HSBC Amanah Funds - Aviva · The Board of Directors presents the Audited Annual Report for HSBC...

R.C.S. Luxembourg B 74 964 16, boulevard d’Avranches L-1160 Luxembourg Grand Duchy of Luxembourg

HSBC Amanah Funds

Audited Annual Report for the year ended 31 December 2016

Audited Annual Report for the year ended 31 December 2016

Société d’Investissement à Capital Variable (SICAV), Luxembourg

No subscription can be received on the basis of financial reports only. Subscriptions are only valid if made on the basis of the current

relevant Key Investor Information Document and the current Prospectus accompanied by the latest annual and the most recent semi-

annual report, if published thereafter.

Audited report for the year from 1 January 2016 to 31 December 2016

Table of Contents Board of Directors 1

HSBC Shariah Executive Committee 2

Management and Administration 3

Shareholder Information 5

Directors’ Report 6

Annual Shariah Compliance Report 9

Audit Report 10

Statement of Net Assets as at 31 December 2016 12

Statement of Operations and Changes in Net Assets 13

Changes in the Number of Shares 14

Statistics over the last three years 15

Portfolio of Investments and Other Net Assets 16

Notes to the Financial Statements 19

Currency Conversion Table 25

Fund Holiday Calendar for 2017 26

Appendix I (Unaudited Additional Disclosures) – Taxation of the Company (foreign countries) 27

Appendix II (Unaudited Additional Disclosures) – UK SORP Disclosure 28

1

Board of Directors George Efthimiou (Chairman),

Global Chief Operating Officer

HSBC Global Asset Management Limited,

78 St James’s Street, London SW1A 1HL, United Kingdom

Dr. Michael Boehm, Chief Operating Officer

HSBC Global Asset Management (Deutschland) GmbH

Königsallee 21/23, 40212 Düsseldorf, Germany

Jean de Courrèges, Independent Director

Resident in Luxembourg

Eimear Cowhey, Independent Director

Resident in the Republic of Ireland

Peter Dew, Independent Director

Resident in the United Kingdom

Dean Lam, Managing Director

HSBC Bank (Mauritius) Limited, 6th Floor, HSBC Centre, 18 CyberCity,

Ebene, Mauritius

John Li, Independent Director

The Directors Office, 19 Rue de Bitbourg, L-1273, Luxembourg

Joanna Munro, Global Head of Fiduciary Governance

HSBC Global Asset Management Limited

78 St James’s Street, London SW1A 1HL, United Kingdom

2

HSBC Shariah Executive Committee

Dr. Nizam Yaquby

Dr. Mohamed Ali Elgari

3

Management and Administration

Registered Office

16, boulevard d’Avranches

L-1160 Luxembourg

Grand Duchy of Luxembourg

Management Company

HSBC Investment Funds (Luxembourg) S.A.


L-1160 Luxembourg


Administration Agent, Depositary

Bank, Central Paying Agent,

Corporate Agent and Domiciliary

Agent

HSBC Bank Plc, Luxembourg Branch


L-1160 Luxembourg


Registrar and Transfer Agent HSBC Bank Plc, Luxembourg Branch


L-1160 Luxembourg


Investment Adviser HSBC Global Asset Management (UK) Limited

8 Canada Square

London, E14 5HQ

United Kingdom

4

Management and Administration (continued) Share Distributors Global Distributor

HSBC Investment Funds (Luxembourg) S.A.


L-1160 Luxembourg,


Distributor for Middle-East

HSBC Bank Middle East Limited

HSBC House

Esplanade, St. Helier, JE4 8WP

Jersey

Distributor for Continental Europe

HSBC Global Asset Management (France)

Immeuble Cœur Défense – Tour A,

110 Esplanade du Général de Gaulle - La Défense 4,

75419 Paris Cedex 08,

France

Distributor and Representative for the United Kingdom

HSBC Global Asset Management (UK) Limited

8 Canada Square

London E14 5HQ

United Kingdom

Auditor PricewaterhouseCoopers, Société coopérative

2, rue Gerhard Mercator, B.P. 1443,

L-1014 Luxembourg,


5

Shareholder Information Automatic Exchange of Information

The OECD has developed a common reporting standard ("CRS") to achieve a comprehensive and multilateral automatic exchange of information

AEOI on a global basis. On 9 December 2014, Council Directive 2014/107/EU amending Directive 2011/16/EU as regards mandatory automatic

exchange of information in the field of taxation (the "Euro-CRS Directive") was adopted in order to implement the CRS among the Member States.

For Austria, the Euro-CRS Directive will apply for the first time by 30 September 2018 for the calendar year 2017, i.e. the Council Directive

2003/48/EC on the taxation of savings income in the form of interest payments of 3 June 2003, as amended (the "Savings Directive"), will apply

one year longer.

The Euro-CRS Directive was implemented into Luxembourg law by the law of 18 December 2015 on the automatic exchange of financial account

information in the field of taxation ("CRS Law").

The CRS Law requires Luxembourg financial institutions to identify financial assets holders and establish if they are tax resident in countries with

which Luxembourg has a tax information sharing agreement. Accordingly, the Company may require its investors to provide information in relation

to the identity and tax residence of financial account holders (including certain entities and their controlling persons) in order to ascertain their

CRS status. Responding to CRS-related questions is mandatory. The personal data obtained will be used for the purpose of the CRS Law or

such other purposes indicated by the Company in the data protection section of the Prospectus in compliance with Luxembourg data protection

law. Information regarding a shareholder and his/her/its account will be reported to the Luxembourg tax authorities (Administration des

Contributions Directes), which will thereafter automatically transfer this information to the competent foreign tax authorities on a yearly basis, if

such account is deemed a CRS reportable account under the CRS Law.

Under the CRS Law, the first exchange of information will be applied by 30 September 2017 for information related to the calendar year 2016.

Under the Euro-CRS Directive, the first AEOI must be applied by 30 September 2017 to the local tax authorities of the Member States for the

data relating to the calendar year 2016.

In addition, Luxembourg signed the OECD's multilateral competent authority agreement ("Multilateral Agreement") to exchange information

automatically under the CRS. The Multilateral Agreement aims to implement the CRS among non-Member States; it requires agreements on a

country-by-country basis.

The Company reserves the right to refuse any application for Shares if the information provided or not provided does not satisfy the requirements

under the CRS Law.

Name of the

sub-fund

Tax status

for redemptions

Tax status

for distributions

Method used to

determine the status

Period of validity of

the status

Global Equity Index Fund

Out of Scope

Out of Scope

Investment Policy

01/01/2016

31/12/2016

Global Equity*

Out of Scope

Out of Scope

Investment Policy

01/01/2016

26/02/2016 * Global Equity merged into Global Equity Index Fund on 26 February 2016

6

Directors’ Report The Board of Directors presents the Audited Annual Report for HSBC Amanah Funds (the "Company") for the year ending 31 December 2016.

The Company The Company is a variable capital investment company, incorporated under the laws of the Grand Duchy of Luxembourg and is organized as an

"umbrella" with a number of sub-funds, each of which has it’s own investment policy and restrictions. At present, the Company has issued shares

in 1 sub-fund. During the financial year, the total net assets of the Company increased from USD 281.5 million to USD 348.6 million at year end.

The Company qualifies as an Undertaking for Collective Investments in Transferable Securities under the amended Directive 2009/65/EC of 13

July 2009 and may therefore be offered for sale in European Union Member States, subject to registration in countries other than the Grand Duchy

of Luxembourg. In addition, applications to register the Company and its sub-funds may be made in non-European Union countries, subject to

compliance with local laws and regulations. The Company and its sub-fund are currently registered for offer and distribution in the Grand Duchy

of Luxembourg and in the following jurisdictions: Bahrain, France, Jersey, Mauritius, Qatar, Sweden, the United Kingdom and the United Arab

Emirates.

Responsibility of the Directors The responsibility of the Directors of the Company is governed exclusively by Luxembourg law. With respect to these financial statements, the

duties of the Directors are governed by general corporate law and the law of 19 December 2002 on the register of commerce and companies and

the accounting and annual accounts of undertakings and by the law of 17 December 2010 relating to undertakings for collective investments, as

amended (the "2010 Law"). Since 1 July 2011, the Company is governed by Part I of the 2010 Law implementing the Directive 2009/65/EC into

Luxembourg law.

Remuneration Policy HSBC Investment Funds (Luxembourg) S.A. (“HIFL”) has implemented a remuneration policy pursuant to Directive 2014/91/EU of the European

Parliament and of the Council of 23 July 2014 amending Directive 2009/65/EC on the coordination of laws, regulations and administrative

provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards to depositary functions, remuneration

policies and sanctions (the “UCITS V Directive”), which was transposed into Luxembourg law on 1 June 2016 by way of the Luxembourg law of

10 May 2016.

The remuneration policy, which has been approved by HIFL’s board of directors, includes measures to avoid conflicts of interest and seeks to

promote sound and effective risk management and that neither encourage risk taking which is inconsistent with the risk profile and articles of

incorporation of the Company nor impair compliance with HIFL’s duty to act in the best interest of the Company.

The remuneration policy, which describes how remuneration and benefits are determined, is available at

www.global.assetmanagement.hsbc.com/about-us/governance-structure, or on request from HIFL.

As at the end of the Company’s financial year on 31 December 2016, HIFL has not completed its first annual performance period in which it has

to comply with the UCITS V remuneration rules. As a result, the aggregate amount of remuneration broken down by category of employees or

other staff members as well as the other information that is required by the UCITS V Directive to be disclosed in the annual report is not yet

available and has not been included in this annual report.

Corporate Governance Statement The Board of Directors confirms its adoption of the ALFI (Association of the Luxembourg Fund Industry) Code of Conduct for Luxembourg

Investment Funds (the “Code”) and confirms its adherence to the principles of the Code at all times during the period.

Annual General Meeting

The next Annual General Meeting of the Company will be held on Friday, 21 April 2017.

7

Directors’ Report (continued) Market Overview Global equities

Even more so than usual, worldwide equities were driven by global events in 2016, as surprising election results, oil prices and central banks’

monetary policy dominated headlines, creating a backdrop of uncertainty. Global equity markets rose in US dollar terms over the year, as

measured by the MSCI World index. In the first half of the year, China was in focus, as indications of an economic slowdown in the region triggered

markets to sell off in January and February. Indeed, global growth was a concern, with the World Bank revising downwards its 2016 global growth

projections, citing slow growth in developed markets and the impact of weaker commodity prices on emerging markets. However, 2016 was a

year that defied expectations from even the most seasoned market observers. In June, voters in the UK elected to leave the European Union

(EU), an event that created shockwaves worldwide. After an initial sell-off, markets – especially those that stood to benefit from the subsequent

drop in the value of the pound – bounced back, with most ending the year in positive territory. In November, the surprising victory of Donald Trump

in the US presidential election resulted in a similar pattern: markets initially wobbled then rallied as investors seemed ready to embrace the

potential economic upsides of a Trump presidency. At the end of the month, it was the oil producers’ turn to surprise investors, as representatives

from OPEC and non-OPEC member nations agreed to the first production cut since 2009, driving crude prices higher and boosting the energy

sector. Throughout the tumultuous year, central banks took divergent paths, with many remaining accommodative and the US Federal Reserve

(Fed) ultimately raising rates.

US equities

After a rough start, and against a backdrop of global market volatility, US equities posted solid gains in 2016 with most indexes nearing or achieving

record highs towards the end of the year. The rotation from growth stocks to value stocks was significant, as investors backed off from chasing

growth and sought out solid value plays (as well as safe havens in fixed income and commodities). The domestic economy remained sound;

annualised GDP growth as of the third quarter of 2016 was 3.5%, unemployment remained low and inflation edged higher in line with market

expectations. Following a negative first quarter, US stock markets began to trend upwards in May when new data figures exceeded expectations

and Fed chair Janet Yellen hinted at interest-rate increases later in the year. The second half started out strong, with the US dollar and the oil

price gaining; following a post-Brexit dip in late June, the rally was robust on the back of economic data including a significant reduction in the

budget deficit, a strong jobs picture and, in the autumn, the fastest rate of GDP growth seen in two years. Despite having priced in a victory for

Hillary Clinton in the November elections, equity markets did not experience a prolonged correction in light of Trump’s surprising victory. Instead,

US indices went on to enjoy a very strong fourth quarter, boosted by rising oil prices after the OPEC meeting, the perception that Trump’s

presidency would be good for business, and the Fed’s announcement it was raising its key interest rate by 25 basis points to 0.50%.

European ex UK equities

European equities made gains over the period, albeit among significant volatility and at more modest levels than other world equity markets. In

particular, recovering earnings in the materials and resources sectors lent support to European equities, thanks to stabilising energy prices. Easing

government austerity measures, as well as some surprisingly resilient economic data across several countries, further bolstered the eurozone’s

positive performance. In March, the European Central Bank (ECB) cut interest rates and extended its monthly asset purchases to €80 billion. After

the UK’s Brexit vote, there was a major sell-off in equities across the eurozone, especially financials and others with assumed exposure to Brexit-

related risk. However, a growing perception that central banks would attempt to offset any slowdown with further stimulus prompted a rally across

eurozone markets. The ECB continued to pursue its asset-purchase scheme (albeit at lower levels), while keeping rates at the levels set in March.

Following a constitutional referendum, the Italian prime minister resigned; but as with Brexit and the Trump election, the market reaction was

ultimately more muted than anticipated, and expectations of ongoing support from central banks pushed market returns higher to end the period

on a strong note.

8

Directors’ Report (continued)

UK equities

During the period under review, UK equities gained, despite considerable market volatility and the tumultuous decision by British voters to bring

the UK out of the EU. UK equity markets and the pound soared in the lead-up to the vote, amid expectations for the referendum to go in favour of

the status quo, then fell dramatically in the aftermath, with the pound dropping to a 30-year low. However, UK shares proved resilient, posting

gains over the second half of the year, partly due to investors finding attractive valuations in the sell-off and partly due to the lower pound bolstering

the outlook for large UK companies with overseas earnings. The swift appointment of Prime Minister Theresa May helped calm markets, as did

the Bank of England’s (BoE) subsequent decisions in August to cut interest rates to a record low of 0.25% and to purchase corporate bonds. But

there were also surprising signs of strength in the British economy: third-quarter GDP (the first post-Brexit report) was 2.2% higher year-over-

year, as strong performance from service industries offset declines in other industrial segments. Looking ahead, however, the Office for Budget

Responsibility has cut back its GDP estimates for 2017 and 2018, and uncertainty still surrounds how exactly Brexit will be enacted – and what

effect it will have on the UK economy.

Japanese equities

Japanese equities made significant gains in the period under review. The first half of the year was a challenging time as markets struggled with

the effects of a negative base rate and a strong yen. Following the UK’s Brexit vote at the end of June, Japanese equities fell sharply. The

Japanese Government Pension Fund reported a loss in value of $50 billion over the second quarter. GDP figures for the first quarter of the year

showed growth that was only just above recession and quarter-two figures revealed an economy that had stalled; however, the figure for the latter

period was revised up in September from 0% to 0.2%. Unemployment levels fell over June, July and again in September to 3.0% – a low not seen

for 21 years. In August, a vast ¥13.5 trillion programme of economic stimulus was announced by the prime minister, Shinzo Abe. The money is

aimed at infrastructure projects and cash boosts for low-income earners. Since the late summer, the Japanese economy has been improving and

equities have advanced, with technology companies, insurers and lenders at the forefront of the rally. GDP figures for quarter three were much

more positive, with 0.5% quarter-on-quarter growth. Following the US election, the dollar strengthened against the yen, pricing in expectations in

the US for growth, inflation and a rate hike – all positive news for the export-reliant Japanese economy. The Bank of Japan has maintained its

negative -0.1% interest rate. Yield curve control has been introduced with an unlimited bond-buying programme.

Asia ex Japan equities

Asia Pacific equities made marginal gains over the period amid bouts of market instability. Like other regions, it was a tale of two halves in 2016:

the first half marked by global growth concerns and the second half characterised by geopolitical events. However, unlike many other markets,

Asian equities recorded losses in the fourth quarter. Both China’s economy and stock market faced challenges over the period, starting in January,

when volatility in Chinese equities prompted policymakers to use their ‘circuit breaker’, a tool that ceases trading of domestic stocks should they

fall by 7%. Chinese GDP came in at an annualised 6.7% for 2016, the lowest rate of growth in 26 years. In India, equities gained after the

administration agreed to implement a pay increase for government employees, which was expected to help boost consumption, although stocks

came off their intra-year highs towards the end of the year as foreign investors flocked elsewhere and demonetisation slowed growth. South

Korean markets gained as policymakers cut interest rates to a new low of 1.25% in June due to weak domestic demand and an ongoing decline

in exports, then fell sharply when Samsung’s Note 7 sales were suspended in September. The Philippines performed well initially, as investors

responded positively to an economic plan from the incoming administration of Rodrigo Duterte, but by the end of the year they had lost confidence

in his plans, resulting in capital outflows.

Emerging market equities

Emerging market equities overall had a strong year in 2016 on the back of improved prices for oil and metals and, at least for most of the period,

reduced fears of imminent interest-rate rises in the US. Mid-year, in the aftermath of the Brexit vote, emerging markets worldwide benefited from

the boost to share prices resulting from the fall in sterling. Although the results of the presidential election in the US in early November initially

knocked back markets, given Trump’s trade policies and the likelihood of the Fed raising rates again, emerging equities quickly bounced back.

Brazil was among the strongest-performing markets for the year as investors responded positively to the impeachment of President Dilma

Rousseff, the efforts of a pro-reform government, improving inflation data and central-bank rate cuts. Argentina made a return to the economic

world stage following its default in 2002, and, in Mexico, equity markets were more volatile but ultimately posted gains for the year. Russia also

performed well over the period, given surging oil prices and the perception that the new US president aims to improve the relationship between

the two countries.

9

Annual Shariah Compliance Report

Based on our view of the investments of HSBC Amanah Global Equity Index Fund and HSBC Amanah Global Equity and on the information

provided to us by the representatives of HSBC Amanah Funds, we hereby confirm that the investments and transactions of the current sub-fund

during the calendar year ended 31 December 2016 were in compliance with the Islamic investment guidelines as interpreted and issued by the

Executive Shariah Committee of HSBC Saudi Arabia Limited.

28 February 2017

Dr. Nizam Yaquby Dr. Mohamed Ali Elgari

Members of the Executive Shariah Committee of HSBC Saudi Arabia Limited

Past performance does not guarantee future results, which may vary

10

Audit Report To the Shareholders of HSBC Amanah Funds We have audited the accompanying financial statements of HSBC Amanah Funds (the “SICAV”) and of each of its sub-funds, which comprise

the Statement of Net Assets and the Portfolio of Investments and Other Net Assets as at 31 December 2016 and the Statement of Operations

and Changes in Net Assets for the year then ended and a summary of significant accounting policies and other explanatory notes to the

financial statements.

Responsibility of the Board of Directors of the SICAV for the financial statements

The Board of Directors of the SICAV is responsible for the preparation and fair presentation of these financial statements in accordance with

Luxembourg legal and regulatory requirements relating to the preparation of the financial statements and for such internal control as the

Board of Directors of the SICAV determines is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Responsibility of the “Réviseur d’entreprises agréé”

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with

International Standards on Auditing as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier”. Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The

procedures selected depend on the judgment of the “Réviseur d’entreprises agréé”, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the “Réviseur d’entreprises agréé”

considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by the Board of Directors of the SICAV, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg T: +352 494848 1, F:+352 494848 2900, www.pwc.lu Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256) R.C.S. Luxembourg B 65 477 - TVA LU25482518

PWffi

Opinion

In our opinion, the financial statements give a lrue and fair view of the financial position of HSBC Amanah Funds and of each of its sub-funds as of 31 December 2016, and of the results of their operations and changes in their net assets for the year then ended in accordancewith Luxembourg legal and regulatory requirements relating to the preparation of the financial statements.

Other information

The Board of Directors of the SICAV is responsible for the other information. The other information comprises the information included inthe annual report but does not include the financial statements and our audit report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.

ln @nnection with our audit of the financial statements, our responsibility is to read lhe other information and, in doing so, consider whetherthe other information is materially inconsistent with the financial slatements or our knowledge obtained in the audit or otherwise appear tobe materially misstated. lf, based on the work we have performed, we conclude that there is a material misstatement of this other information.we are required to report this fact. We have nothing to report in this regard.

Luxembourg, 30 March 2017

PricewalerhouseCoopers, Sociitd coopdrative,2 nte Gerhard Mercator, B.P. 1443, L-|014 LuxembourgT: +352 494848 I, F:+352 494848 2900, www.pwc.lzt

Cabinet de rdvbion agrdi. Expert-comptable (autorisation gouvernementale nol 0028256)RC.S. Lutembourg B 65 477 - TyA LU25482518

11

12

Statement of Net Assets as at 31 December 2016

The accompanying notes form an integral part of these financial statements.

Notes

Global EquityIndex Fund

USD

Assets

Portfolio at Market Value 3.b 346,266,785

Cash at Bank 1,746,218

Receivable from Brokers 582,687

Receivable from Shareholders 638,228

Dividend and interest receivables, net 339,595

Total Assets 349,573,513

Liabilities

Payable to Brokers (587,090)

Payable to Shareholders (102,728)

Other Liabilities 4 (277,511)

Total Liabilities (967,329)

Total Net Assets 348,606,184

13

Statement of Operations and Changes in Net Assets

for the year ended 31 December 2016

* Global Equity merged into Global Equity Index Fund on 26 February 2016.


Notes

ConsolidatedTotalUSD

Global EquityIndex Fund

USDGlobal Equity

USD*

Net Assets at the Beginning of the Year 281,514,169 270,388,055 11,126,114

INCOME

Investment Income 3.c 5,623,370 5,575,949 47,421

Other Income 205,933 204,740 1,193

Total Income 5,829,303 5,780,689 48,614

EXPENSES

Management Fees 4 (542,748) (526,346) (16,402)

Taxe d'abonnement 5 (142,964) (142,595) (369)

Operating, Administrative and Servicing Fees (484,510) (457,592) (26,918)

Other Fees (4,310) (4,178) (132)

Other Expenses (50,637) (50,637) -

Total Expenses (1,225,169) (1,181,348) (43,821)

Net Investment Income 4,604,134 4,599,341 4,793

Realised Gain/(Loss) on Sale on Investments 3.e (1,458,881) (1,798,041) 339,160

Gain/(Loss) on Foreign Currency (68,239) (62,436) (5,803)

Realised Gain/(Loss) for the Year 3,077,014 2,738,864 338,150

Change in unrealised appreciation/(depreciation) of Investments 3.d 10,224,461 11,038,740 (814,279)

Change in Total Net Assets as a Result of Operations 13,301,475 13,777,604 (476,129)

Proceeds on Issue of Shares 102,623,400 102,513,484 109,916

Payments on Redemption of Shares (48,086,119) (37,326,218) (10,759,901)

Dividends Paid 6 (746,741) (746,741) -

Net Assets as at the End of Year 348,606,184 348,606,184 -

14

Changes in the Number of Shares





Share AC (USD) Share AD (USD) Share ID (USD) Share WD (USD) Share YC (GBP) Share ZC (USD)

Number of Shares in Issue at theBeginning of the Year

1,034,193.250 5,999,576.343 - 1,702,311.694 10,627,976.956 1,531,806.206

Number of Shares Subscribed 678,642.737 1,021,185.415 222,770.477 - 4,647,209.666 610,616.396

Number of Shares Redeemed (587,992.769) (880,825.816) (6,212.079) (147,241.483) (1,319,707.074) (41,078.570)

Number of Shares in Issue at the End of the Year

1,124,843.218 6,139,935.942 216,558.398 1,555,070.211 13,955,479.548 2,101,344.032

Global Equity*

Share AC (USD) Share AD (USD) Share ZD (USD)

Number of Shares in Issue at theBeginning of the Year

780,371.694 15,909.568 202,795.704

Number of Shares Subscribed 10,480.093 - -

Number of Shares Redeemed (790,851.787) (15,909.568) (202,795.704)

Number of Shares in Issue at the End of the Year - - -

15

Statistics over the last three years




Sub-Fund31 December 2014 31 December 2015 31 December 2016

Global Equity Index FundUSD

AC (USD) 1.02% 1,124,843.218 USD 9.20 USD 9.24 USD 9.61

AD (USD) 1.02% 6,139,935.942 USD 8.98 USD 8.96 USD 9.24

ID (USD) 0.60% 216,558.398 - - USD 10.94

WD (USD) 0.02% 1,555,070.211 USD 9.77 USD 9.73 USD 10.04

YC (GBP) 0.27% 13,955,479.548 GBP 10.41 GBP 11.14 GBP 13.92

ZC (USD) 0.23% 2,101,344.032 USD 10.33 USD 10.45 USD 10.96

Total Net Assets USD 230,427,064 USD 270,388,055 USD 348,606,184

Global Equity USD*

AC (USD) - - USD 11.68 USD 11.04 -

AD (USD) - - USD 11.68 USD 11.04 -

ZD (USD) - - USD 12.01 USD 11.50 -

Total Net Assets USD 13,838,601 USD 11,126,114 -

Net Asset Value per Share

Total Expense ratio (TER)

31 December 2016

Shares Outstanding

31 December 2016

16

Portfolio of Investments and Other Net Assets as at 31 December 2016 Global Equity Index Fund Statement of investments as at 31 December 2016

(expressed in USD)


Description Quantity Currency Evaluation % net Description Quantity Currency Evaluation % net

assets assets

IN VEST M EN T S KAO 19,067 JPY 905,819 0.26

KEYENCE 1,653 JPY 1,136,628 0.33

T R A N SF ER A B LE SEC UR IT IES A D M IT T ED T O A N OF F IC IA L ST OC K M URATA M ANUFACTURING 7,983 JPY 1,071,153 0.31

EXC H A N GE LIST IN G NIDEC 10,413 JPY 900,374 0.26

NTT DOCOM O 49,341 JPY 1,126,549 0.32

SH A R ES OTSUKA HOLDINGS 21,112 JPY 921,880 0.26

SHIN-ETSU CHEM ICAL 15,324 JPY 1,191,261 0.34

A UST R A LIA TAKEDA PHARM ACEUTICAL 28,065 JPY 1,163,410 0.33

CSL 17,254 AUD 1,254,484 0.36 15,767,829 4 .52

1,254,484 0 .36 N ET H ER LA N D S

C H IN A ASM L HOLDING 16,134 EUR 1,814,899 0.52

TENCENT HOLDINGS 144,891 HKD 3,545,117 1.02 UNILEVER (NL0000009355) 63,225 EUR 2,608,445 0.75

3 ,545,117 1.02 4 ,423,344 1.27

D EN M A R K SIN GA P OR E

NOVO NORDISK "B" 68,271 DKK 2,466,629 0.71 BROADCOM 14,168 USD 2,504,478 0.72

2 ,466,629 0 .71 SINGAPORE

F R A N C E TELECOM M UNICATIONS 302,432 SGD 764,087 0.22

DANONE 22,701 EUR 1,441,422 0.41 3,268,565 0 .94

L'OREAL 9,062 EUR 1,657,382 0.47 SP A IN

SANOFI 43,247 EUR 3,507,776 1.01 INDUSTRIA DE DISENO

SCHNEIDER ELTE 21,819 EUR 1,521,428 0.44 TEXTIL 41,370 EUR 1,415,083 0.41

8 ,128,008 2 .33 1,415,083 0 .41

GER M A N Y SWED EN

ADIDAS 7,714 EUR 1,221,672 0.35 HENNES & M AURITZ "B" 34,469 SEK 961,456 0.28

BASF 33,866 EUR 3,154,447 0.91 961,456 0 .28

BAYER 30,491 EUR 3,188,059 0.91 SWIT Z ER LA N D

DEUTSCHE POST 35,237 EUR 1,160,887 0.33 ABB "R" 73,496 CHF 1,553,298 0.44

M ITSUBISHI ELECTRIC 81,152 JPY 1,133,769 0.33 CIE FINANCIERE

SAP 36,238 EUR 3,165,166 0.91 RICHEM ONT "A" 19,247 CHF 1,277,326 0.37

13,024,000 3 .74 NESTLE "R" 90,802 CHF 6,526,380 1.87

GR EA T B R IT A IN NOVARTIS "R" 90,009 CHF 6,562,372 1.88

ASTRAZENECA 46,036 GBP 2,524,243 0.72 ROCHE HOLDING 25,905 CHF 5,928,571 1.70

COM PASS GROUP 61,089 GBP 1,133,024 0.33 ROCHE HOLDING 'B ' 1,011 CHF 236,747 0.07

GLAXOSM ITHKLINE 180,105 GBP 3,476,179 1.00 SYNGENTA 3,434 CHF 1,359,950 0.39

RECKITT BENCKISER 24,714 GBP 2,102,836 0.60 23,444,644 6 .72

UNILEVER (GB00B10RZP78) 47,324 GBP 1,925,318 0.55 UN IT ED ST A T ES

11,161,600 3 .20 3M CO 21,448 USD 3,829,969 1.10

H ON G KON G ABBOTT LABORATORIES 52,502 USD 2,016,602 0.58

CHINA M OBILE 208,852 HKD 2,214,279 0.63 ALPHABET 'A ' 10,559 USD 8,367,480 2.40

2 ,214,279 0 .63 ALPHABET 'C' 10,583 USD 8,168,171 2.34

IR ELA N D AM GEN 26,484 USD 3,872,226 1.11

ACCENTURE CORP 22,120 USD 2,590,915 0.74 APPLE 190,107 USD 22,018,193 6.32

M EDTRONIC 48,907 USD 3,483,646 1.00 BIOGEN IDEC 7,755 USD 2,199,163 0.63

6 ,074,561 1.74 BRISTOL M YERS SQUIBB 59,596 USD 3,482,790 1.00

JA P A N CELGENE 27,643 USD 3,199,677 0.92

ASTELLAS PHARM A 81,399 JPY 1,133,033 0.33 CHEVRON 67,318 USD 7,923,329 2.27

BRIDGESTONE 25,832 JPY 933,305 0.27 COCA-COLA 138,420 USD 5,738,893 1.65

CANON 41,324 JPY 1,167,425 0.33 COLGATE-PALM OLIVE 31,696 USD 2,074,186 0.60

DAIKIN INDUSTRIES 11,114 JPY 1,022,924 0.29 CVS CAREM ARK 38,029 USD 3,000,868 0.86

FANUC CORP 7,319 JPY 1,243,417 0.36 EI DU PONT DE NEM OURS 30,942 USD 2,271,143 0.65

FAST RETAILING 2,370 JPY 849,977 0.24 ELI LILLY 34,643 USD 2,547,993 0.73

FUJI HEAVY INDUSTRIES 24,458 JPY 1,000,674 0.29 EOG RESOURCES 20,557 USD 2,078,313 0.60

17

Portfolio of Investments and Other Net Assets (continued) as at 31 December 2016 Global Equity Index Fund Statement of investments as at 31 December 2016

(expressed in USD)


Description Quantity Currency Evaluation % net Description Quantity Currency Evaluation % net

assets assets

EXXON M OBIL 147,814 USD 13,341,692 3.83 T A IWA N

FACEBOOK 83,474 USD 9,603,684 2.75 TAIWAN SEM ICONDUCTOR 122,440 USD 3,520,150 1.01

GILEAD SCIENCES 46,980 USD 3,364,238 0.97 3,520,150 1.01

HOM E DEPOT 43,439 USD 5,824,301 1.67 T OT A L D EP OSIT A R Y R EC EIP T S 10,647,677 3 .05

HONEYWELL INTERNATIONA 27,178 USD 3,148,571 0.90 T OT A L T R A N SF ER A B LE SEC UR IT IES

INTEL 168,992 USD 6,129,340 1.76 A D M IT T ED T O A N OF F IC IA L ST OC K

INTERNATIONAL BUSINESS EXC H A N GE LIST IN G 346,266,785 99.33

M ACHINES 30,855 USD 5,121,621 1.47 T OT A L IN VEST M EN T S 346,266,785 99.33

JOHNSON & JOHNSON 97,014 USD 11,176,983 3.21 OT H ER N ET A SSET S LESS LIA B ILIT IES 2,339,399 0 .67

KRAFT HEINZ 21,269 USD 1,857,209 0.53 T OT A L N ET A SSET S 348,606,184 100.00

LOWES 30,954 USD 2,201,448 0.63

M ASTERCARD 33,936 USD 3,503,892 1.01

M CDONALDS 29,614 USD 3,604,616 1.03

M ERCK & CO 98,319 USD 5,788,039 1.66

M ICROSOFT 277,216 USD 17,226,202 4.94

M ONDELEZ INTERNATIONAL

"A" 55,050 USD 2,440,366 0.70

M ONSANTO 15,618 USD 1,643,170 0.47

NIKE "B" 47,648 USD 2,421,948 0.69

OCCIDENTAL PETROLEUM 27,251 USD 1,941,089 0.56

PEPSICO 51,143 USD 5,351,092 1.53

PFIZER 216,397 USD 7,028,575 2.02

PRICELINE GROUP 1,757 USD 2,575,867 0.74

PROCTER AND GAM BLE 95,426 USD 8,023,418 2.30

QUALCOM M 52,666 USD 3,433,823 0.99

SCHLUM BERGER 49,614 USD 4,165,095 1.19

STARBUCKS 51,902 USD 2,881,599 0.83

TEXAS INSTRUM ENTS 35,642 USD 2,600,797 0.75

THERM O FISHER SCIENTIFIC 14,086 USD 1,987,535 0.57

UNION PACIFIC 29,388 USD 3,046,948 0.87

UNITED PARCEL SERVICES 24,583 USD 2,818,195 0.81

VISA "A" 66,598 USD 5,195,976 1.49

WAL M ART STORES 53,640 USD 3,707,597 1.06

WALGREENS BOOTS

ALLIANCE 30,517 USD 2,525,587 0.72

238,469,509 68.41

T OT A L SH A R ES 335,619,108 96.28

D EP OSIT A R Y R EC EIP T S

C H IN A

ALIBABA GROUP HOLDING 39,003 USD 3,424,853 0.98

BAIDU 10,240 USD 1,683,558 0.48

JD COM 36,243 USD 922,022 0.27

6,030,433 1.73

IN D IA

INFOSYS 73,978 USD 1,097,094 0.31

1,097,094 0 .31

18

Portfolio of Investments and Other Net Assets (continued) as at 31 December 2016 Global Equity Index Fund


Economic Division of Investment

(expressed as a percentage of net assets)

%

Technology 29.29

Healthcare 22.75

Consumer Goods 14.67

Consumer Services 9.78

Oil & Gas 8.45

Industrials 7.51

Basic Materials 3.20

Financials 2.50

Telecommunications 1.18

Other net assets less liabilities 0.67

Total Net Assets 100.00

19

Notes to the Financial Statements

for the year ended 31 December 2016 1. Basis of presentation

HSBC Amanah Funds (the "SICAV" or the "Company") is incorporated under the laws of the Grand Duchy of Luxembourg as an investment

Company with variable capital (Société d’Investissement à Capital Variable). The capital comprises various Shares of different classes (the

"Share Classes" or "Classes of Shares") within different compartments each relating to a separate portfolio (a “sub-fund”) consisting of

securities, cash and other sundry assets and liabilities.

The accompanying financial statements present the assets and liabilities of the individual sub-funds and of the Company taken as a whole.

The financial statements of each sub-fund are expressed in the currency designated in the Company’s prospectus for that particular sub-

fund and the financial statements of the Company are expressed in United States dollars (USD). The Company’s financial statements have

been prepared in accordance with the format prescribed by the Luxembourg law for Luxembourg investment companies.

The Company qualifies as an undertaking for collective investment in transferable securities under Part I of the Luxembourg law of 17

December 2010 on undertakings for collective investment, as amended (the “2010 Law”) and is authorised by the Commision de Surveillance

du Sectuer Financier.

In the prospectus and in the reports, the short names of the sub-funds are used. The complete name of each sub-fund consists of “HSBC

Amanah” plus the short name of the sub-fund.

The following merger occurred during the period:

Effective date Merging UCITS Receiving UCITS

26 February 2016 HSBC Amanah Funds - Global Equity HSBC Amanah Funds - Global Equity Index Fund

2. Share Capital

The Company currently offers the following Classes of Shares:

Class Description

Class A A Shares are available to all investors.

The minimum initial investment amount and the minimum holding for A Shares are USD 5,000 or the equivalent in the relevant currency of denomination of the sub-fund.

Class I I Shares are only available for investors qualifying as institutional investors within the meaning of article 174 of the 2010 Law. The minimum initial investment amount and the minimum holding for I Shares are USD 1,000,000 or the equivalent.

Class S S Shares are available through specific distributors selected by the Global Distributor provided that the investors qualify as institutional investors within the meaning of article 174 of the 2010 Law. The minimum initial investment amount and the minimum holding for S Shares are USD 500,000 or the equivalent.

No S Shares were issued as at 31 December 2016.

Class W W Shares are available through certain distributors selected by the Global Distributor provided that the investors qualify as institutional investors within the meaning of article 174 of the 2010 Law. The minimum initial investment amount and the minimum holding for W Shares are USD 100,000 or the equivalent.

Class Y Y Shares are available to certain distributors selected by the Global Distributor provided that the investors qualify as institutional investors within the meaning of article 174 of the 2010 Law. The minimum initial investment amount and the minimum holding for Y Shares are USD 100,000 or the equivalent.

Class Z Z Shares are available to investors having entered into a discretionary management agreement with an HSBC Group entity and to investors subscribing via distributors selected by the Global Distributor provided that such investors qualify as institutional investors within the meaning of article 174 of the 2010 Law. The minimum initial investment amount and the minimum holding for Z Shares are USD 1,000,000 or the equivalent.

20


for the year ended 31 December 2016 (continued) 2. Share Capital (continued)

The Board of Directors has resolved to issue Distribution and Capital-Accumulation Shares as different classes of the sub-funds. Capital-

Accumulation Shares of the Company are identifiable by a “C” following the sub-fund and Share Class names and do not pay any dividends.

Distribution Shares of the Company are identifiable by a "D" following the sub-fund and Share Class names.

The Company has applied for UK reporting fund status for certain distributing Share Classes from the accounting period commencing on

1 January 2010. Prior to this, the Company had applied UK distributor status for such distributing Share Classes.

Details of which Share Classes have UK reporting fund status can be found on the HM Revenue & Customs’ website at www.hmrc.gov.uk.

At the date of this report the exact location of this report is http://www.hmrc.gov.uk/collective/rep-funds.xls

As at 31 December 2016, the following Classes were open:


Class Launch date

AC (USD) 12/11/2009

AD (USD) 09/01/2001

ID (USD) 25/02/2016

WD (USD) 31/03/2004

YC (GBP) 15/09/2014

ZC (USD) 14/05/2014

3. Accounting Policies

The following accounting policies have been used consistently in dealing with items which are considered material in relation to the

Company’s financial statements.

a) Accounting convention

The financial statements have been prepared under the historical cost convention modified by the revaluation of investments.

b) Assets and portfolio securities valuation

Investments are included in the Statement of Net Assets at their market value at 31 December 2016. The market values are based on closing mid-market prices on leading markets.

c) Income and Expenses

Dividends are accounted for on an ex-dividend basis.

d) Foreign Exchange

The cost of investments, income and expenses in currencies other than the Company’s relevant reporting currency have been recorded at

the rate of exchange ruling at the time of the transaction. The market value of the investments and other assets and liabilities in currencies

other than the relevant reporting currency has been converted at the rates of exchange ruling at 31 December 2016.

e) Realised Gain/(Loss) on Sale of Investments

Realised gain/(loss) on sale of investments is the difference between the historical average cost of the investment and the sale proceeds.

4. Charges and Expenses

The Company pays to the Management Company a management fee per annum on the basis of the net asset value of the sub-funds,

calculated daily and payable monthly in arrears at the rate disclosed in the prospectus. The fee covers all management, advisory and

distribution services provided to the relevant sub-fund by the Management Company, the Investment Adviser and the distributors. The

Management Company is responsible for discharging, out of such fee, the fees of the Investment Advisor and the distributors and other

recognised intermediaries or such other person as the Management Company may determine.

21


for the year ended 31 December 2016 (continued) 4. Charges and Expenses (continued)

The management fee payable to the Management Company from the net asset value of the relevant category of shares issues in each

sub-fund is as follows:


A 0.750%

I 0.375%

S 0.000%

W 0.000%

Y 0.000%

Z 0.000%

S and W Shares incur no charges. All the fees and charges allocated to such Share Classes will be paid directly by members or affiliated

entities of the HSBC Group.

Y Shares incur no annual management charges. Y Shares incur operating, administrative and servicing expenses fixed at 0.30% of the net

asset value per annum. This fee is paid quarterly in arrears. The excess of such expenses above such annual rate will be borne directly by

the Management Company or its affiliates, and equally the Management Company or its affiliates may retain any surplus.

Z Shares incur no annual management charge.

The Company pays to HSBC Bank plc a fee for its services rendered with respect to the appointment of the Shariah Committee. The fee is

payable at the end of each calendar quarter. It currently amounts to USD 2,500 and is subject to annual review. The Company also pays

reasonable related out-of-pocket expenses of the HSBC Bank plc.

The Company pays to the Depositary Bank a fee which is payable quarterly in arrears. In addition the Depositary Bank is entitled to be

reimbursed by the Company for its reasonable out-of-pocket expenses and disbursements and the fees and expenses of its correspondent

banks.

The Company pays to the Administration Agent and the Registrar and Transfer Agent a fee which has been agreed between the parties

based on different services and transactions provided. This fee is payable quarterly.

The Company also pays other expenses incurred in its operation including the fees of its auditors and legal advisers, the cost of printing and

distributing the annual and half-yearly reports, the prospectus, the Key Investor Information Documents, the costs and expenses incurred in

connection with the formation and registration of the Company in various jurisdictions, and fees and expenses involved in registering and

maintaining the registration of the Shares of the Company (the "Shares"), with any governmental agency or stock exchange, the cost of

publication of prices, fees of the Board of Directors and reasonable out-of-pocket expenses incurred by them and its other operating

expenses such as accounting and pricing costs and other recurring or non-recurring expenses.

22


for the year ended 31 December 2016 (continued) 4. Charges and Expenses (continued)

Allocation of Charges and Expenses

Each sub-fund or each Class of Shares is charged with all costs or expenses attributable to it. Costs and expenses not attributable to a

particular sub-fund or Class of Shares are allocated between the categories on an equitable basis. Charges and expenses shall be charged

first against investment income. The costs and expenses incurred in connection with the formation and registration of the Company as a

UCITS in Luxembourg and elsewhere and the offer of Shares, including the costs incurred in obtaining a listing for the Shares on the

Luxembourg Stock Exchange, all legal and printing costs and other preliminary expenses were borne by the sub-funds out of their assets

on a pro rata accrual basis and amortised against capital over five years when incurred. As at 31 December 2016 all such formation expenses

have been fully amortized.

The amounts of Transfer Agent, Depositary and Administration Fees which are included in the Operational Costs are the following:

Directors’ Fees, Expenses and Interests

A Director may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is

interested, provided that he has disclosed to the other Directors, prior to the conclusion of any such transaction or arrangement, the nature

and extent of any interest of his therein. A Director may vote in respect of any contract or arrangement or any proposal whatsoever in which

he has an interest, having first disclosed such interest. He shall not be disqualified by his office from contracting with the Company. If a

Director declares his interest in any contract which the Company is considering entering into, he may be counted in the quorum of any

meeting to consider the contract and may vote on any resolution to enter into such contract.

The Company pays an annual fee to each of the Independent Directors amounting to EUR 5,000. This amount is paid by the Management

Company through the operating, administrative and servicing expenses supported by the Company and is accrued with every net asset

value calculation and paid quarterly in arrears. As at 31 December 2016, EUR 5,000 was payable to the directors.

The Company also pays an annual fee to each of the Independent Directors who are members of the Investment Performance Working

Group, a sub-committee of the Board established to monitor the investment performance and governance and risk profile of the Company's

sub-funds, amounting to EUR 715. The amount is accrued with every net asset value calculation and paid quarterly in arrears. As at 31

December 2016, EUR 358 was payable to the Independent Directors.

5. Taxation of the Company

The Company is not subject to taxation in Luxembourg on its income, profits or gains.

The Company is not subject to net wealth tax in Luxembourg.

No stamp duty, capital duty or other tax will be payable in Luxembourg upon the issue of the Shares of the Company.

The sub-funds are, nevertheless, in principle, subject to a subscription tax (taxe d'abonnement) levied at the rate of 0.05% per annum based

on their net asset value at the end of the relevant quarter, calculated and paid quarterly.

A reduced subscription tax rate of 0.01% per annum is however applicable to any sub-fund whose exclusive object is the collective

investment in money market instruments, the placing of deposits with credit institutions, or both. A reduced subscription tax rate of 0.01%

per annum is also applicable to any sub-fund or Share classes provided that their shares are only held by one or more institutional investors

within the meaning of article 174 of the 2010 Law (an "Institutional Investor").

Sub-FundSub-Fund Currency

Transfer Agent, Depositary and Administration Agent Fees

Global Equity Index Fund USD 309,309

Global Equity USD 18,440

23


for the year ended 31 December 2016 (continued) 5. Taxation of the Company (continued)

A subscription tax exemption applies to:

The portion of any sub-fund’s assets (prorata) invested in a Luxembourg investment fund or any of its sub-funds to the extent it is

subject to the subscription tax;

Any sub-fund (i) whose securities are only held by Institutional Investor(s), and (ii) whose sole object is the collective investment in

money market instruments and the placing of deposits with credit institutions, and (iii) whose weighted residual portfolio maturity does

not exceed 90 days, and (iv) that have obtained the highest possible rating from a recognised rating agency. If several Share classes

are in issue in the relevant sub-fund meeting (ii) to (iv) above, only those Share classes meeting (i) above will benefit from this

exemption;

Any sub-fund, whose main objective is the investment in microfinance institutions;

Any sub-fund, (i) whose securities are listed or traded on a stock exchange and (ii) whose exclusive object is to replicate the

performance of one or more indices. If several Share classes are in issue in the relevant sub-fund meeting (ii) above, only those Share

classes meeting (i) above will benefit from this exemption; and

Any sub-fund only held by pension funds and assimilated vehicles.

Withholding tax

Interest and dividend income received by the Company may be subject to non-recoverable withholding tax in the source countries. The

Company may further be subject to tax on the realised or unrealised capital appreciation of its assets in the countries of origin. The Company

may benefit from double tax treaties entered into by Luxembourg, which may provide for exemption from withholding tax or reduction of

withholding tax rate.

Distributions made by the Company as well as liquidation proceeds and capital gains derived therefrom are not subject to withholding tax in

Luxembourg.

6. Dividends

At the Annual General Meeting of the Company held on 13 May 2016, the following dividends were declared, out of the profits of the

Company for the year ended 31 December 2015, for the Classes of Shares listed below:

7. Transactions Expenses

The transaction expenses linked to security dealing have been written off against the realised gain/(loss) on the sale of investments.

Each sub-fund bears the costs and expenses of buying and selling portfolio securities and financial instruments, brokerage fees and

commissions, interest or taxes payable, and other transaction related expenses. These transaction fees are accounted for on a cash basis

and are paid when incurred or invoiced from the net assets of the sub-fund to which they are attributable. Transaction fees are allocated

across each sub-fund’s Share Classes.

The Company bears any extraordinary expenses including, without limitation, litigation expenses and the full amount of any tax, levy, duty

or similar charge and any unforeseen charges imposed on the Company or its assets.

The Company incurred transaction costs relating to purchase or sale of transferable securities, money market instruments, derivatives or

other eligible assets:

Global Equity Index Fund 62,379 USD

Global Equity 2,577 USD

Sub-Fund Dividend per share


-Class AD 0.073568


-Class WD 0.179555

24


for the year ended 31 December 2016 (continued) 8. Dividend Purification

The Shariah Committee has issued guidelines to quantify the annual amount of income of the Company that should be donated to charity,

being derived from companies eligible for investment pursuant to the investment objective, policy and restrictions set out in the Prospectus

for each sub-fund, but that are engaged in an activity or activities of a marginal nature which is or are proscribed by the Shariah Committee

and which is not or are not screened out by the investment restrictions. Such amount will be calculated on an annual basis, based on the

purification ratios, expressed as a percentage of each Company’s dividend. The purification ratios will be provided by the relevant index

provider for each sub fund, for all companies in which the sub-funds have invested. For companies, whose purification ratios are not provided

by the index provider, purification ratios will be calculated based on the financial information of these companies received from the Investment

Advisers. Such income will be disbursed as a charitable donation to one or more worthy causes approved by the Shariah Committee.

9. Commitment Approach

There are currently no derivative positions in any of the sub-funds, however if approved by the Shariah Committee, the sub-funds may have

simple and limited positions in financial derivative instruments but can enter into financial derivative instruments transactions for investment

purposes other than hedging techniques and efficient portfolio management, in particular to gain exposure on financial markets when the

relevant sub-fund Investment Adviser believes that it is more efficient to purchase financial derivative instruments than the corresponding

physical securities. These sub-funds will use the commitment approach.

The commitment approach is generally calculated by converting the derivative contract into the equivalent position in the underlying asset

embedded in that derivative, based on the market value of the underlying. Purchased and sold financial derivative instruments may be netted

in accordance to the CESR’s guidelines 10/788 in order to reduce global exposure. Beyond these netting rules and after application of

hedging rules, it is not allowed to have a negative commitment on a financial derivative instrument to reduce overall exposure and as such,

risk-exposure numbers will always be positive or zero.

10. Disclosure requirements for Index-tracking UCITS: Global Equity Index Fund

The Global Equity Index Fund is the sole index tracking sub-fund existing at the date of this report.

The annualised tracking error for the year ending 31 December 2016 is 0.09%.

The annualised tracking errors are internally calculated by HSBC, based upon investment accounting performance returns using close of

market prices, gross of fees, based on monthly data points. For example, 12 monthly points for 1 year, 36 monthly points for 3 years and 60

monthly points for 5 years.

The anticipated level of tracking error between the Global Equity Index Fund and the index, in normal market conditions is 0.20%. The Global

Equity Index Fund is in line with anticipated tracking error.

The Fund’s net return (based on the Class WD) for the year ending 31 December 2016 was 5.05% against the Index return of 5.07% for the

year. The marginal underperformance is attributable to trading costs.

11. Total Expense Ratio

The Total Expense Ratio (“TER”) is the gross amount of the expenses of the Company to its average net assets.

The TER includes all the expenses levied on the assets of the Company such as management charges, administration charges, depositary

bank charges, distribution charges, professional charges of the auditor, professional charges of the legal advisers, registration charges and

duties. The TER does not include subscription and redemption fees paid directly by the investor.

12. Subsequent Events

There were no events subsequent to the annual report date which would require adjustments to or disclosures in these financial statements.

25

Currency Conversion Table To help shareholders in the Company calculate the performance of their individual investment in the reference currency, the following table has been produced.

The table shows the value of one US dollar against various currencies (as at the given dates).

The market value of investments as well as other assets and liabilities expressed in currencies other than the reporting currency are

translated at the exchange rate prevailing as at 31 December 2016.

The consolidated figures are expressed in USD and include the total of the financial statements of the different sub-funds. For the Statement

of Net Assets and the Statement of Operations and Changes in Net Assets, the exchange rate prevailing at the sub-fund’s valuation point

in Luxembourg as at 31 December 2016 is:

31 December 2016 31 December 2015

USD USD

AUD 1.3810 1.3745

CHF 1.0164 1.0010

DKK 7.0496 6.8698

EUR 0.9481 0.9206

GBP 0.8093 0.6785

HKD 7.7531 7.7501

JPY 116.6317 120.2935

SEK 9.0846 8.4306

SGD 1.4447 1.4187

26

Fund Holiday Calendar for 2017

HSBC AMANAH FUNDS (“HAF”)

HAF – HSBC Amanah Global Equity Index will have no net asset value (the “NAV”) calculated on the following days. Any

requests for subscriptions or redemptions of shares received on these dates will be held over to the next Dealing Day: all Saturdays and Sundays

In addition, the sub-fund will have no NAV calculated on the following days:

02 January US 16 January US 20 February US 14 April Luxembourg, US 17 April Luxembourg 01 May Luxembourg 25 May Luxembourg 29 May US 05 June Luxembourg 23 June Luxembourg 04 July US 15 August Luxembourg04 September US 01 November Luxembourg23 November US 25 December Luxembourg, US 26 December Luxembourg

27

Appendix I (Unaudited Additional Disclosures) – Taxation of the Company (foreign countries)

The following summary is based on the Company’s understanding of the law and practice currently in force in the in other jurisdictions and

is subject to changes therein.

United Kingdom

It is the intention of the Board of Directors to conduct the affairs of the Company so that it does not become resident in the United Kingdom.

On the basis that the Company is not resident in the United Kingdom for tax purposes it should not be subject to United Kingdom corporation

tax on its income and capital gains.

The table below shows reporting income for the previous financial year ended 31 December 2015, as per Chapter 7 of the UK Offshore

Funds (Tax) regulations 2009. The information should be used by UK tax payers for the purposes of completing their UK tax returns.

As at the date of this report, all of the above-mentioned sub-funds remain reporting funds.

* The date upon which a declared dividend was scheduled to be paid.

Sub-Fund ISIN Code

Global Equity Index Fund Class AD LU0110459103 USD 0.0015 30/06/2016 Yes 0.0736 27/04/2016

Global Equity Index Fund Class WD LU0187035489 USD 0.0015 30/06/2016 Yes 0.1796 27/04/2016

Global Equity Index Fund Class YC LU1092475968 USD 0.2636 30/06/2016 Yes 0.0000 N/A

Global Equity Class AD LU0290245298 USD 0.0000 30/06/2016 Yes 0.0000 N/A

Global Equity Class ZD LU0290246007 USD 0.0964 30/06/2016 Yes 0.0000 N/A

Distribution per unit in respect of

the reporting

period

Date of distribution*

Share Class /Series

Currency of the

following amounts

Per unit excess reportable

income overdistributions

in respect of the reporting period

Fund distribution

date

Does the fund remain a

reporting fundat the date thisreport is made

available?

28

Appendix II (Unaudited Additional Disclosures) – UK SORP Disclosure Investment Risk

Information in relation to certain investment risks are disclosed for selected sub-funds as follows:

Market risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such

as market prices, foreign exchange rates and interest rates. It comprises of three major types of risks i.e. currency risk, interest rate risk and

other price risk.

As it is invested in equities, the Fund is exposed to the risk that the equity markets decline. This risk is monitored in absolute terms by the

equity exposure and relative to the benchmark by the calculation of the ex-ante tracking-error.

The Sharia committee has expressly declared the use of financial derivatives instruments as inappropriate for the Fund, unless otherwise

approved by the committee.

(i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in foreign exchange

rates.

Investing in assets denominated in a currency other than that of the investor’s own currency perspective exposes the value of the investment

to exchange rate fluctuations. The Fund does not enter into any FX hedging transactions in order to manage its exposure to foreign exchange

movements.

The table below summarises the sub-funds’ exposure to currency risks.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market interest

rates.

HSBC Amanah Global Equity Index Fund aims to track the performance of the Dow Jones Islamic Market Titans 100 Index, through

investment in a diversified portfolio of securities as defined by the relevant index. The Fund does not invest in fixed income securities; hence

the Fund's portfolio is not exposed to interest rate risk.

HSBC Amanah Global Equity Fund (now liquidated) invests in a diversified portfolio of equities. The Fund does not invest in fixed income

securities; hence the Fund is not exposed to interest rate risk.

(iii) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

HSBC Amanah Global Equity Index Fund aims to track the performance of a world index, i.e. Dow Jones Islamic Market Titans 100 Index,

through investment in a diversified portfolio of securities as defined by the relevant index, which meets Islamic investment principles as

interpreted and laid down by the Shariah Committee and provided to the Board of Directors. The Fund does not invest in fixed income

securities, thus the Fund is not exposed to credit risk.

HSBC Amanah Global Equity Fund (now liquidated) aims to invest in a diversified portfolio of global equity securities that comply with Islamic

investment principles. As such, the Fund does not invest in fixed income securities, and thus the fund is not exposed to credit risk. Credit ratings All amounts due from brokers, cash and short-term deposits are held by parties with a credit rating of AA-/Aa or higher.

Net currency exposure in

Currency Currency Sub-fund currency

Global Equity Index Fund CHF 23,444,643

EUR 25,935,476

Other 39,413,875

29

Appendix II (Unaudited Additional Disclosures) – UK SORP Disclosure (continued)

Investment Risk (continued)

Market risk (continued)

(iv) Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market prices (other

than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial

instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

Other price risk arises principally in relation to the Sub-fund’s return seeking portfolio which includes shares and depositary receipts.

The Sub-fund manages this exposure to other price risk by constructing a diverse portfolio of investments across various markets.

At the year end, the Sub-fund’s exposure to investments subject to other price risk was:


Fair Value Hierarchy

The fair value of financial instruments has been determined using the following fair value hierarchy: Category (a) The quoted price for an identical asset in an active market. Category (b) When quoted prices are unavailable, the price of a recent transaction for an identical asset adjusted if necessary. Category (c) Where a quoted price is not available and recent transactions of an identical asset on their own are not a good estimate of fair value, the fair value is determined by using a valuation technique which uses: C (i) observable market data; or C (ii) non-observable data.

All the investments of HSBC Amanah Funds detailed in the “Portfolio of Investments and Other Net Assets” are classified as “Transferable

Securities admitted to an official stock exchange listing”, hence are classified under category (a).

USD

Direct

Shares 335,619,108

Depositary Receipts 10,647,677

30

HSBC Global Asset Management, the sponsor to the HSBC Amanah Funds, is the asset management specialist of the HSBC Group and operates through HSBC Bank plc and its subsidiaries.

HSBC Global Asset Management is the trading name of HSBC Global Asset Management Limited. HSBC Global Asset Management is established at 8 Canada Square, London E14 5HQ, United Kingdom, which is its registered office.

© Copyright. HSBC Global Asset Management Limited 2016. All Rights Reserved 14846/0608

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