Value Formula Fund

SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 Sensible Asset Management Limited 9th Floor, Nexxus Building 41 Connaught Road Central, Tel: (852) 2868 6848 Fax: (852) 2810 9948 Email: [email protected] Website: www.valuepartners.com.hk

In the event of inconsistency, the English text of this Semi-Annual Report shall prevail over the Chinese text. ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

Contents

Pages

General information 2

Manager’s report 3-5

Statement of financial position (unaudited) 6

Investment portfolio (unaudited) 7-13

Investment portfolio movements (unaudited) 14

SEMI-ANNUAL REPORT 20 1 2  FOR THE SIX MONTHS ENDED 30 SEPTEMBER 20 1 2 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

GENERAL INFORMATION

Manager Legal Advisors Sensible Asset Management Limited With respect to Cayman Islands law 9th Floor, Nexxus Building Campbells 41 Connaught Road Central Scotia Centre, P.O. Box 884 Hong Kong Grand Cayman KY1-1103 Cayman Islands Directors of the Manager British West Indies Mr So Chun Ki Louis Mr Tam Raymond Hin Tat With respect to Hong Kong law Mr Tse Wai Ming, Timothy Deacons 5/F, Alexandra House Sub-Investment Manager 18 Charter Road Central Value Partners Limited Hong Kong 9th Floor, Nexxus Building 41 Connaught Road Central Auditor Hong Kong PricewaterhouseCoopers Directors of the Sub-Investment Manager P.O. Box 258 George Town Mr Cheah Cheng Hye Grand Cayman, KY1-1104 Mr Ho Man Kei, Norman Cayman Islands Mr So Chun Ki Louis Information available from: Trustee, Registrar, Administrator and Principal Office Sensible Asset Management Limited 9th Floor, Nexxus Building Bank of Bermuda (Cayman) Limited 41 Connaught Road Central P.O. Box 513 Hong Kong HSBC House 68 West Bay Road Telephone : (852) 2868 6848 Grand Cayman KY1-1106 Fax : (852) 2810 9948 Cayman Islands Email : [email protected] Website : www.valuepartners.com.hk Registrar’s Agent, Administrator’s Agent and Custodian HSBC Institutional Trust Services (Asia) Limited 1 Queen’s Road Central Hong Kong

 SEMI-ANNUAL REPORT 2 0 1 2 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2 0 1 2 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

MANAGER’S REPORT

The second quarter of 2012 saw a lack of good news for the market. The euro crisis was worsening, and the Chinese economic slowdown turned out to be deeper and more severe than widely expected. As a result, the stockmarkets, especially the -related markets dropped significantly. Moving into the third quarter, global markets generally saw a rebound by the end of September, thanks to actions taken by central banks to inject more liquidity to stimulate the stalling economy. Easing policies taken by the US, the European Central Bank and have brought positive impact on markets and across asset classes. Early signs indicate that investors are beginning to put their money back to work – for the first time since February this year, all asset classes saw net inflow by the end of September, and foreign investors have injected US$6.8 billion into Asia-Pacific equity markets.

This year has seen a longer winter for value investing, when bottom-up stock-picking is put to severe test. But we remain confident in our approach and that eventually our persistence and discipline in the value strategy will be rewarded in the harvest period. In fact, in China where we have been conducting extensive on-the-ground research, the economy is expected to bottom out soon (if not already bottoming out). In the face of the recent sharper-than-expected slowdown, China is doing whatever it takes to stabilize the economy. The central government has approved nearly RMB1 trillion worth of infrastructure projects spanning across cities, ranging from railway, roads, subways and waterways. Meanwhile, local governments have also announced project plans that amount to RMB11 trillion. Unlike the previous RMB4 trillion stimulus package, these projects are intended to yield long-term benefits for the country. Various measures launched will help sustain growth and help the country’s transition into a consumption- driven society that escapes the middle-income trap.

Domestic consumption in has remained resilient against the gloomy external environment, with its retail sales growing consistently at above 3.5% year-on-year in July and August. Robust growth of Chinese tourist continues to support the positive consumption sentiment. The booming tourism helps Taiwan to attract foreign investment, as the country has already seen a record-high foreign direct investment of US$2.9 billion this year. 61% of the new investments are put in fields of retail, service and healthcare, which represent the new business opportunities brought by the improving cross-strait relation. The impact of the global macro loosening is believed to be slightly positive to Taiwan in longer term. For foreign investors, Taiwan is attractive not only as an oversold market, but also as one delivering attractive dividend yield compared to its regional peers. The is also well supported by the territory’s fourth largest foreign reserve globally, which is only after China, Japan and Russia.

SEMI-ANNUAL REPORT 2012  FOR THE SIX MONTHS ENDED 3 0 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

MANAGER’S REPORT (Continued)

In Korea, external headwinds continued to weigh on the country’s economy, with GDP growth declining in the review period – from 2.3% in the second quarter to 1.6% in the third quarter. However, the fundamentals of the Korean economy appear resilient, which led to continued capital inflow into the market, which in turn drove the Korean Won to appreciate, with noticeable acceleration following QE3. A stronger currency caused concerns over prospects of Korean exporters, but those focusing on high-end products such as smartphones have not seen slowed growth in terms of sales. With inflation on a down trend, the Bank of Korea cut interest rate in July for the first time in twelve months, due to disappointing data from the US, Eurozone and China in the middle of the year. Private consumption remained resilient, rising at a faster pace in the third quarter at 2.5% compared with the -0.6% in the previous one. For Korea’s export- dependent economy, we only expect export to see a modest trend in the fourth quarter as external weaknesses will likely remain.

Sensible Asset Management Limited 20 November 2012

All performance figures are sourced from HSBC Institutional Trust Services (Asia) Limited and Bloomberg, in USD, NAV to NAV, with dividends reinvested, updated as at 30 September 2012. Performance data is net of all fees.

Investment involves risks. 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 and in companies with medium and small capitalization.

 SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 3 0 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

MANAGER’S REPORT (Continued)

Asia Value Formula Fund NAV per unit = US$9.71 (as at 30 September 2012)

Since launch return compared to index From 15 October 2007 to 30 September 2012

20%

10%

0% -2.9%

-10% -9.0%

-20%

-30%

-40% Asia Value Formula Fund -50% MSCI Asia (ex-Japan) Index

-60%

-70% 10/07 12/07 03/08 06/08 09/08 12/08 03/09 06/09 09/09 12/09 03/10 06/10 09/10 12/10 03/11 06/11 09/11 12/11 03/12 06/12 09/12

Source: HSBC Institutional Trust Services (Asia) Limited and Bloomberg, in USD, NAV to NAV, with dividends reinvested. Performance data is net of all fees.

SEMI-ANNUAL REPORT 2012  FOR THE SIX MONTHS ENDED 3 0 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2012 (UNAUDITED)

30.9.2012 31.3.2012 US$ US$

Assets Financial assets at fair value through profit and loss 7,538,877 15,146,248 Amounts receivable on sales of investments 96,025 247,835 Interest, dividends and other receivables 9,288 60,057 Bank balances 825,213 55,176

Total assets 8,469,403 15,509,316

Liabilities Amounts payable on redemption of units 859,740 250,750 Amounts payable on purchase of investments – 5,240 Management fee payable 10,810 20,126 Accruals and other payables 29,992 40,700

Total liabilities 900,542 316,816

Net assets attributable to unitholders 7,568,861 15,192,500

Represented by: – Net assets attributable to unitholders (at last traded prices) 7,592,313 15,226,871 – Adjustment for different bases adopted by the Fund in arriving at the net assets attributable to unitholders (23,452 ) (34,371 )

7,568,861 15,192,500

Net asset value per unit with 782,298.76 (31.3.2012: 1,527,596.42) units outstanding 9.71 9.97

 SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securities

China China International Marine Containers (Group) Co Ltd – B Shares 31,691 39,483 0.52

Hong Kong Agile Property Holdings Ltd 40,000 44,986 0.59 Agricultural Ltd – H Shares 361,054 140,631 1.86 Anta Sports Products Ltd 46,000 35,300 0.47 Co Ltd – H Shares 150,862 102,151 1.35 Bank of China Ltd – H Shares 359,763 136,880 1.81 BOC Hong Kong (Holdings) Ltd 25,516 80,956 1.07 Cheung Kong Infrastructure Holdings Ltd 10,000 60,489 0.80 China BlueChemical Ltd – H Shares 38,000 22,398 0.30 China CITIC Bank Corporation Ltd – H Shares 204,373 96,473 1.27 China Coal Energy Co Ltd – H Shares 106,432 97,050 1.28 China Communications Construction Co Ltd – H Shares 103,912 83,896 1.11 China Merchants Bank Co Ltd – H Shares 81,010 136,035 1.80 China Minsheng Banking Corporation Ltd – H Shares 124,757 98,152 1.30 China Petroleum & Chemical Corporation – H Shares 146,886 137,158 1.81 China Resources Cement Holdings Ltd 50,000 29,148 0.38 China Yurun Food Group Ltd 31,000 22,190 0.29 Chongqing Rural Commercial Bank Co Ltd – H Shares 52,000 20,388 0.27 Citic Pacific Ltd 37,000 44,285 0.59 Country Garden Holdings Co Ltd 142,602 55,728 0.74 First Pacific Co Ltd 34,000 36,879 0.49 Hang Seng Bank Ltd 5,390 82,656 1.09 Hopewell Holdings Ltd 8,725 30,158 0.40 Huabao International Holdings Ltd 46,000 26,104 0.34 Jiangxi Copper Co Ltd – H Shares 34,332 86,788 1.15 Kerry Properties Ltd 10,000 50,300 0.66 Kingboard Chemical Holdings Ltd 16,127 38,604 0.51

SEMI-ANNUAL REPORT 2012  FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

Hong Kong (Continued) Lifestyle International Holdings Ltd 17,500 35,977 0.48 MGM China Holdings Ltd 12,400 21,366 0.28 MTR Corporation 21,231 80,094 1.06 Power Assets Holdings Ltd 10,109 85,725 1.13 Shougang Fushan Resources Group Ltd 144,000 38,630 0.51 Sino Land Co Ltd 40,728 75,851 1.00 SOHO China Ltd 45,000 27,684 0.37 Swire Pacific Ltd – A Shares 6,480 79,396 1.05 Wharf Holdings Ltd, The 12,245 84,571 1.12 Wynn Macau Ltd 22,672 60,967 0.81

2,386,044 31.54

Indonesia Adaro Energy Tbk PT 183,118 28,289 0.38 Indo Tambangraya Megah Tbk PT 9,199 40,474 0.53 Indofood Sukses Makmur Tbk PT 46,760 27,334 0.36 International Nickel Indonesia Tbk PT 82,000 25,036 0.33 Perusahaan Gas Negara PT 101,552 42,667 0.56 Tambang Batubara Bukit Asam Persero Tbk PT 19,384 32,779 0.43 Telekomunikasi Indonesia Tbk PT 84,499 82,911 1.10 United Tractors Tbk PT 25,000 53,888 0.71

333,378 4.40

 SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

Malaysia Alliance Financial Group BHD 41,100 54,863 0.72 AMMB Holdings BHD 41,500 86,007 1.14 Hong Leong Bank BHD 15,000 65,502 0.87 Hong Leong Financial Group Berhad 5,900 22,837 0.30 Parkson Holdings BHD 38,900 61,067 0.80 RHB Capital BHD 17,764 41,743 0.55 UMW Holdings BHD 15,800 51,309 0.68

383,328 5.06

Philippines Aboitiz Equity Ventures Inc 31,800 36,924 0.49 Aboitiz Power Corporation 39,200 31,298 0.41 Alliance Global Group Inc 79,200 27,835 0.37

96,057 1.27

Singapore ComfortDelGro Corporation Ltd 34,355 47,966 0.63 DBS Group Holdings Ltd 4,994 58,635 0.77 Golden Agri-Resources Ltd 126,000 67,900 0.91 Jardine Cycle & Carriage Ltd 1,000 39,273 0.52 Keppel Corporation Ltd 5,000 46,540 0.61 Keppel Land Ltd 18,011 51,765 0.68 Oversea-Chinese Banking Corporation Ltd 7,999 61,001 0.81 United Overseas Bank Ltd 3,553 57,005 0.75 UOL Group Ltd 13,295 61,875 0.82 Yangzijiang Shipbuilding Holdings Ltd 68,362 54,701 0.72

546,661 7.22

SEMI-ANNUAL REPORT 2012  FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

South Korea Daewoo Shipbuilding & Marine Engineering Co Ltd 3,055 71,194 0.94 Dongbu Insurance Co Ltd 1,555 67,578 0.89 GS Engineering & Construction Corporation 788 54,311 0.72 GS Holdings Corporation 1,314 78,859 1.04 Honam Petrochemical Corporation 406 96,806 1.28 Hyundai Development Co 1,556 31,151 0.41 Hyundai Engineering & Construction Co Ltd 1,795 108,856 1.44 Hyundai Heavy Industries Co Ltd 619 140,353 1.85 Hyundai Hysco Co Ltd 969 41,152 0.54 Hyundai Marine & Fire Insurance Co Ltd 1,384 42,962 0.57 Hanwha Life Insurance Co Ltd 5,390 37,440 0.49 KP Chemical Corporation 2,880 34,076 0.45 KT Corporation 675 21,348 0.28 Mando Corporation 280 38,672 0.51 Samsung Heavy Industries Co Ltd 3,477 117,788 1.56 Shinhan Financial Group Co Ltd 3,936 134,222 1.77 S-Oil Corporation 1,211 114,955 1.52 SK Holdings Co Ltd 686 95,981 1.27 SK Telecom Co Ltd 271 35,722 0.47 Woori Finance Holdings Co Ltd 8,606 84,790 1.13

1,448,216 19.13

1 0 SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

Taiwan Advanced Semiconductor Engineering Inc 66,138 50,879 0.67 Advantech Co Ltd 8,020 29,138 0.38 Asustek Computer Inc 7,864 85,178 1.13 Cheng Uei Precision Industry Co Ltd 14,139 33,812 0.45 Chicony Electronics Co Ltd 14,679 34,503 0.46 31,000 29,876 0.39 Chinatrust Financial Holding Co Ltd 140,675 84,704 1.12 Inc 66,000 59,216 0.78 Farglory Land Development Co Ltd 19,000 35,455 0.47 Feng Hsin Iron & Steel Co Ltd 18,000 31,010 0.41 Fubon Financial Holding Co Ltd 69,535 75,553 1.00 Co Ltd 5,000 35,650 0.47 HTC Corporation 7,634 73,962 0.98 Inventec Co Ltd 86,940 33,960 0.45 Kinsus Interconnect Technology Corporation 10,000 29,373 0.39 LCY Chemical Corporation 21,000 30,483 0.40 Lite-On Technology Corporation 22,230 28,666 0.38 Macronix International Co Ltd 77,848 25,920 0.34 MStar Semiconductor Inc 3,000 24,051 0.32 Novatek Microelectronics Corporation 11,994 43,167 0.57 POU Chen Corporation 22,000 22,441 0.30 Powertech Technology Inc 14,247 27,363 0.36 Inc 24,469 64,693 0.85 Semiconductor Corporation 14,050 27,800 0.37 RichTek Technology Corporation 4,567 27,187 0.36 Simplo Technology Co Ltd 5,500 32,929 0.44 Corporation 43,000 53,103 0.70 Teco Electric & Machinery Co Ltd 48,000 33,159 0.44 TPK Holding Co Ltd 2,000 26,234 0.35 Transcend Information Inc 10,000 27,019 0.36 TSRC Corporation 12,719 28,204 0.37

SEMI-ANNUAL REPORT 2012 1 1 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

Taiwan (Continued) Tung Ho Steel Enterprise Corporation 27,000 27,587 0.36 Unimicron Technology Corporation 24,000 28,492 0.38 United Microelectronics Corporation 145,822 60,691 0.79 Wistron Corporation 24,300 29,097 0.38

1,390,555 18.37

Thailand Krung Thai Bank PCL (FR) 113,200 64,707 0.85 PTT Exploration & Production PCL (FR) 20,082 105,008 1.39

169,715 2.24

Rights

Krung Thai Bank Pcl (FR) Rts 11 October 2012 41,225 6,695 0.09

Warrants

India Deutsche Bank (Mahindra & Mahindra Ltd) CWts 24 January 2017 4,588 74,489 0.98 Deutsche Bank (Bharat Heavy Electricals Ltd (DMT)) CWts 22 March 2017 13,237 61,377 0.81 Deutsche Bank (Oil & Natural Gas Corp Ltd (NSI)) CWts 17 January 2017 11,269 59,425 0.79 Deutsche Bank (Bank of (DMT) (NSI)) CWts 15 January 2018 5,951 34,772 0.46

1 2 SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2012

% of Holdings Fair value net assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Warrants (Continued)

India (Continued) Deutsche Bank (Canara Bank Ltd (NSI)) CWts 15 April 2021 3,947 31,974 0.42 Deutsche Bank (HCL Technologies Ltd (DMT) (NSI)) CWts 17 January 2017 3,882 42,089 0.56 Deutsche Bank (JSW Steel Ltd (DMT) (NSI)) CWts 15 February 2017 1,886 26,805 0.35 Deutsche Bank (Reliance Infrastructure Ltd (NSI)) CWts 21 March 2017 2,571 25,952 0.34 Macquarie Bank (Sesa Goa Ltd (NSI)) CWts 10 December 2014 8,390 27,170 0.36 Macquarie Bank (Aditya Birla Nuvo Ltd (DMT) (NSI)) CWts 13 July 2015 1,910 32,451 0.43 Macquarie Bank (Bank of Baroda (NSI)) CWts 13 May 2014 1,892 28,550 0.38 Macquarie Bank (Gail India Ltd 7 (DMT) (NSI)) CWts 9 January 2015 9,158 66,304 0.88 Macquarie Bank (Hindalco Industries Ltd (DMT) (NSI)) CWts 3 February 2014 25,116 57,264 0.75 Macquarie Bank (State Bank of India (NSI)) CWts 9 January 2015 2,084 88,320 1.17 Macquarie Bank (Tata Steel Ltd (DMT) (NSI)) CWts 9 January 2015 10,792 81,803 1.08

738,745 9.76

Total investments 7,538,877 99.60

Total investments, at cost 6,938,631

SEMI-ANNUAL REPORT 2012 1 3 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 ASIA VALUE FORMULA FUND (A Cayman Islands Unit Trust)

INVESTMENT PORTFOLIO MOVEMENTS FOR THE PERIOD ENDED 30 SEPTEMBER 2012 (UNAUDITED)

% of net assets 30.9.2012 31.3.2012

Listed equity securities China 0.52 1.79 Hong Kong 31.54 32.81 Indonesia 4.40 5.23 Malaysia 5.06 4.91 Philippines 1.27 1.45 Singapore 7.22 7.59 19.13 19.48 Taiwan 18.37 15.79 Thailand 2.24 1.19

89.75 90.24

Rights 0.09 –

Warrants India 9.76 9.23

9.76 9.23

Total investments 99.60 99.47

1 4 SEMI-ANNUAL REPORT 2012 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012