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

Transcription

1 July 2014

2 Index In this Issue... Fund Manager Commentary Pg 2 HSBC Equity Fund Pg 6 HSBC India Opportunities Fund Pg 8 HSBC Midcap Equity Fund Pg 10 HSBC Progressive Themes Fund Pg 12 HSBC Tax Saver Equity Fund Pg 14 HSBC Dividend Yield Equity Fund Pg 16 HSBC Dynamic Fund Pg 18 HSBC Emerging Markets Fund Pg 20 HSBC Brazil Fund Pg 21 HSBC Asia Pacific (Ex Japan) Dividend Yield Fund Pg 22 HSBC Managed Solutions India - Growth Pg 23 HSBC Managed Solutions India - Moderate Pg 24 HSBC Managed Solutions India - Conservative Pg 25 Fund Managers - Equity Pg 26 Comparative Performance of Equity Schemes Pg 28 HSBC MIP - Savings Plan Pg 32 HSBC MIP - Regular Plan Pg 34 HSBC Income Fund - Investment Plan Pg 36 HSBC Income Fund - Short Term Plan Pg 38 HSBC Floating Rate Fund - Long Term Plan Pg 40 HSBC Cash Fund Pg 42 HSBC Gilt Fund Pg 44 HSBC Ultra Short Term Bond Fund Pg 45 HSBC Flexi Debt Fund Pg 47 Fund Managers - MIP & Debt Pg 49 Comparative Performance of MIP & Debt Schemes Pg 51 1

3 Fund Manager Commentary July 2014 Equity & MIP Market Update Equity markets in a consolidation mode Equity markets appeared in a consolidation mode during July 2014 after seeing a significant run-up on a year-to-date (YTD) basis. The much awaited Union Budget which was expected to provide the blueprint of the roadmap for the newly elected government, lacked any large scale announcements. While the Union Budget did have a renewed focus on asset creation and ways of stimulating growth, the market participants expected a more definitive stance on aspects such as the retrospective tax clause and timeline for pending landmark reforms. This meant that the equity markets clearly didn t have enough momentum to sustain the election and pre-budget run-up, resulting in consolidation during the month of July The Union Budget envisaged providing boost to the infrastructure sector and also laid out a roadmap for raising capital for long term funding requirements. The Finance Minister reiterated the new government s commitment on fiscal consolidation (no major populist announcements) and also reduced the tax outgo for individual tax payers % 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% Source: Bloomberg ; Central Statistical Organization (CSO) India The monsoon rainfall picked up during the month of July 2014 while the spatial rainfall distribution still appeared to be worrying factor. The cumulative rainfall deficit across the country stood at 24% vs 43% at the end of June 2014 ( Source: IMD release, as on 24 July- 14). As a result, the cropping pattern and reservoir storage level are still lagging behind that of the levels seen during the same time last year. Despite the intra month volatility, the domestic market indices BSE S&P Sensex & Nifty remained firmly footed in the positive territory delivering returns of 1.9% and 1.4% respectively for the month of July The broader market indices underperformed the benchmark index (BSE S&P Sensex) with the BSE S&P Midcap & Smallcap indices delivering negative gains of 2% & 2.1% respectively for the month of July Sectors such as Healthcare, FMCG & Information Technology outperformed the market indices while Industrials & Energy sectors turned out to be laggards. 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Apr/08 Jul/08 Oct/08 Jan/09 Apr/09 Jul/09 Oct/09 Jan/10 Apr/10 Jul/10 Oct/10 Jan/11 Apr/11 Jul/11 Oct/11 Jan/12 Apr/12 Jul/12 Oct/12 Jan/13 Apr/13 Jul/13 Oct/13 Jan/14 Apr/14 Jul/14 S&P BSE Sensex Repo Rate Movement S&P BSE 100 Source: Bombay Stock Exchange (BSE) Foreign Institutional Investor (FIIs) flows continued to be strong The FIIs allocation into Indian equities continued through July 2014, with around USD 1.6 bn of net inflows from the segment. The FIIs have collectively bought Indian stocks worth ~USD 11.9 bn from the beginning of this calendar year (2014). The domestic institutions appeared far more subdued and ended up on the other side of the trade with net sales of ~USD 540 mn during July The domestic segment has so far seen net outflows to the tune of ~USD 5.4 bn this year (2014), predominantly from the insurance segment. Trade deficit widens marginally as imports pick-up Exports grew by 10.2% Year on Year (YoY) in June 2014 against 12.4% in May 2014, largely driven by an increase in oil exports during the month. Imports recovered and registered a growth of 8.3% YoY in June 2014 against 11.4% in May 2014, a positive growth for the first time since May The trade deficit widened marginally to USD 11.8 bn or 7.3% of Gross Domestic Product (GDP) annualised (USD 11.2 bn in May 2014), as a result of the pick-up in imports. This was a rise of 4.3% YoY in June 2014 (compared to a decline of 42% in May 2014) 2 Repo Rate Indices Performance - July 2014 S&P BSE 200 S&P BSE 500 S&P BSE MidCap S&P BSE SmallCap

4 Fund Manager Commentary July 2014 Inflation & Industrial Growth Base effect leads to moderation in Inflation Inflation trends appeared positive as it showed signs of moderation both at the wholesale as well as the retail front. The Wholesale Price Index (WPI) inflation for the month of June 2014 eased to 5.4% YoY vs 6% in May The drop in inflation however had the benefit of a favourable base in case of food inflation which was a major contributor for the drop in inflation during this period. The high base effect of the previous year continued to have a favourable impact on the retail inflation side as well. The Consumer Price Index (CPI) inflation eased to 7.3% YoY during June 2014 vs 8.3% in May 2014, the lowest reading in almost 30 months. The core CPI inflation also dropped further to settle at 7.4% YoY during June 2014 vs 7.7% in May However given the favourable base effect during this period, it will be important for this trend to sustain especially in case of food inflation given the spatial distribution of monsoon this season. 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% Wholesale Price Index Inflation (WPI) May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 WPI YoY growth (New series; base ) Source: Bloomberg ; Central Statistical Organization (CSO) India Index of Industrial Production (IIP) Growth traction continued The industrial output growth (measured through the IIP) saw a positive growth for the second consecutive month at 4.7% YoY for May 2014 vs 3.4% for April This was also the best growth trajectory seen in IIP since October All the three industry segments grew during the month of May 2014, with manufacturing output witnessing its fastest expansion in-line with the overall IIP reading, while the mining and electricity segments remained in the positive territory. On a use based classification, the overall consumer goods output grew by 3.7% YoY in May 2014, reversing a declining trend of the previous 7 months. 10.0% Index of Industrial Production (IIP) 5.0% 0.0% -5.0% May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Apr/14 May/14 IIP YoY Growth (New Series; base ) Source: Bloomberg ; Central Statistical Organization (CSO) India Global Economic Scenario On the global front, there were concerns on issues such as the Argentinian default, health of Portugal s financial sector and Israel Palestine conflict. Argentina s credit rating was downgraded to selective default by S&P as the government failed to settle with holdout investors following the expiration of the 30 day grace period. However, implications for wider markets are expected to remain limited as the developments in Argentina are local in nature. There were also concerns over the health of Portugal s financial sector, following a proposed debt restructuring by a holding company of one of Portugal s largest listed banks, after it missed a payment on short term debt. The recent developments in Portugal could raise questions over the strength of banks across the weaker peripheral Eurozone countries as the European Central Bank s (ECB) Asset Quality Review (AQR) looms. Continuing geopolitical tensions in Gaza and international concerns after the downing of a Malaysian passenger plane in the rebel controlled area of Ukraine made the market participants nervous and led to some risk aversion mode. However towards the end of the month, global equities were supported by strong macro data releases and better than expected corporate earnings results in developed markets. Going Forward The Union Budget lacked any big bang announcements but the budget document appeared balanced and prudent given the commitment for fiscal consolidation and growth. It also didn t have any major populist announcements while clearly focused on reviving the investment cycle. However the lack of any bold reform announcements in the Union Budget may mean that the equity markets may trade in a range bound manner in the short term. The economic growth is unlikely to rebound sharply in the near term and we could only expect a moderate recovery in economic growth in the Financial year vs (FY15 vs. FY14) driven by an improvement in the external demand and a gradual pick-up in private investments and consumption. There are also concerns on the near term outlook given the weak monsoon this season. The adverse impact of the monsoon deficit could be two-fold. Firstly, it may impact the agricultural output negatively thereby pulling back the economic recovery in FY15. It is also likely to reverse the falling trend seen on the inflation front and this may delay the rate easing cycle by the Central Bank. We must also be wary of repercussions of external geopolitical events like that of Gaza and Ukrainian conflicts, which may lead to risk aversion amongst investors. However for investors with a long term investment horizon, equity investments provide the potential to deliver relatively better returns vis-à-vis other alternatives that have outperformed the asset class over a 5 year period. Therefore, we continue to urge investors to approach equity investing from a long term perspective and always keep the asset allocation plan in mind, taking into account one s risk appetite and future goals in mind. Source: Bloomberg, for all data except where mentioned otherwise 3

5 Fund Manager Commentary July 2014 Sectors HSBC Equity Fund Review: HSBC Midcap Equity Fund Being overweight healthcare, industrials, information technology and underweight financials, utilities helped performance while being overweight consumer discretionary and underweight consumer staples, energy hurt performance. Review: HSBC Progressive Themes Fund The fund is currently focusing on the following themes; 1. Economic Reforms (32.4%) which includes Financial sector reform- 23.6% & Oil & Gas Sector deregulation sub theme- 8.8% 2 Infrastructure (49.1%) which includes Power- 12.7%, Construction 21.1% and Logistics- 15.4%. Well diversified exposure across sectors encompassing the above themes. Review: HSBC Dynamic Fund The cash levels and sector allocation in the fund are likely to change depending on the market conditions and technical factors. Review: HSBC MIP Regular and Savings Plans Our current exposure is 14.36% in HMIP Regular and 23.82%, in HMIP Savings. Currently it is more biased towards large caps than mid or small caps. Debt 4 HSBC India Opportunities Fund HSBC Midcap Equity Fund Consumer Discretionary = Consumer Staples Energy Financials Healthcare Industrials Information Technology = = Materials = Telecommunication Utilities a Overweight r Underweight = Neutral Review: HSBC Equity Fund Being overweight consumer discretionary and underweight utilities helped performance while being overweight financials, industrials, materials and underweight consumer staples, energy, telecommunication hurt performance. Review: HSBC India Opportunities Fund Being overweight industrials, materials and underweight utilities helped performance while being overweight financials and underweight consumer staples, energy, healthcare, telecommunication hurt performance. RBI s Monetary Policy, Economic Events and Data Bond prices remained volatile through the month of July Higher net supply of Government Securities (G-sec) and uncertainty on additional borrowing in the Union Budget contributed to the volatility. The announcement by the Reserve Bank of India (RBI) on increasing the investment limit of the Foreign Institutional Investors (FIIs) into Indian sovereign securities (Government Securities G-Sec) and the issuance of the new ten year benchmark G-sec eased the volatility during the latter half of the month. Southwest monsoons for the first half of its four month period (June 2014 to September 2014) ended with a deficiency of 21%, a marked improvement from a shortfall of 43% at end of June Fiscal Deficit remains contained at 4.1% The Government s Union Budget estimated fiscal deficit for at 4.1% of the Gross Domestic Product (GDP). This estimation is based on higher tax revenue and better divestment proceeds. The Union Budget promises to maintain the optimism that the new government had ushered in context to the reform process. Road maps for several such schemes have been envisaged including increase in Foreign Direct Investment (FDI) in the Defence and Insurance sectors. As expected, the Reserve Bank of India (RBI) kept the key monetary policy rates unchanged at its third bi-monthly credit policy released on 05 August, The policy outcome was a reiteration to the previous policy wherein the RBI maintained its stance to remain committed to anchor inflation and its expectations around its guided path. RBI stays pat indicating a long pause. The RBI, reduced banks Statutory Liquidity Ratio (SLR) requirement by 50 basis points to 22% of NDTL (Net Demand and Time Liabilities). Earlier, banks total holdings of SLR securities in the Held-to-maturity (HTM) category could not exceed 24.5% of their NDTL. This has been brought down to 24%, effective from the fortnight beginning 9 August These measures will help increase credit availability to the private sector. Since the last policy, sentiment on domestic economic activity appears to be reviving with some pick up in exports and industrial growth, as well as improvement in business expectations. Indicators from services remained mixed, though there are early signs of modest strengthening of corporate sales and business flows. Concerns around the slow progress of monsoons and its impact on agricultural production have been largely mitigated, but not entirely ruled out.

6 Fund Manager Commentary July 2014 Global economic activity has been picking up at a modest pace. Investor risk appetite due to continuing accommodative monetary policy in developed economies has resulted in strong portfolio flows to emerging economies. This implies that emerging markets may remain vulnerable to changing investor appetite on account of reassessment of the United States (US) monetary policy or increasing geo-political tensions. Growth in exports during the first quarter of the current financial year ( ) has narrowed the trade deficit from a year ago. The surge in capital flows in all categories combined with the repayment of swaps by oil marketing companies has helped strengthen India s forex reserve position. The economic indicators released during the month of July 2014 brought further optimism on the way ahead. Macro data remains favourable with lower inflation and higher IIP prints Consumer Price Index (CPI) inflation dropped to 7.3% YoY in June 2014 from 8.3% in May 2014, lower than expectations. Wholesale Price Index (WPI) inflation eased to a better-thanexpected 5.4% YoY in June 2014 from 6.0% in May 2014 led by lower food and fuel price inflation. Index of Industrial production (IIP) growth rose to a 19 month high of 4.7% year on year (YoY) in May 2014 from 3.4% in April 2014, above market expectations of 3.6%. Market Activity Bond yield remain volatile as the new ten year debuts at 8.40% G-sec bond prices reacted negatively to the budget despite of announcement on maintaining fiscal deficit target at 4.1%. The big announcement on change in holding period for debt funds and hike in long term capital gains tax to 20% negatively impacted bond markets and especially corporate bond market onshore. The RBI announced the sale of new ten year G-sec security during the third week of July The new paper debuted at 8.40% levels. One of the other key announcements to support G-sec was the release of additional investment limits for FII s into Indian Sovereign securities. Although the overall limit remains unchanged at USD 30 bn. These measures may result in increased foreign investment in government securities over the coming months, which, in turn is likely to drive growth. The last week of July 2014 witnessed selloff across all asset class in the domestic markets. The selloff in bonds was triggered by the re-issue of the new ten year G-sec bond wherein the RBI not only increased the size of the issue (from INR 60 bn to INR 90 bn) but also moved to multiple price auctions instead of standard practice of uniform price auction. Benchmark ten year G-sec yields (new ten year) ended the month at 8.51% levels. Credit curve to undergo change as infra bonds come in and tax free bonds go out Credit yields continue to remain impacted on the back of prospects of increase in fresh supply in the absence of tax free bonds. The upcoming corporate bond supply schedule with maturity of five years and above, coupled with the issuance of long term infra bonds by banks could make this segment relatively less attractive compared to G-sec The credit spreads have increased from pre-budget levels. Global Economy As expected the Federal Open Market Committee (FOMC) proceeded to taper an additional USD 10 bn, bringing the Quantitative Easing (QE) programme from USD 35 bn to USD 25 bn in their July 2014 meeting. The median US Federal Reserve (Fed) fund rate projection for 2015 and 2016 was hiked to 1.13% from 1.00% and 2.5% from 2.25% (i.e. re-affirming higher rates going forward). In terms of statement this month, commentary was slightly more hawkish as the Fed noted CPI has moved somewhat closer to the Committee s longer-run objective. The Fed is expected to remain on track with its tapering and markets expect rate hike in the second half of calendar year 2015.US Treasuries (USTs) have failed to react in a significant manner and continues to adhere to our intended trading range. Going Forward The short term yields are likely to remain well anchored around the RBI operating overnight rate (Repo rate). There can be some upward pressure in the near-term on account of increase in the certificate of deposit issuances by banks. The long term G-sec yields are expected to see some upward pressure on account of higher supply in the coming weeks and shift to multiple pricing in G-sec auction, in the backdrop of the aforementioned risks to inflation. This should be viewed as an opportunity to increase longer duration instruments to the portfolios, given the government s commitment to maintain fiscal discipline and set targets. The corporate bond yield curve is likely to steepen going forward. The short term corporate bond yields are likely to benefit from stable overnight rates as well as increased demand from rollover of fixed maturity plans (FMPs). The long term yields are likely to see spreads between Government Securities (G-sec) and corporate bonds increase further, with a resumption in supply from the traditional issuers as well as new supply from banks (which have been incentivised to issue seven year maturity infrastructure bonds in the recent Union Budget). We would increase duration on further market weakness primarily through G sec position given our expectation of spreads to widen in Corporate bonds. We expect a rate cut cycle to begin in 2015 as inflation trends ease and supply side bottlenecks reduce due to government initiatives/ policies. Source: Bloomberg, for all data except where mentioned otherwise 5

7 An Open Ended Diversified Equity Scheme Investment Objective: Aims to generate long term capital growth from an actively managed portfolio of equity and equity related securities. Issuer HSBC Equity Fund (HEF) July 2014 Market Value (` in Lacs) % to Net Auto Tata Motors 2, % Maruti Suzuki India 2, % Auto Ancillaries Motherson Sumi Systems 1, % Banks ICICI Bank 4, % Axis Bank 3, % State Bank of India 2, % HDFC Bank 1, % Yes Bank 1, % Punjab National Bank 1, % Bank of Baroda 1, % Cement ACC 1, % Construction IRB Infrastructure Developers % Jaiprakash Associates % Construction Project Larsen & Toubro 3, % Consumer Non Durables I T C 3, % Ferrous Metals Jindal Steel and Power 1, % Tata Steel % Finance LIC Housing Finance 1, % Rural Electrification Corporation % Media & Entertainment Sun TV Network % Minerals/Mining Sesa Sterlite 2, % NMDC % Oil Oil & Natural Gas Corporation 2, % Cairn India % Petroleum Products Bharat Petroleum Corporation 1, % Reliance Industries % Pharmaceuticals Dr Reddy s Laboratories % Lupin % Glenmark Pharmaceuticals % Power Power Grid Corporation of India % Software HCL Technologies 2, % Wipro 2, % Tech Mahindra 2, % Infosys 1, % Tata Consultancy Services % Transportation Adani Ports and Special Economic Zone % Total 97.14% 6

8 Issuer HSBC Equity Fund (HEF) July 2014 Market Value (` in Lacs) % to Net Other Equity Investments 1, % CBLOs % Reverse Repos % Net Current % Total Net as on 31 July , % Asset Allocation Auto 7.75% Auto Ancillaries 2.40% Banks 26.28% Cement 2.30% Construction 2.68% Construction Project 5.19% Consumer Non Durables 5.27% Ferrous Metals 4.48% Finance 3.78% Media & Entertainment 1.05% Minerals/Mining 4.98% Oil 6.44% Petroleum Products 2.83% Pharmaceuticals 4.44% Power 1.09% Software 14.68% Transportation 1.50% Other Equity Investments 2.19% Reverse Repos/CBLOs 1.04% Net Current -0.37% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Investment in equity and equity related securities High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 10-Dec-02 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Managers Neelotpal Sahai SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.88% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.41% Direct Plan 1.71% fees of 0.17% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.43% Direct Plan 1.71% fees of 0.17% of Total Net. Portfolio Turnover 0.97 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Equity Fund - Dividend 19-Nov Feb Jun HSBC Equity Fund - Dividend - Direct Plan 22-Feb Jun Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 7

9 An Open Ended Flexi-Cap Equity Scheme Investment Objective: Seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity & equity related securities. However it could move a significant portion of its assets towards fixed income securities if the fund manager becomes negative on equity markets. Issuer HSBC India Opportunities Fund (HIOF) July 2014 Market Value (` in Lacs) % to Net Auto Eicher Motors % Tata Motors % Auto Ancillaries Balkrishna Industries % Sundram Fasteners % Banks ICICI Bank 1, % Axis Bank 1, % HDFC Bank % Yes Bank % State Bank of India % Punjab National Bank % Syndicate Bank % Corporation Bank % Cement Shree Cement % Construction IRB Infrastructure Developers % Prestige Estates Project % Construction Project Larsen & Toubro % Consumer Non Durables I T C 1, % Ferrous Metals Tata Steel % Finance LIC Housing Finance % Industrial Capital Goods AIA Engineering % Industrial Products Supreme Industries % Minerals/Mining Sesa Sterlite % Oil Oil & Natural Gas Corporation % Petroleum Products Hindustan Petroleum Corporation % Gulf Oil Lubricants % Pharmaceuticals Aurobindo Pharma % Power CESC % Software HCL Technologies % Tech Mahindra % Mindtree % Infosys % Eclerx Services % Textile Products Arvind % Transportation Gateway Distriparks % Gujarat Pipavav Port % Total 87.87% 8

10 Issuer HSBC India Opportunities Fund (HIOF) July 2014 Market Value (` in Lacs) % to Net Other Equity Investments 1, % CBLOs % Reverse repos % Net Current % Total Net as on 31 July , % Asset Allocation Auto 5.66% Auto Ancillaries 3.79% Banks 24.98% Cement 2.85% Construction 4.89% Construction Project 2.89% Consumer Non Durables 4.57% Ferrous Metals 2.13% Finance 1.86% Industrial Capital Goods 1.67% Industrial Products 2.33% Minerals/Mining 2.48% Oil 3.38% Petroleum Products 3.63% Pharmaceuticals 2.29% Power 2.07% Software 10.93% Textile Products 2.47% Transportation 3.00% Other Equity Investments 6.75% Reverse Repos/CBLOs 6.67% Net Current -1.29% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities across market capitalisations High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 24-Feb-04 Benchmark S&P BSE 500 NAV (Growth) ` per unit (as on ) Fund Manager Neelotpal Sahai SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.82% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.56% Direct Plan 1.86% fees of 0.19% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.57% Direct Plan 1.87% fees of 0.19% of Total Net. Portfolio Turnover 0.90 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC India Opportunities Fund - Dividend 19-Nov Feb Jun HSBC India Opportunities Fund - Dividend Direct Plan 04-Feb Jun Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 9

11 An Open Ended Diversified Equity Scheme Investment Objective: Seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities primarily being midcap stocks. However, it could move a portion of its assets towards fixed income securities if the fund manager becomes negative on the Indian equity markets. Issuer HSBC Midcap Equity Fund (HMEF) July 2014 Market Value (` in Lacs) % to Net Auto VST Tillers Tractors % Auto Ancillaries Balkrishna Industries % Suprajit Engineering % Apollo Tyres % Sundram Fasteners % Banks Syndicate Bank % Jammu & Kashmir Bank % DCB Bank % South Indian Bank % Federal Bank % Dena Bank % Cement Everest Industries % Construction IRB Infrastructure Developers % National Buildings Construction Corporation % Construction Project KEC International % Consumer Non Durables Godfrey Phillips India % Finance Indiabulls Housing Finance % Cholamandalam Investment & Fin. Co % Industrial Capital Goods BEML % Industrial Products Finolex Industries % Media & Entertainment HT Media % Oil Aban Offshore % Pesticides UPL % PI Industries % Petroleum Products Gulf Oil Lubricants % Hindustan Petroleum Corporation % Gulf Oil Corporation % Pharmaceuticals Aurobindo Pharma % Torrent Pharmaceuticals % Alembic Pharmaceuticals % Lupin % Power CESC % Software Persistent Systems % Tech Mahindra % Nucleus Software Exports % Textile - Cotton Vardhman Textiles % Textile Products Arvind % Transportation Gujarat Pipavav Port % Gateway Distriparks % Adani Ports and Special Economic Zone % Total 87.99% 10

12 Issuer HSBC Midcap Equity Fund (HMEF) July 2014 Market Value (` in Lacs) % to Net Other Equity Investments 2, % CBLOs % Reverse Repos % Net Current % Total Net as on 31 July , % Asset Allocation Auto 2.43% Auto Ancillaries 11.31% Banks 11.67% Cement 1.63% Construction 5.34% Construction Project 2.50% Consumer Non Durables 1.38% Finance 6.29% Industrial Capital Goods 3.02% Industrial Products 2.42% Media & Entertainment 2.30% Oil 1.11% Pesticides 5.66% Petroleum Products 4.19% Pharmaceuticals 7.63% Power 2.44% Software 7.21% Textiles - Cotton 1.23% Textile Products 2.25% Transportation 5.98% Other Equity Investments 9.95% Reverse Repos/CBLOs 3.69% Net Current -1.63% Total Net % Our exposure to midcap stocks in HSBC Midcap Equity Fund (HMEF) is % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in predominantly mid cap equity and equity related securities High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment Benchmark NAV (Growth) per unit (as on ) Fund Manager SIP Minimum Application Amount Exit Nil Statistical Ratios 19-May-05 S&P BSE Midcap ` Dhiraj Sachdev Available ` 10,000 ` 1,000 p.m.(sip) Standard Deviation 1.03% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.57% Direct Plan 1.87% fees of 0.19% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.62% Direct Plan 1.90% fees of 0.19% of Total Net. Portfolio Turnover 0.63 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Midcap Equity Fund - Dividend 24-Mar Dec Nov Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 11

13 An Open Ended Flexi-Theme Equity Scheme Investment Objective: Seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities by investing primarily in sectors, areas and themes that play an important role in, and/or benefit from India s progress, reform process and economic development. Issuer HSBC Progressive Themes Fund (HPTF) July 2014 Market Value (` in Lacs) % to Net Auto Tata Motors DVR % Auto Ancillaries Apollo Tyres % Banks ICICI Bank % Jammu & Kashmir Bank % Karnataka Bank % Dena Bank % Union Bank of India % United Bank of India % Cement Everest Industries % HIL % Construction National Buildings Construction Corporation % IRB Infrastructure Developers % Construction Project Gammon Infrastructure Projects % Finance Rural Electrification Corporation % Gas Gujarat State Petronet % Industrial Capital Goods BEML % Industrial Products FAG Bearings India % Minerals/Mining Gujarat Mineral Development Corporation % Petroleum Products Hindustan Petroleum Corporation % Indian Oil Corporation % Power Reliance Infrastructure % JSW Energy % Power Grid Corporation of India % CESC % PTC India % Textile - Cotton Vardhman Textiles % Transportation Gateway Distriparks % Gujarat Pipavav Port % Adani Ports and Special Economic Zone % Total 96.23% 12

14 Issuer HSBC Progressive Themes Fund (HPTF) July 2014 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Reverse Repos % Net Current % Total Net as on 31 July , % Asset Allocation Auto 3.30% Auto Ancillaries 3.31% Banks 17.74% Cement 5.20% Construction 9.68% Construction Project 1.30% Finance 5.12% Gas 1.24% Industrial Capital Goods 3.29% Industrial Products 5.27% Minerals/Mining 2.86% Petroleum Products 7.57% Power 12.70% Textiles - Cotton 2.30% Transportation 15.35% Other Equity Investments 3.65% Reverse Repos/CBLOs 0.68% Net Current -0.56% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities, primarily in themes that play an important role in India s economic development High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 23-Feb-06 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Dhiraj Sachdev SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 1.20% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.62% Direct Plan 1.92% fees of 0.19% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.64% Direct Plan 1.93% fees of 0.20% of Total Net. Portfolio Turnover 0.13 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Progressive Themes Dividend 11-May May Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 13

15 An Open Ended Equity Linked Savings Scheme (ELSS) Investment Objective: Aims to provide long term capital appreciation by investing in a diversified portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalisation bias. The Fund may also invest in fixed income securities. Issuer HSBC Tax Saver Equity Fund (HTSF) July 2014 Market Value (` in Lacs) % to Net Auto Maruti Suzuki India % Auto Ancillaries Motherson Sumi Systems % Amara Raja Batteries % MRF % Banks ICICI Bank 1, % Indusind Bank % Axis Bank % Jammu & Kashmir Bank % Federal Bank % South Indian Bank % Cement Shree Cements % The Ramco Cements % Construction Jaiprakash Associates % Construction Project Larsen & Toubro % Consumer Durables Whirlpool of India % Bajaj Electricals % Consumer Non Durables I T C % McLeod Russel India % Britannia Industries % Ferrous Metals Jindal Steel & Power % Finance LIC Housing Finance % Sundaram Finance % Gas Petronet LNG % Industrial Capital Goods Crompton Greaves % Industrial Products Supreme Industries % Orient Refractories % Finolex Industries % Oil Oil & Natural Gas Corporation % Pharmaceuticals Ipca Laboratories % Lupin % Power CESC % Software Infosys % Tech Mahindra % Mindtree % Textile Products Arvind % Transportation Gateway Distriparks % Total 96.88% 14

16 Issuer HSBC Tax Saver Equity Fund (HTSF) July 2014 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Reverse Repos % Net Current % Total Net as on 31 July , % Asset Allocation Auto 3.86% Auto Ancillaries 7.44% Banks 21.76% Cement 6.91% Construction 1.25% Construction Project 4.13% Consumer Durables 3.06% Consumer Non Durables 8.78% Ferrous Metals 1.56% Finance 4.79% Gas 1.76% Industrial Capital Goods 2.35% Industrial Products 5.74% Oil 2.79% Pharmaceuticals 4.28% Power 2.33% Software 9.69% Textile Products 2.60% Transportation 1.80% Other Equity Investments 1.75% Reverse Repos/CBLOs 0.74% Net Current 0.63% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities with no market capitilastion bias High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 05-Jan-07 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Aditya Khemani SIP Available Minimum Application Amount ` 500 (Lumpsum & SIP) Exit Nil Statistical Ratios Standard Deviation 0.81% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.58% Direct Plan 1.88% fees of 0.19% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.58% Direct Plan 1.88% fees of 0.19% of Total Net. Portfolio Turnover 0.73 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC Tax Saver Equity Fund Dividend 19-Feb Upon payment of dividend, the NAV per unit falls to the extent of payout and statutory levy, if any. Face value: `10 per unit. 15

17 An Open Ended Equity Scheme Investment Objective: To provide long-term capital growth from a diversified portfolio of equity and equity related instruments. The focus would be to invest in stocks of companies facing out-of-ordinary conditions. Issuer HSBC Dividend Yield Equity Fund (HDYEF) July 2014 Market Value (` in Lacs) % to Net Auto Maruti Suzuki India % Tata Motors % Hero Motocorp % Auto Ancillaries Motherson Sumi System % Amara Raja Batteries % MRF % Banks ICICI Bank % Karur Vysya Bank % Axis Bank % Federal Bank % Bank of Baroda % Jammu & Kashmir Bank % HDFC Bank % Cement Shree Cements % ACC % Construction IRB Infrastructure Developers % Construction Project Larsen & Toubro % Consumer Non Durables I T C % McLeod Russel India % Hindustan Unilever % Ferrous Metals Tata Steel % Finance Indiabulls Housing Finance % Industrial Products Finolex Industries % Supreme Industries % Media & Entertainment Sun TV Network % Minerals/Mining NMDC % Non - Ferrous Metals Hindustan Zinc % Oil Oil & Natural Gas Corporation % Petroleum Products Bharat Petroleum Corporation % Reliance Industries % Pharmaceuticals Lupin % Power NTPC % Power Grid Corporation of India % Software Infosys % Wipro % HCL Technologies % Eclerx Services % Tech Mahindra % Transportation Gateway Distriparks % Total 95.82% 16

18 Issuer HSBC Dividend Yield Equity Fund (HDYEF) July 2014 Market Value (` in Lacs) % to Net Other Equity Investments % CBLOs % Reverse Repos % Net Current % Total Net as on 31 July , % Asset Allocation Auto 4.96% Auto Ancillaries 6.58% Banks 23.38% Cement 3.19% Construction 2.15% Construction Project 3.26% Consumer Non Durables 9.29% Ferrous Metals 1.76% Finance 2.07% Industrial Products 2.91% Media & Entertainment 1.87% Minerals/Mining 1.61% Non - Ferrous Metals 2.37% Oil 5.18% Petroleum Products 4.45% Pharmaceuticals 2.68% Power 2.82% Software 13.30% Transportation 1.99% Other Equity Investments 1.46% Reverse Repos/Cblos 3.21% Net Current -0.49% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities of companies facing out-of-ordinary conditions High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 21-Mar-07 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Gaurav Mehrotra & Amaresh Mishra SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.84% R-Squared,m Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.35% Direct Plan 1.65% fees of 0.16% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.66% Direct Plan 1.95% fees of 0.20% of Total Net. Portfolio Turnover 0.48 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31,

19 An Open Ended Scheme Investment Objective: To provide long term capital appreciation by allocating funds in equity and equity related instruments. It also has the flexibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative. Issuer Auto Market Value (` in Lacs) % to Net Tata Motors % Maruti Suzuki India % Banks ICICI Bank % Axis Bank % HDFC Bank % State Bank of India % Cement ACC % Construction Project Larsen & Toubro % Consumer Non Durables I T C % Ferrous Metals Jindal Steel & Power % Minerals/Mining Sesa Sterlite % Oil Oil & Natural Gas Corporation % Petroleum Products Bharat Petroleum Corporation % Reliance Industries % Pharmaceuticals Lupin % Sun Pharmaceutical Industries % Power HSBC Dynamic Fund (HDF) July 2014 Power Grid Corporation Of India % Software Tata Consultancy Services % HCL Technologies % Telecom Services Bharti Airtel % Transportation Adani Ports and Special Economic Zone % Total 58.99% 18

20 Issuer HSBC Dynamic Fund (HDF) July 2014 Market Value (` in Lacs) % to Net CBLOs 1, % Reverse Repos 1, % Net Current % Total Net as on 31 July , % Asset Allocation Auto 5.71% Banks 16.50% Cement 1.65% Construction Project 3.55% Consumer Non Durables 5.51% Ferrous Metals 1.62% Minerals/Mining 1.71% Oil 2.92% Petroleum Products 3.18% Pharmaceuticals 4.02% Power 2.36% Software 7.63% Telecom Services 1.48% Transportation 1.15% Reverse Repos/CBLOs 41.66% Net Current -0.65% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Invests in equity and equity related securities and in debt instruments when view on equity markets is negative High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment 24-Sep-07 Benchmark S&P BSE 200 NAV (Growth) ` per unit (as on ) Fund Manager Neelotpal Sahai (for Equity portion) Sanjay Shah (for Fixed Income portion) SIP Available Minimum Application Amount ` 10,000 ` 1,000 p.m.(sip) Exit Nil Statistical Ratios Standard Deviation 0.79% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.70% Direct Plan 2.00% fees of 0.20% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.70% Direct Plan 2.00% fees of 0.20% of Total Net. Portfolio Turnover 0.51 Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31,

21 Issuer HSBC Emerging Markets Fund (HEMF) July 2014 An Open Ended Scheme Investment Objective: To provide long term capital appreciation by investing in India and in the emerging markets, in equity and equity related instruments, share classes and units/securities issued by overseas mutual funds or unit trusts. The fund may also invest a limited proportion in domestic debt and money market instruments. Overseas Mutual Fund Market Value (` in Lacs) % to Net HSBC GIF Glob Emerg Mkts Eq S1 Dis 1, % CBLOs % Reverse Repos % Net Current % Total Net as on 31 July , % Asset Allocation Overseas Mutual Fund 98.49% Reverse Repos/CBLOs 0.72% Net Current 0.79% Total Net % This Product is suitable for investors who are seeking* : To create wealth over long term Investment in equity and equity related securities of Emerging economies High risk (Brown) *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Note: Risk may be represented as: (BLUE) investors understand that their principal will be at low risk (YELLOW) investors understand that their principal will be at medium risk (BROWN) investors understand that their principal will be at high risk Date of Allotment Benchmark NAV (Growth) per unit (as on ) Fund Manager SIP Minimum Application Amount Exit 17-Mar-08 MSCI Emerging Markets Index ` Nil Statistical Ratios Piyush Harlalka (Dedicated fund manager for overseas investments) Available ` 10,000 ` 1,000 p.m.(sip) Standard Deviation 1.53% R-Squared Beta (Slope) Sharpe Ratio** Total Expense Ratio as on July 30, 2014 Regular 2.70% Direct Plan 2.00% (inclusive of underlying scheme s expenses) fees of 0.11% of Total Net. Annualised Expense Ratio from 1st April 2014 onwards Regular 2.70% Direct Plan 2.00% (inclusive of underlying scheme s expenses) fees of 0.11% of Total Net. Statistical ratios disclosed as per daily returns of the last 3 years/since inception, whichever is Effective from March 1, 2013 for prospective investments. **Risk free rate: 10 yr Gsec: 8.50% as on July 31, Dividend Declaration Record Date / period of dividend declared Non-Institutional Institutional NAV (`) per unit (cum dividend) HSBC - Emerging Market Fund - Dividend 27-Jun HSBC - Emerging Market Fund - Dividend - Direct Plan 27-Jun