VALUE PARTNERS FUND SEMI-ANNUAL 2020 REPORT For the six months ended 31 December 2020 Value Partners Hong Kong Limited 43rd Floor, The Center 99 Queen’s Road Central, Hong Kong Tel: (852) 2880 9263 Fax: (852) 2565 7975 Email: [email protected] Website: www.valuepartners-group.com

In the event of inconsistency, the English text of this Semi-Annual Report shall prevail over the Chinese text. This report shall not constitute an offer to sell or a solicitation of an offer to buy units in any of the funds. Subscriptions are to be made only on the basis of the information contained in the explanatory memorandum, as supplemented by the latest semi-annual and annual reports. VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) CONTENTS

Pages

General information 2-3

Manager’s report 4-8

Statement of financial position (unaudited) 9

Statement of comprehensive income (unaudited) 10-11

Statement of changes in net assets attributable to unitholders (unaudited) 12

Statement of cash flows (unaudited) 13

Investment portfolio (unaudited) 14-15

Investment portfolio movements (unaudited) 16

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 1 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) GENERAL INFORMATION

Manager Legal Advisors Value Partners Hong Kong Limited With respect to Cayman Islands law 43rd Floor, The Center Maples and Calder 99 Queen’s Road Central P.O. Box 309, Ugland House Hong Kong Grand Cayman, KY1-1104 Directors of the Manager Cayman Islands Dato’ Seri Cheah Cheng Hye Mr. So Chun Ki Louis With respect to Taiwan law Mr. Ho Man Kei, Norman Russin & Vecchi Bank Tower, 9th Floor Trustee, Registrar, Administrator and 205 Tun Hwa North Road Principal Office Taipei, Taiwan, R.O.C. HSBC Trustee (Cayman) Limited With respect to Hong Kong and Principle address: International law Strathvale House Deacons 90 North Church Street 5th Floor, Alexandra House George Town 18 Chater Road Central Grand Cayman Hong Kong Cayman Islands Auditor Registered address: PricewaterhouseCoopers P.O. Box 309 P.O. Box 258 Ugland House 18 Forum Lane Grand Cayman Camana Bay KY1-1104 Grand Cayman Cayman Islands KY1-1104 Cayman Islands Custodian, Registrar’s Agent and Administrator’s Agent Information available from: HSBC Institutional Trust Services (Asia) Value Partners Hong Kong Limited Limited 43rd Floor, The Center 1 Queen’s Road Central 99 Queen’s Road Central Hong Kong Hong Kong

Investor hotline : (852) 2143 0688 Fax : (852) 2565 7975 Email : [email protected] Website : www.valuepartners-group.com

SEMI-ANNUAL REPORT 2020 2 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) GENERAL INFORMATION (Continued)

Recent awards and achievements

Corporate awards

2019 • Asia Asset Management 2019 Best of the Best Awards China: Best WFOE House – Asia Asset Management

2018 • I&M Professional Investment Awards 2018 House Performance Awards: Offshore China Equity (10-Year) – Insights and Mandate

• Benchmark Fund of the Year Awards 2018, Hong Kong Greater China Equity House: Outstanding Achiever – Benchmark

• Benchmark Fund of the Year Awards 2018, Hong Kong Asia ex-Japan Equity House: Best-In-Class – Benchmark

2017 • Benchmark Fund of the Year Awards 2017, Hong Kong Manager of the Year - Greater China Equity (Outstanding Award) Dato’ Seri Cheah Cheng Hye and Mr. Louis So (Value Partners’ Co-CIOs) – Benchmark

• AsiaHedge Awards 2017 Management Firm of the Year: Value Partners – AsiaHedge

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 3 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) MANAGER’S REPORT

Performance review

Despite the hanging trade tension and challenging pandemic, Taiwan equities closed this half-year period at record highs. During the period, the MSCI Taiwan Index and the Taiwan Stock Exchange Index (“TWSE”) rose 43.5% and 36.7%, respectively, while the Fund gained 20.4%. Since the inception in March 2008, the Fund has gained 197.9% on a net return basis, while the MSCI Taiwan Index and TWSE were up 200.8% and 214.5%, respectively.

Strong technology leadership to weather the storm

In 2020, the COVID-19 outbreak, coupled with the stricter U.S. regulations on exports to Chinese companies, impacted the market sentiment significantly. The dip in the first-half of 2020 was more than recovered in the second half of the year as many companies have seen robust corporate earnings growth.

The pandemic has accelerated global digital transformation, resulting in the burst of electronics products demand. Taiwanese companies have strong presences in datacenter, notebook, networking equipment and other connected devices, supplying a wide range of chipsets, electronics components, design and assembly services. We have observed strong order momentum across these products throughout the year. In addition, in response to the rising supply uncertainties amid geopolitical risks, customers across the world further diversify their suppliers and increase their inventory level. This has also benefited the leading semiconductor companies in Taiwan.

Resilient economic growth in Taiwan

For the full-year 2020, overall exports recorded a new high, up 4.9% YoY to US$3.4 trillion1, with the technology-related strength more than offsetting the softness in non-technology exports. The exports in electronic components and information technology products delivered a YoY growth of 20.5% and 15.4%1 during the year, riding the megatrends of 5G, IoT and cloud computing. Domestically, daily life remained largely unchanged in Taiwan with solid virus containment. Together with government stimulus programs, the first eleven month retail sales have recovered to flattish YoY despite the absence of inbound tourists. The upbeat exports and domestic consumption recovery drove up the Taiwan government’s 2020 full-year GDP growth estimate to 2.5% YoY (from the previous 1.6% YoY)2.

Looking into 2021, the Taiwan government remains optimistic on global consumption recovery and export growth. It also thinks effective vaccines could add a positive spin to the global demand recovery process. The authority projects 2021 Taiwan’s GDP to grow 3.8% YoY2.

Portfolio update and outlook

The Fund has increased to a significant weighting in the technology sector which rose to 85% as of 31 December 2020, given the structural digital transformation trends. Despite the pandemic and the U.S. restrictions on Huawei, Taiwan’s technology supply chain demonstrated extraordinary resilience thanks to strong technology leadership. On the other hand, we remain relatively selective on non- technology stock picks as most of them are vulnerable to COVID-induced macro uncertainties.

SEMI-ANNUAL REPORT 2020 4 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) MANAGER’S REPORT (Continued)

Portfolio update and outlook (Continued)

On the 2020 performance, the Fund benefited from the strong technology stocks performance. UMC has been in our top five holdings since the third quarter of the year and continued to perform well. Its share price rallied another 70% in the fourth quarter, ended the year with a 218% rally. The managements’ transformation efforts paid off during the year along with a favorable semiconductor industry environment. We have a 7.7% weighting for the stock exiting 2020 and we still see earnings and share price upsides amid continuous foundry capacity tightness. In addition, one of our fabless technology stock picks recorded an 81.7% share price rally during the year, also contributing to the Fund’s gain. The company is one of the global top 10 integrated circuit (“IC”) design houses, providing connectivity and multimedia chipset solutions. They delivered strong earnings growth benefiting from solid stay-at-home demand while consumers upgraded devices to stay connected with the world. Having said that, our capped 10.0% weighting in TSMC amid a single stock limit (compare with the index’s 41.0%) had resulted in our less relative gains compared with the index. TSMC’s share price rallied 74.7% during the year, driven by Intel’s increasing outsourcing strategy and robust advanced node demand from customers, including Apple, AMD and Mediatek. The company upgraded its 5-year growth CAGR target from 5-10% to 10-15% for 2020-2025 at the recent earnings call.

Looking into 2021, we continue to like Taiwanese companies’ positive business momentum in the new environment with dual supply chains to the U.S. and China customers for the technology industry. Along with global economic recovery, the semiconductor industry’s supply tightness would likely remain in the year 2021. All of our top five holding companies mentioned above enjoyed a solid price hike trend due to their unique value proposition in the supply chain. Having said that, we are mindful of some companies’ relative high valuations and would always monitor the opportunities to switch from fair valued names to undervalued names. Our third and fourth-largest holdings, Greatek (a semiconductor packaging and testing service provider) and Sitronix (a driver IC and sensor design house) are both still trading at attractive 10-11x 2021 PER with 6% dividend yields.

Value Partners Hong Kong Limited 22 February 2021

1. Source: Ministry of Finance, Republic of China (Taiwan), 8 January 2021 2. Source: Directorate-General of Budget Accounting And Statistics, Executive Yuan, Republic of China (Taiwan), 27 November 2020

All performance figures are sourced from HSBC Institutional Trust Services (Asia) Limited and Bloomberg (Data computed in USD terms on NAV-to-NAV basis with dividends reinvested) as at 31 December 2020. Performance data is net of all fees. All indices are for reference only.

Individual stock performance is not indicative of fund performance.

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 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.

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 5 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) MANAGER’S REPORT (Continued)

5 biggest holdings of securities as at 31 December 2020

Valuation Stock Industry (2021 Estimates) Remarks

Taiwan Semiconductors Price: TWD530.0 Taiwan Semiconductor Manufacturing is a world- Semiconductor and semiconductor P/E: 26.3x class independent semiconductor foundry. It provides Manufacturing equipment P/B: 6.8x integrated circuit (IC) design houses with integrated (Code: 2330 TT) Yield: 2.1% services for process design, wafer manufacturing and testing. As a global leader with more than 50% share Market cap: of the outsourcing market, the Company has consistently US$489.2 billion outperformed competitors in terms of technology and profitability. We think the Company is well-positioned to continue to benefit from the growing IC manufacturing outsourcing market and the rising demand for the Internet of things trend, AI chips and new application areas.

United Semiconductors Price: TWD47.2 United Microelectronics Corp (UMC) is the second-largest Microelectronics and semiconductor P/E: 22.5x foundry house in Taiwan, primarily focusing on mature Corp equipment P/B: 2.6x technology nodes. In the past few years, the Company (Code: 2303 TT) Yield: 3.7% has undergone some business transitions, such as resource re-allocation, more efficient capital spending, Market cap: etc. We expect UMC to deliver structural profitability US$20.8 billion improvements going forward. Meanwhile, our channel checks suggested a strong order outlook into 1H21 with ASP upside from capacity tightness.

Greatek Electronics Semiconductors Price: TWD56.0 Greatek Electronics is an integrated circuit (IC) (Code: 2441 TT) and semiconductor P/E: 10.7x packaging and testing services provider. The increasing equipment P/B: 1.7x demand for public hygiene and remote working drives Market cap: Yield: 6.5% up microcontroller (MCU) shipments and thus fills up US$1.1 billion the industry capacity of wire bonding packaging. We expect Greatek to benefit from packaging tightness with a potential average selling price (ASP) increase onwards.

SEMI-ANNUAL REPORT 2020 6 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) MANAGER’S REPORT (Continued)

5 biggest holdings of securities as at 31 December 2020 (Continued)

Valuation Stock Industry (2021 Estimates) Remarks

Sitronix Technology Semiconductors Price: TWD162.5 Sitronix is a mobile display driver IC and sensor provider Corp. and semiconductor P/E: 13.5x for OEMs. The Company has been gaining (Code: 8016 TT) equipment P/B: 4.2x market share in the smartphone sensor market and their Yield: 4.0% strong sensor product roadmap showcases significant Market cap: average selling price expansion potential for sensors. In US$0.7 billion addition, the recent 8-inch wafer tightness has resulted in a driver IC price hike, which further enhances its margin profile. We thus expect strong earnings growth for the Company in the coming years.

MediaTek Inc Semiconductors Price: TWD747.0 MediaTek is a Taiwanese integrated circuit (IC) design (Code: 2454 TT) and semiconductor P/E: 24.2x company with broad product offerings. The Company is equipment P/B: 3.6x a market leader in developing tightly-integrated, power- Market cap: Yield: 2.6% efficient systems-on-chip for mobile devices, home US$42.3 billion entertainment products, networking equipment and other Internet of Things (IoT)-related applications. We expect the Company to deliver strong earnings growth in the coming years, driven by 5G product launches and enhanced mobile margin profile. We also think the Company is well-positioned to offer total solution chips to address the increasing IoT applications in the 5G era.

Note: The above investments made up 32.8 % of Value Partners Taiwan Fund as at 31 December 2020. The stock prices are based on the closing of 31 December 2020.

Individual stock performance/yield is not necessarily indicative of overall fund performance.

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 7 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) MANAGER’S REPORT (Continued)

Value Partners Taiwan Fund NAV per unit = US$29.79 (as at 31 December 2020) Performance since launch From 3 March 2008 to 31 December 2020

1

1. MSCI Taiwan Index (USD) which takes into account of dividend reinvestment after deduction of withholding tax.

SEMI-ANNUAL REPORT 2020 8 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS AT 31 DECEMBER 2020

31.12.2020 30.06.2020 US$ US$

Assets Financial assets at fair value through profit or loss 87,144,082 75,328,677 Amounts receivable on sales of investments – 859,169 Amounts receivable on issue of units 5,423 54,376 Dividends and interest receivables 35,934 75,653 Margin deposit 3,197 3,196 Bank balances 2,919,924 10,709,729

90,108,560 87,030,800 Total assets

Liabilities Amounts payable on purchases of investments – 745,266 Amounts payable on redemption of units 1,000 3,000,609 Management fee payable 98,719 83,599 Performance fee payable 2,955,974 1,584,343 Accruals and other payables 84,784 61,063

3,140,477 5,474,880 Total liabilities

86,968,083 81,555,920 Net assets attributable to unitholders

Net asset value per unit with 2,918,989 29.79 24.75 (30.06.2020: 3,294,919) units outstanding

Note: Semi-annual reports have applied the same accounting policies and methods of computation as are applied in the annual reports of the Fund.

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 9 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

31.12.2020 31.12.2019 US$ US$

Income Dividends 2,021,962 2,335,831 Interest on bank deposits 192 3,851 Net realised gains on investments 11,097,337 4,996,861 Change in unrealised gains on investments 7,545,370 7,984,319 Other income 30,046 – Net foreign exchange gains 72,383 50,935

20,767,290 15,371,797 Total net income

Expenses Management fees Note 2 557,605 461,289 Performance fees Note 2 2,955,974 1,716,843 Trustee fees Note 1 75,834 62,735 Transaction costs Note 1 413,018 296,980 Safe custody and bank charges Note 1 30,348 24,144 Legal and professional fees 3,007 14,800 Auditor’s remuneration 20,511 21,434 Other operating expenses 16,967 19,973

4,073,264 2,618,198 Total operating expenses

Profit before tax 16,694,026 12,753,599

Withholding tax on dividend income (410,917) (477,061)

16,283,109 12,276,538 Profit for the period

SEMI-ANNUAL REPORT 2020 10 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) (Continued) FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

Note 1 During the period ended 31 December 2020 and 2019, other than trustee fees that paid to Trustee or their connected persons, other respective amounts paid to the Trustee or their connected persons were as follows:

31.12.2020 31.12.2019 US$ US$

Transaction costs (25,217) (20,432) Safe custody and bank charges (29,994) (23,961)

Note 2 During the period ended 31 December 2020 and 2019, other than management fees and performance fees paid to Manager, no other amounts were paid to the Manager or their connected persons.

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 11 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

31.12.2020 31.12.2019 US$ US$

81,555,920 67,129,821 Net assets attributable to unitholders as at 1 July

Issue of units 2,785,280 664,550 Redemption of units (13,656,226) (3,354,104)

(10,870,946) (2,689,554) Net decrease from capital transactions

16,283,109 12,276,538 Profit for the period

Net assets attributable to unitholders 86,968,083 76,716,805 as at 31 December

The movement of number of units in issue during the period was as follows:

As at As at 1 July Issue Redemption 31 December Number of units 2020 of units of units 2020

- Class A 3,294,919 106,707 (482,637) 2,918,989

As at As at 1 July Issue Redemption 31 December Number of units 2019 of units of units 2019

- Class A 3,189,099 29,505 (137,442) 3,081,162

SEMI-ANNUAL REPORT 2020 12 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

31.12.2020 31.12.2019 US$ US$

Cash flows from operating activities Profit for the period 16,283,109 12,276,538 Adjustments for: Dividends (2,021,962) (2,335,831) Interest on bank deposits (192) (3,851) Withholding tax on dividends income 410,917 477,061

14,671,872 10,413,917

Increase in financial assets at fair value through profit or loss (11,815,405) (10,800,184) Increase in margin deposit (1) (1,322) Decrease/(increase) in amounts receivable on sales of investments 859,169 (2,544,742) Decrease in amounts payable on purchases of investments (745,266) (6,212,175) Increase in management fee payable, performance fee payable, accruals and other payables 1,410,472 1,766,223

Cash generated from/(used in) operations 4,380,841 (7,378,283)

Dividends received 2,061,664 2,571,014 Interest on bank deposits received 209 4,669 Withholding tax on dividends paid (410,917) (477,061)

6,031,797 (5,279,661) Net cash inflow/(outflow) from operating activities

Cash flows from financing activities Proceeds from issue of units 2,834,233 667,278 Payments on redemption of units (16,655,835) (3,356,104)

(13,821,602) (2,688,826) Net cash outflow from financing activities

Net decrease in cash and cash equivalents (7,789,805) (7,968,487)

Cash and cash equivalents as at 1 July 10,709,729 8,950,426

Cash and cash equivalents as at 31 December, 2,919,924 981,939 representing bank balances

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 13 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) INVESTMENT PORTFOLIO (UNAUDITED) AS AT 31 DECEMBER 2020

% of net Holdings Fair value assets US$ FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securities

Taiwan Ardentec Corp 1,744,000 2,399,972 2.76 ASE Technology Holding Co Ltd 1,061,000 3,071,256 3.53 Cathay Financial Holding Co Ltd 787,000 1,183,891 1.36 Chicony Electronics Co Ltd 1,230,000 3,775,048 4.34 Chicony Power Technology Co Ltd 355,000 892,366 1.03 Chilisin Electronics Corp 199,000 793,563 0.91 CTBC Financial Holding Co Ltd 4,498,880 3,155,591 3.63 Inc 153,000 1,432,707 1.65 Dynamic Electronics Co Ltd 1,558,000 1,076,166 1.24 Elan Microelectronics Corp 656,000 3,118,137 3.59 Flexium Interconnect Inc 333,000 1,434,629 1.65 362,000 1,242,498 1.43 Fusheng Precision Co Ltd 137,000 846,311 0.97 General Interface Solution (GIS) Holding Ltd 189,000 770,508 0.89 Genius Electronic Optical Co Ltd 100,000 2,018,799 2.32 Greatek Electronics Inc 2,309,000 4,603,860 5.29 Holtek Semiconductor Inc 550,000 1,421,705 1.63 Hon Hai Precision Industry Co Ltd 969,000 3,174,108 3.65 ITEQ Corp 537,000 2,638,539 3.03 Jentech Precision Industrial Co Ltd 47,000 414,174 0.48 Largan Precision Co Ltd 4,000 455,031 0.52 Longwell Co 1,752,000 3,249,989 3.74 MediaTek Inc 146,000 3,883,145 4.46 Primax Electronics Ltd 80,000 138,859 0.16 Sigurd Microelectronics Corp 873,000 1,406,510 1.62 Sitronix Technology Corp 773,000 4,472,424 5.14 Sporton International Inc 76,000 725,201 0.83 Syncmold Enterprise Corp 1,005,000 3,105,960 3.57 Taiwan Semiconductor Manufacturing Co Ltd 470,000 8,869,188 10.20 Taiwan Surface Mounting Technology Corp 242,000 1,111,515 1.28 Taiwan Union Technology Corp 382,000 1,645,731 1.89 Test Research Inc 461,000 948,722 1.09 Topco Scientific Co Ltd 205,000 872,232 1.00 Tripod Technology Corp 665,000 2,805,757 3.23 Uni-President Enterprises Corp 714,000 1,715,980 1.97

SEMI-ANNUAL REPORT 2020 14 For the six months ended 31 December 2020 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2020

% of net Holdings Fair value assets US$ FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

Taiwan (Continued) United Microelectronics Corp 3,971,000 6,666,405 7.67 Wistron Information Technology & Services Corp 546,000 1,889,596 2.17 Zhen Ding Technology Holding Ltd 916,000 3,718,009 4.28

87,144,082 100.20 Total investments, net

Total investments, at cost 71,254,471 (inclusive of transaction cost)

SEMI-ANNUAL REPORT 2020 For the six months ended 31 December 2020 15 VALUE PARTNERS TAIWAN FUND (A Cayman Islands Unit Trust) INVESTMENT PORTFOLIO MOVEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

% of net assets 31.12.2020 30.06.2020

Listed equity securities Taiwan 100.20 90.90 United States of America – 1.46

100.20 92.36 Total investments

SEMI-ANNUAL REPORT 2020 16 For the six months ended 31 December 2020

The sales prospectus or the terms of contract or the Placement Memorandum, the

Articles of Association or the Limited Partnership Agreement or the Trust deed as well as the annual and semi-annual reports of the Fund may be obtained free of charge from the Swiss Representative. In respect of the Shares distributed in Switzerland to

Qualified Investors, place of performance and jurisdiction is at the registered office of the Representative.

Swiss Representative: FIRST INDEPENDENT FUND SERVICES LTD, Klausstrasse 33,

CH-8008 Zurich.

Swiss Paying Agent: NPB Neue Privat Bank AG, Limmatquai 1, CH-8024 Zurich.