Fund Manager Commentary Pg 2. HSBC Equity Fund Pg 6. HSBC India Opportunities Fund Pg 8. HSBC Midcap Equity Fund Pg 10

Transcription

1 September 2013

2 Index In this Issue... Fund Manager Commentary Pg 2 HSBC Equity Fund Pg 6 HSBC India Opportunities Fund Pg 8 HSBC Midcap Equity Fund Pg 10 HSBC Progressive Themes Fund Pg 12 HSBC Tax Saver Equity Fund Pg 14 HSBC Unique Opportunities Fund Pg 16 HSBC Dynamic Fund Pg 18 HSBC Emerging Markets Fund Pg 20 HSBC Small Cap Fund Pg 21 HSBC Brazil Fund Pg 23 Fund Managers - Equity Pg 24 Comparative Performance of Equity Schemes Pg 26 HSBC MIP - Savings Plan Pg 29 HSBC MIP - Regular Plan Pg 31 HSBC Income Fund - Investment Plan Pg 33 HSBC Income Fund - Short Term Plan Pg 35 HSBC Floating Rate Fund - Long Term Plan Pg 37 HSBC Cash Fund Pg 39 HSBC Gilt Fund Pg 41 HSBC Ultra Short Term Bond Fund Pg 42 HSBC Flexi Debt Fund Pg 44 Fund Managers - MIP & Debt Pg 46 Comparative Performance of MIP & Debt Schemes Pg 47 1

3 Fund Manager Commentary September 2013 Equity & MIP Market Update Rebound in equity performance September 2013 saw equities rebounding from the lows of August 2013 and assuming some positive momentum. Indian Rupee (INR) recovered from its historical low levels seen earlier during the month and this boosted the equity market sentiments. Externally, the positive news flow related to a delayed Quantitative Easing (QE) tapering plan by the US Federal Reserve also supported the revival in investor sentiments. The Reserve Bank of India (RBI) however jittered the markets by announcing Repo rate hike of 25 bps during its September 2013 mid-quarter policy meet. Though the newly appointed RBI governor Mr. Raghuram Rajan rolled back some of the tightening measures implemented earlier, the aggressive tone of the commentary and the repo rate hike surprised the market participants. The RBI s action on the repo rate front was influenced by elevated short term rates and the recent currency depreciation & volatility. However, the delay in tapering plan by the US Federal Reserve may provide some breathing space for the policy makers as the risk of capital outflows may not be imminent and this may allow India Rupee and the Current Account scenario to stabilise and then improve. This may also be a good period for the government to revive the momentum on the policy reforms front and improve the growth trajectory of the economy % 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% Repo Rate Movement Mar/08 May/08 Jul/08 Sep/08 Nov/08 Jan/09 Mar/09 May/09 Jul/09 Sep/09 Nov/09 Jan/10 Mar/10 May/10 Jul/10 Sep/10 Nov/10 Jan/11 Mar/11 May/11 Jul/11 Sep/11 Nov/11 Jan/12 Mar/12 May/12 Jul/12 Sep/12 Nov/12 Jan/13 Mar/13 May/13 Jul/13 Sep/13 Repo Rate Source: Bloomberg ; Central Statistical Organization (CSO) India Market indices BSE Sensex & Nifty, gained 4.1% & 4.8% respectively during the month, reflecting the positive equity market sentiments. Broader markets gained more with the BSE Midcap & BSE Smallcap indices delivering returns of 5.8% & 5.3% respectively. Amongst the BSE sectoral indices, Cap goods, Auto, Metals & FMCG were the notable outperformers while IT lost some of its earlier gains and ended as the worst performer. With the positive sentiments returning to the street, the Foreign Institutional Investors (FIIs) turned net buyers again for the month of September 2013 after a 3 month gap. The net inflows from the FII segment totaled to US Dollar (USD) ~2 bn (equities cash segment), taking the overall YTD tally to USD 13.4 bn of Rupee stages net inflows. However, the Domestic Institutional Investors (DIIs) slipped back to being sellers in the market, as the segment net sold equities worth USD ~1.5 a recovery bn. On a Year to date (YTD) basis, the net sales in equities from the segment from the stood at USD 8.2 bn. INR staged a recovery during the month by retracing back to 62/63 levels versus the USD from the historical lows seen during the lows. earlier part of the month. The improved sentiments came on the back of a slew of announcements by the RBI aimed at stimulating flows and also the Current US Federal Reserve s decision to continue with the asset purchase plan for some more time. Account The Current Account Deficit (CAD) for the first quarter of the fiscal year 2014 Deficit widens came in at USD 21.8 bn or 4.9% of the annualized GDP (vs. 18.2% or 3.6% of GDP for 4QFY ). Trade deficit widened to USD 50.5 bn on the back of weak exports and higher imports due to spike in gold purchases. But gold import since then has tapered off due to the regulatory restrictions and this may help a better reading for the second quarter. 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Indices Performance - September 2013 S&P BSE Sensex S&P BSE 100 S&P BSE 200 S&P BSE 500 S&P BSE S&P BSE MidCap SmallCap Source: Bombay Stock Exchange (BSE) 2

4 Inflation & Industrial Growth Headline inflation remains elevated Fund Manager Commentary September 2013 The headline inflation, measured by the Wholesale Price Index (WPI) continued to remain high with a reading of 6.1% for August 2013 ( year-on-year (YoY) vs 5.8% in July 2013). The food inflation was the major factor for the elevated headline inflation with it surging by 18.2% (YoY), on the back of high vegetable prices. On the positive side, the core inflation eased to 1.9% (YoY vs. 2.8% in July 2013) and remained well within the comfort zone indicated by the RBI. The retail inflation or the Consumer Price Index (CPI) inflation remained stable at 9.5% during August 2013 (YoY vs. 9.6% recorded in July 2013). Wholesale Price Index Inflation (WPI) 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Aug/13 WPI YoY growth (New series; base ) IIP growth surprises positively Source: Bloomberg ; Central Statistical Organization (CSO) India The industrial output for July 2013 (measured by Index of Industrial Production or IIP), surprised positively by registering a growth of 2.6% (YoY vs. -1.8% in June 2013) as against an expectation of a de-growth. All sectors showed improvement and the manufacturing segment recorded a significant growth. 10.0% Index of Industrial Production (IIP) 5.0% 0.0% -5.0% Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Global Economic Scenario US Federal Shutdown & Debt Ceiling limit discussion to be on focus IIP YoY Growth (New Series; base ) Source: Bloomberg ; Central Statistical Organization (CSO) India The US federal government shutdown will be a keenly watched event during October 2013, as the US Congress was not able to stitch a compromise plan to allow government to continue spending in the new fiscal year. Such a government shutdown though not new to the US economy, will be the first such scenario in almost 17 years. The immediate economic impact of the shutdown is expected to be limited as the impact only applies to discretionary non-essential government spending. Unfortunately, there is an even more worrying deadline on debt ceiling limit coming up soon, i.e. by 17 October 2013 and resolution to this bottleneck may be very essential to fund expenses from thereon. The risk assets across the globe are likely to be volatile in the interim due to the overhang of these key events but a compromise agreement is expected to be arrived at, before the crucial deadline on debt ceiling expires. On the other hand, the risk of a geo-political crisis in Syria has faded as the US military intervention is likely to be avoided. Going Forward Rupee depreciation and the resultant volatility was the key aspect that impacted investor sentiments adversely during the months of July & August However, the currency has since recovered from its historical lows and is showing signs of stabilising at around 62/63 levels vs the USD. The focus of the RBI & the government has been to stimulate capital flows into the economy so as to tackle the currency volatility and effectively manage Current Account Deficit (CAD). While there has been some relief seen on the forex front, the government s challenge now may be to manage the CAD scenario more efficiently. Growth is a larger concern for both the central bank and the government to manage, as with an elevated inflation level coupled with the state of the economy a rate easing cycle may be some time away. Policy reforms have been initiated, but sustaining the momentum on this front is a key element to revive the investor sentiments and their belief in the economy. However on the positive side, with the festival season already underway, we may see the consumer demand picking up especially due to a good monsoon. The global markets may experience volatile times, if the imbroglio on the US debt ceiling discussion extends further and its effects may be felt on emerging markets like India as well. The second quarter FY earnings season for corporate India is slated to be underway and will be closely tracked for any deviation from the expected trends. We urge investors to stay invested in equities and utilise the Systematic Investment Plan (SIP) route to invest incremental sums during volatile times. At HSBC, we employ a selective bottom up stock picking process to invest in profitable companies available at reasonable valuations. We believe that the long term India growth story is still intact and periods of sharp market correction should be viewed as an opportunity to increase one s equity allocation with a long term perspective. Source: Bloomberg, for all data except where mentioned otherwise 3

5 Fund Manager Commentary September 2013 Sectors HSBC Equity Fund HSBC India Opportunities Fund HSBC Midcap Equity Fund Consumer Discretionary = = Consumer Staples Energy Financials = = Healthcare = = Industrials = Information Technology Materials = Telecommunication = = Utilities a Overweight r Underweight = Neutral Review: HSBC Equity Fund Being overweight energy helped performance while being overweight information technology, materials and underweight consumer staples, industrials, utilities hurt performance. Review: HSBC India Opportunities Fund Being overweight energy & underweight consumer staples helped performance while being overweight information technology and underweight utilities hurt performance. Review: HSBC Midcap Equity Fund Being overweight consumer staples, materials and underweight energy, financials, healthcare helped performance while being overweight information technology and underweight industrials, telecommunication, utilities hurt performance. Review: HSBC Progressive Themes Fund Currently focusing on the following themes; 1.Economic Reforms (37.6%) which includes Financial sector reform- 30.3% and Oil & Gas Sector deregulation sub theme- 7.3% 2.Infrastructure (33.3%) which includes Power- 13.9%, Construction 11.3% and Logistics- 8%. Well diversified exposure across sectors encompassing the above themes. Review: HSBC Dynamic Fund The cash levels and sector allocation in the fund are likely to change depending on the market conditions and technical factors. Review: HSBC MIP Regular and Savings Plans Our current exposure is 14.14% in HMIP Regular and 23.85%, in HMIP Savings. Currently it is more biased towards large caps than mid or small caps. Debt Market Assessment Domestic bond markets continued to remain volatile due to hike in Repo rate by the Reserve Bank of India (RBI) in its Mid Quarter Monetary Policy Review, persistent supply and Federal Open Market Committee (FOMC) outcome. Indian Rupee (INR) has shown early signs of stability over the last month. Depreciation bias has been altered since the off shore Foreign Currency Non Resident (FCNR) deposit scheme and allowance to increase banking capital from offshore route were announced in early September Benchmark ten year Government Securities Bonds (G-Sec) yields traded at near term lows of 8.19% post FOMC decision on putting off tapering for now. However, yields inched up sharply post repo rate hike by the RBI. RBI's Monetary Policy, Economic Events and Data RBI surprises market RBI s Mid Quarter Review of Monetary Policy Repo rate (rate at which RBI lends to banks), increased to 7.50% Cash reserve ratio left unchanged (at 4.00%) The RBI surprised the markets with an unexpected hike in repo rate by 25 bps. In order to curb volatility in Indian Rupee (INR), the RBI had announced series of measures over the past few months. Early signs of stability in the INR witnessed over the past few weeks led to gradual roll back of these measures. These include: Reduction in the marginal standing facility (MSF) rate by 75 basis points from 10.25% to 9.50% Reduction in the minimum daily maintenance of the cash reserve ratio (CRR) from 99% of the requirement to 95% effective from the fortnight beginning September 21, 2013 Domestic Growth: Continued sluggishness in industrial activity and services has contributed to weakening growth. Although some pick-up in growth is expected out of brightening prospects for agriculture, improvement in exports and new investments approved (by Cabinet Committee on Investment),growth is expected to trail below potential. 4

6 Volatility continues in IIP and Inflation inches up Market Activity Repo hike led to hardening of yields Corporate spread narrows down across the curve Money market rates eases on back of MSF cut Industrial production for month of July 2013 grew by a better-than-expected 2.6% year-on-year (YoY) as against market expectation of -0.9%. The positive move was entirely due to a sharp surge in capital goods output growth. Consumer durable output growth continued to contract, reflecting weak discretionary demand, while basic & intermediate goods output growth were only marginally better than last month. Inflation: Wholesale Price Index (WPI) inflation, which had eased in first quarter (Q1) of , has started rising again as the pass-through of fuel price increases has been compounded by the sharp depreciation of the rupee and rising international commodity prices. Moreover, high Consumer Price Index (CPI) inflation has been entrenching inflation expectations at elevated levels and eroding consumer and business confidence. WPI inflation rose to a six-month high of 6.1% YoY in August 2013, above market expectations led by higher food prices. Core inflation moderated to 1.9% from 2.4% on weak demand. CPI inflation moderated to 9.5% YoY in August 2013 from 9.6% in July Concerns about funding the Current Account Deficit (CAD), amplified by capital outflows precipitated by anticipated tapering of asset purchases by the US Federal Reserve, increased volatility in the foreign exchange market. India s CAD jumped to USD 21.8 bn in 1QFY (4.9% of GDP) from USD 18.1 bn in 4QFY (3.6% of GDP) due to widening of the merchandise trade deficit. However CAD was better than market expectations as invisible balances were better due to software exports. Going forward, CAD is expected to improve the same is reflected in improving trade deficit data. Gilts gyrated on hope and fear due to various factors such as Syrian conflict, FOMC taper fear and postponement thereof, Foreign Currency Non Resident (FCNR) announcements and policy decisions in the US and India. Hike in repo rate and relatively aggressive undertone on inflation led to a sell off post policy announcement as the benchmark ten year Government Securities Bonds(G- Sec) yield inched up to 8.85% levels. Further, there was an unusual announcement by the RBI stating that it will provide liquidity to the market to support credit demand and for liquidity needs. It also stated that open market operations (OMO) can also be resorted to cater to the liquidity needs, if necessary. This assurance of liquidity provided some relief to the market with some retracement in yields. Corporate credit yields also mirrored the sovereign segments, wherein yields remained range bound amidst thin trades through the early part of the month. Lack of supply in credit assets would provide further comfort on the credit segment. Moreover, as inflows on account of FCNR deposits trickle in we could witness increased demand for short medium tenure credit assets. This segment has already witnessed narrowing of spreads over the last fortnight correcting the inversion in certain segments of the credit curve. Global Economic Scenario Global economy Fund Manager Commentary September 2013 Money market rates continued to drift lower in spite of seasonal tightening due to advance tax outflow. This was largely because of expectation of relaxation in liquidity measures in the RBI s policy and eventual cut in MSF rate by 75 bps to 9.50%. The FOMC unexpectedly decided to not to taper the rate of its asset purchases in last meeting and there was no change to the forward guidance on the federal funds rate. Concerns over tightening financial conditions and the pending fiscal issues were cited as the key reasons for not going ahead with taper and the committee appeared to be less confident about the economic recovery. It said some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Further, the USA government has shutdown from October 1, 2013, for the first time in 17 years as Congress failed to reach a compromise to allow the Federal Government to continue spending in the new fiscal year. The immediate economic impact should be limited as the shutdown only applies to discretionary non-essential government spending. However, the inability to arrive at an agreement does not bode well for the arguably more important deadline of October 17, 2013 when the debt ceiling limit will effectively be reached. Going Forward The Reserve Bank of India under the new Governor has reiterated its stance on anchoring inflation expectations leading to the surprise hike in repo rate. The policy undertone emphasizes the need to anchor inflation expectation even at it acknowledges fragile growth prospects. We feel that the hike in repo rate cannot be construed as a reversal in interest rate stance. As the RBI and Government of India (GOI) induced measures to curb currency depreciation has altered the path of INR, with this policy review the RBI has chosen to focus on internal determinants of the value of rupee, i.e. fiscal deficit and domestic inflation. Prospects of growth revival improves during the second half of this fiscal due to better monsoons, exports revival and project clearances by the Government of India. These prospects along with encouraging inflows on account of FCNR deposits, banking capital and FDI inflows augur well for bonds in the coming months. The impact on long end yields would be determined by the demand supply equation. As the sovereign supply has resumed, we expect sovereign yields to witness some supply pressure, which can only be eased by regular open market operation purchases by the RBI. Further reduction in MSF from 9.50 levels, may bring in further respite to the shorter end of the curve which had witnessed increased hardening over the past few months. Source: Bloomberg, for all data except where mentioned otherwise 5

7 An Open Ended Diversified Equity Scheme Investment Objective: Aims to generate long term capital growth from an actively managed portfolio of equity and equity related securities. Issuer HSBC Equity Fund (HEF) September 2013 Market Value (` in Lacs) % to Net Auto Tata Motors 1, % Bajaj Auto % Auto Ancillaries Motherson Sumi Systems % Banks ICICI Bank 2, % Axis Bank 2, % HDFC Bank 2, % ING Vysya Bank % Yes Bank % Cement Shree Cement 1, % Consumer Non Durables I T C 3, % Colgate Palmolive (India) % Ferrous Metals Tata Steel % Fertilisers Coromandel International % Finance HDFC 2, % Media & Entertainment Sun TV Network 1, % Minerals/Mining Sesa Sterlite 1, % NMDC % Oil Oil & Natural Gas Corporation 2, % Petroleum Products Reliance Industries 2, % Bharat Petroleum Corporation % Pharmaceuticals Dr Reddy s Laboratories 1, % Sun Pharmaceutical Industries % Lupin % Services Aditya Birla Nuvo % Software HCL Technologies 2, % Infosys 2, % Tata Consultancy Services 1, % Tech Mahindra 1, % Wipro % Telecom - Services Bharti Airtel 1, % Total 92.59% 6

8 Issuer HSBC Equity Fund (HEF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments 1, % CBLOs 1, % Net Current % Total Net as on 30 September , % Asset Allocation Auto 4.11% Auto Ancillaries 1.51% Banks 17.57% Cement 2.57% Consumer Non Durables 8.51% Ferrous Metals 1.48% Fertilisers 2.11% Finance 4.59% Media & Entertainment 2.32% Minerals/Mining 3.61% Oil 4.68% Petroleum Products 6.74% Pharmaceuticals 7.97% Services 1.36% Software 20.61% Telecom - Services 2.85% Other Equity Investments 2.74% Reverse Repos/CBLOs 3.50% Net Current 1.17% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Investment in equity and equity related securities High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 10-Dec-02 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Managers Tushar Pradhan & Neelotpal Sahai SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.92% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.47% Direct Plan 1.77% fees of 0.18% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.47% Direct Plan 1.75% fees of 0.18% of Total Net. Portfolio Turnover 0.57 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Equity Fund - Dividend 28-May Nov Feb HSBC Equity Fund - Dividend Direct Plan 22-Feb Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 7

9 An Open Ended Flexi-Cap Equity Scheme Investment Objective: Seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity & equity related securities. However it could move a significant portion of its assets towards fixed income securities if the fund manager s negative on equity markets. Issuer HSBC India Opportunities Fund (HIOF) September 2013 Market Value (` in Lacs) % to Net Auto Eicher Motors % Tata Motors % Hero MotoCorp % Auto Ancillaries Balkrishna Industries % Banks ICICI Bank % HDFC Bank % Axis Bank % Yes Bank % Cement The Ramco Cements % Construction Projects Larsen & Toubro % Consumer Non Durables I T C 1, % Britannia Industries % Ferrous Metals Tata Steel % Finance HDFC % Industrial Products Supreme Industries % Minerals/Mining Sesa Sterlite % Oil Oil & Natural Gas Corporation % Petroleum Products Reliance Industries % Hindustan Petroleum Corporation % Pharmaceuticals Glenmark Pharmaceuticals % Dr Reddy s Laboratories % Divi's Laboratories % Software Infosys % HCL Technologies % Tech Mahindra % Tata Consultancy Services % Eclerx Services % Mindtree % Telecom - Services Bharti Airtel % Textile Product Arvind % Textile Cotton Vardhman Textiles % Total 96.38% 8

10 Issuer HSBC India Opportunities Fund (HIOF) September 2013 Market Value (` in Lacs) % to Net CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Auto 9.13% Auto Ancillaries 2.08% Banks 13.41% Cement 2.07% Construction Project 2.28% Consumer Non Durables 8.70% Ferrous Metals 1.97% Finance 4.43% Industrial Products 3.06% Minerals/Mining 2.62% Oil 3.88% Petroleum Products 6.83% Pharmaceuticals 7.81% Software 21.16% Telecom - Services 2.77% Textile Products 2.25% Textile Cotton 1.93% Reverse Repos/CBLOs 4.32% Net Current -0.70% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities across market capitalisations High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 24-Feb-04 Benchmark S&P BSE 500 NAV (Growth) ` per unit (as on ) Fund Manager Tushar Pradhan & Neelotpal Sahai SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.86% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.59% Direct Plan 1.89% fees of 0.19% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.59% Direct Plan 1.88% fees of 0.19% of Total Net. Portfolio Turnover 0.46 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC India Opportunities Fund - Dividend 11-Dec Nov Feb HSBC India Opportunities Fund - Dividend Direct Plan 4-Feb Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 9

11 An Open Ended Diversified Equity Scheme Investment Objective: Seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities primarily being midcap stocks. However, it could move a portion of its assets towards fixed income securities if the fund manager s negative on the Indian equity markets. Issuer HSBC Midcap Equity Fund (HMEF) September 2013 Market Value (` in Lacs) % to Net Auto Ancillaries Apollo Tyres % Balkrishna Industries % Banks The Jammu & Kashmir Bank % Dena Bank % Allahabad Bank % Development Credit Bank % State Bank of Bikaner and Jaipur % State Bank of Travancore % Cement Everest Industries % HIL % Consumer Durables Bata India % Hitachi Home & Life Solutions (India) % Consumer Non Durables Venky s (India) % Godfrey Phillips India % Zydus Wellness % Industrial Capital Goods BEML % Swelect Energy System % Industrial Products Diamond Power Infrastructure % Minerals/Mining Gujarat Mineral Development Corporation % Pesticides PI Industries % United Phosphorous % Bayer Cropscience % Pharmaceuticals Alembic Pharmaceuticals % Aurobindo Pharma % Biocon % Unichem Laboratories % Power JSW Energy % Software Tech Mahindra % Polaris Financial Technology % Nucleus Software Exports % Persistent Systems % Textile - Cotton Vardhman Textiles % Textile Products Siyaram Silk Mills % Transportation Adani Ports and Special Economic Zone % Gateway Distriparks % Total 92.09% 10

12 Issuer HSBC Midcap Equity Fund (HMEF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Auto Ancillaries 6.97% Banks 16.17% Cement 4.17% Consumer Durables 7.17% Consumer Non Durables 5.53% Industrial Capital Goods 2.68% Industrial Products 2.19% Minerals/Mining 2.82% Pesticides 13.87% Pharmaceuticals 8.06% Power 1.98% Software 11.56% Textile Products 1.11% Textiles - Cotton 4.11% Transportation 3.70% Other Equity Investments 3.07% Reverse Repos/CBLOs 0.66% Net Current 4.18% Total Net % Our exposure to midcap stocks in HSBC Midcap Equity Fund (HMEF) is % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in predominantly mid cap equity and equity related securities High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment Benchmark NAV (Growth) per unit (as on ) Fund Manager SIP Minimum Application Amount Exit Nil Statistical Ratios 19-May-05 S&P BSE Midcap ` Dhiraj Sachdev Available ` 10,000 ` 1,000 p.m.(sip) Standard Deviation 1.22% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.70% Direct Plan 2.00% fees of 0.20% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.72% Direct Plan 2.00% fees of 0.21% of Total Net. Portfolio Turnover 0.45 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Midcap Equity Fund - Dividend 24-Mar Dec Nov Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 11

13 An Open Ended Flexi-Theme Equity Scheme Investment Objective: Seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities by investing primarily in sectors, areas and themes that play an important role in, and/or benefit from India s progress, reform process and economic development. Issuer HSBC Progressive Themes Fund (HPTF) September 2013 Market Value (` in Lacs) % to Net Auto Tata Motors DVR % Auto Ancillaries Apollo Tyres % Banks The Jammu & Kashmir Bank % ICICI Bank % Dena Bank % The Karnataka Bank % Allahabad Bank % Indian Bank % Union Bank of India % United Bank of India % Cement Everest Industries % HIL % JK Cement % Construction IRB Infrastructure Developers % National Buildings Construction Corporation % Construction Projects Gammon Infrastructure Projects % Finance Rural Electrification Corporation % Gas Gujarat State Petronet % Industrial Capital Goods BEML % Industrial Products FAG Bearings India % Diamond Power Infrastructure % Minerals/Mining Gujarat Mineral Development Corporation % Petroleum Products Hindustan Petroleum Corporation % Indian Oil Corporation % Power JSW Energy % Reliance Infrastructure % Power Grid Corporation of India % Services Aditya Birla Nuvo % Textile - Cotton Vardhman Textiles % Textile - Synthetic Bombay Dyeing & Manufacturing Company % Transportation Gateway Distriparks % Adani Ports And Special Economic Zone % Total 96.40% 12

14 Issuer HSBC Progressive Themes Fund (HPTF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Auto 2.89% Auto Ancillaries 6.74% Banks 25.33% Cement 5.69% Construction 3.18% Construction Project 1.12% Finance 4.95% Gas 1.20% Industrial Capital Goods 1.06% Industrial Products 5.79% Minerals/Mining 2.62% Petroleum Products 6.08% Power 10.49% Services 5.79% Textiles - Cotton 3.66% Textiles - Synthetic 1.77% Transportation 8.04% Other Equity Investments 3.15% Reverse Repos/CBLOs 1.63% Net Current -1.18% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities, primarily in themes that play an important role in India s economic development High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 23-Feb-06 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Dhiraj Sachdev SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 1.25% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.70% Direct Plan 2.00% fees of 0.20% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.68% Direct Plan 1.98% fees of 0.20% of Total Net. Portfolio Turnover 0.28 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Progressive Themes Dividend 11-May May Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 13

15 An Open Ended Equity Linked Savings Scheme (ELSS) Investment Objective: Aims to provide long term capital appreciation by investing in a diversified portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalisation bias. The Fund may also invest in fixed income securities. Issuer HSBC Tax Saver Equity Fund (HTSF) September 2013 Market Value (` in Lacs) % to Net Auto Maruti Suzuki India % Auto Ancillaries Amara Raja Batteries % MRF % Motherson Sumi Systems % Exide Industries % Banks HDFC Bank % ICICI Bank % Federal Bank % Karur Vysya Bank % ING Vysya Bank % Yes Bank % Cement Shree Cements % The Ramco Cements % Consumer Durables Havells India % Consumer Non Durables I T C 1, % McLeod Russel India % Nestle India % Jyothy Laboratories % Fertilisers Coromandel International % Finance HDFC % LIC Housing Finance % Gas Petronet LNG % Industrial Capital Goods Crompton Greaves % Industrial Products Supreme Industries % Oil Oil & Natural Gas Corporation % Pharmaceuticals Divi's Laboratories % Lupin % Ipca Laboratories % Wockhardt % Software Tata Consultancy Services % Tech Mahindra % HCL Technologies % Infosys % Telecom - Services Bharti Airtel % Total 96.92% 14

16 Issuer HSBC Tax Saver Equity Fund (HTSF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Auto 3.00% Auto Ancillaries 10.23% Banks 15.82% Cement 8.86% Consumer Durables 2.01% Consumer Non Durables 14.28% Fertilisers 2.03% Finance 7.23% Gas 1.84% Industrial Capital Goods 2.20% Industrial Products 3.52% Oil 2.27% Pharmaceuticals 7.88% Software 13.12% Telecom - Services 2.63% Other Equity Investments 0.88% Reverse Repos/CBLOs 0.79% Net Current 1.41% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities with no market capitilastion bias High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 05-Jan-07 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Aditya Khemani SIP Available Minimum Application Amount ` 500 (Lumpsum & SIP) Exit Nil Statistical Ratios Standard Deviation 0.87% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.61% Direct Plan 1.91% fees of 0.19% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.61% Direct Plan 1.90% fees of 0.20% of Total Net. Portfolio Turnover 0.80 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Tax Saver Equity Dividend 19-Feb Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 15

17 An Open Ended Equity Scheme Investment Objective: To provide long-term capital growth from a diversified portfolio of equity and equity related instruments. The focus would be to invest in stocks of companies facing out-of-ordinary conditions. Issuer HSBC Unique Opportunities Fund (HUOF) September 2013 Market Value (` in Lacs) % to Net Auto Bajaj Auto % Maruti Suzuki India % Auto Ancillaries Amara Raja Batteries % Motherson Sumi System % Bosch % Banks ICICI Bank % HDFC Bank % Bank of Baroda % Karur Vysya Bank % The Jammu & Kashmir Bank % Federal Bank % Cement Grasim Industries % Shree Cements % The Ramco Cements % Construction Projects Larsen & Toubro % Consumer Non Durables I T C % McLeod Russel India % Fertilisers Coromandel International % Finance HDFC % IDFC % LIC Housing Finance % Industrial Products Supreme Industries % Minerals/Mining NMDC % Non - Ferrous Metals Hindustan Zinc % Oil Oil & Natural Gas Corporation % Petroleum Products Reliance Industries % Pharmaceuticals Divi's Laboratories % Lupin % Torrent Pharmaceuticals % Wockhardt % Software Infosys % HCL Technologies % Tata Consultancy Services % Mindtree % Tech Mahindra % Telecom - Services Bharti Airtel % Total 97.91% 16

18 Issuer HSBC Unique Opportunities Fund (HUOF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Auto 4.77% Auto Ancillaries 6.24% Banks 17.81% Cement 6.25% Construction Projects 2.60% Consumer Non Durables 9.91% Fertilisers 1.98% Finance 7.69% Industrial Products 2.28% Minerals/Mining 1.62% Non - Ferrous Metals 1.60% Oil 3.77% Petroleum Products 2.89% Pharmaceuticals 9.27% Software 17.00% Telecom - Services 2.23% Other Equity Investments 0.50% Reverse Repos/CBLOs 2.04% Net Current -0.45% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities of companies facing out-of-ordinary conditions High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 21-Mar-07 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Gaurav Mehrotra & Amaresh Mishra SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.91% R-Squared,m Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.70% Direct Plan 1.99% fees of 0.20% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.70% Direct Plan 2.00% fees of 0.21% of Total Net. Portfolio Turnover 0.46 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30,

19 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 flexibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative. Issuer HSBC Dynamic Fund (HDF) September 2013 Market Value (` in Lacs) % to Net Auto Tata Motors % Hero Motocorp % Mahindra & Mahindra % Bajaj Auto % Banks ICICI Bank % HDFC Bank % Axis Bank % Cement Grasim Industries % Construction Projects Larsen & Toubro % Consumer Non Durables I T C % Hindustan Unilever % Ferrous Metals Tata Steel % Finance HDFC % Minerals/Mining NMDC % Oil Oil & Natural Gas Corporation % Petroleum Products Reliance Industries % Pharmaceuticals Dr Reddy s Laboratories % Sun Pharmaceutical Industries % Power Power Grid Corporation of India % Services Aditya Birla Nuvo % Software Infosys % HCL Technologies % Tata Consultancy Services % Telecom - Services Bharti Airtel % Total 71.67% 18

20 Issuer HSBC Dynamic Fund (HDF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs 2, % Net Current % Total Net as on 30 September , % Asset Allocation Auto 6.82% Banks 12.22% Cement 2.37% Construction Projects 2.51% Consumer Non Durables 9.92% Ferrous Metals 1.35% Finance 4.57% Minerals/Mining 1.50% Oil 2.13% Petroleum Products 5.65% Pharmaceuticals 4.50% Power 2.20% Services 1.86% Software 12.61% Telecom - Services 1.46% Other Equity Investments 3.81% Reverse Repos/CBLOs 23.50% Net Current 1.02% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities and in debt instruments when view on equity markets is negative High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 24-Sep-07 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Tushar Pradhan & Neelotpal Sahai (for Equity portion) Sanjay Shah (for Fixed Income portion) SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.89% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.70% Direct Plan 2.00% fees of 0.20% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.66% Direct Plan 1.98% fees of 0.20% of Total Net. Portfolio Turnover 0.87 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30,

21 HSBC Emerging Markets Fund (HEMF) September 2013 An Open Ended Scheme Investment Objective: 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 domestic debt and money market instruments. Issuer Market Value (` in Lacs) % to Net Overseas Mutual Fund HSBC GIF Glob Emerg Mkts Eq S1 Dis 1, % CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Overseas Mutual Fund 95.65% Reverse Repos/CBLOs 2.13% Net Current 2.22% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Investment in equity and equity related securities of Emerging economies High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment Benchmark NAV (Growth) per unit (as on ) Fund Manager SIP Minimum Application Amount Exit 17-Mar-08 MSCI Emerging Markets Index ` Nil Statistical Ratios Piyush Harlalka (Dedicated fund manager for overseas investments) Available ` 10,000 ` 1,000 p.m.(sip) Standard Deviation 1.55% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 1.85% 2.71% (inclusive of underlying scheme s expenses) Direct Plan 1.15% fees of 0.11% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 1.86% 2.71% (inclusive of underlying scheme s expenses) Direct Plan 1.15% fees of 0.11% of Total Net. Portfolio Turnover 0.35 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30,

22 An Open Ended Equity Scheme Investment Objective: To provide long term capital appreciation primarily from a diversified portfolio of equity and equity related instruments of small cap companies. Issuer HSBC Small Cap Fund (HSCF) September 2013 Market Value (` in Lacs) % to Net Auto Ancillaries Balkrishna Industries % Majestic Auto % Banks State Bank of Travancore % State Bank of Bikaner and Jaipur % The Karnataka Bank % Dena Bank % Development Credit Bank % Cement Orient Cement % Orient Paper & Industries % Chemicals India Glycols % Consumer Durables Hitachi Home & Life Solutions (India) % IFB Industries % Bata India % Greenply Industries % Consumer Non Durables Globus Spirits % Godfrey Phillips India % KRBL % Lakshmi Energy and Foods % Finance Cholamandalam Investment Finance Co % Industrial Capital Goods Sanghvi Movers % Indo Tech Transformers % TIL % Industrial Products Ador Welding % Minerals/Mining Gujarat Mineral Development Corporation % Pesticides PI Industries % Pharmaceuticals Aurobindo Pharma % Alembic Pharmaceuticals % Software Nucleus Software Exports % Tech Mahindra % Textile - Products SRF % Textile - Cotton RSWM % Transportation Adani Ports and Special Economic Zone % Total 99.13% 21

23 Issuer HSBC Small Cap Fund (HSCF) September 2013 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Net Current % Total Net as on 30 September , % Asset Allocation Auto Ancillaries 5.13% Banks 18.98% Cement 8.50% Chemicals 2.91% Consumer Durables 10.08% Consumer Non Durables 12.52% Finance 2.02% Industrial Capital Goods 5.50% Industrial Products 1.14% Minerals/Mining 1.71% Pesticides 1.89% Pharmaceuticals 4.56% Software 12.37% Textile - Products 2.01% Textile - Cotton 7.42% Transportation 2.39% Other Equity Investments 0.69% Reverse Repos/CBLOs 5.93% Net Current -5.75% Total Net % Our exposure to small cap stocks in HSBC Small Cap Fund (HSCF) is % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in predominantly small cap equity and equity related securities High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment Benchmark NAV (Growth) per unit (as on ) Fund Manager SIP Minimum Application Amount 24-Mar-08 S&P BSE Small Cap Index ` Dhiraj Sachdev Available ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 1.08% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on September 30, 2013 Regular 2.70% Direct Plan 2.00% fees of 0.20% of Total Net. Annualised Expense Ratio from 1st April 2013 onwards Regular 2.73% Direct Plan 2.00% fees of 0.21% of Total Net. Portfolio Turnover 0.29 Statistical ratios disclosed as per returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.77% as on September 30, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Small Cap Fund - Dividend 19-Nov Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 22