Value Partners Greater China High Yield Income Fund HKD/USD classes and AUD/CAD/NZD/EUR/GBP/SGD hedged classes* available Value Partners Greater China High Yield Income Fund (the Fund ) primarily invests in a portfolio of fixed and floating rate bonds and other debt securities, including convertible bonds, in the Greater China region. The Fund may invest in high yielding securities which may be unrated or below investment grade and debt securities issued by special purpose vehicles. The Fund is therefore exposed to higher credit/insolvency risk and default risk. The Fund primarily invests in the Greater China region and therefore is subject to emerging market and concentration risks. Generally, investments in emerging markets are more volatile than investments in developed markets due to additional risks relating to political, social, economic and regulatory uncertainty. Adverse development in such region may affect the value of the underlying securities in which the Fund invests. In respect of the distribution shares 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 of the net asset value per share of the Fund. 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. You should not make investment decision on the basis of this marketing material alone. Please read the explanatory memorandum for details and risk factors. Why Invest in Value Partners Greater China High Yield Income Fund? 1 China high-yield bond market presents value opportunities Asian markets remain soft due to prolonged political noise and a temporarily heavy supply pipeline. However, a fundamentally sound global economy and gradual normalization of global risk-free rates will continue to be constructive for credit investments Asian credits present more value opportunities, especially in the China high-yield bond space, where spreads are the widest (300bps) versus US high-yield, since September 2015 Fundamentals for Chinese property developers continue to look solid and buying opportunities are emerging in select Chinese industrial names Q3 2018 China high yield is offering a wide spread over US high yield Yield to Worst (%) 11 10 9 8 7 6 5 4 09/2015 12/2015 03/2016 06/2016 09/2016 12/2016 03/2017 06/2017 09/2017 12/2017 03/2018 Bank of America Merrill Lynch Asian Dollar High Yield Corporate China Issuers Index Bank of America Merrill Lynch US High Yield Index Source: Bloomberg, data as of 31 July 2018 2 3 Find alpha in lower-rated or lesser-known bonds Alpha continues to be crucial for achieving outperformance in 2018 The fund not only screens for the best high-yield bonds that bring in a compelling level of income, but also seeks opportunities in lower-rated credits, special-situations/ distressed-debts and under-researched names to generate alpha Rigorous due diligence and bottom-up analysis are required for credit selection in this universe Pioneer of Greater China high yield bond investing One of the largest Greater China high-yield bond strategies in the market (latest AUM at USD5.5 billion); has posted positive returns in all calendar years since inception Managed by our award-winning fixed income team, which has a proven track record in uncovering value and delivering superior return Focus on lower-rated, under-researched credits Buy & Hold Trading Investment Grade Equitylinked New Issues Trading Special Situation/ Event Driven/ Distressed opportunities Preference Shares/ AT1 Active Hedging High Yield Strong Yield + Capital Appreciation for Portfolio Long-term track records across market cycles Fund s AUM (USD million) China s 6,000 European A-share 5,000 debt crisis RMB correction depreciation 4,000 US 3,000 tapering 2,000 1,000 0 2012 2013 2014 2015 2016 2017 Calendar year return* +13.0% +1.2% +1.1% +6.1% +15.9% +10.1% * P Acc USD class 4 Regular income 2 and better return potential The Fund s (P USD MDis) dividend payouts have been steady since launch 2 In addition to attractive income, high-yield bonds are less sensitive to interest rate hikes and offer equity-like longterm return potential with lower volatility Ex-dividend date Dividend history of Class P USD MDis over the past six months Ex-dividend date NAV (USD) Dividend per unit (USD) Annualized yield 1, 2 29/6/2018 8.57 0.0621 8.7% 31/5/2018 8.78 0.0621 8.5% 30/4/2018 8.94 0.0621 8.3% 29/3/2018 9.09 0.0621 8.2% 28/2/2018 9.18 0.0621 8.1% 31/1/2018 9.30 0.0632 8.2% All fund information is quoted as of 29 June 2018. Source: HSBC Institutional Trust Services (Asia) Limited and Bloomberg. Performance in USD, NAV to NAV, is net of fees and with dividends reinvested. * 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 SGD/AUD/CAD/NZD/EUR/GBP Hedged Classes are not recommended for investors whose base currency of investment is not in the aforesaid currencies. 1. 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. 2. The manager intends to declare and pay monthly dividends equal to all or substantially all of the net income attributable to each of the Distribution Classes. However, there is neither a guarantee that such dividends will be made nor will there be a target level of dividend payout. No dividends will be paid with respect to the Accumulation Classes. 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 further details including the distribution policy.
Value Partners Greater China High Yield Income Fund Q3 2018 Investment objective and strategy To provide capital appreciation to investors through primarily investing in Greater China debt securities including but not limited to high yield, convertible, and mainland Chinese offshore bonds. The Fund invests in a broadly diversified portfolio of debt securities in Greater China including non-investment grade bonds, debt securities issued by special purpose vehicles to maximize return potential. Fund facts Share classes P Acc USD/ HKD P MDis USD/ HKD Launch date 27 Mar 2012 P MDis SGD Hedged* 26 Sep 2014 A MDis AUD/CAD/ NZD Hedged* 23 Sep 2013 A MDis EUR Hedged* 5 Feb 2015 A MDis GBP Hedged* 14 Apr 2015 Base currency USD Minimum subscription HKD80,000/ USD10,000 or equivalent Dividend policy aims at monthly distribution subject to manager s discretion 2 Subscription fee Up to 5% Management fee p.a. Performance fee Nil Dealing frequency Daily Administrator HSBC Trustee (Cayman) Limited Custodian HSBC Institutional Trust Services (Asia) Limited Performance P Acc USD P MDis USD 3 months -3.7% -3.7% 6 months -2.9% -2.8% 1 year +1.2% +1.3% Since launch +51.9% +51.7% 2012 (since launch) +13.0% +12.9% 2013 +1.2% +1.2% 2014 +1.1% +1.0% 2015 +6.1% +6.1% 2016 +15.9% +15.9% 2017 +10.1% +10.0% 2018 (year-to-date) -2.9% -2.8% Senior investment staff Chairman & Co-Chief Investment Officer: Deputy Chairman & Co-Chief Investment Officer: Deputy Chief Investment Officer: Senior Investment Director: Fixed income investment team: Chief Investment Officer, Fixed Income: Senior Fund Managers: Fund Manager: Cheah Cheng Hye Louis So Renee Hung Norman Ho, CFA Gordon Ip, CFA Elaine Hu; Jason Yan, CFA, ACCA Edwin Kam, CFA Sector exposure 3, 4 Real estate Energy Diversified financials Cash 5 Materials Others Transportation Retailing Media Capital goods Consumer durables & apparel Banks Consumer services Software & services Technology, hardware & equipment Apparel Utilities Telecommunication services Food, beverage & tobacco Geographical exposure 4 China/Hong Kong Others Cash 5 Indonesia Australia Latin America CEEMEA Singapore Mongolia India Korea Credit ratings A BBB BB B & Below Non-Rated 7 Cash 5 Currency breakdown USD HKD CNY KRW EUR AUD SGD IDR TWD GBP JPY Recent awards 0.4% 0.3% 7.1% 50.6% 35.4% 6.3% 4.8% 1.1% 0.6% 0.5% 0.4% 0.3% 0.3% 0.1% 0.1% 8.2% 8.0% 6.3% 5.7% 5.4% 3.0% 2.9% 2.4% 1.8% 1.7% 1.4% 1.3% 1.2% 1.1% 7.8% 6.3% 6.1% 3.1% 2.6% 2.5% 2.0% 1.7% 1.2% 1.2% 43.6% 65.5% Investment grade High yield Average credit rating 8 90.3% The Asset Benchmark Research Awards 2017 9 Top Investment House in Asian G3 Bonds for 2017 Ranked 1 st in the Hedge Fund category HFM Asia Performance Awards 2017 10 Best Fixed Income Fund Average duration Yield to worst 6 Number of bond issuers 2.0 years 11.2% 209 0.7% 57.7% B 3. Classification is based on Global Industry Classification Standard (GICS). 4. Exposure refers to net exposure (long exposure minus short exposure). Due to rounding, percentages shown may not add up to 100%. 5. Cash refers to net cash on hand excluding cash for collaterals and margins. 6. Investors should note that yield to worst is for reference only and does not represent the actual performance of the Fund or the dividend yield received by investors, nor does a positive yield imply a positive return. 7. Including bonds whose issuers do not seek credit ratings (Greater China Paper 14.8%; Equity-linked Investments 11.2%; Others 4.1%; Loan 3.0%; Mongolia Bonds 1.6%; Dim Sum Bonds 0.8%). 8. The average credit rating is calculated by assigning a sequential integer to all credit ratings from AAA (highest) to D (lowest), taking a simple, assetweighted average of debt holdings by market value and rounding to the nearest rating. The letter rating may be based on bond ratings from different agencies and is provided to indicate the average credit rating of the portfolio s underlying bonds without taking into account derivative positions and unrated securities. As the risk of default increases disproportionately as a bond s rating decreases, the simple weighted average of credit ratings is not a statistical measurement of the portfolio s default risk. 9. Announced in Oct 2017 by The Asset Benchmark Research in the Asian G3 Bond Benchmark Review, which ranks the Top Investment Houses (Hedge Funds category) based on the number of votes won by their astute investors. All votes are subject to a weighting methodology. 10. The awards were judged based on performance over the past 12 months, up to 30 April 2017. The views expressed are the views of Value Partners Hong Kong Limited only and are subject to change based on market and other conditions. The information provided does not constitute investment advice and it should not be relied on as such. All materials have been obtained from sources believed to be reliable, but its accuracy is not guaranteed. This material contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Investors should note investment involves risk and past performance is not indicative of future results. Investors should refer to the explanatory memorandum for details and risk factors in particular those associated with investment in China and other markets in the Asian region, non-investment grade debt securities, and in companies with medium or small capitalization. The fund may also invest in derivatives and structured products which can involve material additional risks, e.g. counterparty default risk or insolvency, and may expose the fund to significant losses. 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. 200808225G Follow us on Hong Kong: ( 852 ) 2143 0688 Singapore: ( 65) 6718 0380 www.valuepartners-group.com
Value Partners Greater China High Yield Income Fund NAV per unit : USD15.29 (P Acc USD) / USD8.56 (P MDis USD) Fund size : USD5,507.7 million July 2018 Value Partners Greater China High Yield Income Fund (the Fund ) primarily invests in a portfolio of fixed and floating rate bonds and other debt securities, including convertible bonds, in the Greater China region. The Fund may invest in high yielding securities which may be unrated or below investment grade and debt securities issued by special purpose vehicles. The Fund is therefore exposed to higher credit/insolvency risk and default risk. The Fund primarily invests in the Greater China region and therefore is subject to emerging market and concentration risks. Generally, investments in emerging markets are more volatile than investments in developed markets due to additional risks relating to political, social, economic and regulatory uncertainty. Adverse development in such region may affect the value of the underlying securities in which the Fund invests. In respect of the distribution shares 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 of the net asset value per share of the Fund. 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. You should not make investment decision on the basis of this marketing material alone. Please read the explanatory memorandum for details and risk factors. Investment objective To provide capital appreciation to investors through primarily investing in Greater China debt securities including but not limited to high yield, convertible, and mainland Chinese offshore bonds. Commentary Portfolio review: Asian credit markets recovered strongly in July after the China Banking and Insurance Regulatory Commission (CBIRC) asked financial institutions to earnestly implement plans to lend to small- to micro-sized companies and lower their funding costs. During the month, a combination of outright buying and short covering pushed the market higher. High-yield issues, especially lower-rated ones, outperformed the rest of the market. We added risks in China as well as selectively bought a few high-yield names that were subject to forced selling earlier in the month. Outlook: Asian credit markets remain relatively cheap on a historical basis. The US- China trade dispute will likely take more time to unfold, but the current market seems to have priced in at least some of the worst possible outcomes. The overall yield of Asian high-yield bonds is still about 300bps higher than that of comparable US high yield a level last seen in 2014-2015. Investors should look past the current turbulence and focus on the fundamentally sound global economy. A gradual normalization of global risk-free rates will be constructive to credit investments and other risk assets. We will continue to deploy our capital into opportunities that offer an attractive risk-reward tradeoff. Performance since launch % 60 The Fund (P Acc USD) 50 +52.9% 40 30 20 10 0-10 3/2012 7/2013 7/2014 7/2015 7/2016 7/2017 7/2018 Performance update The Fund (P Acc USD) One month +0.7% Year-to-date -2.2% One year +0.9% Three years +24.0% Five years +40.4% Since launch +52.9% Annualized return +6.9% Annualized volatility 5.9% Dividend information Class MDis 1 Classes 2 Dividend amount / unit Annualized yield 3 Ex-dividend date P MDis USD 0.0621 8.7% 31-7-2018 P MDis HKD 0.0622 8.7% 31-7-2018 P MDis SGD Hedged 0.0630 8.1% 31-7-2018 A MDis AUD Hedged 0.0609 8.7% 31-7-2018 A MDis CAD Hedged 0.0595 8.4% 31-7-2018 A MDis EUR Hedged 0.0482 6.3% 31-7-2018 A MDis GBP Hedged 0.0576 7.9% 31-7-2018 A MDis NZD Hedged 0.0652 8.9% 31-7-2018 Top 10 securities holdings Name Sector 4 Country % Energy Resources LLC Materials Mongolia 1.8 Float 30/09/2022 MNC Investama Tbk PT Media Indonesia 1.6 9% 11/05/2021 Geo Coal International Pte Ltd Energy Singapore 1.3 8% 10/04/2022 Golden Wheel Tiandi Holdings Real estate China/Hong Kong 1.3 Co Ltd 8.25% 11/03/2019 Sunac China Holdings Ltd 7.35% 19/07/2021 Real estate China/Hong Kong 1.2 Powerlong Real Estate Real estate China/Hong Kong 1.1 Holdings Ltd 5.95% 07/19/2020 China Evergrande Group Real estate China/Hong Kong 1.1 4.25% 02/14/2023 AMTD Group Co Ltd Diversified financials China/Hong Kong 1.1 5% 03/21/2019 Yida China Holdings Ltd Real estate China/Hong Kong 1.1 6.95% 04/19/2020 Times China Holding Ltd 7.85% 06/04/2021 Real estate China/Hong Kong 1.0 The Fund P Acc USD: Monthly performance from 27 Mar 2012 to 31 Jul 2018 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual 2012 N/A N/A -0.3% +1.2% -1.7% +2.7% +1.6% +1.0% +1.4% +2.1% +2.3% +2.1% +13.0% 2013 +0.0% +1.3% -0.6% +1.4% -1.1% -5.0% +0.5% -0.8% +2.6% +2.1% +0.2% +0.9% +1.2% 2014-0.7% +0.7% -0.7% +0.8% +1.3% +2.3% +1.0% +0.9% -2.2% +0.8% -0.2% -2.9% +1.1% 2015 +0.3% +2.0% +0.3% +3.5% +1.6% -0.2% -0.8% -3.6% -1.1% +5.5% -0.2% -1.0% +6.1% 2016 - +0.2% +3.6% +2.2% +0.6% +1.8% +2.9% +1.8% +1.6% + -0.2% +0.6% +15.9% 2017 +2.8% +2.6% +0.7% +1.6% -1.9% -0.3% +0.9% +0.7% +0.7% +1.7% -0.4% +0.6% +10.1% 2018 (YTD) +1.8% -0.6% -0.3% -1.0% -1.2% -1.7% +0.7% -2.2% 9th Floor, Nexxus Building, 41 Connaught Road Central, Hong Kong Hotline: Hong Kong (852) 2143 0688 Singapore (65) 6718 0380 Email: fis@vp.com.hk www.valuepartners-group.com Follow us on
Value Partners Greater China High Yield Income Fund July 2018 NAVs & Codes Classes 2 NAV ISIN Bloomberg P Acc USD 15.29 KYG9319N1097 VPGCPUA KY P Acc HKD 15.34 KYG9319N1253 VPGCPHA KY P MDis USD 8.56 KYG9319N1170 VPGPUMD KY P MDis HKD 8.61 KYG9319N1337 VPGPHMD KY P MDis SGD Hedged 9.31 KYG9319N1824 VPPSHMA KY A Acc EUR Hedged 10.17 KYG9319N3804 VPGAEHA KY A MDis AUD Hedged 8.44 KYG9319N2327 VPGCAUD KY A MDis CAD Hedged 8.53 KYG9319N2400 VPGCCAD KY A MDis GBP Hedged 8.79 KYG9319N3317 VPGCAGH KY A MDis EUR Hedged 9.20 KYG9319N3499 VCHAMEH KY A MDis NZD Hedged 8.79 KYG9319N2574 VPGCHNZ KY Sector exposure 4, 5 Real estate Cash 6 Others Energy Diversified financials Materials Transportation Media Retailing Capital goods Consumer durables & apparel Utilities Software & services Technology, hardware & equipment Banks Consumer services Apparel Telecommunication services Average duration 1.9 years Yield to worst 7 11.2% Number of bond issuers 192 Geographical exposure 5 9.6% 7.5% 7.1% 7.0% 5.6% 2.6% 2.4% 2.3% 1.8% 1.4% 1.4% 1.3% 1.3% 1.2% 1.2% 43.3% Credit ratings A BBB BB B & Below Non-Rated 8 Cash 6 Fund facts 0.3% 0.7% 7.4% 47.9% 34.2% 9.6% Investment grade 1.0% High yield 55.3% Average credit rating 9 B Manager: Value Partners Hong Kong Limited Base currency: USD Administrator: HSBC Trustee (Cayman) Limited Custodian: HSBC Institutional Trust Services (Asia) Limited Launch date: P Acc & MDis USD/HKD 27 Mar 2012 A MDis AUD/CAD/NZD 23 Sep 2013 P MDis SGD 26 Sep 2014 A MDis EUR 5 Feb 2015 A MDis GBP 14 Apr 2015 A Acc EUR 16 Jul 2018 Dividend policy 1 : MDis Aim at Monthly distribution, subject to Manager s discretion Fee structure (Class A and Class P) Minimum subscription HK$80,000/USD10,000 or equivalent Subscription fee Up to 5% Management fee p.a. Performance fee Nil Dealing day Daily Senior investment staff 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 Fixed income investment team: Chief Investment Officer, Fixed Income: Gordon Ip, CFA Senior Fund Managers: Elaine Hu; Jason Yan, CFA, ACCA Fund Manager: Edwin Kam, CFA Recent awards on fixed income capabilities China/Hong Kong Cash 6 Others Indonesia CEEMEA Australia Latin America Singapore Mongolia India Currency breakdown USD HKD CNY EUR SGD TWD AUD IDR GBP 4.5% 1.3% 0.4% 0.4% 0.4% 0.3% 0.3% 0.1% 9.6% 6.9% 6.1% 3.1% 3.0% 2.5% 2.0% 1.8% 1.2% 63.8% 92.3% 2017 Asian G3 Bonds Top Investment House 10 Value Partners - Ranked Number 1 in Hedge Fund category ~ The Asset Benchmark Research Awards 2017 Best Fixed Income Fund 11 ~ HFM Asia Performance Awards 2017 Fund Manager of the Year Long-only Fixed Income (Highly Commended) 12 Value Partners Chief Investment Officer, Fixed Income Gordon Ip ~ The Asset, Triple A, Asset Servicing, Investor and Fund Management Awards 2017 Scan QR code for fund documents 13 : 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. 1. The manager intends to declare and pay monthly dividends equal to all or substantially all of the net income attributable to each of the Distribution Classes. However, there is neither a guarantee that such dividends will be made nor will there be a target level of dividend payout. No dividends will be paid with respect to the Accumulation Classes. 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 further details including the distribution policy. 2. 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/EUR/GBP/NZD/SGD Hedged Classes are not recommended for investors whose base currency of investment is not in the aforesaid currencies. 3. 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. 4. Classification is based on Global Industry Classification Standard (GICS). 5. Exposure refers to net exposure (long exposure minus short exposure). Due to rounding, percentages shown may not add up to 100%. 6. Cash refers to net cash on hand excluding cash for collaterals and margins. 7. Investors should note that Yield to worst is for reference only and does not represent the actual performance of the Fund or the dividend yield received by investors, nor does a positive yield imply a positive return. 8. Including bonds whose issuers do not seek credit ratings (Greater China Paper 14.1%; Equity-linked Investments 10.2%; Dim Sum Bonds 3.6%; Loan 3.5%; Mongolia Bonds 1.8%; Others 1.0%). 9. The average credit rating is calculated by assigning a sequential integer to all credit ratings from AAA (highest) to D (lowest), taking a simple, asset-weighted average of debt holdings by market value and rounding to the nearest rating. The letter rating may be based on bond ratings from different agencies and is provided to indicate the average credit rating of the portfolio s underlying bonds without taking into account derivative positions and unrated securities. As the risk of default increases disproportionately as a bond s rating decreases, the simple weighted average of credit ratings is not a statistical measurement of the portfolio s default risk. 10. Announced in Oct 2017 by The Asset Benchmark Research in the Asian G3 Bond Benchmark Review, which ranks the Top Investment Houses (Hedge Funds category) based on the number of votes won by their astute investors. All votes are subject to a weighting methodology. 11. The awards were judged based on performance over the past 12 months, up to 30 Apr 2017. 12. The period covered by the awards is from 1 Jan 2016 to 31 Dec 2016. 13. For Hong Kong investors only. The views expressed are the views of Value Partners Hong Kong Limited ( VPHK ) only and are subject to change based on market and other conditions. The information provided does not constitute investment advice and it should not be relied on as such. All materials have been obtained from sources believed to be reliable, but their accuracy is not guaranteed. This material contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Investors should note investment involves risk and past performance is not indicative of future results. Investors should refer to the explanatory memorandum for details and risk factors in particular those associated with investment in Greater China markets, non-investment grade debt securities, and debt securities issued by special purpose vehicles. 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. 200808225G This document has not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Hong Kong Limited. GCHY_Master+SG_201807 2
PRODUCT KEY FACTS Value Partners Greater China High Yield Income Fund Issuer: Value Partners Hong Kong Limited April 2018 This statement provides you with key information about the Value Partners Greater China High Yield Income 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: Administrator: Custodian: Ongoing charges over a year # : Value Partners Hong Kong Limited HSBC Trustee (Cayman) Limited HSBC Institutional Trust Services (Asia) Limited Class A AUD Hedged MDis Shares Class A CAD Hedged MDis Shares Class A EUR Hedged Acc Shares Class A EUR Hedged MDis Shares Class A GBP Hedged MDis Shares Class A NZD Hedged MDis Shares Class P USD Acc Shares Class P USD MDis Shares Class P HKD Acc Shares Class P HKD MDis Shares Class P SGD Hedged MDis Shares 1.66% β 1.66% β 1.66% ^ 1.66% β 1.65% β 1.66% β 1.66% β 1.66% β 1.64% β 1.65% β 1.65% β Dealing frequency: Base currency: Dividend policy: Minimum investment: Daily (each day (other than a Saturday or a Sunday) on which banks in Hong Kong are open for general business) US dollars (US$) Class A AUD Hedged MDis Shares, Class A CAD Hedged MDis Shares, Class A EUR Hedged MDis Shares, Class A GBP Hedged MDis Shares, Class A NZD Hedged MDis Shares, Class P USD MDis Shares, Class P HKD MDis Shares and Class P SGD Hedged MDis Shares: Declared monthly on a discretionary basis and dividends, if declared, will be paid monthly. Dividends may be paid out of the capital of the relevant Class and may result in an immediate reduction of the net asset value ( Net Asset Value ) per Participating Share of the Fund. Class A EUR Hedged Acc Shares, Class P USD Acc Shares and Class P HKD Acc Shares: No dividends will be paid on these Classes and the Fund s income and capital gains attributable to these Classes will be reinvested. For Class A AUD Hedged MDis Shares, Class A CAD Hedged MDis Shares, Class A EUR Hedged Acc Shares, Class A EUR Hedged MDis Shares, Class A GBP Hedged MDis Shares and Class A NZD Hedged MDis Shares: (i) AUD, CAD, EUR, GBP, NZD: US$10,000 initial, and US$5,000 subsequent or their equivalent amount in the relevant currency (ii) HKD: HK$80,000 initial, and HK$40,000 subsequent Value Partners Greater China High Yield Income Fund - Product Key Facts 1
Value Partners Greater China High Yield Income Fund Financial year end of this Fund: For Class P USD Acc Shares, Class P USD MDis Shares, Class P HKD Acc Shares, Class P HKD MDis Shares, and Class P SGD Hedged MDis Shares: (i) USD, SGD: US$10,000 initial and US$5,000 subsequent or their equivalent amount in SGD (ii) HKD: HK$80,000 initial and HK$40,000 subsequent 31 December # 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 shares for the corresponding period as described below. This figure may vary from year to year. Information is updated as at 11 April 2018. This figure is based on the expenses for the year ended 31 December 2017. This class of shares is newly launched. The ongoing charges figure is an estimate only and is based on the expenses of Class A EUR Hedged MDis Shares with similar fee structure for the relevant financial period. The actual ongoing charges figure may be different from the estimate and may vary from year to year. What is this product? The Fund is a single fund which is an open-ended mutual fund corporation registered under the laws of the Cayman Islands. Objective and Investment Strategy Investment Objective The Fund aims to provide capital appreciation for investors. In addition, in respect of the Distribution Classes, the Fund also intends to pay monthly dividends equal to all or substantially all of the net income attributable to each of the Distribution Classes. Please note that there is neither a guarantee that such dividends will be made nor will there be a target level of dividend payout. Investment Policies Debt securities in general The Fund aims to achieve its investment objective by investing not less than 70% of its Net Asset Value in a portfolio of debt securities issued by or fully guaranteed by (i) listed or unlisted corporations which have their main operations (or majority of assets) in, or have their majority of their income derived from Greater China (comprising the People s Republic of China ( PRC ), Hong Kong, Macau and Taiwan), and (ii) governments and/or government related entities in Greater China; and where the Manager believes such debt securities are being traded at significant discount to their underlying intrinsic values. For the avoidance of doubt, the issuers of the debt securities who have a majority of their income derived from Greater China as mentioned in (i) above may be based in or outside Greater China. Selection of debt securities for investment by the Fund will be based on the creditworthiness of the issuer (and the parent company or associated company guarantor, in the case of debt securities issued by a special purpose vehicle ( SPVs ) which is fully guaranteed by the parent company or associated company) by forecasting the issuer s (and/or parent company or associated company guarantor s) credit profile by at least 2 years with a primary focus on the issuer s (and or parent company or associated company guarantor s) corporate profile, corporate strategy, forecasted cash flow and financial profile. Investment analysis will also take into account the leverage, liquidity, management and business of the issuer (and the parent company or associated company guarantor, in the case of debt securities issued by a SPV which is fully guaranteed by the parent company or associated company). The debt securities in which the Fund may invest shall include, but are not limited to, convertible and nonconvertible debt securities, fixed and floating rate bonds and high-yield bonds. Such debt securities are across all ratings and thus, may be rated or unrated or rated below investment grade credit rating, such as below Moody s Baa3 or below Standard & Poor s BBB-. Also, the Fund may invest significantly in below investment grade debt securities. The Fund however, will not invest more than 10% of its Net Asset Value in debt securities issued or guaranteed by any single country with a credit rating below investment grade. For the avoidance of doubt, a single country shall include a country, its government, a public or local authority or nationalized industry of that country. Also, the debt securities in which the Fund may invest are mainly denominated in USD. Value Partners Greater China High Yield Income Fund - Product Key Facts 2
Value Partners Greater China High Yield Income Fund The Manager will invest in a broadly diversified portfolio of debt securities with no fixed duration, term structure or industry sector weightings in the allocation of assets in Greater China. Selection of investments will be determined by the availability of attractive investment opportunities. RMB denominated debt securities issued outside the PRC The Fund may also invest up to 30% of its latest Net Asset Value in Renminbi ( RMB ) denominated debt securities issued outside the PRC including RMB denominated debt securities with settlements, coupon payments and principal repayments paid in another currency based on prevailing foreign exchange rates against the RMB. The Fund may invest up to 15% of its latest Net Asset Value in Synthetic RMB Debt Securities, being offshore debt securities denominated in RMB but settled in other currencies. Debt securities issued by SPVs The Fund s investment in subordinated debt securities issued by SPVs will not exceed 15% of its latest Net Asset Value. Currently, the Fund intends to invest only in debt securities issued by SPVs which are fully, unconditionally and irrevocably guaranteed by its parent company or associated company. Such parent company or associated company will be of substance and is not a SPV itself. Equity securities The Fund may invest in equity securities and may invest up to 10% of the Fund s latest Net Asset Value in China B-Shares. Currently, the Fund does not intend to invest either directly or indirectly in China A-Shares. Prior approval of the SFC will be sought and not less than one month s prior notice will be given to the Shareholders in the event the Manager wishes to change the investment policy in relation to China A-Shares and China B-Shares as aforesaid. In such circumstance, the Explanatory Memorandum and the Product Key Facts Statement will be updated to reflect such change as soon as reasonably practicable. Financial derivative instruments and other investments The Fund currently does not intend to use financial derivative instruments extensively for hedging or investment purposes. The Fund may invest in index and currency swaps and currency forwards (which are normally traded over-the-counter) for hedging purposes only. Currently, the Fund does not intend to (i) invest in structured products and mortgaged-backed securities; and (ii) engage in stock lending arrangements, repurchase and reverse repurchase transactions or other similar over-thecounter transactions. The Fund also does not intend to engage in any over-the counter transactions other than index and currency swaps and currency forwards. Prior approval of the Securities and Futures Commission ( SFC ) will be sought and not less than one month s prior notice will be given to the shareholders in the event the Manager wishes to invest in the aforesaid instruments or engage in any of the aforesaid transactions. In such circumstance, the Explanatory Memorandum and the Product Key Facts Statement will be updated to reflect such change as soon as reasonably practicable. Subject to the above investment strategy and the investment restrictions as set out in the Explanatory Memorandum, the Fund may also invest in commodities, futures contracts, options, depository receipts, warrants, units in any unit trust or shares in any mutual fund corporation or any other collective investment scheme (including those managed by the Manager or its connected persons), currencies and interest rates and may hold cash, short-term deposits, and other money instruments (as considered appropriate by the Manager). Currently, the Fund does not intend to invest more than 10% of its latest Net Asset Value in such instruments. Value Partners Greater China High Yield Income Fund - Product Key Facts 3
Value Partners Greater China High Yield Income Fund What are the key risks? Investment involves risks. Please refer to the Explanatory Memorandum for details including the risk factors. 1. Investment risk The Fund s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Fund may suffer losses. The income of the Fund and its Net Asset Value may be adversely affected. There is no guarantee of the repayment of principal. 2. Interest rates risks Investment in the Fund is subject to interest rates risks. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise. 3. Debt securities issued by SPVs Investments in debt securities issued by SPVs may expose the Fund to additional risks such as the credit/default risk of both the SPV and the parent company or associated company (see Credit risk below) and risks relating to the enforceability of the guarantee issued by the parent company or associated company of such SPV. If the parent company or associated company defaults in any of its other debt obligations, this may trigger a cross-default which may then affect the ability of the parent company or associated company to meet its obligations under the guarantee. This may adversely affect the value of the debt securities issued by the SPV and guaranteed by its parent company or associated company. Investments in debt securities of a subordinated nature issued by SPVs will have a lower priority of claim in the event of the relevant issuer s liquidation or bankruptcy as they rank behind holders of unsubordinated debt securities but before holders of equity securities. The Fund is therefore exposed to higher credit / insolvency risk of its counterparties as a holder of subordinated debt securities than as a holder of unsubordinated debt securities. 4. Credit risk The Fund is exposed to the credit or default risk of issuers of bonds or other debt securities that the Fund invests in. The issuers of such instruments may incur difficulties in making full and timely repayments of principal and interest, which may lead to a default and, ultimately, a fall in the value of the Fund. Some of the debt securities are offered on an unsecured basis without collateral. As a result, if the issuer becomes bankrupt, the Fund will become an unsecured creditor of such issuers. 5. Unrated or below investment grade and high yielding debt securities risk The Fund may significantly invest in high yielding securities which may be unrated or rated below investment grade. Such securities are generally subject to lower liquidity, higher volatility and greater risk of loss of principal and interest than high-rated debt securities. 6. Credit rating downgrading risk The credit rating of a debt instrument or its issuer may subsequently be downgraded. Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuers at all times. In the event of such downgrading, the value of the Fund may be adversely affected. The Manager may or may not dispose of the securities that are being downgraded. 7. Sovereign debt risk The Fund s investment in securities issued or guaranteed by governments may be exposed to political, social and economic risks. In adverse situations, the sovereign issuers may not be able or willing to repay the principal and/ or interest when due or may request the Fund to participate in restructuring such debts. The Fund may suffer significant losses when there is a default of sovereign debt issuers. 8. Valuation risk Valuation of the Fund s investments may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the Net Asset Value calculation of the Fund. Value Partners Greater China High Yield Income Fund - Product Key Facts 4
Value Partners Greater China High Yield Income Fund 9. Liquidity of Investment Portfolio The debt securities in the Greater China region may be subject to higher volatility and lower liquidity compared to more developed markets. The prices of securities traded in such markets may be subject to fluctuations. The bid and offer spreads of the price of such securities may be large and the Fund may incur significant trading costs. The debt securities in which the Fund invests (including debt securities issued by SPVs) may not be listed on a stock exchange or a securities market where trading is conducted on a regular basis. Even if the debt securities are listed, the market for such securities may be inactive and the trading volume may be low. If sizeable redemption requests are received, the Fund may need to liquidate its investments at a substantial discount in order to satisfy such requests and the Fund may suffer losses in trading such securities. 10. RMB denominated debt securities risks RMB is currently not freely convertible and is subject to exchange controls and restrictions. 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 ) and onshore CNY ( CNY ) are the same currency, they trade at different rates. Any divergence between CNH and CNY may adversely impact investors. As the quantity of RMB denominated debt securities issued outside the PRC that are available to the Fund is currently limited, the Fund may not have exposure to RMB denominated debt securities as it intended. The Dim Sum bond (i.e. bonds issued outside of the PRC but denominated in RMB) market is still a relatively small market which is more susceptible to volatility and illiquidity. The operation of the Dim Sum bond market as well as new issuances could be disrupted causing a fall in the Net Asset Value of the Fund should there be any promulgation of new rules which limit or restrict the ability of issuers to raise RMB by way of bond issuances and/or reversal or suspension of the liberalisation of the offshore RMB (CNH) market by the relevant regulator(s). 11. Risk relating to dividends paid out of capital The Manager may at its discretion pay dividend out of the capital of the Fund. In respect of the Distribution Classes, investors should note that payment of dividends out of capital amounts to a return or withdrawal of part of their original investment or from any capital gains attributable to the original investment. Any such distributions will generally result in an immediate reduction of the Net Asset Value per Participating Share of the Fund. The distribution amount and Net Asset Value of the hedged share classes may be adversely affected by differences in the interest rates of the reference currency of the hedged share classes and the Fund s base currency (i.e. US dollars), resulting in an increase in the amount of distribution that is paid out of capital and hence a greater erosion of capital than other non-hedged classes. The Manager may amend this policy subject to the SFC s prior approval and by giving not less than one month s prior notice to investors. 12. Dividend risk For the Distribution Classes, the Manager may determine if, and to what extent, dividends may be paid out of capital where the income/capital gain generated by the Fund is insufficient to pay a distribution declared by the Fund. However, there is neither a guarantee that such dividends will be made nor will there be a target level of dividend payout. A high distribution yield does not imply a positive or high return. The Manager currently does not intend to pay dividends in respect of the Accumulation Classes. Accordingly, an investment in the Accumulation Classes may not be suitable for investors seeking income returns for financial or tax planning purposes. Value Partners Greater China High Yield Income Fund - Product Key Facts 5
Value Partners Greater China High Yield Income Fund 13. Geographical concentration risk The Fund s investments are concentrated in the Greater China region. The value of the Fund may be more volatile than that of a fund having a more diverse portfolio of 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 Greater China region. The Fund invests in the China and Taiwan markets which may involve increased risks and special considerations not typically associated with investment in more developed economies or markets, such as liquidity risks, currency risks/ control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility. 14. China tax considerations There are risks and uncertainties associated with the current PRC tax laws, regulations and practice in respect of the Fund s investments in RMB denominated debt securities issued by PRC issuers (which may have retrospective effect). Any increased tax liabilities on the Fund may adversely affect the Fund s value. Currently, based on professional and independent advice from tax advisor, the Manager will not make any tax provisions for PRC taxes in respect of the Fund. In case of any actual tax liabilities imposed on the Fund which will be debited from the Fund s assets, the Fund s Net Asset Value will be adversely affected. Depending on the timing of their subscriptions and/or redemptions, investors may be disadvantaged. 15. Risks of investing in convertible bonds Convertible bonds are a hybrid between debt and equity, permitting holders to convert into shares in the company issuing the bond at a specified future date. As such, convertibles will be exposed to equity movement and greater volatility than straight bond investments. Investments in convertible bonds are subject to the same interest rate risk, credit risk, liquidity risk and prepayment risk associated with comparable straight bond investments. 16. Foreign exchange risk The Fund is denominated in US dollars but may issue classes designated in a currency other than its base currency. In addition, underlying investments of the Fund may be denominated in a currency other than its base currency. The NAV of the Fund may therefore be affected unfavorably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls. 17. 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 Greater China High Yield Income Fund - Product Key Facts 6