Schemewise Annual Reports :

HSBC Global Asset Management Schemewise Annual Reports : 2010-2011 Issued by HSBC Asset Management (India) Private Limited

INDEX Trustees Report...4 HSBC Equity Fund...16 HSBC India Opportunities Fund...25 HSBC Midcap Equity Fund...33 HSBC Progressive Themes Fund...41 HSBC Tax Saver Equity Fund...48 HSBC Dynamic Fund...56 HSBC Emerging Markets Fund...64 HSBC Unique Opportunities Fund...72 HSBC Small Cap Fund...80 HSBC MIP...88 HSBC Income Fund...104 HSBC Gilt Fund...121 HSBC Floating Rate Fund...130 HSBC Ultra Short Term Bond Fund...147 HSBC Flexi Debt Fund...157 HSBC Cash Fund...168 HSBC Fixed Term Series 79...178

Dear Investor, Greetings from HSBC Asset Management in India. I am delighted to be able to write to you in my capacity as the new CEO of the company, a role that I assumed in March 2011. Above all else I want to start by expressing my gratitude to you for the faith you have reposed in the company. For this I am truly grateful. Global Developments: As you are aware HSBC Global Asset Management continues to be a leading player both globally with assets of over USD 443.50 bn as on December 31, 2010 and in the emerging markets, which is a key focus area, with assets of over USD 145 bn as on December 31, 2010. Following recent leadership changes, our parent company the HSBC Group, has committed to focusing on Wealth Management as a key strategic initiative. This makes the Asset Management business of the Group an even more prominent contributor and we are therefore investing further to play this important role. New Investment Philosophy: Whilst our core operating principals remain unchanged, several key changes are being made to the business model which will position us strongly for the future. Prominent amongst these is a new global investment philosophy which introduces a more scientifically developed approach to stock selection to augment our existing processes. Back testing is underway and indicates this model to be very effective in producing investment performance. India Operations: India remains a key market for HSBC s Asset Management business. Our Indian operations are now in their tenth year with a full range of products. This experience has given us a deep insight into India, across investment cycles, that is so necessary for success. We too are making several changes in our business model so as to be more efficient and effective. We are very excited about the new global investment philosophy which we are in the process of adopting. It is our belief that, given the rapid progress we are seeing in data transparency, such an approach will prove to be much more beneficial in the current environment, particularly in the aftermath of the global financial crisis. Though we are still to receive formal communication, based on our discussions with the Employee Provident Fund Organisation, it pleases me to inform you that recently HSBC Asset Management India edged out some of the major financial players in the country to be amongst the four entities selected to manage a part of the prestigious EPFO s corpus of about USD 80 bn. This, to me, is a reflection of the reputation we have developed as a fund house and also a result of our being named the best performing fund manager on basis of the composite scores (which considers the returns, asset quality and maturity profile) during the last mandate**. Ladies and Gentlemen, there are now 45 mutual fund houses in India and this has led to investors being presented with multiple choices. Whilst this is a welcome development, it also exposes investors to the risks associated with frequent switches. According to the data* we have reviewed, over the long term such frequent changes do not result in higher benefits vis-à-vis staying invested in a well managed fund which follows a disciplined investments approach. 1

I would therefore encourage you to bear this in mind. Short term volatility in fund performance is natural and should not be the only criteria to judge performance. The long term track record is to me a more important criterion as mutual fund investments are generally held for an extended period of time. Our approach to fund management is in line with this philosophy i.e. we aim to offer consistent wealth generation to our clients over the long term. HSBC Asset Management also remains committed to bringing to India global best practices, hand-picked from our established expertise across the globe. The recently introduced innovative investment model which has been proven globally is one such example. In addition to our local offerings, we also aim to bring to our investors world-class product offerings from our global range of products. As you are aware we recently launched the HSBC Brazil Fund which offers our investors an opportunity to benefit from the strong growth prospects of the Brazilian economy. From an investor perspective, it is a great way to diversify one s investments outside India and benefit from the other strong growth stories across the world. I am happy to advise that following its launch, the HSBC Brazil Fund has become one of the largest in its category. We aim to continue to leverage our global platform to bring many more such offers for our investors in India. In closing, I thank you once again for choosing us as your trusted partner. We remain committed to our philosophy of aiming for consistent wealth creation and service excellence and I look forward to your continued investments in the HSBC Mutual Fund. Yours sincerely, Puneet Chaddha Chief Executive Officer HSBC Asset Management (India) Private Limited * Date source: MutualFundsIndia Explorer software ** Source: Employee Provident Fund Organisation (EPFO) 2

SPONSOR HSBC Securities and Capital Markets (India) Private Limited Regd. Office: 52/60, Mahatma Gandhi Road, Fort, Mumbai 400 001. TRUSTEE Board of Trustees Office: 314, D. N. Road, Fort, Mumbai 400 001. ASSET MANAGEMENT COMPANY HSBC Asset Management (India) Private Limited Corp. & Regd. Office: 314, D. N. Road, Fort, Mumbai 400 001. CUSTODIAN JP Morgan Chase Bank N. A. Corp. & Regd. Office: J. P. Morgan Tower, C.T.S. No. 5435, Kalina, Santacruz (East), Mumbai 400 098. AUDITORS TO THE SCHEME Price Waterhouse Chartered Accountants 252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai - 400 028. LEGAL ADVISORS Bharucha & Partners Cecil Court, 4th Floor, M. K. Bhushan Marg, Colaba, Mumbai 400 039. REGISTRAR & TRANSFER AGENTS Computer Age Management Services (P) Ltd. (CAMS) Rayala Towers, Tower I, III Floor, 158 Anna Salai, Chennai - 600 002. BOARD OF TRUSTEES* Mr. N. P. Gidwani - Chairman Mr. Nasser Munjee Mr. Manu Tandon Mr. Mehli Mistri Mr. Dilip J. Thakkar Ms. Joanna Munro * Dr. Rudolf Apenbrink has resigned as a Trustee with effect from October 11, 2010. Further, Ms. Joanna Munro has been appointed as the Trustee of HSBC Mutual Fund with effect from June 16, 2011. BOARD OF DIRECTORS** Ms. Naina Lal Kidwai - Chairperson Mr. S. P. Mustafa Mr. Ashok Jha Ms. Kishori J. Udeshi Mr. Puneet Chaddha - Chief Executive Officer Mr. Glenn Berry ** Mr. Vikramaaditya & Mr. Ayaz Ebrahim have resigned as Directors with effect from March 11, 2011 and May 13, 2011 respectively. Further, Mr. Puneet Chaddha and Mr. Glenn Berry have been appointed as the Directors with effect from March 14, 2011 and July 14, 2011 respectively. 3

Trustees Report For the year ended March 31, 2011 The Trustees present the ninth report and the audited abridged financial statements of the Scheme(s) of HSBC Mutual Fund (the Fund ), for the year ended March 31, 2011. 1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES a) Operations and Performance of the Scheme HSBC Equity Fund (HEF) an open-ended diversified Equity Scheme To generate long-term capital growth from an actively managed portfolio of equity and equity related securities. The net assets of HEF amounted to Rs. 966.68 crores as at March 31, 2011 as against Rs. 1,382.78 crores as at March 31, 2010. Around 90.51% of the net assets were invested in equities, 8.24% of the net assets were invested in reverse repos / CBLO and 1.25% were in the net current assets as at March 31, 2011. HEF s approach is to invest across a range of market capitalizations with a preference for large cap companies. The fund follows a growth oriented investment bias. HEF outperformed the benchmark BSE 200 over the past 1 year after underperforming the benchmark in FY10 on high cash and defensive portfolio. Since inception, the fund has beaten its benchmark. Date of Inception : 10 December, 2002 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC Equity Fund Growth 10.43 6.00 11.56 32.75 BSE 200 8.15 7.17 10.98 24.50 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC India Opportunities Fund (HIOF) an open-ended flexi-cap Equity Scheme HIOF seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related securities. However, it could move a significant portion of its assets towards fixed income securities if the fund manager becomes negative on equity markets. The net assets of HIOF amounted to Rs. 189.90 crores as at March 31, 2011 as compared to Rs. 283.80 crores as at March 31, 2010. Around 88.32% of the net assets were invested in equities, 7.37% of the net assets were invested in reverse repos / CBLO and 4.31% were in the net current assets as at March 31, 2011. HIOF outperformed the benchmark over the past 1 year beating its benchmark BSE 500. Since inception, the fund has beaten its benchmark. Date of Inception : 24 February, 2004 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC India Opportunities Fund Growth 11.75 4.75 9.14 19.63 BSE 500 7.48 6.50 10.48 18.30 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Midcap Equity Fund (HMEF) an open-ended diversified Equity Scheme HMEF seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities primarily being midcap stocks. However, it could move a portion of its assets towards fixed income securities if the fund manager becomes negative on the Indian equity markets. The net assets of HMEF amounted to Rs. 138.69 crores as at March 31, 2011 as compared to Rs. 177.24 crores as at March 31, 2010. Around 88.40% of the net assets were invested in equities, 7.63% of the net assets were invested in reverse repos / CBLO and 3.97% were in the net current assets as at March 31, 2011. The midcap carnage witnessed in the markets since October 2010, led to underperformance in the fund. The top holdings of the fund fell more than the benchmark in the second half of FY11. 4

Trustees Report For the year ended March 31, 2011 (Contd...) Date of Inception : 19 May, 2005 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC Midcap Equity Fund Growth -9.93-1.59 1.08 12.22 BSE MID CAP 0.99 2.26 5.14 13.63 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Progressive Themes Fund (HPTF) an open-ended flexi-theme Equity Scheme HPTF seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities by investing primarily in sectors, areas and themes that play an important role in, and / or benefit from, India s progress, reform process and economic development. The net assets of HPTF amounted to Rs. 224.12 crores as at March 31, 2011 as compared to Rs. 391.28 crores as at March 31, 2010. Around 84.77% of the net assets were invested in equities, 12.72% of the net assets were invested in reverse repos / CBLO and 2.51% were in the net current assets as at March 31, 2011. HPTF s investments in the Indian infrastructure and economic reforms oriented themes saw the fund underperforming benchmark. Both sectors have seen de-rating over the past years. Date of Inception : 23 February, 2006 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC Progressive Themes Fund Growth -10.05-7.08 0.65 3.07 BSE 200 8.15 7.17 10.98 12.93 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs.10 invested at inception. Calculations are based on Growth NAVs. HSBC Tax Saver Equity Fund (HTSF) - an open-ended Equity Linked Savings Scheme HTSF seeks to provide long term capital appreciation by investing in a 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. The net assets of HTSF amounted to Rs. 248.29 crores as at March 31, 2011 compared to Rs. 301.54 crores as at March 31, 2010. Around 98.45% of the net assets were invested in equities, 1.59% of the net assets were invested in reverse repos / CBLO and (0.04)% were in the net current assets as at March 31, 2011. HTSF underperformed the index over the past 1 year on relatively higher weight towards capital goods and autos - both of which underperformed the benchmark in the second half year. However, since inception the fund outperformed the benchmark. Date of Inception : 05 January, 2007 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Tax Saver Equity Fund Growth 5.80 11.44 9.33 BSE 200 8.15 7.17 8.81 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Dynamic Fund (HDF) - an open-ended Scheme HDF seeks to provide long term capital appreciation by allocating funds in equity and equity related instruments. It also has the flexibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative. The net assets of HDF amounted to Rs. 114.78 crores as at March 31, 2011 compared to Rs. 238.73 crores as at March 31, 2010. Around 83.38% of the net assets were invested in equities, 10.61% of the net assets were invested in reverse repos / CBLO and 6.01% were in the net current assets as at March 31, 2011. 5

Trustees Report For the year ended March 31, 2011 (Contd...) HDF outperformed its benchmark over the past 1 year beating its benchmark BSE 200. Date of Inception : 24 September, 2007 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Dynamic Fund Growth 9.27 2.72 1.33 BSE 200 8.15 7.17 4.02 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Emerging Markets Fund (HEMF) - an open-ended Scheme HEMF seeks to provide long term capital appreciation by investing in India and in the emerging markets, in equity and equity related instruments, share classes and units / securities issued by overseas mutual funds or unit trusts. The fund may also invest a limited proportion in debt and money market instruments. The net assets of HEMF amounted to Rs. 59.69 crores as at March 31, 2011 compared to Rs. 87.09 crores as at March 31, 2010. Around 98.98% of the net assets were invested in HSBC GEM Equity Fund (overseas mutual fund), 2.73% of the net assets were invested in reverse repos / CBLO and (1.71)% were in the net current assets as at March 31, 2011. HEMF outperformed its benchmark over past 1 year beating its benchmark, MSCI Emerging Market Index. Date of Inception : 17 March, 2008 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Emerging Markets Fund Growth 13.48 1.75 1.83 MSCI Emerging Markets Index 10.81 1.88 3.55 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Unique Opportunities Fund (HUOF) - an open-ended Equity Scheme HUOF seeks 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. The net assets of HUOF amounted to Rs. 96.50 crores as at March 31, 2011 compared to Rs. 214.98 crores as at March 31, 2010. Around 85.68% of the net assets were invested in equities, 11.95% of the net assets were invested in reverse repos / CBLO and 2.37% were in net current assets as at March 31, 2011. HUOF outperformed its benchmark over past 1 year beating its benchmark BSE 200. Date of Inception : 21 March, 2007 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Unique Opportunities Fund Growth 9.98 1.36 2.89 BSE 200 8.15 7.17 11.40 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Small Cap Fund (HSCF) an open-ended Equity Scheme (the Scheme had got converted from a close ended Equity Scheme into an open-ended Equity Scheme with effect from March 25, 2011) HSCF seeks to provide long-term capital appreciation primarily from a diversified portfolio of equity and equity related instruments of small cap companies. 6

Trustees Report For the year ended March 31, 2011 (Contd...) The net assets of HSCF amounted to Rs. 34.60 crores as at March 31, 2011 compared to Rs. 60.91 crores as at March 31, 2010. Around 99.98% of the net assets were invested in equities, 2.93% of the net assets were invested in reverse repos / CBLO and (2.91%) were in the net current assets as at March 31, 2011. Correction in the markets in the second half FY11 led to underperformance in the small cap fund after posting good performance in the first half. Small caps corrected much more than the large caps in the second half. Overall, the performance was better than benchmark for the year. Date of Inception : 24 March, 2008 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Small Cap Fund Growth 0.04 2.27 2.70 BSE Small Cap -3.78 1.40 5.53 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC MIP (HMIP) an open-ended Fund (Monthly income is not assured and is subject to availability of distributable surplus.) HMIP an open-ended fund which seeks to generate reasonable returns through investments in Debt and Money Market Instruments. The secondary objective of the Scheme is to invest in equity and equity related instruments to seek capital appreciation. The Scheme offers two Plans: Regular Plan and Savings Plan. The Regular Plan can have up to 15 percent of the corpus invested in equities while the Savings Plan can have up to 25 percent invested in equities. The net assets of HMIP Regular Plan (HMIP R) amounted to Rs. 222.57 crores as at March 31, 2011 as compared to Rs. 219.32 crores as at March 31, 2010. Around 83.83% of the net assets were invested in debt and money market instruments & 13.51% of the net assets were invested in equities as at March 31, 2011. The net assets of HMIP Savings Plan (HMIP S) amounted to Rs. 676.10 crores as at March 31, 2011 as compared to Rs. 358.31 crores as at March 31, 2010. Around 75.78% of the net assets were invested in debt and money market instruments & 23.04% of the net assets were invested in equities as at March 31, 2011. The performance of HMIP R and HMIP S is benchmarked against CRISIL MIP Blended Index. Both the Plans had higher equity allocation towards mid caps which was since reduced. HMIP Regular Plan Date of Inception : 24 February, 2004 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC MIP Regular Plan Growth 4.02 7.23 8.16 7.76 CRISIL MIP Blended Index 6.17 6.82 7.41 7.21 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HMIP Savings Plan Date of Inception : 24 February, 2004 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC MIP Savings Plan Growth 4.37 8.41 9.49 9.63 CRISIL MIP Blended Index 6.17 6.82 7.41 7.21 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. 7

Trustees Report For the year ended March 31, 2011 (Contd...) HSBC Income Fund (HIF) an open-ended Income Scheme HIF seeks to generate reasonable income through a diversified portfolio of fixed income securities. The AMC s view of interest rate trends and the nature of the Plans will be reflected in the type and maturities of securities in which the Short Term and Investment Plans are invested. The Scheme has two Plans the Investment Plan and the Short Term Plan. The net assets of HSBC Income Fund Investment Plan (HIF IP) amounted to Rs. 21.11 crores as at March 31, 2011 as compared to Rs. 32.66 crores as at March 31, 2010. Around 91% of the net assets were invested in debt and money market instruments, 11.19% of the net assets were invested in reverse repos / CBLO and (2.19)% were in net current assets as at March 31, 2011. The net assets of HSBC Income Fund Short Term Plan (HIF STP) amounted to Rs. 164.21 crores as at March 31, 2011 as compared to Rs. 165.26 crores as at March 31, 2010. Around 96.78% of the net assets were invested in debt and money market instruments, 3.92% of the net assets were invested in reverse repos / CBLO and (0.70)% were in net current assets as at March 31, 2011. HIF - IP outperformed its benchmark through relatively active management of duration. HIF IP Date of Inception : 10 December, 2002 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC Income Fund IP Regular - Growth 5.57 7.33 7.35 6.46 CRISIL Composite Bond Fund Index 5.06 5.94 5.94 5.24 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HIF - STP mostly ran a conservative duration bias on expectation of heightened volatility in short end rates but still managed to outperform the benchmark over the past 1 year. HIF STP Date of Inception : 10 December, 2002 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC Income Fund STP Regular - Growth 5.85 6.78 6.99 6.24 CRISIL Short-Term Bond Fund Index 5.12 6.91 7.04 5.89 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Gilt Fund (HGF) an open-ended Gilt Scheme HGF seeks to generate reasonable returns through investments in Government Securities of various maturities. The AMC s view of interest rate trends will be reflected in the maturities of securities in which the Scheme is invested. The net assets of HGF amounted to Rs. 0.70 crores as at March 31, 2011 as compared to Rs. 0.42 crores as at March 31, 2010. Around 92.04% of the net assets were invested in reverse repos / CBLO and 0.80% were in net current assets as at March 31, 2011. HGF underperformed its benchmark index since inception as low assets under management for an extended period had constrained ability to actively manage the Scheme. However, the Scheme had outperformed the benchmark over the last 1 year as the Scheme has taken active calls in line with other duration funds. Date of Inception : 5 December, 2003 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC Gilt Fund Growth 7.81 2.30 3.19 3.09 I Sec Composite Index 6.41 7.83 7.65 6.12 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. 8

Trustees Report For the year ended March 31, 2011 (Contd...) HSBC Floating Rate Fund (HFRF) an open-ended Income Scheme HFRF seeks to generate reasonable return with commensurate risk from a portfolio comprised of floating rate debt instruments and fixed rate debt instruments swapped for floating rate returns. The Scheme may also invest in fixed rate money market and debt instruments. The Scheme has two Plans Long Term Plan and Short Term Plan. The net assets of HSBC Floating Rate Fund Long Term Plan (HFRF LTP) amounted to Rs. 279.80 crores as at March 31, 2011 as compared to Rs. 597.50 crores as at March 31, 2010. Around 99.39% of the net assets were invested in money market instruments, 0.46% of the net assets were invested in reverse repos / CBLO and 0.16% in net current assets as at March 31, 2011. The net assets of HSBC Floating Rate Fund Short Term Plan (HFRF STP) amounted to Rs. 21.23 crores as at March 31, 2011 as compared to Rs. 72.22 crores as at March 31, 2010. Around 89.56% of the net assets were invested in reverse repos / CBLO and 10.44% in net current assets as at March 31, 2011. HFRF-LTP outperformed its benchmark index since inception, through focus on accruals and investment in shorter end of the curve HFRF LTP Date of Inception : Compounded Annualized Returns (%) 16 November, 2004 Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC FRF LTP Regular Plan Growth 5.74 6.30 6.90 6.55 CRISIL Liquid Fund Index 6.21 6.22 6.51 6.15 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HFRF-STP underperformed its benchmark as incremental investments have been made very conservatively in line with the risk practices for Liquid funds. HFRF STP Date of Inception : 16 November, 2004 Simple Annualized Returns (%) Compounded Annualized Returns (%) Scheme & Benchmark 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception HSBC FRF - STP - Regular 5.84 5.71 4.97 4.91 5.94 5.83 Plan - Growth CRISIL Liquid Fund Index 7.96 7.43 6.21 6.22 6.51 6.15 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Cash Fund (HCF) an open-ended Liquid Scheme HCF aims to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities. The net assets of HCF amounted to Rs. 270.82 crores as at March 31, 2011 as compared to Rs. 470.59 crores as at March 31, 2010. Around 70.68% were invested in debt and money market instruments, 22.43% of the net assets were invested in reverse repos / CBLO and 6.89% in net current assets as at March 31, 2011. HCF underperformed its benchmark index as incremental investments have been made very conservatively in line with the risk environment and risk practices for liquid funds. Date of Inception : 4 December, 2002 Simple Annualized Returns (%) Compounded Annualized Returns (%) Scheme & Benchmark 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception HSBC Cash Fund 7.04 6.47 5.42 4.92 5.87 5.56 Regular Growth CRISIL Liquid Fund Index 7.96 7.43 6.21 6.22 6.51 5.70 9

Trustees Report For the year ended March 31, 2011 (Contd...) Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Ultra Short Term Bond Fund (HUSBF) an open-ended Debt Scheme HUSBF seeks to provide liquidity and reasonable returns by investing primarily in a mix of short term debt and money market instruments. The net assets of HUSBF amounted to Rs. 139.76 crores as at March 31, 2011 as compared to Rs. 512.32 crores as at March 31, 2010. Around 73.59% of the net assets were invested in debt and money market instruments, 19.11% were invested in reverse repos / CBLO and 7.30% were in net current assets as at March 31, 2011. HUSBF underperformed its benchmark index as incremental investments have been made very conservatively in line with the general risk environment. Date of Inception : 17 October, 2006 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Ultra Short Term Bond Fund Regular Growth 5.03 5.56 6.44 CRISIL Liquid Fund Index 6.21 6.22 6.55 Returns data as on March 31, 2011.Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs. HSBC Flexi Debt Fund (HFDF) an open-ended Debt Scheme HFDF seeks to deliver returns in the form of interest income and capital gains, along with high liquidity, commensurate with the current view on the markets and the interest rate cycle, through active investment in debt and money market instruments. The net assets of HFDF amounted to Rs. 54.23 crores as at March 31, 2011 as compared to Rs. 102.42 crores as at March 31, 2010. Around 90.46% of the net assets were invested in debt and money market instruments, 8.35% was invested in reverse repos / CBLO and 1.18% were in the net current assets as at March 31, 2011. HFDF has outperformed its benchmark index through relatively active management of duration. Date of Inception : 5 October, 2007 Compounded Annualized Returns (%) Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Flexi Debt Fund Growth 5.77 8.14 8.24 CRISIL Composite Bond Fund Index 5.06 5.94 6.09 Returns data as on March 31, 2011. Past performance may or may not be sustained in future. Since inception returns are calculated on Rs.10 invested at inception. Calculations are based on Growth NAVs. HSBC Fixed Term Series (HFTS) a close-ended Income Scheme with three plans namely Series 79, Series 80 and Series 81 HFTS seeks to generate returns by investing in a portfolio of fixed income instruments normally maturing in line with the time profile of the respective plan(s). The Scheme launched two series i.e. Series 79 and Series 80, each having tenure of 370 days. Series 79 was launched on March 22, 2011 and Series 80 was launched on June 17, 2011. The performance of the plans is benchmarked against CRISIL Short Term Bond Fund Index. Being closed ended fixed maturity plans, the performance of the schemes are not provided. 10

Trustees Report For the year ended March 31, 2011 (Contd...) b) Market Overview & Outlook Equity Financial year 2010-2011 was a year of two halves. The first half saw a euphoric period culminating with the highly successful Coal India IPO. Banks led the way through first half on buoyant credit growth, soft interest rates, listing of parallel loan origination agencies like microfinance / gold lending firms and an overall improvement in asset quality. However, continuing tightness in monetary policy and a spike in crude oil prices led to Indian markets moving into a corrective phase from November onwards. The surge in commodity prices following the launch of QEII (Quantitative Easing) from the US contributed to India s de-rating. Second half FY2011 also saw a pronounced tilt towards large caps in the Indian market on the back of two factors.: (a) lack of equity mobilisation in domestic institutional investors (MF s / Insurance etc.) leading to a market increasingly dominated by FIIs and (b) Within FIIs a shift towards emerging market funds, ETF s etc. (rather than India centric funds) meant that FIIs were more focussed towards larger Indian stocks. Governments attention getting diverted towards corruption (commonwealth, 2G spectrum, bribes for loan, Adarsh housing etc. to name a few) meant fewer officials taking decisions fearing repurcussions. To add, environment ministry tightening screws on go, no-go areas led to slowdown in investments into mining, power and metal sectors. BSE capital goods index ended 6.4% lower for FY11. The polarisation of the market towards large caps is illustrated below in the table. Performance is skewed towards the large cap indices. Returns ( April 1, 2010 March 31, 2011) 1 Year (%) NIFTY 11.1 Sensex 10.9 BSE 100 8.6 BSE 200 8.2 BSE 500 7.5 CNX Midcap 4.4 Source: Bloomberg Looking ahead the market continues to witness external risks arising from the US which is still in the threshold of a nascent economic recovery and the lack of a follow up to QEII could well lead to another leg down in economic data. Periphery of Europe remains a minefield with fiscal deficits and refinancing needs far in excess of what would be desirable. These have the potential to hurt global growth / commodity prices. As emerging economies battle inflation (refer for details in the fixed income market overview) by raising rates, cooling off of growth rates seems inevitable. It is forecasted that the corporate earnings growth would be 15% for FY12, from 18-20% earlier. India is likely to witness a bulk of its downgrade in the first financial year 2012 and in post the rate tightening cycle and downgrade of corporate earnings growth, it is expected that India will be a second half story into FY12. Debt Fixed income markets remained pressured under various concern for the year FY2010-11. Starting with rate hikes from the early 2010, liquidity concerns on back of 3G outflows / large IPOs, government s borrowing requirements and inflation affected the bond market outlook. The market levels for 10 year government securities ranged from 7.50% to 8.20% with more pressure being felt due to supply towards the end of the year. Liquidity remained major concern for the large part of the year with overnight borrowing of banking system from RBI hitting numbers beyond RBI s comfort. RBI tried to support the liquidity by conducting Open Market Operations. Domestic economic data started to improve towards late calendar year thus further curbing appetite for bonds. Inflation has remained a major concern for the entire year. Annual Wholesale Price Index eased from double digit level to 9%. However, the easing in inflation was not in line with expectation. This was due to higher 11

Trustees Report For the year ended March 31, 2011 (Contd...) non food manufacturing inflation. Earlier part of inflation was regarded as supply side inflation. However, it turned to demand push inflation in later part of year. This movement in inflation prompted RBI action during the entire year. Weakness in global economic data and infusion of further liquidity via QEII remained important considerations for policy makers. Commodity prices (esp. Oil) shot up substantially after the announcement of QEII, which further fired up inflation. The market is expected to wait for a pause / end in rate hike cycle as and when inflation plateaus and growth concerns become more alarming. This may take place after the overnight operative rate (repo rate) touches 8% following a series of small step hikes. Inflation may remain stubborn till September since the recent fuel price hikes will reflect its impact on the market. Inflation also depends on good monsoon leading to reasonable food production. Global concerns over Europe and the US economic recovery may also determine course of RBI s action, if situation weakens further. Government securities supply continues to remain concern for bond market with continued pressure on rates. 2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI). The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs.1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund. HSCI offers integrated investment banking services, securities and corporate finance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid-up equity share capital of HSBC Asset Management (India) Private Limited. b) HSBC Mutual Fund HSBC Mutual Fund ( the Mutual Fund or the Fund ) has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (AMC) to function as the Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002. The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as beneficiaries in such properties / investments and in the profits / income arising therefrom. c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefit of the unit holders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the Schemes floated thereunder are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies. d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Office at 314, D. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide. Its letter No. MFD/BC/163/2002 dated May 27, 2002. 12

Trustees Report For the year ended March 31, 2011 (Contd...) The paid-up equity share capital of the AMC is Rs. 9 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid-up equity share capital of the AMC. 3. INVESTMENT OBJECTIVE OF THE SCHEME The investment objective of the respective Schemes has been provided above under the heading Scheme Performance, Future Outlook and Operation of the Scheme (Refer Section 1). 4. SIGNIFICANT ACCOUNTING POLICIES The accounting policies are in accordance with Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. 5. UNCLAIMED DIVIDENDS & REDEMPTIONS Summary of number of Investors & corresponding amount Scheme-wise as on March 31, 2011: Scheme Unclaimed Dividends Amount (Rs.) No. of Investors Unclaimed Redemptions Amount (Rs.) No. of Investors HSBC Equity Fund 4,077,204.66 1109 2,379,836.99 87 HSBC India Opportunities Fund 1,209,792.27 335 694,180.42 20 HSBC Midcap Equity Fund 458,823.62 341 527,863.88 25 HSBC Progressive Themes Fund 718,704.65 364 2,675,137.34 155 HSBC Tax Saver Equity Fund 596,855.65 428 571,340.80 39 HSBC Dynamic Fund 1,348,548.28 35 HSBC Emerging Markets Fund 91,845.27 8 HSBC Unique Opportunities Fund 1,026,389.98 35 HSBC Small Cap Fund 77,708.40 3 HSBC MIP - Regular Plan 303,674.27 312 58,400.28 3 HSBC MIP Savings Plan 476,626.47 387 12,754.56 4 HSBC Income Fund - Investment Plan 235,932.78 533 325,454.92 17 HSBC Income Fund - Short Term Plan 56,523.18 20 HSBC Gilt Fund 7,395.57 2 HSBC Floating Rate Fund Long Term Plan 41,563.67 56 14,800.14 4 HSBC Ultra Short Term Bond Fund 66,064.60 2 HSBC Flexi Debt Fund 16.59 1 6. INVESTOR SERVICES During the year, the number of official points of acceptance of transactions increased significantly to about 229 locations. In addition to the offices of the Registrar & Transfer agents, the AMC has Investor Service Centres in 14 locations at its own offices - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the AMC has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all Schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. 13

Trustees Report For the year ended March 31, 2011 (Contd...) On the distribution front, the number of empanelled distributors increased from 8859 as on 31 March, 2010 to 8985 as of 31 March, 2011. During the year, the Asset Management Company initiated tie-ups for online distribution of the Mutual Fund s Schemes with several channel partners taking the total number of such tie-ups to 34. Call centre operations have been extended to cover the entire country. The AMC has outsourced certain back office services including call centre services to HSBC Operations and Processing Enterprise (India) Private Limited. 7. DETAILS OF INVESTOR GRIEVANCE REDRESSAL The details of the redressal of investor complaints received against HSBC Mutual Fund during April 2010- March 2011 are as follows: Total Number of Folios: 3,75,572 Complaint Code Type of complaint# (a) No. of complaints pending at the beginning of the year (b) No. of complaints received during the year Within 30 days 30-60 days Resolved 60-180 days Action on (a) and (b) Beyond 180 days Non Actionable* 0-3 months 3-6 months Pending 6-9 months 9-12 months I A Non receipt of 7 6 1 Dividend on Units I B Interest on delayed payment of Dividend I C Non receipt of 13 12 1 Redemption Proceeds I D Interest on delayed 5 5 payment of Redemption II A Non receipt of 1 1 Statement of Account / Unit Certificate II B Discrepancy in 5 5 Statement of Account II C Non receipt of Annual Report / Abridged Summary III A Wrong switch between Schemes III B Unauthorized switch between Schemes III C Deviation from Scheme attributes III D Wrong or excess 1 1 charges / load III E Non updation of 15 15 changes viz. address, PAN, bank details, nomination, etc. IV Others ** 1,114 1,108 3 1 2 Total 1,161 1,153 4 1 3 Note: # including against its authorised persons / distributors / employees, etc. * Non actionable means the complaint which is pending / outside the scope of the mutual fund ** includes correction in investor details 14

Trustees Report For the year ended March 31, 2011 (Contd...) 8. STATUTORY DETAILS a) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund. b) The price and redemption value of the units, and income from them, can go up as well as down with fluctuations in the market value of its underlying investments. c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Office of the mutual fund. Present and prospective unit holder can obtain copy of the trust deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price. 9. ACKNOWLEDGEMENTS The Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated. The Trustees look forward to the continued support of everyone. For and on behalf of the Board of Trustees of HSBC Mutual Fund Sd/- Dilip J. Thakkar Trustee MUMBAI July 15, 2011 15

HSBC Global Asset Management HSBC Equity Fund An open-ended Diversified Equity Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Equity Fund ( The Scheme ) as at March 31, 2011, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, i. The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Equity Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. ii. The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. iii. The methods used to value non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 17

Abridged Balance Sheet as at March 31, 2011 HSBC EQUITY FUND As at March 31, 2011 Rs. in Lakhs As at March 31, 2010 LIABILITIES 1 Unit Capital 22,950.76 33,754.33 2 Reserves & Surplus 2.1 Unit Premium Reserves (18,873.82) (4,983.57) 2.2 Unrealised Appreciation Reserve 25,988.25 33,567.40 2.3 Other Reserves 66,605.00 75,939.39 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 1,557.51 2,810.45 TOTAL 98,227.70 141,088.00 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 87,495.53 131,631.74 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 29.13 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 87,524.66 131,631.74 2 Deposits 5,071.29 4,506.03 3 Other Current Assets 3.1 Cash & Bank Balance 87.02 55.26 3.2 CBLO / Reverse Repo Lending 3,639.35 3,384.73 3.3 Others 1,905.38 1,510.24 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 98,227.70 141,088.00 Notes to Accounts - Annexure I 18

Abridged Revenue Account for the year ended March 31, 2011 HSBC EQUITY FUND Current Year ended March 31, 2011 Rs. in Lakhs Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1,565.88 1,581.76 1.2 Interest 456.15 470.71 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions (10.65) 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of 19,504.28 25,786.64 investments 1.6 Realised Gains / (Losses) on Derivative Transactions 1,241.88 56.53 1.7 Other Income 7.26 29.70 (A) 22,775.45 27,914.69 2 EXPENSES 2.1 Management fees 1,170.64 1,509.09 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 244.68 244.62 2.4 Custodian fees 59.73 62.63 2.5 Trusteeship fees 1.12 1.35 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 687.32 828.04 2.8 Audit fees 12.35 7.00 2.9 Other operating expenses 201.96 248.60 2.10 Less: Expenses to be Reimbursed by the Investment Manager (72.93) (B) 2,304.87 2,901.33 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 20,470.58 25,013.36 4 Change in Unrealised Depreciation in value of investments (D) (123.31) (4,894.10) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 20,593.89 29,907.46 6 Change in unrealised appreciation in the value of investments (F) (7,579.15) 33,545.37 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 13,014.74 63,452.83 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (7,579.15) 33,545.37 7.3 Add / (Less): Equalisation (22,275.63) (13,771.15) 7.4 Transfer from Reserve Fund 7,652.65 8 TOTAL 5,970.91 16,136.31 9 Dividend appropriation 9.1 Income Distributed during the year 7,652.65 7,418.57 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (1,681.74) 8,717.74 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 19

Key Statistics for the year ended March 31, 2011 HSBC EQUITY FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 95.3300 60.1737 Dividend Option 27.2661 18.8099 High Growth Option 116.1716 96.0978 Dividend Option 31.3598 29.4924 Low Growth Option 89.1659 60.6698 Dividend Option 24.2236 18.9650 End Growth Option 105.2711 95.3300 Dividend Option 26.4794 27.2661 2. Closing Assets Under Management (Rs. in Lakhs) End 96,670 138,278 Average (AAuM) 1 114,564 148,727 3. Gross income as % of AAuM 2 19.88% 18.77% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.01% 1.95% Dividend Option 2.01% 1.95% b. Management Fee as % of AAuM (planwise) Growth Option 1.02% 1.01% Dividend Option 1.02% 1.01% 5. Net Income as a percentage of AAuM 3 17.87% 16.82% 6. Portfolio turnover ratio 4 0.96 1.28 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option 3.50 2.50 Corporate Dividend Option 3.50 2.50 8. Returns (%): a. Last One Year Scheme Growth Option 10.4300 58.4247 Dividend Option 10.4300 58.4242 Benchmark BSE200 8.1469 92.8700 b. Since Inception Scheme Growth Option 32.7500 36.1335 Dividend Option 32.8000 36.1895 Benchmark BSE 200 24.5028 26.9200 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 20

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC EQUITY FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives amount to Rs. 473,661,900 and is 4.90% to Net Assets as of year ended March 31, 2011. Open Positions of derivatives amount to Rs. 417,045,564 and is 3.02% to Net Assets as of year ended March 31, 2010. 1.3 Investments in Associates and Group Companies: (Rupees) Issuer Instrument Type Amount Aggregate Investments by all schemes Amount 2011 2010 Aggregate Investments by all schemes The Hongkong & Fixed Shanghai Banking deposits Corporation Limited 430,000,000 970,000,000 430,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the scheme as of the year ended March 31, 2011 and March 31, 2010 is NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2011 and March 31, 2010 and percentage to net assets are as under : Company Name Amount (Rs.) Percentage to Net Assets Amount (Rs.) 2011 2010 Percentage to Net Assets Equity Shares Appreciation 2,662,127,636 27.5382% 3,511,447,614 25.3942% Depreciation 85,078,394 0.8801% 154,707,444 1.1188% Non Convertible Debentures and Bonds Appreciation 2,912,501 0.0301% Depreciation Equity Futures Appreciation 18,863,299 0.1951% 4,260,464 0.0308% Depreciation 16,591,918 0.1200% 1.7. The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 279,250) and sold during the financial year 2010-2011 is Rs. 4,247,546,108 and Rs. 9,832,182,896 respectively being 37.08% and 85.82% of the average daily net assets. The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 710,496) and sold during the financial year 2009-2010 is Rs. 12,919,307,271 and Rs. 14,698,914,601 respectively being 86.87% and 98.83% of the average daily net assets. 21

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 1.8. Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under : Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) 2011 2010 Percentage to Net Assets Debt Instruments 2,912,501 3.0128% Total 2,912,501 3.0128% 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-11, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 35,506 and clearing member charges on derivative transactions amounting to Rs. 1,708,650. During the year 2009-10, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 118,354 and clearing member charges on derivative transactions amounting to Rs. 1,745,886. Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 50.29 22.22 19,868,678 25.79 Associate 2010-2011 0.77 0.34 348,019 0.45 Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Associate 2009-2010 Associate 2009-2010 Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund 154.25 28.82 55,132,417 32.27 1.01 0.19 526,980 0.31 22

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor Nature of Period Value of % of total Brokerage % of Total / AMC and its Association Covered Transactions value of paid [Rs.] brokerage associates / related / Nature of [Rs. in transactions paid by the parties / group Relation Crores] of the Fund Fund companies HSBC Securities and Capital Market (India) Private Limited Sponsor 2010-2011 121.99 3.79 811,777 2.50 Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of Relation Period Covered Value of Transactions [Rs. in Crores] % of total value of transactions of the Fund Brokerage paid [Rs.] % of Total brokerage paid by the Fund Associate 2009-2010 123.77 2.70 922,708 1.63 The brokerage paid was at rates similar to those offered to other brokers / distributors Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010. Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 67,940,001.958 11,108,207.872 33,487,581.496 45,560,628.334 455,606,284 Dividend Option 269,603,291.565 35,686,211.094 121,342,547.098 183,946,955.561 1,839,469,555 Description Growth Option Dividend Option 2009-2010 Opening Units Subscription Redemption Closing Units Face Value 82,822,603.543 31,106,227.231 45,988,828.816 67,940,001.958 679,400,020 315,640,026.026 105,492,570.593 151,529,305.054 269,603,291.565 2,696,032,916 5 Previous year s figures have been re-grouped / re-arranged where necessary. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Managenent Fees are Inclusive of Service Tax where applicable. 8 Other income includes exit load collected in excess of 1% of redemption proceeds credited to the Scheme and provision for expenses written back as no longer required. 23

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 24

HSBC Global Asset Management HSBC India Opportunities Fund An open-ended Flexi-cap Equity Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC India Opportunities Fund ( The Scheme ) as at March 31, 2011, the related Revenue Account for the year ended on that date and Cash Flow Statement for the year ended on that date, which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agents respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC India Opportunities Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 26

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC INDIA OPPORTUNITIES FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 8,957.63 14,295.84 2 Reserves & Surplus 2.1 Unit Premium Reserves (11,139.11) (8,297.85) 2.2 Unrealised Appreciation Reserve 4,849.87 6,029.11 2.3 Other Reserves 16,322.33 16,377.13 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 380.10 520.82 TOTAL 19,370.82 28,925.05 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 16,773.39 25,599.08 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 16.44 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 16,773.39 25,615.52 2 Deposits 1,300.00 1,349.02 3 Other Current Assets 3.1 Cash & Bank Balance 9.78 9.36 3.2 CBLO / Reverse Repo Lending 99.06 570.08 3.3 Others 1,188.59 1,381.07 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 19,370.82 28,925.05 Notes to Accounts - Annexure I 27

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC INDIA OPPORTUNITIES FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 304.11 319.36 1.2 Interest 97.50 90.81 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of 3,998.89 8,690.11 investments 1.6 Realised Gains / (Losses) on Derivative Transactions 178.26 (295.25) 1.7 Other Income 0.15 0.52 (A) 4,578.91 8,805.55 2 EXPENSES 2.1 Management fees 256.26 355.31 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 49.27 54.02 2.4 Custodian fees 13.24 15.47 2.5 Trusteeship fees 0.24 0.30 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 181.02 256.82 2.8 Audit fees 2.43 5.00 2.9 Other operating expenses 42.88 57.10 (B) 545.34 744.02 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 4,033.57 8,061.53 4 Change in Unrealised Depreciation in value of investments (D) (1,967.69) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 4,033.57 10,029.22 6 Change in unrealised appreciation in the value of investments (F) (1,179.24) 6,016.99 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 2,854.33 16,046.21 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (1,179.24) 6,016.99 7.3 Add / (Less): Equalisation (3,354.55) (3,301.93) 7.4 Transfer from Reserve Fund 733.83 3,806.22 7.5 Transfer from Unit Premium Reserve 8 TOTAL 1,412.85 10,533.51 9 Dividend Appropriation 9.1 Income Distributed during the year 733.83 1,222.51 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 679.02 9,311.00 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 28

Key Statistics for the year ended March 31, 2011 HSBC INDIA OPPORTUNITIES FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 31.9869 19.6995 Dividend Option 15.9436 10.4365 High Growth Option 39.1289 32.7859 Dividend Option 19.5031 17.0045 Low Growth Option 29.9530 19.8927 Dividend Option 14.9298 10.5389 End Growth Option 35.7149 31.9869 Dividend Option 16.8252 15.9436 2. Closing Assets Under Management (Rs. in Lakhs) End 18,991 28,404 Average (AAuM) 1 23,126 33,032 3. Gross income as % of AAuM 2 19.80% 26.66% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.36% 2.24% Dividend Option 2.36% 2.24% b. Management Fee as % of AAuM (planwise) Growth Option 1.11% 1.08% Dividend Option 1.11% 1.08% 5. Net Income as a percentage of AAuM 3 17.44% 24.42% 6. Portfolio turnover ratio 4 1.21 1.34 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option 1.0000 1.0000 Corporate Dividend Option 1.0000 1.0000 8. Returns (%): a. Last One Year Scheme Growth Option 11.7500 62.2361 Dividend Option 11.7500 62.2364 Benchmark BSE 500 7.4818 96.3800 b. Since Inception Scheme Growth Option 19.6300 20.9771 Dividend Option 19.6400 20.9854 Benchmark BSE 500 18.3016 20.1800 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Lossed) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 29

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC INDIA OPPORTUNITIES FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives as of March 31, 2011 is Rs. 76,968,000 and is 4.05% to the net assets. Open Positions of derivatives as of March 31, 2010 is Rs. 193,993,801 and is 6.83% to the net assets. 1.3 Investments in Associates and Group Companies Issuer The Hongkong & Shanghai Banking Corporation Ltd. Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount (Rupees) Aggregate Investments by all schemes 2011 2010 130,000,000 970,000,000 130,000,000 1,018,000,000 1.4 Open position of Securities Borrowed and / or Lent by the scheme as of financial years ended 2011 and 2010 are NIL. 1.5 The NPAs as on March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2011 and March 31, 2010 are as under : Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equity Shares Appreciation 495,568,376 26.0953% 619,460,514 21.8061% Depreciation 13,803,840 0.7269% 20,612,129 0.7256% Equity Futures - Appreciation 3,222,582 0.1697% 4,487,301 0.1580% - Depreciation 424,303 0.0149% 1.7 The aggregate value of investments purchased and sold during the financial year 2010-2011 is Rs. 561,742,276 and Rs. 1,728,760,483 respectively being 24.29% and 74.75% of the average daily net assets. The aggregate value of investments purchased and sold during the financial year 2009-2010 is Rs. 2,446,418,500 and Rs. 3,886,879,848 respectively being 74.06% and 117.67% of the average daily net assets. 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets are as under : Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equities 1,643,930 0.06% Money Market Instruments 30

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended for the year ended March 31, 2011 is as under: During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges Rs. 210 and Clearing member charges on derivative transactions amounting to Rs. 493,792. During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges Rs. 25,830 and Clearing member charges on derivative transactions amounting to Rs. 561,071. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 2.23 12.70 3,711,315 29.66 Associate 2010-2011 0.01 0.05 37,188 0.30 Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2009-2010 7.37 22.78 8,081,423 37.27 Associate 2009-2010 0.03 0.09 55,346 0.26 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of Relation Period Covered Value of % of Total Transactions Transaction (Rs. in of the crores) Fund Brokerage paid (Rs.) % of Total Brokerage paid by the Fund Sponsor 2010-2011 55.04 7.05 353,065 5.48 31

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of Relation Period Covered Value of % of Total Transactions Transaction (Rs. in of the crores) Fund Brokerage paid (Rs.) % of Total Brokerage paid by the Fund Sponsor 2009-2010 67.32 5.30 367,945 2.78 The brokerage paid was at rates similar to those offered to other brokers / distributors. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010. 2010-2011 Description Opening Units Subscription Redemption Closing Units Face Value Growth Option 34,977,620.244 1,674,315.413 15,903,230.816 20,748,704.841 207,487,049 Dividend Option 107,980,739.996 5,187,135.400 44,340,250.196 68,827,625.200 688,276,253 2009-2010 Description Opening Units Subscription Redemption Closing Units Face Value Growth Option 53,478,209.207 5,215,347.572 23,715,936.535 34,977,620.244 349,776,202 Dividend Option 167,277,543.980 11,264,297.076 70,561,101.060 107,980,739.996 1,079,807,401 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Managenent Fees are Inclusive of Service Tax where applicable. 8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 32

HSBC Global Asset Management HSBC Midcap Equity Fund An open-ended Diversified Equity Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Midcap Equity Fund ( The Scheme ) as at March 31, 2011, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, i. The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Midcap Equity Fund as at March 31, 2011, its net deficit and its cash flows for the year ended on that date. ii. The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. iii. The methods used to value equity shares awaiting listing as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 34

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC MIDCAP EQUITY FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 9,780.82 10,725.81 2 Reserves & Surplus 2.1 Unit Premium Reserves (4,465.91) (4,337.15) 2.2 Unrealised Appreciation Reserve 686.20 2.3 Other Reserves 8,553.76 10,649.36 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 149.97 228.76 TOTAL 14,018.64 17,952.98 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 12,224.62 16,174.34 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 16.47 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 35.31 65.14 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 12,259.93 16,255.95 2 Deposits 320.00 432.13 3 Other Current Assets 3.1 Cash & Bank Balance 23.09 29.74 3.2 CBLO / Reverse Repo Lending 738.29 585.36 3.3 Others 677.33 644.31 4 Deferred Revenue Expenditure 5.49 (to the extent not written off) TOTAL 14,018.64 17,952.98 Notes to Accounts - Annexure I 35

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC MIDCAP EQUITY FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 192.81 184.67 1.2 Interest 49.50 49.16 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of 2,749.51 5,742.53 investments 1.6 Realised Gains / (Losses) on Derivative Transactions (166.92) 1,446.46 1.7 Other Income 0.04 0.09 (A) 2,824.94 7,422.91 2 EXPENSES 2.1 Management fees 196.81 177.23 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 36.89 25.36 2.4 Custodian fees 8.81 9.76 2.5 Trusteeship fees 0.18 0.13 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 132.85 87.62 2.8 Audit fees 1.77 1.00 2.9 Other operating expenses 39.23 66.50 2.10 Less:Expenses to be Reimbursed by the Investment Manager (4.75) (B) 411.79 367.60 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 2,413.15 7,055.31 4 Change in Unrealised Depreciation in value of investments (D) 3,271.19 (2,556.51) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = ( C - D)] (858.04) 9,611.82 6 Change in unrealised appreciation in the value of investments (F) (686.20) 686.20 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) (1,544.24) 10,298.02 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (686.20) 686.20 7.3 Add / (Less): Equalisation (75.57) 129.19 7.4 Transfer from Reserve Fund 1,161.99 860.36 7.5 Transfer from Unit Premium Reserve 8 TOTAL 228.38 10,601.37 9 Dividend Appropriation 9.1 Income Distributed during the year 1,161.99 657.40 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (933.61) 9,943.97 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 36

Key Statistics for the year ended March 31, 2011 HSBC MIDCAP EQUITY FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 21.8352 10.1084 Dividend Option 13.4004 6.6851 High Growth Option 28.3993 22.5346 Dividend Option 17.4288 14.0594 Low Growth Option 17.8851 10.2556 Dividend Option 9.5589 6.7825 End Growth Option 19.6665 21.8352 Dividend Option 10.5110 13.4004 2. Closing Assets Under Management (Rs. in Lakhs) End 13,869 17,724 Average (AAuM) 1 17,181 15,277 3. Gross income as % of AAuM 2 16.44% 48.59% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.36% 2.41% Dividend Option 2.36% 2.41% b. Management Fee as % of AAuM (planwise) Growth Option 1.15% 1.16% Dividend Option 1.15% 1.16% 5. Net Income as a percentage of AAuM 3 14.05% 46.18% 6. Portfolio turnover ratio 4 1.93 4.23 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend 2.00 1.00 Corporate Dividend 2.00 1.00 8. Returns(%): a. Last One Year Scheme Growth Option (9.9300) 116.0144 Dividend Option (9.9300) 116.0027 Benchmark BSE MID CAP 0.9876 130.2300 b. Since Inception Scheme Growth Option 12.2200 17.3992 Dividend Option 12.1600 17.3338 Benchmark BSE MID CAP 13.6306 16.4200 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Lossed) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year 37

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC MIDCAP EQUITY FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s Unitholders. 1.2 Open Positions of derivatives amount to Rs. 147,187,500 and is 10.61% to Net Assets as at 31 March, 2011. Open Positions of derivatives amount to Rs. 77,544,688 and is 4.38% to Net Assets as at 31 March, 2010. 1.3 Investments in Associates and Group Companies: (Rupees) Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount Aggregate Investments by all schemes 2011 2010 32,000,000 970,000,000 42,000,000 1,018,000,000 1.4 Open position of Securities Borrowed and / or Lent by the Scheme as of financial years ended 2011 and 2010 are NIL. 1.5 The NPAs as on March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2011 and March 31, 2010 are as under : Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equity Shares - Appreciation 65,529,846 4.7250% 152,588,178 8.6090% - Depreciation 391,068,845 28.1980% 86,632,744 4.8878% Equity Futures - Appreciation 101,128 0.0073% 3,298,026 0.1861% - Depreciation 1,681,504 0.1212% 633,589 0.0357% 1.7 The aggregate value of investments purchased and sold (including matured) during the year 2010-2011 is Rs. 1,784,678,836 and Rs. 2,067,737,077 respectively being 103.87% and 120.35% of the average daily net assets. The aggregate value of investments purchased and sold (including matured) during the year 2009-2010 is Rs. 3,222,984,582 and Rs. 3,250,544,036 respectively being 210.97% and 212.77% of the average daily net assets. 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under: Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Equities 3,530,713 0.2546% 8,160,759 0.4604% Total 3,530,713 0.2546% 8,160,759 0.4604% 38

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-11, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 586 and clearing member charges on derivative transactions amounting to Rs. 254,340. During the year 2009-10, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection/bank charges amounting to Rs. 30,945 and clearing member charges on derivative transactions amounting to Rs. 552,472. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. in Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 26.52 29.98 4,038,443 26.91 Associate 2010-2011 0.09 0.10 23,392 0.16 Nature of Association / Nature of Relation Period Covered Business Given [Rs. in Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2009-2010 17.45 35.98 3,962,653 32.02 Associate 2009-2010 0.02 0.04 20,184 0.16 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of Relation Period Covered Value of Transactions [Rs. in Crores] % of Total Value of Transactions of the Fund Brokerage paid [Rs.] % of Total brokerage paid by the Fund Sponsor 2010-2011 32.7 4.79 359,886 4.38 39

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Name of Sponsor / AMC and its associates / related parties / group companies HSBC InvestDirect Securities (India) Limited HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of Relation Period Covered Value of Transactions [Rs. in Crores] % of Total Value of Transactions of the Fund Brokerage paid [Rs.] (on accrual basis) % of Total brokerage paid by the Fund Associate 2009-2010 0.73 0.06 14,526 0.11 Sponsor 2009-2010 63.01 4.90 351,893 2.65 The brokerage paid was at rates similar to those offered to other brokers / distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the year ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the year ended March 31, 2011 and March 31, 2010: Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth 39,730,638.063 22,070,171.208 22,610,670.278 39,190,138.993 391,901,390 Dividend 67,527,457.193 22,732,722.431 31,642,119.882 58,618,059.742 586,180,597 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth 42,452,067.060 13,794,502.150 16,515,931.147 39,730,638.063 397,306,381 Dividend 75,926,965.375 17,092,673.068 25,492,181.250 67,527,457.193 675,274,572 5 Previous year s figures have been re grouped / re-arranged where appropriate. 6 No contingent liabilities for the year ended March 31, 2011 and March 31, 2010. 7 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8 Other Income of Rs. 4,434 represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme. 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 40

HSBC Global Asset Management HSBC Progressive Themes Fund An open-ended Flexi-theme Equity Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Progressive Themes Fund ( The Scheme ) as at March 31, 2011, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, i. The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Progressive Themes Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. ii. The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. iii. The methods used to equity shares awaiting listing as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 42

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC PROGRESSIVE THEMES FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 20,699.57 32,633.73 2 Reserves & Surplus 2.1 Unit Premium Reserves (27,126.28) (24,803.48) 2.2 Unrealised Appreciation Reserve 6,517.15 2.3 Other Reserves 28,872.19 24,812.55 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 396.90 719.06 TOTAL 22,842.38 39,879.01 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 18,999.65 35,899.96 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 18,999.65 35,899.96 2 Deposits 1,600.00 1,650.00 3 Other Current Assets 3.1 Cash & Bank Balance 28.94 38.16 3.2 CBLO / Reverse Repo Lending 1,250.28 680.08 3.3 Others 963.51 1,526.69 4 Deferred Revenue Expenditure 84.12 (to the extent not written off) TOTAL 22,842.38 39,879.01 Notes to Accounts - Annexure I 43

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC PROGRESSIVE THEMES FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 381.59 429.59 1.2 Interest 174.92 131.86 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / 8,221.47 8,963.10 redemption of investments 1.6 Realised Gains / (Losses) on Derivative Transactions (612.60) 49.71 1.7 Other Income 0.17 0.46 (A) 8,165.55 9,574.72 2 EXPENSES 2.1 Management fees 342.56 458.91 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 66.95 72.22 2.4 Custodian fees 21.61 16.45 2.5 Trusteeship fees 0.29 0.38 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 216.75 338.76 2.8 Audit fees 2.87 6.60 2.9 Amortisation of Deferred Revenue Expenditure 84.12 132.78 2.10 Other operating expenses 139.68 209.10 (B) 790.71 1,102.42 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 7,374.84 8,472.30 4 Change in Unrealised Depreciation in value of investments (D) 2,379.33 (4,115.64) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 4,995.51 12,587.94 6 Change in unrealised appreciation in the value of investments (F) (6,517.15) 6,511.09 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) (1,521.64) 19,099.03 7.1 Add: Balance transfer from Unrealised 6,517.15 Appreciation Reserve 7.2 Less: Balance transfer to Unrealised 6,511.09 Appreciation Reserve 7.3 Add / (Less): Equalisation (935.86) 1,259.33 7.4 Transfer from Reserve Fund 7.5 Transfer from Unit Premium Reserve 8 TOTAL 4,059.65 13,847.27 9 Dividend Appropriation 9.1 Income Distributed during the year 0.01 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 4,059.64 13,847.27 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 44

Key Statistics for the year ended March 31, 2011 HSBC PROGRESSIVE THEMES FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 12.9811 8.3228 Dividend Option 11.0414 7.0792 High Growth Option 15.9238 13.5597 Dividend Option 13.5447 11.5335 Low Growth Option 10.7336 8.3959 Dividend Option 9.1300 7.1414 End Growth Option 11.6848 12.9811 Dividend Option 9.9391 11.0414 2. Closing Assets Under Management (Rs. in Lakhs) End 22,445 39,160 Average (AAuM) 1 31,790 44,048 3. Gross income as % of AAuM 2 25.69% 21.74% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.22% 2.20% Dividend Option 2.22% 2.20% b. Management Fee as % of AAuM (planwise) Growth Option 1.08% 1.04% Dividend Option 1.08% 1.04% 5. Net Income as a percentage of AAuM 3 23.20% 19.24% 6. Portfolio turnover ratio 4 2.49 1.41 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option Corporate Dividend Option 8. Returns (%): a. Last One Year Scheme Growth Option (10.0500) 55.8478 Dividend Option (10.0500) 55.8467 Benchmark BSE 200 8.1469 92.8700 b. Since Inception Scheme Growth Option 3.0700 6.5478 Dividend Option 3.0500 6.5243 Benchmark BSE 200 12.9251 14.1200 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 45

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC PROGRESSIVE THEMES FUND 1 Investments: 1.1 It is confirmed that investments of the schemes are registered in the name of the Trustees for the benefit of the scheme s unitholders. 1.2 Open Positions of derivatives amount to Rs. 314,697,425 and 14.02% to Net Assets as of year ended 31 March 2011. Open Positions of derivatives amount to Rs. 292,171,950 and 7.46% to Net Assets as of year ended 31 March, 2010. 1.3 Investments in Associates and Group Companies: (Rupees) Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount Aggregate Investments by all schemes 2011 2010 160,000,000 970,000,000 160,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial year 2010-2011 and percentage to net assets are as under : Company Name Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equity Shares Appreciation 152,103,732 6.7766% 698,236,771 17.8304% Depreciation 388,521,356 17.3096% 50,277,699 1.2839% Equity Futures Appreciation 1,573,985 0.0701% 7,092,309 0.1811% Depreciation 3,089,773 0.1377% 3,336,168 0.0852% 1.7 The aggregate value of investments securities purchased and sold (including matured) during the financial year 2010-2011 is 2,800,932,603 and 4,428,734,789 respectively being 88.11% and 139.31% of the average daily net assets. The aggregate value of investments securities purchased and sold (including matured) during the financial year 2009-2010 is 4,484,625,154 and 5,700,864,079 respectively being 101.81% and 129.42% of the average daily net assets. 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as follows: Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Equities 3,391,414 0.15% 46

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 As Amended: During the year 2010-11, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 210 and clearing member charges on derivative transactions amounting to Rs. 853,247. During the year 2009-10, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs.15,434 and clearing member charges on derivative transactions amounting to Rs. 328,519. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 1.91 10.74 2,440,311 14.01 Associate 2010-2011 0.06 0.32 52,103 0.30 Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2009-2010 7.27 17.92 5,828,905 19.66 Associate 2009-2010 69,317 0.23 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor Nature of Period Value of % of total Brokerage % of total / AMC and its Association Covered Transactions value of paid [Rs.] brokerage associate / related / Nature of [Rs. In transaction paid by the parties / group relation Crores] of the Fund companies Fund HSBC Securities and Capital Market (India) Private Limited Sponsor 2010-2011 85.85 4.98 510,467 2.95 Name of Sponsor / AMC and its associate / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total value of transaction of the Fund Brokerage paid [Rs.] % of total brokerage paid by the Fund Sponsor 2009-2010 50.35 3.62 642,935 3.07 The brokerage paid was at rates similar to those offered to other brokers / distributors. 47

HSBC Global Asset Management HSBC Tax Saver Equity Fund An open-ended Equity Linked Savings Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Tax Saver Equity Fund ( The Scheme ), the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Tax Saver Equity Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. (iii) The methods used to value: a) equity shares awaiting listing b) non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 49

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC TAX SAVER EQUITY FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 17,535.86 22,546.23 2 Reserves & Surplus 2.1 Unit Premium Reserves (1,720.38) (127.95) 2.2 Unrealised Appreciation Reserve 4,130.54 5,394.07 2.3 Other Reserves 4,883.69 2,341.64 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 225.60 461.36 TOTAL 25,055.31 30,615.35 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 24,421.67 29,138.00 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 22.11 28.67 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 8.83-1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 24,452.61 29,166.67 2 Deposits 3 Other Current Assets 3.1 Cash & Bank Balance 28.56 111.68 3.2 CBLO / Reverse Repo Lending 385.50 1,044.20 3.3 Others 188.64 292.80 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 25,055.31 30,615.35 Notes to Accounts - Annexure I 50

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC TAX SAVER EQUITY FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 319.76 301.49 1.2 Interest 28.45 32.19 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of 3,453.80 9,283.80 investments 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income (A) 3,802.01 9,617.48 2 EXPENSES 2.1 Management fees 300.02 295.01 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 59.32 47.50 2.4 Custodian fees 10.99 9.29 2.5 Trusteeship fees 0.26 0.28 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 227.92 282.93 2.8 Audit fees 3.17 1.75 2.9 Other operating expenses 50.47 52.54 2.10 Expenses to be Reimbursed by the Investment Manager (8.35) (19.24) (B) 643.80 670.06 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 3,158.21 8,947.42 4 Change in Unrealised Depreciation in value of investments (D) (1,533.86) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 3,158.21 10,481.28 6 Change in unrealised appreciation in the value of investments (F) (1,263.53) 5,394.07 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,894.68 15,875.35 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (1,263.53) 5,394.07 7.3 Add / (Less): Equalisation (616.17) (294.10) 7.4 Transfer from Reserve Fund 7.5 Transfer from Unit Premium Reserve 8 TOTAL 2,542.04 10,187.18 9 Dividend Appropriation 9.1 Income Distributed during the year 902.79 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 2,542.04 9,284.39 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 51

Key Statistics for the year ended March 31, 2011 HSBC TAX SAVER EQUITY FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 13.7906 7.3693 Dividend Option 12.7190 7.3693 High Growth Option 16.9081 13.9333 Dividend Option 15.5943 13.9333 Low Growth Option 12.9150 7.4082 Dividend Option 11.9116 7.4082 End Growth Option 14.5910 13.7906 Dividend Option 13.4572 12.7190 2. Closing Assets Under Management (Rs. in Lakhs) End 24,830 30,154 Average (AAuM) 1 27,502 28,703 3. Gross income as % of AAuM 2 13.82% 33.51% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.34% 2.33% Dividend Option 2.34% 2.33% b. Management Fee as % of AAuM (planwise) Growth Option 1.09% 1.03% Dividend Option 1.09% 1.03% 5. Net Income as a percentage of AAuM 3 11.48% 31.17% 6. Portfolio turnover ratio 4 1.07 1.89 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option 1.00 Corporate Dividend Option 1.00 8. Returns (%): a. Last One Year Scheme Growth Option 5.8000 87.1384 Dividend Option 5.8000 87.1357 Benchmark BSE 200 8.1469 92.8700 b. Since Inception Scheme Growth Option 9.3300 10.4434 Dividend Option 9.3300 10.4429 Benchmark BSE 200 8.8109 9.0200 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 52

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC TAX SAVER EQUITY FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives as of March 31, 2011 is Nil. Open Positions of derivatives as of March 31, 2010 is Nil. 1.3 Investments in Associates and Group Companies are as under : Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount (Rupees) Aggregate Investments by all schemes 2011 2010 970,000,000 1,018,000,000 1.4 Open position of Securities Borrowed and / or Lent by the Scheme as of the year ended 31 March, 2011 is NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial year and their percentages to net assets are as under: Company Name Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equity Shares Appreciation 469,428,451 18.9054% 563,326,418 18.6817% Depreciation 57,257,195 2.3059% 23,919,419 0.7932% Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 882,576 0.0355% Depreciation 1.7 The aggregate value of investments purchased and sold (including matured) during the financial year 2010-2011 is Rs.2,937,507,052 and Rs. 3,624,594,914 respectively being 106.81% and 131.79% of the average daily net assets. The aggregate value of investments purchased and sold (including matured) during the financial year 2009-2010 is Rs. 5,435,615,688 and Rs. 5,578,682,825 respectively being 189.38% and 194.36% of the average daily net assets. 1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under : Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Equities 2,210,941 0.089% 2,866,880 0.10% Debt Instruments Money market Instrument Total 2,210,941 0.089% 2,866,880 0.10% 53

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 1,831. During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 298,444. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Commission Business paid [Rs.] received by the Fund % of Total commission paid by the Fund Associate 2010-2011 0.32 1.60 599,532 3.29 Associate 2010-2011 0.03 0.16 56,558 0.31 Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Commission Business paid [Rs.] received by the Fund % of Total commission paid by the Fund Associate 2009-2010 0.65 2.39 849,881 3.33 Associate 2009-2010 0.11 0.41 65,360 0.26 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association /Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total Brokerage value of paid [Rs.] transaction of the Fund % of total brokerage paid by the Fund Sponsor 2010-2011 20.40 3.23 408,432 3.26 54

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Name of Sponsor/ AMC and its associates/related parties/group companies HSBC InvestDirect Securities (India) Limited HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total Brokerage value of paid [Rs.] transaction of the Fund % of total brokerage paid by the Fund Associate 2009-2010 1.82 0.17 36,558 0.17 Sponsor 2009-2010 27.60 2.55 552,086 2.60 The brokerage paid was at rates similar to those offered to other brokers / distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010: Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 137,876,158.949 8,745,396.032 38,023,617.881 108,597,937.100 1,085,979,369 Dividend Option 87,586,118.639 3,447,298.637 24,272,755.368 66,760,661.908 667,606,618 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option 150,646,655.461 12,786,096.898 25,556,593.410 137,876,158.949 1,378,761,588 Dividend Option 94,404,698.350 9,216,234.324 16,034,814.035 87,586,118.639 875,861,185 5 Previous year s figures have 0been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Managenent Fees are Inclusive of Service Tax where applicable. 8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 55

HSBC Global Asset Management HSBC Dynamic Fund An open-ended Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Dynamic Fund ( The Scheme ) as at March 31, 2011, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, i. The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Dynamic Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. ii. The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. iii. The methods used to value non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 57

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC DYNAMIC FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 10,956.31 24,899.69 2 Reserves & Surplus 2.1 Unit Premium Reserves (7,067.46) (2,687.00) 2.2 Unrealised Appreciation Reserve 3,293.16 5,548.39 2.3 Other Reserves 4,297.15 (3,888.14) 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 299.87 517.96 TOTAL 11,779.03 24,390.90 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 9,570.60 21,260.01 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 3.18 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 9,573.78 21,260.01 2 Deposits 960.00 1,460.00 3 Other Current Assets 3.1 Cash & Bank Balance 6.10 20.13 3.2 CBLO / Reverse Repo Lending 254.54 435.37 3.3 Others 984.61 1,215.39 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 11,779.03 24,390.90 Notes to Accounts - Annexure I 58

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC DYNAMIC FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 224.85 283.90 1.2 Interest 83.05 121.18 1.3 Realised Gain / (Loss) on Foreign Exchange (3.74) Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / 4,249.29 5,255.18 redemption of investments 1.6 Realised Gains / (Losses) on Derivative Transactions 43.02 (363.83) 1.7 Other Income 0.03 0.01 (A) 4,600.24 5,292.70 2 EXPENSES 2.1 Management fees 190.88 294.13 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 34.55 44.10 2.4 Custodian fees 9.94 13.49 2.5 Trusteeship fees 0.15 0.24 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 130.67 227.71 2.8 Audit fees 1.47 2.50 2.9 Other operating expenses 30.57 48.37 (B) 398.23 630.54 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 4,202.01 4,662.16 4 Change in Unrealised Depreciation in value of investments (D) (968.84) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 4,202.01 5,631.00 6 Change in unrealised appreciation in the value of investments (F) (2,255.23) 5,548.39 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,946.78 11,179.39 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 2,255.23 7.2 Less: Balance transfer to Unrealised 5,548.39 Appreciation Reserve 7.3 Add / (Less): Equalisation 3,983.28 3,741.94 7.4 Transfer from Reserve Fund 7.5 Transfer from Unit Premium Reserve 8 TOTAL 8,185.29 9,372.94 9 Dividend Appropriation 9.1 Income Distributed during the year 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 8,185.29 9,372.94 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 59

Key Statistics for the year ended March 31, 2011 HSBC DYNAMIC FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 9.5876 6.3088 Dividend Option 9.5876 6.3088 High Growth Option 11.5949 9.7482 Dividend Option 11.5949 9.7482 Low Growth Option 8.9708 6.3191 Dividend Option 8.9708 6.3191 End Growth Option 10.4772 9.5876 Dividend Option 10.4772 9.5876 2. Closing Assets Under Management (Rs. in Lakhs) End 11,479 23,873 Average (AAuM) 1 16,588 26,914 3. Gross income as % of AAuM 2 27.73% 19.67% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.40% 2.34% Dividend Option 2.40% 2.34% b. Management Fee as % of AAuM (planwise) Growth Option 1.15% 1.09% Dividend Option 1.15% 1.09% 5. Net Income as a percentage of AAuM 3 25.33% 17.32% 6. Portfolio turnover ratio 4 1.20 1.57 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option Corporate Dividend Option 8. Returns (%): a. Last One Year Scheme Growth Option 9.2700 51.9718 Dividend Option 9.2700 51.9718 Benchmark BSE 200 8.1469 92.8658 b. Since Inception Scheme Growth Option 1.3300 (1.6588) Dividend Option 1.3300 (1.6588) Benchmark BSE 200 4.0188 2.4233 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 60

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC DYNAMIC FUND 1 Investments: 1.1 It is confirmed that investments of the schemes are registered in the name of the Trustees for the benefit of the scheme s unitholders. 1.2 Open Positions of derivatives amount to Rs. 116,264,800 and is 10.13% to Net Assets for the year ended March 31, 2011. Open Positions of derivatives amount to Rs. 144,098,597 and is 6.04% to Net Assets for the year end March 31, 2010. 1.3 Investments in Associates and Group Companies : (Rupees) Issuer Instrument Type Amount Aggregate Investments by all schemes Amount Aggregate Investments by all schemes 2011 2010 The Hongkong & Shanghai Banking Corporation Limited Fixed deposits 96,000,000 970,000,000 146,000,000 1,018,000,000 1.4 Open position of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial year and percentage to net assets. Security Category Equity Shares Amount (Rs.) Percentage to Net Assets Amount (Rs.) 2011 2010 Percentage to Net Assets Appreciation 330,488,482 28.7903% 582,644,211 24.4061% Depreciation 7,037,733 0.6131% 30,122,536 1.2618% Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 317,727 0.0277% Depreciation Equity Futures Appreciation 5,547,624 0.4833% 2,622,855 0.1099% Depreciation 305,068 0.0128% 1.7 The aggregate value of investments securities purchased and sold during the financial year 2010-2011 is Rs. 244,139,085 and Rs. 1,608,937,198 respectively being 14.72% and 97.00% of the average daily net assets. The aggregate value of investments securities purchased and sold during the financial year 2009-2010 is Rs. 2,745,924,605 and Rs. 3,607,759,880 respectively being 102.03% and 134.05% of the average daily net assets. 61

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under : Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) 2011 2010 Percentage to Net Assets Debt Instruments 317,727 0.0277% Total 317,727 0.0277% 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 As Amended During the year 2010-11, Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 110 and clearing member charges on derivative transactions amounting to Rs. 421,989. During the year 2009-10, Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 168,872 and clearing member charges on derivative transactions amounting to Rs. 530,800. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Commission Business paid [Rs.] received by the Fund % of Total commission paid by the Fund Associate 2010-2011 2.67 32.78 1,830,420 16.18 Associate 2010-2011 0.05 0.63 21,300 0.19 Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] (on accrual basis) % of Total commission paid by the Fund Associate 2009-2010 3.77 22.30 4,906,397 23.50 Associate 2009-2010 0.02 0.12 29,382 0.14 62

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associate / related parties / group companies Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total Brokerage value of paid [Rs.] transaction of the Fund % of total brokerage paid by the Fund HSBC Securities and Capital Market (India) Private Limited Sponsor 2010-2011 43.21 6.70 209,314 3.97 Name of Sponsor/ AMC and its associate/related parties/group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association /Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total value of transaction of the Fund Brokerage paid [Rs.] (on accrual basis) % of total brokerage paid by the Fund Sponsor 2009-2010 42.48 3.52 341,708 2.51 The brokerage paid was at rates similar to those offered to other brokers / distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010. Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 139,004,646.491 3,058,833.813 71,707,847.937 70,355,632.367 703,556,324 Dividend Option 109,992,230.656 3,425,608.781 74,210,402.448 39,207,436.989 392,074,369 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option 190,248,100.865 7,916,961.708 59,160,416.082 139,004,646.491 1,390,046,465 Dividend Option 180,871,982.404 11,722,378.320 82,602,130.068 109,992,230.656 1,099,922,305 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6. No contingent liabilities for the years ended March 31, 2011 and March 31, 2010 7. Expenses other than Managenent Fees are Inclusive of Service Tax where applicable. 8. The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 63

HSBC Global Asset Management HSBC Emerging Markets Fund An open-ended Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Emerging Markets Fund ( The Scheme ) as at March 31, 2011 and the related Revenue Account for the year ended March 31, 2011, which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet and the Revenue Account referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet and the Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Emerging Markets Fund as at March 31, 2011 and its net surplus for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 65

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC EMERGING MARKETS FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 5,648.85 9,354.14 2 Reserves & Surplus 2.1 Unit Premium Reserves (117.31) 135.71 2.2 Unrealised Appreciation Reserve 484.75 2.3 Other Reserves (47.53) (780.52) 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 126.48 208.59 TOTAL 6,095.24 8,917.92 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities 5,907.55 8,595.69 Total Investments 5,907.55 8,595.69 2 Deposits 3 Other Current Assets 3.1 Cash & Bank Balance 9.35 6.46 3.2 CBLO / Reverse Repo Lending 163.16 310.55 3.3 Others 15.18 5.22 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 6,095.24 8,917.92 Notes to Accounts - Annexure I 66

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC EMERGING MARKETS FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 58.11 1.2 Interest 11.09 10.90 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.54 (37.26) 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments (88.26) (513.85) 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 0.00~ 0.08 (A) (75.63) (482.02) 2 EXPENSES 2.1 Management fees 21.87 5.13 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 12.01 12.38 2.4 Custodian fees 3.17 3.94 2.5 Trusteeship fees 0.06 0.09 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 44.50 53.52 2.8 Audit fees 0.76 0.50 2.9 Other operating expenses 7.12 6.45 2.10 Expenses to be Reimbursed by the Investment Manager (14.67) (5.03) (B) 74.82 76.98 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) (150.45) (559.00) 4 Change in Unrealised Depreciation in value of investments *** (D) (455.18) (4,555.39) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 304.73 3,996.39 6 Change in unrealised appreciation in the value of investments (F) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 304.73 3,996.39 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve 7.3 Add / (Less): Equalisation 428.26 546.05 7.4 Transfer from Reserve Fund 7.5 Transfer from Unit Premium Reserve 8 TOTAL 732.99 4,542.43 9 Dividend Appropriation 9.1 Income Distributed during the year 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 732.99 4,542.43 Notes to Accounts - Annexure I ~ Indicates less than 0.01 * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. *** Includes Unrealised Depreciation in the value of Foreign Currency Transactions. 67

Key Statistics for the year ended March 31, 2011 HSBC EMERGING MARKETS FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 9.3106 6.2554 Dividend Option 9.3107 6.2554 High Growth Option 10.8410 9.8071 Dividend Option 10.8410 9.8071 Low Growth Option 8.1775 6.5362 Dividend Option 8.1775 6.5362 End Growth Option 10.5663 9.3106 Dividend Option 10.5663 9.3107 2. Closing Assets Under Management (Rs. in Lakhs) End 5,969 8,709 Average (AAuM) 1 6,813 10,264 3. Gross income as % of AAuM 2-1.11% -4.70% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 1.10% 0.75% Dividend Option 1.10% 0.75% b. Management Fee as % of AAuM (planwise) Growth Option 0.32% 0.05% Dividend Option 0.32% 0.05% 5. Net Income as a percentage of AAuM 3-2.21% -5.45% 6. Portfolio turnover ratio 4 0.05 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option Corporate Dividend Option 8. Returns (%): a. Last One Year Scheme Growth Option 13.4800 48.8450 Dividend Option 13.4800 48.8450 Benchmark MSCI Emerging Markets Index 10.8141 54.6700 68

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC EMERGING MARKETS FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 b. Since Inception Scheme Growth Option 1.8300 (3.4432) Dividend Option 1.8300 (3.4432) Benchnmark MSCI Emerging Markets Index 3.5506 0.1600 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 69

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC EMERGING MARKETS FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives as a % to Net Assets as of 2010-2011 and 2009-2010 are NIL. 1.3 Investments in Associates and Group Companies (Rupees) Issuer Instrument Type Amount Aggregate Investments by all schemes Amount Aggregate Investments by all schemes 2011 2010 The Hongkong & Shanghai Banking Corporation Limited Fixed deposits 970,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the scheme as of financial year ended 2011 and 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2011 & March 31, 2010 and their percentages to net assets are as under: Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Units in Mutual Fund - Appreciation 48,474,532 0.08% - Depreciation 45,518,394 5.2264% 1.7 The aggregate value of investments securities purchased and sold (including matured) during the financial year 2010-2011 is Rs. NIL and Rs. 353,991,928 respectively being 0.00% and 51.90% of the average daily net assets. The aggregate value of investments securities purchased and sold (including matured) during the financial year 2009-2010 is Rs. 48,569,303 and Rs. 402,515,128 respectively being 4.73% and 39.21% of the average daily net assets. 1.8 Non-Traded securities in the portfolio as on March 31, 2011 and March 31, 2010 are Nil. 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as Amended for the year ended March 31, 2011 is as under : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 1.11 12.88 2,179,150 53.03 Associate 2010-2011 0.00~ 0.01 1,859 0.05 70

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Name of Sponsor / AMC and its associates / related parties / group companies Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund The Hongkong and Associate 2009-2010 9.08 62.94 4,910,499 62.12 Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Associate 2009-2010 0.10 0.72 19,007 0.24 ~ Indicates less than 0.01 During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. Nil During the year 2009-10, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 300. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31,2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010. Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 62,416,351.976 1,525,684.486 26,052,892.929 37,889,143.533 378,891,436 Dividend Option 31,125,080.331 6,405,159.777 18,930,886.353 18,599,353.755 185,993,537 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option 84,302,484.733 13,367,388.355 35,253,521.112 62,416,351.976 624,163,520 Dividend Option 50,922,901.492 3,579,638.005 23,377,459.166 31,125,080.331 311,250,802 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8 Other income represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme. 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 71

HSBC Global Asset Management HSBC Unique Opportunities Fund An open-ended Equity Scheme Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Unique Opportunities Fund ( The Scheme ) as at March 31, 2011, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, i. The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Unique Opportunities Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. ii. The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. iii. The methods used to value equity shares awaiting listing as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 73

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC UNIQUE OPPORTUNITIES FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 8,603.93 21,084.45 2 Reserves & Surplus 2.1 Unit Premium Reserves (4,544.95) (1,509.48) 2.2 Unrealised Appreciation Reserve 1,441.83 4,421.23 2.3 Other Reserves 4,149.75 (2,485.72) 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 111.27 783.99 TOTAL 9,761.83 22,294.47 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 8,259.21 20,077.60 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 9.28 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities: 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 8,268.49 20,077.60 2 Deposits 900.00 900.00 3 Other Current Assets 3.1 Cash & Bank Balance 8.91 24.12 3.2 CBLO / Reverse Repo Lending 252.93 456.20 3.3 Others 331.50 836.55 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 9,761.83 22,294.47 Notes to Accounts - Annexure I 74

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC UNIQUE OPPORTUNITIES FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 199.18 291.56 1.2 Interest 67.40 76.98 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of 5,031.47 8,968.35 investments 1.6 Realised Gains / (Losses) on Derivative Transactions (168.84) 1.7 Other Income (A) 5,129.21 9,336.89 2 EXPENSES 2.1 Management fees 165.22 299.35 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 29.20 45.29 2.4 Custodian fees 8.45 15.80 2.5 Trusteeship fees 0.13 0.24 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 115.76 215.27 2.8 Audit fees 1.23 6.00 2.9 Other operating expenses 24.99 462.55 2.10 Expenses to be Reimbursed by the Investment Manager (4.48) (B) 340.48 1,044.50 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 4,788.73 8,292.39 4 Change in Unrealised Depreciation in value of investments (D) (14.70) (3,084.05) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 4,803.43 11,376.44 6 Change in unrealised appreciation in the value of investments (F) (2,979.40) 4,417.13 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,824.03 15,793.57 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (2,979.40) 4,417.13 7.3 Add / (Less): Equalisation 1,832.04 581.91 7.4 Transfer from Reserve Fund 7.5 Transfer from Unit Premium Reserve 8 TOTAL 6,635.47 11,958.35 9 Dividend Appropriation 9.1 Income Distributed during the year 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 6,635.47 11,958.35 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 75

Key Statistics for the year ended March 31, 2011 HSBC UNIQUE OPPORTUNITIES FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 10.2021 5.6683 Dividend Option 10.2021 5.6683 High Growth Option 13.1459 10.4458 Dividend Option 13.1459 10.4458 Low Growth Option 9.4990 5.7112 Dividend Option 9.4990 5.7112 End Growth Option 11.2165 10.2021 Dividend Option 11.2165 10.2021 2. Closing Assets Under Management (Rs. in Lakhs) End 9,650 21,510 Average (AAuM) 1 14,022 27,706 3. Gross income as % of AAuM 2 36.58% 33.70% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.43% 3.77% Dividend Option 2.43% 3.77% b. Management Fee as % of AAuM (planwise) Growth Option 1.18% 1.08% Dividend Option 1.18% 1.08% 5. Net Income as a percentage of AAuM 3 34.15% 29.93% 6. Portfolio turnover ratio 4 2.25 2.79 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option Corporate Dividend Option 8. Returns (%): a. Last One Year Scheme Growth Option 9.9800 79.9181 Dividend Option 9.9800 79.9181 Benchmark BSE 200 8.1469 92.8700 b. Since Inception Scheme Growth Option 2.8900 0.6501 Dividend Option 2.8900 0.6501 Benchmark BSE 200 11.4017 12.5000 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 76

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC UNIQUE OPPORTUNITIES FUND 1 Investments: 1.1 It is confirmed that Investments of the Schemes are registered in the name of the Trustees for the benefits of the Scheme s Unitholders. 1.2 Open Positions of derivatives amount to Rs. 129,703,300 and is 13.44% to Net Assets as at March 31, 2011. Open Positions of derivatives amount to Rs. 175,617,653 and is 8.16% to Net Assets as at March 31, 2010. 1.3 Investments in Associates and Group Companies : (Rupees) Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount Aggregate Investments by all schemes 2011 2010 90,000,000 970,000,000 90,000,000 1,018,000,000 1.4 Open position of Securities Borrowed and / or Lent by the scheme as of the year ended 31 March, 2011 is NIL. 1.5 NPAs as at year ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial year and their percentages to net assets are as under: Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equity Shares Appreciation 174,104,630 18.0419% 476,973,223 22.1740% Depreciation 31,422,641 3.2560% 34,850,114 1.6201% Equity Futures Appreciation 2,432,851 0.2521% 636,898 0.0296% Depreciation 932,009 0.0966% 2,106,828 0.0979% 1.7 The aggregate value of investments securities purchased and sold (including matured) during the financial year 2010-2011 is Rs.1,098,866,929 and Rs. 2,449,716,820 respectively being 78.19% and 174.31% of the average daily net assets. The aggregate value of investments securities purchased and sold (including matured) during the financial year 2009-2010 (excluding accretion of discount of Rs. 4,156,301) is Rs. 3,386,000,287 and Rs. 4,667,516,230 respectively being 122.21% and 168.47% of the average daily net assets. 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets are as under: Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Equities 928,135 0.10% Total 928,135 0.10% 77

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 As Amended: During the year 2010-11, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 2,618 and clearing member charges on derivative transactions amounting to Rs. 354,783. During the year 2009-10, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 122,423 and clearing member charges on derivative transactions amounting to Rs. 759,468. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor Nature of / AMC and its Association/ associates/related Nature of parties / group Relation companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Period Covered Business Given [Rs. In Crores] % of Total Commission Business paid [Rs.] received by the Fund % of Total commission paid by the Fund Associate 2010-2011 1.41 21.59 1,453,607 15.19 Associate 2010-2011 9,721 0.10 Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] (on accrual basis) % of Total commission paid by the Fund Associate 2009-2010 2.12 18.54 4,502,804 21.67 Associate 2009-2010 0.01 0.09 13,668 0.07 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited Nature of Association /Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total Brokerage value of paid [Rs.] transaction of the Fund % of total brokerage paid by the Fund Sponsor 2010-2011 38.65 5.02 363,455 4.35 Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. In Crores] % of total value of transaction of the Fund Brokerage paid [Rs.] (on accrual basis) % of total brokerage paid by the Fund Sponsor 2009-2010 68.98 4.1 472,954 2.55 78

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 The brokerage paid was at rates similar to those offered to other brokers / distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the year ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the year ended March 31, 2011 and March 31, 2010. Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 99,531,254.387 1,460,998.153 55,301,958.928 45,690,293.612 456,902,935 Dividend Option 111,313,252.213 2,149,156.298 73,113,373.333 40,349,035.178 403,490,351 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option Dividend Option 146,326,985.344 2,469,971.529 49,265,702.486 99,531,254.387 995,312,543 240,917,869.036 9,473,289.843 139,077,906.666 111,313,252.213 1,113,132,522 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Managenent Fees are Inclusive of Service Tax where applicable. 8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 79

HSBC Global Asset Management HSBC Small Cap Fund An open-ended Equity Scheme* Abridged Annual Report 2010-2011 * With An effect open-ended from March fund. 25, 2011 Monthly the Scheme income got converted is not assured from a close-ended and is subject Scheme to the an availability open-ended Scheme. of distributable surplus. Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Small Cap Fund ( The Scheme ) as at March 31, 2011, and the related Revenue Account for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet and the Revenue Account referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, i. The Balance Sheet and the Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Small Cap Fund as at March 31, 2011 and its net surplus for the year ended on that date. ii. The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. iii. The methods used to value equity shares awaiting listing as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 81

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC SMALL CAP FUND As at As at March 31, 2011 March 31, 2010 LIABILITIES 1 Unit Capital 3,271.41 5,621.17 2 Reserves & Surplus 2.1 Unit Premium Reserves (59.97) 479.07 2.2 Unrealised Appreciation Reserve 901.38 2.3 Other Reserves 248.49 (910.97) 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 104.07 365.52 TOTAL 3,564.00 6,456.17 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 3,451.52 6,048.19 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 3.13 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 7.87 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 3,459.39 6,051.32 2 Deposits 3 Other Current Assets 3.1 Cash & Bank Balance 2.88 0.96 3.2 CBLO / Reverse Repo Lending 101.48 174.11 3.3 Others 0.25 111.36 4 Deferred Revenue Expenditure 118.42 (to the extent not written off) TOTAL 3,564.00 6,456.17 Notes to Accounts - Annexure I 82

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC SMALL CAP FUND Current Year Previous Year ended ended March 31, 2011 March 31, 2010 1 INCOME 1.1 Dividend 95.39 98.38 1.2 Interest 6.54 10.42 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments 2,158.57 2,032.09 1.6 Realised Gains / (Losses) on Derivative Transactions 88.97 1.7 Other Income (1.52) 7.00 (A) 2,258.98 2,236.86 2 EXPENSES 2.1 Management fees 69.99 70.05 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 11.75 9.77 2.4 Custodian fees 2.23 2.23 2.5 Trusteeship fees 0.07 0.05 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 44.01 45.73 2.8 Audit fees 0.44 1.00 2.9 Other operating expenses 101.63 151.29 (B) 230.12 280.12 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 2,028.86 1,956.74 4 Change in Unrealised Depreciation in value of investments (D) 710.22 (1,316.27) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 1,318.64 3,273.01 6 Change in unrealised appreciation in the value of investments (F) (901.38) 901.38 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 417.26 4,174.39 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (901.38) 901.38 7.3 Add / (Less): Equalisation (39.87) 7.4 Transfer from Reserve Fund 7.5 Transfer from Unit Premium Reserve 8 TOTAL 1,278.77 3,273.01 9 Dividend Appropriation 9.1 Income Distributed during the year 119.31 9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 1,159.46 3,273.01 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 83

Key Statistics for the year ended March 31, 2011 HSBC SMALL CAP FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 10.8352 4.8483 Dividend Option 10.8352 4.8483 High Growth Option 15.9470 11.1002 Dividend Option 15.9470 11.1002 Low Growth Option 10.2300 4.9282 Dividend Option 9.5149 4.9282 End Growth Option 10.8375 10.8352 Dividend Option 10.0800 10.8352 2. Closing Assets Under Management (Rs. in Lakhs) End 3,460 6,091 Average (AAuM) 1 5,647 5,821 3. Gross income as % of AAuM 2 40.00% 38.42% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.48% 2.42% Dividend Option 2.48% 2.42% b. Management Fee as % of AAuM (planwise) Growth Option 1.24% 1.21% Dividend Option 1.24% 1.21% 5. Net Income as a percentage of AAuM 3 35.93% 33.61% 6. Portfolio turnover ratio 4 0.79 2.06 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option 1.00 Corporate Dividend Option 1.00 8. Returns (%): a. Last One Year Scheme Growth Option 0.0400 123.8286 Dividend Option 0.0400 123.8286 Benchmark BSE Small Cap (3.7840) 161.7300 b. Since Inception Scheme Growth Option 2.7000 4.0479 Dividend Option 2.7000 4.0479 Benchmark BSE Small Cap 5.5273 10.4700 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 84

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC SMALL CAP FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives as of March 31, 2011 and March 31, 2010 is Nil. 1.3 Investments in Associates and Group Companies: (Rupees) Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount 2011 2010 Aggregate Investments by all schemes 970,000,000 1,018,000,000 1.4. Open position of Securities Borrowed and / or Lent by the scheme as of the year ended March 31, 2011 and March 31, 2010 are Nil. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2011 and March 31, 2010 are as under : Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Equity Shares - Appreciation 24,489,795 7.0781% 116,064,144 19.0561% - Depreciation 95,511,987 27.6052% 25,926,611 4.2568% 1.7 The aggregate value of investments purchased and sold during the financial year 2010-2011 is Rs. 448,031,735 and Rs. 761,923,988 respectively being 79.34% and 134.92% of the average daily net assets. The aggregate value of investments purchased and sold during the financial year 2009-2010 is Rs. 816,768,026 and Rs. 917,819,629 respectively being 140.31% and 157.66% of the average daily net assets. 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under : Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) 2011 2010 Percentage to Net Assets Equities 787,200 0.23% 312,790 0.05% Total 787,200 0.23% 312,790 0.05% 85

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-2011, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. Nil and clearing member charges on derivative transactions amounting to Rs. Nil. During the year 2009-2010, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 42,037 and clearing member charges on derivative transactions amounting to Rs. 63,638. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. in Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 0.05 3.55 252,414 7.56 Associate 2010-2011 0.00~ 0.00~ 1,195 0.04 Nature of Association / Nature of Relation Period Covered Business Given [Rs. in Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2009-2010 0.13 0.74 288,400 7.41 Associate 2009-2010 0.00~ 0.00~ 1,462 0.04 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associate / related parties / group companies Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. in Crores] % of total Brokerage value of paid [Rs.] transaction of the Fund % of total brokerage paid by the Fund HSBC InvestDirect Securities (India) Limited HSBC Securities and Capital Market (India) Private Limited Associate 2010-2011 Sponsor 2010-2011 3.88 3.22 77,768 3.42 86

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Name of Sponsor/ AMC and its associate / related parties / group companies Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. in Crores] % of total value of transaction of the Fund Brokerage paid [Rs.] (on accrual basis) % of total brokerage paid by the Fund HSBC InvestDirect Securities (India) Associate 2009-2010 0.88 0.36 17,000 0.48 Limited HSBC Securities and Capital Market (India) Private Limited Sponsor 2009-2010 2.36 0.97 25,679 0.73 ~ Indicates less than 0.01 The brokerage paid was at rates similar to those offered to other brokers / distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3. None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4. Unit Capital movement during the years ended March 31, 2011 and March 31, 2010 : Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 38,513,485.047 353,447.144 17,435,503.861 21,431,428.330 214,314,282 Dividend Option 17,698,244.274 163,554.953 6,579,124.813 11,282,674.414 112,826,744 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option 44,079,840.395 12,466,410.552 18,032,765.900 38,513,485.047 385,134,850 Dividend Option 29,259,696.530 1,509,540.509 13,070,992.765 17,698,244.274 176,982,442 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6. No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7. Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8. The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 87

HSBC Global Asset Management HSBC MIP An open-ended Fund with Regular & Savings Plans. Monthly income is not assured and is subject to the availability of distributable surplus. Abridged Annual Report 2010-2011 Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC MIP ( The Scheme ) as at March 31, 2011 and the related Revenue Account for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet and the Revenue Account referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet and the Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC MIP as at March 31, 2011 and its net surplus for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. (iii) The methods used to value: a) equity shares awaiting listing b) non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 89

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC MIP - REGULAR PLAN As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 18,313.41 17,072.93 2 Reserves & Surplus 2.1 Unit Premium Reserves 758.86 685.38 2.2 Unrealised Appreciation Reserve 50.67 319.49 2.3 Other Reserves 3,134.39 3,854.25 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 404.24 435.34 TOTAL 22,661.57 22,367.39 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 2,996.04 2,750.49 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 4,541.13 3,600.64 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 10.91 20.18 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 303.58 1.3.5 Securitised Debt securities 660.56 1.4 Government Securities 219.88 286.72 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 13,685.94 9,697.10 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 21,453.90 17,319.27 2 Deposits 477.06 352.04 3 Other Current Assets 3.1 Cash & Bank Balance 5.46 83.14 3.2 CBLO / Reverse Repo Lending 111.49 4,111.46 3.3 Others 613.66 501.48 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 22,661.57 22,367.39 Notes to Accounts - Annexure I 90

Abridged Balance Sheet as at March 31, 2011 (Contd...) Rs. in Lakhs HSBC MIP - SAVINGS PLAN As at As at March 31, 2011 March 31, 2010 LIABILITIES 1 Unit Capital 50,576.34 26,134.05 2 Reserves & Surplus 2.1 Unit Premium Reserves 5,372.94 2,084.92 2.2 Unrealised Appreciation Reserve 63.40 839.91 2.3 Other Reserves 11,597.48 6,771.99 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 948.68 425.27 TOTAL 68,558.84 36,256.14 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 15,514.58 7,333.44 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 12,948.68 5,478.57 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 60.40 32.06 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 746.21 1.3.5 Securitised Debt securities 911.56 1.4 Government Securities 639.66 122.88 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 37,351.94 14,528.40 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 66,515.26 29,153.12 2 Deposits 371.96 477.04 3 Other Current Assets 3.1 Cash & Bank Balance 39.43 331.61 3.2 CBLO / Reverse Repo Lending 74.11 5,574.80 3.3 Others 1,558.08 719.57 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 68,558.84 36,256.14 Notes to Accounts - Annexure I 91

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC MIP - REGULAR PLAN Current Previous Year ended Year ended March 31, 2011 March 31, 2010 1 INCOME 1.1 Dividend 39.05 12.06 1.2 Interest 1,452.75 556.78 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments 350.97 753.81 1.6 Realised Gains / (Losses) on Derivative Transactions (42.17) (8.15) 1.7 Other Income (A) 1,800.60 1,314.50 2 EXPENSES 2.1 Management fees 267.18 106.52 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 20.56 10.30 2.4 Custodian fees 4.63 1.89 2.5 Trusteeship fees 0.35 0.19 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 214.70 152.32 2.8 Audit fees 0.25 0.75 2.9 Other operating expenses 1.69 2.05 (B) 509.37 274.02 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A B = C) 1,291.23 1,040.48 4 Change in Unrealised Depreciation in value of investments (D) 88.69 (52.60) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 1,202.54 1,093.08 6 Change in unrealised appreciation in the value of investments (F) (268.82) 208.77 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 933.72 1,301.85 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (268.82) 208.77 7.3 Add / (Less): Equalisation (299.42) 2,427.36 7.4 Transfer from Reserve Fund 765.46 11.04 7.5 Transfer from Unit Premium Reserve 8 TOTAL 1,668.58 3,531.48 9 Dividend appropriation 9.1 Income Distributed during the year 1,413.83 558.07 9.2 Tax on income distributed during the year 209.16 86.17 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 45.59 2,887.24 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. 92

Abridged Revenue Account for the year ended March 31, 2011 (Contd...) Rs. in Lakhs HSBC MIP - SAVINGS PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 125.64 34.67 1.2 Interest 3,189.11 816.30 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments 565.43 1,943.51 1.6 Realised Gains / (Losses) on Derivative Transactions (46.29) 19.74 1.7 Other Income 0.83 2.90 (A) 3,834.72 2,817.12 2 EXPENSES 2.1 Management fees 595.34 169.85 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 49.11 16.36 2.4 Custodian fees 13.15 3.70 2.5 Trusteeship fees 0.57 0.27 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 481.89 232.83 2.8 Audit fees 0.76 0.75 2.9 Other operating expenses (21.14) 2.08 (B) 1,119.68 425.84 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 2,715.04 2,391.28 4 Change in Unrealised Depreciation in value of investments (D) 374.95 (124.93) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 2,340.09 2,516.21 6 Change in unrealised appreciation in the value of investments (F) (776.52) 583.39 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,563.57 3,099.60 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (776.52) 583.39 7.3 Add / (Less): Equalisation 6,016.17 4,104.59 7.4 Transfer from Reserve Fund 986.63 7.5 Transfer from Unit Premium Reserve 8 TOTAL 9,342.89 6,620.80 9 Dividend appropriation 9.1 Income Distributed during the year 3,071.36 1,037.23 9.2 Tax on income distributed during the year 459.40 154.90 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 5,812.13 5,428.67 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. 93

Key Statistics for the year ended March 31, 2011 HSBC MIP - REGULAR PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 NAV per unit (Rs.): Open Growth Option 16.3418 14.1825 Monthly Dividend Option 11.4773 10.7325 Quarterly Dividend Option 11.6340 10.8919 High Growth Option 17.1649 16.3418 Monthly Dividend Option 11.6488 11.7633 Quarterly Dividend Option 11.8078 12.0062 Low Growth Option 16.3363 14.2534 Monthly Dividend Option 10.5779 10.7861 Quarterly Dividend Option 11.0584 10.9463 End Growth Option 16.9989 16.3418 Monthly Dividend Option 10.7617 11.4773 Quarterly Dividend Option 11.2192 11.6340 2. Closing Assets Under Management (Rs. in Lakhs) End 22,257 21,932 Average (AAuM) 1 24,219 12,657 3. Gross income as % of AAuM 2 7.43% 10.39% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.10% 2.16% Monthly Dividend Option 2.10% 2.16% Quarterly Dividend Option 2.10% 2.16% b. Management Fee as % of AAuM (planwise) Growth Option 1.10% 0.84% Monthly Dividend Option 1.10% 0.84% Quarterly Dividend Option 1.10% 0.84% 5. Net Income as a percentage of AAuM 3 5.33% 8.23% 6. Portfolio turnover ratio 4 0.24 0.39 7. Total Dividend per unit distributed during the year (planwise) Retail Monthly Dividend Option 1.0187 0.7533 Quarterly Dividend Option 0.7642 0.7796 Corporate Monthly Dividend Option 0.9493 0.7011 Quarterly Dividend Option 0.7123 0.7256 94

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC MIP - REGULAR PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 8. Returns (%): a. Last One Year Scheme Growth Option 4.0200 15.2251 Monthly Dividend Option 2.7200 14.1546 Quarterly Dividend Option 3.0800 14.1551 Benchmark CRISIL MIP Blended Index 6.1663 14.2700 b. Since Inception Scheme Growth Option 7.7600 8.3825 Monthly Dividend Option 6.9100 7.6149 Quarterly Dividend Option 7.0000 7.6516 Benchmark CRISIL MIP Blended Index 7.2107 7.3900 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 95

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC MIP - SAVINGS PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 NAV per unit (Rs.): Open Growth Option 18.4006 15.0356 Monthly Dividend Option 12.0933 10.7242 Quarterly Dividend Option 12.1196 10.7209 High Growth Option 19.7189 18.4223 Monthly Dividend Option 12.3278 12.4013 Quarterly Dividend Option 12.4651 12.4927 Low Growth Option 18.2706 15.1489 Monthly Dividend Option 11.0752 10.8050 Quarterly Dividend Option 11.4551 10.8017 End Growth Option 19.2049 18.4006 Monthly Dividend Option 11.3836 12.0933 Quarterly Dividend Option 11.7079 12.1196 2. Closing Assets Under Management (Rs. in Lakhs) End 67,610 35,831 Average (AAuM) 1 57,121 20,112 3. Gross income as % of AAuM 2 6.71% 14.01% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 1.96% 2.12% Monthly Dividend Option 1.96% 2.12% Quarterly Dividend Option 1.96% 2.12% b. Management Fee as % of AAuM (planwise) Growth Option 1.04% 0.84% Monthly Dividend Option 1.04% 0.84% Quarterly Dividend Option 1.04% 0.84% 5. Net Income as a percentage of AAuM 3 4.75% 11.89% 6. Portfolio turnover ratio 4 0.40 0.63 7. Total Dividend per unit distributed during the year (planwise) Retail Monthly Dividend Option 1.0758 0.8584 Quarterly Dividend Option 0.8170 0.8409 Corporate Monthly Dividend Option 1.0025 0.7990 Quarterly Dividend Option 0.7614 0.7827 96

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC MIP - SAVINGS PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 8. Returns (%): a. Last One Year Scheme Growth Option 4.3700 22.3802 Monthly Dividend Option 3.0700 21.1355 Quarterly Dividend Option 3.4000 21.1925 Benchmark CRISIL MIP Blended Index 6.1663 14.2700 b. Since Inception Scheme Growth Option 9.6200 10.5110 Monthly Dividend Option 8.6400 9.5802 Quarterly Dividend Option 8.7000 9.5923 Benchmark CRISIL MIP Blended Index 7.2107 7.3900 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 97

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC MIP - REGULAR / SAVINGS PLAN 1 Investments: 1.1. It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the scheme s unitholders. 1.2. Open Positions of derivatives in MIP - Regular Plan as at March 31, 2011 is NIL. Open Positions of derivatives in MIP - Regular Plan as at March 31, 2010 is Rs. 24,075,176 and is 1.10% to net assets. Open Positions of derivatives in MIP - Savings Plan as at March 31, 2011 is NIL. Open Positions of derivatives in MIP - Savings Plan as at March 31, 2010 is Rs. 50,822,111 and is 1.42% to net assets. 1.3. Investments in Associates and Group Companies are as under : Issuer 2011 The Hongkong & Shanghai Banking Corporation Limited Instrument Type Regular Plan Savings Plan (Rupees) Aggregate Investments by all schemes Fixed deposits 10,000,000 22,000,000 970,000,000 Issuer 2010 The Hongkong & Shanghai Banking Corporation Limited Instrument Type Regular Plan Savings Plan Aggregate Investments by all schemes Fixed deposits 10,000,000 10,000,000 1,018,000,000 1.4. Open positions of Securities Borrowed and / or Lent by the MIP - Regular Plan as of financial year ended 2011 and 2010 are NIL. Open positions of Securities Borrowed and / or Lent by the MIP - Savings Plan as of financial year ended 2011 and 2010 are NIL. 1.5. The NPAs for MIP - Regular Plan as on March 31, 2011 and March 31, 2010 are NIL. The NPAs for MIP - Savings Plan as on March 31, 2011 and March 31, 2010 are NIL. 1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years 2011 and 2010 and their percentage to net assets are as under : Security Category Amount (Rs.) Regular Plan Percentage to Net Assets March 31, 2011 Amount (Rs.) Savings Plan Percentage to Net Assets Equity Shares Appreciation 22,867,095 1.0274% 101,566,533 1.5022% Depreciation 18,930,655 0.8505% 117,550,379 1.7386% Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 510,002 0.0229% 1,854,290 0.0274% Depreciation 9,361,311 0.4206% 23,312,827 0.3448% Privately Placed Non Convertible Debentures / Bonds Appreciation Depreciation 98

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Security Category Amount (Rs.) Regular Plan Percentage to Net Assets March 31, 2011 Amount (Rs.) Savings Plan Percentage to Net Assets Asset Backed Securities Appreciation Depreciation Government of India Securities Appreciation Depreciation 18,094 0.0008% 52,800 0.0781% Equity Futures Appreciation Depreciation Commercial Paper / Certificate of Deposit Appreciation 3,094,306 0.1390% 9,114,954 0.1348% Depreciation 1,963,734 0.0882% 2,775,200 0.0410% Security Category Amount (Rs.) Regular Plan Percentage to Net Assets March 31, 2010 Amount (Rs.) Savings Plan Percentage to Net Assets Equity Shares Appreciation 35,159,577 1.6031% 243,422,390 6.7937% Depreciation 8,227,405 0.3751% 167,450,117 4.6733% Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 3,093,155 0.1410% 4,437,820 0.1239% Depreciation 219,238 0.0100% 325,981 0.0091% Privately Placed Non Convertible Debentures / Bonds Appreciation 576,049 1.6077% Depreciation Asset Backed Securities Appreciation 1,739,064 0.0793% 2,604,039 0.0727% Depreciation Government of India Securities Appreciation 32,116 0.0015% 13,687 0.0004% Depreciation Equity Futures Appreciation 485,963 0.0222% 983,230 0.0274% Depreciation 114,450 0.0052% 269,600 0.0075% Commercial Paper / Certificate of Deposit Appreciation Depreciation 99

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 1.7. The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 69,304,417 and Rs. 155,284,947 for Regular and Savings Plan respectively) and The aggregate value of investment securities purchased and sold (including matured) during the year 2009-10 (excluding accretion of discount of Rs. 24,603,133 and Rs. 33,480,802 for Regular and Savings Plan respectively) are : Plan March 31, 2011 Aggregate Purchases Aggregate Sales Rupees Percentage of Average Daily Net Assets Rupees Percentage of Average Daily Net Assets Regular Plan 18,102,936,980 747.47% 17,758,495,701 733.25% Savings Plan 40,066,934,889 701.44% 36,428,116,067 637.74% Plan March 31, 2010 Aggregate Purchases Aggregate Sales Rupees Percentage of Average Daily Net Assets Rupees Percentage of Average Daily Net Assets Regular Plan 8,666,663,810 684.74% 7,579,938,462 598.88% Savings Plan 13,374,285,652 664.99% 11,634,947,422 578.51% 1.8. Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under : Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets Security Category Regular Plan 2011 2010 Equities 1,091,187 0.0490% 2,018,410 0.0920% Debt Instruments 454,113,258 20.4029% 381,375,038 17.3889% Money Market Instruments 1,368,593,494 61.4896% 969,709,005 44.2142% Total 1,823,797,939 81.9415% 1,353,102,453 61.6952% Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets Security Category Savings Plan 2011 2010 Equities 6,039,864 0.0893% 3,205,710 0.0895% Debt Instruments 1,294,867,566 19.1520% 638,530,506 17.8207% Money Market Instruments 3,735,193,722 55.2460% 1,452,839,619 40.5472% Total 5,036,101,152 74.4873% 2,094,575,835 58.4573% 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-11, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid Collection / Bank charges amounting to Rs. 640 and Rs. 1,086 for the Regular Plan and Savings Plan respectively and clearing member charges 100

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 on derivative transactions amounting to Rs. 33,223 and Rs. 149,601 for the Regular Plan and Savings Plan respectively. During the year 2009-10, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid Collection / Bank charges amounting to Rs. 1,202 and Rs. 1,198 for the Regular Plan and Savings Plan respectively and clearing member charges on derivative transactions amounting to Rs. 26,038 and Rs. 65,477 for the Regular Plan and Savings Plan respectively. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor/ AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] Regular Plan % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 45.66 21.60 5,662,279 22.48 Associate 2010-2011 0.31 0.15 51,315 0.20 Savings Plan Associate 2010-2011 131.03 20.15 14,244,334 17.93 Associate 2010-2011 1.26 0.19 149,906 0.19 Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] Regular Plan % of Total Business received by the Fund Commission paid [Rs.] (on accrual basis) % of Total commission paid by the Fund Associate 2009-2010 75.06 38.04 7,582,562 31.68 Associate 2009-2010 0.72 0.36 84,829 0.35 Savings Plan Associate 2009-2010 93.16 31.40 10,037,894 27.67 Associate 2009-2010 0.26 0.09 49,702 0.14 101

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Brokerage paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies HSBC Securities and Capital Market (India) Private Limited HSBC Securities and Capital Market (India) Private Limited Name of Sponsor / AMC and its associates / related parties / group companies HSBC InvestDirect Securities (India) Limited HSBC Securities and Capital Market (India) Private Limited HSBC InvestDirect Securities (India) Limited HSBC Securities and Capital Market (India) Private Limited Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. In Crores] Regular Plan % of total value of transaction of the Fund Brokerage paid [Rs.] % of total brokerage paid by the Fund Sponsor 2010-2011 6.10 0.66 87,784 3.22 Savings Plan Sponsor 2010-2011 27.92 1.34 420,296 4.45 Nature of Association / Nature of relation Period Covered Value of Transactions [Rs. In Crores] Regular Plan % of total value of transaction of the Fund Brokerage paid [Rs.] (on accrual basis) % of total brokerage paid by the Fund Associate 2009-2010 0.24 0.05 4,760 0.22 Sponsor 2009-2010 1.75 0.35 30,556 1.40 Savings Plan Associate 2009-2010 0.71 0.07 14,280 0.26 Sponsor 2009-2010 4.16 0.44 70,290 1.29 The brokerage paid was at rates similar to those offered to other distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the schemes at the years ended March 31, 2011 and March 31, 2010. 102

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010: Description Regular Plan Opening Units Subscription Redemption Closing Units Face Value 2010-2011 Growth Option 46,865,391.998 31,353,805.237 41,000,619.023 37,218,578.212 372,185,782 Monthly Dividend Option 87,365,066.104 96,344,927.811 87,540,254.245 96,169,739.670 961,697,397 Quarterly Dividend Option 36,498,869.190 36,551,359.322 23,304,487.219 49,745,741.293 497,457,413 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option 20,343,046.918 36,509,108.348 9,986,763.268 46,865,391.998 468,653,919 Monthly Dividend Option 11,179,392.387 92,918,786.004 16,733,112.287 87,365,066.104 873,650,662 Quarterly Dividend Option 15,065,276.417 27,233,449.862 5,799,857.089 36,498,869.190 364,988,692 Savings Plan Description Opening Units Subscription Redemption Closing Units Face Value 2010-2011 Growth Option 66,682,194.233 110,504,442.735 54,525,552.688 122,661,084.280 1,226,610,843 Monthly Dividend 117,679,029.512 254,267,713.904 125,281,128.913 246,665,614.503 Option 2,466,656,145 Quarterly Dividend Option 76,979,245.665 107,884,751.165 48,427,260.251 136,436,736.579 1,364,367,366 Description 2009-2010 Opening Units Subscription Redemption Closing Units FaceValue Growth Option 27,263,343.045 55,702,716.349 16,283,865.161 66,682,194.233 666,821,943 Monthly Dividend Option 22,335,867.542 113,309,617.474 17,966,455.504 117,679,029.512 1,176,790,295 Quarterly Dividend Option 35,851,537.631 50,500,233.466 9,372,525.432 76,979,245.665 769,792,456 5 Prior year amounts have been re-grouped and reclassified, wherever applicable, to confirm to current year s presentation. 6 No contingent liabilities for MIP - Regular and MIP - Savings funds for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Managenent Fees are Inclusive of Service Tax where applicable. 8 Other income in Savings Plan represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme. 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 103

HSBC Global Asset Management HSBC Income Fund An open-ended Income Scheme Abridged Annual Report 2010-2011 * An open-ended fund. Monthly income is not assured and is subject to the availability of distributable surplus. Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Income Fund ( The Scheme ) and the related Revenue Account for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet and the Revenue Account referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet and the Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Income Fund as at March 31, 2011 and its net surplus for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. (iii) The methods used to value non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 105

Abridged Balance Sheet as at March 31, 2011 106 Rs. in Lakhs HSBC INCOME FUND - INVESTMENT PLAN As at As at March 31, 2011 March 31, 2010 LIABILITIES 1 Unit Capital 1,410.60 2,418.14 2 Reserves & Surplus 2.1 Unit Premium Reserves (672.29) (602.92) 2.2 Unrealised Appreciation Reserve 4.85 2.3 Other Reserves 1,368.05 1,451.25 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 122.48 212.25 TOTAL 2,233.69 3,478.72 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 913.57 813.04 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 50.44 63.92 1.4 Government Securities 25.35 627.68 1.5 Treasury Bills 1.6 Commercial Paper 197.32 497.34 1.7 Certificate of Deposits 734.54 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 1,921.22 2,001.98 2 Deposits 189.55 3 Other Current Assets 3.1 Cash & Bank Balance 14.64 14.24 3.2 CBLO / Reverse Repo Lending 236.31 1,224.53 3.3 Others 61.52 48.42 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 2,233.69 3,478.72 Notes to Accounts - Annexure I

Abridged Balance Sheet as at March 31, 2011 (Contd...) Rs. in Lakhs HSBC INCOME FUND - SHORT TERM PLAN As at As at March 31, 2011 March 31, 2010 LIABILITIES 1 Unit Capital 14,796.72 14,887.54 2 Reserves & Surplus 2.1 Unit Premium Reserves 518.40 372.47 2.2 Unrealised Appreciation Reserve 44.88 3.45 2.3 Other Reserves 1,060.80 1,266.30 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 580.12 84.33 TOTAL 17,000.92 16,614.09 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 517.72 500.66 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1,276.44 2,394.53 1.7 Certificate of Deposits 14,098.57 12,616.23 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 15,892.73 15,511.42 2 Deposits 4.04 3 Other Current Assets 3.1 Cash & Bank Balance 440.36 53.89 3.2 CBLO / Reverse Repo Lending 643.18 977.31 3.3 Others 24.65 67.43 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 17,000.92 16,614.09 Notes to Accounts - Annexure I 107

Abridged Revenue Account for the year ended March 31, 2011 108 Rs. in Lakhs HSBC INCOME FUND - INVESTMENT PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 206.01 446.43 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments (15.25) 1.5 Realised Gains / (Losses) on External sale / redemption of investments 238.82 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 0.38 (A) 190.76 685.63 2 EXPENSES 2.1 Management fees 35.14 95.71 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 2.24 6.33 2.4 Custodian fees 0.24 0.46 2.5 Trusteeship fees 0.12 0.11 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 11.87 33.75 2.8 Audit fees 0.20 1.50 2.9 Other operating expenses 0.75 1.00 2.10 Expenses to be Reimbursed by the Investment Manager (B) 50.56 138.86 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 140.20 546.77 4 Change in Unrealised Depreciation in value of investments (D) (4.40) (157.02) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 144.60 703.79 6 Change in unrealised appreciation in the value of investments (F) 4.85 (29.07) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 149.45 674.72 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve 4.86 (29.07) 7.3 Add / (Less): Equalisation (173.72) (1,078.50) 7.4 Transfer from Reserve Fund 54.08 428.37 7.5 Transfer from Unit Premium Reserve 8 TOTAL 24.96 53.66 9 Dividend Appropriation 9.1 Income Distributed during the year 47.41 213.83 9.2 Tax on income distributed during the year 6.67 31.70 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (29.12) (191.87) Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses.

Abridged Revenue Account for the year ended March 31, 2011 (Contd...) 109 Rs. in Lakhs HSBC INCOME FUND - SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 939.38 1,868.40 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments (44.67) 274.99 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 5.82 (A) 894.71 2,149.21 2 EXPENSES 2.1 Management fees 65.91 241.79 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 8.66 17.55 2.4 Custodian fees 2.79 4.19 2.5 Trusteeship fees 0.14 0.51 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 69.17 128.88 2.8 Audit fees 0.20 1.00 2.9 Other operating expenses 0.10 1.45 2.10 Expenses to be Reimbursed by the Investment Manager (23.92) (B) 123.05 395.37 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 771.66 1,753.84 4 Change in Unrealised Depreciation in value of investments (D) 0.01 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 771.65 1,753.84 6 Change in unrealised appreciation in the value of investments (F) 41.43 (45.94) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 813.08 1,707.90 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve 41.43 (45.94) 7.3 Add / (Less): Equalisation (374.26) (14.78) 7.4 Transfer from Reserve Fund 113.76 10.19 7.5 Transfer from Unit Premium Reserve 8 TOTAL 511.15 1,749.25 9 Dividend Appropriation 9.1 Income Distributed during the year 508.97 1,208.44 9.2 Tax on income distributed during the year 93.92 218.13 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (91.74) 322.68 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses.

Key Statistics for the year ended March 31, 2011 HSBC INCOME FUND - INVESTMENT PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Regular Growth Option 15.9381 14.8409 Regular Dividend Option 11.1692 11.1795 Regular Weekly Dividend Option Institutional Growth Option 9.5776 Institutional Dividend Option 10.6682 Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option High Regular Growth Option 16.8254 15.9383 Regular Dividend Option 11.3368 11.7989 Regular Weekly Dividend Option Institutional Growth Option 10.3921 10.2803 Institutional Dividend Option 11.2616 Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Low Regular Growth Option 15.9587 14.9264 Regular Dividend Option 10.8719 11.1456 Regular Weekly Dividend Option Institutional Growth Option 10.0106 9.6330 Institutional Dividend Option 10.7298 Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option End Regular Growth Option 16.8253 15.9381 Regular Dividend Option 10.9288 11.1692 Regular Weekly Dividend Option Institutional Growth Option Institutional Dividend Option Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 2. Closing Assets Under Management (Rs. in Lakhs) End 2,111 3,266 Average (AAuM) 1 2,811 7,715 110

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC INCOME FUND - INVESTMENT PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 3. Gross income as % of AAuM 2 6.79% 8.89% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 1.85% 1.86% Regular Dividend Option 1.85% 1.86% Regular Weekly Dividend Option Institutional Growth Option 1.50% 1.50% Institutional Dividend Option 1.50% Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option b. Management Fee as % of AAuM (planwise) Regular Growth Option 1.25% 1.24% Regular Dividend Option 1.25% 1.24% Regular Weekly Dividend Option Institutional Growth Option 1.25% 1.24% Institutional Dividend Option 1.24% Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 5. Net Income as a percentage of AAuM 3 4.99% 7.09% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year (planwise) Retail Regular Dividend Option 0.7379 0.7183 Regular Weekly Dividend Option Institutional Growth Option Institutional Dividend Option 0.3416 Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Corporate Regular Dividend Option 0.6877 0.6685 Regular Weekly Dividend Option Institutional Growth Option Institutional Dividend Option 0.3179 Institutional Weekly Dividend Option Institutional Plus Growth Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 111

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC INCOME FUND - INVESTMENT PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 8. Returns (%): a. Last One Year Scheme Regular Growth Option 5.5700 7.3944 Regular Dividend Option 4.6000 6.4429 Regular Weekly Dividend Option N/A N/A Institutional Growth Option N/A 7.9191 Institutional Dividend Option N/A N/A Institutional Weekly Dividend Option N/A N/A Institutional Plus Growth Option N/A N/A Institutional Plus Weekly Dividend Option N/A N/A Institutional Plus Monthly Dividend Option N/A N/A Benchmark CRISIL Composite Bond Fund Index (Investment Plan) 5.0617 5.3800 b. Since Inception Scheme Regular Growth Option 6.4600 6.5848 Regular Dividend Option 5.8000 5.9678 Regular Weekly Dividend Option N/A N/A Institutional Growth Option N/A 0.3824 Institutional Dividend Option N/A N/A Institutional Weekly Dividend Option N/A N/A Institutional Plus Growth Option N/A N/A Institutional Plus Weekly Dividend Option N/A N/A Institutional Plus Monthly Dividend Option N/A N/A Benchmark CRISIL Composite Bond Fund Index (Investment Plan) 5.2354 5.2600 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Lossed) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year 112

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC INCOME FUND - SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Regular Growth Option 15.6284 14.8706 Regular Dividend Option 10.9030 10.8304 Regular Weekly Dividend Option 10.1393 10.0712 Institutional Growth Option 12.3381 11.6871 Institutional Dividend Option 10.5488 10.4456 Institutional Weekly Dividend Option 10.4336 10.2542 Institutional Plus Growth Option 10.1070 Institutional Plus Weekly Dividend Option 10.0558 Institutional Plus Monthly Dividend Option 10.1482 10.0362 High Regular Growth Option 16.5419 15.6284 Regular Dividend Option 10.9879 11.0379 Regular Weekly Dividend Option 10.1741 10.2224 Institutional Growth Option 13.0988 12.3381 Institutional Dividend Option 10.6000 10.6486 Institutional Weekly Dividend Option 10.4701 10.4622 Institutional Plus Growth Option 10.0700 10.6740 Institutional Plus Weekly Dividend Option 10.0878 10.1031 Institutional Plus Monthly Dividend Option 10.2040 10.2315 Low Regular Growth Option 15.6474 14.9072 Regular Dividend Option 10.8452 10.8570 Regular Weekly Dividend Option 10.1202 10.0844 Institutional Growth Option 12.3538 11.7162 Institutional Dividend Option 10.0031 10.4715 Institutional Weekly Dividend Option 10.3844 10.2648 Institutional Plus Growth Option 10.0014 10.1322 Institutional Plus Weekly Dividend Option 10.0407 10.0188 Institutional Plus Monthly Dividend Option 10.0023 10.0611 End Regular Growth Option 16.5419 15.6284 Regular Dividend Option 10.9778 10.9030 Regular Weekly Dividend Option 10.1741 10.1393 Institutional Growth Option 13.0988 12.3381 Institutional Dividend Option 10.2283 10.5488 Institutional Weekly Dividend Option 10.4701 10.4336 Institutional Plus Growth Option Institutional Plus Weekly Dividend Option 10.0553 10.0558 Institutional Plus Monthly Dividend Option 10.0540 10.1482 2. Closing Assets Under Management (Rs. in Lakhs) End 16,421 16,530 Average (AAuM) 1 14,951 38,875 113

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC INCOME FUND - SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 3. Gross income as % of AAuM 2 5.98% 5.53% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 1.01% 1.25% Regular Dividend Option 1.01% 1.25% Regular Weekly Dividend Option 1.01% 1.25% Institutional Growth Option 0.70% 0.80% Institutional Dividend Option 0.70% 0.80% Institutional Weekly Dividend Option 0.70% 0.80% Institutional Plus Growth Option 0.60% 0.75% Institutional Plus Weekly Dividend Option 0.60% 0.75% Institutional Plus Monthly Dividend Option 0.60% 0.75% b. Management Fee as % of AAuM (planwise) Regular Growth Option 0.44% 0.62% Regular Dividend Option 0.44% 0.62% Regular Weekly Dividend Option 0.44% 0.62% Institutional Growth Option 0.44% 0.62% Institutional Dividend Option 0.44% 0.62% Institutional Weekly Dividend Option 0.44% 0.62% Institutional Plus Growth Option 0.44% 0.62% Institutional Plus Weekly Dividend Option 0.44% 0.62% Institutional Plus Monthly Dividend Option 0.44% 0.62% 5. Net Income as a percentage of AAuM 3 5.16% 4.51% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year (planwise) Retail Regular Dividend Option 0.4788 0.4122 Regular Weekly Dividend Option 0.4757 0.3823 Institutional Growth Option Institutional Dividend Option 0.2265 0.4109 Institutional Weekly Dividend Option 0.5149 0.3344 Institutional Plus Growth Option Institutional Plus Weekly Dividend Option 0.5379 0.3679 Institutional Plus Monthly Dividend Option 0.3318 0.3884 Corporate Regular Dividend Option 0.4461 0.3837 Regular Weekly Dividend Option 0.4433 0.3558 Institutional Growth Option Institutional Dividend Option 0.2111 0.3825 Institutional Weekly Dividend Option 0.4798 0.3112 Institutional Plus Growth Option Institutional Plus Weekly Dividend Option 0.5013 0.3424 Institutional Plus Monthly Dividend Option 0.3092 0.3615 114

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC INCOME FUND - SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 8. Returns (%): a. Last One Year Scheme Regular Growth Option 5.8500 5.0960 Regular Dividend Option 5.2100 4.5371 Regular Weekly Dividend Option 5.1600 4.5385 Institutional Growth Option 6.1700 5.5702 Institutional Dividend Option (0.8300) N/A Institutional Weekly Dividend Option 5.4400 5.0891 Institutional Plus Growth Option N/A 5.6258 Institutional Plus Weekly Dividend Option 5.4900 N/A Institutional Plus Monthly Dividend Option 2.3700 4.5414 Benchmark CRISIL Short Term Bond Fund Index (Short Term Plan) 5.1199 5.8500 b. Since Inception Scheme Regular Growth Option 6.2400 6.2989 Regular Dividend Option 5.6200 5.6818 Regular Weekly Dividend Option 5.5600 5.6759 Institutional Growth Option 2.9400 2.4616 Institutional Dividend Option 3.3800 Institutional Weekly Dividend Option 5.3600 5.3322 Institutional Plus Growth Option N/A 6.0546 Institutional Plus Weekly Dividend Option 4.2700 3.6402 Institutional Plus Monthly Dividend Option 3.6100 4.8518 Benchmark CRISIL Short Term Bond Fund Index (Short Term Plan) 5.8938 6.0000 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Lossed) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year 115

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC INCOME FUND 1 Investments: 1.1 It is confirmed that investments of the schemes are registered in the name of the Trustees for the benefit of the scheme s unitholders. 1.2 Open Positions of derivatives for HSBC Income Fund - Investment Plan is Nil as at March 31, 2011 and as at March 31, 2010. Open Positions of derivatives for HSBC Income Fund - Short Term Plan is Nil as at March 31, 2011 and as at March 31, 2010. 1.3 Investments in Associates and Group Companies: Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount 2011 2010 (Rupees) Aggregate Investments by all schemes 970,000,000 1,018,000,000 1.4 Open position of Securities Borrowed and / or Lent by the schemes as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs for the schemes for the years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years 2011 and 2010 and their percentages to net assets are as under : Security Category March 31, 2011 INVESTMENT PLAN SHORT TERM PLAN Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 215,076 0.1019% Depreciation 139,868 0.0662% 1,500 0.0001% Certificate of Deposits Appreciation 409,315 0.1939% 4,487,556 0.2733% Depreciation Asset Backed Securities Appreciation Depreciation 477,225 0.2260% Government of India Securities Appreciation Depreciation 6,528 0.0031% 116

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Security Category March 31, 2010 INVESTMENT PLAN Amount (Rs.) Percentage to Net Assets SHORT TERM PLAN Amount (Rs.) Percentage to Net Assets Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 250,564 0.0767% 344,566 0.0208% Depreciation 306,366 0.0938% Asset Backed Securities Appreciation Depreciation 441,583 0.1352% Government of India Securities Appreciation 10,873 0.0033% Depreciation 437,566 0.1340% 1.7 The aggregate value of investments purchased (excluding accretion of discount of Rs. 8,9754,342 and Rs. 3,298,815 for HSBC Income Fund - Investment Plan and HSBC Income Fund - Short Term Plan respectively) and sold (including matured) during the year 2010-2011 are: Plan Aggregate Purchases Aggregate Sales Amount (Rs.) Percentage of Average Daily Net Assets Amount (Rs.) Percentage of Average Daily Net Assets Investment Plan 5,342,626,089 1900.42% 5,353,400,443 1900.25% Short Term Plan 4,513,345,293 301.88% 4,564,642,895 305.32% The aggregate value of investments purchased (excluding accretion of discount of Rs. 3,669,515 and Rs. 103,649,039 for HSBC Income Fund - Investment Plan and HSBC Income Fund - Short Term Plan respectively) and sold (including matured) during the year 2009-2010 are : Plan Aggregate Purchases Aggregate Sales Amount (Rs.) Percentage of Average Daily Net Assets Amount (Rs.) Percentage of Average Daily Net Assets Investment Plan 9,142,476,843 1185.04% 10,057,164,104 1303.60% Short Term Plan 23,963,152,456 616.42% 23,982,294,982 616.91% 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets are as under: Security Category Fair Value (Rs.) INVESTMENT PLAN Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Debt Instruments 70,421,034 33.3557% 87,696,285 26.8474% Money market Instruments 93,186,340 44.1387% 49,732,940 15.2253% Total 163,607,374 77.4944% 137,429,225 42.0726% 117

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Security Category Fair Value (Rs.) SHORT TERM PLAN 118 Percentage to Net Assets Fair Value (Rs.) 2011 2010 Percentage to Net Assets Debt Instruments 50,065,916 3.0288% Money market Instruments 1,537,500,635 93.6313% 1,501,075,589 90.8105% Total 1,537,500,635 93.6313% 1,551,141,505 93.8393% 2 Disclosure Under Regulation 25(8) of the Securities And Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 9,188 for the Investment Plan and Rs. 33,644 for the Short Term Plan. During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 22,806 for the Investment Plan and Rs. 7,865 for the Short Term Plan. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] INVESTMENT PLAN % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 1.14 14.75 556,576 39.27 Associate 2010-2011 0.04 0.52 5,709 0.40 SHORT TERM PLAN Associate 2010-2011 230.78 68.88 4,767,298 73.43 Associate 2010-2011 0.00~ 0.00~ 3,382 0.05 Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] INVESTMENT PLAN % of Total Business received by the Fund Commission paid [Rs.] (on accrual basis) % of Total commission paid by the Fund Associate 2009-2010 16.97 44.20 2,750,823 55.53 Associate 2009-2010 0.00~ 0.00~ 5,415 0.11 SHORT TERM PLAN Associate 2009-2010 253.25 29.71 11,527,114 58.98 Associate 2009-2010 6.76 0.79 130,877 0.67

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 ~ Indicates less than 0.01 The brokerage paid was at rates similar to those offered to other distributors. Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of HSBC Income Fund - Investment Plan and Short Term Plan as at the years ended on March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010. INVESTMENT PLAN Description Opening Units Subscription Redemption Closing Units Face Value 2010-2011 Regular Dividend 12,321,384.234 1,333,071.168 9,208,184.044 4,446,271.358 44,462,715 Option Regular Growth 11,860,052.788 745,260.856 2,945,536.937 9,659,776.707 96,597,767 Option Regular Weekly Dividend Option Institutional Dividend Option Institutional Growth Option 5,000,000.000 5,000,000.000 2009-2010 Description Opening Units Subscription Redemption Closing Units Face Value Regular Dividend 58,649,984.489 14,455,550.272 60,784,150.527 12,321,384.234 123,213,843 Option Regular Growth Option 25,707,313.077 6,885,022.408 20,732,282.697 11,860,052.788 118,600,528 Regular Weekly Dividend Option Institutional Dividend Option 10,013,416.171 18,672.866 10,032,089.037 Institutional Growth Option 519,254.435 11,032,977.203 11,552,231.638 SHORT TERM PLAN Description Opening Units Subscription Redemption Closing Units Face Value 2010-2011 Regular Dividend 39,938,792.341 103,276,086.586 89,454,461.862 53,760,417.065 537,604,172 Option Regular Growth 14,747,400.770 25,132,723.022 25,886,782.650 13,993,341.142 139,933,410 Option Regular Weekly 20,379,450.229 76,793,939.250 38,370,050.308 58,803,339.171 588,033,393 Dividend Option Institutional Dividend Option 486,140.282 13,238,681.916 10,712,489.848 3,012,332.350 30,123,325 Institutional 11,638,971.961 2,014,163.598 11,638,971.961 2,014,163.598 20,141,635 Growth Option Institutional Weekly Dividend Option 29,906,364.288 2,590,672.001 31,932,504.118 564,532.171 5,645,320 Institutional Plus Growth Option 50,264,958.110 50,264,958.110 119

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 SHORT TERM PLAN Description Opening Units Subscription Redemption Closing Units Face Value 2010-2011 Institutional Plus 30,759,481.865 18,399,294.635 38,388,259.734 10,770,516.766 107,705,166 Weekly Dividend Option Institutional Plus 1,018,803.528 15,108,424.310 11,078,696.915 5,048,530.923 50,485,309 Monthly Dividend Option 2009-2010 Description Opening Units Subscription Redemption Closing Units Face Value Regular Dividend 53,157,406.512 163,384,188.969 176,602,803.140 39,938,792.341 399,387,924 Option Regular Growth 15,450,409.839 24,352,826.602 25,055,835.671 14,747,400.770 147,474,007 Option Regular Weekly 14,467,296.399 73,014,114.879 67,101,961.049 20,379,450.229 203,794,503 Dividend Option Institutional Dividend Option 4,837,013.350 53,253,516.264 57,604,389.332 486,140.282 4,861,404 Institutional 8,845,986.502 37,282,068.211 34,489,082.752 11,638,971.961 116,389,719 Growth Option Institutional 24,995,115.818 81,693,798.828 76,782,550.358 29,906,364.288 299,063,642 Weekly Dividend Option Institutional Plus - 14,250,000.000 65,758,134.542 80,008,134.542 Growth Option Institutional Plus - 219,694,038.845 188,934,556.980 30,759,481.865 307,594,818 Weekly Dividend Option Institutional Plus - 1,000,000.000 84,875,537.437 84,856,733.909 1,018,803.528 10,188,035 Monthly Dividend Option 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for Investment Plan and Short Term Plan for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8 Transition to New valuation norms : SEBI circular no. SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/ DF/4/2010 dated June 21, 2010 required Mutual Funds to implement revised valuation norms for debt securities, floating rate securities and money market securities with effect from August 01, 2010. As a measure of best practice and in order to ensure a non disruptive transition from old valuation norms to the new valuation norms applicable with effect from August 01, 2010, non-traded debt securities, floating rate securities and money market securities were progressively so valued that the impact due to transition was spread out from June 11, 2010 to July 31, 2010 to reflect the valuations fairly as per the new regulatory norms by July 31, 2010. The aforesaid has been approved by the Board of Trustees of HSBC Mutual Fund. Further, the same has also been intimated to SEBI vide letter dated June 10, 2010 and June 23, 2010. 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 120

HSBC Global Asset Management HSBC Gilt Fund An open-ended Gilt Scheme Abridged Annual Report 2010-2011 * An open-ended fund. Monthly income is not assured and is subject to the availability of distributable surplus. Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Gilt Fund ( The Scheme ), the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Gilt Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 122

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC GILT FUND As at As at March 31, 2011 March 31, 2010 LIABILITIES 1 Unit Capital 58.33 38.03 2 Reserves & Surplus 2.1 Unit Premium Reserves (6.12) (26.34) 2.2 Unrealised Appreciation Reserve 0.00~ 2.3 Other Reserves 17.59 30.56 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 0.74 0.98 TOTAL 70.54 43.23 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 5.00 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 5.00 2 Deposits 3 Other Current Assets 3.1 Cash & Bank Balance 1.19 2.31 3.2 CBLO / Reverse Repo Lending 64.25 40.91 3.3 Others 0.10 0.01 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 70.54 43.23 Notes to Accounts - Annexure I ~ Indicates less than 0.01 123

Abridged Revenue Account for the year ended March 31, 2011 124 HSBC GILT FUND Current Year ended March 31, 2011 Rs. in Lakhs Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 5.15 25.78 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments 1.48 (3.42) 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income (A) 6.63 22.36 2 EXPENSES 2.1 Management fees 0.21 1.77 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 0.06 0.41 2.4 Custodian fees 2.5 Trusteeship fees 0.00 ~ 0.01 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 1.62 2.8 Audit fees 0.20 0.12 2.9 Other operating expenses 0.16 0.02 2.10 Expenses to be Reimbursed by the Investment Manager (0.02) (B) 0.61 3.95 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 6.02 18.41 4 Change in Unrealised Depreciation in value of investments (D) (48.48) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 6.02 66.89 6 Change in unrealised appreciation in the value of investments (F) 0.00 ~ 7 NET SURPLUS / (DEFICIT) OR THE YEAR (E + F = G) 6.02 66.89 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (0.00) ~ 7.3 Add / (Less): Equalisation (18.79) 142.95 7.4 Transfer from Reserve Fund 0.20 7.5 Transfer from Unit Premium Reserve 8 TOTAL (12.57) 209.84 9 Dividend Appropriation 9.1 Income Distributed during the year 0.18 9.2 Tax on income distributed during the year 0.02 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (12.76) 209.84 Notes to Accounts - Annexure I ~ Indicates less than 0.01

Key Statistics for the year ended March 31, 2011 HSBC GILT FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Growth Option 11.5879 10.7725 Dividend Option 10.2186 9.4995 Weekly Dividend Option 9.5097 8.8405 High Growth Option 12.4932 11.5879 Dividend Option 11.0170 10.2186 Weekly Dividend Option 10.0727 9.5097 Low Growth Option 11.5901 10.8152 Dividend Option 10.2206 9.5372 Weekly Dividend Option 9.5115 8.9398 End Growth Option 12.4926 11.5879 Dividend Option 11.0165 10.2186 Weekly Dividend Option 10.0429 9.5097 2. Closing Assets Under Management (Rs. in Lakhs) End 69.80 42.24 Average (AAuM) 1 81.02 522.75 3. Gross income as % of AAuM 2 8.19% 4.28% 4. Expense Ratio: a. Total Expense as % of AAuM (Planwise) Growth Option 0.75% 0.75% Dividend Option 0.75% 0.75% Weekly Dividend Option 0.75% 0.75% b. Management Fee as % of AAuM (Planwise) Growth Option 0.25% 0.34% Dividend Option 0.25% 0.34% Weekly Dividend Option 0.25% 0.34% 5. Net Income as a percentage of AAuM 3 7.43% 3.52% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year (planwise) Retail Dividend Option Weekly Dividend Option 0.1821 Corporate Dividend Option Weekly Dividend Option 0.1697 125

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC GILT FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 8. Returns (%): a. Last One Year Scheme Growth Option 7.8100 7.5699 Dividend Option 7.8100 7.5693 Weekly Dividend Option 7.5400 7.5697 Benchmark I-Sec Composite Index 6.4067 4.4200 b. Since Inception Scheme Growth Option 3.0900 2.1060 Dividend Option 2.8700 2.3581 Weekly Dividend Option 1.3400 (2.6716) Benchmark I-Sec Composite Index 6.1165 6.0700 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 126

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC GILT FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives as of March 31, 2011 is NIL. Open Positions of derivatives as of March 31, 2010 is NIL. 1.3 Investments in Associates and Group Companies: Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount 2011 2010 (Rupees) Aggregate Investments by all schemes 970,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial year end and their percentages to net assets are as under: Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Government of India Securities - Appreciation 214 0.0031% - Depreciation 1.7 The aggregate value of investments purchased and sold during the financial year 2010-2011 (excluding accretion of discount of Rs. 26,154) is Rs. 254,752,780 and Rs. 254,427,673 respectively being 3,147.15% and 3,143.13% of the average daily net assets. The aggregate value of investments securities purchased (excluding accretion of discount of Rs.187,184) and sold during the financial year 2009-2010 is Rs. 829,684,134 and Rs. 961,307,513 respectively being 1587.15% and 1838.94% of the average daily net assets. 1.8 Non-Traded securities in the portfolios as at March 31, 2011 and March 31, 2010 are NIL. 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. NIL. During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. NIL. 127

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties/group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Commission Business paid [Rs.] received by the Fund % of Total commission paid by the Fund Associate 2010-2011 0.18 21.27 2,076 9.90 Associate 2010-2011 0.02 2.36 25 0.12 Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Commission Business paid [Rs.] received by the Fund % of Total commission paid by the Fund Associate 2009-2010 0.43 6.64 11,295 7.50 Associate 2009-2010 564 0.37 The brokerage paid was at rates similar to those offered to other distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010: Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Growth Option 276,151.441 338,302.775 173,962.423 440,491.793 4,404,917 Dividend Option 48,627.589 380,112.209 384,337.214 44,402.584 444,025 Weekly Dividend Option 55,473.174 48,358.958 5,430.683 98,401.449 984,014 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Growth Option 2,554,537.361 93,544.839 2,371,930.759 276,151.441 2,761,513 Dividend Option 3,037,397.103 448,522.876 3,437,292.390 48,627.589 486,275 Weekly Dividend 13,934,870.718 6,553,849.420 20,433,246.964 55,473.174 554,731 Option 128

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Litigations Pending: Pursuant to the Compliant Filed by certain investors (the appellants ), SEBI issued a Show Cause notice dated August 7, 2009 to the Board of Trustees of the Fund, the Fund, HSBC Asset Management (India) Private Limited and the CEO of the HSBC Asset Management (India) Private Limited, (together the respondents ) pertaining to changes made in the Scheme Information Document of HSBC Gilt Fund via the addendums dated January 05, 2009 and March 02, 2009. However, after considering the submissions made by the respondents, SEBI, vide its order dated April 23, 2010 disposed off the show cause notice dated August 7, 2009. The matter was then referred to the Securities Appellate Tribunal (SAT) by the appellants. The SAT issued an order dated May 03, 2011 directing the respondents to comply with Regulation 18(15A) of the SEBI Regulations and provide an exit option to the appellants of the case. HSBC Asset Management (India) Private Limited has reviewed the SAT order and has filed an appeal against the same in the Supreme Court. Any liability that may arise as a result of the Supreme Court order will be borne by HSBC Asset Management (India) Private Limited. Further, HSBC Asset Management (India) Private Limited has also received complaints from Consumer Disputes Redressal Forum in December 2010, filed by investors, pertaining to changes made in the Scheme Information Document of HSBC Gilt Fund via the addendums. The matters are under litigation and have been adjourned to later date(s) for further hearing. 8 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 129

HSBC Global Asset Management HSBC Floating Rate Fund An open-ended Income Scheme Abridged Annual Report 2010-2011 * An open-ended fund. Monthly income is not assured and is subject to the availability of distributable surplus. Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Floating Rate Fund ( The Scheme ), the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Floating Rate Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. (iii) The methods used to value non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 131

Abridged Balance Sheet as at March 31, 2011 132 Rs. in Lakhs HSBC FLOATING RATE FUND LONG TERM PLAN As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 24,973.08 51,992.65 2 Reserves & Surplus 2.1 Unit Premium Reserves 2,378.57 4,917.52 2.2 Unrealised Appreciation Reserve 2.3 Other Reserves 627.98 2,866.22 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 113.05 2,576.98 TOTAL 28,092.68 62,353.37 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 5,890.48 9,745.17 1.7 Certificate of Deposits 21,917.48 49,212.78 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 27,807.96 58,957.95 2 Deposits 56.10 3 Other Current Assets 3.1 Cash & Bank Balance 147.28 4.14 3.2 CBLO / Reverse Repo Lending 127.41 835.52 3.3 Others 10.03 2,499.66 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 28,092.68 62,353.37 Notes to Accounts - Annexure I

Abridged Balance Sheet as at March 31, 2011 (Contd...) Rs. in Lakhs HSBC FLOATING RATE FUND SHORT TERM PLAN As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 2,026.22 6,706.37 2 Reserves & Surplus 2.1 Unit Premium Reserves (27.86) 4,186.98 2.2 Unrealised Appreciation Reserve 2.3 Other Reserves 125.70 (3,670.33) 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 6.24 10.53 TOTAL 2,130.30 7,233.55 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 2 Deposits 202.99 50.17 3 Other Current Assets 3.1 Cash & Bank Balance 20.80 25.51 3.2 CBLO / Reverse Repo Lending 1,901.57 7,153.52 3.3 Others 4.94 4.35 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 2,130.30 7,233.55 Notes to Accounts - Annexure I 133

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC FLOATING RATE FUND LONG TERM PLAN Current Previous Year ended Year ended March 31, 2011 March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 3,611.84 5,815.31 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments 10.71 1,198.53 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 0.08 0.05 (A) 3,622.63 7,013.88 2 EXPENSES 2.1 Management fees 84.03 496.32 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 30.45 64.36 2.4 Custodian fees 9.73 14.89 2.5 Trusteeship fees 0.40 1.19 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 73.61 253.18 2.8 Audit fees 0.31 0.25 2.9 Other operating expenses 3.15 4.17 2.10 Expenses to be Reimbursed by the Investment Manager (B) 201.68 834.36 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A B = C) 3,420.95 6,179.52 4 Change in Unrealised Depreciation in value of investments (D) (6.64) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C D)] 3,420.95 6,186.16 6 Change in unrealised appreciation in the value of investments (F) (29.05) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 3,420.95 6,157.11 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (29.05) 7.3 Add / (Less): Equalisation (3,222.47) (2,869.27) 7.4 Transfer from Reserve Fund 24.96 71.62 7.5 Transfer from Unit Premium Reserve 8 TOTAL 223.44 3,388.51 9 Dividend Appropriation 9.1 Income Distributed during the year 2,026.37 3,300.21 9.2 Tax on income distributed during the year 410.34 682.67 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (2,213.27) (594.37) Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 134

Abridged Revenue Account for the year ended March 31, 2011 (Contd...) Rs. in Lakhs HSBC FLOATING RATE FUND SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 196.85 212.63 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments (1.76) (2.72) 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 0.01 (A) 195.09 209.92 2 EXPENSES 2.1 Management fees 10.11 20.29 2.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 1.94 3.63 2.4 Custodian fees 0.11 2.5 Trusteeship fees 0.03 0.07 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 5.71 13.07 2.8 Audit fees 0.20 0.12 2.9 Other operating expenses 0.38 0.57 2.10 Expenses to be Reimbursed by the Investment Manager (B) 18.37 37.86 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A B = C) 176.72 172.06 4 Change in Unrealised Depreciation in value of investments (D) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C D)] 176.72 172.06 6 Change in unrealised appreciation in the value of investments (F) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 176.72 172.06 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve 7.3 Add / (Less): Equalisation 3,742.92 (4,141.00) 7.4 Transfer from Reserve Fund 19.26 42.36 7.5 Transfer from Unit Premium Reserve 8 TOTAL 3,938.90 (3,926.58) 9 Dividend Appropriation 9.1 Income Distributed during the year 96.76 103.75 9.2 Tax on income distributed during the year 26.84 29.39 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 3,815.30 (4,059.72) Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. ** Service Tax on Management Fees is included in Other Operating Expenses. 135

Key Statistics for the year ended March 31, 2011 HSBC FLOATING RATE FUND LONG TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Regular Growth Option 14.1925 13.5781 Regular Daily Dividend Option 10.0126 10.0114 Regular Weekly Dividend Option 10.0047 10.0066 Regular Monthly Dividend Option 10.0063 10.0064 Institutional Growth Option 14.4137 13.7348 Institutional Daily Dividend Option 10.1799 10.0980 Institutional Weekly Dividend Option 11.2299 11.2348 Institutional Fortnightly Dividend Option 10.1971 10.2245 Institutional Monthly Dividend Option 10.1891 10.0614 Institutional Plus Growth Option Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option High Regular Growth Option 15.0072 14.1925 Regular Daily Dividend Option 10.0621 10.0136 Regular Weekly Dividend Option 10.0199 10.0240 Regular Monthly Dividend Option 10.0688 Institutional Growth Option 15.3477 14.4137 Institutional Daily Dividend Option 10.2198 10.1799 Institutional Weekly Dividend Option 11.2487 11.2550 Institutional Fortnightly Dividend Option 10.2468 Institutional Monthly Dividend Option 10.3713 10.1891 Institutional Plus Growth Option 10.5135 Institutional Plus Daily Dividend Option 10.0417 Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Low Regular Growth Option 14.1925 13.5915 Regular Daily Dividend Option 10.0031 10.0114 Regular Weekly Dividend Option 10.0044 10.0009 Regular Monthly Dividend Option 10.0027 Institutional Growth Option 14.4137 13.7486 Institutional Daily Dividend Option 10.0000 10.1000 Institutional Weekly Dividend Option 11.2297 10.0990 Institutional Fortnightly Dividend Option 10.1606 Institutional Monthly Dividend Option 10.1558 10.0645 Institutional Plus Growth Option 10.1799 Institutional Plus Daily Dividend Option 10.0126 Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option End Regular Growth Option 15.0055 14.1925 Regular Daily Dividend Option 10.0547 10.0126 Regular Weekly Dividend Option 10.0049 10.0047 Regular Monthly Dividend Option 10.0130 10.0063 Institutional Growth Option 15.3589 14.4137 Institutional Daily Dividend Option 10.1799 Institutional Weekly Dividend Option 11.2296 11.2299 Institutional Fortnightly Dividend Option 9.9998 10.1971 Institutional Monthly Dividend Option 10.3028 10.1891 136

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC FLOATING RATE FUND LONG TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 Institutional Plus Growth Option Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 2. Closing Assets Under Management (Rs. in Lakhs) End 27,980 59,776 Average (AAuM) 1 57,286 131,250 3. Gross income as % of AAuM 2 6.32% 5.34% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 0.98% 1.00% Regular Daily Dividend Option 0.98% 1.00% Regular Weekly Dividend Option 0.98% 1.00% Regular Monthly Dividend Option 0.98% 1.00% Institutional Growth Option 0.28% 0.61% Institutional Daily Dividend Option 0.28% 0.61% Institutional Weekly Dividend Option 0.28% 0.61% Institutional Fortnightly Dividend Option 0.28% 0.61% Institutional Monthly Dividend Option 0.28% 0.61% Institutional Plus Growth Option Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option b. Management Fee as % of AAuM (planwise) Regular Growth Option 0.15% 0.38% Regular Daily Dividend Option 0.15% 0.38% Regular Weekly Dividend Option 0.15% 0.38% Regular Monthly Dividend Option 0.15% 0.38% Institutional Growth Option 0.15% 0.38% Institutional Daily Dividend Option 0.15% 0.38% Institutional Weekly Dividend Option 0.15% 0.38% Institutional Fortnightly Dividend Option 0.15% 0.38% Institutional Monthly Dividend Option 0.15% 0.38% Institutional Plus Growth Option Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 5. Net Income as a percentage of AAuM 3 5.97% 4.71% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year (planwise) Retail Regular Daily Dividend Option 0.4657 0.3871 Regular Weekly Dividend Option 0.4909 0.3897 Regular Monthly Dividend Option 0.4851 0.3886 Institutional Daily Dividend Option 0.0409 0.3578 Institutional Weekly Dividend Option 0.6198 0.4792 Institutional Fortnightly Dividend Option 0.2672 0.4551 Institutional Monthly Dividend Option 0.4566 0.3157 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 137

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC FLOATING RATE FUND LONG TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 Corporate Regular Daily Dividend Option 0.4340 0.3603 Regular Weekly Dividend Option 0.4575 0.3627 Regular Monthly Dividend Option 0.4521 0.3617 Institutional Daily Dividend Option 0.0380 0.3330 Institutional Weekly Dividend Option 0.5775 0.4460 Institutional Fortnightly Dividend Option 0.2491 0.4236 Institutional Monthly Dividend Option 0.4255 0.2938 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 8. Returns (%): a. Last One Year Scheme Regular Growth Option 5.7400 4.5249 Regular Daily Dividend Option 5.0600 3.9436 Regular Weekly Dividend Option 5.0300 3.9506 Regular Monthly Dividend Option 5.0400 3.9532 Institutional Growth Option 6.4800 4.9429 Institutional Daily Dividend Option 4.4107 Institutional Weekly Dividend Option 5.6700 4.3116 Institutional Fortnightly Dividend Option 0.9300 4.2832 Institutional Monthly Dividend Option 5.8200 4.4802 Institutional Plus Growth Option Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Benchmark CRISIL Liquid Fund Index 6.2075 3.6700 b. Since Inception Scheme Regular Growth Option 6.5500 6.7022 Regular Daily Dividend Option 5.0500 5.0434 Regular Weekly Dividend Option 4.5000 4.0210 Regular Monthly Dividend Option 5.7200 5.8500 Institutional Growth Option 6.9300 7.0090 Institutional Daily Dividend Option 5.6624 Institutional Weekly Dividend Option 6.3100 6.4241 Institutional Fortnightly Dividend Option 4.9000 6.5441 Institutional Monthly Dividend Option 6.1100 6.1640 Institutional Plus Growth Option Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Benchmark CRISIL Liquid Fund Index 6.1475 6.1400 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 138

Key Statistics for the year ended March 31, 2011 HSBC FLOATING RATE FUND SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Regular Growth Option 13.6668 13.3675 Regular Daily Dividend Option 10.0000 10.0000 Regular Weekly Dividend Option 10.0155 10.0205 Regular Monthly Dividend Option Institutional Growth Option 13.8138 13.5003 Institutional Daily Dividend Option 10.1363 10.0623 Institutional Weekly Dividend Option 10.4999 Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 10.1346 10.1350 Institutional Plus Growth Option 11.7344 11.4592 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 10.0373 Institutional Plus Monthly Dividend Option High Regular Growth Option 14.3458 13.6668 Regular Daily Dividend Option 10.0000 10.0000 Regular Weekly Dividend Option 10.0279 10.0222 Regular Monthly Dividend Option Institutional Growth Option 14.5096 13.8138 Institutional Daily Dividend Option 10.5801 10.1360 Institutional Weekly Dividend Option 10.5018 Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 10.5322 10.1548 Institutional Plus Growth Option 12.0334 11.7344 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 10.0392 Institutional Plus Monthly Dividend Option Low Regular Growth Option 13.6668 13.3689 Regular Daily Dividend Option 10.0000 10.0000 Regular Weekly Dividend Option 10.0155 10.0156 Regular Monthly Dividend Option Institutional Growth Option 13.8138 13.5018 Institutional Daily Dividend Option 10.1360 10.0623 Institutional Weekly Dividend Option 10.4943 Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 10.1314 10.1296 Institutional Plus Growth Option 11.7344 11.4605 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 10.0319 Institutional Plus Monthly Dividend Option End Regular Growth Option 14.3458 13.6668 Regular Daily Dividend Option 10.0000 10.0000 Regular Weekly Dividend Option 10.0155 10.0155 Regular Monthly Dividend Option Institutional Growth Option 14.5099 13.8138 Institutional Daily Dividend Option 10.1363 Institutional Weekly Dividend Option Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 10.1346 139

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC FLOATING RATE FUND SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 Institutional Plus Growth Option 11.7344 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option 2. Closing Assets Under Management (Rs. in Lakhs) End 2,124 7,223 Average (AAuM) 1 7,720 7,720 3. Gross income as % of AAuM 2 2.53% 2.72% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 0.50% 0.51% Regular Daily Dividend Option 0.50% 0.51% Regular Weekly Dividend Option 0.50% 0.51% Regular Monthly Dividend Option Institutional Growth Option 0.43% 0.44% Institutional Daily Dividend Option 0.44% Institutional Weekly Dividend Option 0.44% Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 0.44% Institutional Plus Growth Option 0.37% Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 0.37% Institutional Plus Monthly Dividend Option b. Management Fee as % of AAuM (planwise) Regular Growth Option 0.26% 0.26% Regular Daily Dividend Option 0.26% 0.26% Regular Weekly Dividend Option 0.26% 0.26% Regular Monthly Dividend Option Institutional Growth Option 0.26% 0.26% Institutional Daily Dividend Option 0.26% Institutional Weekly Dividend Option 0.26% Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 0.26% Institutional Plus Growth Option 0.26% Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 0.26% Institutional Plus Monthly Dividend Option 5. Net Income as a percentage of AAuM 3 2.29% 2.23% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year (planwise) Retail Regular Daily Dividend Option 0.3796 0.1726 Regular Weekly Dividend Option 0.3804 0.1768 Regular Monthly Dividend Option Institutional Daily Dividend Option 0.1230 Institutional Weekly Dividend Option 0.0733 Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 0.0410 0.1817 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 0.0161 Institutional Plus Monthly Dividend Option 140

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC FLOATING RATE FUND SHORT TERM PLAN Current Year ended March 31, 2011 Previous Year ended March 31, 2010 Corporate Regular Daily Dividend Option 0.3796 0.1726 Regular Weekly Dividend Option 0.3804 0.1768 Regular Monthly Dividend Option Institutional Daily Dividend Option 0.1230 Institutional Weekly Dividend Option 0.0733 Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 0.0410 0.1817 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option 0.0161 Institutional Plus Monthly Dividend Option 8. Returns (%): a. Last One Year Scheme Regular Growth Option 4.9700 2.2390 Regular Daily Dividend Option 3.8700 1.7359 Regular Weekly Dividend Option 3.8700 1.7298 Regular Monthly Dividend Option Institutional Growth Option 5.0400 2.3222 Institutional Daily Dividend Option 1.9645 Institutional Weekly Dividend Option Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 1.8045 Institutional Plus Growth Option 2.4016 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Benchmark CRISIL Liquid Fund Index 6.2075 3.6800 b. Since Inception Scheme Regular Growth Option 5.8300 5.9868 Regular Daily Dividend Option 4.7000 4.8521 Regular Weekly Dividend Option 4.7400 4.9173 Regular Monthly Dividend Option Institutional Growth Option 5.9900 6.1719 Institutional Daily Dividend Option 5.0985 Institutional Weekly Dividend Option Institutional Fortnightly Dividend Option Institutional Monthly Dividend Option 5.1270 Institutional Plus Growth Option 3.7350 Institutional Plus Daily Dividend Option Institutional Plus Weekly Dividend Option Institutional Plus Monthly Dividend Option Benchmark CRISIL Liquid Fund Index 6.1475 6.1400 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 141

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC FLOATING RATE FUND (COMBINED) 1 Investments: 1.1 It is confirmed that investments of the schemes are registered in the name of the Trustees for the benefit of the scheme s unitholders. 1.2 Open Positions of derivatives for HSBC Floating Rate Fund Long Term Plan and HSBC Floating Rate Fund Short Term Plan as of March 31, 2011 and March 31, 2010 are NIL. 1.3 Investments in Associates and Group Companies are as under: Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount (Rupees) Aggregate Investments by all schemes 2011 2010 970,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the schemes as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss at the end of the Financial year ended March 31, 2011 and March 31, 2010 for HSBC Floating Rate Fund Long Term Plan and HSBC Floating Rate Fund Short Term Plan are Nil. 1.7 The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 334,133,769) and Rs. Nil for Long Term Plan and Short Term Plan respectively) are: Plan 2010-2011 Aggregate Purchases Amount Rupees Percentage of Average Daily Net Assets Amount Rupees Aggregate Sales Percentage of Average Daily Net Assets Long Term Plan 26,359,357,319 460.14% 29,809,561,449 520.37% Short Term Plan 175,630 0.02% The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 523,693,413 and Rs. 2,730,000 for Long Term Plan and Short Term Plan respectively) Plan 2009-2010 Aggregate Purchases Amount Rupees Percentage of Average Daily Net Assets Amount Rupees Aggregate Sales Percentage of Average Daily Net Assets Long Term Plan 72,453,262,526 552.03% 71,918,677,941 547.95% Short Term Plan 797,541,975 103.30% 800,000,000 103.62% 142

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 1.8 Non -Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under : Security Category 2010-2011 Fair Value Percentage to (Rs.) Net Assets LONG TERM PLAN Fair Value (Rs.) Percentage to Net Assets SHORT TERM PLAN Money market Instruments 2,780,796,406 99.39% Total 2,780,796,406 99.39% Security Category 2009-2010 Fair Value Percentage to (Rs.) Net Assets LONG TERM PLAN Fair Value (Rs.) Percentage to Net Assets SHORT TERM PLAN Money market Instruments 5,895,795,487 98.63% Total 5,895,795,487 98.63% 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended for the year ended March 31, 2011 is as under: During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. Nil in Long Term Plan and Short Term Plan respectively. During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 3,831 and Rs. 6,386 in Long Term Plan and Short Term Plan respectively. Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund LONG TERM PLAN Associate 2010-2011 146.52 6.47 1,105,014 13.97 Associate 2010-2011 0.00 0.00 431 0.01 SHORT TERM PLAN Associate 2010-2011 2.97 14.42 311,663 62.69 Associate 2010-2011 1.17 5.70 582 0.12 143

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Name of Sponsor / AMC and its associate / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited Nature of Association / Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] (on accrual basis) % of Total commission paid by the Fund LONG TERM PLAN Associate 2009-2010 271.44 4.44 3,987,136 13.90 HSBC InvestDirect Associate 2009-2010 83.70 1.37 342,379 1.19 Securities (India) Limited SHORT TERM PLAN The Hongkong and Shanghai Banking Corporation Limited Associate 2009-2010 27.75 30.58 810,250 64.35 HSBC InvestDirect Associate 2009-2010 2.51 2.76 1,542 0.12 Securities (India) Limited The brokerage paid was at rates similar to those offered to other distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 Large Holdings in the Scheme (i.e. in excess of 25% of the net assets). Name of Scheme No. of holders % Holding No. of holders % Holding 2011 2010 HSBC Floating Rate Fund Long Term Plan 1 35.39% 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010: Description LONG TERM PLAN 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 9,329,103.605 23,128,796.559 25,555,177.869 6,902,722.295 69,027,221 Regular Daily Dividend 2,756,744.322 41,097.983 2,686,038.936 111,803.369 1,118,035 Regular Weekly 19,522,344.489 77,697,585.540 70,823,236.827 26,396,693.202 263,966,933 Dividend Regular Monthly 24,483,247.290 12,598,651.715 27,209,391.800 9,872,507.205 98,725,073 Dividend Institutional Growth 56,101,800.927 719,577,020.650 771,927,777.748 3,751,043.829 37,510,438 Institutional 7,197,487.341 914,225.760 8,111,713.101 Daily Dividend Institutional Fortnightly Dividend 568,462.756 1,701,128.066 579,250.174 1,690,340.648 16,903,405 Institutional 398,091,374.663 935,257,782.344 1,133,875,989.938 199,473,167.069 1,994,731,672 Weekly Dividend Institutional Monthly Dividend 1,875,973.986 25,342,811.494 25,686,211.806 1,532,573.674 15,325,736 144

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Description SHORT TERM PLAN 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 4,927,595.930 1,746,500.354 4,471,805.494 2,202,290.790 22,022,907 Regular Daily Dividend 20,343,588.524 15,947,837.886 27,435,302.049 8,856,124.361 88,561,246 Regular Weekly Dividend 23,335,871.766 2,151,659.614 16,299,452.631 9,188,078.749 91,880,786 Institutional Growth 2,512,271.146 2,496,593.295 15,677.851 156,778 Institutional Daily Dividend 99,780.341 99,780.341 Institutional Weekly Dividend Institutional Monthly Dividend 2,401,290.952 9,740.143 2,411,031.095 Institutional Plus Growth 13,443,253.681 13,443,253.681 Institutional Plus Daily Dividend Institutional Plus Weekly Dividend LONG TERM PLAN Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 7,361,353.037 29,072,069.318 27,104,318.750 9,329,103.605 93,291,035 Regular Daily Dividend 4,719,009.792 157,887.379 2,120,152.849 2,756,744.322 27,567,444 Regular Weekly 5,869,893.642 69,964,899.678 56,312,448.831 19,522,344.489 195,223,446 Dividend Regular Monthly 43,136,652.841 33,002,015.276 51,655,420.827 24,483,247.290 244,832,474 Dividend Institutional Growth 88,532,331.128 2,513,293,697.351 2,545,724,227.552 56,101,800.927 561,018,008 Institutional 12,461,806.332 Daily Dividend 979,230.716 6,243,549.707 7,197,487.341 71,974,873 Institutional Fortnightly 545,333.900 2,652,232.224 2,629,103.368 568,462.756 5,684,626 Dividend Institutional Weekly 217,865,967.972 2,158,763,676.331 1,978,538,269.640 398,091,374.663 3,980,913,748 Dividend Institutional Monthly Dividend 11,109,646.396 4,073,334.085 13,307,006.495 1,875,973.986 18,759,739 145

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Description SHORT TERM PLAN 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 7,967,470.081 5,212,911.625 8,252,785.776 4,927,595.930 49,275,958 Regular Daily Dividend 25,849,979.215 37,428,733.365 42,935,124.056 20,343,588.524 203,435,886 Regular Weekly Dividend 26,900,500.774 25,526,798.856 29,091,427.864 23,335,871.766 233,358,716 Institutional Growth 97,055.445 4,049,696.111 1,634,480.410 2,512,271.146 25,122,711 Institutional Daily Dividend 6,894,975.853 4,840,621.594 11,635,817.106 99,780.341 997,806 Institutional Weekly 3,440,995.435 Dividend 9,778.962 3,450,774.397 Institutional Monthly Dividend 4,339,496.053 50,934.139 1,989,139.240 2,401,290.952 24,012,908 Institutional Plus Growth 4,987,332.184 8,737,217.855 281,296.358 13,443,253.681 134,432,538 Institutional Plus Daily Dividend Institutional Plus Weekly Dividend 3,580,547.191 4,157.938 3,584,705.129 5 Prior year s amounts have been re-grouped and reclassified, wherever applicable, to confirm to current year s presentation. 6 No contingent liabilities for HSBC Floating Rate Fund Long Term Plan and Short Term Plan for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8 Miscellaneous income in Long Term Plan and Short Term Plan represents excess provision for brokerage expenses of previous year written back as no longer required. 9 Transition to New valuation norms : SEBI circular no. SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/ DF/4/2010 dated June 21, 2010 required Mutual Funds to implement revised valuation norms for debt securities, floating rate securities and money market securities with effect from August 01, 2010. As a measure of best practice and in order to ensure a non disruptive transition from old valuation norms to the new valuation norms applicable with effect from August 01, 2010, non-traded debt securities, floating rate securities and money market securities were progressively so valued that the impact due to transition was spread out from June 11, 2010 to July 31, 2010 to reflect the valuations fairly as per the new regulatory norms by July 31, 2010. The aforesaid has been approved by the Board of Trustees of HSBC Mutual Fund. Further, the same has also been intimated to SEBI vide letter dated June 10, 2010 and June 23, 2010. 10 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 146

HSBC Global Asset Management HSBC Ultra Short Term Bond Fund An open-ended Debt Scheme Abridged Annual Report 2010-2011 * An open-ended fund. Monthly income is not assured and is subject to the availability of distributable surplus. Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Ultra Short Term Bond Fund ( The Scheme ), the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, the Revenue Account and the Cash Flow Statement referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet, the Revenue Account and the Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Ultra Short Term Bond Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. (iii) The methods used to value non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 148

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC ULTRA SHORT TERM BOND FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 13,577.67 49,298.93 2 Reserves & Surplus 2.1 Unit Premium Reserves (2.22) 16.00 2.2 Unrealised Appreciation Reserve 1.21 2.3 Other Reserves 400.87 1,923.00 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 74.36 355.22 TOTAL 14,050.68 51,594.36 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 4,441.98 22,513.75 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities: 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 8,495.75 1.3.5 Securitised Debt securities 1,711.12 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 5,842.67 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 10,284.65 32,720.62 2 Deposits 958.51 2,031.00 3 Other Current Assets 3.1 Cash & Bank Balance 26.90 90.90 3.2 CBLO / Reverse Repo Lending 2,670.79 14,862.54 3.3 Others 109.83 1,889.30 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 14,050.68 51,594.36 Notes to Accounts - Annexure I 149

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC ULTRA SHORT TERM BOND FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 2,104.39 4,070.88 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments (41.68) (54.71) 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 1.88 (A) 2,062.71 4,018.05 2 EXPENSES 2.1 Management fees 239.99 701.07 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 16.98 37.33 2.4 Custodian fees 3.32 5.34 2.5 Trusteeship fees 0.26 0.72 2.6 Commission to Agents * 2.7 Marketing & Distribution expenses 48.86 108.53 2.8 Audit fees 0.20 0.50 2.9 Other operating expenses 2.59 2.72 (B) 312.18 856.21 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 1,750.53 3,161.84 4 Change in Unrealised Depreciation in value of investments (D) 57.61 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 1,692.92 3,161.84 6 Change in unrealised appreciation in the value of investments (F) (1.21) (48.74) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,691.71 3,113.10 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve (1.21) (48.74) 7.3 Add / (Less): Equalisation (1,809.88) (2,459.75) 7.4 Transfer from Reserve Fund 187.75 258.83 7.5 Transfer from Unit Premium Reserve 8 TOTAL 70.79 960.92 9 Dividend Appropriation 9.1 Income Distributed during the year 1,196.21 2,075.16 9.2 Tax on income distributed during the year 208.96 344.04 10 Retained Surplus / (Deficit) carried forward to Balance Sheet (1,334.38) (1,458.28) Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. 150

Key Statistics for the year ended March 31, 2011 HSBC ULTRA SHORT TERM BOND FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Regular Growth Option 12.5727 12.1193 Regular Daily Dividend Option 10.0122 10.0122 Regular Weekly Dividend Option 10.0331 10.0418 Institutional Growth Option 12.6572 12.1702 Institutional Daily Dividend Option 10.0125 10.0125 Institutional Weekly Dividend Option 10.0342 10.0432 Institutional Monthly Dividend Option 10.1446 10.1476 Institutional Plus Growth Option 12.7669 12.2294 Institutional Plus Daily Dividend Option 10.1094 10.0506 Institutional Plus Weekly Dividend Option 10.1637 10.0447 Institutional Plus Monthly Dividend Option 10.3343 10.3369 High Regular Growth Option 13.2048 12.5727 Regular Daily Dividend Option 10.0155 10.0122 Regular Weekly Dividend Option 10.0516 10.0461 Institutional Growth Option 13.3268 12.6572 Institutional Daily Dividend Option 10.0158 10.0125 Institutional Weekly Dividend Option 10.0532 10.0477 Institutional Monthly Dividend Option 10.1917 10.1780 Institutional Plus Growth Option 13.4962 12.7630 Institutional Plus Daily Dividend Option 10.1289 10.1078 Institutional Plus Weekly Dividend Option 10.1844 10.1661 Institutional Plus Monthly Dividend Option 10.3865 10.3556 Low Regular Growth Option 12.5727 12.1235 Regular Daily Dividend Option 9.9963 10.0122 Regular Weekly Dividend Option 10.0315 10.0345 Institutional Growth Option 12.6572 12.1852 Institutional Daily Dividend Option 9.9953 10.0125 Institutional Weekly Dividend Option 10.0330 10.0358 Institutional Monthly Dividend Option 10.1399 10.1415 Institutional Plus Growth Option 12.7669 12.2416 Institutional Plus Daily Dividend Option 10.1062 10.0506 Institutional Plus Weekly Dividend Option 10.1634 10.0385 Institutional Plus Monthly Dividend Option 10.3296 10.3330 End Regular Growth Option 13.2048 12.5727 Regular Daily Dividend Option 10.0021 10.0122 Regular Weekly Dividend Option 10.0331 10.0331 Institutional Growth Option 13.3268 12.6572 Institutional Daily Dividend Option 10.0009 10.0125 Institutional Weekly Dividend Option 10.0342 10.0342 Institutional Monthly Dividend Option 10.1546 10.1446 Institutional Plus Growth Option N.A.! 12.7669 Institutional Plus Daily Dividend Option 10.1107 10.1094 Institutional Plus Weekly Dividend Option 10.1637 10.1637 Institutional Plus Monthly Dividend Option 10.3446 10.3343 151

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC ULTRA SHORT TERM BOND FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 2. Closing Assets Under Management (Rs. in Lakhs) End 13,976 51,239 Average (AAuM) 1 33,963 79,681 3. Gross income as % of AAuM 2 6.07% 5.04% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 1.27% 1.30% Regular Daily Dividend Option 1.27% 1.30% Regular Weekly Dividend Option 1.27% 1.30% Institutional Growth Option 1.02% 1.05% Institutional Daily Dividend Option 1.02% 1.05% Institutional Weekly Dividend Option 1.02% 1.05% Institutional Monthly Dividend Option 1.02% 1.05% Institutional Plus Growth Option 1.02% 0.67% Institutional Plus Daily Dividend Option 0.37% 0.67% Institutional Plus Weekly Dividend Option 0.37% 0.67% Institutional Plus Monthly Dividend Option 0.37% 0.67% b. Management Fee as % of AAuM (planwise) Regular Growth Option 0.71% 0.88% Regular Daily Dividend Option 0.71% 0.88% Regular Weekly Dividend Option 0.71% 0.88% Institutional Growth Option 0.71% 0.88% Institutional Daily Dividend Option 0.71% 0.88% Institutional Weekly Dividend Option 0.71% 0.88% Institutional Monthly Dividend Option 0.71% 0.88% Institutional Plus Growth Option 0.71% 0.88% Institutional Plus Daily Dividend Option 0.71% 0.88% Institutional Plus Weekly Dividend Option 0.71% 0.88% Institutional Plus Monthly Dividend Option 0.71% 0.88% 5. Net Income as a percentage of AAuM 3 5.15% 3.97% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year (planwise) Retail Regular Daily Dividend Option 0.4400 0.3222 Regular Weekly Dividend Option 0.4324 0.3306 Institutional Daily Dividend Option 0.4632 0.3441 Institutional Weekly Dividend Option 0.4545 0.3529 Institutional Monthly Dividend Option 0.4512 0.3516 Institutional Plus Daily Dividend Option 0.5148 0.3286 Institutional Plus Weekly Dividend Option 0.5184 0.2764 Institutional Plus Monthly Dividend Option 0.5187 0.3922 Corporate Regular Daily Dividend Option 0.4100 0.2998 Regular Weekly Dividend Option 0.4030 0.3077 Institutional Daily Dividend Option 0.4317 0.3203 152

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC ULTRA SHORT TERM BOND FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 Institutional Weekly Dividend Option 0.4236 0.3284 Institutional Monthly Dividend Option 0.4205 0.3273 Institutional Plus Daily Dividend Option 0.4797 0.3059 Institutional Plus Weekly Dividend Option 0.4831 0.2573 Institutional Plus Monthly Dividend Option 0.4834 0.3650 8. Returns (%): a. Last One Year Scheme Regular Growth Option 5.0300 3.7411 Regular Daily Dividend Option 4.3900 3.2617 Regular Weekly Dividend Option 4.4000 3.2590 Institutional Growth Option 5.2900 4.0016 Institutional Daily Dividend Option 4.6200 3.4874 Institutional Weekly Dividend Option 4.6300 3.4853 Institutional Monthly Dividend Option 4.6500 3.4918 Institutional Plus Growth Option 5.2900 4.3951 Institutional Plus Daily Dividend Option 5.2300 3.9109 Institutional Plus Weekly Dividend Option 5.2300 3.9919 Institutional Plus Monthly Dividend Option 3.8363 Benchmark CRISIL Composite Index ^^ 6.0942 3.9300 b. Since Inception Scheme Regular Growth Option 6.4400 6.8513 Regular Daily Dividend Option 5.6200 5.9760 Regular Weekly Dividend Option 5.6000 5.9528 Institutional Growth Option 6.6600 7.0587 Institutional Daily Dividend Option 5.8100 6.1557 Institutional Weekly Dividend Option 5.8000 6.1458 Institutional Monthly Dividend Option 5.7600 6.0791 Institutional Plus Growth Option 6.6600 7.3264 Institutional Plus Daily Dividend Option 6.1500 6.4129 Institutional Plus Weekly Dividend Option 6.1500 6.4134 Institutional Plus Monthly Dividend Option 6.5143 Benchmark CRISIL Composite Index ^^ 6.5962 6.7400 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.! No Units Outstnding as at March 31, 2011 ^^ Composite Index of CRISIL Liquid Find Index (90%) and CRISIL Short Term Bond Fund Index (10%) 153

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC ULTRA SHORT TERM BOND FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the scheme s unitholders. 1.2 Open Positions of derivatives as of March 31, 2011 is NIL. Open Positions of derivatives as of March 31, 2010 is NIL. 1.3 Investments in Associates and Group Companies: (Rupees) Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Amount Aggregate Investments by all schemes Amount Aggregate Investments by all schemes 2011 2010 Fixed deposits 970,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years and percentages to net assets is as under : Company Name Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 118,650 0.0023% Depreciation 5,761,295 0.4122% 10 0.0000% Asset Backed Securities Appreciation 2,182 0.0000% Depreciation 1.7 The aggregate value of investment securities purchased and sold (including matured) during the financial year 2010-2011 (excluding accretion of discount of Rs. 72,103,737) are Rs. 9,336,124,545 and Rs. 11,641,776,343 respectively being 274.89% and 342.78% of the average daily net assets. The aggregate value of investment securities purchased (excluding accretion of discount of Rs. 16,855,956) and sold (including matured) during the financial year 2009-2010 are Rs. Nil and Rs. 3,945,886,455 respectively being 0.00% and 49.52% of the average daily net assets. 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under : Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Debt Instruments 444,197,669 31.7822 3,272,062,567 63.8586 Money market 584,267,127 41.8041 Instruments Total 1,028,464,796 73.5863 3,272,062,567 63.8586 154

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 2 Disclosure Under Regulation 25(8) of the Securities And Exchange Board of India (Mutual Funds) Regulations, 1996 as amended: During the year 2010-2011, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 600. During the year 2009-2010, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 62,633. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties/group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Name of Sponsor / AMC and its associates / related parties / group companies Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] 155 % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 126.18 8.66 1,900,431 41.66 Associate 2010-2011 0.00~ 0.00~ 3,488 0.08 Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund The Hongkong and Associate 2009-2010 632.82 23.69 6,055,879 49.19 Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Associate 2009-2010 26.40 0.99 26,101 0.21 ~ Indicates less than 0.01 The brokerage paid was at rates similar to those offered to other distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2011 and March 31, 2010. 4 Unit Capital movement during the years ended March 31, 2011 and March 31, 2010. Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 24,419,950.558 27,655,465.709 44,091,110.779 7,984,305.488 79,843,056 Regular Daily Dividend 184,467,080.286 93,531,334.910 225,986,714.882 52,011,700.314 520,117,003 Regular Weekly 65,312,487.368 25,367,003.139 71,580,534.960 19,098,955.547 190,989,556 Dividend Institutional Growth 9,306,702.799 9,620,847.685 16,438,897.614 2,488,652.870 24,886,530 Institutional Daily Dividend 46,209,439.948 105,429,568.629 140,893,421.118 10,745,587.459 107,455,875 Institutional Weekly Dividend 17,829,567.652 5,845,458.880 20,520,572.316 3,154,454.216 31,544,541 Institutional Monthly Dividend 5,315,781.230 2,020,415.996 6,423,830.599 912,366.627 9,123,666

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Institutional Plus Growth Institutional Plus Daily Dividend Institutional Plus Weekly Dividend Institutional Plus Monthly Dividend 30,370,722.487 361,589,812.464 391,960,534.951 54,569,000.612 558,170,808.662 582,371,478.835 30,368,330.439 303,683,305 48,977,965.510 140,790,603.624 181,653,641.169 8,114,927.965 81,149,280 6,210,629.419 0.000 5,313,240.871 897,388.548 8,973,884 Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 30,701,774.121 64,545,530.369 70,827,353.932 24,419,950.558 244,199,507 Regular Daily 325,722,386.273 407,087,307.877 548,342,613.864 184,467,080.286 1,844,670,802 Dividend Regular Weekly 84,576,307.762 121,748,732.303 141,012,552.697 65,312,487.368 653,124,874 Dividend Institutional Growth 19,011,827.930 29,588,213.966 39,293,339.097 9,306,702.799 93,067,029 Institutional 149,222,257.022 310,840,531.571 413,853,348.645 46,209,439.948 462,094,400 Daily Dividend Institutional 39,216,714.706 55,193,822.795 76,580,969.857 17,829,567.652 178,295,675 Weekly Dividend Institutional Monthly Dividend 12,394,879.767 4,722,154.825 11,801,253.362 5,315,781.230 53,157,812 Institutional 101,445,807.318 510,642,756.113 581,717,840.944 30,370,722.487 303,707,225 Plus Growth Institutional 137,853,200.124 773,255,945.564 856,540,145.076 54,569,000.612 545,690,006 Plus Daily Dividend Institutional 39,471,878.513 231,504,498.928 221,998,411.931 48,977,965.510 489,779,655 Plus Weekly Dividend Institutional Plus Monthly Dividend 8,865,584.027 1,936,573.988 4,591,528.596 6,210,629.419 62,106,293 5 Prior year amounts have been re-grouped and reclassified, wherever applicable, to confirm to current year s presentation. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 156

HSBC Global Asset Management HSBC Flexi Debt Fund An open-ended Debt Scheme Abridged Annual Report 2010-2011 * An open-ended fund. Monthly income is not assured and is subject to the availability of distributable surplus. Issued by HSBC Asset Management (India) Private Limited

Auditors Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund - HSBC Flexi Debt Fund ( The Scheme ) and the related Revenue Account for the year ended on that date which we have signed under reference to this report. These financial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the Management ). Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned and unit capital balances as at March 31, 2011 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet and the Revenue Account referred to above are in agreement with the books of account of the Scheme. 4. In our opinion and to the best of our information and according to the explanations given to us, (i) The Balance Sheet and the Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund - HSBC Flexi Debt Fund as at March 31, 2011 and its net surplus for the year ended on that date. (ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable. (iii) The methods used to value non-traded debt securities as at March 31, 2011, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds, issued by the Securities and Exchange Board of India and the amendments thereto, are fair and reasonable. For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Sd/- Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011 158

Abridged Balance Sheet as at March 31, 2011 Rs. in Lakhs HSBC FLEXI DEBT FUND As at March 31, 2011 As at March 31, 2010 LIABILITIES 1 Unit Capital 4,579.35 9,307.33 2 Reserves & Surplus 2.1 Unit Premium Reserves (168.25) (58.18) 2.2 Unrealised Appreciation Reserve 8.32 6.00 2.3 Other Reserves 1,003.28 992.29 3 Loans & Borrowings 4 Current Liabilities & Provisions 4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 90.30 53.62 TOTAL 5,513.00 10,301.06 ASSETS 1 Investments 1.1. Listed Securities: 1.1.1 Equity Shares 1.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds 1,462.02 1,597.55 1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing: 1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities 1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures 1.3.4 Other Debentures & Bonds 9.89 1.3.5 Securitised Debt securities 1.4 Government Securities 109.94 1.5 Treasury Bills 1.6 Commercial Paper 492.16 1.7 Certificate of Deposits 2,841.51 8,257.15 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities Total Investments 4,905.63 9,864.59 2 Deposits 89.01 3 Other Current Assets 3.1 Cash & Bank Balance 4.23 6.46 3.2 CBLO / Reverse Repo Lending 453.04 419.91 3.3 Others 61.09 10.10 4 Deferred Revenue Expenditure (to the extent not written off) TOTAL 5,513.00 10,301.06 Notes to Accounts - Annexure I 159

Abridged Revenue Account for the year ended March 31, 2011 Rs. in Lakhs HSBC FLEXI DEBT FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1 INCOME 1.1 Dividend 1.2 Interest 578.99 859.56 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 1.5 Realised Gains / (Losses) on External sale / redemption of investments 30.22 848.63 1.6 Realised Gains / (Losses) on Derivative Transactions 1.7 Other Income 0.31 (A) 609.21 1,708.50 2 EXPENSES 2.1 Management fees 84.50 117.66 2.2 Service tax on Management fees 2.3 Transfer agents fees and expenses 4.63 8.56 2.4 Custodian fees 1.01 4.27 2.5 Trusteeship fees 0.16 0.25 2.6 Commission to Agents* 2.7 Marketing & Distribution expenses 53.39 122.76 2.8 Audit fees 0.20 0.50 2.9 Other operating expenses 0.51 0.59 2.10 Less: Expenses to be Reimbursed by the (14.23) Investment Manager (B) 130.17 254.59 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 479.04 1,453.91 4 Change in Unrealised Depreciation in value of investments (D) 0.10 (391.46) 5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 478.94 1,845.37 6 Change in unrealised appreciation in the value of investments (F) 2.32 (135.50) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 481.26 1,709.87 7.1 Add: Balance transfer from Unrealised Appreciation Reserve 7.2 Less: Balance transfer to Unrealised Appreciation Reserve 2.32 (135.50) 7.3 Add / (Less): Equalisation (198.38) (876.61) 7.4 Transfer from Reserve Fund 168.92 13.65 7.5 Transfer from Unit Premium Reserve 8 TOTAL 449.48 982.41 9 Dividend Appropriation 9.1 Income Distributed during the year 234.44 546.20 9.2 Tax on income distributed during the year 35.15 89.41 10 Retained Surplus / (Deficit) carried forward to Balance Sheet 179.89 346.80 Notes to Accounts - Annexure I * Commission to Agents is included in Marketing & Distribution expenses. 160

Key Statistics for the year ended March 31, 2011 HSBC FLEXI DEBT FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 1. NAV per unit (Rs.): Open Regular Growth Option 12.4521 11.6483 Regular Fortnightly Dividend Option 10.7340 10.3662 Regular Monthly Dividend Option 10.3129 10.2553 Regular Quarterly Dividend Option 11.1163 10.7885 Regular Half Yearly Dividend Option 10.2541 9.8005 Institutional Growth Option 12.5608 11.7088 Institutional Fortnightly Dividend Option 10.0592 9.7535 Institutional Monthly Dividend Option 10.5441 10.5214 Institutional Quarterly Dividend Option 10.9411 10.6734 Institutional Half Yearly Dividend Option High Regular Growth Option 13.1704 12.4521 Regular Fortnightly Dividend Option 10.8123 10.9247 Regular Monthly Dividend Option 10.4201 10.8078 Regular Quarterly Dividend Option 11.3030 11.3698 Regular Half Yearly Dividend Option 10.6654 10.3551 Institutional Growth Option 13.3320 12.5608 Institutional Fortnightly Dividend Option 10.1339 10.2659 Institutional Monthly Dividend Option 10.6567 11.0906 Institutional Quarterly Dividend Option 11.1322 11.2508 Institutional Half Yearly Dividend Option 10.2862 Low Regular Growth Option 12.4693 11.7127 Regular Fortnightly Dividend Option 10.6910 10.4236 Regular Monthly Dividend Option 10.2617 10.3033 Regular Quarterly Dividend Option 11.0575 10.8482 Regular Half Yearly Dividend Option 10.2683 9.8548 Institutional Growth Option 12.5787 11.7739 Institutional Fortnightly Dividend Option 10.0199 9.8076 Institutional Monthly Dividend Option 10.4924 10.5177 Institutional Quarterly Dividend Option 10.9039 10.7327 Institutional Half Yearly Dividend Option 10.0071 End Regular Growth Option 13.1704 12.4521 Regular Fortnightly Dividend Option 10.7327 10.7340 Regular Monthly Dividend Option 10.3414 10.3129 Regular Quarterly Dividend Option 11.1421 11.1163 Regular Half Yearly Dividend Option 10.6003 10.2541 Institutional Growth Option 13.3320 12.5608 Institutional Fortnightly Dividend Option 10.0579 10.0592 Institutional Monthly Dividend Option 10.5730 10.5441 Institutional Quarterly Dividend Option 10.9965 10.9411 Institutional Half Yearly Dividend Option 10.2816 161

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC FLEXI DEBT FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 2. Closing Assets Under Management (Rs. in Lakhs) End 5,423 10,247 Average (AAuM) 1 8,437 16,219 3. Gross income as % of AAuM 2 7.22% 10.53% 4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 1.85% 1.86% Regular Fortnightly Dividend Option 1.85% 1.86% Regular Monthly Dividend Option 1.85% 1.86% Regular Quarterly Dividend Option 1.85% 1.86% Regular Half Yearly Dividend Option 1.85% 1.86% Institutional Growth Option 1.50% 1.51% Institutional Fortnightly Dividend Option 1.50% 1.51% Institutional Monthly Dividend Option 1.50% 1.51% Institutional Quarterly Dividend Option 1.50% 1.51% Institutional Half Yearly Dividend Option 1.50% 1.51% b. Management Fee as % of AAuM (planwise) Regular Growth Option 1.00% 0.73% Regular Fortnightly Dividend Option 1.00% 0.73% Regular Monthly Dividend Option 1.00% 0.73% Regular Quarterly Dividend Option 1.00% 0.73% Regular Half Yearly Dividend Option 1.00% 0.73% Institutional Growth Option 1.00% 0.73% Institutional Fortnightly Dividend Option 1.00% 0.73% Institutional Monthly Dividend Option 1.00% 0.73% Institutional Quarterly Dividend Option 1.00% 0.73% Institutional Half Yearly Dividend Option 1.00% 0.73% 5. Net Income as a percentage of AAuM 3 5.68% 8.96% 6. Portfolio turnover ratio 4 7. Total Dividend per unit distributed during the year / period (planwise) Retail Regular Fortnightly Dividend Option 0.5306 0.3027 Regular Monthly Dividend Option 0.4840 0.5592 Regular Quarterly Dividend Option 0.5270 0.3591 Regular Half Yearly Dividend Option 0.2108 0.1927 Institutional Fortnightly Dividend Option 0.5283 0.3482 Institutional Monthly Dividend Option 0.5275 0.6357 Institutional Quarterly Dividend Option 0.5270 0.4380 Institutional Half Yearly Dividend Option 0.0527 Corporate Regular Fortnightly Dividend Option 0.4944 0.2817 Regular Monthly Dividend Option 0.4509 0.5205 Regular Quarterly Dividend Option 0.4912 0.3343 162

Key Statistics for the year ended March 31, 2011 (Contd...) HSBC FLEXI DEBT FUND Current Year ended March 31, 2011 Previous Year ended March 31, 2010 Regular Half Yearly Dividend Option 0.1965 0.1794 Institutional Fortnightly Dividend Option 0.4922 0.3241 Institutional Monthly Dividend Option 0.4915 0.5917 Institutional Quarterly Dividend Option 0.4912 0.4076 Institutional Half Yearly Dividend Option 0.0491 8. Returns (%): a. Last One Year Scheme Regular Growth Option 5.7700 6.9006 Regular Fortnightly Dividend Option 5.0500 6.4777 Regular Monthly Dividend Option 5.0900 6.0895 Regular Quarterly Dividend Option 5.0800 6.4166 Regular Half Yearly Dividend Option 5.4800 6.6180 Institutional Growth Option 6.1400 7.2766 Institutional Fortnightly Dividend Option 5.2500 6.7516 Institutional Monthly Dividend Option 5.4100 6.3702 Institutional Quarterly Dividend Option 5.4400 6.6757 Institutional Half Yearly Dividend Option Benchmark CRISIL Composite Bond Fund Index 5.0617 5.3800 b. Since Inception Scheme Regular Growth Option 8.2400 9.2478 Regular Fortnightly Dividend Option 7.3400 8.2764 Regular Monthly Dividend Option 7.3100 8.2167 Regular Quarterly Dividend Option 7.6000 8.9021 Regular Half Yearly Dividend Option 4.3400 3.4705 Institutional growth Option 8.6200 9.6314 Institutional Fortnightly Dividend Option 7.4400 8.3344 Institutional Monthly Dividend Option 7.7300 8.6806 Institutional Quarterly Dividend Option 8.4400 10.4923 Institutional Half Yearly Dividend Option Benchmark CRISIL Composite Bond Fund Index 6.0873 6.5000 1 AAuM = Average daily net assets. 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year. 163

Notes to Accounts - Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 HSBC FLEXI DEBT FUND 1 Investments: 1.1 It is confirmed that investments of the Schemes are registered in the name of the Trustees for the benefit of the Scheme s unitholders. 1.2 Open Positions of derivatives as a % to Net Assets as of years ended March 31, 2011 is Nil. Open Positions of derivatives as a % to Net Assets as of year ended March 31, 2010 is NIL. 1.3 Investments in Associates and Group Companies: Issuer The Hongkong & Shanghai Banking Corporation Limited Instrument Type Fixed deposits Amount Aggregate Investments by all schemes Amount (Rupees) Aggregate Investments by all schemes 2011 2010 970,000,000 1,018,000,000 1.4 Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2011 and March 31, 2010 are NIL. 1.5 NPAs as at years ended March 31, 2011 and March 31, 2010 are NIL. 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial years and percentages to net assets is as under : Security Category Amount (Rs.) Percentage to Net Assets Amount (Rs.) Percentage to Net Assets 2011 2010 Non Convertible Debentures and Bonds Listed / Awaiting Listing Appreciation 483,692 0.0892% 592,346 0.0578% Depreciation 128,059 0.0236% Non Convertible Debentures and Bonds Privately Placed Appreciation 7,612 0.0007% Depreciation Certificate of Deposit Appreciation 826,721 0.1525% Depreciation 350,546 0.0646% Government of India Securities Appreciation Depreciation 9,881 0.0018% 1.7 The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 22,591,940) and sold (including matured) during the financial year 2010-2011 is Rs.16,110,602,047 and Rs. 16,632,334,773 respectively being 1906.56% and 1968.30% of the average daily net assets. The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 13,501,279) and sold (including matured) during the financial year 2009-2010 is Rs. 19,227,187,601 and Rs. 21,287,109,534 respectively being 1185.45% and 1312.46% of the average daily net assets. 164

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 1.8 Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under: Security Category Fair Value (Rs.) Percentage to Net Assets Fair Value (Rs.) Percentage to Net Assets 2011 2010 Debt Instruments 146,202,108 26.9612% 160,743,327 15.6862% Money market 333,366,577 61.4763% 825,716,153 80.5778% Instruments Total 479,568,685 88.4375% 986,459,480 96.2639% 2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended, for the year ended March 31, 2011 is as under : During the year 2010-2011, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. Nil. During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 1,680. Details of amounts paid to associates in terms of Regulation 25 (8) are as follows : Commission paid to Sponsor / AMC and its associates / related parties / group companies Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited Name of Sponsor / AMC and its associates / related parties / group companies The Hongkong and Shanghai Banking Corporation Limited HSBC InvestDirect Securities (India) Limited Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2010-2011 10.09 36.51 3,767,457 65.16 Nature of Association/ Nature of Relation Period Covered Business Given [Rs. In Crores] % of Total Business received by the Fund Commission paid [Rs.] % of Total commission paid by the Fund Associate 2009-2010 20.83 43.85 7,355,753 54.76 Associate 2009-2010 0.30 0.63 293,137 2.18 The brokerage paid was at rates similar to those offered to other distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 3 Large Holdings in the Scheme (i.e. in excess of 25% of the net assets): Name of Scheme No. of holders % Holding No. of holders % Holding 2011 2010 HSBC Flexi Debt Fund 2 57.03% 165

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 4 Unit Capital movement during the year ended March 31, 2011 and March 31, 2010: Description 2010-2011 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 4,826,443.715 1,393,607.578 5,198,847.663 1,021,203.630 10,212,036 Regular Monthly Dividend 3,124,675.360 231,101.295 1,796,712.658 1,559,063.997 15,590,639 Regular Fortnightly Dividend 716,902.735 485,500.659 1,096,972.841 105,430.553 1,054,308 Regular Quarterly Dividend 3,198,586.047 239,860.492 2,386,409.348 1,052,037.191 10,520,373 Regular Half Yearly Dividend 1,341,015.203 1,340,048.851 966.352 9,663 Institutional 22,483,472.275 12,178,125.003 13,963,305.045 20,698,292.233 206,982,924 Growth Institutional 11,761,922.583 2,247,598.485 12,859,025.404 1,150,495.664 11,504,957 Monthly Dividend Institutional Fortnightly Dividend 34,181,810.440 1,082,194.357 28,312,554.791 6,951,450.006 69,514,500 Institutional 11,438,436.190 635.302 3,710,976.583 7,728,094.909 77,280,949 Quarterly Dividend Institutional Half 5,526,418.415 5,526,418.415 55,264,184 Yearly Dividend Description 2009-2010 Opening Units Subscription Redemption Closing Units Face Value Regular Growth 11,320,074.613 5,141,823.875 11,635,454.773 4,826,443.715 48,264,437 Regular Monthly Dividend Regular Fortnightly Dividend Regular Quarterly Dividend Regular Half Yearly Dividend Institutional Growth Institutional Monthly Dividend Institutional Fortnightly Dividend Institutional Quarterly Dividend Institutional Half Yearly Dividend 22,377,892.041 2,013,779.622 21,266,996.303 3,124,675.360 31,246,753 2,851,879.905 503,018.935 2,637,996.105 716,902.735 7,169,028 6,647,539.396 1,500,941.400 4,949,894.749 3,198,586.047 31,985,860 197,382.137 1,341,015.203 197,382.137 1,341,015.203 13,410,152 77,479,560.708 9,205,154.887 64,201,243.320 22,483,472.275 224,834,723 61,694,176.890 15,784,931.042 65,717,185.349 11,761,922.583 117,619,226 99,822,416.031 2,048,808.411 67,689,414.002 34,181,810.440 341,818,104 16,293,401.195 4,653,040.877 9,508,005.882 11,438,436.190 114,384,362 166

Notes to Accounts - Annexure I (Contd...) To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2011 5 Previous year s figures have been re-grouped / re-arranged where appropriate. 6 No contingent liabilities for the years ended March 31, 2011 and March 31, 2010. 7 Expenses other than Management Fees are Inclusive of Service Tax where applicable. 8 Transition to New valuation norms : SEBI circular no. SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir/IMD/ DF/4/2010 dated June 21, 2010 required Mutual Funds to implement revised valuation norms for debt securities, floating rate securities and money market securities with effect from August 01, 2010. As a measure of best practice and in order to ensure a non disruptive transition from old valuation norms to the new valuation norms applicable with effect from August 01, 2010, non-traded debt securities, floating rate securities and money market securities were progressively so valued that the impact due to transition was spread out from June 11, 2010 to July 31, 2010 to reflect the valuations fairly as per the new regulatory norms by July 31, 2010. The aforesaid has been approved by the Board of Trustees of HSBC Mutual Fund. Further, the same has also been intimated to SEBI vide letter dated June 10, 2010 and June 23, 2010. 9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 14, 2011 & July 15, 2011 respectively. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir 8/132968/2008 dated July 24, 2008. 167

HSBC Global Asset Management HSBC Cash Fund An open-ended Liquid Scheme Abridged Annual Report 2010-2011 * An open-ended fund. Monthly income is not assured and is subject to the availability of distributable surplus. Issued by HSBC Asset Management (India) Private Limited