Description of the Fund's Indicative Index and Service Provider's Website The performance of the Fund will not be linked to any index. Non-independent Member of the Board of Directors of Thoub Al Asil Company and Member of Saudi. The Board of Directors of the Fund agreed to outsource the preparation of the financial statements of the Mutual Funds.
In the Chinese part of the Fund, we generally increased exposure to the consumer luxury and real estate sectors over the year. For the Indian part of the Fund, in most cases we have increased exposure to the materials and energy sectors, while reducing our exposure to the consumer discretionary and consumer durables sectors. The performance of the Chinese market was affected by the change in the stance of the regulators/Chinese authorities regarding various sectors and companies, especially leading Internet companies.
In contrast to the Chinese market, the Indian market witnessed a good year due to the spread of the COVID-19 vaccine in the second half of the year and the Indian government's focus on infrastructure development. The percentage of management fees calculated for the fund itself and other funds in which the fund invests (if the fund invests to a greater extent in other investment funds). The percentage of expenses of each fund until the end of the year and the weighted average of the expenses of the main funds that are the subject of investments.
Brief description of the main duties and responsibilities of the Custodian - Taking custody of the assets of the Investment Fund;
Concise Description of the Custodian's main roles and responsibilities - Take custody of the assets of the Investment Fund;
Name & Address of the Fund Operator HSBC Saudi Arabia
Concise Description of the Fund Operator main roles and responsibilities As responsible for operating the Fund; the Fund Operator shall
HSBC China and India Equity Freestyle Fund (Managed by HSBC Saudi Arabia)
FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT
TO THE SHARES IN THE HSBC CHINA AND INDIA EQUITY FREESTYLE FUND (ADMINISTERED BY HSBC SAUDI ARABIA). We have audited the accounts of the HSBC China and India Equity Freestyle Fund (the "Fund") managed by HSBC Saudi Arabia (the "Fund Manager"), which include the statement of financial position as at 31 December 2021, and the statement of comprehensive income, statement of equity attributable to the shareholders, and statement of cash flows for the financial year ended at that time, as well as notes to the financial statements, including a summary of significant accounting practices. It is our opinion that the accompanying accounts in all material respects give a true and fair view of the fund's financial position as of December 31, 2021, and its financial results and cash flows for the year then ended in accordance with International Financial Reporting Standards adopted in the Kingdom of Saudi Arabia and other standards and statements approved by the Saudi Organization for Chartered and Professional Accountants.
We conducted our audit in accordance with International Auditing Standards endorsed in the Kingdom of Saudi Arabia. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Fund in accordance with the professional code of conduct and ethics endorsed in the Kingdom of Saudi Arabia relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The financial statements of the Fund for the year ended 31 December 2020 were audited by another auditor who expressed an unqualified opinion on those financial statements on 26 Sha'aban 1442H (corresponding to 8 April 2021). Management is responsible for the preparation and fair presentation of financial statements in accordance with international financial reporting standards adopted by the Kingdom of Saudi Arabia and other standards and pronouncements approved by the Saudi Organization for Certified Public Accountants, as well as applicable provisions and regulations on investment funds. , issued by the Board of the Capital Market Authority, and the terms of the fund and the information memorandum, and for such internal control as management deems necessary for the preparation of financial statements that are free from material misstatement, or due to fraud or error. In preparing the financial statements, management is responsible for evaluating the fund's ability to continue as a going concern, disclosing, as appropriate, going concern matters and applying the going concern basis of accounting, unless management either intends to liquidate the fund or cease operations, or he has no real choice but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the International Standards on Auditing adopted in the Kingdom of Saudi Arabia will always detect a material misstatement if one exists. Misstatements may arise as a result of fraud or error and are material if they can reasonably be expected, individually or in the aggregate, to influence the economic decisions that users make on the basis of these financial statements.
As part of an audit in accordance with international auditing standards endorsed by the Kingdom of Saudi Arabia, we exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures that respond to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. Obtain an understanding of internal control relevant to the audit 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 fund's internal control.
HSBC CHINA AND INDIA EQUITY FREESTYLE FUND STATEMENT OF FINANCIAL POSITION
HSBC CHINA AND INDIA EQUITY FREESTYLE FUND STATEMENT OF COMPREHENSIVE INCOME
HSBC CHINA AND INDIA EQUITY FREESTYLE FUND
STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO THE UNITHOLDERS
HSBC CHINA AND INDIA EQUITY FREESTYLE FUND STATEMENT OF CASH FLOWS
HSBC CHINA AND INDIA EQUITY FREESTYLE FUND NOTES TO THE FINANCIAL STATEMENTS
REGULATING AUTHORITY
BASIS OF PREPARATION AND CHANGES TO SIGNIFICANT ACCOUNTING POLICIES 1 Statement of compliance
HSBC CHINA AND INDIA EQUITY FREESTYLE FUND NOTES TO THE FINANCIAL STATEMENTS (continued)
- BASIS OF PREPARATION AND CHANGES TO SIGNIFICANT ACCOUNTING POLICIES (continued)
- Significant accounting policies (continued)
- Significant accounting policies (continued) (vi) Offsetting of financial instruments
- Significant accounting policies (continued) (vii) Impairment of financial assets (continued)
- Significant accounting policies (continued) Redeemable units (continued)
- Significant accounting policies (continued) Expenses
- SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
- FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)
- FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL) (continued) 31 December 2020
- TRANSACTIONS WITH RELATED PARTIES A. Transactions and balances with Fund Manager
- TRANSACTIONS WITH RELATED PARTIES (continued)
- ACCRUED EXPENSES AND OTHER PAYABLES
- OTHER EXPENSES
- FAIR VALUE OF FINANCIAL INSTRUMENTS
- MATURITY ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
- FINANCIAL RISK MANAGEMENT Introduction
- FINANCIAL RISK MANAGEMENT (continued) Concentration risk
- LAST VALUATION DAY
- SIGNIFICANT EVENT
- APPROVAL OF THE FINANCIAL STATEMENTS
The fund recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of the instrument. After initial measurement, the fund measures financial instruments classified as FVTPL at fair value. The fund establishes policies and procedures for both recurring fair value measurement and for one-off measurement.
The Fund also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. All ordinary purchases and sales of financial assets are recognized/derecognised on the trade date (ie the date on which the fund undertakes to buy or sell the assets). The redeemable shares entitle the shareholder to a proportionate share of the fund's net assets in the event of the fund's liquidation.
Total cash flows are largely based on operating profit, the change in recognized net assets, or the change in the fair value of the fund's recognized and unrecognized net assets. In the statement of comprehensive income, no profit or loss is recognized on the purchase, issue or cancellation of the fund's own capital instruments. Fund management fees are charged at rates agreed with the fund manager and as set out in the fund terms and conditions.
The new and amended standards and interpretations that have been issued, but not yet effective, up to the date of issue of the Fund's financial statements are disclosed below. In the ordinary course of its activities, the Fund deals with Fund Manager and related parties. The Fund has investments at fair value through profit or loss that are measured at fair values and classified within level 1 of the fair value hierarchy.
The Board of Directors supervises the Fund Manager and is ultimately responsible for the overall risk management of the Fund. Concentration indicates the relative sensitivity of the Fund's performance to developments affecting a particular industry or geographic location. The table below shows the Fund's maximum exposure to credit risk for the components of the statement of financial position.
The table below indicates the Fund's foreign currency exposure at 31 December 2021, as a result of its monetary assets and liabilities. The analysis calculates the effect on the statement of comprehensive income of a reasonably possible movement of the Fund's major currency exposures against the USD with all other variables held constant.
