Value Partners Classic Fund Q Investment objective and strategy The Fund aims to achieve consistent superior returns through an investment disci

Transcription

1 Value Partners Classic Fund HKD/USD/AUD/CAD/NZD/RMB classes and HKD/USD/RMB monthly distribution classes available for C Units Morningstar RatingTM1 Q As at Value Partners Classic Fund (The Fund ) primarily invests in markets of the Asia-Pacific region, with a Greater China focus. The Fund invests in China-related companies and emerging markets which involve certain risks not typically associated with investment in more developed markets, such as greater political, tax, economic, foreign exchange, liquidity and regulatory risks. The Fund is also subject to concentration risk due to its concentration in Asia-Pacific region, particularly China-related companies. The value of the Fund can be extremely volatile and could go down substantially within a short period of time. It is possible that the entire value of your investment could be lost. The Fund may also invest in derivatives which can involve material risks, e.g. counterparty default risk, insolvency or liquidity risk, and may expose the Fund to significant losses. In respect of the distribution units for the Fund, the Manager currently intends to make monthly dividend distribution. However, the distribution rate is not guaranteed. Distribution yield is not indicative of the return of the Fund. Distribution may be paid from capital of the Fund. Investors should note that where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the value of units. You should not make investment decision on the basis of this material alone. Please read the explanatory memorandum for details and risk factors. Why invest in Value Partners Classic Fund? 1 A value-investing flagship product Uncovers quality stocks in the Greater China market by adopting value investing principles One of the largest and longest-standing Greater China equity funds 2 Achieved positive calendar-year returns in 18 of the past 25 years 3 and delivered outstanding performance throughout major market cycles (%) Positive calendar-year returns in 18 of the past 25 years 63% % -1% -29% 84% 38% 4 46% 41% 21% 16% 10% 6% -48% 83% 20% -17% The Fund (A units) Index 4 14% 14% 11% - -3% % Emphasize on risk-adjusted returns Ranked first among Greater China equity funds 5 for delivering the highest annualized return while maintaining the lowest volatility 6 Extensive and in-depth bottom-up investment research is complemented with a macro overlay to effectively mitigate downside risks Solid macro backdrop and attractive valuations China s corporate earnings growth has stayed on track against a sanguine macro backdrop; 2018 expected EPS growth was revised upwards to 16% in Q2 (vs. 15% in Q1) Historical data 8 since 2003 show that the MSCI China Index tends to generate positive returns whenever its EPS growth exceeds 15% The MSCI China Index s valuation (13.1x) still appears attractive versus that of other regions and historical levels Uncover value in Greater China stock market The China domestic consumption market is expected to see strong growth as urbanization continues. Companies with a quality earnings outlook that is less sensitive to macro event risks are in favour. A prime example is the consumer discretionary Chinese banks and non-bank financial companies continue to show stable profitability. Despite short term headwinds in a deleveraging cycle, improvements in the efficiency of risks and capital allocation will be positive for this sector Annualized Return% Risk/reward trade-off Value Partners Classic Fund (A Units) 10 Greater China Index 4 5 Category Hang Seng Index Annualized Volatility% Greater China Equity Peers Hong Kong Equity Category China Equity Category Index Hang Seng Index Category Average Source: Morningstar, data from 1 April 1993 to 29 June 2018 Market China earnings growth continues to be healthy 12-month forward P/E(times) 10-year high(times) 2018E EPS growth(%) US 17.3x 20.0x 21.9% Europe 13.8x 16.5x 12.1% Asia ex-japan 12.7x 19.2x 13.6% China 13.1x 19.0x 15.7% Source: FactSet, I/B/E/S, MSCI, Worldscope, Goldman Sachs Research, 28 June 2018 Less sensitive to trade dispute Rising middle class, urbanization and favourable policies to benefit sectors such as consumer discretionary, consumer staples, education and healthcare Key investment themes to watch Consumption upgrade Technology leaders Financials Solid long-term outlook Leaders of internet & hardware supply chain continue to gain market share Improving asset quality Potential earnings re-rating at attractive valuations Fund performance is quoted as of 29 June Source: HSBC Institutional Trust Services (Asia) Limited and Bloomberg, in USD, NAV to NAV, with dividends reinvested. Performance data is net of all fees Morningstar. All Rights Reserved. Morningstar Rating TM as of 30 June AUM, annualized return and annualized volatility as of 29 June Greater China equity funds refer to funds in Morningstar Greater China Equity Fund Category. 3. The Fund (A Units) was launched on 1 April Calendar year return of A Units: 2013: +11%; 2014: +14%; 2015: -; 2016: -3%; 2017: +45%. The Fund (C Units) was launched on 15 October Calendar return of the C Units: 2013: +11%; 2014: +13%; 2015: -; 2016: -4%; 2017: +43%. Investors should note that figures for A Units shown above may differ from those of classes currently available for subscription (C Units), due to differences in launch date of these classes. For C Units, the since launch return is +97.7%. The Manager does not accept any application for A Units until further notice. New investors and existing unitholders who wish to top up may subscribe in C Units. 4. Index refers to Hang Seng Price Return Index till 31 December 2004, thereafter it is the Hang Seng Total Return Index up to 30 September With effect from 1 October 2017, it is the MSCI Golden Dragon Net Total Return Index, which takes into account of dividend reinvestment after deduction of withholding tax. All indices are for reference only. 5. Peer group includes all funds with performance history started before 1 April 1993 in the Morningstar category of Greater China Equity (offshore domiciled open-end funds). 6. Annualized return and volatility are calculated from inception. Volatility is a measure of the theoretical risk in terms of standard deviation; in general, the lower the number, the less risky the investment, and vice versa. 7. Index refers to Hang Seng Price Return Index up to 31 December 2004, thereafter it is the Hang Seng Total Return Index. Hang Seng Total Return Index includes dividend reinvestment whereas Hang Seng Price Return Index does not take into account reinvestment of dividends. 8. Source: Bloomberg.

2 Value Partners Classic Fund Q Investment objective and strategy The Fund aims to achieve consistent superior returns through an investment discipline that places emphasis on the fundamental value of potential investments, which the Manager believes are being traded at deep discounts to their intrinsic values. The Fund will concentrate on investing in the markets of the Asia Pacific region (particularly in Greater China region) but without fixed geographical, sectoral or industry weightings. Fund facts (C Units) 9 Share classes Launch date USD 15 October 2009 AUD/CAD/ NZD hedged* 17 March 2014 RMB hedged* 28 October 2015 HKD hedged* RMB 30 November 1 December Subscription fee Up to 5% Management fee 1.25% p.a Performance fee 10 15% of profit (high-on-high principle) Redemption fee Nil Dealing frequency Daily dealing Senior investment staff Chairman & Co-Chief Investment Officer Deputy Chairman & Co-Chief Investment Officer Deputy Chief Investment Officer Senior Investment Director Investment Directors Senior Fund Managers Performance 11 Cheah Cheng Hye Louis So MDis HKD/USD/RMB unhedged & RMB hedged* 16 October 2017 Renee Hung Norman Ho, CFA Chung Man Wing; Kenny Tjan, CFA; Michelle Yu, CFA; Yu Xiao Bo Anthony Chan, CFA; Kelly Chung, CFA; Doris Ho; Glenda Hsia; Philip Li, CFA; Luo Jing, CFA; Kai Mak; Yu Chen Jun The Fund (A Units USD) Index 4 One year +10.6% +13.7% Three years (annualized) +3.7% +6.0% Five years (annualized) +12.0% +10.1% Ten years (annualized) % Since launch +3,426.0% % Annualized return % Annualized volatility % 25.9% Geographical exposure by listing 12 Hong Kong H Shares China A Shares Taiwan United States Red Chips Bonds China B Shares Vietnam 13 Cash -1% 11% 9% 9% 5% Short exposure includes: United States, -1.1% and H Shares, -0.5%. 12, 14 Sector exposure Information technology Consumer discretionary Banks Utilities Insurance Consumer staples Energy Industrials Real estate Health care Bonds Other financials Materials 13 Cash -1% 21% 17% 14% 9% 8% 7% 6% 6% 5% 3% 1% Total short exposure is -1.6%. Short exposure includes: Consumer discretionary, -1.1% and Industrials, -0.5%. Recent awards Corporate: Fund: 26% 35% Benchmark Fund of the Year Awards 2017, Hong Kong 15 Outstanding Manager of the Year - Greater China Equity - Dato Seri Cheah Cheng Hye and Mr. Louis So Asian Private Banker Asset Management Awards for Excellence Best Fund Provider Greater China Equity AsiaHedge Awards Best Asia ex-japan Fund HFM Asia Performance Awards Fund of the Year 2017 Best Greater China fund over US$500 million * The fund may invest in financial derivative instruments ( FDI ) for hedging purposes. In adverse situations, the fund s use of FDI may become ineffective in hedging and the fund may suffer significant losses. Each hedged share class will hedge the fund s base currency back to its currency of denomination on a best efforts basis. However, the volatility of the hedged classes measured in the fund s base currency may be higher than that of the equivalent class denominated in the fund s base currency. Risks associated with FDI include counterparty risk, credit risk and liquidity risk. Such exposure may lead to a high risk of capital loss. The AUD/CAD/NZD/RMB/HKD Hedged Classes are not recommended for investors whose base currency of investment is not in the aforesaid currencies. 9. A Units and B Units are closed for subscription. New investors and existing unitholders who wish to top up may subscribe in C Units. 10. Performance fee will only be charged if the NAV at the end of the financial year exceeds the high watermark, which is the all-time year-end high of the fund s NAV. If in any one year, the fund suffers a loss, no performance fee can be charged in subsequent years until the loss is recovered fully (the high-on-high principle). 11. Performance in USD, NAV to NAV, is net of fees and with dividend reinvested. 12. Exposure refers to net exposure (long exposure minus short exposure). Due to rounding, percentages shown may not add up to 100%. 13. Cash refers to net cash on hand excluding cash for collaterals and margins. 14. Classification is based on Global Industry Classification Standard (GICS). 15. The award recognized individuals who have led his/her team to outstanding performances over the consistency of three-year and five-year performances against the benchmark and their peers up to 30 September Dato' Seri Cheah Cheng Hye and Mr. Louis So are Value Partners Co-Chief Investment Officers. 16. The awards reflect performance as at December Based on performance for the 12-month period from September 2016 to the end of August The awards were judged based on performance over the past 12 months, up to 30 April Investors should note investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Information in this report has been obtained from sources believed to be reliable but Value Partners Hong Kong Limited does not guarantee the accuracy or completeness of the information provided by third parties. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. This material has not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Hong Kong Limited. For Singapore investors: The Fund is registered as a restricted foreign scheme in Singapore and will only be distributed to (i) institutional investors and (ii) accredited investors and certain other persons in Singapore in accordance with section 304 and 305 of the Securities and Futures Act. Value Partners Asset Management Singapore Pte Ltd, Singapore Company Registration No G Follow us on Hong Kong: ( 852 ) Singapore: ( 65)

3 Value Partners Classic Fund NAV per unit : A Units - USD B Units - USD C Units - USD19.72 Fund size : USD1,381.6 million HHHH Morningstar Rating TM1 As at Investment objective The Fund aims to achieve consistent superior returns through an investment discipline that places emphasis on the fundamental value of potential investments, which the Manager believes are being traded at deep discounts to their intrinsic values. The Fund will concentrate on investing in the markets of the Asia Pacific region (particularly in Greater China region) but without fixed geographical, sectoral or industry weightings. Performance since launch % 4,000 3,600 3,200 2,800 2,400 2,000 1,600 1, The Fund (A Units, USD) Hong Kong Hang Seng Index 2 Index 3 +3,419. July 2018 Value Partners Classic Fund (The Fund ) primarily invests in markets of the Asia-Pacific region, with a Greater China focus. The Fund invests in China-related companies and emerging markets which involve certain risks not typically associated with investment in more developed markets, such as greater political, tax, economic, foreign exchange, liquidity and regulatory risks. The Fund is also subject to concentration risk due to its concentration in Asia-Pacific region, particularly China-related companies. The value of the Fund can be extremely volatile and could go down substantially within a short period of time. It is possible that the entire value of your investment could be lost. The Fund may also invest in derivatives which can involve material risks, e.g. counterparty default risk, insolvency or liquidity risk, and may expose the Fund to significant losses. In respect of the distribution units for the Fund, the Manager currently intends to make monthly dividend distribution. However, the distribution rate is not guaranteed. Distribution yield is not indicative of the return of the Fund. Distribution may be paid from capital of the Fund. Investors should note that where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the value of units. You should not make investment decision on the basis of this material alone. Please read the explanatory memorandum for details and risk factors. Performance update A Units B Units C Units Hang Seng USD USD USD Index 2 Index 3 One month % -0.5% -0.1% Year-to-date -4.6% -4.8% -4.8% -2.5% -1.9% One year +5.7% % +8.0% +6.5% Three years +24.8% +23.0% +22.1% +28.3% +26.5% Five years +71.8% +67.6% +67.5% +55.4% +53.3% Since launch +3, ,471.9% % % Annualized return ^ +15.1% % +8.0% +8.0% Annualized volatility ^ 21.6% 22.3% 19.3% 25.8% 25.8% Annual performance from 2009 to 2018 A Units B Units C Units USD USD USD % +82.0% +7.7% % % -17.6% % % +13.4% +13.4% % % +10.8% % +13.0% +13.3% % -2.0% -2.0% NAVs & codes % -3.7% % +44.1% +43.3% Classes 4 NAV ISIN Bloomberg A Units USD HK VLPARAI HK 2018 (YTD) -4.6% -4.8% -4.8% B Units USD HK VLPARBI HK Dividend information C Units MDis 7 C Units USD HK VLPARCI HK Classes 4 Dividend per Annualized Ex-dividend C Units HKD HK VLPARCI HK unit 8 yield 9 date C Units RMB HK VLCHCRM HK C Units MDis USD % C Units AUD Hedged HK VLCHAUD HK C Units MDis HKD % C Units CAD Hedged HK VLCHCAD HK C Units HKD Hedged HK VLCHCHH HK C Units MDis RMB C Units NZD Hedged HK VLCHNZD HK C Units MDis RMB Hedged % C Units RMB Hedged HK VLCHCRH HK C Units MDis USD 9.45 HK VLCCMDU HK C Units MDis HKD 9.44 HK VLCCMDH HK C Units MDis RMB 9.56 HK VLCCMDR HK C Units MDis RMB Hedged 9.41 HK VLCCMRH HK The Fund A Units USD: Monthly performance from 1 Jan 2009 to 31 Jul 2018 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual % +1.3% +11.5% +0.1% +2.5% +7.5% +5.9% % % % +3.1% -6.1% +1.1% +5.0% % +3.8% -0.7% -0.7% % -1.6% +5.4% +3.5% -1.3% % -7.5% -19.8% +15.3% -7.8% +1.0% % +6.3% -5.7% +1.6% % -1.3% +1.7% +6.4% +2.3% +1.9% +5.9% +14.0% % -2.5% -2.9% +0.6% % +2.3% +0.5% % +0.4% % +2.3% -4.0% -1.6% +2.0% +4.6% % -1.5% +1.6% +1.9% +4.6% +13.5% % +2.4% +3.7% +17.1% -1.5% -3.5% -11.0% -11.6% % -3.8% +2.9% -1.5% % -1.5% +8.7% % +2.4% +5.0% +7.4% +1.4% -1.8% % % +1.9% +3.7% +2.6% +5.7% +3.0% +4.5% +3.5% +0.3% +4.9% -0.1% +1.8% +44.9% 2018 (YTD) +10.8% -5.7% -2.5% -1.8% +1.5% -5.8% % ^ Annualized return and volatility are calculated from inception. Volatility is a measure of the theoretical risk in terms of standard deviation; in general, the lower the number, the less risky the investment, and vice versa. 9th Floor, Nexxus Building, 41 Connaught Road Central, Hong Kong Hotline: Hong Kong (852) Singapore (65) fis@vp.com.hk Follow us on

4 Value Partners Classic Fund July 2018 Top 10 securities holdings Name Industry 10 % 12 Alibaba Group Holding Ltd Software & services 7.9 Taiwan Semiconductor Manufacturing Co Ltd Semiconductors & semiconductor equipment 5.9 SIIC Environment Holdings Ltd Utilities 4.6 Kweichow Moutai Co Ltd Food, beverage & tobacco 3.9 AIA Group Ltd Insurance 3.8 Ping An Insurance Group Insurance 3.3 Co of China Ltd Huaneng Renewables Corporation Ltd Utilities 3.2 Hope Education Group Co Ltd Consumer services 3.1 Industrial and Commercial Banks 3.0 Bank of China Ltd Tencent Holdings Ltd Software & services 2.9 These stocks constitute 4 12 of the Fund. Portfolio characteristics As at 31 Jul Price/earnings ratio 11.6 times Price/book ratio 1.4 times Portfolio yield 3. Geographical exposure by listing 12 Hong Kong H Shares United States China A Shares Taiwan Red Chips Bonds China B Shares Vietnam 13 Cash -7% Short exposure includes: H Shares, -0.7%. 10, 12 Sector exposure Information technology Consumer discretionary Banks Utilities Insurance Industrials Consumer staples Energy Real estate Health care Bonds Materials Other financials 13 Cash -7% Total short exposure is -0.7%. Short exposure includes: Industrials, -0.7%. 1 10% 9% 7% 25% 2 20% 15% 9% 8% 7% 6% 6% 5% 3% 39% Fund facts Manager: Value Partners Hong Kong Limited Base currency: USD Trustee: HSBC Institutional Trust Services (Asia) Limited Custodian: HSBC Institutional Trust Services (Asia) Limited Launch date: A Units USD - 1 Apr 1993 B Units USD - 15 May 1996 C Units USD - 15 Oct 2009 C Units AUD/CAD/NZD Hedged - 17 Mar 2014 C Units RMB Hedged - 28 Oct 2015 C Units HKD Hedged - 30 Nov 2015 C Units RMB - 1 Dec 2015 C Units MDis USD - 16 Oct 2017 C Units MDis HKD - 16 Oct 2017 C Units MDis RMB - 16 Oct 2017 C Units MDis RMB Hedged - 16 Oct 2017 Dividend Policy 7 : C Units MDis aim at monthly distribution, subject to Manager s discretion A, B and C units are invested in the same fund, A and B units were no longer issued from 12 Apr 2002 and 15 Oct 2009 respectively. Only C units are currently available. Fee structure A Units B Units C Units Minimum subscription Closed Closed USD10,000 or equivalent Minimum subsequent USD5,000 Nil Nil subscription or equivalent Subscription fee Closed Closed up to 5% Management fee 0.75% p.a. 1.25% p.a. 1.25% p.a. Performance fee 14 15% of profit (High-on-high principle) Redemption fee Nil Daily Dealing day redemption Senior investment staff Daily redemption Daily dealing Chairman & Co-Chief Investment Officer: Cheah Cheng Hye Deputy Chairman & Co-Chief Investment Officer: Louis So Deputy Chief Investment Officer: Renee Hung Senior Investment Director: Norman Ho, CFA Investment Directors: Chung Man Wing; Kenny Tjan, CFA; Michelle Yu, CFA; Yu Xiao Bo Senior Fund Managers: Anthony Chan, CFA; Kelly Chung, CFA; Doris Ho; Glenda Hsia; Philip Li, CFA; Luo Jing, CFA; Kai Mak; Yu Chen Jun Recent fund awards Best Asia ex-japan Fund 15 ~ AsiaHedge Awards 2017 Fund of the Year ~ HFM Asia Performance Awards 2017 Best Greater China fund over US$500 million 16 ~ HFM Asia Performance Awards 2017 Scan QR code for fund documents 17 : Source: HSBC Institutional Trust Services (Asia) Limited and Bloomberg, data as at the last valuation date of the month as stated above, unless stated otherwise. Performance is calculated on NAV to NAV in base currency with dividend reinvested and net of fees. All indices are for reference only Morningstar, Inc. All Rights Reserved (for A Units). 2. Hang Seng Price Return Index was used till 31 Dec 2004, thereafter it is the Hang Seng Total Return Index. Hang Seng Total Return Index takes into account of dividend reinvestment whereas Hang Seng Price Return Index does not. 3. Index refers to Hang Seng Index (Price Return) since fund inception till 31 Dec 2004, thereafter it is the Hang Seng Index (Total Return) up to 30 Sep Hang Seng Index (Total Return) includes dividend reinvestment whereas Hang Seng Index (Price Return) does not take into account reinvestment of dividends. With effect from 1 Oct 2017, it is the MSCI Golden Dragon Index (Total Net Return), which takes into account of dividend reinvestment after deduction of withholding tax. 4. Each hedged share class will hedge the Fund s base currency back to its currency of denomination on a best efforts basis. However, the volatility of the hedged classes measured in the Fund s base currency may be higher than that of the equivalent class denominated in the Fund s base currency. The AUD/CAD/NZD/RMB Hedged Classes are not recommended for investors whose base currency of investment is not in the aforesaid currencies. 5. Investors should note that the base currency of C Units is in USD. The HKD is for reference only and should not be used for subscription or redemption purpose. Conversion to the base currency of C Units will normally take place at the prevailing rate (as determined by the Fund s Trustee or Custodian) on the corresponding fund dealing day. Investor should be aware of possible risks resulting from fluctuations of exchange rates against USD. 6. Calculated based on the since inception return of C Untis. 7. The Manager currently intends to make monthly dividend distribution in respect of the C Unit MDis Classes; actual dividend payout will be subject to the Manager s discretion. Distribution may be paid from capital of the Fund. Investors should note that where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount that have been originally invested or capital gains attributable to that and may result in an immediate decrease in the value of units. Please refer to the explanatory memorandum for more details. 8. The receiving bank may charge a fee for incoming payments. Such fees will reduce the actual amount of dividends received by the investor. 9. Annualized yield of MDis Class is calculated as follows: (Latest dividend amount/nav as of ex-dividend date) x 12. Investors should note that yield figures are estimated and for reference only and do not represent the performance of the Fund, and that there is no guarantee as to the actual frequency and/or amount of dividend payments. 10. Classification is based on Global Industry Classification Standard (GICS). 11. The profile is based on market consensus forecast as derived from S&P Capital IQ and Bloomberg. Harmonic mean methodology is applied to calculate the forecast P/E ratio and P/B ratio. Note that the manager s internal estimates may differ significantly from S&P Capital IQ and Bloomberg estimates. 12. Exposure refers to net exposure (long exposure minus short exposure). Exposure of equity swaps is measured by the value of the underlying stock holdings. (Due to rounding, percentages shown may not add up to 100%). 13. Cash refers to net cash on hand excluding cash for collaterals and margins. 14. Performance fee will only be charged if the NAV at the end of the financial year or upon realization of units exceeds the high watermark, which is the all-time year-end high of the Fund s NAV. If in any one year, the Fund suffers a loss, no performance fee can be charged in subsequent years until the loss is recovered fully (the high-on-high principle). 15. The award was based on performance for the full 12-month period, from Sep 2016 to the end of Aug The awards were judged based on performance over the past 12 months, up to 30 Apr For Hong Kong investors only. Investors should note investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Information in this report has been obtained from sources believed to be reliable but Value Partners Hong Kong Limited does not guarantee the accuracy or completeness of the information provided by third parties. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. For Singapore investors: The Fund is registered as a restricted foreign scheme in Singapore and will only be distributed to (i) institutional investors and (ii) accredited investors and certain other persons in Singapore in accordance with section 304 and 305 of the Securities and Futures Act. Value Partners Asset Management Singapore Pte Ltd, Singapore Company Registration No G This document has not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Hong Kong Limited. VPCF_Master+SG_

5 PRODUCT KEY FACTS Value Partners Classic Fund Issuer: Value Partners Hong Kong Limited April 2018 This statement provides you with key information about the Value Partners Classic Fund (the Fund ). This statement is a part of the offering document. You should not invest in this product based on this statement alone. Quick facts Manager: Trustee and Custodian: Ongoing charges over a year # : Value Partners Hong Kong Limited HSBC Institutional Trust Services (Asia) Limited Exclusive of performance fees Inclusive of performance fees A Units 0.99% β 6.86% β B Units 1.50% β 7.05% β C Units USD 1.50% β 7.05% β C Units MDis USD 1.49% β 1.87% β C Units AUD Hedged 1.50% β 7.4 β C Units CAD Hedged 1.50% β 6.98% β C Units NZD Hedged 1.49% β 7.27% β C Units RMB 1.5 β 7.30% β C Units HKD Hedged 1.50% β 6.98% β C Units MDis HKD 1.48% β 1.90% β C Units RMB Hedged 1.50% β 7.79% β C Units MDis RMB 1.44% β 1.47% β C Units MDis RMB Hedged 1.49% β 1.89% β Dealing frequency: A Units Daily redemption (Hong Kong business days) B Units Daily redemption (Hong Kong business days) C Units + Daily dealing (Hong Kong business days) Base currency: C Units Hedged* Daily dealing (Hong Kong business days) US dollars (US$) Value Partners Classic Fund Product Key Facts 1

6 Value Partners Classic Fund Dividend policy: For all classes of Units other than C Units MDis USD, C Units MDis HKD, C Units MDis RMB and C Units MDis RMB Hedged, it is the current intention of the Manager that distributions of income will not be made from the Fund. C Units MDis USD, C Units MDis HKD, C Units MDis RMB and C Units MDis RMB Hedged: Subject to the Manager s discretion, it is the current intention of the Manager that dividend, if declared, will be distributed monthly. Dividends may, at the discretion of the Manager, be paid out of capital of the relevant class of Units and may result in an immediate reduction of the net asset value per Unit of the Fund. Minimum investment: For C Units and C Units Hedged only: US$10,000 (or its equivalent in the relevant class currency) initial, and US$5,000 (or its equivalent in the relevant class currency) subsequent Financial year-end of this Fund: 31 December + C Units include C Units RMB, C Units USD, C Units MDis HKD, C Units MDis RMB and C Units MDis USD. * C Units Hedged include C Units AUD Hedged, C Units CAD Hedged, C Units EUR Hedged, C Units GBP Hedged, C Units HKD Hedged, C Units NZD Hedged, C Units RMB Hedged, C Units SGD Hedged and C Units MDis RMB Hedged. C Units EUR Hedged, C Units GBP Hedged and C Units SGD Hedged, which have not been launched yet as at the date of this document, will be launched on a future date to be determined and notified by the Manager, with the prior approval of the Trustee. # β The ongoing charges figure is expressed as a percentage of the sum of expenses over the average net asset value of the class of units for the corresponding period as described below. This figure may vary from year to year. The performance fees to be paid as at year end, where applicable, may vary subject to market conditions. Information is updated as at 11 April This figure is based on the expenses for the year ended 31 December What is this product? The Fund was originally a unit trust constituted under the laws of the Cayman Islands. With effect on and from 21 September 2015, the jurisdiction of the Fund was changed from the Cayman Islands to Hong Kong. Value Partners Classic Fund Product Key Facts 2

7 Value Partners Classic Fund Objectives and Investment Strategy Objectives The investment objective of the Fund is to achieve consistent superior returns through an investment discipline that places emphasis on the fundamental value of potential investments. The Manager seeks to select stocks which it believes are being traded at deep discounts to their intrinsic values. Strategy The Fund will concentrate on investing in the markets of the Asia Pacific region. There are no fixed geographical, sectoral or industry weightings in the allocation of assets in the Fund. The Manager does not attempt to follow benchmark indices in determining the geographical, sectoral or industry weighting of the Fund. The Manager may make large investments in a relatively small number of stocks. The Fund will invest at least 70% of its net asset value ( NAV ) in equity securities. The Fund may invest in equity securities issued by companies of any market size and in such proportions as the Manager deems appropriate. Equity securities that the Fund may invest in include but are not limited to listed equities, real estate investment trusts ( REITs ), and Exchange Traded Funds ( ETFs ). The Fund may invest less than 30% of its NAV in each of the following types of securities, namely REITs and ETFs, in accordance with the requirements under the SFC s Code on Unit Trusts and Mutual Funds. In addition to equity securities, the portfolio may from time to time include cash, deposits, short-term papers such as treasury bills, certificates of deposit, bankers acceptances, short-term commercial paper and other fixed income instruments. However, the Fund will not invest more than 10% of its NAV in debt securities issued and/or guaranteed by a single sovereign issuer (including its government, public or local authority) which is below investment grade. The Manager may also place a substantial portion of the portfolio in cash or cash equivalents, and may invest up to 30% of the Fund s NAV in collective investment schemes (including those managed or offered by the Manager or its Connected Persons (as defined in the section headed Conflicts of Interest of the Explanatory Memorandum)) to the extent permitted by the SFC s Code on Unit Trusts and Mutual Funds. Under exceptional circumstances (e.g. market crash or major crisis), the Fund may be invested temporarily up to 100% in liquid assets such as deposits, treasury bills, certificates of deposit, short-term commercial papers for cash flow management. The Fund may also invest in commodities, futures, options, warrants, equity-linked notes and other financial instruments to the extent permitted by the SFC s Code on Unit Trusts and Mutual Funds and the provisions set out under the section Investment Restrictions in the Explanatory Memorandum. The Fund s exposure to A shares through the Shanghai-Hong Kong Stock Connect and the Shenzhen- Hong Kong Stock Connect, China A Shares Access Products and collective investment schemes (including those managed or offered by the Manager or its Connected Persons) directly investing in A shares through qualified foreign institutional investors or Renminbi qualified foreign institutional investors is subject to a maximum exposure of 20% of the Fund s total NAV. The aggregate exposure to investments in the Mainland China market such as A shares and B shares will not exceed 20% of the Fund s latest available NAV. The Fund will have limited exposure (i.e. less than 30% of its NAV) to investments denominated in RMB. Assets denominated in RMB are valued with reference to the CNH rate (see the risk factor below headed Risks associated with RMB classes of units for meaning of CNH rate ). The value of the Fund s holding of securities issued by any single issuer will not exceed 10% of the total NAV of the Fund. The Fund does not use securitized and structured finance instruments such as collateralised debt obligations, mortgage backed securities, asset-backed securities and credit default swaps. Nor does the Fund intend to engage in repurchase and reverse repurchase transactions or other similar over-the-counter transactions. However, the Fund may enter into stock lending arrangements provided that the value of the securities to be loaned, together with the value of all other securities which are the subject of a loan by the Fund does not exceed 10% of its latest available NAV. Subject to obtaining the prior consent of the Trustee, the Manager may make loans out of the assets of the Fund. To the extent permitted by the SFC s Code on Unit Trusts and Mutual Funds and the provisions set out under the sub-section headed Investment Restrictions in the Explanatory Memorandum, the Fund may invest in commodities, commodity futures contracts and financial futures contracts and write covered call options. However, the Manager would not ordinarily expect to utilize any of these investment techniques except to hedge against adverse political and economic developments and/or adverse movements in currency exchange rates or interest rates. Value Partners Classic Fund Product Key Facts 3

8 Value Partners Classic Fund What are the key risks? Investment involves risks. Please refer to the offering document for details including the risk factors. 1. Investment risk The Fund is an investment fund. The Fund s investment portfolio may fall in value due to any of the key risk factors below and you may lose a substantial proportion or all of your investment in the Fund. There is no guarantee of the repayment of principal. 2. Concentration risk The Fund s investments are concentrated in the Asia Pacific region and may be concentrated in specific sector or a small number of stocks. This may result in greater volatility than portfolios which comprise broad-based global investments. The value of the Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Asia Pacific region. 3. Risk of investing in emerging markets Investing in emerging markets involves increased risks and special considerations not typically associated with investment in more developed economies or markets, such as greater political, policy, tax, economic, foreign exchange risks/control, liquidity, settlement, custody, legal and regulatory risk and the likelihood of a high degree of volatility. 4. Equity market risk The Fund's investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors. 5. Risk associated with high volatility of the equity market in the Asia Pacific region High market volatility and potential settlement difficulties in certain emerging markets in the Asia Pacific region may also result in significant fluctuations in the prices of the securities traded on such markets and thereby may adversely affect the value of the Fund. 6. Risk associated with regulatory/exchanges requirements/policies of the equity market in the Asia Pacific region Securities exchanges in certain emerging markets in the Asia Pacific region typically have the right to suspend or limit trading in any security traded on the relevant exchange. The government or the regulators may also implement policies that may affect the financial markets. All these may have a negative impact on the Fund. 7. Risks associated with small/mid-capitalisation companies The Fund may invest in stocks of small/mid-capitalisation companies which may have lower liquidity and their prices are more volatile to adverse economic developments than those of larger capitalisation companies in general. 8. Currency exchange risk The Fund is denominated in US dollars. Underlying investments of the Fund may be denominated in currencies other than the base currency of the Fund. Also, a class of units may be designated in a currency other than the base currency of the Fund. The Fund s performance may be affected unfavourably by movements in the exchange rates between the currencies in which the assets are held and US dollars, and any changes in exchange control regulations which may cause difficulties in the repatriation of funds. Value Partners Classic Fund Product Key Facts 4

9 Value Partners Classic Fund 9. Performance fee risk The performance fee payable to the Manager may create an incentive for the Manager to make investments that are riskier or more speculative than would be the case in the absence of a performance fee. There is no adjustment of equalisation credit or equalisation losses on an individual unitholder basis for the calculation of the performance fee. A unitholder redeeming units may still incur performance fee in respect of the units, even though a loss in investment capital has been suffered by the redeeming unitholder. In addition, performance fees may be paid on unrealised gains which may never be realised by the Fund. 10. Risks of investing in other collective investment schemes The underlying schemes in which the Fund may invest may not be regulated by the SFC. There may be additional costs involved when investing into these underlying schemes. There is also no guarantee that the underlying schemes will always have sufficient liquidity to meet the Fund s redemption requests as and when made. Investment decisions of the underlying schemes are made at the level of such schemes. There can be no assurance that (i) the selection of the managers of the underlying schemes will result in an effective diversification of investment styles and that positions taken by the underlying schemes will always be consistent; and (ii) the investment objective and strategy of the underlying schemes will be successfully achieved. Prospective investors should note that the Fund bears the fees payable to the Manager and its other service providers, as well as, indirectly, a proportionate share of the fees paid by the underlying schemes to their managers and the service providers of the underlying schemes. There may be potential conflicts of interest where the Fund invests in shares or units of a collective investment scheme managed by the Manager, its delegates, or any Connected Persons. In the event of such conflicts, the Manager will endeavour to ensure that such conflicts are resolved fairly and all transactions between the Fund and any of them are on an arm s length basis. 11. Risks relating to currency hedging and the currency hedged classes ( Currency Hedged Classes ) The Manager may (but is not obliged to) enter into certain currency related transactions in order to hedge the currency exposure of the assets of the Fund attributable to a particular class into the class currency of the relevant class. Investors in the Currency Hedged Classes may have exposure to currencies other than the currency of that Currency Hedged Class. Investors should also be aware that the hedging strategy may substantially limit the benefits of any potential increase in value of a Currency Hedged Class expressed in the class currency, if the Currency Hedged Class denominating currency falls against the base currency of the Fund. The precise hedging strategy applied to a particular Currency Hedged Class may vary. In addition, there is no guarantee that the desired hedging instruments will be available or hedging strategy will achieve its desired result. In such circumstances, investors of the Currency Hedged Class may still be subject to the currency exchange risk on an unhedged basis. If the counterparties of the instruments used for hedging purposes default, investors of the Currency Hedged Classes may be exposed to the currency exchange risk on an unhedged basis and may therefore suffer further losses. Value Partners Classic Fund Product Key Facts 5

10 Value Partners Classic Fund 12. Risks associated with RMB classes of units Investors may invest in C Units RMB, C Units RMB Hedged, C Units MDis RMB or C Units MDis RMB Hedged ( RMB classes ). It should be noted that the RMB is currently not a freely convertible currency as it is subject to foreign exchange control policies and restrictions of the PRC government. The PRC government s policies on exchange control and repatriation restrictions are subject to change and the investors investment in the RMB classes of units may be adversely affected. Non-RMB based investors are exposed to foreign exchange risk and there is no guarantee that the value of RMB against the investors base currencies will not depreciate. Any depreciation of the RMB could adversely affect the investors investments in the Fund. Although offshore RMB ( CNH rate ) and onshore CNY ( CNY rate ) are the same currency, they trade at different rates. Any divergence between the CNH rate and the CNY rate may adversely impact investors. Under exceptional circumstances, payment of redemption proceeds and/or distributions in RMB may be delayed due to exchange controls and restrictions applicable to RMB. 13. Risks associated with distribution out of capital Payment of dividends out of capital amounts to a return or withdrawal of part of an investor s original investment or from any capital gains attributable to that original investments. Any such distributions may result in an immediate reduction of the NAV per unit. 14. Risks associated with investments in derivative instruments Risks associated with derivative instruments include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/ component of a derivative instrument and adverse changes in the value or level of the underlying asset, rate or index can result in a loss significantly greater than the amount invested in the derivative instrument by the Fund. Exposure to derivative instruments may lead to a high risk of significant loss by the Fund. Value Partners Classic Fund Product Key Facts 6

11 Value Partners Classic Fund How has the Fund performed? 100% 80% 82.9% 60% 40% 20% % % 44.9% 0% -20% -40% -60% % % Note: Past performance information is not indicative of future performance. Investors may not get back the full amount invested. The computation basis of the performance is based on the calendar year end, NAV-to-NAV, with dividend reinvested. The figures show by how much A Units increased or decreased in value during the calendar year being shown. Performance data has been calculated in US$ including ongoing charges and excluding subscription fee and redemption fee you might have to pay. Fund launch date: 1 April 1993 A Units launch date: 1 April 1993 A Units have the longest history and are broadly indicative of the Fund s performance characteristics. A Units are closed for subscription from 12 April 2002; existing and new investors may subscribe for C Units or C Units Hedged. Please note that C Units or C Units Hedged are subject to a higher management fee than A Units. Is there any guarantee? This Fund does not have any guarantees. You may not get back the full amount of money you invest. What are the fees and charges? Charges which may be payable by you You may have to pay the following fees when dealing in the units of the Fund. Fee Subscription fee (Preliminary Charge) Switching fee Redemption fee What you pay Up to 5% of the amount you buy Nil** Nil ** Certain distributors may impose a charge for each switching of units in a class of the Fund acquired through them for units in another class of the Fund, which will be deducted at the time of the switching and paid to the relevant distributors. Unitholders who intend to switch their units in one class to units in another class should check with their respective distributors for the charge on switching. Value Partners Classic Fund Product Key Facts 7

12 Value Partners Classic Fund Ongoing fees payable by the Fund The following expenses will be paid out of the Fund. They affect you because they reduce the return you get on your investments. Annual rate (as a % of the Fund s NAV) Management fee* A Units 0.75% B Units 1.25% C Units and C Units Hedged 1.25% Trustee fees (including fees of the Custodian and Registrar s Agent) First US$150 million of the Fund s NAV %* Next US$150 million of the Fund s NAV % Thereafter % Under the terms of the Trust Deed, the Trustee is also entitled to a fixed annual fee of US$3,000. In addition, the Trustee is also entitled to 0.03% per annum of the Fund s NAV for the services provided as the Fund s registrar. Performance fee 15% of the outperformance in the NAV per unit during a performance period above the high water mark per unit. Outperformance means the amount by which the increase in NAV per unit during the relevant performance period exceeds the high water mark. The high water mark is the higher of (i) the initial offer price and (ii) the NAV per unit as at the end of performance period in respect of which a performance fee was last paid. Each performance period corresponds to the financial year of the Fund. Where a performance fee is payable to the Manager for a performance period, the NAV per unit (after deduction of performance fee and any distribution declared or paid in respect of that preceding performance period) on the last valuation day of that performance period will be set as the high water mark for the next performance period. Performance fee accrues on each valuation day if the NAV per unit exceeds the high water mark. On each valuation day, the performance fee accrual made (if any) on the previous valuation day will be reversed and a new performance fee accrual will be calculated. If the NAV per unit is lower than or equal to the high water mark, any performance fee accrual will be reversed and no performance fee will be accrued. The performance fees for A Units and B Units are calculated on an aggregate basis and are apportioned between A Units and B Units proportionately. The performance fees for C Units and C Units Hedged are calculated in respect of each class of units in the Fund. For details and illustrative examples of the performance fee calculation, please refer to the section headed Performance Fee in the Fund s Explanatory Memorandum. Value Partners Classic Fund Product Key Facts 8

13 Value Partners Classic Fund Other fees You may have to pay other fees when dealing in the units of the Fund. * Please note that some fees may be increased up to a specified permitted maximum on giving unitholders at least one month s prior notice. Please refer to the section of the offering document entitled Fees and Expenses for further details of the fees and charges payable and the permitted maximum of such fees, as well as other ongoing expenses that may be borne by the Fund. Additional Information You generally buy and redeem units at the Fund s next-determined NAV after the Manager receives your request, directly or via a distributor, in good order at or before 5:00 p.m. (Hong Kong time), being the Fund s dealing cut-off time on each dealing day of the Fund. Before placing your subscription or redemption orders, please check with your distributor for the distributor s internal dealing cut-off time (which may be earlier than the Fund s dealing cut-off time). The NAV of the Fund is calculated and the price of units is published each business day on the Manager s website Investors may obtain the past performance information of other unit classes offered to Hong Kong investors from the website of the Manager at Where dividends comprise amounts from both income and capital, the composition of the dividends (i.e. the relative amounts paid out of (i) net distributable income and (ii) capital) (if any) for the last 12 months is available by the Manager on request and also on the Manager s website at Investors may obtain information on the distributor(s) appointed in respect of the Fund by making a telephone enquiry with the Manager on (852) *This website has not been reviewed or authorised by the SFC. Important If you are in doubt, you should seek professional advice. The SFC takes no responsibility for the contents of this statement and makes no representation as to its accuracy or completeness. Value Partners Classic Fund Product Key Facts 9