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INDEX

HSBC Equity Fund 3

HSBC Progressive Themes Fund 20

HSBC Emerging Markets Fund 37

HSBC Dynamic Fund 54

HSBC Tax Saver Equity Fund 75

HSBC India Opportunities Fund 92

HSBC Midcap Equity Fund 112

HSBC Unique Opportunities Fund 129

HSBC Small Cap Fund 149

HSBC MIP 169

HSBC Income Fund 196

HSBC Floating Rate Fund 225

HSBC Ultra Short Term Bond Fund 252

HSBC Cash Fund 273

HSBC Gilt Fund 294

HSBC Flexi Debt Fund 311

HSBC Fixed Term Series 332

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Abridged Annual Report 2009 - 2010

HSBC Equity FundAn open-ended diversified equity Scheme

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Dear Investor,

We thank you for investing with HSBC Mutual Fund.

We are pleased to inform you that HSBC MIP Savings Plan has been rated CPR1

by CRISIL, in the Open end MIP Aggressive Fund category, among 21 schemes, for its 2

year performance, ended March 31, 2010 (Monthly income is not assured and is subjectto availability of distributable surplus). We have also been rated the top performing fund

manager for a one year period, on the Employees Provident Fund Organisation (EPFO)

mandate, which is one of the largest provident funds in India, amongst the 4 fund

managers who have been provided with this mandate. (Past performance may or may not

be sustained in the future and is no guarantee of future results).

At the global level, HSBC Global Asset Management continues to be one of the leading

players in emerging markets with assets of USD 90 bn as at December 31, 2009.

The Group continues to be committed to our asset management business in India which is

a core market for the Group.

HSBC Asset Management (India) Private Limited through its mutual fund business as well

as Portfolio Management Services (PMS) business (including EPFO money deployed till

date) manages assets of about Rs. 40,161 Crores as at June 30, 2010.

HSBC Asset Management (India) also offers Portfolio Management Services (PMS)

which aims to provide long-term wealth creation for high net-worth individuals through

active portfolio management and manages mandates for large institutional clients.

The core to our winning strategy is our endeavour to deliver consistent performance over

the medium to long term for our investors in a risk controlled environment and aim forconsistent wealth creation under varying market conditions.

We remain committed to our philosophy of aiming for consistent wealth creation and

service excellence and look forward to your continued investments inHSBC Mutual Fund.

Yours sincerely,

Vikramaaditya

Chief Executive Officer

HSBC Asset Management (India) Private Limited

* Please refer Ranking methodology and disclaimers mentioned at the end of the AbridgedAnnual Report for the year ended March 31, 2010.

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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


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, Off CST Road,

Kalina, Santacruz (East), Mumbai 400 098.

AUDITORS TO THE SCHEME

Price Waterhouse

Chartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai 400 028.

LEGAL ADVISORS

Bharucha & Partners

Hague Building, Sprott Road, Ballard Estate, Mumbai 400 001

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

Dr. Rudolf Apenbrink

Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri

Mr. Dilip J. Thakkar

BOARD OF DIRECTORS

Ms. Naina Lal Kidwai Chairman

Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*

Ms. Kishori J. Udeshi

Mr. Vikramaaditya Chief Executive Officer

* Mr. Ashok Jha has been appointed as a Director with effect from August 20, 2009 andMr. Vithal Palekar has resigned as a Director with effect from August 10, 2009.

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The Trustees present the eighth report and the audited abridged financial statements of the Scheme(s) ofHSBC Mutual Fund (the Fund), for the year ended March 31, 2010.

1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEME

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 relatedsecurities. HEF offers investors two Options (1) Growth Option (2) Dividend Option. The Dividend Optionoffers Dividend Payout and Dividend Reinvestment Facilities.

The net assets of HEF amounted to Rs. 1382.78 crores as at March 31, 2010 as against Rs.1092.07 croresas at March 31, 2009. Around 98.30% of the net assets were invested in equities, 2.45% of the net assetswere invested in reverse repos / CBLO and (0.75)% were invested in net current assets as at March 31,2010.

HEFs approach is to invest across a range of market capitalizations with a preference for medium and largecompanies. Income is not a primary consideration in the investment policies of HEF.

HEF underperformed over the past 1 year on a defensive portfolio and relatively higher level of cash in amarket that rose significantly. Longer term performance has been in line with benchmarks.

Date of Inception: 10 December, 2002 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception

HSBC Equity Fund Growth 58.42 11.97 21.37 36.13

BSE 200 92.87 12.19 20.44 26.92

Returns data as on March 31, 2010.

Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10invested at inception. Calculations are based on Growth NAVs.

b) Market Overview & Outlook

MARKET OVERVIEW

(as furnished by HSBC Asset Management (India) Private Limited)

Equity Market Overview

The financial year ended 31st March, 2010 turned out to be equally eventful as last year. The main

difference between the two being that last year marked lot of negative events for the equity marketsglobally while FY10 was a very positive one with positive events both at global and domestic level forIndia. Globally, we saw the fiscal / monetary stimuli by various governments to take the credit crisis headon continue thereby leading to economic improvement in most parts of the world. And domestically,we saw the United Progressive Alliance (UPA) sweeping victory in the central elections thereby ensuringstability, policy continuity, and a great degree of space to implement reforms. With the fragmented natureof the opposition leaving it too weak to deter the reform process, everyone expected to see a boost toinvestment growth and policy initiatives thereby leading to an upward bias to growth. The second budgetfrom the present government continues to underpin on its key focus areas of infrastructure and socialsector spending.

For the financial year 2009-2010, BSE SENSEX was up by 80.5%. The BSE Midcap was up by 130.2% and

the broader indices like BSE 200, 96.3% and BSE 500, 99.8% also reflected the sharp up move across themarkets.

Economic data points coming out globally remained positive thereby indicating the sustainability of theglobal recovery process. This led to improving risk appetite globally and investors buying most of the riskierasset classes hence lot of money flowed into the emerging markets and India benefited as it was one ofthe few economies which grew very well even in the downturn thereby indicating the broad strength ofthe country. The second half of last year saw improvement in most of the economic indicators leading togood performance by equity markets globally. But over the last couple of months, we are seeing investorfocus globally shift to monetary and fiscal tightening by the Central Banks and Governments around the

Trustees ReportFor the year ended March 31, 2010

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world. And hence there is a fear that this might de-rail the recovery process what we are witnessing overthe last few months thereby leading to correction in most of the asset classes like commodities, equitiesaround the world.

In another important event, we saw S&P revise its outlook on Indias long-term sovereign credit rating tostable from negative. It affirmed its BBB- long-term and A-3 short-term sovereign credit ratings on India.The outlook upgrade driven by consolidation in fiscal deficit and strong growth.

Debt Market Overview

Bond yields rose for most of the financial year 2009-2010 as market was hit by a huge borrowing calendarof the government. This was a consequence of the fiscal expansion that was undertaken since 2008 toenhance public expenditure in the face of the global crisis that had hit the economy. Supply fatigue soon setinto the market, leading to a gradual rise in bond yields over the year. Domestic economic data started toimprove towards late calendar year thus further curbing appetite for bonds. 10 year benchmark sovereignyield rose approximately 80 bps over the fiscal.

System liquidity remained abundant for most of the year on the back of aggressive cuts in Cash Reserve

Ratio (CRR) undertaken by the RBI between October 2008 January 2009. Liquidity was also aided bythe open market purchases of government bonds by the RBI done between December 2008 September2009. Consequently, system liquidity as measured by excess balances parked by banks under the RBIliquidity adjustment facility (LAF) window averaged approximately INR 100,000 crores during the fiscal.Consequently, short end rates rallied by 150 200 bps over the fiscal. Sentiment on short end rates wasfurther aided by the RBIs stated intention of a calibrated exit from the monetary policy accommodationput in place late 2008. It hiked CRR by 75 bps in the policy review in January 2010 and repo, reverse reporates by 25 bps each in March 2010.

MARKET OUTLOOK


Equity Market OutlookFinancial Year (FY) 2009-10 was a year marked by most of the governments and Central banks aroundtheir world doing their best to enable the economies to come out of the sub-prime crisis that had ledto credit market freezing and recessionary conditions in developed nations and slowdown in emergingeconomies. And these efforts led to slow and gradual improvement in the economic recovery process withgrowth in emerging economies picking up sharply even though the developed economies continued toimprove slowly. But over the last few months, we saw the Greek crisis become bigger which eventuallyculminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fundto support fiscally strained Euro Area member countries, all of which comes with severe austerity measures,has once again brought to the fore issues regarding deficits and debt sustainability. This led to enormousuncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investorsrisk appetite. So now apart from concerns on Chinas overheated property market focus shifted to the Euro

region uncertainty. So overall the next year is going to be very crucial with respect to the direction of theeconomic environment amidst all this uncertainty.

In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP forFY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons andindustry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growthin FY09. India remains a supply-constrained and capital-starved economy with significant latent unmetdemand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robustdomestic demand, driven by private consumption and investment, may be complemented by improvingexternal demand. The key to track will be the strength of the upturn in the investment cycle. Even thoughthere are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a moregradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the

economic downturn exceptionally well, and is doing the right things to position growth at an elevated levelwithout either fuelling a sustained rise in inflation or pushing the banks to lend more aggressively. Fiscalconsolidation will be credible as the government has little choice but to begin the much-needed processof fiscal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure,infrastructure building and domestic consumption are still intact. The key concerns at this point stemfrom the uncertainty in the developed economies and any fallout of the same on India and the domesticinflations which seems to be very high.

The next financial year 2010-2011 is likely to be one where specific sectors and company performancesmay be much better than broader market indices. The challenge will be to pick these stocks and sectors

Trustees ReportFor the year ended March 31, 2010 (Contd...)

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ahead of the market. Given that markets valuations have come off the trough seen in early March 2009with the markets now trading at valuations of around 15-16X FY2011 earnings, in the near term we expectmarkets to enter a phase of consolidation.

Debt Market OutlookThe interest rate view for the year ahead is set against the following backdrop:

l Domestic non agricultural growth has rebounded sharply led by manufacturing over last 2 quarters.While this has been helped by the fiscal and monetary stimulus in place since early last year, the lastfew months are showing definitive signs of pick up in private sector momentum as well.

l Inflation has surged largely on the back of rise in food prices. However, with a manufacturing reboundunderway demand side pressures are rapidly building. Recent fall in commodity prices, if sustained,along with expectation of normal monsoons domestically may be incrementally beneficial for supplyside inflation.

l Even after 2 rate hikes of 25 bps each in March and April 2010, current real policy rates of the ReserveBank of India (RBI) are significantly negative. However, the central bank is showing a decided biastowards calibrated rate hikes.

l The recent European crisis has led to weakness in asset markets and a drop in commodity pricesglobally. Even though domestic rebound remains strong, international linkages from trade, finance,and portfolio flows have made policy makers more watchful in the near term.

l Gross market borrowing for FY 2010-11 is pegged at INR 4,57,000 crores versus INR 4,51,000 croresin 2009-10. A few demand-supply dynamics for government securities are as follows:

l Demand for government bonds may not be as strong in the year ahead given rising inflation, lowerliquidity, expectations of policy rate rise and relatively better credit growth. However, demand mayimprove if the European situation were to cause a significant change in markets growth versusinflation expectations.

l Absence of RBI OMO and MSS de-sequestering imply that net supply of government securities tothe market will be higher than last year by almost INR 1,00,000 crores.

l 3G + BWA auctions may result in more than 3 times budgeted proceeds for GoI. While prospectsof additional expenditures (particularly on subsidy) remain, there are tentative expectations of somereduction in second half borrowing.

Overall, while sufficient risks remain to bond yields, some factors as discussed above have turned bondpositive. These, if sustained, could ensure against a very sharp rise in yields thus providing opportunitiesfor select duration plays. Moreover, if market were to get more comfort that the governments fiscal deficitwould progressively reduce in the year ahead, some of the so-called supply premium that has been builton the curve since last year may begin to unwind thus leading to softening of yields later in the year. Also,given that system liquidity is expected to progressively reduce going into the October December 2009quarter, we expect the curve to start to flatten thereon.

2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSETMANAGEMENT COMPANY

a) Sponsor

HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI). TheSponsor is the Settlor of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (RupeesOne Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.

HSCI is a member of the HSBC Group, one of the largest banking and financial services organisations,in the world. Headquartered in London, HSBC operates through long-established businesses in five

regions: Europe, Asia-Pacific region, Middle East, America and Africa. Through its global network ofsome 10,000 offices in 83 countries and territories, HSBC provides a comprehensive range of financialservices to personal, commercial, corporate, institutional and investment and private banking clients.

HSCI offers integrated investment banking services, securities and corporate finance & advisory. HSCI isa member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivativemarket segments) and is also a category I merchant banker registered with Securities and ExchangeBoard of India.

HSCI holds 100% of the paid-up equity share capital of the AMC.


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b) HSBC Mutual Fund

HSBC Mutual Fund (the Mutual Fund or the Fund) has been constituted as a Trust in accordancewith 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 datedFebruary 7, 2002 with HSBC Asset Management (India) Private Limited (the AMC) to function asthe Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI videregistration 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 investmentin securities / any other property for the purpose of providing facilities for participation by persons asbeneficiaries 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 thebenefit of the unitholders. 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. TheTrustees seek to ensure that the Fund and the Schemes floated thereunder are managed by the AMCin 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 privatelimited company incorporated under the Companies Act, 1956 on December 12, 2001 having itsRegistered Office at 314, D. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) PrivateLimited has been appointed as the Asset Management Company of the HSBC Mutual Fund by theTrustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed betweenthe Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide.its letter No. MFD/BC/163/2002 dated May 27, 2002.

The paid-up equity share capital of the AMC is Rs. 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 Scheme 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 as on 31 March 2010

Scheme

Unclaimed Dividends Unclaimed Redemptions

Amount(Rs.)

No. ofInvestors

Amount(Rs.)

No. ofInvestors

HSBC Equity Fund 2,779,078 617 1,696,434 50

6. INVESTOR SERVICES

During the year, the number of official points of acceptance of transactions increased significantly toabout 206 locations. In addition to the offices of the Registrar & Transfer agents, the Asset ManagementCompany has Investor Service Centres in 14 locations at its own offices - namely Mumbai, New Delhi,Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore,Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset ManagementCompany has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (forcredit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days


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from the record date in all schemes. The internal standards on redemption payouts have been consistentlymet, with very few exceptions. The number of locations for the ECS Auto Debit facility for investmentsthrough Systematic Investment Plan also increased to about 87 by March 2010.

On the distribution front, the number of empanelled distributors increased from 8632 as on 31 March,2009 to 8859 as of 31 March, 2010. During the year, the Asset Management Company initiated tie-upsfor online distribution of the Mutual Funds schemes with several channel partners taking the total numberof such tie-ups to 32 (Angel Capital & Dept Market Ltd, Bajaj Capital Ltd, Bonanza Portfolio Ltd., CITIBANKNA, Citigroup Wealth Advisors India Private Limited, DawnayDay AV India Advisors Pvt.Ltd., HDFC BankLtd., Hongkong & Shanghai Banking Corporation Ltd., HSBC Corporate Investment Solution Services,ICICI Securities Limited, iFAST Financial India Pvt.Ltd., INDIA INFOLINE LTD., IndusInd Bank Limited, INGVysya Bank Ltd., Karvy Stock Broking Ltd., Kotak Mahindra Bank Limited, Kotak Securities Limited, MotilalOswal Securities Limited, NJ India Invest Pvt. Ltd., Reliance Securities Limited, Religare Securities Limited, RRInvestors Capital Services Pvt. Ltd., SBICAP Securities Ltd., Sharekhan Limited, Shriram Insight Share BrokersLtd., SMC Global Securities Limited, Standard Chartered - STCI Capital Markets Ltd., Standard CharteredBank, Tom Distribution Services Ltd., Yes Bank Limited, IDBI Capital Market Services Ltd., JRG Securities

Limited).Call centre operations have been extended to cover the entire country. The Asset Management Companyhas outsourced certain back office services including call Centre Services to HSBC Operations and ProcessingEnterprise (India) Private Limited (HOPE).

7. DETAILS OF INVESTOR GRIEVANCE REDRESSAL

The details of the redressal of investor complaints received against HSBC Mutual Fund during 2009-2010are as follows:

Total Number of Folios: 5,22,334

Comp-

laintCode

Type of

complaint #

(a) No. of

complaintspendingat the

beginningof the year

(b) No. of

complaintsreceived

during theyear

Action on (a) and (b)

Resolved NonActio-nable*

Pending

Within30

days

30-60days

60-180days

Beyond180days

0-3months

3-6months

6-9months

9-12months

I A Dividend onUnits

1 61 62 0 0 0 0 0 0 0 0

I B Interest ondelayedpayment ofDividend

0 0 0 0 0 0 0 0 0 0 0

I C RedemptionProceeds

2 57 59 0 0 0 0 0 0 0 0

I D Interest ondelayedpayment ofRedemption

0 0 0 0 0 0 0 0 0 0 0

II A Non receipt ofstatement ofaccount/ UnitCertificate

0 101 101 0 0 0 0 0 0 0 0

II B Discrepancy inStatement ofAccount

0 0 0 0 0 0 0 0 0 0 0

II C Non receipt ofAnnual Report/AbridgedSummary

0 0 0 0 0 0 0 0 0 0 0

III A Wrong Switchbetweenschemes

0 0 0 0 0 0 0 0 0 0 0


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Comp-laintCode

Type ofcomplaint #

(a) No. ofcomplaints

pendingat the


(b) No. ofcomplaints

receivedduring the

year


Resolved NonActio-

nable*

Pending

Within30days

30-60days 60-180days Beyond180days

0-3months 3-6months 6-9months 9-12months

III B Unauthorisedswitch betweenschemes

0 0 0 0 0 0 0 0 0 0 0

III C Deviationfrom Schemeattributes

0 3 3 0 0 0 0 0 0 0 0

III D Wrong or excesscharges/load

0 1 1 0 0 0 0 0 0 0 0

III E Non updationof changes viz.address, PAN,bank details,nomination etc.

0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0

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

8. STATUTORY DETAILS

a) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes ofthe 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 withfluctuations 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 shallbe available for inspection at the Head Office of the mutual fund. Present and prospective unit holdercan obtain copy of the trust deed, the full Annual Report of the Scheme(s), the Annual Report of HSBCAsset 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 alsothank 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 Trusteesalso 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 advocatesand the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) PrivateLimited 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/-N. P. GidwaniChairman

MUMBAI

July 20, 2010

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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, 2010, the related Revenue Account for the year ended on that date and the Cash FlowStatement 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 andthe Management of HSBC Asset Management (India) Private Limited (the Management). Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe 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 includedconfirmation of securities owned and unit capital balances as at March 31, 2010 by correspondencewith the custodian / others and registrar and transfer agent respectively. An audit also includesassessing the accounting principles used and significant estimates made by the Management as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. We have obtained all the information and explanations which to the best of our knowledge and beliefwere necessary for the purpose of our audit. The Balance Sheet, Revenue Account and Cash FlowStatement 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, Revenue Account and Cash Flow Statement together with the notes thereongive 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 andfair view of the state of affairs of HSBC Mutual Fund HSBC Equity Fund as at March 31, 2010, itsnet surplus and its cash flows for the year ended on that date.

ii. The Balance Sheet as at March 31, 2010 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 theaccounting policies and standards specified in the Ninth Schedule of the Securities and ExchangeBoard of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.

For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants

Sd/-

Vivek PrasadPartnerMembership No. F-104941

Place : MumbaiDate : July 20, 2010

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Abridged Balance Sheet as at March 31, 2010

Rs. in Lakhs

HSBC EQUITY FUND

As at

March 31, 2010

As at

March 31, 2009

LIABILITIES

1 Unit Capital 33,754.33 39,846.26

2 Reserves & Surplus

2.1 Unit Premium Reserves (4,983.57) 2,119.082.2 Unrealised Appreciation Reserve 33,567.40 22.032.3 Other Reserves 75,939.39 67,221.65

3 Loans & Borrowings

4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 2,810.45 1,337.52

TOTAL 141,088.00 110,546.55

ASSETS

1 Investments

1.1. Listed Securities:1.1.1 Equity Shares 131,631.74 85,046.831.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds

1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing:1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures

1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities

Total Investments 131,631.74 85,046.83

2 Deposits 4,506.03 6,256.033 Other Current Assets

3.1 Cash & Bank Balance 55.26 214.243.2 CBLO / Reverse Repo Lending 3,384.73 16,548.573.3 Others 1,510.24 2,480.884 Deferred Revenue Expenditure

(to the extent not written off)

TOTAL 141,088.00 110,546.55

Notes to Accounts Annexure I

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Rs. in Lakhs

HSBC EQUITY FUND

Current

Year endedMarch 31, 2010

Previous

Year endedMarch 31, 2009

1 INCOME1.1 Dividend 1,581.76 1,130.001.2 Interest 470.71 1,426.941.3 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

investments25,786.64 (28,846.88)

1.6 Realised Gains / (Losses) on Derivative Transactions 56.53 1,828.551.7 Other Income 29.70

(A) 27,914.69 (24,461.39)

2 EXPENSES2.1 Management fees 1,509.09 697.592.2 Service tax on Management fees** 2.3 Transfer agents fees and expenses 244.62 215.562.4 Custodian fees 62.63 58.332.5 Trusteeship fees 1.35 0.452.6 Commission to Agents * 2.7 Marketing & Distribution expenses 828.04 1,205.762.8 Audit fees 7.00 5.502.9 Other operating expenses 248.60 20.45

(B) 2,901.33 2,203.64

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 25,013.36 (26,665.03)

4 Change in Unrealised Depreciation invalue of investments (D) (4,894.10) 16,683.17

5 NET GAINS / (LOSSES)FOR THE YEAR [E = (C - D)] 29,907.46 (43,348.20)

6 Change in unrealised appreciation inthe value of investments (F) 33,545.37

7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 63,452.83 (43,348.20)

7.1 Add: Balance transfer fromUnrealised Appreciation Reserve

7.2 Less: Balance transfer toUnrealised Appreciation Reserve 33,545.37

7.3 Add / (Less): Equalisation (13,771.15) 31,164.97

8 TOTAL 16,136.31 (12,183.23)

9 Dividend appropriation

9.1 Income Distributed during the year 7,418.57 0.25

9.2 Tax on income distributed during the year 10 Retained Surplus / (Deficit)

carried forward to Balance Sheet 8,717.74 (12,183.48)


* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.

Abridged Revenue Account for the year ended March 31, 2010

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HSBC EQUITY FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 20091. NAV per unit (Rs.):

Open

Regular Growth Option 60.1737 88.3814

Regular Dividend Option 18.8099 27.6286

High



Low


Regular Dividend Option 18.9650 16.5549End



2. Closing Assets Under Management (Rs. in Lakhs)

End 138,278 109,209

Average (AAuM)1 148,727 108,793

3. Gross income as % of AAuM2 18.77% -22.48%

4. Expense Ratio:

a. Total Expense as % of AAuM (planwise)

Regular Growth Option 1.95% 2.03%

Regular Dividend Option 1.95% 2.03%

b. Management Fee as % of AAuM (planwise)



5. Net Income as a percentage of AAuM3 16.82% -24.51%

6. Portfolio turnover ratio4 1.28 1.10

7. Total Dividend per unit distributedduring the year (planwise)

Retail

Regular Dividend Option 2.50

CorporateRegular Dividend Option 2.50

8. Returns (%):

a. Last One Year

Scheme

Regular Growth Option 58.4247 (31.9159)

Regular Dividend Option 58.4242 (31.9190)

Benchmark

BSE 200 92.8700 (40.9800)

b. Since Inception

SchemeRegular Growth Option 36.1335 32.9007


Benchmark

BSE 200 26.9200 18.7800

1 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.

Key Statistics for the year ended March 31, 2010

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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 Schemes unitholders.1.2. Open Positions of derivatives amount to Rs. 417,045,564 and is 3.02% to Net Assets as of year

ended March 31, 2010. Open Positions of derivatives amount to Rs. (123,697,400) and is 1.13%to Net Assets as of year ended March 31, 2009.

1.3. Investments in Associates and Group Companies:

Issuer InstrumentType

Amount(Rs.)

AggregateInvestments

by all schemes

Amount(Rs.)

AggregateInvestments

by allschemes

2010 2009

The Hongkong &Shanghai BankingCorporation Limited

Fixed deposits 430,000,000 1,018,000,000 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March31, 2010 and March 31, 2009 is NIL.

1.5. NPAs as at years ended March 31, 2010 and March 31, 2009 are NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year 2009-2010 and percentage tonet assets are as under:

Company Name Amount(Rs.)

Percentage toNet Assets

Amount(Rs.)


2010 2009

Equity Shares

Appreciation 3,511,447,614 25.3942% 419,474,916 3.8410%

Depreciation 154,707,444 1.1188% 921,216,805 8.4354%

Equity Futures

Appreciation 4,260,464 0.0308% 2,218,589 0.0203%

Depreciation 16,591,918 0.1200% 15,363 0.0001%

1.7. The aggregate value of investments securities purchased (excluding accretion of discountof Rs. 710,496) and sold during the financial year 2009-2010 is Rs. 12,919,307,271 andRs. 14,698,914,601 respectively being 86.87% and 98.83% of the average daily net assets.

The aggregate value of investments securities purchased (excluding accretion of discount ofRs. 14,024,158) and sold during the financial year 2008-2009 is Rs. 20,051,454,038 andRs. 15,984,411,730 respectively being 184.31% and 146.93% of the average daily net assets.

1.8. Non-Traded securities in the portfolio as on March 31, 2010 and March 31, 2009 is Nil.

2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 as amended.

During the year 2009-10, The Hongkong & Shanghai Banking Corporation Limited, an associate entityof HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting toRs. 118,354 and clearing member charges on derivative transactions amounting to Rs. 1,745,886.

During the year 2008-09, The Hongkong & Shanghai Banking Corporation Limited, an associate entityof HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting toRs. 39,751 and clearing member charges on derivative transactions Rs. 2,429,235.


To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2010

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Commission paid to Sponsor / AMC and its associates / related parties / group companies

Name of Sponsor /AMC and itsassociates / relatedparties / groupcompanies

Nature ofAssociation /

Nature ofRelation

PeriodCovered

BusinessGiven

[Rs. in Crores]

% of TotalBusiness

received bythe Fund

Commissionpaid[Rs.]

% of Totalcommissionpaid by the

Fund

The Hongkong andShanghai BankingCorporation Limited

Associate 2009 - 2010 154.25 28.82 55,132,417 32.27

HSBC InvestDirectSecurities (India)Limited

Associate 2009 - 2010 1.01 0.19 526,980 0.31



Nature ofRelation

PeriodCovered

BusinessGiven

[Rs. in Crores]

% of TotalBusiness

received bythe Fund

Commissionpaid[Rs.]

(on accrualbasis)

% of Totalcommissionpaid by the

Fund

The Hongkong andShanghai BankingCorporation Limited

Associate 2008 - 2009 224.05 10.03 71,596,880 10.65

Brokerage paid to Sponsor / AMC and its associates / related parties / group companies



Nature ofrelation

PeriodCovered

Value ofTransactions

[Rs. in Crores]

% of totalvalue of

transactionof the Fund

Brokeragepaid[Rs.]

% of totalbrokeragepaid by the

Fund

HSBC Securities andCapital Market (India)Private Limited

Sponsor 2009 - 2010 123.77 2.70 922,708 1.63



Nature ofRelation

PeriodCovered

Value ofTransactions

[Rs. in Crores]

% of TotalValue of

Transactionsof the Fund

Brokeragepaid[Rs.]

(on accrualbasis)

% of Totalbrokeragepaid by the

Fund

HSBC InvestDirectSecurities (India)Limited

Associate 2008 - 2009 5.14 0.09 102,367 0.16

HSBC Securities and

Capital Market (India)Private Limited

Sponsor 2008 - 2009 222.09 4.09 1,993,781 3.17

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 endedMarch 31, 2010 and March 31, 2009.

Notes to Accounts Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2010

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Notes to Accounts Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2010

4 Unit Capital movement during the years ended March 31, 2010 and March 31, 2009.

Description2009-2010

Opening Units Subscription Redemption Closing Units Face Value

Regular GrowthOption

82,822,603.543 31,106,227.231 45,988,828.816 67,940,001.958 679,400,020

RegularDividend Option

315,640,026.026 105,492,570.593 151,529,305.054 269,603,291.565 2,696,032,916

Description2008-2009

Opening Units Subscription Redemption Closing Units Face Value

Regular Growth

Option

47,671,381.108 54,767,475.116 19,616,252.681 82,822,603.543 828,226,035

RegularDividend Option

230,018,561.715 146,706,869.491 61,085,405.180 315,640,026.026 3,156,400,260

5 Previous years figures have been re-grouped / re-arranged where necessary.

6 No contingent liabilities for the years ended March 31, 2010 and March 31, 2009.

7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.

8 Other income includes exit load collected in excess of 1% of redemption proceeds credited to theScheme and provision for expenses written back as no longer required.

9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies andstandards 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 20,2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridgedaccounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No.IMD/Cir8/132968/2008 dated July 24, 2008.

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DISCLAIMERSThis content of this report has been prepared by HSBC Asset Management (India) Private Limited (HSBC) forinformation purposes only and should not be construed as an offer or solicitation of an offer for purchaseof any of the funds of HSBC Mutual Fund. The information is for general information only and does nothave regard to specific investment objectives, financial situation and the particular needs of any specificperson who may receive this information. Investments in mutual funds inherently involve risks and investorsshould read the relevant documents / information for details and risk factors and consult their legal, taxand financial advisors before investing. Investors should understand that statements made herein regarding

future prospects may not be realised. Neither this document nor the units of HSBC Mutual Fund have beenregistered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted ortotally prohibited and accordingly, persons who come into possession of this document are required toinform themselves about, and to observe, any such restrictions.

Investors may obtain Statement of Additional Information, Scheme Information Document and KeyInformation Memorandums along with application forms from the office of HSBC Mutual Fund, 314 D. N.Road, Fort, Mumbai 400 001. Tel: 022-6666 8819.

Statutory Details:

HSBC Mutual Fund has been set up as a trust by HSBC Securities and Capital Markets (India) Private Limited(liability restricted to the corpus of Rs. 1 lakh). The Sponsor / associates of the Sponsor / Asset ManagementCompany (AMC) are not responsible or liable for any loss or shortfall resulting from the operation of the

Schemes. The Trustees of HSBC Mutual Fund have appointed HSBC Asset Management (India) PrivateLimited as the Investment Manager.

Risk Factors:

All investments in mutual funds and securities are subject to market risks and the Net AssetValue (NAV) of the Scheme(s) may go up or down depending on the factors and forces affectingthe securities markets. There can be no assurance that the objectives of the Scheme(s) will beachieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC EquityFund (HEF) is the name of the Scheme and does not in any manner indicate the quality of theScheme or its future prospects or returns.

Terms of Issue:Units of the Scheme(s) are being offered at NAV based prices, subject to the prevailing loads. The AMCcalculates and publishes NAVs and offers for sale, redemption and switch outs, units of the Scheme(s)on all Business Days, at the Applicable NAV for all Schemes (at least once a week, i.e., every Wednesdayand daily during the period of redemption in case of HSCF). HSCF & HFTS will not be open for ongoingsubscriptions / switch-ins. HSCF would be available for sale on an ongoing basis (after a period of 3 yearsfrom the date of allotment). Conversion of HSCF to an open-ended scheme will be done only after thebalance unamortized amount has been fully recovered from the Scheme. Units can be redeemed / switchedout on every Business Day at NAV based prices, subject to prevailing exit loads. In case of HSCF, units canbe redeemed / switched-out on a monthly basis on the stipulated date i.e. last 3 Business Days of everymonth at NAV based prices, subject to provisions of exit load, if any, and recovery of balance proportionateunamortized NFO expenses.

Load Structure (includes SIP/STP, where applicable):

Exit: 1% - if redeemed / switched out* within 1 year from date of investment; Otherwise Nil.

*No load in case of switches between equity Schemes of HSBC Mutual Fund.

Consult the nearest investor service centre for details. The applicable exit loads (if any) at the time ofallotment of the Schemes of HSBC Mutual Fund shall also be charged on investments made by all investors.Bonus units and units issued on reinvestment of dividends shall not be subject to exit load.

The exit load set forth above is subject to change at the discretion of the AMC and such changes shall beimplemented prospectively.

Mutual Fund investments are subject to market risks. Read the Scheme Information Documentand Scheme Additional Information carefully before investing.

CRISIL Ranking Methodology

CRISIL~CPR 1 Open End MIP Aggressive Schemes, March 2010 *CRISIL~CPR 1 The composite performanceof HSBC MIP - Savings is Very Good in the Open End MIP Aggressive Fund Category, and ranks within thetop 10% of the 21 schemes ranked in this category. The criteria used in computing the CRISIL CompositePerformance Rank are Superior Return Score, based on NAVs over the 2-year period ended March 31,2010, Concentration, Liquidity, Asset Quality and Average Maturity of the scheme. The methodology doesnot take into account the entry and exit loads levied by the scheme. The CRISIL CPR is no indication ofthe performance that can be expected from the scheme in future. Ranking Source: CRISIL FundServices,CRISIL Limited.

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Abridged Annual Report 2009 - 2010

HSBC Progressive Themes Fund

An open-ended flexi-theme equity Scheme

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Dear Investor,

We thank you for investing with HSBC Mutual Fund.

We are pleased to inform you that HSBC MIP Savings Plan has been rated CPR1

by CRISIL, in the Open end MIP Aggressive Fund category, among 21 schemes, for its 2

year performance, ended March 31, 2010 (Monthly income is not assured and is subjectto availability of distributable surplus). We have also been rated the top performing fund

manager for a one year period, on the Employees Provident Fund Organisation (EPFO)

mandate, which is one of the largest provident funds in India, amongst the 4 fund

managers who have been provided with this mandate. (Past performance may or may not

be sustained in the future and is no guarantee of future results).

At the global level, HSBC Global Asset Management continues to be one of the leading

players in emerging markets with assets of USD 90 bn as at December 31, 2009.

The Group continues to be committed to our asset management business in India which is

a core market for the Group.

HSBC Asset Management (India) Private Limited through its mutual fund business as well

as Portfolio Management Services (PMS) business (including EPFO money deployed till

date) manages assets of about Rs. 40,161 Crores as at June 30, 2010.

HSBC Asset Management (India) also offers Portfolio Management Services (PMS)

which aims to provide long-term wealth creation for high net-worth individuals through

active portfolio management and manages mandates for large institutional clients.

The core to our winning strategy is our endeavour to deliver consistent performance over

the medium to long term for our investors in a risk controlled environment and aim forconsistent wealth creation under varying market conditions.

We remain committed to our philosophy of aiming for consistent wealth creation and

service excellence and look forward to your continued investments inHSBC Mutual Fund.

Yours sincerely,

Vikramaaditya

Chief Executive OfficerHSBC Asset Management (India) Private Limited

* Please refer Ranking methodology and disclaimers mentioned at the end of the AbridgedAnnual Report for the year ended March 31, 2010.

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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


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, Off CST Road,

Kalina, Santacruz (East), Mumbai 400 098.

AUDITORS TO THE SCHEME

Price Waterhouse

Chartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai 400 028.

LEGAL ADVISORS

Bharucha & Partners

Hague Building, Sprott Road, Ballard Estate, Mumbai 400 001

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

Dr. Rudolf Apenbrink

Mr. Nasser MunjeeMr. Manu Tandon

Mr. Mehli Mistri

Mr. Dilip J. Thakkar

BOARD OF DIRECTORS

Ms. Naina Lal Kidwai Chairman

Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*

Ms. Kishori J. Udeshi

Mr. Vikramaaditya Chief Executive Officer

* Mr. Ashok Jha has been appointed as a Director with effect from August 20, 2009 andMr. Vithal Palekar has resigned as a Director with effect from August 10, 2009.

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The Trustees present the eighth report and the audited abridged financial statements of the Scheme(s) ofHSBC Mutual Fund (the Fund), for the year ended March 31, 2010.

1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEME

a) Operations and Performance of the Scheme

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 equityrelated securities by investing primarily in sectors, areas and themes that play an important role in, and / orbenefit from, Indias progress, reform process and economic development.

The net assets of HPTF amounted to Rs. 391.28 crores as at March 31, 2010 as compared to Rs. 357.55crores as at March 31, 2009. Around 95.84% of the net assets were invested in equities, 1.74% of thenet assets were invested in reverse repos / CBLO were invested in reverse repos / CBLO and 2.42% wereinvested in net current assets as at March 31, 2010.

HPTF underperformed last year on being invested in consumption oriented themes. This was changed w.e.fAugust 2009 towards economic reforms and infrastructure oriented sectors post the electoral outcome.

Date of Inception: 23 February, 2006 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since Inception

HSBC Progressive Themes Fund Growth 55.85 3.38 6.55

BSE 200 92.87 12.19 14.12

Returns data as on March 31, 2010.

Past performance may or may not be sustained in future. Since inception returns are calculated on Rs. 10invested at inception. Calculations are based on Growth NAVs.

b) Market Overview & Outlook

MARKET OVERVIEW


Equity Market Overview

The financial year ended 31st March, 2010 turned out to be equally eventful as last year. The maindifference between the two being that last year marked lot of negative events for the equity marketsglobally while FY10 was a very positive one with positive events both at global and domestic level forIndia. Globally, we saw the fiscal / monetary stimuli by various governments to take the credit crisis head

on continue thereby leading to economic improvement in most parts of the world. And domestically,we saw the United Progressive Alliance (UPA) sweeping victory in the central elections thereby ensuringstability, policy continuity, and a great degree of space to implement reforms. With the fragmented natureof the opposition leaving it too weak to deter the reform process, everyone expected to see a boost toinvestment growth and policy initiatives thereby leading to an upward bias to growth. The second budgetfrom the present government continues to underpin on its key focus areas of infrastructure and socialsector spending.

For the financial year 2009-2010, BSE SENSEX was up by 80.5%. The BSE Midcap was up by 130.2% andthe broader indices like BSE 200, 96.3% and BSE 500, 99.8% also reflected the sharp up move across themarkets.

Economic data points coming out globally remained positive thereby indicating the sustainability of the

global recovery process. This led to improving risk appetite globally and investors buying most of the riskierasset classes hence lot of money flowed into the emerging markets and India benefited as it was one ofthe few economies which grew very well even in the downturn thereby indicating the broad strength ofthe country. The second half of last year saw improvement in most of the economic indicators leading togood performance by equity markets globally. But over the last couple of months, we are seeing investorfocus globally shift to monetary and fiscal tightening by the Central Banks and Governments around theworld. And hence there is a fear that this might de-rail the recovery process what we are witnessing overthe last few months thereby leading to correction in most of the asset classes like commodities, equitiesaround the world.

Trustees ReportFor the year ended March 31, 2010

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In another important event, we saw S&P revise its outlook on Indias long-term sovereign credit rating tostable from negative. It affirmed its BBB- long-term and A-3 short-term sovereign credit ratings on India.The outlook upgrade driven by consolidation in fiscal deficit and strong growth.

Debt Market Overview

Bond yields rose for most of the financial year 2009-2010 as market was hit by a huge borrowing calendarof the government. This was a consequence of the fiscal expansion that was undertaken since 2008 toenhance public expenditure in the face of the global crisis that had hit the economy. Supply fatigue soon setinto the market, leading to a gradual rise in bond yields over the year. Domestic economic data started toimprove towards late calendar year thus further curbing appetite for bonds. 10 year benchmark sovereignyield rose approximately 80 bps over the fiscal.

System liquidity remained abundant for most of the year on the back of aggressive cuts in Cash ReserveRatio (CRR) undertaken by the RBI between October 2008 January 2009. Liquidity was also aided bythe open market purchases of government bonds by the RBI done between December 2008 September2009. Consequently, system liquidity as measured by excess balances parked by banks under the RBIliquidity adjustment facility (LAF) window averaged approximately INR 100,000 crores during the fiscal.Consequently, short end rates rallied by 150 200 bps over the fiscal. Sentiment on short end rates wasfurther aided by the RBIs stated intention of a calibrated exit from the monetary policy accommodationput in place late 2008. It hiked CRR by 75 bps in the policy review in January 2010 and repo, reverse reporates by 25 bps each in March 2010.

MARKET OUTLOOK


Equity Market Outlook

Financial Year (FY) 2009-10 was a year marked by most of the governments and Central banks aroundtheir world doing their best to enable the economies to come out of the sub-prime crisis that had led

to credit market freezing and recessionary conditions in developed nations and slowdown in emergingeconomies. And these efforts led to slow and gradual improvement in the economic recovery process withgrowth in emerging economies picking up sharply even though the developed economies continued toimprove slowly. But over the last few months, we saw the Greek crisis become bigger which eventuallyculminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fundto support fiscally strained Euro Area member countries, all of which comes with severe austerity measures,has once again brought to the fore issues regarding deficits and debt sustainability. This led to enormousuncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investorsrisk appetite. So now apart from concerns on Chinas overheated property market focus shifted to the Euroregion uncertainty. So overall the next year is going to be very crucial with respect to the direction of theeconomic environment amidst all this uncertainty.

In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP forFY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons andindustry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growthin FY09. India remains a supply-constrained and capital-starved economy with significant latent unmetdemand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robustdomestic demand, driven by private consumption and investment, may be complemented by improvingexternal demand. The key to track will be the strength of the upturn in the investment cycle. Even thoughthere are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a moregradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed theeconomic downturn exceptionally well, and is doing the right things to position growth at an elevated levelwithout either fuelling a sustained rise in inflation or pushing the banks to lend more aggressively. Fiscalconsolidation will be credible as the government has little choice but to begin the much-needed process

of fiscal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure,infrastructure building and domestic consumption are still intact. The key concerns at this point stemfrom the uncertainty in the developed economies and any fallout of the same on India and the domesticinflations which seems to be very high.

The next financial year 2010-2011 is likely to be one where specific sectors and company performancesmay be much better than broader market indices. The challenge will be to pick these stocks and sectorsahead of the market. Given that markets valuations have come off the trough seen in early March 2009with the markets now trading at valuations of around 15-16X FY2011 earnings, in the near term we expectmarkets to enter a phase of consolidation.


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Debt Market Outlook

The interest rate view for the year ahead is set against the following backdrop:

l Domestic non agricultural growth has rebounded sharply led by manufacturing over last 2 quarters.

While this has been helped by the fiscal and monetary stimulus in place since early last year, the lastfew months are showing definitive signs of pick up in private sector momentum as well.

l Inflation has surged largely on the back of rise in food prices. However, with a manufacturing rebound

underway demand side pressures are rapidly building. Recent fall in commodity prices, if sustained,

along with expectation of normal monsoons domestically may be incrementally beneficial for supply

side inflation.

l Even after 2 rate hikes of 25 bps each in March and April 2010, current real policy rates of the Reserve

Bank of India (RBI) are significantly negative. However, the central bank is showing a decided bias

towards calibrated rate hikes.

l The recent European crisis has led to weakness in asset markets and a drop in commodity prices

globally. Even though domestic rebound remains strong, international linkages from trade, finance,and portfolio flows have made policy makers more watchful in the near term.

l Gross market borrowing for FY 2010-11 is pegged at INR 4,57,000 crores versus INR 4,51,000 crores

in 2009-10. A few demand-supply dynamics for government securities are as follows:

l Demand for government bonds may not be as strong in the year ahead given rising inflation, lower

liquidity, expectations of policy rate rise and relatively better credit growth. However, demand may

improve if the European situation were to cause a significant change in markets growth versus

inflation expectations.

l Absence of RBI OMO and MSS de-sequestering imply that net supply of government securities to

the market will be higher than last year by almost INR 1,00,000 crores.

l 3G + BWA auctions may result in more than 3 times budgeted proceeds for GoI. While prospectsof additional expenditures (particularly on subsidy) remain, there are tentative expectations of some

reduction in second half borrowing.

Overall, while sufficient risks remain to bond yields, some factors as discussed above have turned bond

positive. These, if sustained, could ensure against a very sharp rise in yields thus providing opportunities

for select duration plays. Moreover, if market were to get more comfort that the governments fiscal deficit

would progressively reduce in the year ahead, some of the so-called supply premium that has been built

on the curve since last year may begin to unwind thus leading to softening of yields later in the year. Also,

given that system liquidity is expected to progressively reduce going into the October December 2009

quarter, we expect the curve to start to flatten thereon.

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 Settlor 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 is a member of the HSBC Group, one of the largest banking and financial services organisations,

in the world. Headquartered in London, HSBC operates through long-established businesses in five

regions: Europe, Asia-Pacific region, Middle East, America and Africa. Through its global network of

some 10,000 offices in 83 countries and territories, HSBC provides a comprehensive range of financialservices to personal, commercial, corporate, institutional and investment and private banking clients.

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) and is also a category I merchant banker registered with Securities and Exchange

Board of India.

HSCI holds 100% of the paid-up equity share capital of the AMC.


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b) HSBC Mutual Fund

HSBC Mutual Fund (the Mutual Fund or the Fund) has been constituted as a Trust in accordancewith 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 datedFebruary 7, 2002 with HSBC Asset Management (India) Private Limited (the AMC) to function asthe Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI videregistration 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 investmentin securities / any other property for the purpose of providing facilities for participation by persons asbeneficiaries 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 thebenefit of the unitholders. 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. TheTrustees seek to ensure that the Fund and the Schemes floated thereunder are managed by the AMCin 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 privatelimited company incorporated under the Companies Act, 1956 on December 12, 2001 having itsRegistered Office at 314, D. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) PrivateLimited has been appointed as the Asset Management Company of the HSBC Mutual Fund by theTrustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed betweenthe Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide.its letter No. MFD/BC/163/2002 dated May 27, 2002.

The paid-up equity share capital of the AMC is Rs. 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 Scheme 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 as on 31 March 2010

Scheme

Unclaimed Dividends Unclaimed Redemptions

Amount(Rs.)

No. ofInvestors

Amount(Rs.)

No. ofInvestors

HSBC Progressive Themes Fund 814,640 401 1,409,876 86

6. INVESTOR SERVICESDuring the year, the number of official points of acceptance of transactions increased significantly toabout 206 locations. In addition to the offices of the Registrar & Transfer agents, the Asset ManagementCompany has Investor Service Centres in 14 locations at its own offices - namely Mumbai, New Delhi,Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore,Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset ManagementCompany has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (forcredit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working daysfrom the record date in all schemes. The internal standards on redemption payouts have been consistently


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met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investmentsthrough Systematic Investment Plan also increased to about 87 by March 2010.

On the distribution front, the number of empanelled distributors increased from 8632 as on 31 March,2009 to 8859 as of 31 March, 2010. During the year, the Asset Management Company initiated tie-upsfor online distribution of the Mutual Funds schemes with several channel partners taking the total numberof such tie-ups to 32 (Angel Capital & Dept Market Ltd, Bajaj Capital Ltd, Bonanza Portfolio Ltd., CITIBANKNA, Citigroup Wealth Advisors India Private Limited, DawnayDay AV India Advisors Pvt.Ltd., HDFC BankLtd., Hongkong & Shanghai Banking Corporation Ltd., HSBC Corporate Investment Solution Services,ICICI Securities Limited, iFAST Financial India Pvt.Ltd., INDIA INFOLINE LTD., IndusInd Bank Limited, INGVysya Bank Ltd., Karvy Stock Broking Ltd., Kotak Mahindra Bank Limited, Kotak Securities Limited, MotilalOswal Securities Limited, NJ India Invest Pvt. Ltd., Reliance Securities Limited, Religare Securities Limited, RRInvestors Capital Services Pvt. Ltd., SBICAP Securities Ltd., Sharekhan Limited, Shriram Insight Share BrokersLtd., SMC Global Securities Limited, Standard Chartered - STCI Capital Markets Ltd., Standard CharteredBank, Tom Distribution Services Ltd., Yes Bank Limited, IDBI Capital Market Services Ltd., JRG SecuritiesLimited).

Call centre operations have been extended to cover the entire country. The Asset Management Companyhas outsourced certain back office services including call Centre Services to HSBC Operations and ProcessingEnterprise (India) Private Limited (HOPE).

7. DETAILS OF INVESTOR GRIEVANCE REDRESSAL

The details of the redressal of investor complaints received against HSBC Mutual Fund during 2009-2010are as follows:

Total Number of Folios: 5,22,334

Comp-laint

Code

Type ofcomp

laint #


pendingat the



receivedduring the

year


Resolved NonActio-nable*

Pending

Within30

days

30-60days

60-180days

Beyond180days

0-3months

3-6months

6-9months

9-12months

I A Dividend onUnits

1 61 62 0 0 0 0 0 0 0 0

I B Interest ondelayedpayment ofDividend

0 0 0 0 0 0 0 0 0 0 0

I C RedemptionProceeds 2 57 59 0 0 0 0 0 0 0 0

I D Interest ondelayedpayment ofRedemption

0 0 0 0 0 0 0 0 0 0 0

II A Non receipt ofstatement ofaccount/ UnitCertificate

0 101 101 0 0 0 0 0 0 0 0

II B Discrepancy in

Statement ofAccount

0 0 0 0 0 0 0 0 0 0 0

II C Non receipt ofAnnual Report/AbridgedSummary

0 0 0 0 0 0 0 0 0 0 0

III A Wrong Switchbetweenschemes

0 0 0 0 0 0 0 0 0 0 0


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Comp-laintCode

Type ofcomplaint #


pendingat the



receivedduring the

year


Resolved NonActio-

nable*

Pending

Within30

days

30-60days

60-180days

Beyond180days

0-3months

3-6months

6-9months

9-12months

III B Unauthorisedswitch betweenschemes

0 0 0 0 0 0 0 0 0 0 0

III C Deviationfrom Schemeattributes

0 3 3 0 0 0 0 0 0 0 0

III D Wrong or excesscharges/load

0 1 1 0 0 0 0 0 0 0 0

III E Non updationof changes viz.address, PAN,bank details,nomination etc.

0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0

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

8. STATUTORY DETAILS

a) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes ofthe 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 withfluctuations 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 shallbe available for inspection at the Head Office of the mutual fund. Present and prospective unit holdercan obtain copy of the trust deed, the full Annual Report of the Scheme(s), the Annual Report of HSBCAsset 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 alsothank 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 Trusteesalso 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 advocatesand the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) PrivateLimited 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/-N. P. GidwaniChairman

MUMBAI

July 20, 2010

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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 (Formerly

HSBC Advantage India Fund) (The Scheme) as at March 31, 2010, the related Revenue Accountfor the year ended on that date and the Cash Flow Statement for the year ended on that date whichwe have signed under reference to this report. These financial statements are the responsibility of theBoard 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 financialstatements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe 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 includedconfirmation of securities owned and unit capital balances as at March 31, 2010 by correspondencewith the custodian / others and registrar and transfer agent respectively. An audit also includesassessing the accounting principles used and significant estimates made by the Management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. We have obtained all the information and explanations which to the best of our knowledge and beliefwere necessary for the purpose of our audit. The Balance Sheet, Revenue Account and Cash FlowStatement 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, Revenue Account and 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 andfair view of the state of affairs of HSBC Mutual Fund HSBC Progressive Themes Fund as at March31, 2010, its net surplus and its cash flows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010 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 theaccounting policies and standards specified in the Ninth Schedule of the Securities and ExchangeBoard of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.

For PRICE WATERHOUSEFirm Registration Number: 301112E

Chartered Accountants

Sd/-

Vivek PrasadPartnerMembership No. F-104941

Place : MumbaiDate : July 20, 2010

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Abridged Balance Sheet as at March 31, 2010

Rs. in Lakhs

HSBC PROGRESSIVE THEMES FUND(Formerly, HSBC Advantage India Fund)

As atMarch 31, 2010 As atMarch 31, 2009

LIABILITIES

1 Unit Capital 32,633.73 46,572.80

2 Reserves & Surplus2.1 Unit Premium Reserves (24,803.48) (21,788.97)2.2 Unrealised Appreciation Reserve 6,517.15 6.062.3 Other Reserves 24,812.55 10,965.28

3 Loans & Borrowings

4 Current Liabilities & Provisions

4.1 Provision for doubtful Income / Deposits 4.2 Other Current Liabilities & Provisions 719.06 656.75

TOTAL 39,879.01 36,411.92

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 35,899.96 28,504.021.1.2 Preference Shares 1.1.3 Equity Linked Debentures 1.1.4 Other Debentures & Bonds

1.1.5 Securitised Debt securities 1.2 Securities Awaited Listing:1.2.1 Equity Shares 1.2.2 Preference Shares 1.2.3 Equity Linked Debentures 1.2.4 Other Debentures & Bonds 1.2.5 Securitised Debt securities 1.3 Unlisted Securities1.3.1 Equity Shares 1.3.2 Preference Shares 1.3.3 Equity Linked Debentures

1.3.4 Other Debentures & Bonds 1.3.5 Securitised Debt securities 1.4 Government Securities 1.5 Treasury Bills 1.6 Commercial Paper 1.7 Certificate of Deposits 1.8 Bill Rediscounting 1.9 Units of Domestic Mutual Fund 1.10 Foreign Securities

Total Investments 35,899.96 28,504.02

2 Deposits 1,650.00 3,162.503 Other Current Assets3.1 Cash & Bank Balance 38.16 28.743.2 CBLO / Reverse Repo Lending 680.08 3,291.643.3 Others 1,526.69 1,208.12

4 Deferred Revenue Expenditure 84.12 216.90(to the extent not written off)

TOTAL 39,879.01 36,411.92


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Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 429.59 483.281.2 Interest 131.86 453.631.3 Realised Gain / (Loss) on Foreign Exchange Transactions 1.4 Realised Gains / (Losses) on Interscheme sale of investments 0.181.5 Realised Gains / (Losses) on External sale / redemption of

investments8,963.10 (21,835.57)

1.6 Realised Gains / (Losses) on Derivative Transactions 49.71 453.39

1.7 Other Income 0.46 (A) 9,574.72 (20,445.09)

2 EXPENSES2.1 Management fees 458.91 484.422.2 Service tax on Management fees ** 2.3 Transfer agents fees and expenses 72.22 99.752.4 Custodian fees 16.45 29.062.5 Trusteeship fees 0.38 0.212.6 Commission to Agents * 2.7 Marketing & Distribution expenses 338.76 384.252.8 Audit fees 6.60 5.50

2.9 Other operating expenses 209.10 253.83

(B) 1,102.42 1,257.02

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 8,472.30 (21,702.11)

4 Change in Unrealised Depreciationin value of investments (D) (4,115.64) 4,115.64

5 NET GAINS / (LOSSES)FOR THE YEAR [E = (C - D)] 12,587.94 (25,817.75)

6 Change in unrealised appreciation in

the value of investments (F) 6,511.09 (2,088.22)

7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 19,099.03 (27,905.97)

7.1 Add: Balance transfer fromUnrealised Appreciation Reserve 2,088.22

7.2 Less: Balance transfer to Unrealised Appreciation Reserve 6,511.09 7.3 Add / (Less): Equalisation 1,259.33 (84.87)7.4 Transfer from Reserve Fund 17,246.547.5 Transfer from Unit Premium Reserve

8 TOTAL 13,847.27 (8,656.08)

9 Dividend Appropriation9.1 Income Distributed during the year 2,681.85

9.2 Tax on income distributed during the year

10 Retained Surplus / (Deficit)carried forward to Balance Sheet 13,847.27 (11,337.93)

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.

Abridged Revenue Account for the year ended March 31, 2010

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Current Year ended

March 31, 2010

Previous Year ended

March 31, 2009

1. NAV per unit (Rs.):

Open



High



Low


Regular Dividend Option 7.1414 6.3796End



2. Closing Assets Under Management (Rs. in Lakhs)

End 39,160 35,755

Average (AAuM)1 44,048 49,971

3. Gross income as % of AAuM2 21.74% -40.91%

4. Expense Ratio:

a. Total Expense as % of AAuM (planwise)

Regular Growth Option 2.20% 2.22%Regular Dividend Option 2.20% 2.22%

b. Management Fee as % of AAuM (planwise)



5. Net Income as a percentage of AAuM3 19.24% -43.43%

6. Portfolio turnover ratio4 1.41 1.34

7. Total Dividend per unit distributed during the year (planwise)

Retail


Corporate


8. Returns (%):

a. Last One Year

Scheme

Regular Growth Option 55.8478 (42.7774)

Regular Dividend Option 55.8467 (42.8257)

Benchmark

BSE 200 92.8700 (40.9800)

b. Since Inception

Scheme

Regular Growth Option 6.5478 (5.7477)Regular Dividend Option 6.5243 (5.7750)

Benchmark

BSE 200 14.1200 (3.6400)

1 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.

Key Statistics for the year ended March 31, 2010

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HSBC PROGRESSIVE THEMES FUND (Formerly, HSBC Advantage India 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 Schemes unitholders.

1.2. Open Positions of derivatives amount to Rs. 292,171,950 and 7.46% to Net Assets as of yearended March 31, 2010. Open Positions of derivatives amount to Rs. (32,362,600) and 0.91% toNet Assets as of year ended March 31, 2009.

1.3. Investments in Associates and Group Companies(Rupees)

Issuer InstrumentType

Amount AggregateInvestments

by all schemes

Amount AggregateInvestments

by allschemes

2010 2009

The Hongkong &Shanghai BankingCorporation Limited

Fixed deposits 160,000,000 1,018,000,000 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March31, 2010 and March 31, 2009 is NIL.

1.5. NPAs as at years ended March 31, 2010 and March 31, 2009 are NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year 2009-2010 and percentage to

net assets are as under:

Company Name Amount(Rs.)


Amount(Rs.)


2010 2009

Equity Shares

Appreciation 698,236,771 17.8304% 78,574,286 2.1976%

Depreciation 50,277,699 1.2839% 490,138,560 13.7082%

Equity Futures Appreciation 7,092,309 0.1811% 610,412 0.0171%

Depreciation 3,336,168 0.0852% 3,982 0.0001%

1.7. The aggregate value of investments securities purchased and sold (including matured) during thefinancial year 2009-2010 is Rs. 4,484,625,154 and Rs. 5,700,864,07

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