fund

The list provided above is only indicative and will undergo changes from time to time to include or exclude any new / existing schemes offered by HSBC Mutual Fund. A snapshot of the Underlying schemes managed by HSBC is provided below:

Scheme Type of scheme Investment Objective Asset AllocationHSBC Equity Fund An open-ended

diversifi ed equity Scheme



Minimum MaximumEquities & Equity related securities 65% 100%Debt securities & Money Market instruments (including cash & cash equivalents)

0% 35%

HSBC India Opportunities Fund

An open-ended fl exi-cap equity Scheme



Minimum MaximumEquities & Equity related securities 65% 100%Debt instruments & Money Market instruments (including Cash & Cash equivalents)

0% 35%

HSBC Midcap Equity Fund


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.


Minimum MaximumEquities & equity related securities of companies whose market capitalization (a) does not exceed the capitalization of the largest constituent and (b) is not less than the market capitalization of the smallest constituent of S&P BSE MID CAP Index

65% 100%

Other equities & equity related securities 0% 35%Debt and money market instruments (including cash and money at call)

0% 35%

HSBC Mutual Fund 47

Scheme Type of scheme Investment Objective Asset AllocationHSBC Income Fund - Short Term Plan


To provide a 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.


Minimum MaximumDebt Instruments and Money Market Instruments with residual maturity / average maturity less than 367 days and fl oating rate instruments where the reset tenor is one year or less

40% 100%

Debt Instruments with residual maturity / average maturity greater than 1 year

0% 60%

HSBC Income Fund - Investment Plan


Minimum MaximumDebt Instruments with residual maturity / average maturity greater than 182 days

40% 100%

Money Market and debt instruments (including cash, money at call) with residual maturity / average maturity less than 183 days and fl oating rate instruments where the reset tenor is one year or less

0% 60%

HSBC Flexi Debt Fund

An open-ended debt Scheme

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.


Minimum MaximumDebt and money market instruments 0% 100%

HSBC Cash Fund An open-ended liquid Scheme

Aims to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities. However, there can be no assurance that the Scheme’s objective can be realized.


Minimum MaximumDebt Instruments with residual maturity / average maturity upto 91 days

0% 50%

Money Market instruments (including cash and money at call) with residual maturity / average maturity upto 91 days

0% 100%

HGIF Global Emerging Market Equity Fund

An open ended fund based in Luxemburg

The fund seeks long-term capital growth by investing at least two thirds of its noncash assets in a well-diversifi ed portfolio of investments in equity and equity equivalent securities issued by companies which have their registered offi ce in, and with an offi cial listing in, an Emerging Market, as well as companies which carry out a preponderant part of their economic activities in Emerging Markets. The sub-fund will seek to invest primarily in securities listed on a regulated market, but may also invest up to 10% of the sub-fund’s net assets in securities listed on markets that are not Regulated Markets. Investment in interest bearing securities is also permitted either for short-term cash surpluses or in response to unfavourable equity market conditions and this is limited to one third of the total assets of the sub-fund. Whilst there are no capitalisation restrictions, it is anticipated that the sub-fund will invest primarily in larger, established companies.



The fund invests for long-term total return normally at least 90% of the net assets of the fund in a diversifi ed portfolio of investments in equity and equity equivalent securities of mid to large cap companies around the world, positioned to benefi t from the growing middle class and changing consumer behaviour in China. The investment universe mainly comprises of mid to large cap global companies with growing revenues in the luxury sector as well as consumer discretionary and staples sectors that have appeal and recognition by Chinese consumers. The reference to “mid to large cap” generally refers to the top 85% of each market’s free-fl oat adjusted market capitalisation. Such percentage may differ from market to market and may be subject to change from time to time. The fund will invest in the consumer discretionary and consumer staples sector which includes, but is not limited to automobiles & components, consumer durables & apparel, consumer services, media, retailing, food & staples retailing, food, beverage & tobacco, household & personal products industries. The fund may use fi nancial derivative instruments for hedging purposes only.


Scheme Type of scheme Investment Objective Asset AllocationHGIF Asia Pacifi c Ex Japan Equity High Dividend Fund


The fund seeks long-term capital growth by investing primarily in a well-diversifi ed portfolio of investments in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other regulated market of any Asian country (excluding Japan) as well as companies which carry out a preponderant part of their economic activities in the Asian region (excluding Japan). As the fund will seek to invest in companies throughout Asia (excluding Japan), these can be both companies with a registered offi ce in, and with an offi cial listing in developed markets such as the Asian OECD countries and also those in emerging Asian countries. Whilst there are no capitalisation restrictions, it is anticipated that the fund will seek to invest primarily in larger, established companies. At least 60% of the fund’s assets will be invested in securities denominated in currencies other than the Korean Won.

Investments into units of third party domestic mutual funds shall be made in the following circumstances:a. Non-availability of a scheme managed by HSBC in a certain categories (i.e. currently gold ETFs and other ETFs); or

b. If the investment by the Plan under the Scheme exceeds 20% of the net assets of the Underlying scheme(s). In such a scenario, the third party domestic mutual fund will be similar to the Underlying schemes of HSBC Mutual Fund in terms of its objective, asset allocation pattern and risk profi le.

While investing in such third party domestic mutual fund schemes or prospective schemes of HSBC Mutual Fund, it shall be ensured that the investment objective, asset allocation pattern and risk profi le of such schemes are in line with the respective Plans under the Scheme. The Plans under the Scheme may also invest certain proportion of its corpus in money market instruments in order to meet liquidity requirements from time to time. The offshore Underlying schemes of HSBC shall not take any exposure to unrated securities, their investments in derivatives shall be for the purposes of hedging and portfolio rebalancing only and investments in unlisted securities shall be limited to 10% of its net assets. The domestic Underlying schemes of HSBC or third parties shall take exposure to the foreign securities, derivatives, unrated, securitized debt and may undertake short selling and securities lending activity as per the limits provided (if any) in the Scheme Information Document of the respective Underlying schemes and applicable SEBI Regulations from time to time.Performance data of the above mentioned Underlying schemes of HSBC as on April 30, 2016 is provided below:

Performance as on 30/4/2016

Fund / Benchmark 1 year 3 years 5 years Since Inception

Inception Date

HSBC Equity Funds

HSBC Equity Fund - Growth -2.94 11.44 6.43 21.9810-Dec-02

S&P BSE 200 -3.02 11.61 7.03 17.46HSBC India Opportunities Fund - Growth -1.85 20.48 12.00 16.25

24-Feb-04S&P BSE 500 -2.72 12.11 6.97 13.37HSBC Midcap Equity Fund - Growth 1.15 29.50 12.81 9.80

19-May-05S&P BSE MID CAP 6.02 20.29 9.24 9.26

HSBC Debt Funds

HSBC Flexi Debt Fund - Growth 6.14 7.28 8.83 8.7105-Oct-07

Crisil Composite Bond Fund Index 9.03 8.55 8.91 7.71HSBC Income Fund - Investment Plan - Growth 5.98 6.61 8.30 7.13

10-Dec-02Crisil Composite Bond Fund Index 9.03 8.55 8.91 6.59HSBC Income Fund - S T P - Growth 7.67 8.06 8.52 7.09

10-Dec-02Crisil Short Term Bond Fund Index 8.66 9.06 9.03 7.06HSBC Cash Fund - Growth 8.08 8.82 – 8.80

04-Dec-02Crisil Liquid Fund Index 7.97 8.78 – 8.63

HSBC Offshore Funds

HGIF GEM Equity Fund -26.74 -12.09 -9.16 5.9523-Apr-03

MSCI Emerging Market index -23.13 -8.58 -5.08 10.4HGIF Asia Pacifi c Ex Japan Equity High Dividend -20.64 -6.68 -2.12 4.9

05-Nov-04MSCI AC ASIA PAC EX JP -20.74 -5.05 -1.05 7.26

HGIF China Consumer Opportunities Fund -17.71 -1.54 N/A 5.1723-Sep-11

MSCI World AC Index -11.83 4.22 N/A 9.6HGIF Brazil Equity Fund -44.31 -30.06 -22.21 1

16-Sep-04MSCI Brazil 10/40 Net -38.32 -23.91 -17.61 5.87

HSBC Mutual Fund 49


The corpus of the each Plan under the Scheme will be predominantly invested in -

� Existing or prospective schemes of HSBC Mutual Funds / third party domestic mutual funds that invests in equity and equity related instruments, debt, money market instruments etc. depending upon the asset allocation pattern, investment objective and risk profi le of the respective Plans.

� Units of offshore mutual funds � Units of Gold Exchange Traded Funds and other Exchange

Traded Funds � Money market instruments including overnight instruments

such as Collateralized Borrowing and Lending Obligations, Repurchase and reverse repurchase obligations in government securities and treasury bills.

� Pending deployment of the funds in short term deposits of scheduled commercial banks as per the guidelines given in SEBI Circular no. SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007.

E. INVESTMENT STRATEGIES

Investment Approach and Risk Control

HSBC EQUITY FUND

The aim of HSBC Equity Fund is to deliver above-benchmark returns by providing long-term capital growth from an actively managed portfolio, mainly comprising companies registered in and / or listed on a regulated market of India. Income is not a primary consideration in the investment policies of HEF. The Scheme will invest across a range of market capitalisations with a preference for medium and large companies.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.

Since investing requires disciplined risk management, the AMC would incorporate adequate safeguards for controlling risks in the portfolio construction process. Stock specifi c risk will be minimised by investing only in those companies that have been analysed by the Investment Team at the AMC.

Risk will also be reduced through adequate diversifi cation of the portfolio. Diversifi cation will be achieved by spreading the investments over a range of industries / sectors.

The Scheme may however, invest in unlisted and / or privately placed and / or unrated debt securities, subject to the limits indicated under “Investment Restrictions for the Scheme(s)” as per this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.

As per the asset allocation pattern indicated above, for investment in debt securities and money market instruments, the Fund may invest a part of the portfolio in various debt securities issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the treasury or supported only by the sovereign guarantee or of the state government or supported by GOI / state government in some other way.

The Scheme may invest in other Scheme(s) managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments.


The aim of HSBC India Opportunities Fund is to seek aggressive growth and deliver above-benchmark returns by providing long-term capital growth from an actively managed portfolio, mainly comprising a judicious mix of small, mid and large cap stocks. Income is not a primary consideration in the investment policies of HIOF. The Scheme 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 becomes negative on equity markets.A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.Since investing requires disciplined risk management, the AMC would incorporate adequate safeguards for controlling risks in the portfolio construction process. Risk will also be reduced through adequate diversifi cation of the portfolio. Diversifi cation will be achieved by spreading the investments over a range of industries / sectors.The Scheme may however, invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.As per the asset allocation pattern indicated above, for investment in debt securities and money market instruments, the Fund may invest a part of the portfolio in various debt securities issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the treasury or supported only by the sovereign guarantee or of the state government or supported by GOI / state government in some other way.With the aim of controlling risks, rigorous in depth credit evaluation of the instruments proposed to be invested in will be carried out by the Investment Team of the AMC. The credit evaluation includes a study of the operating environment of the company, the past track record as well as the future prospects of the issuer, the short as well as long-term fi nancial health of the issuer. The AMC will also be guided by the ratings of rating agencies such as CRISIL, CARE and ICRA or any other rating agency as approved by the regulators.

In addition, the Investment Team of the AMC will study the macro economic conditions, including the political, economic environment and factors affecting liquidity and interest rates. The AMC would use this analysis to attempt to predict the likely direction of interest rates and position the portfolio appropriately to take advantage of the same.



HSBC MIDCAP EQUITY FUND

The aim of HSBC Midcap Fund is to deliver above-benchmark returns by providing long-term capital growth from an actively managed portfolio, primarily comprising of midcap stocks. Income is not a primary consideration in the investment policies of HMEF. The Scheme aims to be predominantly invested in midcap equity and equity related securities and also invest in small cap equity and equity related securities. However, it could move a portion of its assets towards fi xed income securities if the fund becomes cautious or negative on equity markets.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, corporate governance trends, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.

Since investing requires disciplined risk management, the AMC would incorporate adequate safeguards for controlling risks in the portfolio construction process. Risk will also be reduced through adequate diversifi cation of the portfolio. Diversifi cation will be achieved by spreading the investments over a range of industries / sectors.

The Scheme may however, invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.


With the aim of controlling risks, rigorous in depth credit evaluation of the instruments proposed to be invested in will be carried out by the Investment Team of the AMC. The credit evaluation includes a study of the operating environment of the company, the past track record as well as the future prospects of the issuer, the short as well as long-term fi nancial health of the issuer. The AMC will also be guided by the ratings of rating agencies such as CRISIL, CARE and ICRA or any other rating agency as approved by the regulators.


The Scheme may invest in other Schemes managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments.


The aim of HSBC Infrastructure Equity Fund is to deliver above benchmark returns by providing long-term capital growth from an actively managed portfolio, primarily comprising of stocks of companies engaged in or expected to benefi t from growth and development of Infrastructure in India.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in Infrastructure related sectors based on the Investment Team’s identifi cation of the drivers of growth of the Indian economy. For this, the Fund Manager(s) will do an analysis of business cycles, regulatory reforms, demographics, investment / infrastructure requirements, competitive advantage etc. The Fund Manager(s) in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management and its strategy, corporate governance trends, sensitivity to economic factors, operating effi ciency, the fi nancial strength of the company, key earnings and cash fl ow drivers.

Since disciplined investing requires risk management, the AMC would incorporate adequate safeguards for controlling risks in the portfolio construction process.

The Scheme may invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.






The aim of HSBC Tax Saver Equity Fund is to provide long-term capital appreciation from an actively managed portfolio, primarily comprising of a mix of small, mid and large cap stocks. Income is not a primary consideration in the investment policies of HTSF. The Scheme aims to be predominantly invested in equity and equity related securities. The Fund may also invest in fi xed income securities.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, corporate governance trends, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.

HSBC Mutual Fund 51


The Scheme may however, invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.





HSBC DIVIDEND YIELD EQUITY FUND


The Fund Manager will seek to largely invest in stocks with above the average market yields at the time of investments and which have potential for capital appreciation. The ‘above market yields’ means the scheme’s portfolio dividend yield being greater than the dividend yield of the Nifty index as per the investment strategy.

The fund will invest predominantly in equity and equity related instruments but may also invest a limited portion in debt and money market instruments.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors.


The Scheme may however, invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme” prescribed in this

Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.





HSBC DYNAMIC FUND

The Scheme has the fl exibility to allocate assets to both equity and debt instruments. It will hold a mix of securities - primarily equity and equity related instruments. This allocation will be steadily monitored and updated as and when the market movements demand it, a switch would be made. This product offers a lower risk alternative to pure equity offerings as it has the fl exibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative. The relative balance of these securities can be periodically changed to take advantage of phases in the economic cycle. The Scheme would switch over from one asset-class combination to another, looking towards more aggressive growth oriented stocks when the market is bullish and vice versa. Thus, the Scheme endeavours to achieve the ideal asset allocation to make the most of the markets and save opportunity costs for the investor. The fund will endeavour to provide long-term growth of principal and income. Thus, it aims to perform even in a distressed market scenario.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager(s) in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.


The Scheme may invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of


the AMC and the Trustees) shall be obtained, as per the Regulations.




The Scheme may invest in other Scheme managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments.


The Scheme shall invest in debt and money market instruments and would seek to generate regular returns. The scheme may also invest in equity and equity related instruments to seek capital appreciation. The Scheme does not assure any returns.


The Scheme may invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under Investment Restrictions for the Scheme prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations. The AMC shall follow such policies as may be prescribed under the SEBI regulations from time to time.

As per the asset allocation pattern indicated above, the Fund may invest in various debt securities and money market instruments issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the treasury or supported only by the sovereign guarantee or of the state government or supported by GOI / state government in some other way.


In addition, the Investment Team of the AMC will study the macro economic conditions, including the political, economic environment

and factors affecting liquidity and interest rates. The AMC would use this analysis to attempt to predict the likely direction of interest rates and position the portfolio appropriately to take advantage of the same.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.


HSBC INCOME FUND

HIF - Short Term Plan will invest predominantly in debt and money market instruments where interest rate risk is low. HIF - Investment Plan aims to provide investors with income, with appropriate liquidity, and therefore will invest in a mix of debt and money market instruments, over varying maturities.

The AMC’s view of interest rate trends will be refl ected in the type and the maturity dates of instruments in which funds are invested. In pursuing such a policy, it should be recognised that the best overall returns are achieved by anticipating or reacting to interest rate changes rather than aiming for the highest possible interest rates at all times. The best resultant overall return is therefore achieved through both capital appreciation and income, which may result in somewhat lower yields than might otherwise normally appear obtainable from the relevant securities. The Scheme aims to provide investors with actively managed portfolios of interest bearing transferable debt and money market instruments. The portfolios may also include liquid assets and other assets permitted from time to time, with a short remaining maturity, especially in times of rising interest rates.

In the Short Term Plan, exposure to instruments bearing price risk will be controlled, such that the Plan offers an appropriate mix of liquidity and returns. In the Investment Plan, investments will be made mainly into debt instruments, with an appropriate allocation to money market instruments to maintain the overall liquidity of the portfolio.

The Scheme may invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.



The Fund may invest a part of the portfolio in various debt securities issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the treasury or supported only by the

HSBC Mutual Fund 53

sovereign guarantee or of the state government or supported by GOI / state government in some other way.

Given that the liquidity of fi xed income instruments is currently limited, the AMC will try to provide liquidity by staggering maturities for various instruments, as well as holding a suffi cient portion of the portfolio in more liquid government and corporate paper as well as money market securities.



The aim of the Investment Manager will be to allocate the assets of the Scheme between various money market and fi xed income securities (predominantly short duration instruments) with the objective of providing liquidity and achieving optimal returns with the surplus funds.

Since providing liquidity is of paramount importance, the focus will be to ensure liquidity while seeking to maximise the yield. An appropriate mix of money market and debt instruments will be used to achieve this. The Investment Team of the AMC will carry out rigorous in depth credit evaluation of the money market and debt instruments proposed to be invested in. The credit evaluation includes a study of the operating environment of the issuer, the past track record as well as the future prospects of the issuer and the short term / long term fi nancial health of the issuer. The AMC will study the macro economic conditions, including the political and economic environment and factors affecting liquidity and yields in an attempt to predict the direction of interest rates.

Liquidity will be maintained through a combination of cash, reverse repo, daily put/call MIBOR papers and liquid CPs / CDs of strong credits. As compared to a liquid scheme, the higher portfolio maturity would mean higher allocation to 6-12 months instruments and a mix of structured credits in the 1 year segment as well as moving down the credit curve to improve yield. The scheme could run a mark to market component slightly higher than a liquid scheme (whose regulatory maximum is 10%) but sharply lower than an STP (in the region of 40-60%).

With the aim of controlling risks, a credit evaluation of the instruments proposed to be invested in will be carried out by the Investment Team of the AMC. The credit evaluation includes a study of the operating environment of the company, the past track record as well as the future prospects of the issuer, the short as well as long-term fi nancial health of the issuer. The AMC will also be guided by the ratings of rating agencies such as CRISIL, CARE and ICRA or any other rating agency as approved by the regulators.


The Fund may invest a part of the portfolio in various debt securities issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the Treasury or supported only by India’s sovereign guarantee or of the state government or supported by GOI / state government in some other way.

The Scheme may invest in other Schemes managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the respective schemes and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments

HSBC CASH FUND

Since providing liquidity is of paramount importance, the focus will be to ensure liquidity while seeking to maximise the yield. An appropriate mix of money market and debt instruments will be used to achieve this. The Investment Team of the AMC will carry out rigorous in depth credit evaluation of the money market and debt instruments proposed to be invested in. The credit evaluation includes a study of the operating environment of the issuer, the past track record as well as the future prospects of the issuer and the short term / long term fi nancial health of the issuer.

The AMC will study the macro economic conditions, including the political and economic environment and factors affecting liquidity in an attempt to predict the direction of interest rates.

The Scheme may invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.

The Fund may invest a part of the portfolio in various debt securities issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the treasury or supported only by the sovereign guarantee or of the state government or supported by GOI / state government in some other way.

The Scheme may invest in other Scheme(s) managed by the AMC or in the schemes of any other mutual fund, provided such investment is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments.


The Scheme can invest across all classes of fi xed income instruments. There will be no cap or fl oor on maturity, duration or instrument type concentrations. The Fund Manager, depending on the interest rates view has the flexibility to allocate the funds in any fixed income instrument and endeavour to provide yields in line with the current market scenario. The Fund aims to optimise returns for the investors by designing a portfolio, which will dynamically track interest rate movements in the short term by reducing duration in a rising rate environment while increasing duration in a falling interest rate environment. The investment strategy would revolve around structuring the portfolio with an aim to capture positive price movements and minimise the impact of adverse price movements.

A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager(s) in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.


The Scheme may invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme(s)” prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.





The Scheme may invest in other Scheme managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments


The aim of HSBC Emerging Markets Fund is to provide long-term capital appreciation from an actively managed portfolio, primarily comprising of a mix of small, mid and large cap stocks. Income is not a primary consideration in the investment policies of HEMF. The Scheme aims to be predominantly invested in equity and equity related securities. The Fund may also invest in fi xed income securities.

HEMF may invest in the Emerging Markets through overseas funds or overseas equity and equity related securities share classes /Units of equity Fund as permitted by SEBI. HEMF proposes to invest in the overseas market by investing in units / securities issued by overseas mutual funds managed by HSBC globally, for example HSBC GEM Equity Fund (GEM) etc. The Fund may undertake currency hedge to protect the investors from the risk associated with movement in currency markets as mentioned in the risk factors earlier.A top down and bottom up approach will be used to invest in equity and equity related instruments. Investments will be pursued in select sectors based on the Investment Team’s analysis of business cycles, regulatory reforms, competitive advantage etc. Selective stock picking will be done from these sectors. The fund manager in selecting scrips will focus on the fundamentals of the business, the industry structure, the quality of management, corporate governance trends, sensitivity to economic factors, the fi nancial strength of the company and the key earnings drivers.Since investing requires disciplined risk management, the AMC would incorporate adequate safeguards for controlling risks in the portfolio construction process. Risk will also be reduced through adequate diversifi cation of the portfolio. Diversifi cation will be achieved by spreading the investments over a range of industries / sectors.The Scheme may however, invest in unlisted and / or privately placed and / or unrated debt securities subject to the limits indicated under “Investment Restrictions for the Scheme prescribed in this Combined SID, from issuers of repute and sound fi nancial standing. If investment is made in unrated debt securities, the approval of the Board of the AMC and the Trustees or the Investment Management Committee (within the broad parameters approved by the Board of the AMC and the Trustees) shall be obtained, as per the Regulations.As per the asset allocation pattern indicated above, for investment in debt securities and money market instruments, the Fund may invest

a part of the portfolio in various debt securities issued by corporates and / or state and central government. Such government securities may include securities which are supported by the ability to borrow from the treasury or supported only by the sovereign guarantee or of the state government or supported by GOI / state government in some other way.With the aim of controlling risks, rigorous in depth credit evaluation of the instruments proposed to be invested in will be carried out by the Investment Team of the AMC. The credit evaluation includes a study of the operating environment of the company, the past track record as well as the future prospects of the issuer, the short as well as long-term fi nancial health of the issuer. The AMC will also be guided by the ratings of rating agencies such as CRISIL, CARE and ICRA or any other rating agency as approved by the regulators.In addition, the Investment Team of the AMC will study the macro economic conditions, including the political, economic environment and factors affecting liquidity and interest rates. The AMC would use this analysis to attempt to predict the likely direction of interest rates and position the portfolio appropriately to take advantage of the same.The Scheme may invest in other Scheme(s) managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations.

Emerging Markets Outlook and Strategy

Emerging Market countries are characterized by an underdeveloped or developing commercial and fi nancial infrastructure, with signifi cant potential for economic growth and eased capital market participation by foreign investors. Countries generally considered to be Emerging Markets possess some, but not necessarily all, of the following characteristics: � Per capita GNP of less than U.S. $9,656 (the current World Bank

defi nition of low- and middle-income economies); � Recent or relatively recent economic liberalization (including,

but not limited to, a reduction in the state’s role in the economy, privatization of previously state-owned companies, and / or removal of foreign exchange controls and obstacles to foreign investment);

� Debt ratings below investment grade by major international ratings agencies and a recent history of defaulting on, or rescheduling of, sovereign debt;

� Recent liberalization of the political system and a move towards greater public participation in the political process; and

� Non-membership in the Organization of Economic Co-operation and Development (OECD).

Countries that are usually considered classic examples of Emerging Markets include Argentina, Brazil, India, Mexico, China, Central and Eastern European nations and Russia. Others that may be considered borderline cases, possessing fewer of the above characteristics, include Greece, Portugal, and Turkey.

However, the list of countries could change depending on various other factors.

Opportunities in Emerging Markets

Emerging Markets are playing an increasingly important role in the world economy. Although, they may often be characterized by volatility, they also display a great degree of diversity, rapid economic growth and the potential to unlock greater value over the long term. Such avenues enable the fund manager to take advantage of ineffi ciencies and assume higher positions at attractive valuation levels.Backed by continuing improvements in economic fundamentals and abundant human and natural resources, emerging markets are set to outpace developed economies.Some of the key benefi ts of investing in emerging markets are:

HSBC Mutual Fund 55

Diversifi cationBy adding emerging markets to their portfolio, investors have the opportunity to diversify across several currencies and economies having competitive advantage and participate in their growth. This can lead to the construction of more effi cient portfolios.

Broader opportunity setIn emerging markets, there are asset plays, growth stories and restructuring plays, among others. Many companies in emerging markets have absolute advantages, either in terms of labour costs or raw materials. By including emerging markets in the opportunity set, investors can access some world class companies, such as Samsung and Infosys.

Rapid economic growthMany emerging markets are gradually profiting from economic reforms and technological advances, ensuring faster growth.

Positive economic trendsDriven by a demographic profi le that is expected to have increased earning ability and spending power, Emerging Markets are poised to benefit from growth in consumption. Also, most Emerging Markets are witnessing a sharp growth in exports in key areas like technology, automobiles, precious metals, agricultural products etc. Moreover, many Asian countries are cashing in on the outsourcing wave especially in the service sector. In the future, several themes may characterize the growth emerging markets. These include the rise of China as a global manufacturing center, the growth of inter Asian trade, the emergence of Russia as major energy supplier, the enlargement of the EU, outsourcing, and the wiring of the emerging world, to name a few.

Reduced risksAs a result of widespread reforms many companies domiciled in Emerging Markets benefit from better corporate governance, disclosure norms and risk management policies. At the country level, many Emerging Markets now have well controlled budget defi cits and infl ation, improved solvency and current account surplus. Their currencies are increasingly becoming more stable and foreign reserves stand at healthy fi gures.

Most Indian investors continue to be underweight in non-domestic equities and, in particular, emerging markets. Although political and other risks are to be considered carefully, adding emerging markets to a portfolio can both increase return and diversify risk. Worldwide, the performance of Emerging Market Funds has also been looking positive.

OVERVIEW OF THE UNDERLYING SCHEME(S)

HSBC GLOBAL INVESTMENT FUNDS

HSBC Emerging Market Fund - HGIF - Global Emerging Markets Equity Fund (HSBC GEM Fund) is the sub-fund of HGIF and has been currently identifi ed by HSBC Emerging Markets Fund (HEMF) for overseas investment of funds collected by HEMF. Further, HEMF may in future identify such additional funds as may be required from time to time.

HSBC GLOBAL INVESTMENT FUNDS is an investment company (“Société d’Investissement à Capital Variable”) incorporated in the Grand Duchy of Luxembourg and qualifi es as an Undertaking for Collective Investment in Transferable Securities (UCITS) complying with the provisions of Part I of the 2010 Law.

The Investment Objective and asset allocation pattern of HSBC GEM Fund is as under:As per the prospectus of HSBC GEM Fund, the sub-fund seeks long-term capital growth by investing at least two thirds of its non-cash assets in a well-diversifi ed portfolio of investments in equity and equity equivalent securities issued by companies which have their registered offi ce in, and with an offi cial listing in, an Emerging Market, as well as companies which carry out a preponderant part of their economic activities in Emerging Markets. The sub-fund will seek

to invest primarily in securities listed on a regulated market, but may also invest up to 10% of the sub-fund’s net assets in securities listed on markets that are not Regulated Markets. Investment in interest bearing securities is also permitted either for short-term cash surpluses or in response to unfavourable equity market conditions and this is limited to one third of the total assets of the sub-fund. Whilst there are no capitalisation restrictions, it is anticipated that the sub-fund will invest primarily in larger, established companies.

The exposure of HSBC GEM Fund in the following countries as of April 30, 2016 is

Country Weight Taiwan 10.91%India 9.99%Brazil 5.58%Mexico 3.62%Malaysia 3.15%Saudi Arabia 0.99%Qatar 1.04%South Africa 7.48%Turkey 3.74%Indonesia 2.18%Colombia 0.50%Thailand 2.97%China 24.92%Korea 13.49%Russia 4.58%

As on April 30, 2016, asset allocation of HSBC GEM Fund was as follows:

Type of Securities % of allocationEquity 95.16%Cash 4.84%Total 100.00%

Sector exposure of HSBC GEM Fund as on April 30, 2016 was as follows:

Sr. No. Sector Weight 1 Consumer Staples 3.36%2 Telecommunication Services 3.25%3 Industrials 3.84%4 Utilities 2.85%5 Information Technology 23.62%6 Materials 8.53%7 Consumer Discretionary 9.39%8 Energy 7.72%9 Financials 32.60%

The top 10 holdings of HSBC GEM Fund as on April 30, 2016 was as follows:

Sr.No. Stocks Weight1 Samsung Electronics Co Ltd 70000927 5.08%2 Taiwan Semiconductor Co Ltd 70071797 4.79%3 Tencent Holdings Ltd 70017928 2.90%4 China Construction Bank (939) Class 'H' Rmb

1.00 (China) 700837562.50%

5 Hon Hai Precision Industry 70001691 2.47%6 Picc Property & Casualty (2328) 'H' Share

Ordinary Cny 1 (China) 700837212.26%

7 Firstrand Ltd 70022361 2.16%


Sr.No. Stocks Weight8 Hyundai Motor Co 70001436 2.14%9 The Foschini Group Ltd 70002233 2.12%10 Industrial & Commercial Bk of China 'H' Cny

1.00 (1398) (China) 700837871.95%

As on April 30, 2016, performance of HSBC GEM Fund was as follows:

Annualized Performance

Underlying scheme

Benchmark MSCI Emerging Market index

1 Year -19.63 -17.563 Years -6.25 -2.565 Years -8.31 -2.16Since Inception 7.05 11.37

Dollar conversion processFor the purpose of US dollar conversion, HEMF intends to use the prices available through Reuter as per the closing time of the Indian Markets or any other currency rate widely representative of the market. Eg. Mean of inter-bank bid ask rate.

Expenses of Underlying schemeHSBC Global Investment Funds - Global Emerging Markets Equity (HSBC GEM Fund) has various share classes and has different expenses for each such share class. The expenses charged by HSBC GEM Fund, into which HEMF invests will be upto 0.85% of the net assets of HSBC GEM Fund. HGIF could change the expenses for the various share classes from time to time. However the total expenses shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits prescribed thereunder.

HSBC BRAZIL FUND

The Scheme will invest predominantly in units / shares of 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 Scheme may invest in units of liquid mutual fund schemes managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations.

As and when the AMC decides to invest in similar overseas mutual fund schemes other than HGIF, then it shall be ensured that the investment objective, process, philosophy, asset allocation pattern etc. of such overseas schemes is similar to that of HGIF Brazil Equity Fund as disclosed in this SID. This will ensure that the fundamental attributes of HBF remains intact.

Investment Objective of HGIF Brazil Equity Fund (underlying scheme)HGIF Brazil Equity Fund is the sub-fund of HGIF and has been currently identifi ed by HBF for overseas investment of funds collected by HBF. Further, HBF may in future identify such additional funds as may be required from time to time.

As per the prospectus, HGIF Brazil Equity Fund seeks long-term capital growth by investing primarily in a well diversifi ed portfolio of investments in equity and equity equivalent securities of companies which have their registered offi ce in, and with an offi cial listing on a major stock exchange or other Regulated Market of Brazil, as well as those companies which carry out a preponderant part of their business activities in Brazil. There are no capitalisation restrictions, and it is anticipated that HGIF Brazil Equity Fund will seek to invest across a range of capitalisations.

Investment Process & Philosophy of HGIF Brazil Equity Fund � Combines stock-picking focus with strong idea generation team,

portfolio construction and risk management � Stock selection is primary source for generating alpha � Portfolio construction focusses on creating alpha

Stock Selection Portfolio Construction

A bottom up approach is used for research and top down approach is used for validation as follows:

Research � Increased sectorial coverage in Brazil and in Latin America. � Database to ensure communication and maintenance of research � Project based � Communication

Top Down Validation � Theme generation is a by-product of our original research focused

process � Top down views used to validate the bottom-up process � Non-partisan thematic research verifi cation provides independent

cross referencing � Cross referencing may provide additional ideas for further research

As on April 30, 2016, HGIF Brazil Equity Fund had exposure to the following country:

Sr. No. Country % of Fund1 Brazil 95.25%

As on April 30, 2016, asset allocation of HGIF Brazil Equity Fund was as follows:

Sr. No. Type of Securities % of allocation1 Equity 95.25%2 Cash 4.75%

Total 100.00%

The exposure to top 10 sectors of HGIF Brazil Equity Fund as on April 30, 2016 was as follows:

Sr. No. Sector Weight 1 Energy 8.80%2 Materials 5.55%3 Information Technology 4.41%4 Industrials 12.76%5 Consumer Discretionary 6.98%6 Telecommunication Services 2.69%

HSBC Mutual Fund 57

Sr. No. Sector Weight 7 Health Care 0.86%8 Utilities 7.75%9 Financials 30.08%10 Consumer Staples 15.36%

The top 10 holdings of HSBC Brazil Equity Fund as on April 30, 2016 was as follows:

Sr.No. Stocks Weight1 Petrobras - Petroleo Bras 70013561 8.80%2 Ambev Sa 70544982 8.29%3 Itausa-Investimentos Itau-Pr

700009316.96%

4 Banco Bradesco S.A. 70061477 6.40%5 Ccr Sa 70011498 5.67%6 Cielo Sa 70112979 4.41%7 Kroton Educacional Sa 70016119 4.26%8 Itau Unibanco Holding S-Pref

700201084.18%

9 Tractebel Energia Sa 70012851 4.08%10 Bb Seguridade Participacoes

704933334.00%

As on April 30, 2016, performance of HGIF Brazil Equity Fund was as follows:


Underlying scheme

Benchmark MSCI Brazil 10/40


Dollar conversion processFor the purpose of US dollar conversion, HBF intends to use the prices available through Reuter / Bloomberg / RBI reference rate. The AMC reserves the right to change the source for determining the exchange rate.

ExpensesHGIF Brazil Equity Fund, underlying scheme of HBF has various share classes and has different expenses for each such share class. The expenses are classifi ed into Management & Distribution expenses and Operating expenses. The management & distribution expense for the Share Class into which the Scheme will invest, (currently Share Class S3) is 0.85% of the net assets. HGIF could change the expenses for the various share classes from time to time. However the total expenses shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits prescribed thereunder.

HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND

The Scheme will invest predominantly in the units of the Underlying scheme - 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.


Currently, the Scheme intends to invest into a special Share class (S9) of the Underlying scheme

Further, the Scheme reserves the right to switch to any other Share Class of HGIF at any point in time for various reasons, including commercial reasons. However, at all times, the total expenses of the

Scheme shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits stated herein. Therefore, such change in Share Class will not have any adverse impact on the Unit holders.

Overview of Underlying scheme The Underlying scheme (HEHDF), an open ended fund based in Luxembourg, is the sub-fund of HGIF and has been currently identifi ed by HAPDF for overseas investment of funds collected by HAPDF. The date of inception of the Underlying scheme is November 05, 2004.

(i) Basis of selecting the Underlying scheme The Underlying scheme is a dividend yield focused equity fund which can offer investors access to the potentially exciting long-term investment opportunities in predominately emerging markets in the Asia Pacifi c region, with investment primarily into stocks which have a higher dividend yield as compared to market average. The Underlying scheme’s investment strategy is different from the investment strategies of the existing fund of funds schemes of the Fund. This will be a fi rst offering from the AMC in the offshore dividend yield equity category.

(ii) Investment Objective of the Underlying schemeThe Underlying scheme seeks long-term capital growth and a high level of income by investing primarily in a diversifi ed portfolio of investments in equity and equity equivalent securities of companies which have their registered offi ce in and with an offi cial listing on a major stock exchange or other Regulated Market of any Asia Pacifi c country (excluding Japan) as well as companies which carry out a preponderant part of their economic activities in the Asia Pacifi c region (excluding Japan), that offer short-term sustainable dividend yields above the market average and / or the potential for dividend growth above the market average over the short-term.

As the Underlying scheme seeks to invest in companies throughout the Asia Pacifi c region (excluding Japan), these can be both companies with a registered offi ce in, and with an offi cial listing in developed markets, and also those in emerging Asian countries. Whilst there are no capitalisation restrictions, it is anticipated that the Underlying scheme seeks to invest primarily in larger, established companies. At least 60% of its assets will be invested in securities denominated in currencies other than the Korean Won.

(iii) Investment Process and Philosophy of the Underlying scheme Investment philosophy: The Underlying scheme engages in extensive, rigorous and proprietary research with a focus on the sustainability of profi ts and dividends. It is believed that a fundamental analysis of companies gives a competitive advantage and seeks to identify companies which are mispriced given their sustainable profi tability. The Underlying scheme’s fund manager believes that in the long term the inherent value of companies will be recognised by the market thus eliminating mis-pricing and enabling us to deliver superior returns. The investment strategies of the Underlying scheme are founded on the belief that markets are not effi cient and that much of this ineffi ciency comes from the market mispricing the sustainable return on capital. The overseas fund manager believes that it is possible for talented investors to identify and capture alpha opportunities via bottom-up fundamental research, focusing primarily on outliers to the economic relationship between valuation and return on capital.

The Underlying scheme’s approach is based on the premise that Asian companies are undergoing a structural change: emphasising quality through de-leveraging, cash-fl ow generation and sustainable earnings. The goal is to identify and invest in companies which combine mis-priced profi tability with sustainable and attractive dividend yield. Fundamental, bottom-up proprietary research drives this process within the profi tability / valuation framework. Research analysts work along both sector and country lines to produce in-depth equity research. Stock research focusses on examining the sustainability of a company’s profi tability. There are fi ve aspects


that the Underlying scheme believes underpin that sustainability viz. Industry analysis, Ability to create shareholder wealth, Profi tability relative to risk, Financial strength, and Corporate governance.

Investment process: The investment process for the Underlying scheme is based on a fundamental analytical approach, designed to exploit the ineffi ciencies of the Asian market by identifying mis-priced stocks. The investment professionals conduct detailed, in-depth research to fi nd the best stock opportunities. The following fl owchart illustrates the investment process.

iv) Asset Allocation of the Underlying scheme As on April 30, 2016, asset allocation of HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND was as follows:


Total 100.00%

v) Country/region exposureThe exposure of HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND in the following countries as on April 30, 2016 is

Country Weight Hong Kong 15.55%Indonesia 1.77%China 19.24%Singapore 7.92%Malaysia 2.75%New Zealand 1.54%India 6.30%Thailand 2.39%Australia 17.38%Korea 8.41%Taiwan 12.88%

The remaining balance was held in cash.

vi) Top 10 holdings of the Underlying scheme The top 10 holdings as on April 30, 2016 was as follows:

Sr.No. Stocks Weight1 Taiwan Semiconductor Co Ltd 70071797 4.74%2 Samsung Electronics Co Ltd 70000927 3.39%3 Commonwealth Bank of Australia Ordinary

NPV Fully Paid 700035063.24%

4 CK Hutchison Holdings Ltd 70674872 2.82%5 KT&G Corp 70006854 2.74%6 China Mobile Ltd (941)(China) Ord Hkd

0.10 700836992.66%

Sr.No. Stocks Weight7 National Australia Bank Ltd 70003548 2.64%8 Telstra Corp Ltd 70002651 2.59%9 BOC Hong Kong Holdings Ltd 70007667 2.43%10 MTR Corp 70004572 2.38%

The exposure to top 10 sectors of HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND as on April 30, 2016 was as follows:

Sr. No. Sector Weight 1 Energy 5.05%2 Utilities 7.18%3 Consumer Staples 10.89%4 Materials 2.13%5 Consumer Discretionary 2.84%6 Financials 27.18%7 Telecommunication Services 14.81%8 Industrials 12.33%9 Information Technology 13.73%

vii) Where will the Underlying scheme invest ?The Underlying scheme will invest primarily in a diversifi ed portfolio of investments in equity and equity equivalent securities of :

� companies which have their registered offi ce in and with an offi cial listing on a major stock exchange or other Regulated Market of any Asia Pacifi c country (excluding Japan) and

� companies which carry out a preponderant part of their economic activities in the Asia Pacifi c region (excluding Japan), that offer short-term sustainable dividend yields above the market average and / or the potential for dividend growth above the market average over the short-term.

� companies throughout the Asia Pacifi c region (excluding Japan), with a registered offi ce in, and with an offi cial listing in developed markets, and also those in emerging Asian countries.

Whilst there are no capitalization restrictions, it is anticipated that the Underlying scheme will seek to invest primarily in larger, established companies. At least 60% of its assets will be invested in securities denominated in currencies other than the Korean Won.

Exposure to unrated securities, unlisted securities and derivatives by Underlying schemeThere will be no exposure to unrated securities by the Underlying scheme. Exposure to Indian equities by the Underlying scheme will be limited to 15% of the Underlying scheme’s net assets. If this limit is breached then a period of 3 months will be allowed for the Underlying scheme to re-balance its exposure to Indian equities in a manner that it is limited to 15%. In case the breach continues beyond the re-balancing period of 3 months then the Scheme will stop accepting fresh subscriptions for the next 9 months. In case this breach continues beyond the period of 12 months then the Scheme will be wound up after informing the Unit holders and providing them with a 30 day period to exit the Scheme at prevailing NAV without any exit load. The Underlying scheme will invest in derivatives for the purpose of portfolio rebalancing and hedging only and such exposure will not exceed the total net assets of the Underlying scheme.

The Underlying scheme’s exposure to unlisted securities will be limited to 10% of its net assets as currently prescribed by SEBI vide SEBI circular dated September 26, 2007. Further, the Underlying scheme will at all times, be in compliance with the guidelines for permissible overseas investments prescribed by SEBI vide circular dated September 26, 2007 or any other guidelines that may be prescribed from time to time. Kindly read the risk factors associated with Underlying scheme investing in different kinds of securities,

HSBC Mutual Fund 59

under section ‘A.Risk Factors’ in the SID.

viii) Risk profi le / control The commitment approach is used to measure and monitor the level of risk for this Underlying scheme. The commitment approach is generally calculated by converting the derivative contract into the equivalent position in the underlying asset embedded in that derivative, based on the market value of the underlying. Purchased and sold fi nancial derivative instruments may be netted in accordance to the CESR’s guidelines 10/788 in order to reduce global exposure. Beyond these netting rules and after application of hedging rules, it is not allowed to have a negative commitment on a fi nancial derivative instrument to reduce overall exposure and as such, risk-exposure numbers will always be positive or zero.

ix) Category of eligible investorsThe Underlying scheme describes investors in the dynamic category. Dynamic category is suitable for investors with a long term investment horizon. The Underlying scheme is intended to provide additional exposure for more experienced investors within a portfolio where a high proportion of the assets may be invested in Emerging Markets and smaller capitalization securities, which may restrict liquidity and increase the volatility of return.

x) Performance of the Underlying scheme as on April 30, 2016


Underlying scheme

Benchmark MSCI AC Asia Pacifi c ex-Japan Index


xi) Expense ratio of Underlying schemeThe Underlying scheme of HAPDF has various share classes and has different expenses for each such share class. The expenses are classifi ed into Management & Distribution expenses and Operating expenses. The management & distribution expense for the Share Class into which the Scheme will invest, (Share Class S9) is 0.70% of the net assets. HGIF could change the expenses for the various share classes from time to time. Further, the Scheme reserves the right to switch to any other Share Class of HGIF at any point in time for various reasons, including commercial reasons. However, at all times, the total expenses of the Scheme shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits stated under Section IV. B. ‘Annual Scheme Recurring Expenses’ of the SID. Therefore, such change in Share Class will not have any adverse impact on the Unit holders.

A table showing the expense ratio of the Underlying scheme is as follows:

Share Class S9Management Fee (%) 0.35Operating, Administrative and Servicing Expenses (%) 0.30

Dollar Conversion Process : For the purpose of US dollar conversion, the Scheme intends to use the prices available through Reuter / Bloomberg / RBI reference rate. Incase of non-availability of exchange rate through Reuter / Bloomberg / RBI , the AMC reserves the right to change the source for determining the exchange rate.

HSBC GLOBAL CONSUMER OPPORTUNITIES FUND –

BENEFITING FROM CHINA’S GROWING CONSUMPTION POWER

The Scheme will invest predominantly in units of HGIF China Consumer Opportunities Fund. 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.


Overview of Underlying scheme (HGIF China Consumer Opportunities Fund)HGIF China Consumer Opportunities Fund, an open ended fund domiciled in Luxemburg, is the sub-fund of HGIF and has been currently identified by local Scheme (HGCOF) for overseas investment of funds collected by the Scheme.

(i) Basis/ Reasons for selecting the Underlying schemeChina has emerged as a global economic super-power and is entering a golden age of consumption growth. Fueled by a surging Chinese millionaire and middle class population, the Chinese spending engine is shifting into high gear and reshaping the global consumption landscape. By 2020, China is expected to overtake the US to become the world’s largest consumption market. This emerging Chinese consumer spending trend brings new investment opportunities in a wider global perspective with key benefi ciaries including the global luxury companies as well as Chinese domestic consumer brands. The product is aimed at providing Indian retail investors an opportunity to participate in the China consumption story.

(ii) Investment Objective and investment universe of HGIF China Consumer Opportunities Fund (Underlying scheme)

The Underlying scheme invests for long-term total return normally at least 90% of the net assets of the Fund in a diversifi ed portfolio of investments in equity and equity equivalent securities of mid to large cap companies around the world, positioned to benefi t from the growing middle class and changing consumer behavior in China. The Underlying scheme will invest the remaining net assets, if any, largely in money market instruments, for the purpose of liquidity.

The investment universe mainly comprises of mid to large cap global companies with signifi cant revenues in the luxury sector as well as consumer discretionary and staples sectors that have appeal and recognition by Chinese consumers. The reference to “mid to large cap” generally refers to the top 85% of each market’s free-fl oat adjusted market capitalisation. Such percentage may differ from market to market and may be subject to change from time to time.

The Underlying scheme will invest in the consumer discretionary and consumer staples sector which includes, but is not limited to automobiles & components, consumer durables & apparel, consumer services, media, retailing, food & staples retailing, food, beverage & tobacco, household & personal products industries.

(iii) Investment Process & Philosophy of Underlying scheme

iv) Asset allocation (As on April 30, 2016)


Total 100.00%


v) The exposure of HSBC China Consumer Opportunities Fund in the following countries as of April 30, 2016 is

Country Weight China 18.34%Japan 3.43%Switzerland 9.41%Netherlands 1.79%Germany 6.03%France 11.01%Korea 1.76%United Kingdom 15.03%USA 32.21%

vi) Sector exposure of HSBC China Consumer Opportunities Fund as on April 30, 2016 was as follows:

Sr. No. Sector Weight 1 Consumer Staples 21.99%2 Materials 1.79%3 Telecommunication Services 1.75%4 Consumer Discretionary 62.51%5 Information Technology 10.99%

vii) Top 10 holdings as on April 30, 2016

Stocks WeightKAO Corp 70000223 3.43%Samsonite International Sa (1910) Ordinary USD 0.01 (HK) 70425962

3.37%

Starwood Hotels & Resorts 70012525 3.34%SEB SA 70004916 3.34%Mead Johnson Nutrition Co 70054593 3.34%CIE Financiere Richemont-Reg 70539322 3.20%Tiffany & Co 70003819 3.18%LVMH Moet Hennessy Louis Vui 70004307 3.16%Nestle Sa-Reg 70018320 3.15%Estee Lauder Companies-Cl A 70002874 3.13%

viii) Where will the Underlying scheme invest?At least 90% of the Underlying scheme’s net assets will be invested in a diversifi ed portfolio of equity and equity equivalent securities of mid to large cap companies around the world, positioned to benefi t from the growing middle class and changing consumer behavior in China.

Exposure to unrated securities, unlisted securities and derivatives There will be no exposure to unrated securities by the Underlying scheme. Exposure to Indian equities by the Underlying scheme will be limited to 15% of the Underlying scheme’s net assets. If this limit is breached then a period of 3 months will be allowed for the Underlying scheme to re-balance its exposure to Indian equities in a manner that it is limited to 15%. In case the breach continues beyond the re-balancing period of 3 months then the Scheme will stop accepting fresh subscriptions for the next 9 months. In case this breach continues beyond the period of 12 months then the Scheme will be wound up after informing the Unit holders and providing them with a 30 day period to exit the Scheme at prevailing NAV without any exit load. The Underlying scheme will invest in derivatives for the purpose of portfolio rebalancing and hedging only and such exposure will not exceed the total net assets of the Underlying scheme.

The Underlying scheme’s exposure to unlisted securities will be limited to 10% of its net assets as currently prescribed by SEBI vide SEBI circular dated September 26, 2007. Further, the Underlying scheme will at all times, be in compliance with the guidelines for permissible overseas investments prescribed by SEBI vide circular

dated September 26, 2007 or any other guidelines that may be prescribed from time to time. Kindly read the risk factors associated with Underlying scheme investing in different kinds of securities, under section ‘A. Risk Factors’ in the SID.

ix) Exposure to unrated securities/ derivatives (as on 30/04/2016)

The Underlying scheme did not have any exposure to unrated securities/derivatives as on April 30, 2016.

x) Risk profi le / control The commitment approach is used to measure and monitor the level of risk for this underlying scheme.

The commitment approach is generally calculated by converting the derivative contract into the equivalent position in the underlying asset embedded in that derivative, based on the market value of the underlying. Purchased and sold fi nancial derivative instruments may be netted in accordance to the Committee of European Securities Regulators’ (CESR) guidelines 10/788 in order to reduce global exposure. Beyond these netting rules and after application of hedging rules, it is not allowed to have a negative commitment on a fi nancial derivative instrument to reduce overall exposure and as such, risk-exposure numbers will always be positive or zero.

xi) Category of eligible investorsThe Underlying scheme describes investors in the dynamic category. Dynamic category is suitable for investors with a long term investment horizon. The Underlying scheme is intended to provide additional exposure for more experienced investors within a portfolio where a high proportion of the assets may be invested in Emerging Markets and smaller capitalization securities, which may restrict liquidity and increase the volatility of return.

xii) Performance as on April 30, 2016

Performance Underlying scheme MSCI World AC Index1 Year -12.59 -5.133 Years 0.07 5.62Since Inception 6.59 11.33

Launch date: September 23, 2011Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.

xiii) Expense ratio of Underlying schemeHGIF China Consumer Opportunities Fund has various share classes and has different expenses for each such share class. The expenses are classifi ed into Management & Distribution expenses and Operating expenses. The total expenses of the Share Class S5 into which the Scheme will invest is 0.70% p.a. of the net assets. HGIF could change the expenses for its various share classes from time to time. Further, the Scheme reserves the right to switch to any other Share Class of HGIF at any point in time for various reasons, including commercial reasons. However, at all times, the total expenses of the Scheme shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits stated under Section IV. B. ‘Annual Scheme Recurring Expenses’ of the SID. Therefore, such change in Share Class will not have any adverse impact on the Unit holders.

A table showing the expense ratio of the Underlying scheme is as follows:

Class of Shares S5Management Fee (%) 0.40Operating, Administrative and Servicing Expenses (%) 0.30

Dollar Conversion Process : For the purpose of US dollar conversion, HGCOF intends to use the prices available through Reuter / Bloomberg / RBI reference rate. In case of non-availability of

HSBC Mutual Fund 61

reference rate through Reuter / Bloomberg / RBI, the AMC reserves the right to change the source for determining the exchange rate.

HSBC MANAGED SOLUTIONS

The Plans under the Scheme will invest predominantly in the existing and / or prospective schemes of HSBC Mutual Fund, units of third party domestic mutual funds, units of offshore equity oriented funds managed by HSBC Global Asset Management, gold ETFs and other ETFs of third parties until such time that the Fund doesn’t have such scheme offerings. The Plans may also invest certain proportion of its corpus in money market instruments in order to meet liquidity requirements from time to time.

For asset classes where HSBC Mutual Fund has scheme offerings, the Plans under the Scheme would invest only in such schemes. Investments into units of third party domestic mutual funds shall be made in the following circumstances:a. Non-availability of a scheme managed by HSBC in a certain

categories (i.e. currently gold ETFs and other ETFs); or b. If the investment by the Plan under the Scheme exceeds 20% of

the net assets of the Underlying scheme(s). In such a scenario, the third party domestic mutual fund will be similar to the Underlying schemes of HSBC Mutual Fund in terms of its objective, asset allocation pattern and risk profi le.

While investing in such third party domestic mutual fund schemes or prospective schemes of HSBC Mutual Fund, it shall be ensured that the investment objective, asset allocation pattern and risk profi le of such schemes are in line with the respective Plans under the Scheme.

All new infl ows will be invested as per the asset allocation pattern indicated in this SID. The asset allocation pattern is proposed to be rebalanced on a monthly basis at the minimum to bring the allocation in line with the suggested pattern, if so required.

It is the intention of the Fund Manager to stay fully invested in the underlying mutual fund schemes. The Scheme may invest in such open ended schemes offered by the Mutual Fund from time to time subject to the above asset allocation of the Plans under the Scheme. However, the Fund Manager reserves the right to maintain adequate cash balance to meet the requirements of redemptions.

The asset allocation of the Underlying schemes that the fund intends to invest into will be maintained as per the Scheme Information Document of the respective schemes. It shall always be ensured that the actual allocation of all the Funds is within the asset allocation range as disclosed in the asset allocation pattern above. Further, investment by the Scheme into the Underlying scheme(s) will not exceed 20% of the net assets of the Underlying scheme(s).

The Concept of Asset AllocationAsset allocation strategy is based on the concept of risk diversifi cation. Investments in fi nancial instruments are recommended based on the risk appetite of the investor. Through asset allocation, investors can decide on the best mix of debt, equity, gold ETFs and other ETFs, offshore mutual fund units and money market instruments, which is commensurate with their risk profi le. The advantages of asset allocation strategy include: � Diversifi cation across asset classes and across schemes within

an asset class. � Fulfi llment based on risk profi les. � Ability to maintain the asset allocation by continuous rebalancing. � Asset allocation reacts differently to the market conditions, a

loss in one asset class could be made up by the gain in the other.

Expenses of Underlying Scheme as on April 30, 2016

S. No.

Scheme Expenses of Underlying Scheme

1 HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund

0.65%

S. No.

Scheme Expenses of Underlying Scheme

2 HSBC Brazil Fund 0.85%3 HSBC Emerging Markets Fund 0.85%4 HSBC Global Consumer

Opportunities Fund0.70%

5 HSBC Managed Solution India-Conservative - Regular Plan

0.75%

HSBC Managed Solution India-Conservative - Direct Plan

0.74%

6 HSBC Managed Solutions India-Growth

1.65%

7 HSBC Managed Solutions India-Moderate - Regular Plan

1.34%

HSBC Managed Solutions India-Moderate - Direct Plan

1.35%

POSITION OF DEBT MARKETS IN INDIAThe major players in the Indian debt markets today are banks, fi nancial institutions, insurance companies and mutual funds. The instruments in the market can be broadly categorised as those issued by corporates, banks, fi nancial institutions and those issued by state / central governments. The risks associated with any investment are - credit risk, interest rate risk and liquidity risk. While corporate papers carry credit risk due to changing business conditions, government securities are perceived to have zero credit risk. Interest rate risk is present in all debt securities and depends on a variety of macroeconomic factors. The liquidity risk in the corporate securities market is higher as compared to that in case of government securities. Liquidity in the corporate debt market has been improving due to the entry of more players and due to various measures taken by the regulators in this direction over a period of time. SEBI’s directive of a compulsory rating by a rating agency for any public issuance over 18 months, dematerialisation, entry of private insurance companies, listing of debt securities and growth of fi xed income mutual funds have enhanced liquidity in the corporate debt market. The setting up of clearing corporations, real time gross settlement and electronic clearing system for government securities have considerably enhanced the depth and width of the Indian debt markets and bringing it at par with developed markets.

The following table attempts to give a broad overview of the available instruments in the fi nancial markets and their risk - return profi le. The data is based on the market conditions as on the date of the Combined SID and may vary substantially depending upon the factors and forces affecting the securities market including the fl uctuations in the interest rates.

The indicative yields and liquidity on various securities as on May 2, 2016 are as under: -

Issuer Instrument Maturity Yields LiquidityGOI Treasury Bill 91 days 6.50 – 7.50% Medium

to HighGOI Treasury Bill 364 days 6.50 – 7.50% Medium

to HighGOI Short Dated 1 – 3 Yrs 7.00 – 8.50% MediumGOI Medium Dated 3 – 5 Yrs 7.00 – 8.50% Medium

to HighGOI Medium Dated 5 – 10 Yrs 7.50 – 8.50% HighGOI Long Dated 10 – 15Yrs 7.50 – 8.50% HighGOI Long Dated >15Yrs 7.75 – 8.75% Low to

MediumGOI Reverse Repo /

CBLO1 – 14 days 5.00 – 9.00% High


Issuer Instrument Maturity Yields LiquidityCorporate Debt

Taxable Bonds (AAA)

364 days 7.00 – 9.00% Low to Medium

Corporate Debt

Taxable Bonds (AAA)

1 – 3 Yrs 7.50 – 9.50% Medium

Corporate Debt

Taxable Bonds (AAA)

3 – 5 Yrs 7.50 – 9.50% Medium

Corporate Debt

Taxable Bonds (AAA)

5 – 10 Yrs 8.00 – 9.00% Medium

Corporate Debt

CPs (A1+) 3 months 7.00 – 10.00% Low to Medium

Corporate Debt

CPs (A1+) 1 Year 7.00 – 10.50% Low to medium

Strategies for fi xed income derivatives

1. Bond - Swap: Under this strategy, the fund manager pays fi xed rate on Overnight Indexed Swap (OIS) against an underlying bond of a similar or greater tenor and receives Mumbai Inter-Bank Offer Rate (MIBOR). This is essentially done for hedging interest rate risk or for rebalancing portfolio allocation to fi xed and fl oating rate bonds. Effectively, through this trade the fund manager is able to convert a fi xed rate bond into a fl oating rate MIBOR linked instrument. The trade has exposure to ‘basis movement’ - the relative movement of bond versus OIS.

2. Receive OIS: Here the fund manager receives fi xed rate on OIS against either cash or a fl oating rate bond of a similar or greater tenor, and pays MIBOR. The objective is to rebalance portfolio in favor of fi xed rate exposure.

3. Curve Steepener: This strategy aims to capture a potential steepening of the curve between any 2 tenors: say, 1 and 5 years. For example, the fund manager can receive fi xed rate on 1 year OIS (against cash or fl oating rate bond) and pay fi xed rate on 5 year OIS (against fi xed rate bond). However, apart from the relative spread between the 5 year and 1 year OIS, the trade is also exposed to relative duration for the 2 tenors as well as basis risk on the bond-swap (in this example, the 5 year bond-swap).

4. Curve Flattener: This strategy aims to capture a potential fl attening of the curve between any 2 tenors: say 1 and 5 years. For example, the fund manager can pay fixed rate on 1 year OIS (against fi xed rate bond) and receive fi xed rate 5 year OIS (against cash or fl oating rate bond). Like mentioned above, the trade is also exposed to duration as well as basis risk.

Procedure followed for Investment Decisions

The Fund Manager(s) of the Scheme(s) is / are responsible for making buy / sell decisions in respect of the securities in the Scheme’s portfolio and to develop a well diversifi ed portfolio that minimizes liquidity and credit risk. The investment decisions are made on a daily basis keeping in view the market conditions and all relevant aspects.

The Board of the AMC has constituted an Investment Management Committee that meets at periodic intervals. The Investment Management Committee, at its meetings, reviews investments, including investments in unrated debt instruments. The approval of unrated debt instruments is based on parameters laid down by the Board of the AMC and the Trustees. The details of such investments are communicated by the AMC to the Trustees in their periodical reports along with a disclosure regarding how the parameters have been complied with. Such reportings shall be in the manner prescribed by SEBI from time to time. The Committee also reviews the performance of the Scheme and general market outlook and formulates the broad investment strategy at their meetings.

It is the responsibility of the AMC to ensure that the investments are made as per the internal / Regulatory guidelines, Scheme investment objectives and in the best interest of the Unitholders of the respective

Scheme. The Fund may follow internal guidelines as approved by the Board of the AMC and the Trustees from time to time.

HEF: All individual holdings in securities above 5% of the NAV will not exceed 50% of the NAV and no individual holding will exceed 10% of NAV. If however, the above limits are exceeded due to redemptions or the relative movements in prices of the holdings in the portfolio, the position would be rectifi ed as soon as practicable.

HIOF : All individual equity holdings in securities above 6% of the NAV will not exceed 60% of the Net Assets of the Scheme

HMEF : All individual equity holdings in securities above 5% of the portfolio will not exceed 40% of the portfolio

HIF & HCF: No more than 12.50% of the NAV of the Scheme(s) will be invested in securities of any one issuer rated AAA. This limit will however, not apply to Central Government securities.

HTSF & HDYEF : Investments in each stock may be allowed to reach a level of upto 15% of the Net Assets of the Scheme (at the time of investment, it shall not be allowed to exceed the limit of 10%, as required under the SEBI Regulations but may be allowed to reach a level of 15% of the Net Assets of the Scheme, due to market appreciation, redemptions, dividend payments etc but not from fresh investments).

The AMC reserves the right to modify, alter, add, delete any internal limits from time to time, in accordance with Group policies.

The Chief Investment Offi cer and Fund Manager - Equities & Fixed Income present to the Board of the AMC and the Trustees periodically, the performance of the Schemes. The performance of the Scheme(s) will be reviewed by the Boards with reference to their appropriate benchmark(s).

However, the Schemes’ performance may not be strictly comparable with the performance of their respective Indices due to the inherent differences in the construction of the portfolios. The Boards may review the benchmark selection process from time to time, and make suitable changes as to use of the benchmark, or related to composition of the benchmark, whenever it deems necessary.

The Chief Investment Offi cer and Fund Manager - Equities & Fixed Income will bring to the notice of the AMC Board, specifi c factors if any, which are impacting the performance of the Scheme(s). The Board on consideration of all relevant factors may, if necessary, give appropriate directions to the AMC. Similarly, the performance of the Scheme(s) will be submitted to the Trustees. The Heads of Fund Management - Equities & Fixed Income will explain to the Trustees, the details on the Schemes’ performance vis-à-vis the benchmark returns.

The AMC will keep a record of all investment decisions.

Investment of Subscription Money

The Fund may invest subscription money received from the investing public in bank deposits, or money market instruments before fi nalisation of the allotment of Units. The AMC, on being satisfi ed of the receipt of the minimum subscription amount, can commence investment out of the funds received in accordance with the investment objectives of the Scheme and as per the existing Regulations. The income earned out of such investments would be merged with the corpus of the Scheme on completion of the allotment of the Units.

Investments by the AMC in the Scheme

The AMC may invest in the Scheme(s) at any time during the continuous offer period subject to the SEBI Regulations & circulars issued by SEBI and to the extent permitted by its Board of Directors from time to time. As per the existing SEBI Regulations, the AMC will not charge investment management and advisory fee on the investment made by it in the Scheme(s).

HSBC Mutual Fund 63

F. PRODUCT DIFFERENTIATION

A tabular comparison of the features and product differentiation of each of the schemes of the Fund is detailed below, for understanding purpose :

EQUITY SCHEMES

Name of Scheme

Investment Objective

Investment Strategy Product Differentiation AUM as on 30.4.2016

(Rs. in crores)

Folios as on 30.4.2016

HEF, an open-ended diversifi ed equity Scheme


The aim of HEF is to deliver above benchmark returns by providing long-term capital growth from an actively managed portfolio, mainly comprising companies registered in and / or listed on a regulated market of India. Income is not a primary consideration in the investment policies of HEF. The Scheme will invest across a range of market capitalisations with a preference for medium and large companies.

This Scheme seeks to invest primarily into large cap Indian equity stocks which makes the scheme d i ffe ren t f rom o ther schemes of the Fund.

563.86 30,150

HIOF, an open-ended fl exi-cap equity Scheme

To seek long term capital growth through investments a c r o s s a l l m a r k e t capitalisations, including small, mid and large cap stocks. The fund aims to be predominantly invested in equity and equity related securities. However, it could move a signifi cant portion of its assets towards fixed income securities if the fund manager becomes negative on equity markets.

The aim of HIOF is to seek aggressive growth and deliver above-benchmark returns by providing long-term capital growth from an actively managed portfolio, mainly comprising a judicious mix of small, mid and large cap stocks. Income is not a primary consideration in the investment policies of HIOF. The Scheme aims to be predominantly invested in equity and equity related securities. However, it could move a significant portion of its assets towards fi xed income securities if the fund becomes negative on equity markets.

This Scheme seeks to invest pr imari ly into Indian equity stocks with no market capitalization or other biases.

470.68 13,631

HIEF, an open ended equity Scheme

To generate long term capital appreciation from an actively managed portfolio of equity and equity related securit ies by investing predominantly in equity and equity related securities of companies engaged in or expected to benefi t from growth and development of Infrastructure in India.

The aim of HSBC Infrastructure Equity Fund is to deliver above benchmark returns by providing long-term capital growth from an actively managed portfolio, primarily comprising of stocks of companies engaged in or expected to benefi t from growth and development of Infrastructure in India.

This fund seeks to invest, t h o u g h n o t l i m i t e d to, in the sectors that are beneficiaries of the infrastructure growth and economic reforms expected in the country in the coming years.

108.03 29,585

HMEF, an open-ended diversifi ed equity Scheme

To generate long term capital growth from an actively managed portfolio of equity and equity related securities primarily being Midcap stocks. However, it could move a portion of its assets towards fixed income securities if the fund manager becomes negative on the Indian equity markets.

The aim of HMEF is to deliver above-benchmark returns by providing long-term capital growth from an actively managed portfolio, primarily comprising of midcap stocks. Income is not a primary consideration in the investment policies of HMEF. The Scheme aims to be predominantly invested in midcap equity and equity related securities and also invest in small cap equity and equity related securities. However, it could move a portion of its assets towards fi xed income securities if the fund becomes cautious or negative on equity markets.

It seeks to invest primarily into mid cap Indian equity stocks which makes the Scheme different from other equity Schemes of the Fund.

376.26 15,956


Name of Scheme

Investment Objective

Investment Strategy Product Differentiation AUM as on 30.4.2016

(Rs. in crores)

Folios as on 30.4.2016

HDF, an open-ended Scheme

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 Scheme has the fl exibility to allocate assets to both equity and debt instruments. It will hold a mix of securities-primarily equity and equity related instruments. This allocation will be steadily monitored and updated as and when the market movements demand it, a switch would be made. This product offers a lower risk alternative to pure equity offerings as it has the fl exibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative. The relative balance of these securities can be periodically changed to take advantage of phases in the economic cycle.

This Scheme seeks to normally invest in equity, with an aim to capitalise on the potential upside in equity markets but can react quickly to a negative market by moving 100 per cent of its assets into debt instruments, with an aim to limit the downside risk, in the event that the fund manager is bearish on the market.

53.72 9,763

HTSF, an open-ended Equity Linked Savings Scheme

To provide long term capital appreciation by investing in a diversified portfolio of equity & equity related instruments of companies across var ious sectors and industries, with no capitalization bias. The Fund may also invest in fi xed income securities.

The aim of HTSF is to provide long-term capital appreciation from an actively managed portfolio, primarily comprising of a mix of small, mid and large cap stocks. Income is not a primary consideration in the investment policies of HTSF. The Scheme aims to be predominantly invested in equity and equity related securities. The Fund may also invest in fi xed income securities.

It is the only scheme launched as an Equity Linked Savings Scheme, available for deduction, subject to a maximum of Rs. 1,00,000, under section 80C of the Income Tax Act, 1961.

162.57 35,702

HDYEF, an open-ended equity Scheme


The Fund Manager will seek to largely invest in stocks with above the average market yields at the time of investments and which have potential for capital appreciation. The ‘above market yields’ means the scheme’s portfolio dividend yield being greater than the dividend yield of the Nifty index as per the investment strategy.

This Scheme seeks to invest in to s tocks of companies to generate dividend yield and capital appreciation. It aims to largely invest in stocks with above the average markets yields at the time of investments and which have a potential of capital appreciation. This is the only domestic equity scheme with an investment s t r a t e g y f o c u s e d o n Dividend yield along with capital appreciation over time.

38.14 8,874

Income / Debt schemes

Name of the Scheme

Investment Objective Investment Strategy Product Differentiation AUM as on 30.4.2016

(Rs. in crores)

Folios as on

30.4.2016

HMIP, an open ended Fund. Monthly income is not assured and is subject to the availability of distributable surplus.

To seek genera t ion of 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 shall invest in debt and money market instruments and would seek to generate regular returns. The Scheme may also invest in equity and equity related instruments to seek capital appreciation. The Scheme does not assure any returns.

HMIP - seeks to invest a large portion in debt and money market instruments with a cap on equities upto 25%.

298.59 4,720

HSBC Mutual Fund 65

Name of the Scheme


(Rs. in crores)

Folios as on

30.4.2016

HIF, an open ended income Scheme

To provide a reasonable income through a diversifi ed portfolio of fixed 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 Short Term Plan wil l invest predominantly in debt and money market instruments where interest rate risk is low. The Investment Plan aims to provide investors with income, with appropriate liquidity, and therefore will invest in a mix of debt and money market instruments, over varying maturities. In the Short Term Plan, exposure to instruments bearing price risk will be controlled, such that the Plan offers an appropriate mix of liquidity and returns. In the Investment Plan, investments will be made mainly into debt instruments, with an appropriate allocation to money market instruments to maintain the overall liquidity of the portfolio.

HIF - Short Term Plan primarily takes exposure to securities with modifi ed duration ranging between 1-3 years.HIF - Investment Plan primarily takes exposure to securities with modifi ed duration ranging between 6 months - 8 years.This makes the Scheme different from the other income / debt schemes of the Fund.

1836.10 4,974

HCF, an open ended liquid Scheme

To provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities. However there can be no assurance that the Scheme’s objective can be realised.

Since providing liquidity is of paramount importance, the focus will be to ensure liquidity while seeking to maximise the yield. An appropriate mix of money market and debt instruments will be used to achieve this. The Fund may invest a part of the portfolio in various debt securities issued by corporates and / or State and Central Government.

HCF is a liquid scheme w h i c h i n v e s t s u p t o 100% in debt and money market instruments with the average matur i ty of the portfolio being upto 91 days thereby differentiating it from other existing open-ended liquid schemes of the Fund.

2221.17 2,013

HFDF, an open ended debt Scheme

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 Scheme can invest across all classes of fi xed income instruments. There will be no cap or fl oor on maturity, duration or instrument type concentrations. The Fund Manager, depending on the interest rates view has the fl exibility to allocate the funds in any fi xed income instrument and endeavour to provide yields in line with the current market scenario. The Fund aims to optimise returns for the investors by designing a portfolio, which will dynamically track interest rate movements in the short term by reducing duration in a rising rate environment while increasing duration in a falling interest rate environment. The investment strategy would revolve around structuring the portfolio with an aim to capture positive price movements and minimise the impact of adverse price movements.

HFDF invests across all classes of fixed income instruments with no cap or f loor on maturi ty, duration or instrument type concentrations. This makes the scheme different from other existing open-ended income / debt schemes of the Fund.

495.52 1,494

HUSBF, an open ended debt Scheme

Seeks to provide liquidity and reasonable returns by investing primarily in a mix of short term debt and money market instruments.

The aim of the Investment Manager will be to allocate the assets of the Scheme between various money market and fi xed income securities (predominantly short duration instruments) with the objective of providing liquidity and achieving optimal returns with the surplus funds. Since providing liquidity is of paramount importance, the focus will be to ensure liquidity while seeking to maximise the yield. An appropriate mix of money market and debt instruments will be used to achieve this. Liquidity will be maintained through a combination of cash, reverse repo, daily put / call MIBOR

HUSBF is a very short term fi xed income scheme that invests at least 70% into money market and debt instruments maturing or having interest rate reset not greater than 1 year thereby differentiating it from other existing open-ended income / debt schemes of the Fund.

502.13 1,895


Name of the Scheme


(Rs. in crores)

Folios as on

30.4.2016

papers and liquid CPs / CDs of strong credits. As compared to a liquid fund, the higher portfolio maturity would mean higher allocation to 6-12 months instruments and a mix of structured credits in the 1 year segment as well as moving down the credit curve to improve yield. The fund could run a mark to market component slightly higher than a liquid fund (whose regulatory maximum is 10%) but sharply lower than an STP (in the region of 40-60%).

Fund of Funds Schemes

Name of the Scheme

Investment Objective Investment Strategy Product differentiation AUM as on 30.4.2016 (Rs.

in crores)

Folios as on

30.4.2016HEMF, an open ended Scheme

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.

HEMF proposes to invest in the overseas market by investing in units/securities issued by overseas mutual funds managed by HSBC globally, for example HSBC GEM Equity Fund etc. The Fund may undertake currency hedging to protect the investors from the risk associated with movement in currency markets as mentioned in the risk factors earlier.

HEMF is a fund of fund scheme which invests into HGIF Global Emerging Markets Equity Fund, which in turn invests into equities of countries which are classifi ed as emerging markets

8.84 2,637

HBF, an open ended fund of funds scheme

To provide long term capital appreciation by investing predominantly in units /shares of 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 Scheme will invest predominantly in units /shares of 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.As and when the AMC decides to invest in similar overseas mutual fund schemes other than HGIF, then it shall be ensured that the investment objective, process, philosophy, asset allocation pattern etc. of such overseas schemes is similar to that of HGIF Brazil Equity Fund as disclosed in this SID. This will ensure that the fundamental attributes of HBF remains intact.

HBF is a fund of fund scheme which invests into HGIF Brazil Equity Fund, which in turn invests into the stocks listed in the Brazilian equity markets.

28.98 2,010

HAPDF, an open ended fund of funds scheme

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. 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 will invest predominantly in the units of the Underlying scheme - 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. The Scheme may invest in units of liquid mutual fund schemes managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations.

HAPDF is a fund of fund scheme which invests into HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund which in turn invests into companies of the Asia Pacifi c region (excluding Japan) that offers sustainable dividend yields or has potential for dividend growth above the market average.

13.42 289

HSBC Mutual Fund 67

Name of the Scheme

Investment Objective Investment Strategy Product differentiation AUM as on 30.4.2016 (Rs.

in crores)

Folios as on

30.4.2016

HMS, an open ended fund of funds scheme

The scheme has 3 Plans. Kindly refer the investment objective of the Plans under Section I. Highlights/Summary of the Schemes.

The Plans under the Scheme will invest predominantly in the existing and / or prospective schemes of HSBC Mutual Fund, units of third party domestic mutual funds, units of offshore equity oriented funds managed by HSBC Global Asset Management, gold ETFs and other ETFs of third parties until such time that the Fund doesn’t have such scheme offerings. The Plans may also invest certain proportion of its corpus in money market instruments in order to meet liquidity requirements from time to time.

HMS is a Fund of Fund scheme having three Plans thereunder, each corresponding to a particular investor risk profi le. The asset allocation strategy of HMS is based on the concept of risk diversifi cation. The Scheme intends to provide long term solutions which are customer friendly and avoid product proliferation.

632.60 3,937

HGCOF, an open ended fund of funds scheme

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 will invest predominantly in units of HGIF China Consumer Opportunities Fund. 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 may invest in units of liquid mutual fund schemes managed by the AMC or in the schemes of any other mutual fund, provided it is in conformity with the investment objectives of the Scheme and in terms of the prevailing Regulations"

HGCOF is a fund of fund scheme investing into HGIF China Consumer Opportunities Fund, which in turn invests in a diversifi ed portfolio of mid to large cap companies that have appeal and recognition by Chinese consumers. These companies are primarily equities of well known global brands that have a growing trend of revenue attribution to the China market and also leading Chinese companies that produce consumer staples.

10.21 356

G. FUNDAMENTAL ATTRIBUTES

The following are the fundamental attributes of the Scheme(s), in terms of Regulation 18 (15A) of the Regulations:

(i) Type of scheme � Open ended / Close ended/Interval scheme � Sectoral Fund / Equity Fund / Balance Fund / Income Fund /

Index Fund / Any other type of Fund

(ii) Investment Objective � Main Objective - Growth/Income/Both. � Investment pattern - The tentative Equity / Debt / Money Market

portfolio break-up with minimum and maximum asset allocation, while retaining the option to alter the asset allocation for a short term period on defensive considerations.

(iii) Terms of Issue � Liquidity provisions such as listing, repurchase, redemption. � Aggregate fees and expenses charged to the scheme. � Any safety net or guarantee provided.

Further, investment by HBF in units/shares of overseas mutual fund schemes other than HGIF Brazil Equity Fund, will be considered as a change in the fundamental attribute of HBF.

In accordance with Regulation 18(15A) of the SEBI Regulations, the Trustees shall ensure that no change in the fundamental attributes of the Scheme(s) and the Plan(s) / Option(s) thereunder or the trust or fee and expenses payable or any other change which would modify the Scheme(s) and the Plan(s) / Option(s) thereunder and affect the interests of Unitholders is carried out unless: � A written communication about the proposed change is sent to

each Unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a

newspaper published in the language of the region where the Head Offi ce of the Mutual Fund is situated; and

� The Unitholders are given an option for a period of 30 days to exit at the prevailing Net Asset Value without any exit load.

� Further, in accordance with AMFI Best practices circular dated July 30, 2014, prior approval of SEBI will be obtained before effecting the changes in fundamental attributes.

H. HOW WILL THE SCHEME(S) BENCHMARK

ITS PERFORMANCE(S)?

Benchmark Index:

The Scheme(s)/Plan(s) performance will be compared with their respective benchmark (s) as per the table below:

Scheme / Plan Benchmark

HEF S&P BSE 200

HIOF S&P BSE 500

HMEF S&P BSE Midcap

HIEF S&P BSE 200

HMIP CRISIL MIP Blended Index

HIF-ST CRISIL Short Term Bond Fund Index

HIF-IP CRISIL Composite Bond Fund Index

HUSTF CRISIL Liquid Fund Index - 90%CRISIL Short Term Bond Fund Index - 10%

HCF CRISIL Liquid Fund Index

HTSF S&P BSE 200


Scheme / Plan Benchmark

HDYEF S&P BSE 200

HDF S&P BSE 200

HFDF CRISIL Composite Bond Fund Index

HEMF MSCI Emerging Market Index

HAPDF MSCI AC Asia Pacifi c ex-Japan Index

HBF MSCI Brazil 10/40 Index

HGCOF MSCI AC World Index

Managed Solutions India - Growth

Composite Index constituting 80% of BSE 200 Index and 20% of CRISIL Composite Bond Index

Managed Solutions India – Moderate

CRISIL Balanced Fund Index

Managed Solutions India – Conservative

Composite Index constituting of 90% into CRISIL Composite Bond Index and 10% of BSE 200 Index

However, the Schemes’/ Plans’ performance may not be strictly comparable with the performance of the Indices due to the inherent differences in the construction of the portfolios. The Boards may review the benchmark selection process from time to time, and make suitable changes as to use of the benchmark, or related to composition of the benchmark, whenever it deems necessary.

Justifi cation for benchmark

The Scheme(s) / Plan(s) are being benchmarked against the respective Indices mentioned above, since the composition of the Indices is in line with the investment objective of the respective Scheme(s) / Plan(s) and is most suited for comparing performance of the Scheme(s)/ Plan(s). It will also enable the investors to arrive at a more informed judgement on scheme (s) performances.

Details for MSCI Brazil 10/40 Index (Benchmark for HBF)

The MSCI 10/40 Equity Indices takes into account the investment limits as prescribed by UCITS III (Undertakings for Collective Investment in Transferable Securities). The UCITS III directive constrains the weight of any single group entity, at 10% of a fund’s total assets and the sum of the weights of all group entities representing more than 5% of the fund at 40% of the fund’s total assets.

The following are the guiding principles:

• Refl ecting the 10% and 40% concentration

constraints

Refl ecting the 10% and 40% concentration constraints is the primary consideration in terms of both index construction and index maintenance. Ensuring timely and on-going refl ection of the constraints requires a 10/40 Equity Index to be rebalanced as soon as the weights of one or more group entities exceed the constraints. In practice, this requires that rebalancings take place as of the close of the day when the constraints are breached, such that the index will comply with the weight restrictions before the opening of the

following trading day.

• Minimizing turnover in the 10/40 Equity Index

Due to absolute and / or relative market price movements, a 10/40 Equity Index could potentially be rebalanced at the end of every trading day in order to remain compliant with the 10/40 framework. This would result in signifi cant index turnover and exorbitant costs for a portfolio to track the index. Therefore, keeping the ongoing index turnover in a 10/40 Equity Index to a reasonable level is an important guiding principle of the 10/40 Equity Index construction and maintenance methodology.

• Minimizing tracking error to the Parent Index

Minimizing the tracking error between the 10/40 Equity Index and the Parent Index is another important objective of the current methodology. This is achieved by a regular rebalancing of the 10/40 Equity Index relative to the constituents’ weights in the Parent Index, as well as by features in the Index construction and maintenance process which aim at minimizing the difference between the 10/40 Equity Index and the Parent Index.

A link to HBF’s benchmark prices will also be available on the website of the Fund for investors to compare the prices of the benchmark with the NAV of the Scheme. These prices will be available at all times with no additional cost to the investor. For further details on the benchmark index, please refer to www.msci.com

HAPDF - MSCI AC Asia Pacifi c ex Japan has been adopted as the suitable benchmark for HAPDF, since it closely refl ects the geographic investment universe for the strategy of the Underlying scheme and is widely used and understood from an investors’ perspective. The MSCI AC Asia ex Japan Index captures large and midcap representation across 2 of 3 Developed Markets countries* (excluding Japan) and 8 Emerging Markets countries* in Asia. With 609 constituents, the index covers approximately 85% of the free fl oat-adjusted market capitalization in each country.

* Developed Markets countries in the index include Hong Kong and Singapore. Emerging Markets countries include China, India, Indonesia, Korea, Malaysia, Philippines, Taiwan and Thailand.

HMS - As mentioned in asset allocation table, the Plans under the Scheme primarily intend to invest in the units of onshore and offshore mutual fund schemes and money market instruments. The benchmark chosen for the aforesaid Plans refl ects the Underlying scheme’s investment focus as per the allocation. The benchmark will enable the investors to arrive at a more informed judgement on performance of the Plan.

HGCOF - The MSCI AC World Index is a free fl oat-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 45 country indices comprising 24 developed and 21 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey

HSBC Mutual Fund 69

I. WHO MANAGES THE SCHEME(S)?

Fund Manager(s)

Scheme Fund Manager(s) Tenure of managing the scheme (in Years)

HEF Neelotpal Sahai 2.85HIOF Neelotpal Sahai 2.85HIEF Dhiraj Sachdev 6.33HMEF Dhiraj Sachdev 6.33HEMF Anitha Rangan (Dedicated Fund Manager for overseas investments) 1.45HTSF Aditya Khemani 7.10HDYEF Amaresh Mishra 3.75

Gautam Bhupal 0.44HAPDF Anitha Rangan (Dedicated Fund Manager for overseas investments) 1.45

Sanjay Shah (for managing investments in Indian market – fi xed income portion) 2.11HGCOF Anitha Rangan (Dedicated Fund Manager for overseas investments) 1.13

Sanjay Shah 1.13HDF Neelotpal Sahai (for Equity portion) 2.85

Sanjay Shah (for Fixed Income portion) 6.63HMIP Sanjay Shah (for Fixed Income portion) 6.63

Aditya Khemani (for Equity portion) 7.10HCF Kapil Punjabi 2.05HIF- Investment Plan Sanjay Shah 7.23HIF- Short Term Plan Sanjay Shah 7.23

Piyush Harlalka 0.65HUSTF Piyush Harlalka 0.65

Kapil Punjabi 1.45HFDF Sanjay Shah 7.23HBF Anitha Rangan (Dedicated Fund Manager for overseas investments) 1.45HMS Anitha Rangan (Dedicated Fund Manager for overseas investments) 1.45

Gautam Bhupal (for managing investments in Indian market – equity portion) 0.44Sanjay Shah (for managing investments in Indian market – fi xed income portion) 1.92

Anitha Rangan is the dedicated Fund Manager for making overseas investments as permitted under the Regulations, guidelines and circulars issued from time to time.

The details of the Fund Manager(s) are detailed below :

Name of Fund Manager Designation Age Qualifi cations Years of Experience with description

Neelotpal Sahai Senior Vice President & Fund Manager – Equities

47 B.Tech (IIT Varanasi), PGDM (IIM Kolkata)

Over 22 years of experience in Research and Fund Management.• HSBC Asset Management (India) Private Limited

Senior Fund Manager – Equities from April 2013 to onwards.• IDFC Asset Management Company Ltd.

Director from February 2006 to April 2013• Motilal Oswal Securities Ltd.

Senior Research Analyst from March 2005 to January 2006• Infosys Ltd.

Senior Project Manager from June 1999 to March 2005• Vickers Ballas Securities Ltd.

Analyst from September 1998 to June 1999• SBC Warburg

Analyst from May 1997 to May 1998• UTI Securities Ltd.

Equity Analyst from June 1995 to May 1997Dhiraj Sachdev Senior Vice

President & Fund Manager, Equities

43 B . C o m . , ACA, Grad. CWA, Dip . Foreign Trade Management (DFTM)

Over 20 years of experience in Equity Research & Fund Management• HSBC Asset Management (India) Private Limited

Senior Fund Manager from 1 December, 2009 onwards, Head of Equity – Portfolio Management Services from October 2005 to November 2009



• ASK Raymond James Securities India Pvt. Ltd. Portfolio Manager from October 2003 to September 2005

• HDFC Bank Ltd. Senior Manager – Equities from November 1999 to September 2003• DSQ Software Ltd.

Business Analyst from June 1999 to November 1999• Probity Research & Services Ltd. (India Infoline Ltd.)

Research Analyst from November 1998 to May 1999• Ford Brothers Capital Services (P) Ltd.

Manager – Research from July 1996 to Sept. 1998.

Aditya Khemani Vice President & Fund Manager, Equities

34 PGDBM, B.Com. (Hons.)

Over 11 years combined experience in research and fund management• HSBC Asset Management (India) Private Limited

Vice President & Assistant Fund Manager, Equities from February 2009 onwards. Associate Vice President – Investment Management from October 2007 to February 2009

• SBI Funds Management India Private Limited Senior Manager – Equity Research from March 2007 – September 2007• Prudential ICICI Asset Management Company India Private

Limited Assistant Manager – Equity Research from December 2005 to February 2007

• Morgan Stanley Advantage Services Private Limited Research Associate from May 2005 - November 2005

Sanjay Shah Senior Vice President & Head - Fixed Income

41 B. Com., A. C. A., PGDM

Over 17 years of experience in research and risk:• HSBC Asset Management (India) Private Limited

Senior Vice President & Head – Fixed Income from November 2012 to present

Vice President & Fund Manager, Fixed Income since December 2008 till November 2012

Vice President & Fund Manager – Fixed Income from December 2008 to September 2011

• FIL Fund Management Private LimitedCredit Analyst from September 2008 to December 2008

• Lehman Brothers Structured Financial Services Private Limited – Vice President, Convertible Products from September 2006 to September 2008

• Rabo India Finance Private Limited Senior Manager – Credit Risk from July 2004 to September 2006

• ICICI Bank Limited – Manager, Credit Risk from January 2003 to June 2004

• SBI Funds Management Private Limited Chief Manager, Debt Funds from June 1999 to January 2003

Amaresh Mishra Vice President & Assistant Fund Manager

36 Post Graduate Diploma in Business Management, Bachelor of Engineering (Chemical)

Over 12 years of experience in Equities & Sales.• HSBC Asset Management (India) Private Limited – Vice

President & Assistant Fund Manager, from April 2012 till date, Associate Vice President- Investment Management from April 2008 to March 2012, Associate Vice President- Equities from October 2007 to March 2008, Associate Vice President – Sales and Distribution from March 2005 to September 2007.

• Centre for Science and Environment, – Trainee Researcher from July 2001 to July 2002.

Kapil Punjabi Vice President & Fund Manager – Fixed Income

32 B.M.S, M.M.S, Mumbai

Around 11 years of experience in research and fi xed income fund management- • HSBC Asset Management (India) Private Ltd – Vice President

& Fund Manager - Fixed Income from March 04, 2014 onwards• Taurus Asset Management Company Limited – Fund

Manager Fixed Income since June 2012 to February 2014; • Edelweiss Asset Management Limited – Fund Manager Fixed

Income from December 2009 to June 2012;• Edelweiss Securities Limited – Manager Investment from October

2007 to November 2009;• Trans Market Group Research (India) Private Limited –

Research Analyst and Proprietary Trader from May 2006 to October 2007;

HSBC Mutual Fund 71


Anitha Rangan VicePresident –Fixed Income

35 PGDBM (SPJIMR, Mumbai); CA; M.Com

Over 10 years of experience in areas of research and risk.• HSBC Asset Management (India) Private Ltd – Associate

Vice President - Investment Management, from February 2013 onwards

• CRISIL Limited – Senior Manager - Customised Industry Research, from December 2010 to May 2012

• Nomura Structured Financial Services – Vice President - Credit Research , from December 2008 to November 2010

• Lehman Brothers Structured Financial Services – Analyst - Credit Research, from June 2006 to November 2008

• Ambattur Clothing Limited – Executive - October 2002 to March 2004.

Piyush Harlalka Vice President & Fund Manager – Fixed Income

35 M.B.A, (Finance), C.A., C.S.

Over 10 years of experience in research• HSBC Asset Management (India) Private Limited Vice President & Fund Manager – Fixed Income Mutual Fund

Division from August 5, 2015 to present; Vice President & Fund Manager - Portfolio Management Services

Division from June 15 to August 4, 2015; Vice President & Fund Manager – Fixed Income Mutual Fund

Division - October 2010 to June 12, 2015; Assistant Vice President - Investment Management - Portfolio

Management Services Division - December 2008 to October 2010; Research Analyst from July 2007 to November 2008.• Batlivala & Karanai Securities Pvt. Ltd. , Assistant Vice President & Research Analyst, from April 2006 to

June 2007.Gautam Bhupal Vice President

And Fund Manager – Equities

39 PGDBM, CA,CS, B.Com(Hons)

Over 12 years of experience in areas of research and Fund Management.• HSBC Asset Management (India) Private Limited Vice President & Fund Manager, since October 2015 till date Vice President - Investment Management, from June 2015 to

October 2016. Fund Manager for PMS Portfolios from July 2008 till June 2015. • UTI Asset Management Company Equity Research Analyst from May 2004 till June 2008.

J. WHAT ARE THE INVESTMENT

RESTRICTIONS?

Investment Restrictions for the Scheme(s)

All investments by the Scheme(s) and the Mutual Fund, will always be within the investment restrictions as specifi ed in the SEBI (Mutual Funds) Regulations, 1996, as amended from time to time. Pursuant to the Regulations, the following investment and other restrictions are presently applicable to the Scheme(s):1. The Scheme shall not invest more than 10% of its NAV in debt

instruments comprising money market instruments and non-money market instruments issued by a single issuer, which are rated not below investment grade by a credit rating agency authorised to carry out such activity under the SEBI Act, 1992. Such investment limit may be extended to 12% of the NAV of the Scheme with the prior approval of the Board of Trustees and the Board of the AMC. Provided that, such limit shall not be applicable for investments in government securities, treasury bills and collateralized borrowing and lending obligations. Provided further that investment within such limit can be made in mortgage backed securitised debt which are rated not below investment grade by a credit rating agency registered with SEBI.

2. The Scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the Scheme. All such investments shall be made with the prior approval of the Board of Trustees and the Board of the AMC or a Committee constituted in this behalf.

3. The Fund under all its Schemes shall not own more than 10% of any company’s paid up capital carrying voting rights.

4. Transfer of investments from one Scheme to another Scheme in the Mutual Fund is permitted provided:(a) Such transfers are done at the prevailing market price for

quoted instruments on spot basis (spot basis shall have the same meaning as specifi ed by a Stock Exchange for spot transactions); and

(b) The securities so transferred shall be in conformity with the investment objective of the Scheme to which such transfer has been made.

5. The aggregate inter-scheme investment in line with the investment objectives, made by all the Schemes under the same management or in schemes under management of any other asset management company shall not exceed 5% of the Net Asset Value of the Fund. No investment management fees shall be charged for investing in other Schemes of the Fund or in the Schemes of any other Mutual Fund. Provided that this clause shall not apply to any fund of funds scheme and investments in mutual funds in foreign countries.

6. The Fund shall get the securities purchased or transferred in the name of the Fund on account of the concerned Scheme, wherever investments are intended to be of a long-term nature.

7. Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relevant securities and in all cases of sale, deliver the securities:


Provided that a mutual fund may engage in short selling of securities in accordance with the framework relating to short selling and securities lending and borrowing specifi ed by the Board:

Provided further that a mutual fund may enter into derivatives transactions in a recognized stock exchange, subject to the framework specifi ed by the Board

Provided further that sale of government security already contracted for purchase shall be permitted in accordance with the guidelines issued by the Reserve Bank of India in this regard.

8. Pending deployment of funds of a Scheme in terms of investment objectives of the scheme, a mutual fund may invest them in short-term deposits of scheduled commercial banks, subject to such Guidelines as may be specifi ed by the Board. The requirements of SEBI Circulars, SEBI/IMD/CIR No. 1/91171/07 dated 16 April 2007 and SEBI/IMD/CIR No.7/129592/08 dated 23 June 2008 will be adhered to.

9. The Scheme shall not make any investment in:(a) Any unlisted security of an associate or group company of the

Sponsor; or(b) Any security issued by way of private placement by an

associate or group company of the Sponsor; or(c) listed securities of group companies of the Sponsor which is

in excess of 25% of the net assets of the Scheme of the Mutual Fund.

10. The Scheme shall not invest more than 10% of its NAV in the equity shares or equity related instruments of any company. Provided that, the limit of 10 per cent shall not be applicable for investments in case of index fund or sector or industry specifi c scheme.

11. The Scheme shall not invest more than 5% of its NAV in the unlisted equity shares or equity related instruments in case of open ended schemes and 10% of its NAV in case of close ended schemes.

12. The Fund shall not borrow except to meet temporary liquidity needs of the Fund for the purpose of repurchase / redemption of Units or payment of interest and dividend to the Unitholders. Provided that the Fund shall not borrow more than 20% of the net assets of any individual Scheme and the duration of the borrowing shall not exceed a period of 6 months.

13. No loans for any purpose shall be advanced by the Scheme.14. The Fund may lend securities in accordance with the securities

lending scheme of SEBI.

15. The Scheme shall not invest in a fund of funds scheme.

16. A fund of funds scheme shall be subject to the following investment restrictions:(a) A fund of funds scheme shall not invest in any other fund of

funds scheme;(b) A fund of funds scheme shall not invest its assets other than

in schemes of mutual funds, except to the extent of funds required for meeting the liquidity requirements for the purpose of repurchases or redemptions, as disclosed in the SID of the fund of funds scheme.

17. Aggregate value of ‘illiquid securities’ of Scheme, which are defi ned as non-traded, thinly traded and unlisted equity shares, shall not exceed 15% of the total assets of the Scheme. As this percentage is not signifi cant, in the AMC’s view, it will have no material impact on the ability to meet redemptions within 10 days of the date the Scheme’s units are tendered.

18. The cumulative gross exposure through equity, debt and derivative positions, shall not exceed 100% of net assets of the respective Scheme. However, the following shall not be considered while calculating the gross exposure:a) Security-wise hedged position and

b) Exposure in Cash or Cash equivalents with residual maturity of less than 91 days.

19. The total exposure of debt oriented schemes in a particular sector (excluding investments in Bank CDs, CBLO, G-Secs, T-Bills etc., AAA rated securities issued by Public Financial Institutions and Public Sector Banks and Short term deposits of scheduled commercial banks) shall not exceed 25% of the net assets of the respective Schemes.

Provided that an additional exposure to fi nancial services sector (over and above the limit of 25%) not exceeding 5% of the net assets of the Schemes shall be allowed by way of increase in exposure to Housing Finance Companies (HFCs) only; Provided further that the additional exposure to such securities issued by HFCs are rated AA and above and these HFCs are registered with National Housing Bank (NHB) and the total investment/ exposure in HFCs shall not exceed 25% of the net assets of the respective Schemes.

20.The total exposure of a debt scheme in a group (excluding investments in securities issued by Public Sector Units, Public Financial Institutions and Public Sector Banks) shall not exceed 20% of the net assets of the scheme. Such investment limit may be extended to 25% of the net assets of the scheme with the prior approval of the Board of Trustees. For this purpose, a group means a group as defi ned under regulation 2 (mm) of SEBI (Mutual Funds) Regulations, 1996 (Regulations) and shall include an entity, its subsidiaries, fellow subsidiaries, its holding company and its associates.

21. The Scheme will comply with any other regulations applicable to the investments of mutual funds from time to time.

The Trustees may alter the above restrictions from time to time to the extent that changes in the Regulations may allow and as deemed fi t in the general interest of the Unitholders.

It is the responsibility of the AMC to ensure that the investments are made as per the internal / Regulatory guidelines, Scheme investment objectives and in the best interest of the Unitholders of the Scheme. The Fund may follow internal guidelines as approved by the Board of the AMC and the Trustees from time to time. Internal guidelines shall be subject to change and may be amended from time to time in the best interest of the Unitholders. The amendments will be approved by the Board of the AMC and the Trustees of the Mutual Fund.

Policy on Offshore Investments by the Scheme and

the Plans thereunder

SEBI Regulations permit mutual funds to invest in certain securities / instruments viz. ADRs / GDRs issued by Indian or Foreign companies, Equity of overseas companies listed on recognized stock exchanges overseas, Initial public offer (IPO) and Follow on public offerings (FPO) for listing at recognized stock exchanges overseas, Foreign debt securities in the countries with fully convertible currencies, with rating not below investment grade by accredited / registered credit rating agencies, Money market instruments rated not below investment grade, Repos - only as pure investment avenues, where the counterparty is rated not below investment grade; also repos should not however, involve any borrowing of funds by mutual funds, Government securities where the countries are rated not below investment grade, Derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities, Short term deposits with banks overseas where the issuer is rated not below investment grade, Units/securities issued by overseas mutual funds registered with overseas regulators and investing in approved securities or Real Estate Investment Units / securities issued by overseas mutual funds registered with overseas regulators and investing in approved securities or Real Estate Investment Trusts (REITs) listed in recognized stock exchanges overseas or unlisted overseas securities (not exceeding 10% of their net assets) subject to the terms and conditions prescribed, subject to maximum of US$

HSBC Mutual Fund 73

300 million. This would be revised in terms of SEBI approvals / guidelines from time to time.

All the provisions of SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007 and all applicable regulations / guidelines/ directives / notifi cations, as may be stipulated by SEBI and RBI, from time to time will be adhered to including appointment of dedicated fund manager for investment in foreign securities.

It is the Investment Manager’s belief that foreign securities offer new investment and portfolio diversifi cation opportunities into multi-market and multi-currency products. The Fund would look to invest in foreign securities in order to diversify the portfolio in terms of variety of instruments held and enhance returns by taking advantage of market movements in global markets, which may or may not be in sync with the Indian markets. Investment in foreign securities would only be looked at if they provide a return, liquidity, ease of settlement and valuation, transaction costs better than equivalent local investments. Hence only if the Fund Manager becomes cautious or negative on the Indian markets for a reasonably long period of time, would he consider investing in such securities. The Fund will look to identify and capture profi table opportunities as and when they arise. However, such investments also entail additional risks. Such investment opportunities may be pursued by the Investment Manager provided they are considered appropriate in terms of the overall investment objectives of the Scheme. The Scheme may then, if necessary, seek permission from SEBI and RBI to invest abroad in accordance with the investment objectives of the Scheme and in accordance with any guidelines issued by SEBI / RBI from time to time.

Since the Scheme would invest only partially in foreign securities, there may not be readily available and widely accepted benchmarks to measure performance of the Scheme. To manage risks associated with foreign currency, the Fund may use derivatives for effi cient portfolio management including hedging and in accordance with conditions as may be stipulated by SEBI / RBI from time to time.

Offshore investments will be made subject to any / all approvals and conditions thereof as may be stipulated by SEBI / RBI being fulfi lled and provided such investments do not result in expenses to the Fund in excess of the ceiling, if any, on expenses prescribed by SEBI for offshore investment, and if no such ceiling is prescribed by SEBI, the expenses to the Scheme(s) shall be limited to the level which, in the opinion of the Trustees, is reasonable and consistent with costs and expenses attendant to international investing. The Fund may, where necessary, appoint other intermediaries of repute as advisors, sub-custodians, etc. for managing and administering such investments. The appointment of such intermediaries shall be in accordance with the applicable requirements of SEBI and within the permissible ceilings of expenses. The fees and expenses would illustratively include, besides the investment management fees, custody fees and costs, fees of appointed advisors and sub-managers, transaction costs and overseas regulatory costs.

The AMC / Trustee reserves the right to temporarily suspend subscriptions in/switches into the relevant Schemes, or the subsequent installments of HSBC SIP / HSBC STP into the Schemes will be stopped from the month in which the subscriptions exceed or are expected to exceed the maximum permissible limits prescribed by SEBI for overseas investments (currently the limit for all the Schemes of the Fund put together is equivalent to US$ 300mn).

K. HOW HAS THE SCHEME(S) PERFORMED?

Scheme performance as on 30 April, 2016

HSBC EQUITY FUND

Period Scheme Returns Benchmark ReturnsLast 1 year -2.94% -3.02%Last 3 years 11.44% 11.61%Last 5 years 6.43% 7.03%Since Inception 21.98% 17.46%

Absolute Returns

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

27.89 31.72

5.01 6.06

-9.31 -7.86-9.00 -6.34

40% –

20% –

0% –

-20% –

S&P BSE 200HEF – Growth

FY 2014 - 2015

FY 2015 - 2016

16.86 16.70



Absolute Returns

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

FY 2014 - 2015

FY 2015 - 2016

1.61 4.84

-9.14 -7.82-3.78 -6.24

40% –

20% –

0% –

-20% –

S&P BSE 500HIOF – Growth

28.0016.49

45.0632.97



Absolute Returns

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

-17.69 -7.86-7.00

6.06

-9.31-2.98

80% –60% –40% –20% –0% –

-20% –

S&P BSE 200HIEF – Growth

FY 2015 - 2016

FY 2014 - 2015

73.87

31.72

4.6616.70

HSBC Progressive Themes Fund has been repositioned as HSBC Infrastructure Equity Fund with effect from October 14, 2015. Kindly refer to Notice-cum-Addendum dated August 6, 2015 and Corrigendum to Notice-cum-Addendum dated September 7, 2015 available on “http://www.assetmanagement.hsbc.com/in”HSBC MIDCAP EQUITY FUND

Period Scheme Returns Benchmark Returns#

Last 1 year 1.15% 6.02%Last 3 years 29.50% 20.29%Last 5 years 12.81% 9.24%Since Inception$ 9.80% 9.26%

# On account of change in the index composition of the benchmark of HMEF (S&P BSE Midcap), vide BSE Notifi cation dtd 10 April, 2015, the returns for this benchmark are different when compared to the historically published returns$ Further, as the index data for S&P BSE Midcap is available only from Sept 16, 2005, the ‘Since inception’ returns for both this index and the scheme have been calculated from this date onwards.


Absolute Returns

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

80% –60% –40% –20% –

0% –-20% –

FY 2015 - 2016

FY 2014 - 2015

66.6949.48

-5.03 -2.67

3.24 0.25

-7.69-6.61

S&P BSE MID CAPHMEF – Growth

28.4813.90

HSBC DYNAMIC FUND


Absolute Returns

2.63 6.06

-9.31 -7.86-8.35 -3.32

13.24 16.70

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

80% –60% –40% –20% –0% –

-20% –

FY 2015 - 2016

FY 2014 - 2015

23.22 31.72

S&P BSE 200HDF – Growth


Period Scheme Returns

Benchmark ReturnsMSCI Emerging Market Index

Last 1 year -16.65% -14.80%Last 3 years 0.36% -0.17%Last 5 years -0.83% -1.33%Since Inception 0.50% 0.55%

Absolute Returns

4.79 2.82

-7.26 -9.92-6.73 -9.96

3.95 0.81

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

80% –60% –40% –20% –0% –

-20% –

FY 2015 - 2016

FY 2014 - 2015

4.55 7.64

MSCI Emerging Market IndexHEMF – Growth



Absolute Returns

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

80% –60% –40% –20% –0% –

-20% –

FY 2015 - 2016

FY 2014 - 2015

39.09 31.72

S&P BSE 200HTSF – Growth

12.946.06

-9.31 -7.86-4.43 -5.14

22.58 16.70

HSBC DIVIDEND YIELD EQUITY FUND#


Absolute Returns

FY 2011 - 2012

FY 2013 - 2014

FY 2012 - 2013

80% –60% –40% –20% –

0% –-20% –

FY 2015 - 2016

FY 2014 - 2015

33.35 31.72

S&P BSE 200HDYEF – Growth

5.76 6.06

-9.31 -7.86-9.50 -8.06

17.08 16.70

# HSBC Unique Opportunities Fund has been repositioned as HSBC Dividend Yield Equity Fund w.e.f. July 18, 2014. Kindly refer to the notice dated May 26, 2014 available on www.assetmanagement.hsbc.com/in for more details.

HSBC BRAZIL FUND

Period Scheme Returns Benchmark ReturnsLast 1 Year -14.76% -17.70%Last 3 Years -15.36% -17.27%Since Inception -10.22% -15.08%

Absolute Returns

FY 2012 - 2013

40% –20% –0% –

-20% –-40% –

FY 2014 - 2015 FY 2015 - 2016FY 2013 - 2014-28.85

-13.85-29.37

-13.37

MSCI Brazil 10/40 IndexHBF – Growth

-1.83-13.73 -11.40 -14.50

HSBC ASIA PACIFIC (EX JAPAN) DIVIDEND YIELD FUND

Period Scheme Returns Benchmark ReturnsLast 1 Year -12.39% -18.90%Since Inception -0.33% -4.31%

Absolute Returns

40% –20% –

0% –-20% –

FY 2014 - 2015 FY 2015 - 2016

6.87 2.65

-6.10 -14.12

MSCI AC Asia Pacifi c ex JapanHAPDF – Growth

HSBC GLOBAL CONSUMER OPPORTUNITIES FUND

Period Scheme Returns Benchmark ReturnsLast 1 Year -8.94% -7.55%Since Inception -4.94% -5.58%

Absolute Returns

40% –20% –

0% –-20% –

FY 2015 - 2016

-4.09 -6.24

MSCI AC World IndexHGCOF – Growth

HSBC MANAGED SOLUTIONS - GROWTH

Period Scheme Returns Benchmark ReturnsLast 1 Year 1.07% -0.61%Since Inception 13.21% 11.20%

HSBC Mutual Fund 75

Absolute Returns

40% –20% –0% –

-20% –

FY 2015 - 2016

1.60

-4.64

Customised BenchmarkHMS – Growth

HSBC MANAGED SOLUTIONS - MODERATE

Period Scheme Returns Benchmark ReturnsLast 1 Year 2.89% 0.66%Since Inception 12.19% 9.62%

Absolute Returns

40% –20% –0% –

-20% –

FY 2015 - 2016

0.66-2.90

CRISIL Balanced Fund IndexHMS – Moderate

HSBC MANAGED SOLUTIONS - CONSERVATIVE

Period Scheme Returns Benchmark ReturnsLast 1 Year 5.89% 7.83%Since Inception 10.15% 11.34%

Absolute Returns

40% –20% –0% –

FY 2015 - 2016

4.97 6.63

Customised BenchmarkHMS – Conservative

HSBC INCOME FUND

Short Term Plan Scheme Returns Benchmark ReturnsLast 1 year 7.67% 8.66%Last 3 years 8.06% 9.06%Last 5 years 8.52% 9.03%Since Inception 7.09% 7.06%Investment Plan Scheme Returns Benchmark ReturnsLast 1 year 5.98% 9.03%Last 3 years 6.61% 8.55%Last 5 years 8.30% 8.91%Since Inception 7.13% 6.59%

Absolute Returns

12% �

10% �

8% �

6% �

4% �

2% �

0% �

HIF � ST (Regular Growth) CRISIL Short Term Bond Fund Index

FY 2011- 2012

7.428.44

FY 2012- 2013

8.41 8.31

FY 2013- 2014

9.42 9.10

FY 2014- 2015

7.238.79

FY 2015- 2016

9.9510.33

Absolute Returns

16% �14% �12% �10% �8% �6% �4% �2% �0% �

HIF�IP (Regular Growth) CRISIL Composite Bond Fund Index

FY 2011- 2012

4.90

8.22

FY 2012- 2013

8.877.70

FY 2013- 2014

11.049.27

FY 2014- 2015

1.84

4.34

FY 2015- 2016

14.8814.60


Period Scheme Returns Benchmark ReturnsLast 1 year 7.92% 8.04%Last 3 years 8.62% 8.81%Since Inception* 8.63% 16.42%

*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. The inception date of HSBC Ultra Short Term Bond Fund however is 17 October 2006.

Absolute Returns

9.04 8.60 9.04 9.117.88 8.08

10% �8% �6% �4% �2% �0% �

HUSTBF Custom

FY 2013 - 2014 FY 2014 - 2015 FY 2015 - 2016


Regular Plan Scheme Returns Benchmark ReturnsLast 1 year 3.85% 7.15%Last 3 years 7.81% 8.91%Last 5 years 8.13% 8.71%Since Inception 7.90% 7.78%Savings Plan Scheme Returns Benchmark ReturnsLast 1 year 3.94% 7.15%Last 3 years 9.36% 8.91%Last 5 years 9.25% 8.71%Since Inception 9.45% 7.78%

Absolute Returns

10.299.09

5.54 5.266.60 6.47

15.60 16.4218% �16% �14% �12% �10% �8% �6% �4% �2% �0% �

HMIP � RP - Growth CRISIL MIP Blended Index

FY 2013- 2014

FY 2012- 2013

FY 2011- 2012

2.73

5.47

FY 2014- 2015

FY 2015- 2016

Absolute Returns

HMIP � SP - Growth CRISIL MIP Blended Index

20% �18% �16% �14% �12% �10% �8% �6% �4% �2% �0% �

FY 2013- 2014

FY 2012- 2013

FY 2011- 2012

5.47

2.31

5.50 5.26

11.169.09

FY 2014- 2015

8.996.47

18.5716.42

FY 2015- 2016

HSBC CASH FUND

Period Scheme Returns Benchmark ReturnsLast 1 year 8.08% 7.97%Last 3 years 8.82% 8.78%Since Inception* 8.80% 8.63%


Absolute Returns

10% �

8% �

6% �

4% �

2% �

0% �

HCF - Growth CRISIL Liquid Fund Index

8.958.22

9.42 9.46

FY 2012 - 2013

FY 2013 - 2014

8.95 8.97

FY 2014 - 2015

FY 2015 - 2016

8.14 8.03

*Pursuant to SEBI circular dated September 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 4 December 2002.


Period Scheme Returns Benchmark ReturnsLast 1 year 6.14% 9.03%Last 3 years 7.28% 8.55%Last 5 years 8.83% 8.91%Since Inception 8.71% 7.71%

Absolute Returns

16% �14% �12% �10% �8% �6% �4% �2% �0% �

HFDF - LTP - Growth CRISIL Composite Bond Fund Index

FY 2015- 2016

5.03

8.22

FY 2011- 2012

9.557.70

FY 2012- 2013

11.239.27

FY 2013- 2014

3.69 4.34

FY 2014- 2015

14.56 14.60

Note : ^ Returns for 1 year & above are Compounded Annualised; returns below 1 year are absolute. Calculations are based on Growth Option NAVs.

Past performance may or may not be sustained in the future.

‘Since inception’ returns are calculated on Rs 10 invested at inception. Calculations are based on Growth NAVs.

For disclosures on point to point returns on a standard investment of Rs. 10,000/- and other related performance disclosures (as per SEBI circular dated August 22, 2011), kindly refer to the next section.

HSBC Mutual Fund 77

L. SCHEME PORTFOLIO HOLDINGS

The top 10 holdings by issuer and fund allocation towards various sectors is provided below (as on April 30, 2016).

Top 10 Holdings by Issuer

HSBC Dynamic FundS. No. Issuer % to Net Assets

1 Cash and Cash Equivalents 19.92 HDFC Bank Ltd 8.643 Infosys Technologies Ltd 7.424 Reliance Industries Ltd 6.715 Tata Motors Limited 6.046 ITC Ltd 5.937 ICICI Bank Ltd 4.198 Larsen & Toubro Ltd 3.789 Tata Consultancy Services Ltd 3.6310 Yes Bank Limited 3.51

HSBC Dividend Yield Equity FundS. No. Issuer % to Net Assets

1 Infosys Technologies Ltd 8.682 ICICI Bank Ltd 7.863 ITC Ltd 6.574 Axis Bank Ltd 4.335 Karur Vysya Bank 4.176 HDFC Bank Ltd 4.167 Welspun India Ltd 4.018 Hero Motocorp Limited 3.849 Tata Consultancy Services Ltd 3.6610 Bharat Petroleum Corporation Ltd 3.59

HSBC Equity FundS. No. Issuer % to Net Assets

1 HDFC Bank Ltd 9.542 Infosys Technologies Ltd 9.113 Tata Motors Limited 6.524 ITC Ltd 4.95 Tata Consultancy Services Ltd 4.56 Reliance Industries Ltd 4.367 Yes Bank Limited 4.188 ICICI Bank Ltd 3.789 Indusind Bank Ltd 3.7210 HCL Technologies Ltd 3.66

HSBC India OpportunitiesS. No. Issuer % to Net Assets

1 HDFC Bank Ltd 9.022 Infosys Technologies Ltd 8.093 Yes Bank Limited 5.014 ITC Ltd 4.835 Axis Bank Ltd 4.526 Tata Motors Limited 4.347 Welspun India Ltd 4.038 Reliance Industries Ltd 3.979 Indusind Bank Ltd 3.910 Tata Consultancy Services Ltd 3.77

HSBC Infrastructure Equity FundS. No. Issuer % to Net Assets

1 National Building Construction Corporation Ltd.

7.89

2 Hindustan Petroleum Corporation Ltd 7.763 Everest Industires Limited 5.03


4 Sanghvi Movers Ltd. 5.015 Fag Bearings India Ltd 4.876 Gateway Distriparks Limited 4.587 IRB Infrastructure Developers Limited 4.498 Bharat Earth Movers Ltd 4.339 Rural Electrifi cation Corp Ltd 3.9610 Adani Ports And Special Economic

Zone Ltd.3.93

HSBC Midcap Equity FundS. No. Issuer % to Net Assets

1 Welspun India Ltd 4.692 Cholamandalam Investment And

Finance Co.Ltd4.44

3 Aurobindo Pharma Ltd 4.174 Vinati Organics Limited 3.85 Sanghvi Movers Ltd. 3.726 VST Tillers Tractors Limited 3.717 Manappuram Finance Ltd 3.638 Motilal Oswal Financial Services Ltd 3.629 Mirza International Ltd. 3.4510 United Phosphorus Ltd 3.37

HSBC Tax Saver Equiy FundS. No. Issuer % to Net Assets

1 HDFC Bank Ltd 9.72 Infosys Technologies Ltd 6.533 Axis Bank Ltd 4.754 Indusind Bank Ltd 4.525 ICICI Bank Ltd 4.316 Tata Consultancy Services Ltd 3.857 Reliance Industries Ltd 3.548 Tata Motors Limited 3.129 Torrent Pharmaceuticals Ltd 3.1210 Welspun India Ltd 3.04

HSBC Asia Pacifi c (Ex Japan) Dividend Yield FundS. No. Issuer % to Net Assets

1 HSBC Mutual Fund (India & Global) 107.572 Cash and Cash Equivalents (7.57)

HSBC Brazil FundS. No. Issuer % to Net Assets

1 HSBC Mutual Fund (India & Global) 112.652 Cash and Cash Equivalents (12.65)

HSBC Emerging Markets FundS. No. Issuer % to Net Assets

1 HSBC Mutual Fund (India & Global) 97.942 Cash and Cash Equivalents 2.06

HSBC Global Consumer Opportunities FundS. No. Issuer % to Net Assets

1 HSBC Mutual Fund (India & Global) 98.512 Cash and Cash Equivalents 1.49

HSBC Managed Solutions India - ConservativeS. No. Issuer % to Net Assets

1 Units of HSBC Income Fund Short Term - Direct- Growth

46.73

2 Units of HSBC Flexi Debt Fund - Direct- Growth

30.1



3 Units of HSBC Equity Fund - Direct - Growth

9.68

4 Units of L&T Triple Ace Bond Fund - Direct - Growth

6.72

5 Units of HSBC Income Fund Investment Plan -Direct-Growth

4.83

6 Cash and Cash Equivalents 1.94

HSBC Managed Solutions India - GrowthS. No. Issuer % to Net Assets


59.66

2 Units of HSBC Midcap Equity Fund - Direct- Growth

19.84


11.46


5.16


2.96


HSBC Managed Solutions India - ModerateS. No. Issuer % to Net Assets


49


19.37

3 Units of HSBC Midcap Equity Fund - Direct- Growth

16.02


10.4


5.06


HSBC Cash FundS. No. Issuer % to Net Assets

1 Union Bank of India 7.812 Canara Bank 6.683 IDBI Bank Ltd 5.584 Cox And Kings Limited 4.995 Vijaya Bank 4.486 Central And State Government

Securities4.47

7 Bank of Maharashtra 4.468 Inox Wind Ltd 4.469 Dewan Housing Finance Corp. Ltd. 4.4510 Il&Fs Financial Services Limited 3.55

HSBC Flexi Debt FundS. No. Issuer % to Net Assets

1 Central and State Government Securities

75.5

2 Cash and Cash Equivalents 8.773 Shriram Transport Finance Company

Ltd5.08

4 Housing Development Finance Corporation Ltd

4.08

5 Power Grid Corporation of (I) Ltd 3.766 Rural Electrifi cation Corporation 2.81

HSBC Income Fund - Investment PlanS. No. Issuer % to Net Assets


69.36

2 Cash and Cash Equivalents 8.293 EXIM 6.984 Power Finance Corporation Limited 6.485 Shriram Transport Finance Company

Ltd6.47

6 Rural Electrifi cation Corporation 1.567 Power Grid Corporation of (I) Ltd 0.788 India Mbs 2002 Series 0.08

HSBC Income Fund - Short Term PlanS. No. Issuer % to Net Assets


14.63

2 LIC Housing Finance Limited 7.163 Tata Capital Financial Services Limited 7.134 Power Finance Corporation Limited 5.875 National Bank For Agriculture and

Rural Development5.72

6 Cash and Cash Equivalents 5.47 Housing Development Finance

Corporation Ltd4.67

8 Nabha Power Limited 4.289 L & T Finance Limited 4.2710 Small Industries Development Bank

of India4.23

HSBC MIP - Regular PlanS. No. Issuer % to Net Assets


48.55

2 Power Grid Corporation of (I) Ltd 7.043 Cash and Cash Equivalents 74 LIC Housing Finance Limited 6.665 Power Finance Corporation Limited 5.986 India Infradebt Limited 3.567 Rural Electrifi cation Corporation 3.238 Housing Development Finance

Corporation Ltd2.37

9 Shriram Transport Finance Company Ltd

1.79

10 HDFC Bank Ltd 1.36

HSBC MIP - Saving PlanS. No. Issuer % to Net Assets


45.79

2 Cash and Cash Equivalents 8.123 Power Finance Corporation Limited 5.274 Power Grid Corporation of (I) Ltd 4.865 India Infradebt Limited 3.276 LIC Housing Finance Limited 3.187 Rural Electrifi cation Corporation 2.978 HDFC Bank Ltd 2.319 Housing Development Finance

Corporation Ltd1.86

10 Shriram Transport Finance Company Ltd

1.65

HSBC Mutual Fund 79

HSBC Ultra Short Term Bond FundS. No. Issuer % to Net Assets

1 State Bank of Hyderabad 9.382 COX and Kings Limited 7.53 Housing Development Finance

Corporation Ltd6.79

4 Cash and Cash Equivalents 6.635 Power Finance Corporation Limited 4.996 Indiabulls Housing Finance Ltd 4.997 CLP Wind Farms (India) Private

Limited4.97

8 JK Tyre & Industries Ltd. 4.949 Uco Bank 4.9410 India Infoline Finance Ltd 4.92

Note: Cash and Cash Equivalents includes Overnight Investments (CBLO/Reverse Repo)

Fund Allocation towards various Sectors

HSBC Dynamic FundS. No. Issuer % to Net Assets

1 Financial Services 21.992 Cash and Cash Equivalents 19.913 IT 11.054 Consumer Goods 10.975 Energy 9.366 Automobile 8.897 Pharma 6.698 Construction 5.979 Cement & Cement Products 3.2410 Telecom 1.93

Grand Total 100.00

HSBC Dividend Yield Equity FundS. No. Issuer % to Net Assets

1 Financial Services 26.372 IT 17.763 Automobile 11.314 Energy 115 Consumer Goods 9.936 Construction 5.637 Pharma 4.28 Metals 4.069 Textiles 4.0110 Cement & Cement Products 1.9111 Industrial Manufacturing 1.6312 Chemicals 1.613 Cash and Cash Equivalents 0.59

Grand Total 100.00

HSBC Equity FundS. No. Issuer % to Net Assets

1 Financial Services 33.052 IT 17.273 Automobile 11.124 Pharma 8.625 Energy 7.266 Construction 6.317 Consumer Goods 5.958 Textiles 2.869 Fertilisers & Pesticides 2.8610 Cement & Cement Products 2.811 Cash and Cash Equivalents 1.9

Grand Total 100.00

HSBC India Opportunities FundS. No. Issuer % to Net Assets

1 Financial Services 34.632 IT 15.053 Automobile 8.534 Pharma 8.225 Textiles 7.336 Construction 7.27 Consumer Goods 5.928 Energy 3.979 Fertilisers & Pesticides 2.5710 Industrial Manufacturing 2.5511 Chemicals 1.9412 Media & Entertainment 1.1513 Cash and Cash Equivalents 0.94

Grand Total 100.00


1 Energy 30.522 Construction 21.513 Industrial Manufacturing 19.044 Services 10.875 Financial Services 8.856 Cement & Cement Products 5.037 Metals 3.28 Cash and Cash Equivalents 0.98

Grand Total 100.00

HSBC Midcap Equity FundS. No. Issuer % to Net Assets

1 Financial Services 18.692 Industrial Manufacturing 12.013 Textiles 10.374 Construction 8.715 Energy 8.646 Pharma 7.897 Consumer Goods 7.338 Automobile 6.269 Chemicals 5.0210 Media & Entertainment 4.9111 Fertilisers & Pesticides 4.712 IT 2.4213 Cash and Cash Equivalents 1.2614 Cement & Cement Products 0.815 Services 0.7416 Metals 0.2317 Paper 0.02

Grand Total 100.00

HSBC Tax Saver Equity FundS. No. Issuer % to Net Assets

1 Financial Services 29.362 IT 12.233 Consumer Goods 11.184 Textiles 9.065 Automobile 7.566 Pharma 6.737 Construction 4.78 Cement & Cement Products 4.569 Services 4.510 Energy 3.5411 Fertilisers & Pesticides 2.28


HSBC Tax Saver Equity FundS. No. Issuer % to Net Assets

12 Industrial Manufacturing 1.8613 Cash and Cash Equivalents 1.4714 Media & Entertainment 0.97

Grand Total 100.00

HSBC Asia Pacifi c (Ex Japan) Dividend Yield FundS. No. Issuer % to Net Assets

1 Unit Trust/Mutual Funds 107.572 Cash and Cash Equivalents (7.57)

Grand Total 100.00

HSBC Brazil FundS. No. Issuer % to Net Assets

1 Unit Trust/Mutual Funds 112.652 Cash and Cash Equivalents (12.65)

Grand Total 100.00

HSBC Emerging Markets FundS. No. Issuer % to Net Assets

1 Unit Trust/Mutual Funds 97.942 Cash and Cash Equivalents 2.06

Grand Total 100.00

HSBC Global Consumer Opportunities FundS. No. Issuer % to Net Assets


Grand Total 100.00



Grand Total 100.00

HSBC Managed Solutions India - GrowthS. No. Issuer % to Net Assets


Grand Total 100.00

HSBC Managed Solutions India - ModerateS. No. Issuer % to Net Assets


Grand Total 100.00

HSBC Cash FundS. No. Issuer % to Net Assets

1 Financial Services 80.222 Services 6.993 Central and State Government

Securities4.47

4 Industrial Manufacturing 4.465 Cash and Cash Equivalents 2.756 Automobile 1.11

Grand Total 100.00

HSBC Flexi Debt FundS. No. Issuer % to Net Assets


75.5

2 Financial Services 11.973 Cash and Cash Equivalents 8.774 Energy 3.76

Grand Total 100.00

HSBC Income Fund - Investment PlanS. No. Issuer % to Net Assets


69.36

2 Financial Services 21.573 Cash and Cash Equivalents 8.294 Energy 0.78

Grand Total 100.00

HSBC Income Fund - Short Term PlanS. No. Issuer % to Net Assets

1 Financial Services 59.612 Central and State Government

Securities14.63

3 Energy 13.034 Cash and Cash Equivalents 5.385 Services 3.106 Textiles 1.447 Automobile 1.418 Cement & Cement Products 1.40

Grand Total 100.00

HSBC MIP - Regular PlanS. No. Issuer % to Net Assets


48.55

2 Financial Services 26.923 Energy 7.044 Cash and Cash Equivalents 6.995 Consumer Goods 1.956 Textiles 1.727 Automobile 1.448 Pharma 1.429 Services 1.0110 Construction 0.9911 IT 0.9312 Cement & Cement Products 0.5613 Fertilisers & Pesticides 0.4114 Industrial Manufacturing 0.07

Grand Total 100.00



45.79

2 Financial Services 24.353 Cash and Cash Equivalents 8.144 Energy 4.865 Consumer Goods 2.886 Automobile 2.447 IT 2.348 Textiles 2.259 Cement & Cement Products 1.7110 Pharma 1.6711 Services 1.59

HSBC Mutual Fund 81


12 Construction 1.3513 Fertilisers & Pesticides 0.614 Industrial Manufacturing 0.03

Grand Total 100.00

HSBC Ultra Short Term Bond FundS. No. Issuer % to Net Assets

1 Financial Services 67.082 Services 11.443 Cash and Cash Equivalents 6.654 Energy 4.975 Automobile 4.946 Cement & Cement Products 4.92

Grand Total 100.00Note: Cash and Cash Equivalents includes Overnight Investments (CBLO/Reverse Repo)

Kindly refer the Fund’s website, www.assetmanagement.hsbc.com/in for monthly portfolio disclosures.

M. PORTFOLIO TURNOVER

Portfolio turnover is defi ned as lesser of purchases and sales as a percentage of the average corpus of the Scheme(s) during a specifi ed period of time. The Scheme(s) being open-ended in nature, it is expected that there would be a number of subscriptions and redemptions on a daily basis.

The Portfolio Turnover Ratio of the equity schemes of the Fund (as on April 30, 2016) are as below.

Fund Name Portfolio Turnover HSBC Equity Fund 0.96 HSBC India Opportunities Fund 0.73 HSBC MIP Regular Plan 1.80 HSBC MIP Savings Plan 1.78 HSBC Midcap Equity Fund 0.55 HSBC Infrastructure Equity Fund 0.23 HSBC Tax Saver Equity Fund 0.58 HSBC Dividend Yield Equity Fund 0.32 HSBC Dynamic Fund 0.85

N. INVESTMENT BY DIRECTORS, FUND MANAGER’S AND KEY MANAGERIAL PERSONNEL OF

THE AMC IN SCHEMES OF HSBC MUTUAL FUND

Scheme Name AuM in INRAMC Directors Fund Manager Other Key Managerial

Personnel of AMCHSBC Managed Solution - Growth Fund 7,778,373.01 6,071,516.33 HSBC Managed Solution - Moderate Fund 1,258,580.00 316,222.50 –HSBC Brazil Fund – – 950,834.91 HSBC Cash Fund – – 14,550,102.26 HSBC Dividend Yield Equity Fund – 19,512.57 222,434.99 HSBC Dynamic Fund 597,786.01 1,018,678.82 72,002.01 HSBC Equity Fund – 1,431,121.93 2,521,135.21 HSBC Flexi Debt Fund – 246,070.53 947,557.44 HSBC Income Fund - Short Term Plan – 1,913,521.58 645,933.52 HSBC India Opportunities Fund 1,041,848.40 5,624,151.41 6,923,785.65 HSBC Midcap Equity Fund 2,811,692.97 880,822.29 19,684.36 HSBC MIP-Regular Plan 910,944.15 – 13,114.92 HSBC MIP-Savings Plan 3,721,949.57 – –HSBC Tax Saver Equity Fund 169,957.29 – 307,720.17 HSBC Infrastructure Equity Fund 465,723.22 761,935.39 9,001.14 HSBC Ultra Short Term Bond Fund – – 1,521,157.52 Grand Total 18,756,854.62 12,212,037.01 34,775,980.43

Note: The above investments are based on holdings as of April 30, 2016 and sourced from the Fund’s Registrars records, on the basis of PAN of the above persons. The investments have been aggregated at a scheme level, irrespective of the date of investment into the scheme. The CEO of the AMC being a Director has been included under AMC Directors and not under Key Managerial Personnel.


SECTION III - UNITS AND OFFERThis section provides the details you need to know for investing in the Scheme(s).

New Fund Offer, New Fund Offer Period, New Fund Offer Price, Extension / Pre-poning of the New Fund Offer Period, Minimum Amount for Application in the NFO, Minimum Target Amount, Maximum Amount to be raised, Allotment & Refund and Special Products / facilities available during the NFO

These sections are not applicable as there is Continuous offer of Units of the Scheme (s) at NAV based prices.

ONGOING OFFER DETAILS

1. Plans / Options / Sub-options offered under the Scheme(s)

The following table details the Plans / Options / Sub-options available in the respective Scheme(s) and their respective dividend frequencies:

Name of Scheme and Plans, if any (including Direct Plan)

Options Sub-Options Frequency of dividend declaration

Record Date

HSBC Equity Fund Growth – – –Dividend Payout

Reinvestment From time to time As may be decided by the Dividend

Committee.HSBC India Opportunities Fund

Growth – – –Dividend Payout


Committee.HSBC Midcap Equity Fund



Committee.HSBC Infrastructure Equity Fund



Committee.HSBC Tax Saver Equity Fund

Growth – – –Dividend Payout From time to time As may be decided by the Dividend

Committee.HSBC Dynamic Fund Growth – – –

Dividend PayoutReinvestment

From time to time As may be decided by the Dividend Committee.

HSBC Dividend Yield Equity Fund



Committee.HSBC Cash Fund ** Growth – – –

Dividend Daily Dividend (Reinvestment) Daily DailyWeekly Dividend (Reinvestment and Payout)

Weekly Every Tuesday1

Monthly Dividend (Payout & Reinvestment)

Monthly 25th of every month1

Quarterly Dividend (Payout and Reinvestment)

Quarterly 25th of every calendar quarter end

HSBC Income Fund – Short Term Plan

Growth – – –Dividend Weekly Dividend (Reinvestment) Weekly Every Tuesday1



HSBC Income Fund – Investment Plan

Growth – – –Dividend Monthly Dividend (Payout &

Reinvestment) Monthly 25th of every month1

Quarterly Dividend(Payout & Re-investment)

Quarterly 25th of every calendar quarter end1

HSBC Monthly Income Plan

Growth – – –Dividend Monthly Dividend (Payout &

Reinvestment)Monthly 25th of every month1

Quarterly Dividend (Payout & Reinvestment)


HSBC Mutual Fund 83

** In accordance with SEBI circular dated February 25, 2016, HSBC Cash Fund has four separate plans for the limited purpose of deploying the unclaimed redemption and dividend amounts into this scheme . These plans are not available for regular investments / switches by investors. The investment objective, asset allocation pattern, investment strategy, risk factors and portfolio of these Plans will be same as other existing plans of HSBC Cash Fund. These plans will only have a growth option. Further, the Total Expense Ratio of these four plans will be capped at 50 bps and there will be no exit load charged, as required under the aforesaid circular. The list of names and address of Unitholders in whose folios there are unclaimed amounts along with the process of claiming such unclaimed amounts are available on our website http://www.assetmanagement.hsbc.com/in.*Direct PlanVide SEBI Circular dated September 13, 2012, the AMC has with effect from January 1, 2013 introduced a separate plan viz. ‘Direct Plan’ for investors who purchase/subscribe units in a scheme directly with the Fund. Purchase/subscription applications routed through distributor will not be eligible for investment under Direct Plan. Direct Plan is available in all Schemes/Plans of the Fund. All Plans and Options thereunder (including Direct Plan) will have a common portfolio.

All characteristics of the Schemes viz. investment objective, asset allocation pattern, investment strategy, risk factors, facilities offered and terms and conditions including load structure will be same for Direct Plan except that:

(a) Switch of investments from existing Plans, where the transaction has been received with Distributor Code, (whether the investments were made before or after January 1, 2013) to Direct Plan shall be subject to applicable exit load, if any.

(b) No exit load shall be levied:i. in case of switches from Direct Plan to existing Plan.ii. in case of switches from existing Plan, where the transactions

were made without Distributor Code, (whether the investments were made before or after January 1, 2013) to Direct Plan.

Direct Plan shall have a lower expense ratio compared to the existing Plan and no commission for distribution of units will be paid / charged under Direct Plan.

All categories of investors (whether existing or new Unit holders) are eligible to subscribe under Direct Plan. Investments under Direct Plan can be made through various modes offered by the Fund for investing directly with the Fund {except Stock Exchange platform(s) and all other platform(s)/modes where investors’ applications for subscription of Units are routed through Distributors}.

Investors wishing to transfer their accumulated balance held under any existing Plan of the Schemes (through lumpsum /systematic investments made with or without distributor code) to Direct Plan will have to switch/redeem their investments (subject to applicable exit load, if any) and apply under the Direct Plan. Investors who have invested through distributor code and have opted for Dividend Reinvestment facility under the existing plan may note that the dividend will continue to be reinvested in the existing plan only.

Name of Scheme and Plans, if any (including Direct Plan)

Options Sub-Options Frequency of dividend declaration

Record Date

HSBC Ultra Short Term Bond Fund

Growth – – –Dividend Weekly Dividend (Reinvestment) Weekly Every Tuesday1

Daily Dividend (Reinvestment) Daily Daily Monthly Dividend (Payout & Reinvestment)


HSBC Flexi Debt Fund Growth – – –Dividend Fortnightly Dividend (Reinvestment) Fortnightly 14th and 28th of every month1



Quarterly Dividend (Payout & Re–investment)


Half Yearly Dividend (Payout & Re-investment)

Half Yearly 25th of every half year end1

HSBC Emerging Markets Fund

Growth – – –Dividend Payout & Re–investment From time to time As may be decided by the Dividend

CommitteeHSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund

Growth – – –Dividend Payout & Re–investment From time to time As may be decided by the Dividend

Committee.HSBC Brazil Fund Growth – – –

Dividend Payout & Re–investment From time to time As may be decided by the Dividend Committee.

HSBC Managed Solutions Growth – – –Dividend Payout & Re–investment From time to time As may be decided by the Dividend

Committee.HSBC Global Consumer Opportunities Fund – Benefi ting from China’s Growing Consumption Power

Growth – – –

Notes: 1 If such day is a holiday, then the record date shall be the immediately succeeding Business Day.


Investors should indicate the Scheme / Plan and / or Option etc., wherever applicable, for which the subscription is made by indicating the choice in the appropriate box provided for this purpose in the Application Form. In case of valid applications received, without indicating/incorrectly indicating the Scheme / Plan and / or Option etc. the following defaults will be fl agged off :

If indication not made / incorrectly made

Default##

Common to all Schemes

Scheme Name As indicated on the application form / transaction slip (The applicable NAV shall be as per the funds available for utilization).

Dividend / Growth Option / Sub-options

Growth Option / Sub-option

Dividend Payout / Reinvestment Dividend Reinvestment*

Mode of holding (in cases where there are more than one applicants)

Joint

Status of First Applicant (Individual, HUF, Company etc.)

Others #

**Demat account details Units will be held in physical mode

Scheme Specifi c

HMIPMonthly / Quarterly sub-option Quarterly sub-optionHIFInvestment Plan / Short Term Plan Short Term PlanWeekly, Monthly and Quarterly dividend sub-options in Short Term Plan

Weekly Sub-Option

HCFDaily, Weekly and Monthly dividend sub-options

Daily sub-option

HUSBFDaily, Weekly and Monthly dividend sub-options

Daily sub-option

HFDFFortnightly, Monthly, Quarterly and Half yearly dividend sub-options

Monthly sub-option

* In case of HTSF, only dividend payout option is available.** Applicants, who wish to opt for Demat mode (including a

transferee), will be required to have a benefi ciary account with a DP of NSDL / CDSL and will be required to indicate in the application the DP’s name, DP ID Number and its benefi ciary account number with DP. In the absence of the information (including incomplete/incorrect information) in respect of DP ID/BO ID, the application will be processed with statement option as ‘physical’ only.

# Tax rates (including the tax on dividend distribution) wherever applied on ‘Others’ by the Mutual Fund shall be the same as applicable to a Resident Indian Company.

## Any investments or switch-in requests received in the name of the discontinued Plans will be processed under the available single Plan. For more details refer to Notice-cum-Addendum dated September 28, 2012 or visit our website at www.assetmanagement.hsbc.com/in.

With regard to Broker Code, default Plan as per the following table will apply to investors.

Broker Code mentioned by the investor

Plan mentioned by the investor

Default Plan to be captured by the AMC

Not mentioned Not mentioned Direct PlanNot mentioned Direct Direct PlanNot mentioned Regular Direct PlanMentioned Direct Direct PlanDirect Not Mentioned Direct PlanDirect Regular Direct PlanMentioned Regular Regular PlanMentioned Not Mentioned Regular Plan

In cases of wrong / invalid / incomplete ARN codes mentioned on the application form, the application shall be processed under Regular Plan. The AMC shall contact and obtain the correct ARN code within 30 calendar days of the receipt of the application form from the investor / distributor. In case, the correct code is not received within 30 calendar days, the AMC shall reprocess the transaction under Direct Plan from the date of application without any exit load.

2. Dividend Distribution Policy

The Trustees propose to follow the following dividend distribution policy:

Declaration of dividend is subject to the availability of distributable surplus. Such dividends if declared, will be paid under normal circumstances, only to those Unitholders who have opted for Dividend options with specifi ed sub-options. Further, no entry / exit load shall be charged for units allotted under dividend reinvestment option.

However, it must be distinctly understood that the actual declaration of dividends under the Scheme and the frequency thereof will, inter-alia, depend upon the distributable surplus of the Scheme, as computed in accordance with SEBI Regulations. The Trustees reserve the right of dividend declaration and to change the frequency, date of declaration and the decision of the Trustees in this regard shall be fi nal. There is no assurance or guarantee to Unit holders as to the rate of dividend distribution nor that dividend will be regularly paid.

The dividend that may be paid out of the net surplus of the Scheme will be paid only to those Unitholders whose names appear in the register of Unitholders on the notifi ed record date. The dividend will be at such rate as may be decided by the AMC in consultation with the Trustees.

Under the Growth Option, income earned on the Scheme’s corpus will remain invested in the Scheme and will be refl ected in the Net Asset Value (NAV). Unit holders who opt for this Option will not receive any dividend in normal circumstances. Under the Dividend Option, it is proposed to distribute dividends at regular intervals, subject to availability of distributable profi ts, as computed in accordance with SEBI Regulations. Investors in the Scheme(s) have the choice of opting for either payout or reinvestment of dividend, as stated above. Subsequent to the declaration of dividend, NAV of the Dividend Option and Growth Option will be different.

Dividend Distribution ProcedureIn accordance with SEBI Circular no. SEBI/IMD/Cir No. 1/ 64057/06 dated April 4, 2006, the procedure for Dividend Distribution would be as under:i) Quantum of dividend in rupee terms) and the record date will be

fi xed by the Trustee in their meeting. Dividend so decided shall be paid, subject to availability of distributable surplus.

ii) Within one calendar day of decision by the Trustee, the AMC shall issue notice to the public communicating the decision about the dividend including the record date, in one English daily newspaper having nationwide circulation as well as in a

HSBC Mutual Fund 85

newspaper published in the language of the region where the head offi ce of the Mutual Fund is situated.

iii) Record date shall be the date which will be considered for the purpose of determining the eligibility of investors whose names appear on the register of Unit holders for receiving dividends. (Please refer the Dividend Option(s) under each of the Schemes). The Record Date will be 5 calendar days from the issue of notice.

iv) The notice will, in font size 10, bold, categorically state that pursuant to payment of dividend, the NAV of the Scheme would fall to the extent of payout and statutory levy (if applicable).

v) The NAV will be adjusted to the extent of dividend distribution and statutory levy, if any, at the close of business hours on record date.

vi) Before the issue of such notice, no communication indicating the probable date of dividend declaration in any whatsoever, will be issued by Mutual Fund.

In case of Liquid / Debt Scheme(s), the requirement of giving notice regarding the quantum and record date of the dividend in two newspapers shall not be compulsory for Scheme(s)/ Plan(s)/ Option(s) having frequency of dividend distribution from daily up to monthly dividend.

The dividend proceeds may be paid by way of dividend warrants / direct credit / EFT / ECS Credit/ SEFT / RTGS / Wired Transfer / any other manner through the investor’s bank account specifi ed in the Registrar’s records. The AMC, at its discretion at a later date, may choose to alter or add other modes of payment.

3. Who can invest?

This is an indicative list and you are requested to consult your fi nancial advisor to ascertain whether the Scheme(s) are suitable to your risk profi le.

The following persons are eligible and may apply for subscription to the Units of the Scheme(s) (subject, wherever relevant, to purchase of units of mutual funds being permitted and duly authorised under their respective constitutions, charter documents, corporate / other authorisations and relevant statutory provisions etc):

1. Indian resident adult individuals, either singly or jointly.2. Karta of Hindu Undivided Family (HUF)3. Minor through parent / lawful guardian.4. Companies, bodies corporate, public sector undertakings,

association of persons, bodies of individuals, societies registered under the Societies Registration Act, 1860, mutual fund schemes (so long as the purchase of units is permitted under the respective constitutions)

5. Religious and Charitable Trusts, Wakfs or endowments of private trusts (subject to receipt of necessary approvals as required) and Private Trusts authorised to invest in mutual fund schemes under their trust deeds

6. Partnership Firms7. Banks (including Co-operative Banks and Regional Rural

Banks) & Financial Institutions8. Non-resident Indians (NRIs) / Persons of Indian Origin on full

repatriation basis (subject to RBI approval, if required) or on non-repatriation basis

9. Foreign Institutional Investors (FIIs) / Foreign Portfolio investors (FPI) registered with SEBI on full repatriation basis (subject to RBI approval, if required)

10. Army, Air Force, Navy and other para-military funds and eligible institutions

11. Scientifi c and Industrial Research Organisations12. Provident / Pension / Gratuity and such other Funds as and when

permitted to invest13. International Multilateral Agencies approved by the Government

of India / RBI

14. Other Schemes of the Fund subject to the conditions and limits prescribed in SEBI Regulations

15. Trustees, AMC or Sponsor or their associates (if eligible and permitted under prevailing laws), may subscribe to the Units under the Scheme.

16. Foreign investors (termed as Qualifi ed Foreign Investors) who meet KYC requirement as per PMLA (Prevention of Money Laundering Act, 2002) and FATF (Financial Action Task Force) standards. Acceptance of subscriptions from Foreign investors will be subject to compliance with provisions under SEBI circular no. CIR/IMD/DF/14/2011 dated August 9, 2011 and any other applicable guidelines. .

Note: Since HSBC Tax Saver Equity Fund is a growth oriented investment avenue primarily in equity shares with the objective of long term capital appreciation, the following entities may also apply for subscription to the Units of HSBC Tax Saver Equity Fund, subject to where relevant, purchase of Units being permitted by the respective constitutions, relevant laws and regulations. These entities, will not, however, qualify for tax benefi ts under Section 80C of Income Tax Act, 1961.

Who cannot invest?

The following persons / entities cannot invest in any schemes of the Fund:

1. United States Person as defi ned under the Laws of the United States of America, including, without limitation, the rules and regulations promulgated by the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission; or is a person who has elected to be treated as a US tax resident for US federal income tax purposes

2. Persons residing in Canada;3. Persons residing in any Financial Action Task Force (FATF)

declared non-compliant country or territory.4. Overseas Corporate Bodies (OCBs), being fi rms and societies

which are held directly / indirectly to the extent of at least 60% by NRIs and / or overseas trusts in which at least 60% of the benefi cial interest is similarly held irrevocably by such persons.

5. a. Persons who are, subject to sanctions or residing in or have any of their addresses in countries which are subject to sanctions.

b. Persons who are in breach of the laws and regulations relating to KYC, money laundering, terrorist fi nancing or any other Financial Crimes.

Note: i) Investors are requested to note that if subsequent to the account

opening, an investors’ status changes or is found to be of any category mentioned under ‘Who cannot invest?’ as above, the AMC reserves the reserves the right to redeem such investor’s investments.

ii) Non Resident Indian investors and Foreign Nationals must provide their complete overseas address, including the Country of residence, in the application form, to avoid rejection of the application.

iii) The Trustee and / or AMC shall be entitled to reject any application from investors and/or carry out forceful redemption of Units when it is discovered that the investor is subject to sanctions or any other fi nancial crimes, directly or indirectly.

iv) The AMC and its Group companies (in India and outside India) are required to and may take any action to meet their Compliance Obligations relating to or in connection with the detection, investigation and prevention of Financial Crime and act in accordance with the laws, regulations and requests of public and regulatory authorities operating in various jurisdictions which relate to Financial Crime. The AMC may take, and may instruct (or be instructed by) any of its group companies to take, any


action which it or such other member, in its sole and absolute discretion, considers appropriate to take in accordance with all such laws, regulations and requests. Such action may include but is not limited to (a) combining investor information with other related information in the possession of HSBC Group, (b) making further enquiries as to the status of a person or entity, whether they are subject to a sanctions regime, or confi rming your identity and status and/or (c) share information on a confi dential basis with such Group offi ces whether located in India or overseas in relation to prevention of Financial Crime.

For the purpose of this clause:

“Compliance Obligations” means obligations of the AMC to comply with: (a) laws or international guidance and internal policies or procedures, (b) any demand or request from authorities or reporting, disclosure or other obligations under laws, and (c) laws requiring us to verify the identity of our customers.

“Financial Crime” includes money laundering, terrorist fi nancing, bribery, corruption, tax evasion, fraud, evasion of economic or trade sanctions, and/or any acts or attempts to circumvent or violate any laws relating to these matters.”

Investors are requested to note that information will be obtained from SEBI appointed KRA (KYC Registration Agency) database and information in the AMC records will be overwritten. In the event of any discrepancy in the application on account of address or residence status, the application will be rejected and the money will be refunded upon confi rmation from KRA database.

The Fund reserves the right to include or exclude new / existing categories of investors to invest in the Scheme from time to time, subject to SEBI Regulations and other prevailing statutory regulations, if any. Subject to the SEBI (MF) Regulations, any application for Units may be accepted or rejected in the sole and absolute discretion of the Trustee. The Trustee may inter-alia reject any application for the purchase of Units if the application is invalid or incomplete or if the Trustee for any other reason does not believe that it would be in the best interest of the Scheme or its Unit holders to accept such an application.

4. Where can you submit the fi lled up applications

Computer Age Management Services Private Limited (CAMS) with registered offi ce at Rayala Towers, Tower I, III Floor, 158, Anna Salai, Chennai 600002 have been appointed as Registrar for the Schemes of the Fund. The Registrar is registered with SEBI under registration no: INR000002813. The applications duly fi lled up and signed by the applicants should be submitted at the offi ce of the Collection Centres / ISCs / Offi cial Points of Acceptance. Details of offi cial points of acceptance of transactions are viewed from www.assetmanagement.hsbc.com/in and www.camsonline.com.

Bank Account Numbers

In order to protect the interest of investors from fraudulent encashment of cheques, cheques specify the name of the Unitholder and the bank name and account number where payments are to be credited. As per the directive issued by SEBI vide its letters IIMARP/MF/CIR/07/826/98 dated April 15, 1998, and IMD/CIR/No. 6/4213/04 dated March 1, 2004, it is mandatory for applicants to mention their bank details in their applications for purchase or redemption of units.

It is important for applicants to mention their bank name, bank account number, branch address, account type in their applications for subscription or repurchase of Units. Applications without this information shall be rejected.It may be noted that in case of those Unitholders who hold Units in demat form, the bank mandate available with respective DP will be treated as the valid bank mandate for the purpose of payout at the time of any corporate action.

5. How to apply?

Please refer to the Statement of Additional Information (SAI) and instructions under the Key Information Memorandum cum Application form of equity and debt schemes of the Fund.For Investors, who wish to opt for holding Units in demat mode, the applicants under the scheme (including a transferee) will be required to have a benefi ciary account with a DP of NSDL / CDSL and will be required to indicate in the application the DP’s name, DP ID Number and its benefi ciary owner account number (BO ID) with DP. In the absence of the information (including incomplete / incorrect information) in respect of DP ID / BO ID, the application will be processed with statement option as ‘physical’.

Investors subscribing under Direct Plan of a Scheme are required to indicate “Direct Plan” against the Scheme name in the application form e.g. “HSBC Equity Fund - Direct Plan”. Investors are also required to indicate “Direct” in the ARN column of the application form. However, in case Distributor Code is mentioned in the application form but “Direct Plan” is indicated against the Scheme name, the Distributor Code will be ignored and the application will be processed under Direct Plan.

Further, new investors who are not KYC compliant are requested to use the Common KYC Application form available on the website of the Fund and complete the KYC process including In-Person Verifi cation (IPV), through any SEBI registered intermediary like Mutual Funds, Portfolio Managers, Depository Participants, Venture Capital Funds etc. The investor upon completing the KYC process through any SEBI registered intermediary, will not be required to undergo the KYC process again with other intermediaries including Mutual Funds. Further, IPV conducted for an investor by any SEBI registered intermediary can be relied upon by the Fund. With respect to Mutual Funds, IPV can be carried out by the AMC or by KYD (Know Your Distributor) compliant distributors who hold certifi cations from NISM / AMFI, while for applications received directly from investors (i.e. not through any distributor), IPV conducted by scheduled commercial banks can be relied upon.

In continuation to the above, all investors investing or switching Units should mandatorily complete the KRA KYC formalities. Those investors who had obtained MF KYC compliance through CVL (KYC registration authority till 31 December 2011) are required to submit necessary supporting(s) and update the missing information to be in compliance with the uniform KYC requirement laid down by SEBI. For investors who have not completed KYC compliance through KRA, any application received without the requisite KYC information will be rejected. However, investors who have obtained KRA KYC compliance, as well as existing investors of the Fund who have registered their KYC details with the Fund shall be required to submit the additional KYC information to the Fund, only in the event of change in their occupation or income details. Kindly use the updated application forms or the separate KYC form of the Fund, available at ISCs or on the Fund’s website for updating the additional information.

Benefi cial Ownership : SEBI circular dated January 24, 2013 on identifi cation of Benefi cial Ownership has prescribed a uniform approach to be followed for determination of benefi cial owners. A ‘Benefi cial owner’ is defi ned as a natural person/s who ultimately own, control or infl uence a client and / or persons on whose behalf a transaction is being conducted, which includes persons who exercise ultimate effective control over a legal person or arrangement. All categories of investors (except individuals, company listed on a stock exchange or majority-owned subsidiary of such company) are requested to provide details about benefi cial ownership in the specifi ed section of the Fund’s application forms. The Fund reserves the right to reject applications (including switches) / restrict further investments from such investors or seek additional information if the requisite information on benefi cial ownership is not duly provided. In the event of change in benefi cial ownership, investors are requested to update the details with the Fund / Registrar.

HSBC Mutual Fund 87

Subscription of Units through Registrar & Transfer Agent’s Website:

The Fund will allow existing investors to transact (i.e. additional purchase, switch and redemption of the Units of the Fund) through the website of the Fund’s Registrar & Transfer Agent (CAMS), i.e. www.camsonline.com. However, the Fund will not be liable for any failure to act upon electronic instructions or to provide any facility for any cause that is beyond the control of the Fund.

6. Listing

Being open ended Scheme(s) under which sale and repurchase of Units will be made on continuous basis by the Mutual Fund, the Units of the Scheme are generally not proposed to be listed on any stock exchange. However, the AMC may at its sole discretion, list the Units under the Scheme on one or more stock exchanges at a later date, if deemed necessary.

7. The policy regarding reissue of repurchased

units, including the maximum extent, the manner

of reissue, the entity (the scheme or the AMC)

involved in the same:

Presently the AMC does not intend to reissue the repurchased units. The Trustee reserves the right to reissue the repurchased units at a later date after issuing adequate public notices and taking approvals, if any, from SEBI.

8. Option to hold Units in dematerialized (Demat)

form

An option is available to investors to receive allotment of mutual fund Units in their demat account while subscribing to any scheme of the Fund. Unit holders opting to hold the Units in demat form must provide their demat account details in the specifi ed section of the application form and should furnish Bank Account details linked with their demat account. (Kindly refer the application form for Demat available on the Fund’s website, www.assetmanagement.hsbc.com/in). Units will be credited to the investor’s demat account after due verifi cation and confi rmation from NSDL / CDSL of the demat account details. The bank mandate registered in the demat account will be treated as the valid bank mandate for the purpose of payout by the Fund. The option to subscribe / hold Units in demat form shall be in accordance with the guidelines / procedural requirements laid down by the Depositories (NSDL / CDSL) from time to time.

The option to hold Units in demat mode also includes allotment of Units made through SIP transactions in any scheme of the Fund, which offers the SIP facility. For SIP transactions, Units will be allotted as per ‘Applicable NAV for Sale of Units’ as mentioned under Section III. ‘Units and Offer’ and will be credited to the investor’s demat account on a weekly basis upon realization of funds. The demat facility is currently not available in plans / options where the dividend distribution frequency is less than 1 month..

In case the Unit holder desires to hold the Units in a dematerialized / rematerialized form at a later date, the request for conversion of Units held in physical form into demat (electronic) form or vice-versa should be submitted along with a Demat / Remat Request Form to the Depository Participant. Unitholders will be required to submit all non-fi nancial requests and redemption requests to their respective Depository Participant, for Units held in demat form. Such Units held in demat form will be transferable subject to the provisions laid down in the SID / SAI and / or KIM of the Fund and in accordance with provisions of Depositories Act, 1996 and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, as may be amended from time to time.

9. Restrictions, if any, on the right to freely retain or

dispose of units being offered

i) Transfer & Transmission of UnitsUnits held in physical form : As the Scheme stands ready to redeem Units on a continuous basis as laid down herein, the transfer facility is found redundant. Units of the Scheme shall therefore be non transferable. However, if a transferee becomes a holder of Units by operation of law including upon enforcement of a pledge, then the Trustees shall, subject to production of such evidence, which in their opinion is suffi cient, proceed to effect the transfer within 30 days from the date of lodgement if the intended transferee is otherwise eligible to hold the Units.

Units in electronic (demat) form : Units of all Schemes of the Fund which are held in electronic (demat) form are, freely transferable and subject to the transmission facility in accordance with the provisions of SEBI (Depositories and Participants) Regulations, 1996 as may be amended from time to time. Such units will be transferable subject to the investor being eligible to hold the units as mentioned in this SID. However, restriction on transfer of Units of HTSF (ELSS scheme) during the lock-in period will continue to be applicable as per ELSS guidelines.

A person becoming entitled to hold the Units in consequence of the death, insolvency, or winding up of the sole holder or the survivors of joint holders, upon producing evidence and documentation to the satisfaction of the Fund and upon executing suitable indemnities in favour of the Fund and the AMC, shall be registered as a Unitholder. It may be noted that the nominee / legal heir is required to provide a copy of his / her PAN card as well as fulfi ll the Know Your Customer (KYC) requirements which is a pre-requisite for the transmission process.

In case of HTSF, unitholders should, however, note that in the event of death of the Unitholder, the legal heir, subject to production of requisite documentary evidence, will be able to redeem the investment only after the completion of one year or anytime thereafter, from the date of allotment of Units to the deceased Unitholder. Units issued under HTSF can be transferred, assigned or pledged after a period of 3 years from the date of allotment.

In the event of transmission of units to a Minor, documents submitted including KYC, bank attestation, indemnity etc. should be of the guardian of the minor.

Investor(s) claiming transmission of Units in his / their name(s) are required to submit prescribed documents based on the kind of scenario for transmission. Kindly refer the Fund’s website (www.assetmanagement.hsbc.com/in) for a ready reckoner matrix of necessary documents under different transmission scenarios. The Fund may also seek additional documents if the amount involved is above Rs. 2 lacs, on a case to case basis or depending upon the circumstances of each case.

Processing of Transmission-cum-transaction requests: If an investor submits either a fi nancial or non fi nancial transaction request alongwith transmission request, then only the transmission request will be processed after the units are transferred in the name of new unit holder, and only upon subsequent submission of fresh request from the new unit holder, will the fi nancial / non-fi nancial transaction request be processed. Under normal circumstances, the Fund will endeavour to process the transmission request within 10 business days, subject to receipt of complete documentation as applicable

ii) Pledge / LienIf in conformity with the guidelines and notifi cations issued by SEBI / Government of India / any other regulatory body from time to time, Units under the Scheme may be offered as security by way of a pledge / charge in favour of scheduled banks, fi nancial institutions, non-banking fi nance companies (NBFCs), or any other body. In case of HTSF, unitholders should, however, note that the Units issued


under the Scheme can be transferred, assigned or pledged after a period of 3 years from the date of allotment.

The AMC and / or the ISC will note and record such pledged/lien marked Units. A standard form for this purpose is available on request from any ISC. Disbursement of such loans will be at the entire discretion of the bank / fi nancial institution / NBFC or any other body concerned and the Mutual Fund assumes no responsibility thereof. The Pledgor / Lendor will not be able to redeem / switch Units that are pledged /l en marked until the entity to which the Units are pledged/lien marked provides written authorisation to the Mutual Fund that the pledge / lien charge may be removed. As long as Units are pledged / lien marked, the pledge / Lendor will have complete authority to redeem such Units.

The distributions in the nature of dividends which are paid out on pledged / lien marked units shall be made in favour of the investor.

iii) Fractional UnitsSince a request for redemption or purchase is generally made in rupee amounts and not in terms of number of Units of the Scheme, an investor may be left with fractional Units. Fractional Units will be computed and accounted for up to three decimal places for the Scheme. However, fractional Units will in no way affect the investor’s ability to redeem the Units, either in part or in full, standing to the Unitholder’s credit.

iv) Right to Limit RedemptionsThe Trustees may, in the general interest of the Unitholders of the Scheme(s) offered under this Combined SID, and keeping in view the unforeseen circumstances / unusual market conditions, limit the total number of Units which may be redeemed on any Business Day to 5% of the total number of Units then in issue, under the Scheme(s) and Plan(s) thereof, or such other percentage as the Trustees may determine. Any Units, which by virtue of these limitations are not redeemed on a particular Business Day, will be carried forward for redemption to the next Business Day, in order of receipt. Redemptions so carried forward will be priced on the basis of the Applicable NAV (subject to the prevailing load) of the Business Day on which redemption is made. Under such circumstances, to the extent multiple redemption requests are received at the same time on a single Business Day, redemptions will be made on pro-rata basis, based on the size of each redemption request, the balance amount being carried forward for redemption to the next Business Day. In addition, the Trustees reserve the right in their sole discretion, to limit redemptions with respect to any single account to an amount of Rs. 1 crore (Rupees One Crore Only) in a single day.

v) Suspension of Sale / Repurchase / Switch of UnitsThe Mutual Fund at its sole discretion reserves the right to withdraw sale and / or repurchase and / or switch of the Units in the Scheme(s) (including any one of the Plan of any of the Scheme(s)) temporarily or indefi nitely, if in the opinion of the AMC, the general market conditions are not favourable and / or suitable investment opportunities are not available for deployment of funds. However, the suspension of sale / repurchase / switch either temporarily or indefi nitely will be with the approval of the Trustees.

The sale / repurchase / switch of the Units may be suspended under the following conditions: � When one or more stock exchanges or markets, which provide

basis for valuation for a substantial portion of the assets of the Scheme(s) is closed otherwise than for ordinary holidays.

� When, as a result of political, economic or monetary events or any circumstances outside the control of the Trustees and the AMC, the disposal of the assets of the Scheme(s) is not reasonable, or would not reasonably be practicable without being detrimental to the interests of the Unitholders.

� In the event of breakdown in the means of communication used for the valuation of investments of the Scheme(s), without which the value of the securities of the Scheme(s) cannot be accurately calculated.

� During periods of extreme volatility of markets, which in the opinion of the AMC are prejudicial to the interests of the Unitholders of the Scheme(s).

� In case of natural calamities, strikes, riots and bandhs. � In the event of any force majeure or disaster that affects the

normal functioning of the AMC, ISC or the Registrar. � If so directed by SEBI.

In the above eventualities, the time limits indicated above, for processing of requests for purchase, switch and redemption of Units will not be applicable. Further, an order to purchase Units is not binding on and may be rejected by the Trustees, the AMC or their respective agents, until it has been confi rmed in writing by the AMC or its agents and payment has been received.

Suspension or restriction of repurchase / redemption facility under any Scheme(s) / Plan of the Mutual Fund shall be made applicable only after the approval from the Board of Directors of the AMC and the Trustees. The approval from the AMC Board and the Trustees giving details of circumstances and justifi cation for the proposed action shall also be informed to SEBI in advance

HEMF, HBF, HGCOF and HAPDF (fund of funds schemes): The AMC/Trustee reserves the right to temporarily suspend subscriptions in / switches into the relevant Schemes, or the subsequent installments of HSBC SIP / HSBC STP into the Schemes will be stopped from the month in which the subscriptions exceed or are expected to exceed the maximum permissible limits prescribed by SEBI for overseas investments (currently the limit for all the Schemes of the Fund put together is equivalent to US$ 300mn).

vi) Freezing / Seizure of AccountsInvestors may note that under the following circumstances the Trustee / AMC may at its sole discretion (and without being responsible and / or liable in any manner whatsoever) freeze / seize a Unit holder’s account (or deal with the same in the manner the Trustee / AMC is directed and / or ordered) under the Scheme(s): � Under any requirement of any law or regulations for the time

being in force. � Under the direction and / or order (including interim orders) of

any regulatory / statutory authority or any judicial authority or any quasi-judicial authority or such other competent authority having the powers to give direction and / or order.

vii) Third party ChequesInvestment/subscription made through third party cheque(s) will not be accepted for investments in the units of HSBC Mutual Fund. Please visit www.assetmanagement.hsbc.com/in for further details

viii) Multiple Bank accounts The unit holder/ investor can register multiple bank account details under its existing folio by submitting separate form available on the website of the AMC at www.assetmanagement.hsbc.com/in. Individuals/HUF can register upto 5 different bank accounts for a folio, whereas non-individuals can register upto 10 different bank accounts for a folio.

ix) Know Your Client (KYC) Norms With effect from 1st January 2011, KYC (Know Your Customer) norms are mandatory for all investors for making investments in Mutual Funds, irrespective of the amount of investment. Further, w.e.f 1 January 2012, uniform KYC for securities markets was made applicable. Investors are requested to note that, w.e.f December 1, 2012, all investors are required to be KRA KYC compliant. Those investors who had obtained MF KYC compliance through CVL (KYC registration authority till 31 December 2011) are required to submit necessary supporting(s) and update the missing information to be in compliance with the uniform KYC requirement laid down by SEBI.

Pursuant to SEBI circular dated December 26, 2013 on uniform KYC norms, certain information from Part I of the standard KYC

HSBC Mutual Fund 89

application form, sourced by KRA (KYC Registration Agency) has been shifted to Part II which captures information specifi c to the area of activity of an intermediary. Accordingly, the additional KYC information required for mutual fund activities has been incorporated into the new application forms of the Fund and investors are requested to provide the same in order for the Fund to have all the necessary KYC details. For investors who have not completed KYC compliance through KRA, any application received without the requisite KYC information will be rejected. However, investors who have obtained KRA KYC compliance, as well as existing investors of the Fund who have registered their KYC details with the Fund shall be required to submit the additional KYC information to the Fund, only in the event of change in their occupation or income details. Kindly use the updated application forms or the separate KYC form of the Fund, available at ISCs or on the Fund’s website for updating the additional information. The AMC reserves the right to reject the application and refund the application amount, post acceptance of the application, in the event that the required KYC information is not provided or not found adequate.

Further, in accordance with SEBI Circulars MIRSD/SE/Cir-21/2011 dated October 5, 2011 and MIRSD/Cir-5/2012 dated April 13, 2012 on Uniform Know Your Client (KYC) read with AMFI Best practices guidelines circular no. 62/2015-16 dated September 18, 2015, it shall be mandatory for existing Unitholders to provide additional KYC information such as Income details, Occupation, Politically Exposed Person status, Net worth etc. as mentioned in the application form as well as complete In-Person Verifi cation (IPV) and provide any missing KYC information, failing which the AMC shall have the authority to reject the transaction for additional subscription (including switches) in their existing folios. However, any SIP/STP registered till December 31, 2015 will be exempt from this requirement.

10. Sale, Repurchase and Switch of Units on

On-going Basis

The Units of the Scheme(s) are available for sale, repurchase and switch at applicable NAV based prices, subject to prevalent load provisions, if any, on every business day.

i) Sale (Purchase) of UnitsThe Units of the Scheme(s) will be available at the sale price, which is based on the Applicable NAV, subject to sales load and subject to the minimum application amount specifi cations. Subscriptions on an ongoing basis will be made only by specifying the amount to be invested and not the number of Units to be subscribed. The total number of Units allotted will be determined with reference to the applicable sale price and fractional Units may be created. Fractional Units will be computed and accounted for up to three decimal places for all Scheme(s). Fractional Units will in no way affect the investor’s ability to redeem Units. The AMC reserves the right to review the terms of acceptance of subscription requests and reserves the right to change the basis for subscription from amount basis to any other basis, subject to the SEBI Regulations. Refer Section III.8 v) on ‘Suspension of Sale / Repurchase / Switch of Units.’

ii) Repurchase (Redemption) of UnitsThe repurchase request can be made on a pre-printed form or by such other method(s) as may be acceptable to the Fund / AMC from time to time. Such request should be submitted at any of the Investor Service Centres / Designated Collection Centres.

HTSF: The Units can be redeemed at the applicable NAV after a lock in period of three years from the date of allotment. The Unit holders shall have the option to switch all or part of their investment from the Scheme on the expiry of the period of three years from the date of allotment to any of the other Scheme(s) offered by the Fund which is / are available for investment at that time.

The repurchase would be permitted to the extent of credit balance in the Unitholder’s account. The repurchase request can be made by specifying the rupee amount or the number of Units to be

repurchased. Repurchase requests can be made for a minimum amount of Rs. 1000/- (Rupees One Thousand Only) and in multiples of Re. 1/- (Rupee One Only) thereafter in case of all the Schemes of the Fund. However, in case of HCF, this shall be applicable for Regular Option only. In case of Institutional & Institutional Plus Options, repurchase requests can be made for a minimum amount of Rs. 10,000 (Rs. Ten Thousand only) and in multiples of Re. 1/- (Rupee One Only) thereafter). Where a request for a repurchase is for both amount and number of Units, the amount requested for repurchase will be considered as the defi nitive request.

If the balance in the Unitholder’s account does not cover the amount of repurchase request, then the Mutual Fund is authorised to close the account of the Unitholder and send the entire such (lesser) balance to the Unitholder. In case an investor has purchased Units on more than 1 Business Day (either under the NFO or through subsequent purchases), the Units purchased prior in time (i.e. those Units which have been held for the longest period of time), will be deemed to have been redeemed fi rst i.e. on a First-in-First-Out basis.

Unitholders may also request for redemption of their entire holding and close the account by indicating the same to the Fund / AMC. Where however, the Unitholder wishes to redeem Units for a specifi ed amount, then the amount to be paid on redemption will be divided by the redemption price, and the resultant number of Units will be redeemed.

In case the Units are standing in the names of more than one Unitholder, where mode of holding is specifi ed as ‘Joint’, redemption requests will have to be signed by ALL joint holders. However, in cases of holding specifi ed as ‘Anyone or Survivor’, any one of the Unitholders will have the power to make redemption requests, without it being necessary for all the Unitholders to sign. However, in all cases, the proceeds of the redemption will be paid to the fi rst-named holder only. A fresh Account Statement / Transaction Confi rmation will be sent to the redeeming investors, indicating the new balance to the credit in the Account.

The redemption cheque will be issued in favour of the Sole / First Unitholder’s registered name and bank account number, and will be mailed to the registered address of the Sole / First holder as indicated in the original Application Form. The Fund may also directly credit the investor’s bank account with the redemption proceeds, in lieu of issue of redemption cheque. The redemption cheque will be payable at par at all the places where the Investor Service Centres are located. The bank charges for collection of cheques at all other places will be borne by the AMC.

Further, as Units may not be held by any person in breach of the Regulations, law or requirements of any governmental, statutory authority including, without limitation, Exchange Control Regulations, the Mutual Fund may mandatorily redeem all the Units of any Unitholder where the Units are held by a Unitholder in breach of the same.

The Trustees may mandatorily redeem Units of any Unitholder in the event it is found that the Unitholder has submitted information either in the application or otherwise that is false, misleading or incomplete.

If a Unitholder makes a redemption request immediately after purchase of Units, the Fund shall have a right to withhold the redemption request till suffi cient time has elapsed to ensure that the amount remitted by him (for purchase of Units) is realised and the proceeds have been credited to the concerned Scheme’s Account. However, this is only applicable if the value of redemption is such that some or all of the freshly purchased Units may have to be redeemed to effect the full redemption.

iii) Switching OptionsOn an on-going basis, the Unitholders have the option to switch all or part of their investment from one Scheme to any of the other Scheme(s) offered by the Fund, which is available for investment at that time, subject to prevailing load structure. The Unit holders shall


ExampleIf the Applicable NAV is Rs.15 and the sales load, if applicable is 2%, the sales price is calculated as follows:

Sales Price = 15 * (1+ 0.02) = 15 * 1.02 = 15.30However, as stated above, in accordance with SEBI circular dated 30 June 2009, no entry load will be charged for purchase/additional purchase/switch-in including registrations for HSBC SIP / HSBC STP, accepted by the Fund, with effect from August 01, 2009.

12. Ongoing price for redemption (sale) / switch

outs (to other Schemes / plans of the Mutual

Fund) by investors. (Repurchase Price)

This is the price an investor will receive on redemptions / switch outs.Investors may submit their redemption / switch out request on any Business Day. The redemption will be processed as per the cut off timing and desired amount / units will be redeemed at the Applicable NAV on such date after charging applicable Exit Load, if any.

While calculating the repurchase price, the Fund shall be at liberty to charge a load as permitted under SEBI Regulations. The Repurchase Price of the Units as per current SEBI Regulations shall not be lower than 93% of the Applicable NAV. The Fund also has the right to charge a different load and therefore a different repurchase price for investors who want to switch over to other eligible Schemes of the Fund.

The repurchase price of the Units, on an ongoing basis, is based on the Applicable NAV. As per SEBI Regulations, an exit load upto a maximum of 7% may be charged for all redemptions under the Plans / Options available under the Scheme(s), provided that the difference between the repurchase price and the sale price of the Units shall not exceed the permissible limit of 7% calculated on the sale price.

The AMC reserves the right to impose different exit loads under the various Plans / Options available under the Scheme(s).

Repurchase Price = Applicable NAV * (1 - Exit Load, if any)

ExampleIf the Applicable NAV is Rs.15 and the exit load applicable is 0.5%, the repurchase price is calculated as follows:Repurchase Price = 15 * (1 - 0.005) = 15 * 0.995 = 14.925

13. Cut off timings for subscriptions/

redemptions / switch-ins / switch-outs

This is the time before which an investor’s application (complete in all respects) should reach the offi cial points of acceptance.

The cut off timings for determining applicable NAVs for subscriptions / redemptions / switch-ins / switch-outs to be made at the Investor Service Centres / Designated Collection Centres (designated as ‘Offi cial Points of Acceptance’ from time to time) are as per the following table:

Scheme / Plan Subscription Redemption Switch In Switch Out

HCF (irrespective of subscription amount)

2.00 p.m..

3.00 p.m. 2.00 p.m.

3.00 p.m.

HEF,HIOF, HDYEF, HMEF, HIEF, HMIP, HTSF, HDF, HEMF, HAPDF, HIF, HUSBF, HBF, HFDF, HGCOF and HMS

3.00 p.m. 3.00 p.m. 3.00 p.m.

3.00 p.m.

have the option to switch all or part of their investment from HTSF on the expiry of the period of three years from the date of allotment to any of the other Scheme(s) offered by the Fund which is / are available for investment at that time.

Where an investor seeks to move between the dividend and growth alternatives within an option of the Scheme / Plan, this will not be construed as a switch. Consequently, no load will apply to such movements. Investors also have the option of switching between various Plans / Options of the same Scheme. To effect a switch, a Unitholder must provide clear instructions. A request for a switch may be specifi ed either in terms of amount or in terms of the number of Units of the Scheme from which the switch is sought. Where a request for switch is for both amount and number of Units, the amount requested will be considered as the defi nitive request. Such instructions may be provided in writing and lodged on any Business Day at any of the Investor Service Centres / Designated Collection Centres..

The switch will be effected by redeeming units from the Scheme in which the units are held and investing the net proceeds in the other Scheme(s) / Plans / Options, subject to the minimum balance, minimum application amount and subscription / redemption criteria applicable for the respective Scheme(s).

Valid requests for ‘switch out’ shall be treated as redemptions and for ‘switch in’ shall be treated as purchases, after considering any prevalent exit and entry loads or a combination thereof for switches. A switch by NRI / FII Unitholders will be subject to the compliance of procedures and / or fi nal approval of the Reserve Bank of India or and any other agency, as may be required.

Investors can subscribe to units of HCF and give standing instructions in the same form to switch the funds on a specifi ed future date to other eligible Scheme(s). The switch-in and switch-out Scheme(s) may be enabled by the Mutual Fund / AMC from time to time. Unitholders can switch funds from HCF to any eligible NFOs of Scheme(s) of the Mutual Fund, as enabled by the Mutual Fund / AMC from time to time, by giving auto-switch instruction from HCF to such Scheme(s). For details of the above facility including switch-in/ switch-out Scheme(s) enabled, please contact the nearest Investor Service Centre.

In case of switch into Regular Option under HCF by an existing investor of any Scheme of the Mutual Fund, the minimum application amount shall be Rs. 25,000/- instead of Rs. 1,00,000/- and the additional investments shall be in multiples of Re. 1/-.

The AMC reserves the right to charge different (including zero) loads on Applicable NAV on switchover as compared to the sale/repurchase as the case may be.

In view of the individual nature of tax impact, each investor is advised to consult his or her own tax consultant with respect to the capital gains / loss and specifi c tax implications arising out of switches and redemptions.

11. Ongoing price for subscription (purchase) /

switch-in (from other Schemes / Plans of the

Fund) by investors (Sale Price)

This is the price an investor needs to pay for purchase/switch-in.The sale price of the Units, on an ongoing basis, is based on the Applicable NAV. As per SEBI circular dated June 30, 2009, no entry load shall be charged for subscriptions made under the Plans / Options available under the Scheme(s).

The AMC reserves the right to impose different entry loads under the various Plans / Options available under the Scheme(s), as permitted under the Regulations. In case of entry load, the Mutual Fund shall ensure that the Sale Price is not higher than 107% of the NAV, provided that the difference between the Repurchase Price and Sale Price of the Unit shall not exceed the permissible limit of 7% of the Sale Price, as provided for under the SEBI Regulations.

Sale Price = Applicable NAV * (1 + Entry Load, if any)

HSBC Mutual Fund 91

Where a request for redemption / switch is received after the cut-off time as mentioned above, the request will be deemed to have been received on the next Business Day.

i) Applicable NAV for Sale of Units

a) Applicable NAV for HEF, HIOF, HMEF, HIEF, HMIP, HIF, HDF, HUSBF, HTSF, HDYEF, HFDF, HEMF, HBF, HAPDF, HGCOF and HMS :

Particulars Applicable NAVwhere the application is received upto 3.00 pm with a local cheque or demand draft payable at par at the place where it is received

the closing NAV of the day of receipt of application

where the application is received after 3.00 pm with a local cheque or demand draft payable at par at the place where it is received

the closing NAV of the next business day

In partial modifi cation to SEBI circular no. SEBI/IMD/CIR No. 11/142521/08 dated October 24, 2008 and Cir/IMD/DF/19/2010 dated November 26, 2010, in respect of purchase of units of all mutual fund schemes (other than liquid schemes), the closing NAV of the day on which the funds are available for utilization will be applicable for application amount equal to or more than Rs. 2 lakh, provided the application is received and funds are available for utilization before the applicable cut-off time.

In respect of purchase of units of mutual fund schemes (other than liquid schemes), the closing NAV of the day on which the funds are available for utilization shall be applicable for application amount aggregated at Permanent Account Number (PAN) of the holders to the investment.

b) Applicable NAV for HCF

Particulars Applicable NAV

where the application is received upto 2.00 p.m. on a day and funds are available for utilization before the cut-off time without availing any credit facility, whether, intra-day or otherwise

the closing NAV of the day immediately preceding the day of receipt of application

where the application is received after 2.00 p.m. on a day and funds are available for utilization on the same day without availing any credit facility, whether, intra-day or otherwise

the closing NAV of the day immediately preceding the next business day

irrespective of the time of receipt of application, where the funds are not available for utilization before the cut-off time without availing any credit facility, whether intra-day or otherwise.

the closing NAV of the day immediately preceding the day on which the funds are available for utilization

Allotment of Units in Liquid, Equity and Income/Debt Oriented SchemesFor allotment of units in respect of purchase in Equity schemes or Income / Debt oriented schemes of Rs. 2 lacs, it shall be ensured that:

i. Application is received before the applicable cut-off time.ii. Funds for the entire amount of subscription / purchase as per the

application are credited to the bank account of the respective schemes before the cut-off time.

iii. The funds are available for utilization before the cut-off time without availing any credit facility whether intra-day or otherwise, by the respective schemes.

For allotment of units in respect of any switch-in to liquid schemes or Rs. 2 lacs and above switch-in to equity / income / debt oriented schemes from other schemes, it shall be ensured that:

i. Application for switch-in is received before the applicable cut-off time.

ii. Funds for the entire amount of subscription / purchase as per the switch-in request are credited to the bank account of the respective switch-in schemes before the cut-off time.

iii. The funds are available for utilization before the cut-off time without availing any credit facility whether intra-day or otherwise, by the respective switch-in schemes. Allotment of Units in Liquid and Income / Debt Oriented Schemes.

The Mutual Fund shall calculate NAV for each calendar day in respect of the above scheme(s) / plan(s).

Explanation: ‘Business day’ does not include a day on which the money markets are closed or otherwise not accessible.

ii) Applicable NAV for Repurchase of Units

a) Applicable NAV for HEF, HIOF, HMEF, HIEF, HMIP, HIF, HDF, HGF HUSBF, HTSF, HDYEF, HFDF, HEMF, HAPDF, HGCOF and HMS:

Particulars Applicable NAVwhere the application is received upto 3.00 pm

closing NAV of the day of receipt of application

where the application is received after 3.00 pm

closing NAV of the next business day.

b) Applicable NAV for HCFParticulars Applicable NAVwhere the application is received upto 3.00 pm

closing NAV of the day immediately preceding the next business day

where the application is received after 3.00 pm

closing NAV of the next business day

The Mutual Fund shall calculate NAV for each calendar day in respect of the above scheme(s) / plan(s) and their plans.

Explanation: ‘Business day’ does not include a day on which the money markets are closed or otherwise not accessible. If the underlying scheme(s) declare any day as a non-business day, AMC will also declare that day as a non business day for the Scheme(s) investing into such underlying scheme(s). However, if this information is received by the AMC from the underlying scheme(s) later in the day and the relevant scheme has already accepted transactions, such transactions will be processed on the next business day

Valid applications for ‘switch-out’ shall be treated as applications for Redemption and valid applications for ‘switch-in’ shall be treated as applications for Purchase, and the provisions of the Cut-off time, purchase / redemption price, minimum amounts for Purchase /Redemption and the Applicable NAV as applicable to Purchase and Redemption, as mentioned in above paragraph, shall be applied respectively to the ‘switch-in’ and ‘switch-out’ applications.

14. Where can the applications for purchase /

redemption / switches be submitted?

The applications, fi lled up and duly signed by the applicants may be submitted at the offi ce of the Collection Centres / ISCs / Offi cial Points of Acceptance. Details of offi cial points of acceptance of Branches of AMC and CAMS are provided on back cover page of this Combined SID.

15. Minimum Application / Purchase Amount /

Minimum Additional Investment Amount /

Minimum Amount for Redemption / Switches

The minimum application/purchase amount, the minimum


additional investment amount and the minimum amount for Redemption / Switches under the Scheme(s) / Plan(s) / Option(s) shall be as under:

Scheme/Plans (including Direct Plan)

Minimum Application Amount Additional investment Minimum Redemption / Switch Amount

HSBC Equity Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter

Rs. 1000/- per application and in multiples of Re. 1/- thereafter

Rs. 1000/- and in multiples of Re. 1/- thereafter

HSBC India Opportunities Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter



HSBC Midcap Equity Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter

Rs.1000/- per application and in multiples of Re. 1/- thereafter


HSBC Infrastructure Equity Fund




HSBC Dynamic Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter



HSBC Emerging Markets Fund Rs.1 0,000/- per application and in multiples of Re. 1/- thereafter



HSBC Tax Saver Equity Fund Rs. 500/- per application and in multiples of Rs. 500/- thereafter

Rs. 500/- per application and in multiples of Rs. 500/- thereafter


HSBC Dividend Yield Equity Fund

Rs. 1 0,000/- per application and in multiples of Re. 1/- thereafter



HSBC Monthly Income Plan (Growth Option)




HSBC Monthly Income Plan (Monthly Dividend Option)




HSBC Monthly Income Plan (Quarterly Dividend Option)




HSBC Income Fund – Investment Plan


Rs 1,000/- per application & multiples of Re. 1/- thereafter


HSBC Income Fund – Short Term Plan




HSBC Ultra Short Term Bond Fund




HSBC Cash Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter



HSBC Flexi Debt Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter



HSBC Asia Pacifi c (Ex Japan) Dividend Yield Fund


Rs 1,000 per application & in multiples of Re. 1/- thereafter

Rs 1,000 & in multiples of Re. 1/- thereafter

HSBC Brazil Fund Rs. 10,000/- per application and in multiples of Re. 1/- thereafter


Rs. 1000/- and in multiples of Re. 1/- thereafter, or 100 units

HSBC Global Consumer Opportunities Fund – Benefi ting from China’s Growing Consumption Power

Rs. 5,000 and in multiples of Re. 1/- thereafter. Minimum application amount is applicable for switch-ins as well.

Rs. 1,000/- and in multiples of Re. 1/- thereafter.

Rs. 1,000/- and in multiples of Re. 1/- thereafter, or 100 Units.

HSBC Managed Solutions Rs. 5,000 and in multiples of Re. 1/- thereafter. Minimum application amount is applicable for switch-ins as well.

Rs. 1,000/- and in multiples of Re. 1/- thereafter.

Rs. 1,000/- and in multiples of Re. 1/- thereafter, or 100 Units.

The AMC reserves the right to change the minimum application / purchase amount, the minimum additional investment amount and the minimum amount for Redemption / Switches under the Scheme(s) / Plan(s) / Option(s) from time to time.

16. Minimum balance to be maintained and consequences of non maintenance

The Fund may close the Unitholder’s account if as a consequence of a redemption/repurchase, the balance falls below the minimum redemption amount as mentioned above for the respective scheme. In such a case, entire Units to the Unitholder’s account will be redeemed at the Applicable NAV with the applicable Load, if any, and the account will be closed. In case of HTSF, the Fund may close a Unitholder’s account if as a consequence of a redemption, the balance falls below Rs. 500/-.

HSBC Mutual Fund 93

17. Special Products / Facilities available/offered to

the investors under the Scheme(s)

(1) HSBC Systematic Investment Plan (HSBC SIP)Unitholders of the Scheme(s) can benefi t by investing specifi c rupee amounts periodically, for a continuous period. SIP allows the investors to invest a fi xed amount every month or quarter for purchasing additional Units of the Scheme(s) at NAV based prices. The requirement of ‘Minimum Amount for Application’ will not be applicable in case of SIPs.

In case an investor wishes to invest on a monthly basis, the investor is required to provide: � at least 12 (6 in case application is processed through non ECS

locations) post-dated cheques of at least Rs. 1000 (Rs. One Thousand) or

� one cheque for the fi rst installment in addition to a mandate form to enable subsequent debits either through Electronic Clearing System (ECS) debit or such other facilities as may be provided by the AMC for a block of atleast 11 installments.

In case an investor wishes to invest on a quarterly basis, the investor is required to provide: � at least 4 post-dated cheques of at least Rs. 3000 (Rs. Three

Thousand) each, or � one cheque for the fi rst instalment in addition to a mandate form

to enable subsequent debits either through Electronic Clearing System (ECS) debit or such other facilities as may be provided by the AMC for a block of atleast 3 balance installments.

The Fund shall offer a ‘Daily’ SIP facility in HCF.

In case an investor wishes to invest through the Daily SIP facility, the investor is required to provide: � One cheque for the fi rst instalment in addition to a mandate form

to enable subsequent debits either through Electronic Clearing System (ECS) or such other facilities as may be provided by the AMC for a block of at least 20 instalments.

� The fi rst investment cheque while applying for Daily SIP should be either equal to or greater than the subsequent SIP instalment amounts.

Notes: � Investors are required to use only the Auto Debit Facility while

applying for Daily SIP. No Post Dated Cheques are allowed under this facility.

� Investors willing to opt for the Daily SIP facility cannot invest via Micro fi nancial products.

� Under the Daily SIP facility, if 5 or more consecutive payment instructions provided by the investor are dishonoured for either insuffi ciency of funds or as a result of a stop payment instruction issued by the investor, the AMC reserves the right to discontinue the SIP.

� Facility of trading through Stock Exchange mode is not offered for Daily SIP

HTSF : In the case of HTSF, Units allotted therein shall be locked-in for a period of three years, from the date of allotment. An investor can start an SIP by providing at least 12 post-dated cheques of Rs. 500 (Rs. Five Hundred) each, for a block of 6 months in advance, in case he wishes to invest monthly. Unitholders wishing to invest on a quarterly basis must provide at least 4 post-dated cheques, for a minimum of Rs. 1500 (Rupees One Thousand Five Hundred Only) per cheque for a block of 4 quarters.

Alternatively, the Auto Debit Facility can be used. The Auto Debit Facility enable direct debits from the account prescribed by the investor in select cities where the facility is available. The cities in the list may be modifi ed / updated / changed / removed at any time entirely at the discretion of the AMC without assigning any reason or prior notice. The AMC reserves the right to withdraw the Auto Debit Facility at any time.

The cheque for the fi rst SIP installment can carry any date. The fi rst installment of the SIP will be processed subject to applicable NAV & load, if any, on the date of receipt of the application form (post dated cheque will not be accepted). The second installment in case of monthly SIP will be processed on the available SIP date (currently 3rd, 10th, 17th, 26th or 30th of every month; however for the month of February, the SIP date will be “last business day of month” instead of “30th of every month”) indicated by the investor, but immediately following the expiry of 25 business days from the date of processing the fi rst SIP. If the choice of date for the second installment is not indicated by the investor, the second installment of SIP will be processed on the earliest SIP date (3rd, 10th, 17th, 26th or 30th of every month; however for the month of February, the SIP date will be “last business day of month” instead of “30th of every month”) immediately following the expiry of 25 business days from the date of processing the fi rst SIP installment. In case of quarterly SIP, the date for next installment will be 10th of the relevant month. If any of above dates falls on a holiday, the transaction will be taken as of the next Business Day.

The cheques should be drawn in the name of the Scheme or its abbreviation e.g. “HSBC Infrastructure Equity Fund” or “HIEF” and crossed “Account Payee only” and must be payable at the locations where the applications are submitted at the Investor Service Centres. Outstation cheques will not be accepted and applications accompanied by such cheques are liable to be rejected. In case of investments under the SIP, if 2 or more consecutive post dated cheques/ payment instructions provided by the investor are dishonored for either insuffi ciency of funds or as a result of a stop payment instruction issued by the investor, the AMC reserves the right to discontinue the SIP. The SIP may be discontinued on a written notice to the Registrar of at least 25 business days by a unit holder of the Scheme. The AMC reserves the right to introduce / discontinue SIP / variants of SIP from time to time.

The Mutual Fund may have arrangements with organisations to accept group SIPs whereby the employees of such organisations can opt for a direct deduction from their salary and invest in the Scheme of the Mutual Fund in which the SIP facility is available. The Mutual Fund will decide the terms and conditions on which such group SIPs would be made available.

In case of HEMF or HBF, the subsequent installments of SIP into these Schemes will be stopped from the month in which the subscriptions exceed the SEBI permissible limits for overseas investments (currently the limit for all the Schemes of the Fund put together is equivalent to US$ 300mn).

Investment transactions (Lumpsum and SIPs) upto Rs.50,000/- exempt from Permanent Account Number (PAN)In accordance with SEBI letter no. MRD/DoP/PAN/PM/166999/2009 dated June 19, 2009 issued to Association of Mutual Funds in India (AMFI), guidelines issued by AMFI vide its circular no. 35P/MEM-COR/4/09-10 dated July 14, 2009 and subsequent guidelines issued by SEBI vide letter No. OW/16541/2012 dated July 24, 2012 in this regard, lumpsum SIPs upto Rs. 50,000/- per year per investor i.e. aggregate of investments in a rolling 12 month period or in a fi nancial year i.e. April to March (hereinafter referred to as “Micro fi nancial products (MFP)”) shall be exempted from the requirement of PAN. This exemption shall be applicable only to investments by individuals (including NRIs but not PIOs), Minors and Sole proprietary fi rms including joint holders. HUFs and other categories of investors will not be eligible for this exemption. MFP investors will require to be KYC compliant by submitting requisite documents and obtaining KYC compliance by undergoing the uniform KYC process applicable for securities markets.

Investors are advised to refer to the uniform KYC process and form to comply with the KYC requirement.

While making subsequent MFP applications with a mutual fund, investor can quote the existing folio number where a MFP has been registered and therefore need not resubmit the supporting document.


The MFP application will be rejected by the AMC where it is found that the registration of the application will result in the aggregate of MFP investments in a fi nancial year exceeding Rs 50,000 or where there are defi ciencies in the documents submitted by the investors in lieu of PAN as mentioned above. The rejected application will be sent back to the investor with a defi ciency memo. In case the fi rst MFP -SIP installment is processed (as the cheque may be banked), and the application is found to be defective, the MFP - SIP registration will be ceased for future installments. No refunds shall be made by the AMC for the units already allotted and a communication to this effect will be sent to the investors. However, investors shall be allowed to redeem their investments at applicable NAV.

(2) Systematic Encashment Plan (SEP)Unitholders have the benefi t of enrolling themselves under the Systematic Encashment Plan. The SEP allows the Unitholder to withdraw sums of money each month / quarter from his investments in the Scheme. SEP is ideal for Unitholders seeking a regular infl ow of funds for their needs fn a tax effi cient manner. It is also suited to retired persons or individuals who wish to invest a lumpsum and withdraw from the investment over a period of time. Investors can opt for either monthly or quarterly withdrawals. The Unitholder may avail of this Plan by sending a written request to the Registrar.

The amount thus withdrawn by redemption will be converted into Units at the Applicable NAV based prices and the number of Units so arrived at will be subtracted from the Unit balance to the credit of that Unitholder. The SEP transaction will be on the fi rst Business Day of every month / quarter and the payout will be as per the payout schedule of the respective Scheme(s). The Fund may close a Unitholder’s account if the balance falls below Rs 1,000/- in the respective Options / sub-options within 30 days from the date on which a written intimation in this regard is sent to the Unitholder. A Unitholder in HTSF, may avail this facility only after completion of the lock-in Period of 3 years from the date of allotment.

The SEP may be terminated or modifi ed on a written notice to the Registrar of at least 14 days by a Unitholder of the Scheme and it will terminate automatically if all Units are liquidated or withdrawn from the account by the Unitholder.

Under SEP, investors can opt for withdrawal of a Fixed Amount or the Capital Appreciation on their investment (for a minimum period of 3 months).

Under the Fixed Amount Option, the investor specifi es the fi xed amount that he would like to receive on a regular basis irrespective of the gain / loss on the Fund in the specifi ed period. The minimum amount which the Unitholder can withdraw is Rs 1000/- (Rupees One Thousand Only) and in multiples of Re.1 (Rupee One Only) thereafter.

The Capital Appreciation Option allows the automatic redemption of the incremental amount i.e. appreciation on the original investment. For example, if the appreciation on the initial investment in a period is Rs. 5000/- and Rs. 4500/- in the next period, then the investor would receive only the appreciation i.e. Rs. 5000/- and Rs. 4500/- in the respective periods. Unitholders should note that in the event of there being no capital appreciation, no withdrawal / payment would be effected.

The AMC reserves the right to introduce / discontinue SEP from time to time.

(3) Systematic Transfer Plan (STP)Unitholders of the Scheme can benefi t by transferring specifi c rupee amounts periodically, for a continuous period. STP allows the investors to transfer a fi xed amount every month to a particular Scheme at NAV based prices. Investors can opt for the Systematic Transfer Plan by investing a lumpsum amount in the HSBC Income Fund, HSBC Cash Fund, HSBC Monthly Income Plan, HSBC Ultra Short Term Bond Fund and HSBC Flexi Debt Fund and providing a standing instruction to transfer sums at monthly intervals (for a minimum period of 3 months) into Equity Schemes of the Mutual

Fund. Investors could also opt for STP from an existing account by quoting their account / folio number. Investors could choose to specify the fi xed sum to be transferred every month. Alternatively, in the Growth Sub-Options under the Regular, Institutional and Institutional Plus Options of HSBC Cash Fund, investors could opt to automatically transfer the capital appreciation (between the immediately preceding STP date and the present STP date) in the value of their investments to equity Schemes of the Mutual Fund. A Unitholder in HTSF, may avail this facility only after completion of the lock-in Period of 3 years from the date of allotment.

Transfers would be effected on the available STP date (currently 3rd, 10th, 17th, 26th or 30th of every month however for the month of February, the STP date will be “last business day of month” instead of “30th of every month”) indicated by the investor. If these dates fall on a holiday, the transaction will be effected as of the next Business Day. Transfers must be for a minimum amount of Rs.1,000/- per month. In case of STP if the choice of date for the installment is not indicated by the investor, the installment of STP will be processed on the next earliest STP date (3rd, 10th, 17th, 26th or 30th of every month however for the month of February, the STP date will be “last business day of month” instead of “30th of every month”). Transfers must be for a minimum amount of Rs.1,000/- in case of STPs where a fi xed sum is specifi ed to be transferred every month. Kindly note that STP will come into effect within 10 days from the date of receipt of application.

The STP may be discontinued on a written notice to the Registrar of at least 14 days by a unit holder of the Scheme. The AMC reserves the right to introduce / discontinue STP / variants of STP from time to time.

In case of HEMF and HBF, the subsequent installments of STPs into HEMF or HBF will be stopped from the month in which the subscriptions exceed the maximum permissible limit for overseas investments (currently the limit for all the Schemes of the Fund put together is equivalent to US$ 300mn).

SIP / STP in Direct Plan - Investors who had registered for SIP/STP facility prior to January 1, 2013 (i..e. before introduction of Direct Plan) with distributor code and now wish to invest their future installments into the Direct Plan, shall make a written request to the Fund in this behalf. The Fund will take at least 15 days to process such requests. Intervening installments will continue in the existing Plan. However, investors who had registered for STP facility prior to this date with distributor code and wish to invest under the Direct Plan through this facility shall cancel their existing STP and register afresh.

In case of SIP / STP facility registered prior to January 1, 2013 without any distributor code, installments falling on or after this date are being automatically processed under the Direct Plan. In all cases, the terms and conditions of the registered enrolment will continue to apply.

Smart STP - Investors can opt for the Smart STP facility by investing a lumpsum amount in HSBC Flexi Debt Fund and providing a standing instruction to transfer gains at monthly intervals into HSBC India Opportunities Fund. Under this facility, there will be a monthly transfer of gains (if any) from HSBC Flexi Debt Fund – Growth on the original investment value. The gains would be calculated on NAV pertaining to the transfer date as compared to the NAV on the original purchase date. There will be no transfer if there is no gain from original investment value. The NAV for the transfer-out scheme and transfer- in scheme will be as per the provisions under the SEBI (Mutual Funds) Regulations, 1996.

Investors who wish to opt for this facility need to submit the Smart STP form along with the Common Application form and accompanied with fresh investment (such investments will be allotted a new folio). Duly fi lled applications should be submitted at offi cial point of acceptance on or before 20th of the month to avail the Smart STP facility in the subsequent month. The Smart STP transaction will be triggered on the 2nd calendar day of every month

HSBC Mutual Fund 95

and incase such day is a holiday, the subsequent business day would be considered for transfer. Smart STP if registered in a folio will be applicable to all subsequent purchases /switch-in done in the folio. The facility will not be available for exchange and demat folios.

(4) Facility to purchase / redeem units of the Scheme(s) through Stock Exchange

The Fund offers an alternate transaction platform for investors to buy / sell units of all schemes of the Fund through BSE StAR MF (BSE Stock Exchange Platform for Allotment and Repurchase of Mutual Funds), trading platform of Bombay Stock Exchange (BSE).

The facility of transacting through the stock exchange mechanism enables investors to buy and sell the Units of the Scheme(s) through the stock brokers registered with the BSE and / or NSE in accordance with the guidelines issued by SEBI and operating guidelines and directives issued by NSE, BSE or such other recognized stock exchange in this regard and agreed with the Asset Management Company / Registrar and Transfer Agent. Investors shall place orders for subscriptions / redemptions with registered stock brokers and clearing members of recognized stock exchanges. Stock brokers, Clearing members and Depository Participants empanelled with the AMC shall be considered as empanelled distributors and as ‘Offi cial Points of Acceptance of Transactions’. The investor shall be serviced directly by such stock brokers/ Depository Participant. The Mutual Fund will not be in a position to accept any request for transactions or service requests in respect of Units bought under this facility in demat mode.

This facility will be offered to investors who wish to hold Units in dematerialized form or in physical mode. Further, the minimum purchase/ redemption amount in the respective plan / option of such notifi ed Schemes of the Fund will be applicable for each transaction. This facility will currently not support transactions done through switches or facilities such as SWP and STP

Investors transacting in the Units of the Schemes will be subject to KYC formalities carried out by the DP. Applicable NAV shall be reckoned on the basis of the time stamping as evidenced by confi rmation slip given by the stock exchange mechanism. The allotment and redemption of Units on any Business Day with respect to transactions carried out through this mechanism will depend upon the order processing / settlement by BSE and its respective clearing corporation. A Demat statement provided by the DP in such form and manner and at such time as agreed with the DP, shall be equivalent to an Account Statement. For any grievance with respect to transactions through BSE, the investors should approach the investor grievance cell of BSE or their DP.

18. Account Statements

An allotment confi rmation specifying the number of Units allotted will be sent to the Unitholder by way of email and / or SMS to the registered e-mail address and / or mobile number, within 5 Business Days from the date of closure of the initial subscription list and / or from the date of receipt of the request from the Unitholder. In case of any specifi c request received from the Unit holder, the AMC/Fund will provide the account statement to the Unitholder within 5 Business Days from the receipt of such request.

A Consolidated Account Statement (CAS) for each calendar month shall be sent by email on or before 10th of the succeeding month to those Unitholders in whose folio(s) transactions have taken place during the month and have provided a valid Permanent Account Number (PAN). In the event that the registered email address of the Unitholder is not available with the Fund, the CAS will be sent as a physical statement. CAS shall contain details relating to all transactions* carried out by the Unitholder across schemes of all mutual funds during the month, holdings at the end of the month and transaction charges paid to the distributor, if any. Further, an e-CAS will be sent either to the email id updated in KYC records or to the email id available in the last transacted folio. Unitholders are requested to update a common email id across all folios with

different mutual funds and also in their KYC records.

* The word ‘transaction’ includes purchase, redemption, switch, dividend payout, dividend reinvestment, SIP, STP, SWP, and bonus transactions.For the purpose of sending CAS, common Unitholders’ across mutual funds shall be identifi ed by their PAN. In the event that the folio has more than one registered Unitholder, the fi rst named holder will receive the CAS. The CAS shall not be received by those Unitholders whose folio(s) are not updated with PAN details. Unitholders are therefore requested to ensure that each of their folio(s) are updated with their PAN details. Incas a specifi c request is received from the Unitholder, the AMC / Fund will provide the account statement to the unit holder(s) within 5 Business Days from the receipt of such request. Further, the CAS detailing the holdings across schemes of all mutual funds at the end of every six months (i.e. September/ March), shall be sent on or before 10th day of succeeding month, to all such Unit holders in whose folios no transaction has taken place during that period. The half yearly CAS will be sent by e-mail to the Unitholders whose e-mail address is available, unless a specifi c request is made to receive in physical.

SEBI has vide a recent circular dated November 12, 2014 on CAS for all securities assets, prescribed that in order to enable a single consolidated view of all investments of an investor in mutual funds as well as securities held in demat form, the Depositories shall generate and dispatch a single CAS to an investor having mutual fund investments and holding demat accounts.

The AMC/Registrar will share the requisite information with the Depositories on a monthly basis to enable generation and despatch of CAS by Depositories, at such frequency as is currently done by the AMC/RTA.

For Unitholders who have mutual fund investments and also hold demat accounts, CAS shall be sent by the Depository on a monthly basis. In case there is no transaction in the mutual fund folios or demat accounts, then CAS with holding details shall be sent by the Depository on a half yearly basis. Incase an investor has multiple accounts across two Depositories, the Depository with whom the account has been opened earlier will be the default Depository. If statements are presently being dispatched to the Unitholder by email either by the AMC/RTA or by the Depository, CAS shall continue to be sent through email. However, if the Unitholder does not wish to receive CAS through email, an option shall be given to receive the CAS in physical form at the address registered in the Depository system.

With respect to investors who hold mutual fund folios but do not have demat accounts, CAS shall continue to be sent by the AMC/its RTA as is being presently done.

The Fund reserves the right to reverse the transaction of crediting Units in the Unitholder’s account, in the event of non-realisation of any cheque or other instrument remitted by the investor. The Unit balance shown on the account statement is subject to realisation of cheque, fulfi lment of regulatory requirements, fulfi lment of requirements of the SID / Addendum(s) and furnishing necessary information to the satisfaction of the Fund. For those Unitholders who have provided an e-mail address, the AMC will send the account statement by e-mail at the email address provided by the Unitholder. The Unitholder may request for a physical account statement by writing / calling the AMC/ISC/R&T. Further please refer “Receiving Account Statement / Correspondence by e-mail” mentioned below.

The statement of holding of the benefi ciary account holder for Units held in demat form will be sent by the respective Depository Participant.

As Units of the Scheme will be non-transferable, the Account Statements shall be non-transferable. If the Unitholder so desires, non-transferable unit certifi cates will be issued within 5 business days of the receipt of request for the certifi cate. The Account Statement


shall not be construed as a proof of title and is only a computer-printed statement indicating the details of transactions under the scheme. The Account Statement is a record of the transaction in the schemes of the Fund. Investors are requested to review the account statement carefully and contact their nearest Investor Service Centre in case of any discrepancy.

Allotment Advice (for investors holding units in dematerialised mode)An Allotment advice will be sent upon allotment of Units stating the number of Units allotted to each of the Unit holder(s) who have opted for allotment in dematerialized mode within 5 working days from the date of closure of the NFO period. The Units allotted will be credited to the DP account of the Unit holder as per the details provided in the application form.

For SIP transactions, Units will be credited to the investors demat account on a weekly basis upon realization of funds. Units will be allotted as per Applicable NAV for subscriptions / purchases as mentioned in the SID.

Dematerialisation / Rematerialization of Units, if any will be in accordance with the provisions of SEBI (Depositories & Participants) Regulations, 1996 as may be amended from time to time.

All Units will rank pari passu among Units within the same Option / Sub-Option, i.e. either the Dividend Sub-Option or the Growth Sub-Option, as to assets, earnings and the receipt of dividend distributions, if any, as may be declared by the Trustees. Allotment of Units and despatch of Account Statements to NRIs / FIIs will be subject to RBI’s general permission dated 30 March, 1999 to mutual funds, in terms of Notifi cation no. FERA.195/99-RB or such other notifi cations, guidelines issued by RBI from time to time.

Receiving Account Statement / Correspondence by e-mailThe Mutual Fund will encourage the investors to provide their e-mail addresses for all correspondence. The Mutual Fund’s website may facilitate request for Account Statement by Unitholders. The Mutual Fund will endeavour to send Account Statements and any other correspondence including Annual Reports using e-mail as the mode for communication as may be decided from time to time.

The Unitholder will be required to download and print the Account Statement after receiving the e-mail from the Mutual Fund. Should the Unitholder experience any diffi culty in accessing the electronically delivered Account Statement, the Unitholder shall promptly advise the Mutual Fund to enable the Mutual Fund to make the delivery through alternate means. Failure to advise the Mutual Fund of such diffi culty within 24 hours after receiving the e-mail will serve as an affi rmation regarding the acceptance by the Unitholder of the Account Statement.

In case an investor who has provided an e-mail address and opted for electronic mode of receipt of account statements and other updates wishes to change over to the physical mode, he would need to provide a written request to any of our offi cial points of acceptance. Please note that such a request will be treated as a non fi nancial transaction and processed within 3 - 5 business days from the date of submission.

It is deemed that the Unitholder is aware of all security risks including possible third party interception of the Account Statements and content of the Account Statements becoming known to third parties.

Under no circumstances, including negligence, shall the Mutual Fund or anyone involved in creating, producing, delivering or managing the Account Statements of the Unitholders, be liable for any direct, indirect, incidental, special or consequential damages that may result from the use of or inability to use the service or out of the breach of any warranty. The use and storage of any information including, without limitation, the password, account information,

transaction activity, account balances and any other information available on the Unitholder’s personal computer is at the risk and sole responsibility of the Unitholder.

19. Dividends and Distributions

The dividend warrants shall be dispatched to the unitholders within 30 days of the date of declaration of the dividend.The dividend proceeds may be paid by way of dividend warrants / direct credit / EFT / ECS Credit / SEFT / RTGS / Wired Transfer / any other manner through the investor’s bank account specifi ed in the Registrar’s records. The AMC, at its discretion at a later date, may choose to alter or add other modes of payment. The AMC shall also appropriately intimate the Unitholders about the dividend announcements / payout / reinvestment within 30 days of the date of declaration of dividend.

Further, in case of units held in dematerialized form, based on the list provided by the Depositories (NSDL/ CDSL) giving the details of the demat account holders and the number of Units held by them in demat form on the Record date, the Registrars & Transfer Agent will pay the dividend proceeds by forwarding a dividend warrant or directly crediting the bank account linked to the demat account depending on the mode of receipt of dividend proceeds chosen by the Unit holder.

20. Redemption/ Repurchase proceeds

As per the Regulations, the Fund shall despatch the redemption/repurchase proceeds within 10 Business Days from the date of acceptance of redemption request at any of the Investor Service Centres. Under normal circumstances, the Fund will endeavour to despatch the redemption proceeds within 3 business days (in case of equity / ELSS Scheme(s)), 7 business days (in case of HEMF and HBF) & 1 Business Day (in case of income/debt Schemes) from the date of receiving a valid redemption request.

21. NRIs / FIIs

The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (the “FEMA Regulations”) permit a NRI to purchase on repatriation or non-repatriation basis, without limit, units of domestic mutual funds. Payment for such units must be made either by: (i) inward remittance through normal banking channels; or (ii) out of funds held in the NRE / FCNR account, or (iii) Indian Rupee drafts purchased abroad in the case of purchases on a repatriation basis or out of funds held in the NRE / FCNR / NRO account, in the case of purchases on a non-repatriation basis.

In case Indian Rupee drafts are purchased abroad or from FCNR / NRE accounts, an account debit certifi cate from the bank / fi nancial entity issuing the draft confi rming the debit shall also be enclosed. NRIs shall also be required to furnish such other documents as may be necessary and as desired by the AMC / Mutual Fund/Registrar, in connection with the investment in the schemes.

The FEMA Regulations also permit a registered FII to purchase, on repatriation basis, units of domestic mutual funds provided the FII restricts allocation of its total investment between equity and debt instruments in the ratio as applicable at the time of investments. Payment by the FII must be made either by inward remittance through normal banking channels or out of funds held in foreign currency account or non resident rupee account maintained by the FII with a designated branch of an authorised dealer with the approval of the RBI in terms of paragraph 2 of Schedule 2 to the FEMA Regulations.

Redemption by NRIs / FIIsUnits held by an NRI investor and FIIs may be redeemed by such investor by tendering Units to the Mutual Fund or for payment of maturity proceeds, subject to any procedures laid down by RBI from time to time. The Fund will not be liable for any delays or for any loss on account of any exchange fl uctuations, while converting the

HSBC Mutual Fund 97

rupee amount in foreign exchange in the case of transactions with NRIs / FIIs. Provisions with respect to NRIs/ FIIs stated above, is as per the AMC’s understanding of the laws currently prevalent in India.

22. Delay in payment of redemption / repurchase

proceeds

In the event of failure to despatch the redemption proceeds within the above time, the Asset Management Company shall be liable to pay interest to the unitholders at such rate as may be specifi ed by SEBI for the period of such delay (presently @ 15% per annum).

23. Duration of the Scheme / Winding up

The AMC, the Fund and the Trustees reserve the right to make such changes / alterations to all or any of the Scheme (including the charging of fees and expenses) offered under this Combined SID to the extent permitted by the applicable Regulations. However, in terms of the Regulations a scheme may be wound up after repaying the amount due to the Unitholders:

� On the happening of any event, which in the opinion of the Trustees, requires the Scheme to be wound up i.e. if the underlying scheme(s) are not available for investment by the Scheme, then the Scheme may be wound up.

� If seventy fi ve per cent (75%) of the Unitholders of the Scheme pass a resolution that the Scheme be wound up.

� If SEBI so directs in the interest of the Unitholders. � Where the Scheme is so wound up, the Trustees shall give notice

of the circumstances leading to the winding up of the Scheme to:

a) SEBI andb) In two daily newspapers having a circulation all over India

and in one vernacular newspaper with circulation in Mumbai.

� On and from the date of the publication of notice of winding up, the Trustees or the AMC, as the case may be, shall:a) Cease to carry on any business activities in respect of the

Scheme so wound upb) Cease to create or cancel Units in the Schemec) Cease to issue or redeem Units in the Scheme

Procedure and Manner of Winding upThe Trustees shall call a meeting of the Unitholders of the Scheme to approve by simple majority of the Unitholders present and voting at the meeting, resolution for authorising the Trustees or any other person to take steps for the winding up of the Scheme. The Trustees or the person authorised as above, shall dispose off the assets of the Scheme concerned in the best interest of the Unitholders of the Scheme. The proceeds of sale realised in pursuance of the above, shall be fi rst utilised towards discharge of such liabilities as are due and payable under the Scheme, and after meeting the expenses connected with such winding up, the balance shall be paid to the Unitholders in proportion to their respective interest in the assets of the Scheme, as on the date the decision for winding up was taken.

On completion of the winding up, the Trustees shall forward to SEBI and the Unitholders, a report on the winding up, detailing the circumstances leading to the winding up, the steps taken for disposal of the assets of the Scheme before winding up, expenses of the Scheme for winding up, net assets available for distribution to the Unitholders and a certifi cate from the auditors of the Fund. Notwithstanding anything contained herein above, the provisions of the Regulations in respect of disclosures of half-yearly reports and annual reports shall continue to be applicable, until winding up is completed or the Scheme cease to exist.

After the receipt of the report referred to above, if SEBI is satisfi ed that all measures for winding up of the Scheme have been complied with, the Scheme shall cease to exist.

B. PERIODIC DISCLOSURES

1. Net Asset Value

This is the value per unit of the Scheme(s) on a particular day. You can ascertain the value of your investments by multiplying the NAV with your unit balance.

The NAVs of the respective Scheme(s) / Plan(s) / Option(s) will be calculated and published by the Fund for every Business Day. The Unitholders may obtain the information on NAVs of any day by calling the offi ce of the AMC or any of the Investor Service Centres or on the website of the AMC at www.assetmanagement.hsbc.com/in. The Fund will publish the NAVs, Purchase Price and Redemption Price of the Scheme in at least two daily newspapers on all Business Days.

The AMC shall update the NAVs on the website of Association of Mutual Funds in India - AMFI (www.amfi india.com) and the Fund’s website (www.assetmanagement.hsbc.com/in)by 9.00 p.m. on every Business Day. However, the AMC will endeavour to update the NAVs on the above websites daily by 9:00 p.m. on every Business Day. In case of any delay, the reasons for such delay would be explained to AMFI by the next day. If the NAVs are not available before commencement of business hours on the following day due to any reason, the Fund shall issue a press release providing reasons and explaining when the Fund would be able to publish the NAVs. In case of FoF Schemes, the AMC shall update the NAVs on the websites of AMFI and the Fund’s website latest by by 10.00 am on the next Business Day, due to differences in the time zones. The NAVs will be determined on every Business Day except under special circumstances specifi ed in this Combined SID.

Impact of overseas investment in the fund for NAV Calculations (Applicable for HEMF, HBF, HAPDF HAPDF, HGCOF and HMS)HEMF intends to invest its assets into overseas securities / units issued by overseas mutual funds or unit trusts, while HBF intends to invest its assets in HGIF Brazil Equity Fund or other similar overseas mutual fund schemes. HAPDF predominantly invests into HGIF Asia Pacifi c Ex Japan Equity High Dividend Fund. HGCOF predominantly invests into HGIF China Consumer Opportunities Fund. HMS intends to invest into units issued by overseas mutual funds or unit trusts. For instance, if any of the fund of funds schemes invest into their respective underlying schemes, the impact on the NAV of the relevant Scheme is illustrated below. It also demonstrates the inclusion of the NAV of the underlying scheme into the fund of funds Scheme.

Example

Collections at Day Zero A 100,000,000Purchase Price per unit B 10Units allotted to domestic investors A / B C 10,000,000.00Collection Invested overseas D 90,000,000Exchange Rate (Rs/USD) E 48Amount in USD D / E F 1,875,000NAV per unit of Overseas Fund (USD) G 11.75Units allotted in the overseas fund F / G H 159,574.47Amount invested locally in Money market fund

A - D I 10,000,000

Yield on domestic investment J 6%Expense ratio (excluding expenses of underlying schemes)

K 1.65%

AUM after one month Domestic Component I + Interest

in IL 10,050,000

NAV per unit of the Overseas Fund M 11.97


Exchange Rate (Rs/USD) N 48Overseas Component H x M x N O 91,685,106Expenses (for one month) (INR)-approximated at average of opening and closing AUM

[(A+L+O) / 2 *K/12]

P 138,693

AUM after one month L + O - P Q 101,596,413NAV per unit Q / C R 10.1596

* All expenses charged by the underlying scheme are included in its NAV

2. Monthly and Half yearly Disclosures:

Portfolio / Financial Results

This contains a list of securities where the corpus of the Scheme is invested. The market value of these investments is also stated in portfolio disclosures.

Effective October 1, 2012, the Fund will make half yearly disclosure of the schemes un-audited fi nancial results on its website within one month from the close of each half year i.e. on 31st March and on 30th September. An advertisement disclosing the hosting of such fi nancial results on the website will be issued in atleast one English daily newspaper having nationwide circulation and in a newspaper having wide circulation published in the language of the region where the Head Offi ce of the mutual fund is situated. Such disclosure shall be updated on the Fund’s website at www.assetmanagement.hsbc.com/in and on AMFI’s website at www.amfi india.comin the formats as prescribed by SEBI.

The Fund shall before the expiry of 1 month from the close of each half year (31 March and 30 September) send to the Unitholders, a complete statement of the Scheme’s portfolios or if such statement is not sent to the Unitholders, it will be published by way of an advertisement in one English daily newspaper circulating in the whole of India and in a newspaper published in the language of the region where the Head Offi ce of the Mutual Fund is situated. The Scheme’s portfolios shall also be displayed on the Fund’s website at www.assetmanagement.hsbc.com/in, within 1 month from the close of each half year. The statement shall be in the format as prescribed by SEBI.

Investors are requested to note that in terms of SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, portfolios of the Schemes (alongwith ISIN) shall be disclosed and uploaded on a monthly basis on the website at www.assetmanagement.hsbc.com/in on or before the tenth day of the succeeding month.

3. Annual Report

A schemewise Annual Report of the Fund or an abridged summary thereof shall be mailed to all Unitholders as soon as may be but not later than 4 months from the date of closure of the relevant accounting year (i.e. 31st March of each year). The abridged annual report shall contain such details as are required under the Regulations. The Fund shall, from the fi nancial year 2011-12 onwards, send the Scheme wise annual report / abridged summary thereof as under:

(i) By e-mail only, to those Unit holders’ whose e-mail address is available with the Fund;

(ii) In physical form, to those Unit holders’ whose email address is not available with the Fund and / or to those Unit holders’ who have specifi cally opted/requested for physical report.

Unit holders are therefore requested to update their email address with the Fund to receive annual reports through email.

The physical copy of the scheme wise annual report / abridged summary thereof shall be made available to the investors at the registered offi ce of the AMC. A link of the scheme annual report or abridged summary shall be displayed prominently on the website of the Fund and on the website of Association of Mutual Funds in India (AMFI).

4. Associate Transactions

For details of Associate transactions including dealing with associate companies, Investors are advised to please refer Statement of Additional Information (SAI).

5. Taxation

The information is provided for general information only. However, in view of the individual nature of the implications, each investor is advised to consult his or her own tax advisors / authorised dealers with respect to the specifi c amount of tax and other implications arising out of his or her participation in the Schemes.

Particulars Resident Investors Mutual FundTax on Dividend Debt / Equity /Liquid Fund

Nil Equity Fund : NILDebt Fund : For Individuals and HUF 25% plus applicable surcharge and education cess;For other than Individual / HUF - 30% plus applicable surcharge and education cess.Liquid Fund: For Individuals and HUF - 25% plus applicable surcharge and education cess;For other than Individual / HUF - 30% plus applicable surcharge and education cess..

Capital Gains: Debt Fund / Liquid Fund : 1) Long Term

2) Short Term

20%** with Cost Infl ation Index benefi t Income tax rate applicable to the Unit holders as per their income slabs**

Nil

Nil

Equity Fund: 1) Long Term 2) Short Term

Nil 15%**

Nil Nil

**plus surcharge and education cess as applicable.

Investors in HTSF are entitled to deductions of the amount invested in Units of the Scheme, subject to a maximum of Rs. 1,50,000, under and in terms of Section 80C (2) (xiii) of the Income Tax Act, 1961.

The Scheme(s) shall bear the dividend distribution tax as per section 115R of Income Tax Act 1961. As per extant Income Tax regulations, dividends distributed by mutual funds are tax free in the hands of the investor. Any additional tax liability due to demand raised on the fund by the IT authorities and deemed payable would be borne by the Scheme. Any additional tax liability due to demand raised on the Investor by the IT authorities and deemed payable would be borne by the respective investor.

For further details on taxation, Investors are requested to refer to the section on Taxation in the Statement of Additional Information (SAI).

6. Investor Services

The Fund will follow-up with the Investor Service Centres and the Registrar on complaints and enquiries received from investors with an endeavour to resolve them promptly. For this purpose, Ms. Rheitu

HSBC Mutual Fund 99

of price for a period upto or less than 30 days the AMC shall fair value such securities supported by quotes from brokers / market makers, wherever possible.

The latest NAV of the Underlying schemes of the FOFs, shall be obtained from reliable sources like direct communication from the R&T agent of the underlying scheme, investment managers of the scheme, Bloomberg/Reuters, website of the funds/ website of the R&T Agent / Fund Administrator of the underlying scheme or other generally accepted public sources of information, for computation of the NAV of the Underlying scheme.

The R&T agent (RTA) of the Underlying scheme is responsible for declaring NAV’s on a daily basis. The following is the brief process for NAV declaration of the underlying scheme :

� NAV publication of this underlying scheme (being overseas mutual fund units) is currently 20:30 Central European Time on daily basis for the NAV of the same day.

� RTA or Fund administrator, through a system generated fi le provides all NAV’s to their agents who has link with data providers, such as Bloomberg, Telekurs etc. for updating of information on their platforms. RTA or Fund administrator shall also declare NAV’s simulataneously, through email, using the same system to various recipients including investors of the Underlying schemes.

� RTA or Fund administrator has a BCP & DR Plan in case of exigency at the primary site.

Forex rates for conversion : The NAV of the underlying scheme(s) which is denominated in foreign currency shall be converted to INR, using the conversion rate available on RBI / Reuters / Bloomberg reference rate. The AMC reserves the right to change the source for determining the exchange rate.

The AMC shall compute the NAVs of the Scheme and update the same on the website of the Fund (www.assetmanagement.hsbc.com/in) and AMFI (www.amfi india.com), latest by 10.00 a.m. on the next Business Day, due to differences in the time zones. In case of unforeseen events like system breakdown, natural calamities etc. delaying the NAV of the underlying scheme, the NAV of HBF may also be delayed and the AMC shall suitably intimate AMFI / SEBI in this regard.

The process of NAV calculation of the Scheme is depicted below through a fl owchart :

Bansal is currently designated as the Investor Relations Offi cer. Her contact details are as follows :

16, V. N. Road, Fort, Mumbai 400 001.Tel. : 1800 00 2434 Fax : (91) (22) 40029600E-mail: [email protected]

C. COMPUTATION OF NAV

The NAV of Units under the Scheme(s) / Plan(s) / Option(s) shall be calculated as shown below:

Market or Fair Value of Scheme’s investments (+) Current Assets (-) Current Liabilities and ProvisionsNAV (Rs.) = _________________________________________ No. of Units outstanding under the Scheme

The Direct Plan shall have a separate NAV.

The NAVs of the Scheme(s) / Plan(s) / Option(s) (including Direct Plans) will be calculated and disclosed as of the close of every Business Day. The NAVs of the Scheme shall be disclosed up to 4 decimal places. The valuation of the Scheme’ assets and calculation of the Scheme’ NAV shall be subject to audit on an annual basis and such regulations as may be prescribed by SEBI from time to time.

Fractional Units

Since a request for redemption or purchase is generally made in rupee amounts and not in terms of number of Units of the Scheme, an investor may be left with fractional Units. Fractional Units will be computed and accounted for up to three decimal places for the Scheme. However, fractional Units will in no way affect the investor’s ability to redeem the Units, either in part or in full, standing to the Unitholder’s credit.

Policy on computation of NAV in case of investment

in foreign securities

In case of investment in listed foreign securities by schemes other than FOF schemes, the last available traded price on recognized stock exchange at around 6 p.m IST on the valuation date will be considered for valuation of that security. In case of investment in listed foreign securities by FOF schemes, the closing traded price for the valuation date on recognized stock exchange will be considered for valuation of that security. In case of non availability

ReceiveNAV of

underlyingscheme

DeclareNAV of

the localScheme

Convert the NAV into INR andcompute the NAV of the local

Scheme in INR

Time 3.00 a.m. 4.00 a.m. 5.00 a.m. 6.00 a.m. 7.00 a.m. 8.00 a.m. 9.00 a.m. 10.00 a.m.


This section outlines the expenses that will be charged to the Scheme(s) / Plan(s) / Option(s). The information provided under this Section seeks to assist the investor in understanding the expense structure of the Scheme(s) / Plan(s) / Option(s) and types of different fees / expenses and the percentage the investor is likely to incur on purchasing and selling the Units of the respective Plan(s) under the Scheme(s) / Plan(s) / Option(s).

A. NEW FUND OFFER (NFO) EXPENSES

These expenses are incurred for the purpose of various activities related to the NFO like sales and distribution fees paid marketing and advertising, registrar expenses, printing and stationary, bank charges etc. In case of schemes where entry load was charged during the NFO, the same was utilized for meeting the initial issue expenses in terms of SEBI circular no. SEBI/IMD/CIR No.1/64057/06 dated April 4, 2006 and any expenditure over and above the entry load collected was borne by the AMC. In case of schemes where no entry load was charged, entire expenses were borne by AMC.

B. ANNUAL SCHEME RECURRING EXPENSES

These are the fees and expenses for operating the Schemes. These expenses include Investment Management and Advisory Fee charged by the AMC, Registrar and Transfer Agents’ fee, marketing and selling costs etc as is given in the table below:

The AMC has estimated that upto 2.25% of the daily net assets of the non- equity schemes and upto 2.50% of the daily net assets of the equity schemes and upto 2.50% (including expenses of underlying schemes) of the daily net assets of the fund of funds scheme will be charged to the respective Scheme(s)/Plan(s)/Option(s) as recurring expenses as provided under Regulation 52(6) of the Regulations. In addition to the above, the AMC has estimated that additional expenses of upto 0.30% for gross infl ows from specifi ed cities and upto 0.20% for various expense heads mentioned in table below will be charged to the respective Scheme(s)/Plan(s)/Option(s) as recurring expenses as provided respectively under Regulation 52(6A)(b) and 52(6A)(c) of the Regulations.

Please refer to the table below for indicative details. For the actual current expenses being charged, the investor should refer to the Fact Sheet or website of the Fund.

Particulars % of Net AssetsEquity schemes

and Fund of Funds Schemes@

Debt Schemes@

Investment Management and Advisory Fees

Upto 2.50% Upto 2.25%

Trustee feeAudit feesCustodian feesRTA FeesMarketing & Selling expense incl. agent commissionCost related to investor communicationsCost of fund transfer from location to locationCost of providing account statements and dividend redemption cheques and warrantsCosts of statutory AdvertisementsCost towards investor education & awareness (at least 2 bps)Brokerage & transaction cost (inclusive of service tax) over and above 12 bps and 5 bps for cash and derivative market trades, respectively.#Service tax on expenses other than investment and advisory fees

Particulars % of Net AssetsEquity schemes

and Fund of Funds Schemes@

Debt Schemes@

Other Expenses (includes expenses of Underlying schemes for FOF schemes) Upto 2.50% Upto 2.25%

Maximum total expense ratio (TER) permissible under Regulation 52 (6) (c) (i) and (6) (a)

Upto 2.50% Upto 2.25%

Additional expenses under regulation 52 (6A) (c)#$ Upto 0.20% Upto 0.20%

Additional expenses for gross new infl ows from specifi ed cities under regulation 52(6A)(b) ##

Upto 0.30% Upto 0.30%

@ The expenses of the Direct Plan will be lower than that of existing plans of the Schemes. For HAPDF & HGCOF, the expenses under the Direct Plan will be lower by atleast 20% than that of the Regular Plan. No commission or distribution expenses will be charged under the Direct Plan.

The AMC may charge the following costs and expenses in addition to the total recurring expense limits as prescribed in the table above:

# (a) Brokerage and transaction costs (inclusive of service tax) which are incurred for the purpose of execution of trade and is included in the cost of investment, not exceeding 0.12 per cent in case of cash market transactions and 0.05 per cent in case of derivatives transactions; Any payment towards brokerage and transaction cost, over and above the said 0.12 percent and 0.05 percent for cash market transactions and derivatives transactions respectively may be charged to the scheme within the maximum limit of Total Expense Ratio (TER) as prescribed under regulation 52 of the SEBI (Mutual Funds) Regulations, 1996.

## (b) Expenses not exceeding of 0.30 per cent of daily net assets, if the new infl ows from beyond Top 15 cities** are at least -

(i) 30 per cent of gross new infl ows in the Plan, or; (ii) 15 per cent of the average assets under management

(year to date) of the Plan, whichever is higher.

Provided that if infl ows from such cities are less than the higher of (i) or (ii), such expenses on daily net assets of the Plan shall be charged on proportionate basis. Provided further that, expenses so charged shall be utilised for distribution expenses incurred for bringing infl ows from beyond Top 15 cities. Provided further that amount incurred as expense on account of infl ows from such cities shall be credited back to the scheme in case the said infl ows are redeemed within a period of one year from the date of investment.

** The top 15 cities shall mean top 15 cities based on Association of Mutual Funds in India (AMFI) data on ‘AUM by Geography - Consolidated Data for Mutual Fund Industry’ as at the end of the previous fi nancial year.

$ (c) Additional expenses not exceeding 0.20 per cent of daily net assets of the Plan which may be incurred towards different expense heads as mentioned under Regulation 52 (2) and (4) of the Regulations.

The above expenses are subject to change and may increase / decrease as per actual and / or any change in the Regulations but the total recurring expenses that can be charged to the Scheme(s) will be subject to limits prescribed from time to time under the SEBI (MF) Regulations. Expenses over and above the permitted limits will be borne by the AMC.

Any other expenses which are directly attributable to the Scheme(s), may be charged with approval of the Trustee within the overall limits as specifi ed in the Regulations except those expenses which are specifi cally prohibited.

SECTION IV - FEES AND EXPENSES

HSBC Mutual Fund 101

The total recurring expenses of the Plan(s), shall be as per the limits prescribed under sub-regulation 6 and 6A of Regulation 52 of the SEBI Regulations and shall not exceed the limits prescribed there under. Currently, as per the Regulation 52(6), the maximum recurring expenses that can be charged to the Scheme(s) shall be subject to a percentage limit of daily average net assets in the table below:

i) Equity Schemes (HEF, HIOP, HMEF, HIEF, HDYEF, HTSF, & HDF)

First Rs. 100 crore

Next Rs. 300 crore

Next Rs. 300 crore

Balance

2.50% 2.25% 2.00% 1.75%

ii) Non Equity Schemes (HMIP, HUSBF, HIF, HCF & HFDF)

First Rs. 100 crore

Next Rs. 300 crore

Next Rs. 300 crore

Balance

2.25% 2.00% 1.75% 1.50%

Further, as per current Regulation 52 (6A), the additional recurring expenses that can be charged to Scheme(s) shall be subject to a percentage limit of daily average net assets as specifi ed below :

Regulation 52 (6A) (b) Additional recurring expenses of upto 0.30% for amounts mobilized from specifi ed cities

Regulation 52 (6A) (c ) Additional recurring expenses of upto 0.20% towards different heads mentioned in regulation 52(2) and 52(4)

iii) Fund of Funds schemes (HEMF, HBF, HMS, HGCOF and HAPDF)

The total expenses of these schemes including weighted average of charges levied by their respective underlying schemes shall not exceed 2.50 % of the daily net assets of the schemes.The Underlying schemes to these FoF schemes have various share classes and different expenses for each such share class. The expenses charged by HSBC GEM Fund and HGIF Brazil Equity Fund into which HEMF and HBF invest respectively, will be upto 0.85% of the net assets of HSBC GEM Fund and HGIF Brazil Equity Fund. The management & distribution expense for the share class into which HAPDF and HGCOF will invest is 0.70% of the respective underlying scheme(s). HGIF could change the expenses for the various share classes from time to time. However the total expenses shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits prescribed thereunder. The recurring expenses of of the Underlying schemes or equivalent shall be as per the limits prescribed under sub-regulation 6 of Regulation 52 of the SEBI Regulations and shall not exceed the limits prescribed thereunder. Subject to Regulations and this Combined SID, expenses over and above the prescribed ceiling will be borne by the AMC.

The AMC reserves the right to vary the expense ratios charged to all Schemes of the Mutual Fund, at such frequencies as the AMC may decide, subject to the maximum SEBI permissible limits. The AMC would make adequate disclosures to keep investors informed of the changes from time to time by various channels of communication viz. web site disclosures, factsheet, etc.

An illustration of the impact of expense ratio on scheme’s investments is also provided below for reference.

Collections at Day Zero A 100,000,000Purchase Price per unit B 10Units allotted to domestic investors

A / B C 10,000,000.00

Amount Invested D 100,000,000Yield on investment E 6%

Expense ratio F 1.65%AUM after one month AUM including Yield (D*E))/12

+DG 100,500,000

Expenses (for one month) (INR)-approximated at average of opening and closing AUM

((A+G)/2) * F)/12

H 137,844

AUM after one month G-H I 100,362,156NAV per unit I/C J 10.0362Annualized returns (Pre Expenses) %

(G-D)/ D*100*12

K 6.00

Annualized returns (Post Expenses) %

(I-D )/ D *100*12

L 4.35

C. SERVICE TAX

Service tax on investment and advisory fees shall be charged to the respective schemes in addition to the maximum limit of total recurring expenses as permitted under regulation 52 of the Regulations. Service tax on any other fees/expenses incurred by the respective schemes shall be borne by the schemes within the overall limit of the total recurring expenses.

D. LOAD STRUCTURE

Load is an amount which is paid by the investor to redeem the units from the Scheme. This amount is used by the AMC to pay commissions to the distributor and to take care of other marketing and selling expenses. Load amounts are variable and are subject to change from time to time. For the current applicable structure, please refer to the website of the AMC at www.assetmanagement.hsbc.com/in or may call at ISC or your distributor.

Sale of Units under any Scheme(s)/Plan(s)/Option(s) could attract an entry load (as a % of the invested amount). Repurchases could attract an exit load (as a % of the Applicable NAV for redemptions). Unitholders should note that the AMC retains the right to change / impose an entry / exit load as per the provisions below:

Particulars (as % of NAV)Maximum Entry/Sales load imposed on purchases*

7%

Maximum load on issue of units in lieu of dividends/ bonus

Nil

Maximum Repurchase load 7%Maximum Switchover Fee No load in case of switches

between equity Schemes of the Mutual Fund.

*However, as per SEBI circular dated 30 June 2009, no entry load will be charged for purchase/additional purchase/switch-in including registrations for HSBC SIP/HSBC STP, accepted by the Fund, with effect from August 01, 2009.

The repurchase price however, will not be lower than 93% of the NAV and the sales price will not be higher than 107% of the NAV, provided that the difference between the repurchase price and the sales price at any point in time shall not exceed the permitted limit as prescribed by SEBI from time to time, which is presently 7% calculated on the sales price.

Load Structure (Including SIP / STP, wherever applicable) for all Schemes / Plans of the Fund: NIL

* In terms of SEBI circular no. SEBI/IMD/CIR No.4/ 168230/09 dated June 30, 2009, no entry load will be charged by the Scheme to the investor effective August 1, 2009. Upfront commission shall be paid directly by the investor to the AMFI registered Distributors based on the investors assessment of various factors including the service rendered by the distributors.


Bonus Units and Units issued on reinvestment of dividends shall not be subject to exit load for existing as well as prospective investors. The exit load set forth above is subject to change at the discretion of the AMC and such changes shall be implemented prospectively. The above mentioned load structure shall be equally applicable to the special products such as HSBC SIP, HSBC SEP and HSBC STP, etc. offered by the AMC.

The applicable exit loads (if any) at the time of allotment of the Schemes of Mutual Fund shall also be charged on investments made by all investors including Fund-of Funds scheme(s). The exit load charged, if any, will be credited to the schemes. Service tax on exit load, if any, will be paid out of the exit load proceeds and exit load net of service tax, if any, will be credited to the scheme.

The entry / exit loads set forth above are subject to change at the discretion of the AMC and such changes shall be implemented prospectively. Bonus units and units issued on reinvestment of dividends shall not be subject to entry and exit load.

The investor is requested to check the prevailing load structure of the Scheme before investing. For any change in load structure AMC will issue an addendum and display it on the website / Investor Service Centres.

Subject to the Regulations, the Trustees reserve the right to modify / alter the load structure and may decide to introduce a differential load structure on the Units redeemed on any Business Day. Such changes will be applicable prospectively. The changes may also be disclosed in the Statements of Account issued after the introduction of such load.

Any imposition or enhancement of Load in future shall be applicable on prospective investments only. At the time of changing the Load Structure:(i) The addendum detailing the changes will be attached to the

Combined SID and Key Information Memorandum. The addendum will be circulated to all the distributors / brokers so that the same can be attached to all the Combined SIDs and Key Information Memorandum already in stock.

(ii) Arrangements will be made to display the changes / modifi cations in the Combined SID in the form of a notice in all the Investor Service Centres and distributors / brokers’ offi ce.

(iii) The introduction of the Exit Load alongwith the details will be stamped in the acknowledgement slip issued to the investors on submission of the application form and will also be disclosed in the Account Statement or in the covering letter issued to the Unit holders after the introduction of such Load.

(iv) A public notice shall be given in respect of such changes in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of region where the Head Offi ce of the Mutual Fund is situated.

(v) Any other measures which the mutual fund may feel necessary.

E. DEDUCTION OF TRANSACTION

CHARGE FOR INVESTMENTS THROUGH

DISTRIBUTORS / AGENTS

SEBI has vide its Circular No. Cir/ IMD/ DF/13/ 2011 dated August 22, 2011 allowed Mutual Funds to deduct following transaction charge on per subscription of Rs. 10,000 and above, where such subscriptions are received through distributors / agents based on the type of product opted-in to receive the transaction charges.

(i) First Time Investor in Mutual Fund (across all

Mutual Funds)

Transaction charge of Rs. 150/- per subscription of Rs. 10,000 and above will be deducted from the subscription amount and paid to the distributor / agent of the fi rst time investor and the balance shall be invested in the relevant scheme opted by the investor.

(ii) Existing Investor in Mutual Fund

Transaction charge of Rs. 100/- per subscription of Rs.10,000 and above will be deducted by the Fund from the subscription amount and paid to the distributor/agent of the investor and the balance shall be invested in the relevant scheme opted by the investor.

However, transaction charges in case of investments through SIP under (i) and (ii) above shall be deducted only if the total commitment (i.e. amount per SIP installment x No. of installments) amounts to Rs. 10,000/- or more. The transaction charge shall be deducted in 4 equal installments, starting from the 2nd installment to the 5th installment.

(iii) Transaction charges shall not be deducted for

(a) Purchases / subscriptions for an amount less than Rs. 10,000;

(b) Transactions other than purchases / subscriptions relating to new infl ows such as Switch / STP/SWP etc.;

(c) Purchases / subscriptions made directly with the Fund without any ARN code i.e. not through any distributor /agent.

(d) Purchases / subscriptions carried out through the Stock Exchange Platform.

The statement of account to unit holders will clearly provide details of the net investments as gross subscription amount less transaction charge and the number of units allotted against the net investment.

F. PROCEDURE FOR DIRECT APPLICATIONS

Pursuant to SEBI Circular No. SEBI/IMD/CIR No. 4/168230/09 dated June 30, 2009, no Entry Load will be charged for all Mutual Fund Schemes. Therefore, the procedure for Waiver of Load for Direct Applications is no longer applicable.


1. All disclosures regarding penalties and action(s) taken against foreign Sponsor(s) may be limited to the jurisdiction of the country where the principal activities (in terms of income / revenue) of the Sponsor(s) are carried out or where the headquarters of the Sponsor(s) is situated. Further, only top 10 monetary penalties during the last three years shall be disclosed.

The Sponsor of the Mutual Fund is HSBC Securities and Capital Markets (India) Private Limited, a company incorporated under the provisions of the Companies Act, 1956. The Sponsor being an Indian entity, this section is not applicable. Please refer below point.

2. In case of Indian Sponsor(s), details of all monetary penalties imposed and/ or action taken during the last three years or pending with any fi nancial regulatory body or governmental authority, against Sponsor(s) and/ or the AMC and/ or the Board of Trustees /Trustee Company; for irregularities or for violations in the fi nancial services sector, or for defaults with respect to share holders or debenture holders and depositors, or for economic offences, or for violation of securities law. Details of settlement, if any, arrived at with the aforesaid authorities during the last three years shall also be disclosed.

a. Penalties imposed by a fi nancial regulatory body or government authority against the Sponsor and/ or the AMC and/ or the Board of the Trustees, for irregularities / violations in the fi nancial services sector, or for defaults with respect to share holders or debenture holders and depositors, or for economic offences, or for violation of securities law, during the last three years:

Please fi nd below the penalty imposed by exchange during April 01, 2013 - March 31, 2016 excluding the penalties imposed by the exchange in the ordinary course of business : -

Penalty Levised by Exchanges of HSCI : Period April 2013 – March 2016

Exchange Reason Date Penalty Amount

NSE Late submission charges for CTCL System audit report – Nov 2013

Dec-13 1000

BSE Fine levied in respect of Post facto approval for change in Designated Director

Mar-16 5725

b. For irregularities or for violations in the fi nancial services sector, or for defaults with respect to share holders or debenture holders and depositors, or for economic offences, or for violation of securities law.

(i) HSCI (Sponsor to the Fund) was appointed as a manager to the open offer made by India Star (Mauritius) Limited (“India Star”) to the shareholders of Garware Offshore Services Limited which was completed in 2008. An individual shareholder had fi led a complaint with SEBI in January 2012 against India Star alleging inadequate disclosures with regard to (i) the ultimate shareholders of India Star and (ii) one of the directors who had certain criminal charges pending against him. SEBI had

dismissed the complaint stating that the disclosures made during the open offer were in terms of the SEBI Takeover Regulations. Thereafter the complainant fi led an appeal before the Securities Appellate Tribunal in November 2012 where HSCI was also inducted as a party. SAT passed an order dated September 3, 2013 directing SEBI to reconsider the complaint but did not express any opinion on the merits of the case. SEBI passed an order dated November 21, 2014 reprimanding India Star and HSCI for non-disclosures with regard to the ultimate shareholders of India Star. The non-disclosures of litigation against one of the directors has been held to be not required as per the Takeover Regulations-

(iii) Against the SEBI Order dated April 23, 2010 (as detailed in point 3 below), two appeals were fi led by the AMC with the Securities Appellate Tribunal (SAT) by certain aggrieved investors of HSBC Gilt Fund.

- SAT issued Order dated May 03, 2011 and July 5, 2012 to the Mutual Fund, Trustees of the Mutual Fund, AMC and CEO of the AMC pertaining to the change effected in modifi ed duration in HSBC Gilt Fund during January 2009. SAT held that the changes brought about in the scheme altered the fundamental attributes of the same affecting the interest of unitholders. SAT therefore directed the AMC and related parties to comply with regulation 18(15A) of the SEBI Regulations and provide an exit option to the appellants of the case. An appeal was fi led by the AMC against these Orders before the Supreme Court. The Supreme Court vide its Order dated January 15, 2014 upheld the Order of SAT and dismissed the appeal fi led by the AMC. The AMC has complied with the Order of the Supreme Court read with the SAT Order

3. Details of all enforcement actions taken by SEBI in the last three years and / or pending with SEBI for the violation of SEBI Act, 1992 and Rules and Regulations framed there under including debarment and/ or suspension and / or cancellation and / or imposition of monetary penalty / adjudication/enquiry proceedings, if any, to which the Sponsor(s) and / or the AMC and/ or the Board of Trustees /Trustee Company and / or any of the directors and/ or key personnel (especially the fund managers) of the AMC and Trustee Company were / are a party. The details of the violation shall also be disclosed.

- SEBI issued a Show Cause notice dated August 7, 2009 to the Trustees of the Mutual Fund, Mutual Fund, AMC & CEO pertaining to the changes made in the Scheme Information Document of HSBC Gilt Fund via an Addendum. SEBI stated in the said Show Cause notice that the change made to the name, benchmark index and duration of the Scheme would be construed as a change in the fundamental attribute of the Scheme and hence the applicable provisions of the SEBI (Mutual Funds) Regulations, 1996 with respect to the same should have been complied with. The AMC has on behalf of the Trustees of the Mutual Fund, the Mutual Fund and CEO fi led its response with relevant supporting documents

SECTION V - RIGHTS OF UNITHOLDERSFor details of Rights of Unitholders, please refer Statement of Additional Information (SAI).

SECTION VI - PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTIONS OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR IS IN THE PROCESS OF BEING TAKEN BY ANY REGULATORY AUTHORITY


with SEBI. Subsequently, the personal hearing took place before the Whole Time Member, SEBI. After considering the submissions made by the AMC, Whole Time Member, SEBI vide its order dated April 23, 2010 disposed off the show cause notice dated August 7, 2009 and warned the Board of Trustees of the Mutual Fund, the Mutual Fund, AMC and its CEO that they should strictly comply with the law governing the conduct and business of mutual fund in securities market.

4. Any pending material civil or criminal litigation incidental to the business of the Mutual Fund to which the Sponsor(s) and/ or the AMC and/ or the Board of Trustees /Trustee Company and/ or any of the directors and/ or key personnel are a party should also be disclosed separately.

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 mutual fund 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 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.

5. Any defi ciency in the systems and operations of the Sponsor(s) and / or the AMC and/ or the Board of Trustees/Trustee Company which SEBI has specifi cally advised to be disclosed in the SID, or which has been notifi ed by any other regulatory agency, shall be disclosed.

There are no defi ciencies in the systems and operations of the Sponsor of the Mutual Fund and / or the AMC and / or the Board of Trustees which SEBI has specifi cally advised to be disclosed in the SID, or which has been notifi ed by any other regulatory agency to be disclosed in SID.

The above information has been disclosed in good faith as per the information available to the AMC.

Notwithstanding anything contained in this Combined SID, the provisions of the SEBI (Mutual Funds) Regulations, 1996 and the guidelines there under shall be applicable.

Notes: Any amendments / replacement / re-enactment of SEBI (MF) Regulations subsequent to the date of this Combined SID shall prevail over those specifi ed in this Combined SID.

For and on behalf of the Board of Directors ofHSBC Asset Management (India) Private Limited

Sd/-

Nisha SanjeevCompliance Offi cer

Place: MumbaiDate: October 10, 2016.


OFFICIAL POINTS OF ACCEPTANCE OF TRANSACTION REQUESTS

HSBC MUTUAL FUND � Ahmedabad : Mardia Plaza, CG. Road, Ahmedabad - 380 006.� Bengaluru : No. 7, Hsbc Center, M.G. Road, Bengaluru - 560 001. � Chennai : No. 30, Rajaji Salai, 2nd Floor, Chennai - 600 001. � Hyderabad : 6-3-1107 & 1108, Rajbhavan Road, Somajiguda, Hyderabad - 50082. � Kolkata : Jasmine Tower, 1St Floor, 31, Shakespeare Sarani, Kolkata - 700 017. � Mumbai : 16, V.N. Road, Fort, Mumbai - 400 001 � New Delhi : 3Rd Floor, East Tower, Birla Tower, 25, Barakhamba Road, New Delhi - 110 001. � Pune : Amar Avinash Corporate City, Sector No. 11, Bund Garden Road, Pune - 411011.

CAMS SERVICE CENTRES / CAMS LIMITED TRANSACTION POINTS / CAMS COLLECTION CENTRES

For details on CAMS Service Centres, CAMS Limited Transaction Points and CAMS Collection Centres, please visit www.camsonline.com or call us on 1800 200 2434 AND Investors calling from abroad may call on - +91 44 39923900 to connect to our customer care centre.

CAMS Limited Transaction Points and CAMS Collection Centres have limited operating hours from 12:00 p.m. to 3 p.m. Collection Centres only accept application forms and service requests. For any enquiries, customers transacting at these locations are requested to call the nearest CAMS Service Center or the National Toll Free Customer Support number.

Toll Free Number : 1800 200 2434 (can be dialled from all phones within India)

AND Investors calling from abroad may call on - +91 44 39923900 to connect to our customer care centre.

For more details on visit : www.camsonline.com

Please check our website www.assetmanagement.hsbc.com/in for an updated list of Offi cial Points of Acceptance of HSBC Mutual Fund.

HSBC Asset Management (India) Private LimitedRegistered Offi ce 16, Veer Nariman Road, Fort, Mumbai 400 001, IndiaTel.: 1800 200 2434. Fax : (91) (22) 4002 9600E-mail : [email protected] : (www.assetmanagement.hsbc.com/in)

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