HSBC Global Investment Trust – HSBC RMB Bond Fund … · HSBC Global Investment Trust – HSBC RMB Bond Fund Annual Report 2017. Contents Page ... Eva WONG ) HSBC Trustee (Cayman)

HSBC Global Investment Trust– HSBC RMB Bond FundAnnual Report 2017

Contents

Page

Investmentadviser’sreport 1Trustee’sreport 2Independentauditors’reporttotheunitholders 3Statementoffinancialposition 5Statementofcomprehensiveincome 7Statementofchangesinnetassetsattributabletounitholders 8Cashflowstatement 9Distributionstatement 10Notestothefinancialstatements 11Portfoliostatement(Unaudited) 25Statementofmovementsinportfolioholdings(Unaudited) 27Performancerecord(Unaudited) 28Administration 30

BoardofDirectorsofHSBCInvestmentFunds(HongKong)Limited 31

1

InvestmentAdviser’sReport

HSBC RMB Bond Fund

Market review

Fortheyearendingat31July2017,theoffshorerenminbibondmarketdeliveredapositivereturninbothlocalcurrencyterms and in USD terms. Spreads tightened for bothinvestmentgradenamesandnon-investmentgradenames,which helped offset the broad rise in offshore renminbigovernmentbondyields.OffshoreChinagovernmentbondswere largely driven by volatility in the offshore renminbiliquiditywhileyieldsstarted tostabilizecoming intoJune2017onthebackofimprovedsentimenttowardstheoutlookfor the renminbi. As for the currency, the renminbidepreciatedamidbroadUSdollarweaknessinthesecondhalf of 2016. However, coming into 2017, depreciationpressure eased and the renminbi started to strengthenagainst the USdollarwith enhanced scrutinyover capitaloutflows, broad US dollar weakness, and more benignmacroeconomic outlook for China.The Fund delivered apositivereturnfortheyear,asourexposuretohighqualitycorporatebondsaddedvalue.Ourfundcontinuestofavourbetterqualitybondsoverlowerratedones,andcontinuestolook for relative value opportunities with solid creditfundamentals.TheFundremainsveryattractivefromayieldstandpointwithashortduration.

HSBC Global Asset Management (Hong Kong) Limited27November2017

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HSBC RMB Bond Fund (“the Fund”)

Weherebyconfirmthat,tothebestofourknowledge,theManageroftheFundhas,inallmaterialrespects,managedtheFundinaccordancewiththeprovisionsoftheTrustDeeddated31December2010,asamended,fortheyearended31July2017.

) BerthaTAM ) Forandonbehalfof EvaWONG ) HSBCTrustee(Cayman)Limited, ) Trustee )

Trustee’sReport

3

Report on the Audit of Financial Statements

Opinion

Wehave audited thefinancial statementsofHSBCRMBBondFund(the“Fund”)setonpages5to24,whichcomprisethestatementoffinancialpositionasat31July2017, thestatement of comprehensive income, the statement ofchangesinnetassetsattributabletounitholders,thecashflowstatementandthedistributionstatementfortheyearthenended,andnotestothefinancialstatements,includingasummaryofsignificantaccountingpolicies.

Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialdispositionoftheFundasat31July2017,anditsfinancialtransactionsandcashflowsfortheyearthen ended in accordance with Hong Kong FinancialReportingStandards(“HKFRSs”)issuedbytheHongKongInstituteofCertifiedPublicAccountants(“HKICPA”).

Basis for Opinion

We conducted our audit in accordance with Hong KongStandardsonAuditing(“HKSAs”)issuedbytheHKICPA.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditors’ Responsibilities for the Audit of the Financial Statementssectionofourreport.WeareindependentoftheFund inaccordancewith theHKICPA’sCodeofEthics forProfessionalAccountants (“the Code”) together with theethical requirements that are relevant to our audit of thefinancialstatementsinCaymanIslands,andwehavefulfilledourotherethicalresponsibilities inaccordancewiththeserequirements and the Code.We believe that the auditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

Information Other than the Financial Statements and Auditors’ Report Thereon

TheManagerandtheTrusteeoftheFundareresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationincludedintheannualreport,butdoesnotincludethefinancialstatementsandourauditors’reportthereon.

Ouropiniononthefinancialstatementsdoesnotcovertheother information and we do not express any form ofassuranceconclusionthereon.

Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso, consider whether the other information is materiallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheaudit,orotherwiseappearstobematerially

IndependentAuditors’ReporttotheUnitholders

misstated. If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,weare required to report that fact.Wehavenothingtoreportinthisregard.

Responsibilities of the Manager and the Trustee of the Fund for the Financial Statements

TheManagerandtheTrusteeoftheFundareresponsibleforthepreparationandfairpresentationoffinancialstatementsinaccordancewithHKFRSsissuedbytheHKICPAandforsuchinternalcontrolastheManagerandtheTrusteeoftheFunddetermine isnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,theManagerandtheTrusteeoftheFundareresponsibleforassessingtheFund’sability to continue as a going concern, disclosing, asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlesstheManagerandtheTrusteeoftheFundeitherintendtoliquidatetheFundortoceaseoperations,orhavenorealisticalternativebuttodoso.

In addition, theManager and theTrusteeof theFundarerequiredtoensurethatthefinancialstatementshavebeenproperlypreparedinaccordancewiththerelevantprovisionsoftheTrustDeed,asamended,(“theTrustDeed”)andtherelevantdisclosureprovisionsofAppendixEoftheCodeonUnitTrustsandMutualFunds(“theSFCCode”) issuedbytheHongKongSecuritiesandFuturesCommission.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance aboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andto issueanauditors’ reportthat includesouropinion.Thisreportismadesolelytoyou,asabody,inaccordancewithouragreedtermsofengagement,fornootherpurpose.Wedonotassumeresponsibilitytowardsoraccept liabilitytoanyotherpersonforthecontentsofthisreport.

Reasonableassuranceisahighlevelofassurance,butisnota guarantee that an audit conducted in accordance withHKSAswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycould reasonably be expected to influence the economicdecisions of users taken on the basis of these financialstatements.Inaddition,wearerequiredtoassesswhether

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IndependentAuditors’ReporttotheUnitholders

the financial statements of the Fund have been properlyprepared, in allmaterial respects, in accordancewith therelevant provisions of theTrust Deed and the relevantdisclosureprovisionsofAppendixEoftheSFCCode.

AspartofanauditinaccordancewithHKSAs,weexerciseprofessionaljudgementandmaintainprofessionalscepticismthroughouttheaudit.Wealso:

• Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsiveto those risks, and obtain audit evidence that issufficient andappropriate toprovide abasis for ouropinion.The risk of not detecting a materialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriate in the circumstances, but not for thepurposeofexpressinganopinionontheeffectivenessoftheFund’sinternalcontrol.

• Evaluate the appropriateness of accounting policiesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebytheManagerandtheTrusteeoftheFund.

• ConcludeontheappropriatenessoftheManager’sandtheTrustee’s use of the going concern basis ofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheFund’sability tocontinueasagoingconcern. Ifweconclude that a material uncertainty exists, we arerequiredtodrawattentioninourauditors’reporttotherelated disclosures in the financial statements or, ifsuchdisclosuresareinadequate,tomodifyouropinion.Our conclusions are based on the audit evidenceobtained up to the date of our auditors’ report.However,futureeventsorconditionsmaycausetheFundtoceasetocontinueasagoingconcern.

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,andwhether thefinancialstatements represent theunderlyingtransactionsandevents inamannerthatachievesfairpresentation.

WecommunicatewiththeManagerandtheTrusteeoftheFund regarding, amongothermatters, theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.

Report on matters under the relevant provisions of the Trust Deed and the relevant disclosure provisions of Appendix E of the SFC Code

Inouropinion,thefinancialstatementshavebeenproperlyprepared, in allmaterial respects, in accordancewith therelevant provisions of theTrust Deed and the relevantdisclosureprovisionsofAppendixEoftheSFCCode.

KPMGP.O.Box493CenturyYard,CricketSquareGrandCaymanKY1-1106CaymanIslands

27November2017

TheaccompanyingreportofKPMGisforsoleandexclusiveuseoftheFund.Further,thereportofKPMGisasof27November2017andKPMGhascarriedoutnoproceduresofanynaturesubsequenttothatdatewhichinanywayextendsthatdate.

5

StatementofFinancialPosition

HSBC RMB Bond Fundasat31July2017

2017 2016Note RMB RMB

ASSETSFinancialassetsatfairvaluethroughprofitorloss 5,12(b),13 695,516,905 1,044,254,860Interestreceivable 8,457,887 12,695,978Subscriptionsreceivable 4,100,186 –Cashandcashequivalents 7(b),15 2,773,769 9,518,765

710,848,747 1,066,469,603

LIABILITIESBankoverdrafts 7(b),15 3,838 –Redemptionspayable 648,280 5,220,443Amountsduetobrokers 6 1,933,560 –Distributionspayable 10 8,216,385 11,130,687Otherpayables 7(a),7(c),7(d) 702,318 1,206,833

11,504,381 17,557,963

Net assets attributable to unitholders 699,344,366 1,048,911,640

Representing:Financial liabilities 699,344,366 1,048,911,640

Total number of units in issue

“AD–HKD”classincomeunit 9(a) 28,077,841 36,534,053

“AD–RMB”classincomeunit 9(b) 34,490,296 49,164,758

“AD–USD”classincomeunit 9(c) 2,140,863 4,183,989

“I–USD”classincomeunit 9(d) 40,365 13,521

6

StatementofFinancialPosition


Net asset value per unit

“AD–HKD”classincomeunit 9(e) 8.138 8.231

“AD–RMB”classincomeunit 9(e) 9.628 9.739

“AD–USD”classincomeunit 9(e) 63.494 64.163

“I–USD”classincomeunit 9(e) 70.215 67.562

ApprovedbytheTrusteeandtheManageron27November2017

) BerthaTAM ) Forandonbehalfof EvaWONG ) HSBCTrustee(Cayman)Limited, ) Trustee

) GuillermoEduardoMALDONADO-CODINA ) Forandonbehalfof ChunPongStephenTAM ) HSBCInvestmentFunds ) (HongKong)Limited, ) Manager

Thenotesonpages11to24formpartofthesefinancialstatements.

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HSBC RMB Bond Fundfortheyearended31July2017


Interestincome 7(b) 6,560 –Netgainsfromfinancialassetsatfairvaluethroughprofitorloss 3 35,149,712 61,627,002Netforeignexchangegain/(loss) 357,395 (1,040,850)Otherincome 7(c),7(d) 640,846 212,875

TOTAL REVENUE 36,154,513 60,799,027

Managementfees 7(a) 6,243,036 10,711,597Trustee’sfees 7(c) 1,007,804 1,442,528Auditors’remuneration 101,020 67,788Administrativefees 7(c) 123,380 371,482Legalandprofessionalfees 39,988 –Registrar’sfees 7(c) 17,069 16,307Miscellaneousexpenses 7(d) 180,034 407,627

TOTAL OPERATING EXPENSES 7,712,331 13,017,329

NET PROFIT FROM OPERATIONS BEFORE FINANCE COSTS 28,442,182 47,781,698

Distributionstounitholders 10 (37,458,936) (68,333,778)

DECREASE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR (9,016,754) (20,552,080)


StatementofComprehensiveIncome

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Balance at the beginning of the year 1,048,911,640 2,098,355,113

Decrease in net assets attributable to unitholders and total comprehensive income for the year (9,016,754) (20,552,080)

Subscriptionsofunits(excludingequalisation) 78,993,686 77,140,008Redemptionsofunits(excludingequalisation) (423,331,119) (1,109,178,991)Incomeequalisationonsubscriptionsandredemptions 11 3,786,913 3,147,590

(340,550,520) (1,028,891,393)

Balance at the end of the year 699,344,366 1,048,911,640


StatementofChangesinNetAssetsAttributabletoUnitholders

9



OPERATING ACTIVITIESInterestreceived 6,008 –Managementfeespaid (6,479,017) (11,394,328)Trustee’sfeespaid (1,010,103) (1,516,940)Paymentsonpurchaseofinvestments (259,328,600) (70,559,848)Proceedsfromsaleofinvestments 649,388,470 1,181,006,586Otheroperatingincomereceived/(expenses)paid 270,515 (1,695,448)

Cash provided by operating activities 382,847,273 1,095,840,022

FINANCING ACTIVITIESProceedsfromissueofunitsincludingequalisation 72,992,083 97,383,414Paymentsonredemptionofunitsincludingequalisation (422,214,952) (1,121,011,732)Distributionspaid (40,373,238) (81,049,786)

Cash used in financing activities (389,596,107) (1,104,678,104)

Net decrease in cash and cash equivalents (6,748,834) (8,838,082)Cash and cash equivalents at the beginning of the year 9,518,765 18,356,847

Cash and cash equivalents at the end of the year 15 2,769,931 9,518,765


CashFlowStatement

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Amount available for distribution brought forward 1,048,911,640 2,098,355,113Netpaidorpayableonissueandredemptionofunits (340,550,520) (1,028,891,393)Incomebeforedistributionsaftertaxation 28,442,182 47,781,698

Amount available for distribution to unitholder 736,803,302 1,117,245,418

Distributionstounitholders (37,458,936) (68,333,778)

Amount available for distribution carried forward 699,344,366 1,048,911,640

Distribution history

Year ended 31 July 2017 Year ended 31 July 2016Distribution

per unitDate of

distributionDistribution

per unitDate of

distributionNote RMB RMB

“AD – HKD” class income unitFirstdistribution 10 0.0873 28October2016 0.1150 29October2015Seconddistribution 10 0.0996 25January2017 0.1127 28January2016Thirddistribution 10 0.1053 27April2017 0.1024 28April2016Fourthdistribution 10 0.0962 28July2017 0.0871 28July2016

“AD – RMB” class income unitFirstdistribution 10 0.1025 28October2016 0.1372 29October2015Seconddistribution 10 0.1181 25January2017 0.1331 28January2016Thirddistribution 10 0.1244 27April2017 0.1211 28April2016Fourthdistribution 10 0.1141 28July2017 0.1035 28July2016

“AD – USD” class income unitFirstdistribution 10 0.6801 28October2016 0.8966 29October2015Seconddistribution 10 0.7770 25January2017 0.8784 28January2016Thirddistribution 10 0.8216 27April2017 0.7982 28April2016Fourthdistribution 10 0.7498 28July2017 0.6787 28July2016


DistributionStatement

NotestotheFinancialStatements

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HSBC RMB Bond Fund

1 The Fund

HSBCRMBBondFund(“theFund”)isasub-fundofHSBCGlobalInvestmentTrust(“theTrust”).TheTrustisanopen-endedumbrellaunittrustestablishedunderthelawsoftheCaymanIslandsbyatrustdeeddated31December2010,asamended(“theTrustDeed”).TheTrustregisteredundertheMutualFundsLawoftheCaymanIslandson5January2011.TheFund commenced its operationson28 January2011.

The Fund aims to provide long term capital growth andincomeinRenminbiterms,primarilythroughinvestmentsinsecuritiesinstruments,productsanddepositswhich,ortheunderlying investments of which, are denominated inRenminbi.

The Fund is authorised by the Hong Kong Securities andFuturesCommission(“SFC”)undersection104oftheHongKongSecuritiesandFuturesOrdinance (“HKSFO”)and isgovernedbytheHongKongCodeonUnitTrustsandMutualFundsissuedbytheSFC.

2 Significant accounting policies

(a) Statementofcompliance

ThefinancialstatementshavebeenpreparedinaccordancewithallapplicableHongKongFinancialReportingStandards(“HKFRSs”), which collective term includes all applicableindividualHongKongFinancialReportingStandards,HongKongAccountingStandards(“HKASs”)andInterpretationsissued by the Hong Kong Institute of Certified PublicAccountants (“HKICPA”), accounting principles generallyacceptedinHongKong,therelevantprovisionsoftheTrustDeedandtherelevantdisclosureprovisionsoftheHongKongCodeonUnitTrustsandMutualFundsissuedbytheSFC.AsummaryofthesignificantaccountingpoliciesadoptedbytheFundissetoutbelow.

(b) Basisofpreparationofthefinancialstatements

The functional and presentation currency of the Fund isRenminbi reflecting the fact that all the underlyinginvestmentsoftheFundaredenominatedinRenminbi.

Thefinancialstatementsarepreparedonafairvaluebasisforfinancialassetsatfairvaluethroughprofitorloss.Otherfinancialassetsandfinancialliabilitiesarestatedatamortisedcostorredemptionamount(redeemableunits).

ThepreparationoffinancialstatementsinconformitywithHKFRSs requires management to make judgements,estimates and assumptions that affect the application ofpoliciesandreportedamountsofassets,liabilities,incomeandexpenses.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgementsaboutcarryingvaluesofassetsand liabilities thatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates.

Theestimatesandunderlyingassumptionsarereviewedonan ongoing basis. Revisions to accounting estimates arerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.

TheaccountingpolicieshavebeenappliedconsistentlybytheFundandareconsistentwiththoseusedinthepreviousyear.

(c) Changesinaccountingpolicies

TheFundhasnotappliedanynewstandardorinterpretationthatisnotyeteffectiveforthecurrentaccountingperiod(seenote16).

(d) Foreigncurrencytranslation

ForeigncurrencytransactionsduringtheyeararetranslatedintoRenminbiattheexchangeratesrulingatthetransactiondates.Monetaryassetsandliabilitiesdenominatedinforeigncurrencies that are statedat fair valueare translated intoRenminbiattheforeignexchangeratesrulingatthedateofthe statement of financial position. Foreign currencyexchangedifferencesarisingontranslationandrealisedgainsandlossesondisposalsorsettlementsofmonetaryassetsandliabilitiesarerecognisedinprofitorloss.

Foreigncurrencyexchangedifferencesrelatingtoinvestmentsatfairvaluethroughprofitorlossareincludedinnetgainsorlossesfromfinancialassetsatfairvaluethroughprofitorloss.Allotherforeigncurrencyexchangedifferencesrelatingtomonetaryitemsincludingcashandcashequivalentsarepresentedseparatelyinprofitorloss.


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(e) Financialinstruments

(i) Classification

AlloftheFund’sinvestmentsareclassifiedasfinancialassetsatfairvaluethroughprofitorloss.ThiscategorycomprisesfinancialinstrumentsheldfortradingwhichareinstrumentsthattheFundhasacquiredprincipallyfor the purpose of short-term profit-taking.Theseinclude investments in bonds and certificates ofdeposit.

Financialassetsatamortisedcostthatareclassifiedas loans and receivables include interest receivableandsubscriptionsreceivable.

Financial liabilities at amortised cost include bankoverdrafts, redemptions payable, amounts due tobrokers, distributions payable and other payables.Financialliabilitiesarisingfromtheredeemableunitsissued by the Fund are carried at the redemptionamount.

(ii) Recognition

The Fund recognises financial assets and financialliabilities on the date it becomes a party to thecontractualprovisionsoftheinstrument.

Aregularwaypurchaseorsaleoffinancialassetsisrecognisedusingtradedateaccounting.Fromthisdateanygainsandlossesarisingfromchangesinfairvalueof the financial assets or financial liabilities arerecorded.

Financial liabilitiesarenot recognisedunlessoneofthepartieshasperformedtheirobligationsunderthecontract or the contract is a derivative contract notexemptedfromthescopeofHKAS39.

(iii) Measurement

Financialinstrumentsaremeasuredinitiallyatfairvalue(transactionprice).Transactioncostsonfinancialassetsand liabilities at fair value through profit or loss areexpensed immediately, while on other financialinstrumentstheyareamortised.

Subsequent to initial recognition, all instrumentsclassified at fair value through profit or loss aremeasuredatfairvaluewithchangesintheirfairvaluerecognisedinprofitorloss.

Financialassetsclassifiedasloansandreceivablesarecarriedatamortisedcostusingtheeffectiveinterestratemethod,lessimpairmentlosses,ifany.

Financialliabilitiesotherthanthoseatfairvaluethroughprofitorlossaremeasuredatamortisedcostusingtheeffective interest rate method. Financial liabilitiesarisingfromtheredeemableunitsissuedbytheFundarecarriedattheredemptionamountrepresentingtheunitholders’ right toa residual interest in theFund’sassets.

(iv) Fairvaluemeasurementprinciples

Fairvalueisthepricethatwouldbereceivedtosellanasset or paid to transfer a liability in an orderlytransaction between market participants at themeasurementdateintheprincipal,orinitsabsence,themostadvantageousmarkettowhichtheFundhasaccessatthatdate.Thefairvalueofaliabilityreflectsitsnonperformancerisk.

Whenavailable,theFundmeasuresthefairvalueofan instrument using the quoted price in an activemarketforthatinstrumentprovidedsuchpriceiswithinthebidaskspread.Amarketisregardedasactiveiftransactionsfor theassetor liability takeplacewithsufficient frequency and volume to provide pricinginformation on an ongoing basis. In circumstanceswherethequotedpriceisnotwithinthebidaskspread,the manager of the Fund will determine the pointswithinthebidaskspreadthataremostrepresentativeofthefairvalue.

Whenthereisnoquotedpriceinanactivemarket,theFundusesvaluationtechniquesthatmaximisetheuseofrelevantobservableinputsandminimisetheuseofunobservableinputs.Thechosenvaluationtechniqueincorporates all the factors that market participantswouldtakeintoaccountinpricingatransaction.

The best evidence of the fair value of a financialinstrument at initial recognition is normally thetransactionpricei.e.thefairvalueoftheconsiderationgivenorreceived.IftheFunddeterminesthatthefairvalueatinitialrecognitiondiffersfromthetransactionpriceandthefairvalueisevidencedneitherbyaquotedpriceinanactivemarketforanidenticalassetorliabilitynorbasedonavaluationtechniquethatusesonlydatafromobservablemarkets,thefinancialinstrumentisinitiallymeasuredatfairvalue,adjustedtodeferthedifferencebetweenthefairvalueatinitialrecognition


13

andthetransactionprice.Subsequently,thatdifferenceisrecognisedinprofitorlossonanappropriatebasisoverthelifeoftheinstrumentbutnolaterthanwhenthevaluationissupportedwhollybyobservablemarketdataorthetransactionisclosedout.

Portfoliosoffinancialassetsandfinancialliabilitiesthatare exposed to market risk and credit risk that aremanagedbytheFundonthebasisofthenetexposuretoeithermarketorcredit risk,aremeasuredonthebasisofapricethatwouldbereceivedtosellanetlongposition(orpaidtotransferanetshortposition)for a particular risk exposure.Those portfolio-leveladjustmentsareallocatedtotheindividualassetsandliabilitiesonthebasisoftherelativeriskadjustmentofeachoftheindividualinstrumentsintheportfolio.

TheFundrecognisestransfersbetweenlevelsofthefairvaluehierarchyasoftheendofthereportingperiodduringwhichthechangehasoccurred.

(v) Amortisedcostmeasurementprinciples

Theamortisedcostofafinancialassetorliabilityistheamount at which the financial asset or liability ismeasured at initial recognition, minus principalrepayments,plusorminusthecumulativeamortisationusingtheeffectiveinterestmethodofanydifferencebetweentheinitialamountrecognisedandthematurityamount,minusanyreductionforimpairment.

(vi) Impairment

Financialassetsthatarestatedatcostoramortisedcostare reviewedateachdateof thestatementoffinancial position to determine whether there isobjectiveevidenceofimpairment.Ifanysuchindicationexists, an impairment loss is recognised inprofitorloss as thedifference between the asset’s carryingamountandthepresentvalueofestimatedfuturecashflows discounted at the financial asset’s originaleffectiveinterestrate.

Ifinasubsequentperiodtheamountofanimpairmentlossrecognisedonafinancialassetcarriedatamortisedcost decreases and the decrease can be linkedobjectivelytoaneventoccurringafterthewrite-down,thewrite-downisreversedthroughprofitorloss.

(vii) Derecognition

The Fund derecognises a financial asset when thecontractualrightstothecashflowsfromthefinancialassetsexpireorittransfersthefinancialassetandthetransferqualifiesforderecognitioninaccordancewithHKAS39.

The Fund uses the weighted average method todeterminerealisedgainsandlossesonderecognition.

Afinancialliabilityisderecognisedwhentheobligationspecified in the contract is discharged, cancelledorexpired.

(viii) Offsetting

Financialassetsand liabilitiesareoffsetandthenetamount is reported in the statement of financialpositionwhentheFundhasalegallyenforceablerighttooffsettherecognisedamountsandthetransactionsare intended to be settled on a net basis orsimultaneously, e.g. through a market clearingmechanism.

(ix) Specificinstruments

Cash and cash equivalents

Cash comprises current deposits with banks. Cashequivalents are short-termhighly liquid investmentsthatarereadilyconvertibletoknownamountsofcash,aresubjecttoaninsignificantriskofchangesinvalue,andareheld for thepurposeofmeetingshort-termcashcommitmentsratherthanforinvestmentorotherpurposes.

(f) Revenuerecognition

ProvideditisprobablethattheeconomicbenefitswillflowtotheFundandtherevenueandcosts,ifapplicable,canbemeasuredreliably,revenueisrecognisedinprofitorlossasfollows:

Interestincome

Interestincomeisrecognisedinprofitorlossasitaccrues,usingtheeffectiveinterestratemethod.Interestincomeonbankdepositsisdisclosedseparatelyonthefaceofprofitorloss. Interest incomeondebtsecurities is includedinnetgainsor losses fromfinancialassetsat fairvalue throughprofitorloss.


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(g) Expenses

Allexpensesarerecognisedinprofitorlossonanaccrualbasis.

(h) Foreignexchangegainsandlosses

Foreignexchangegainsandlossesonfinancialassetsatfairvalue through profit or loss are recognised together withotherchangesinthefairvalue.Includedinprofitorlosslineitem Net foreign exchange gain/(loss) are net of foreignexchangegainsandlossesonmonetaryfinancialassetsandfinancial liabilities other than those classified at fair valuethroughprofitofloss.

(i) Relatedparties

(a) Aperson,oraclosememberofthatperson’sfamily,isrelatedtotheFundifthatperson:

(i) hascontrolorjointcontrolovertheFund;

(ii) hassignificantinfluenceovertheFund;or

(iii) isamemberofthekeymanagementpersonneloftheFund.

(b) AnentityisrelatedtotheFundifanyofthefollowingconditionsapplies:

(i) The entity and the Fund are members of thesame group (which means that each parent,subsidiaryandfellowsubsidiaryisrelatedtotheothers);

(ii) Oneentityisanassociateorjointventureoftheotherentity(oranassociateorjointventureofamemberofagroupofwhichtheotherentityisamember);

(iii) Bothentitiesarejointventuresofthesamethirdparty;

(iv) Oneentityisajointventureofathirdentityandtheotherentityisanassociateofthethirdentity;

(v) TheentityisapostemploymentbenefitplanforthebenefitofemployeesofanentityrelatedtotheFund.

(vi) Theentityiscontrolledorjointlycontrolledbyapersonidentifiedin(a).

(vii) A person identified in (a)(i) has significantinfluenceovertheentityorisamemberofthekeymanagementpersonneloftheentity(orofaparentoftheentity).

(viii) Theentity,oranymemberofagroupofwhichitisapart,provideskeymanagementpersonnelservicestotheFund.

Closemembersof thefamilyofapersonarethosefamilymemberswhomaybeexpectedtoinfluence,orbeinfluencedby,thatpersonintheirdealingswiththeentity.

(j) Subscriptionsandredemptions

TheFund recognisesunitholders’ subscriptions and allotsunits upon receipt of a valid subscription application andderecognises them upon receipt of a valid redemptionapplication.

(k) Unitsinissue

TheFundclassifiesfinancialinstrumentsissuedasfinancialliabilities or equity instruments in accordance with thesubstanceofthecontractualtermsoftheinstruments.

TheFundhasmultipleclassesofredeemableunitsinissue–“AD–HKD”classincomeunit,“AD-RMB”classincomeunit,“AD–USD”class incomeunit and“I –USD”classincomeunit.AlltheclassesbelongtothemostsubordinateclassoffinancialinstrumentsintheFundandrankparipassuin all material respects and have the same terms andconditionsotherthandifferentcurrenciesandmanagementfeerates.Theredeemableunitsprovideunitholderswiththerighttorequireredemptionforcashatavalueproportionateto theunitholders’share in theFund’snetassetsateachredemption date, and also in the event of the Fund’sliquidation.Theredeemableunitsareclassifiedasfinancialliabilities and are measured at the present value of theredemptionamounts.

(l) Distributiontoholdersofredeemableunits

Distributions to holders of redeemable units classified asfinancialliabilitiesarerecognisedinprofitorlossasfinancecosts when they are authorised and no longer at thediscretionoftheFund.


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(m) Segmentreporting

An operating segment is a component of the Fund thatengages in business activities from which it may earnrevenues and incur expenses, including revenues andexpensesthatrelatetotransactionswithanyoftheFund’sothercomponents,whoseoperating resultsare reviewedregularly by the chief operating decision maker to makedecisions about resources allocated to the segment andassess its performance, and for which discrete financialinformationisavailable.Segmentresultsthatarereportedtothechiefoperatingdecisionmakerincludeitemsdirectlyattributable to a segment as well as those that can beallocatedonareasonablebasis.Thechiefoperatingdecisionmaker of the Fund is identified as the manager, HSBCInvestmentFunds(HongKong)Limited.

3 Net gains from financial assets at fair value through profit or loss

2017 2016RMB RMB

Realisedgains 39,188,606 57,072,569Unrealised(losses)/gains (4,038,894) 4,554,433

35,149,712 61,627,002

4 Taxation

There are currently no taxes on income or gains underCayman Islands law.Accordingly,noprovision for incometaxesisincludedinthesefinancialstatements.

NoprovisionforHongKongProfitsTaxhasbeenmadeinthefinancialstatementsas theFund isexempt fromtaxationundersection26A(1A)oftheHongKongInlandRevenueOrdinance.

UnderthecurrentgeneralprovisionsofthePRCCorporateIncomeTaxLawandpublishedtaxcirculars,theFundwouldbe subject to PRC withholding tax at the rate of 10% inrespectofitsPRCsourcedincomeearned,includingcapitalgainsrealisedonthesaleofoffshorePRCgovernmentbonds,offshorecorporatebondsandoffshorecorporatecertificatesofdepositissuedbyPRCtaxresidentsandinterestincomederivedfromoffshorecorporatebondsandoffshorecorporatecertificatesofdepositissuedbyPRCtaxresidents.TheFundwouldalsobesubjecttoBusinessTaxoncapitalgainsrealisedonthesaleofoffshorePRCgovernmentbondsandinterestincomederivedfromoffshorePRCgovernmentbonds.

TheExplanatoryMemorandum(“EM”)oftheFundgivestheManager the right toprovide forwithholding taxon suchgainsorincomeandwithholdthetaxfortheaccountoftheFund.The Manager assesses the tax expense to beinsignificanttotheFundandhasnotprovidedforanytaxationexpenseinthecurrentyearandpreviousperiods.

ForeignAccountTaxComplianceAct(“FATCA”)

On 18 March 2010, the Hiring Incentives to RestoreEmploymentAct of 2010 added chapter 4 to SubtitleA(“Chapter4”)oftheUSInternalRevenueCode(the“Code”).TheprovisionsinChapter4arecommonlyreferredtoastheForeignAccountTaxComplianceAct(“FATCA”).USTreasuryregulations providing guidance on the due diligence,reporting, and withholding obligations under FATCA werepassed and came into effect in January 2013 (“theRegulations”).

TheRegulationsrequireforeignfinancialinstitution(“FFI”)to provide the Internal Revenue Service (“IRS”) withinformation on certain U.S. persons invested in accountsoutsideoftheU.S.andforcertainnonU.S.entitiestoprovideinformationaboutanyU.S.owners.TheobligationsofanFFIunder FATCA may be modified by an IntergovernmentalAgreement(“IGA”)betweentheUSandtheFFI’scountryoforganization.TheCaymanIslandsenteredintoaModel1IGAon 29 November 2013, which provides for reporting andenforcementbyFFIstobefacilitatedbylocalauthorities.TheCayman Islands also entered into a similar IGA with theUnited Kingdom.Therefore, all Cayman Islands domiciled“financial institutions” are subject to domestic legislationandregulationsthatimplementboththeForeignAccountTaxComplianceAct (“USFATCA”)and itsUKequivalent (“UKFATCA” and together,“FATCA”).The due diligence andreportingregimesintroducedbythedomesticlegislationandregulationsapplytoallsuchfinancialinstitutionsirrespectiveofwhethertheyhaveUSorUKbasedaccountholdersand/orhaveUSorUKassetsorsourceincome.

TheFundisanon-reportingfinancialinstitutionandsuchisnotrequiredtoregisterforaGlobalIntermediaryIdentificationNumber(“GIIN”)forUSFATCApurposes.


16

5 Financial assets at fair value through profit or loss

2017 2016RMB RMB

Debtsecurities

Listedbonds 671,354,705 942,269,653Unlistedbutquotedbonds 4,960,000 82,987,307Unlistedbutquoted

certificatesofdeposit 19,202,200 18,997,900

695,516,905 1,044,254,860

Investments,atcost 693,404,394 1,042,342,098Netunrealisedappreciation

invalueofinvestments 2,112,511 1,912,762

Investments,atfairvalue 695,516,905 1,044,254,860

6 Amounts due to brokers

2017 2016RMB RMB

Balances due to brokersAmountspayableon

purchaseofinvestments 1,933,560 –

7 Transactions with the Trustee, Manager and Connected Persons

The following is a summary of significant related partytransactions or transactions entered into during the yearbetweentheFundandtheTrustee,theManagerandtheirConnectedPersons.ConnectedPersonsarethoseasdefinedintheCodeonUnitTrustsandMutualFundsissuedbytheSFC.AlltransactionsduringtheyearbetweentheFundandtheManageranditsConnectedPersonswereenteredintoin the ordinary course of business and under normalcommercial terms.To the best of the knowledge of theTrusteeandtheManager,theFunddidnothaveanyothertransactions with Connected Persons except for thosedisclosedbelow.

(a) The Fund is managed by HSBC Investment Funds(HongKong)Limited(“theManager”),whichreceivesa management fee, payable monthly in arrears,equivalentto0.75%and0.3%perannumofthenet

assetvalueof“AD”class incomeunitand“I”classincomeunitrespectively.

2017 2016RMB RMB

(i) Managementfeesfortheyear 6,243,036 10,711,597

(ii) Managementfeespayableatyearend 448,582 684,563

(b) AbankaccountismaintainedwithamemberoftheHSBCGroup.Thebalanceofthisaccountamountedto¥2,773,769(2016:¥9,518,765)atyearend.Interestincomearisingfromthisaccountamountedto¥6,560(2016:¥nil).BankoverdraftinbankaccountmaintainedwithamemberoftheHSBCGroupatyearendwas¥3,838(2016:¥nil).

(c) The trustee of the Fund is HSBCTrustee (Cayman)Limited (“theTrustee”), a fellow subsidiary of theManager within the HSBC Group, which receives amonthly feeequivalent to0.08% (2016:0.08%)perannumofthenetassetvalueoftheFund.Inaddition,theTrusteereceivesregistrar’sfeesperannumforeachclass of units and fee for various administrativefunctionsperformedonbehalfoftheFund.Effectivefrom1July2017,theTrusteereceivesamonthlyfeeequivalentto0.07%perannumofthenetassetvalueoftheFundandchargestheFundfinancialreportingservicefeeofUS$3,000persetoffinancialstatements.

Duringtheyear,theTrusteerebatedtrustee’sfeestotheFund(2016:¥nil).

2017 2016RMB RMB

(i) Trustee’sfeesfortheyear 1,007,804 1,442,528

(ii) Trustee’sfeespayableatyearend 97,400 99,699

(iii) Registrar’sfeesandadministrativefeesfortheyear 140,449 387,789

(iv) Registrar’sfeesandadministrativefeespayableattheyearend 29,442 202,781

(v) Rebateoftrustee’sfees 273,962 –


17

(d) ThecustodianoftheFundisHSBCTrustee(Cayman)Limited,afellowsubsidiaryoftheManagerwithintheHSBCGroup,whichreceivesamonthlyfeeequivalentto1.5-8basispointsbasedonsub-custodianvalueofthesecurities.ThecustodianalsoreceivesatransactionfeeofUS$21-60foreachtradehandled.Duringtheyear,theTrusteerebatedsafecustodyfeeschargedtotheFund(2016:¥nil).

2017 2016RMB RMB

(i) Safecustodyfeesfortheyear 135,642 257,753

(ii) Safecustodyfeepayableatyearend 7,042 15,278

(iii) Safecustodytransactionfeesfortheyear 18,662 32,912

(iv) Safecustodytransactionfeespayableatyearend 3,221 1,365

(v) Rebateofsafecustodyfees 364,857 –

(e) In itspurchasesandsalesof investments, theFundutilisesthebrokerageservicesofTheHongkongandShanghai Banking Corporation Limited, which is amemberoftheHSBCGroup.Detailsoftransactionseffectedthroughthecompanyareasfollows:

The Hongkong and Shanghai Banking Corporation Limited

2017 2016RMB RMB

Commissionpaidfortheyear – –

Averagerateofcommission – –Totalaggregatevalueof

suchtransactionsfortheyear 100,817,418 237,235,928

Percentageofsuchtransactionsinvaluetototaltransactionsfortheyear 11.61% 20.69%

8 Soft commission arrangements

Nosoftcommissionarrangementswereenteredintowithbrokersduringtheyear(2016:nil).

9 Units issued and redeemed

(a) “AD–HKD”classincomeunit

2017 2016

Numberofunitsinissuebroughtforward 36,534,053 66,600,133

Unitsissuedduringtheyear 1,908,058 1,516,932

Unitsredeemedduringtheyear (10,364,270) (31,583,012)

Numberofunitsinissuecarriedforward 28,077,841 36,534,053

(b) “AD–RMB”classincomeunit

2017 2016


Unitsissuedduringtheyear 2,151,610 4,712,581



(c) “AD–USD”classincomeunit

2017 2016


Unitsissuedduringtheyear 611,356 292,853




18

(d) “I–USD”classincomeunit

2017 2016

Numberofunitsinissuebroughtforward 13,521 118,297

Unitsissuedduringtheyear 26,975 19,981

Unitsredeemedduringtheyear (131) (124,757)

Numberofunitsinissuecarriedforward 40,365 13,521

(e) AccordingtotheEMoftheFund,someoftheclassesare denominated in Hong Kong dollars and UnitedStatesdollarsfordealing,whicharedifferentfromthepresentationcurrencyoftheFund.ThenetassetvalueperunitforeachclassoftheFundintheirrespectivedenominationcurrenciesasatyearendisasfollows:

Denominationcurrency 2017 2016

Net asset value per unit“AD–HKD”classincomeunit HK$ 9.219 9.585“AD–RMB”classincomeunit RMB 9.628 9.739“AD–USD”classincomeunit US$ 9.271 9.633“I–USD”classincomeunit US$ 10.252 10.144

(f) ThecapitaloftheFundisrepresentedbythenetassetsattributable to unitholders which are subject tosubscriptionsandredemptionsofunits.TheTrustandtheFunddonothaveanyexternallyimposedcapitalrequirements.

Unitsmaybeacquiredandredeemedonanyvaluationdate at the unit value determined on that day.Thevaluationdateiseverybusinessday,whichisalsoaday on which banks in China are normally open forbusiness,orsuchotherday(s)as theManagermaydetermine.ForClassAUnits,theminimuminitialandsubsequentinvestmentamountisHK$10,000forClassAD-HKD,US$1,000forClassAD-USDand¥10,000forClassAD-RMB.ForClassIUnitsandClassZUnits,theminimuminitialinvestmentamountisHK$8,000,000orequivalentintheClassCurrencywhilenominimumsubsequentinvestmentamountsapply.

Unitsmayberedeemedonanyvaluationdate,attheredemptionpriceapplicableasatthecloseofbusinessin Hong Kong on such day. For ClassA Units, theminimumamountwhichcanberedeemedatanyonetime isHK$10,000 forClassAD-HKD,US$1,000 forClassAD-USD and ¥10,000 for ClassAD-RMB. NominimumredemptionamountsforClassIUnitsandClassZUnitsapply.Aunitholdermaynotmakeapartialredemptionifthiswouldresultinhisholdingbeinglessthan the minimum holding of HK$10,000 for ClassAD-HKD, US$1,000 for ClassAD-USD, ¥10,000 forClassAD-RMBandHK$8,000,000orequivalentintheClassCurrencyforClassIUnitsandClassZUnits.

10 Distributions

2017 2016RMB RMB

“AD – HKD” class income unit

Distributions attributable to the year

Distributionsdeclaredandpaidduringtheyear

– HK$0.0998peruniton33,492,136.204units(2016:HK$0.1411peruniton52,213,902.913units) 2,922,374 6,006,423



8,715,181 15,218,454

Distributionsdeclaredandunpaidduringtheyear



19

2017 2016RMB RMB

“AD – RMB” class income unit



– ¥0.1025peruniton44,803,214.445units(2016:¥0.1372peruniton82,807,383.482units) 4,592,329 11,361,173



13,638,921 27,092,861



2017 2016RMB RMB

“AD – USD” class income unit



– US$0.1003peruniton3,567,395.883units(2016:US$0.1419peruniton6,810,191.320units) 2,426,093 6,105,888



6,888,449 14,891,776



11 Income equalisation

Incomeportionofreceivedandreceivableonissueofunitsorpaidandpayableonredemptionofunitsiscalculatedbasedon the portion of the unit price related to undistributedaccumulated net investment income and accumulatedexpensesoftheunitatthedateofissueorredemption.


20

12 Financial instruments and associated risks

TheFundmaintainsaninvestmentportfolio inavarietyoflistedandunlistedfinancial instrumentsasdictatedby itsinvestmentmanagementstrategy.TheFundaimstoprovidelong term capital growth and income in Renminbi terms,primarily through investments in securities, instruments,productsanddepositswhich,ortheunderlyinginvestmentof which, are denominated in Renminbi.The Fund’sinvestmentportfoliocomprisesdebtsecurities.

TheFund’sinvestingactivitiesexposeittovarioustypesofrisksthatareassociatedwiththefinancialinstrumentsandmarkets inwhich it invests.TheManagerand theTrusteehavesetoutbelowthemost important typesoffinancialrisks inherent in each type of financial instrument.TheManager and theTrustee would like to highlight that thefollowinglistofassociatedrisksonlysetsoutsomeoftherisksbutdoesnotpurporttoconstituteanexhaustivelistofalltherisksinherentinaninvestmentintheFund.Unitholdersshouldnote thatadditional information in respectof risksassociated with financial instruments in the Fund can befoundintheFund’sofferingdocument.

The nature and extent of the financial instrumentsoutstandingatthedateofstatementoffinancialpositionandthe risk management policies employed by the Fund arediscussedbelow.

(a) Pricerisk

Priceriskistheriskthatthevalueofafinancialinstrumentwillfluctuateasaresultofchangesinmarketprices,whethercausedby factorsspecific toan individual investment, itsissuerorall factorsaffectingall instruments traded in themarket.

TheFundholddebtsecuritiesinboth2017and2016.Asaresult,theFundisnotexposedtosignificantpriceriskarisingfromchangesinmarketprice.

(b) Interestraterisk

InterestrateriskarisesfromchangesininterestrateswhichmayaffectthevalueofdebtinstrumentsandthereforeresultinpotentialgainorlosstotheFund.TheFund’sinterestrateriskismanagedonanongoingbasisbytheManager.

Thefollowingtableindicatestheperiodinwhichtheinterestbearingassetsmatureatthedateofstatementoffinancialposition:

2017

1 year or lessOver 1 year

to 5 yearsOver

5 years TotalRMB RMB RMB RMB

AssetsFinancialassetsatfair

valuethroughprofitorloss 185,411,730 396,747,125 113,358,050 695,516,905

Total interest bearing assets 185,411,730 396,747,125 113,358,050

2016

1 year or lessOver 1 year

to 5 yearsOver

5 years TotalRMB RMB RMB RMB

AssetsFinancialassetsatfair

valuethroughprofitorloss 467,969,168 434,321,083 141,964,609 1,044,254,860

Total interest bearing assets 467,969,168 434,321,083 141,964,609

Interest rate sensitivity

Atthedateofstatementoffinancialposition,assumingallotherfactorsunchanged,itisestimatedthatanincreaseininterestratesof100basispoints(2016:50basispoints)wouldresult in a decrease in the net assets attributable tounitholdersandtheprofitfortheyearby¥15,801,404(2016:¥7,637,332);anequalchangeintheoppositedirectionwouldresult in an increase in the net assets attributable tounitholdersbyanapproximatelyequalamount.

(c) Currencyrisk

TheFundmayinvestinfinancialinstrumentsandenterintotransactions denominated in currencies other than itsfunctionalcurrency.Consequently,theFundisexposedtorisksthattheexchangerateofitsfunctionalcurrencyrelativetootherforeigncurrenciesmaychangeinamannerthathasanadverseeffectonthevalueofthatportionoftheFund’sassets or liabilities denominated in currencies other thanRenminbi.


21

Thefluctuationsintherateofexchangebetweenthecurrencyin which the asset or liability is denominated and thefunctional currency could result in an appreciation ordepreciation in the fair value of that asset or liability.TheManager monitors the Fund’s currency exposures on anongoingbasis.

Currency sensitivity

At31July2017,hadtheRenminbi (“RMB”)weakenedby5%(2016:5%)inrelationtorespectivecurrencies,withallother variables held constant, net assets attributable tounitholdersandprofitfortheyearwouldhaveincreasedbytheamountsshownbelow.

Net exposure

Change in netassets if RMB

weakened by 5%RMB RMB

As at 31 July 2017

CurrenciesHongKongdollar (2,122,612) (106,131)UnitedStatesdollar 1,568,973 78,449

Total (553,639) (27,682)

As at 31 July 2016

CurrenciesHongKongdollar (5,335,136) (266,757)UnitedStatesdollar (3,144,770) (157,239)

Total (8,479,906) (423,996)

(d) Creditrisk

Credit risk is the risk that a counterparty to a financialinstrumentwillfailtodischargeanobligationorcommitmentthatithasenteredintowiththeFund.TheFund’sexposuretocredit risk ismonitoredbytheManageronanongoingbasis.

At31July2017and2016,alloftheFund’sfinancialassetswereexposedtocreditrisk.Theseincludeinvestmentsandcash and cash equivalents placed with banks and thecustodian.

Atthedateofthestatementoffinancialposition,theFundinvestedindebtsecuritieswiththefollowingcreditqualityexpressedasapercentageofdebtsecurities:

% of debt securities2017 2016

Rating (Moody’s/S&P/Fitch)

Aaa/AAA/AAA 1.40 0.94Aa2/AA/AA 5.73 3.35Aa3/AA-/AA- 11.08 8.02A1/A+/A+ 31.01 2.73A2/A/A 4.27 10.33A3/A-/A- 9.04 11.53Baa1/BBB+/BBB+ 12.83 12.88Baa2/BBB/BBB 5.50 4.33Baa3/BBB-/BBB- 0.38 –Ba1/BB+/BB+ 1.63 2.65Ba2/BB/BB 6.37 4.65B1/B+/B+ 3.32 7.68B2/B/B – 3.08B3/B-/B- 0.15 –NR 7.29 27.83

Total 100.00 100.00

CreditriskismanagedbyreviewingandmonitoringthecreditqualityofdebtsecuritiesheldbytheFundortheissuersofthedebtsecuritiesheldbytheFundonanongoingbasis.

Creditriskarisingfromtransactionswithbrokersrelatestotransactionsawaitingsettlement.Riskrelatingtounsettledtransactionsisconsideredsmallduetotheshortsettlementperiod involved and the high credit quality of the brokersused.

AmajorityofthecashheldbytheFundisdepositedwiththeHSBCGroup.BankruptcyorinsolvencyofthebankmaycausetheFund’srightswithrespecttothecashheldbythebanktobedelayedorlimited.TheManagermonitorsthecreditratingandfinancialpositionofthebankonanongoingbasis.

SubstantiallyalloftheassetsoftheFundareheldbythecustodian.Bankruptcyor insolvencyofthecustodianmaycausetheFund’srightswithrespecttosecuritiesheldbythecustodiantobedelayedorlimited.ThecustodianisagroupcompanyofHSBC,forwhichthecreditrisk isconsideredinsignificant.

Thecarryingamountsoffinancialassetsbestrepresentthemaximumcreditriskexposureatthedateofstatementoffinancialposition.

At 31 July 2017 and 2016, there were no significantconcentrationsofcreditrisktocounterpartiesexcepttothecustodian.


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(e) Liquidityrisk

LiquidityriskistheriskthattheFundwillencounterdifficultyinmeetingobligationsarisingfromitsfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset,orthat such obligations will have to be settled in a mannerdisadvantageoustotheFund.TheFundisexposedtodailyliquidityriskonredemptionofunits.

TheFund’spolicyistoregularlymonitorcurrentandexpectedliquidityrequirementstoensurethatitmaintainssufficientreservesofcashandreadilyrealisablemarketablesecuritiestomeet its liquidity requirements in theshort and longerterm.

The Fund’s listed investments are considered to haveinsignificantexposuretoliquidityriskastheyareallreadilyrealisable under normal market conditions.The Fund alsoinvestsinunlistedinvestmentssuchasunlistedbondsandcertificates of deposits, which are not publicly traded onexchanges.

Asat31July2017and2016,theFund’sfinancialliabilitiesareduewithinthreemonths,exceptforredemptionspayable,bank overdrafts and net asset attributable to unitholderswhicharerepayableondemand.

(f) Capitalmanagement

TheFund’scapitalasattheyearenddateisrepresentedbyitsredeemableunits,whichisclassifiedasfinancialliabilities.

TheFund’sobjectiveinmanagingthecapitalistoensureastableandstrongbasetoprovidelong-termcapitalgrowthandincomeinRMBterms,andtomanageliquidityriskarisingfromtheredemptions.TheManagermanagesthecapitaloftheFundinaccordancewiththeFund’sinvestmentobjectivesandpoliciesstatedintheFund’sEM.

TherewerenochangesinthepoliciesandproceduresduringtheyearwithrespecttotheFund’sapproachtoitscapitalmanagement.

Theamountandthemovementofnetassetsattributabletounitholdersarestated in thestatementofchanges innetassetsattributabletounithholders.Astheredeemableunitsare redeemed on demand at the unitholders’ option, theactual level of redemption may differ significantly fromhistoricalexperience.

13 Fair value information

TheFund’sfinancialinstrumentsaremeasuredatfairvalueonthedateofthestatementoffinancialposition.Fairvalueestimatesaremadeataspecifiedpointintime,basedonmarket conditions and information about the financialinstruments.Usually,fairvaluescanbereliablydeterminedwithin a reasonable rangeofestimates. For certainotherfinancial instruments, including interest receivable,subscriptions receivable, bank overdrafts, redemptionspayable,amountsduetobrokers,distributionspayableandotherpayables,thecarryingamountsapproximatefairvaluesduetotheimmediateorshorttermnatureofthesefinancialinstruments.

Valuationoffinancialinstruments

TheFund’saccountingpolicyonfairvaluemeasurementsisdetailedinaccountingpolicyinnote2(e)(iv).

TheFundmeasuresfairvaluesusingthefollowingfairvaluehierarchythatreflectsthesignificanceoftheinputsusedinmakingthemeasurements.

– Level 1: Inputs that are quoted market prices(unadjusted)inactivemarketsforidenticalinstruments.

– Level2:InputsotherthanquotedpricesincludedwithinLevel1thatareobservableeitherdirectly(i.e.asprices)or indirectly (i.e. derived fromprices).This categoryincludes instruments valued using: quoted marketpricesinactivemarketsforsimilarinstruments;quotedpricesfor identicalorsimilar instrumentsinmarketsthatareconsideredlessthanactive;orothervaluationtechniquesinwhichallsignificantinputsaredirectlyorindirectlyobservablefrommarketdata.

– Level3: Inputsthatareunobservable.Thiscategoryincludes all instruments for which the valuationtechnique includes inputs not based on observabledataand theunobservable inputshaveasignificanteffect on the instrument’s valuation.This categoryincludesinstrumentsthatarevaluedbasedonquotedpricesforsimilarinstrumentsbutforwhichsignificantunobservableadjustmentsorassumptionsarerequiredtoreflectdifferencesbetweentheinstruments.

When fairvaluesof listedandquoted investmentsat thereportingdatearebasedonquotedmarketpricesorbindingdealer price quotations in an active market, without anydeduction for transactions costs, the instruments areincludedwithinLevel1ofthehierarchy.Whenfairvaluesofdebtsecuritiesatthereportingdaterepresentquotedprices


23

inmarketsthatareconsideredlessthanactiveorconsensusprices derived by third parties using valuation techniqueswhere all significant inputs are directly or indirectlyobservable from market data, those debt securities areincludedwithinLevel2ofthehierarchy.Forallotherfinancialinstruments,theFunddeterminesfairvalueusingvaluationtechniques.

The Fund uses widely recognised valuation models fordeterminingthefairvalueoftheunittrustswhichdonothavequotedmarketpricesinactivemarkets.Valuationtechniquesinclude net present value, discounted cash flow models,comparison to similar instruments for which marketobservable prices exist, comparison to quoted prices foridentical instruments that are considered less thanactiveandothervaluationmodels.

Thefollowinganalysesfinancialassetsatfairvalueatthedateofthestatementoffinancialposition,bythelevelinthefairvaluehierarchyintowhichthefairvaluemeasurementiscategorised.

Financialassetatfairvaluethroughprofitorloss

Level 1 Level 2 Level 3 Total31 July 2017 RMB RMB RMB RMB

Listedbonds – 671,354,705 – 671,354,705Unlistedbutquotedbonds – 4,960,000 – 4,960,000Unlistedbutquoted

certificatesofdeposit – 19,202,200 – 19,202,200

– 695,516,905 – 695,516,905


Listedbonds – 942,269,653 – 942,269,653Unlistedbutquotedbonds – 82,987,307 – 82,987,307Unlistedbutquoted

certificatesofdeposit – 18,997,900 – 18,997,900

– 1,044,254,860 – 1,044,254,860

Duringtheyearended31July2017and31July2016,therewerenotransferoffinancialinstrumentsbetweenthefairvaluehierarchylevels.

Valuationoffinancialinstrumentsnotmeasuredatfairvalue

Thefinancialinstrumentsnotmeasuredatfairvaluethroughprofitor loss are short termfinancial assets andfinancialliabilitieswhosecarryingamountsapproximatefairvalue.

The following table sets out the fair values of financialinstrumentsnotmeasuredatfairvalueandanalysesitbythelevel in the fair value hierarchy into which each fair valuemeasurementiscategorised.


Financial assets

Interestreceivable – 8,457,887 – 8,457,887Subscriptionsreceivable – 4,100,186 – 4,100,186Cashandcashequivalents – 2,773,769 – 2,773,769

– 15,331,842 – 15,331,842

Financial liabilities

Bankoverdrafts – 3,838 – 3,838Redemptionspayable – 648,280 – 648,280Amountsduetobrokers – 1,933,560 – 1,933,560Distributionspayable – 8,216,385 – 8,216,385Otherpayables – 702,318 – 702,318Netassetsattributableto

unitholders – 699,344,366 – 699,344,366

– 710,848,747 – 710,848,747


24


Financial assets

Interestreceivable – 12,695,978 – 12,695,978Cashandcashequivalents – 9,518,765 – 9,518,765

– 22,214,743 – 22,214,743

Financial liabilities

Redemptionspayable – 5,220,443 – 5,220,443Distributionspayable – 11,130,687 – 11,130,687Otherpayables – 1,206,833 – 1,206,833Netassetsattributableto

unitholders – 1,048,911,640 – 1,048,911,640

– 1,066,469,603 – 1,066,469,603

14 Segment information

The Manager makes the strategic resource allocation onbehalfoftheFundanddeterminesoperatingsegmentsbasedoninternalreportingusedtomakestrategicdecisions.

TheManager’sassetallocationdecisionsarebasedononesingleand integrated investmentstrategy,and theFund’sperformanceisevaluatedonanoverallbasis.AccordinglytheManagerconsidersthattheFundhasonesingleoperatingsegment which is investing in a portfolio of financialinstrumentstogenerateinvestmentreturnsinaccordancewith the investment objective stipulated in its EM.Therewerenochangesintheoperatingsegmentduringtheyear.

AllrevenuesandlossesgeneratedfrominvestmentsbytheFund are disclosed in note 3.The segment informationprovidedtotheManageristhesameasthatdisclosedinthestatementofcomprehensiveincomeandthestatementoffinancialposition.

15 Cash and cash equivalents

2017 2016

Cashatbank 2,773,769 9,518,765Bankoverdrafts (3,838) –

Cash and cash equivalents in the cash flow statement 2,769,931 9,518,765

16 Possible impact of amendments, new standards and interpretations issued but not yet effective for the annual accounting year ended 31 July 2017

Uptothedateofissueofthesefinancialstatements,theHKICPAhasissuedafewamendmentsandnewstandardswhicharenotyeteffectivefortheyearended31July2017and which have not been adopted in these financialstatements.These include the following which may berelevanttotheFund:

Effective foraccounting periods

beginning on or after

AmendmentstoHKAS7,Statement of cash flows: Disclosure initiative 1January2017

HKFRS9 Financial instruments 1January2018

TheFundisintheprocessofmakinganassessmentofwhattheimpactoftheseamendmentsisexpectedtobeintheperiodofinitialapplication.SofarithasconcludedthattheadoptionofthemisunlikelytohaveasignificantimpactontheFund’sresultsofoperationsandfinancialposition.


PortfolioStatement(Unaudited)

25

HoldingsMarket

value

% of net

asset value

RMB

Debt securities

BondsListedinvestments

AIRLIQUIDEFINANCESA3.95%19SEPTEMBER2018 15,000,000 15,046,050 2.15

ASIANDEVELOPMENTBANK2.85%21OCTOBER2020 10,000,000 9,765,500 1.40

AUSTRALIAANDNEWZEALANDBANKINGGROUPVAR30JANUARY2025 25,000,000 25,172,500 3.60

BANKOFCHINALTD(NEWYORKBRANCH)3.6%12JULY2018 20,000,000 19,964,400 2.86

BESTGAINREALESTATELYRALTD4.5%4DECEMBER2018 15,000,000 15,091,650 2.16

BOCAVIATIONLTD4.2%5NOVEMBER2018 14,970,000 15,024,640 2.15

BPCAPITALMARKETSPLC3.65%28FEBRUARY2019 19,000,000 18,865,480 2.70

BPCAPITALMARKETSPLC3.95%8OCTOBER2018 6,000,000 6,010,080 0.86

BSHBOSCHUNDSIEMENSHA4%28SEPTEMBER2018 20,000,000 20,046,800 2.87

CHINACONSTRUCTIONBANKCORPVAR12NOVEMBER2024 20,000,000 20,267,000 2.90

CHINADEVELOPMENTBANK4.2%19JANUARY2027 12,000,000 12,032,520 1.72

CHINAGOVERNMENTBOND3.16%27JUNE2023 20,000,000 19,331,800 2.76

CHINAGOVERNMENTBOND3.25%4JULY2021 6,500,000 6,384,885 0.91


CHINAGOVERNMENTBOND3.38%21NOVEMBER2024 11,000,000 10,619,620 1.52


CHINAGOVERNMENTBOND3.39%21MAY2025 30,000,000 28,801,500 4.12

CHINAGOVERNMENTBOND3.4%12DECEMBER2019 10,000,000 9,964,000 1.43


HoldingsMarket

value

% of net

asset value

RMB

CHINAGOVERNMENTBOND3.6%27JUNE2028 4,000,000 3,837,280 0.55


CHINAGOVERNMENTBOND4%22MAY2024 1,000,000 1,007,400 0.14


CNICAPITALLTD4.3%11NOVEMBER2019 7,500,000 7,488,900 1.07

COMMONWEALTHBANKOFAUSTRALIAVAR11MARCH2025 15,000,000 15,339,150 2.19

DORSETTHOSPITALITYINTERNATIONAL6%3APRIL2018 15,000,000 15,065,550 2.15

EXPORT-IMPORTBANKOFKOREA3.625%27JANUARY2019 15,000,000 14,923,200 2.13

FANTASIAHOLDINGSGROUPCOLTD9.5%4MAY2019 1,000,000 1,031,820 0.15

FONTERRACOOPERATIVEGROUP3.6%29JANUARY2019 18,000,000 17,901,720 2.56

GREENLANDHONGKONGHOLDINGSLTD5.5%23JANUARY2018 22,000,000 22,039,820 3.15

HUNGARYGOVERNMENTBOND6.25%25APRIL2019 2,590,000 2,674,952 0.38

ICBCLTD3.75%19NOVEMBER2018 23,000,000 23,005,290 3.29ICBCILFINANCECOLTD3.9%18

JUNE2018 6,710,000 6,716,442 0.96INDUSTRIALANDCOMMERCIALBANK

OFCHINALTDVARPERP 21,740,000 22,288,935 3.19KOREADEVELOPMENTBANK3.55%

19JUNE2018 10,000,000 9,961,900 1.43KOREADEVELOPMENTBANK4.1%24

AUGUST2018 10,000,000 9,998,400 1.43LAIFUNGHOLDINGSLTD6.875%25

APRIL2018 23,000,000 23,061,640 3.30LONGFORPROPERTIESCOLTD6.75%

28MAY2018 11,130,000 11,336,128 1.62NEWWORLDCHINALANDLTD5.5%6

FEBRUARY2018 18,000,000 18,123,840 2.59SHENZHENQIANHAIFINANCIAL

HOLDINGSCOLTD4.55%28OCTOBER2017 16,000,000 16,035,200 2.29

SHINHANBANK4.2%6AUGUST2018 20,000,000 19,997,000 2.86SINOSTRONGINTERNATIONALLTD

4%28MAY2018 10,000,000 9,996,400 1.43


PortfolioStatement(Unaudited)

26

HoldingsMarket

value

% of net

asset value

RMB

TINGYICAYMANISLANDSHOLDINGCORP4.375%6AUGUST2018 18,300,000 18,342,273 2.62

TMBBANKPUBLICCOLTD(CAYMANISLANDSBRANCH)5.5%9MARCH2018 8,000,000 8,112,560 1.16

TOTALCAPITALSA3.75%24SEPTEMBER2018 25,000,000 24,996,750 3.57

VOLKSWAGENINTERNATIONALFINANCENV3.5%23JANUARY2019 15,000,000 14,907,450 2.13

WESTPACBANKINGCORPVAR9FEBRUARY2025 10,000,000 10,112,100 1.45

WHARFFINANCENO1LTD4%27MARCH2018 10,000,000 10,004,000 1.43

ZHUHAIDAHENGQINCOLTD4.75%11DECEMBER2017 15,000,000 14,993,850 2.14

671,354,705 96.00

Unlistedbutquotedinvestments

HONGKONGMORTGAGECORPLTD3.4%25OCTOBER2018 5,000,000 4,960,000 0.71

4,960,000 0.71

Certificates of depositUnlistedbutquotedinvestments

CHINADEVELOPMENTBANKCORP3.2%23SEPTEMBER2021 20,000,000 19,202,200 2.74

19,202,200 2.74

Total debt securities 695,516,905 99.45

HoldingsMarket

value

% of net

asset value

RMB

Total investments (Totalcostofinvestments:¥693,404,394) 695,516,905 99.45

Other net assets 3,827,461 0.55

Total net assets 699,344,366 100.00

27


% of net asset

value

% of net asset

value2017 2016

Debt securities

Listedbonds 96.00 89.83Unlistedbutquotedbonds 0.71 7.92Unlistedbutquotedcertificatesofdeposit 2.74 1.81

Debt securities (Total) 99.45 99.56

Total investments 99.45 99.56

Other net assets 0.55 0.44

Total net assets 100.00 100.00

StatementofMovementsinPortfolioHoldings(Unaudited)

PerformanceRecord(Unaudited)

28

HSBC RMB Bond FundPrice record (Dealing net asset value per unit)

“AD – HKD” class income unit

Bid OfferYear Lowest Highest Lowest Highest

HKD HKD HKD HKD

2017 9.062 9.667 9.343 9.9662016 9.314 10.297 9.603 10.6162015 10.096 10.760 10.409 11.0932014 10.488 11.039 10.813 11.3812013 10.201 10.930 10.517 11.2692012 9.894 10.308 10.200 10.6272011 9.997 10.264 10.307 10.582

“AD – RMB” class income unit


RMB RMB RMB RMB

2017 9.534 9.822 9.829 10.1262016 9.390 9.837 9.681 10.1422015 9.651 10.054 9.950 10.3652014 9.990 10.160 10.299 10.4752013 9.928 10.249 10.236 10.5662012 9.670 9.993 9.970 10.3032011 9.966 10.093 10.303 10.406

“AD – USD” class income unit


USD USD USD USD

2017 9.108 9.717 9.390 10.0182016 9.311 10.354 9.599 10.6752015 10.147 10.814 10.461 11.1492014 10.544 11.096 10.871 11.4402013 10.253 10.975 10.571 11.3152012 9.906 10.326 10.213 10.6462011 9.997 10.265 10.307 10.583

PerformanceRecord(Unaudited)

29

“I – USD” class income unit


USD USD USD USD

2017 9.711 10.684 10.012 11.0142016 9.560 11.811 9.856 12.1772015 11.270 11.846 11.619 12.2132014 11.179 11.686 11.525 12.0482013 10.309 11.304 10.628 11.6542012 9.922 10.368 10.229 10.6892011 10.035 10.270 10.346 10.588

2017 2016 2015 2014Total net asset value (calculated in

accordance with HKFRS)

“AD–HKD”classincomeunit HKD 258,835,667 350,180,761 684,807,088 1,800,766,560“AD–RMB”classincomeunit RMB 332,085,637 478,816,007 1,003,576,584 2,561,934,475“AD–USD”classincomeunit USD 19,848,250 40,305,832 86,209,272 200,296,730“I–USD”classincomeunit USD 413,842 137,153 1,395,122 4,009,283

Net asset value per unit (calculated in accordance with HKFRS)

“AD–HKD”classincomeunit HKD 9.219 9.585 10.282 10.618“AD–RMB”classincomeunit RMB 9.628 9.739 9.766 10.010“AD–USD”classincomeunit USD 9.271 9.633 10.339 10.680“I–USD”classincomeunit USD 10.252 10.144 11.793 11.577

Total expense ratio

2017Average net asset value

Total expenses

Total expense ratio

RMB RMB %

–“AD–HKD”class 218,654,216 2,318,695 1.06%–“AD–RMB”class 328,329,285 3,618,025 1.10%–“AD–USD”class 139,023,871 1,759,055 1.27%–“I–USD”class 2,078,503 8,507 0.41%

30

Manager and registrar’s agent

HSBCInvestmentFunds(HongKong)LimitedHSBCMainBuilding1Queen’sRoadCentralHongKong

Directors of the Manager

StuartGlennBERRYPedroAugustoBOTELHOBASTOSGuillermoEduardoMALDONADO-CODINAChunPongStephenTAMKaYinJoanneLAU

Investment adviser

HSBCGlobalAssetManagement(HongKong)LimitedHSBCMainBuilding1Queen’sRoadCentralHongKong

Custodian, trustee and registrar

HSBCTrustee(Cayman)LimitedP.O.Box484HSBCHouse68WestBayRoadGrandCaymanKY1-1106CaymanIslands

Auditors

KPMGP.O.Box493CenturyYardCricketSquareGrandCaymanKY1-1106CaymanIslands

Administration

31

StuartGlennBERRY

PedroAugustoBOTELHOBASTOS

GuillermoEduardoMALDONADO-CODINA

ChunPongStephenTAM

KaYinJoanneLAU

BoardofDirectorsofHSBCInvestmentFunds(HongKong)Limited

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Issued by HSBC Global Asset Management (Hong Kong) Limited

HSBC Global Investment Trust – HSBC RMB Bond Fund … · HSBC Global Investment Trust – HSBC RMB Bond Fund Annual Report 2017. Contents Page ... Eva WONG ) HSBC Trustee (Cayman)

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