VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series SEMI-ANNUAL 2016 REPORT For the six months ended 30 June 2016 Value Partners Hong Kong Limited 9th Floor, Nexxus Building 41 Connaught 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 shares 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 CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) CONTENTS

Pages

General information 2-3

Manager’s report 4-6

Statement of financial position (unaudited) 7

Investment portfolio (unaudited) 8-9

Investment portfolio movements (unaudited) 10

SEMI-ANNUAL REPORT 2016 For the six months ended 30 June 2016 1 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) GENERAL INFORMATION

Manager Legal Advisors Value Partners Hong Kong Limited With respect to Hong Kong law 9th Floor, Nexxus Building Simmons & Simmons 41 Connaught Road Central 13th Floor One Pacific Place Hong Kong 88 Queensway Hong Kong Directors of the Manager Dato’ Seri Cheah Cheng Hye With respect to U.S. law Mr. Ho Man Kei, Norman Morgan, Lewis & Bockius LLP Mr. So Chun Ki Louis 101 Park Avenue New York Trustee and Registrar New York 10178 HSBC Institutional Trust Services (Asia) Limited United States of America 1 Queen’s Road Central Hong Kong Information available from: Value Partners Hong Kong Limited Custodian 9th Floor, Nexxus Building The Hongkong and Shanghai Banking 41 Connaught Road Central Corporation Limited Hong Kong 1 Queen’s Road Central Hong Kong Investor hotline : (852) 2143 0688 Fax : (852) 2565 7975 PRC Custodian Email : [email protected] HSBC Bank (China) Company Limited Website : www.valuepartners-group.com 33/F, HSBC Building, Shanghai IFC 8 Century Avenue, Pudong Shanghai 200120 China

Auditor PricewaterhouseCoopers 21st Floor, Edinburgh Tower 15 Queen’s Road Central Hong Kong

SEMI-ANNUAL REPORT 2016 2 For the six months ended 30 June 2016 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) GENERAL INFORMATION (Continued) Recent awards and achievements

Corporate awards

2016 • The Asset Triple A, Asset Servicing, Investor and Fund Management Awards 2016 Asset Management Company of the Year (Hong Kong) Value Partners – Highly Commended Fund House – The Asset • Asset Management Awards 2016 Fund House of the Year – Hong Kong – AsianInvestor • Asset Management Awards for Excellence 2016 Best Fund Provider – Greater China Equity – Asian Private Banker • Thomson Reuters Lipper Fund Awards 2016 Best Equity Group (Hong Kong) – Thomson Reuters • 2015 Best of the Best Performance Awards Value Partners: 20-Year Award for Greater China – Asia Asset Management • 2015 Best of the Best Regional Awards Value Partners: Longevity Awards – Best Asset Management House over the last 20 Years (Co-Winner) – Asia Asset Management • International Financial Annual Champion Awards 2015 Value Partners: Best Asset Management Service Provider – SEEC and Hexun.com

SEMI-ANNUAL REPORT 2016 For the six months ended 30 June 2016 3 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) MANAGER’S REPORT Growth opportunities are scarce

The world is sailing into uncharted waters. The Brexit shock has come at a time when the global economy is struggling with weak economic and profits growth. The British vote against more integrated global markets shows that protectionism and social unrest remain an elevated investment risk. As a result, we expect further pressure on global trade and a knock off impact on the global economy. We have entered an extended period of uncertainty, which now weighs not only on the developing countries but also the developed world.

It’s time to look at China again

Amongst all the major economies around the world, China is one of the very few that is still growing at a decent pace of 6% per annum. Despite the moderation in growth from its peak, we don’t believe China is entering into an economic hard-landing or debt driven crisis. Social stability in China is relatively intact, and the government is carefully walking a tightrope between managing growth and pressing ahead with structural reforms.

As for the vulnerabilities from Brexit, the business of most Chinese companies should not be fundamentally affected, given the UK is not a particularly important economy for China in terms of foreign direct investment and trade. UK represents only 3% of China’s exports, and demand for Chinese products are unlikely to dry up due to Brexit. In the unlikely case of economic fallout, the government continues to have tools to respond with fiscal stimulus.

Despite MSCI’s delay in China A-shares inclusion, the mid to long-term strategy is still to play on China’s increasing presence in the global markets. It is only a matter of time that China opens up for foreign investors, and as one of the largest equity markets in the world it will be a market that they cannot ignore. For bargain hunters, China-related stocks can be very attractive in the current global environment, where there is a shortage of good investment opportunities around the world.

Those who bet against RMB were proven wrong

Brexit may make it more difficult for China to maintain a stable currency. It is believed that the pound sterling and Euro make up 3.9% and 21.5% of China’s currency basket, respectively; as these two currencies weaken sharply in response to Brexit, it would drag the RMB down against the dollar, which is not helpful to Beijing’s combat of capital outflow. It is likely that the People’s Bank of China would resort to intervention to stabilize the RMB, and it has the resources to do so. One can recall that during the global financial crisis of 2008 the Chinese leadership were able to insulate China from the crisis with various forceful measures. The punters are likely to remain wrong.

Value investors’ long winter may be passing

Value Partners China A-Share Select Fund declined by 10.7% in the first six months up to the end of June 2016. For reference, in the same period, Shanghai Composite Index dropped 17.2% and CSI 300 Index was down 14.7%.

SEMI-ANNUAL REPORT 2016 4 For the six months ended 30 June 2016 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) MANAGER’S REPORT (Continued)

2016 continues the trend of a long 5-year winter for the value investment style. Since the last quarter of 2011, the growth style has outperformed the value style in China-related stockmarkets most of the time1. In a risk-off mode, investors tend to look for opportunities that are priced at attractive level with higher safety margin. The negative global investment sentiment towards China has driven its valuation to near crisis level: MSCI China is trading at a forward price-to-book ratio of 1.3 times against a 10-year average of 1.9 times as at end June 2016. The current risk aversion environment may actually trigger a reversal and bring the value style back in favour.

Market outlook

The second quarter remained a challenging period for Chinese equities. Investors focused more on macro concerns than companies’ fundamentals, as an “authoritative person” spoke to a leading China media about the L-shaped China economy outlook and temper market expectations for a large stimulus program. The heightened uncertainty in policy direction led to broad-based market weakness.

In the wake of growing concerns on economic outlook, our portfolio focused on companies with sustainable earnings growth and solid return-on-equity at attractive valuations. Sectors that are sensitive to macro systemic risks were avoided.

We remained nimble in our positioning and continued to strike balances between “old” and “new” economy sectors. There are attractive values amidst broad-based market weakness, and we are confident that companies with fundamental strengths will revive in the challenging environment.

Value Partners Hong Kong Limited 19 August 2016

1. Based on Bloomberg data: MSCI China Growth Index Total Return was 34.8% and MSCI China Value Index Total Return was 27.8% respectively in the period of 30 September 2011 to 30 June 2016.

All performance figures are sourced from The Hong Kong and Shanghai Banking Corporation Limited and Bloomberg, (in RMB, NAV to NAV, with dividends reinvested) as at 30 June 2016. Performance data is net of all fees.

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 material has 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 that investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. This commentary has not been reviewed by the Securities and Futures Commission. Issuer: Value Partners Hong Kong Limited.

SEMI-ANNUAL REPORT 2016 For the six months ended 30 June 2016 5 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) MANAGER’S REPORT (Continued) Value Partners China A-Share Select Fund – NAV as at 30 June 2016

Classes NAV per unit Class A RMB (CNH) CNH11.82 Class A USD Unhedged USD10.99 Class A USD Hedged USD11.06 Class A HKD Unhedged HKD11.01 Class A HKD Hedged HKD11.14 Class A GBP Unhedged GBP12.05 Class A GBP Hedged GBP10.67 Class A AUD Unhedged AUD10.49 Class A AUD Hedged AUD11.18 Class A CAD Hedged CAD10.44 Class A EUR Unhedged EUR10.77 Class A EUR Hedged EUR11.04 Class A NZD Unhedged NZD9.63 Class A NZD Hedged NZD10.98 Class X RMB CNH13.13

Since launch return compared to index From 16 October 2014 to 30 June 2016 120% Value Partners China A-Share Select Fund (Class A, RMB (CNH)) CSI 300 TR CNY 100%

80%

60%

40% +32.3% 20% +18.2%

0% -20% 10/2014 01/2015 04/2015 07/2015 10/2015 01/2016 06/2016

SEMI-ANNUAL REPORT 2016 6 For the six months ended 30 June 2016 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS AT 30 JUNE 2016

30.6.2016 31.12.2015 CNH CNH Assets Deposits reserve 224,000 224,000 Financial assets at fair value through profit or loss 701,868,909 864,438,433 Amounts receivable from subscription of units 1,404,464 38,637,463 Dividends, interest and other receivables 701,287 833,796 Bank balances 50,907,235 45,254,140

Total assets 755,105,895 949,387,832

Liabilities Financial liabilities at fair value through profit or loss 609,388 28,769 Management fee payable 712,381 904,673 Performance fee payable 566 18,684,936 Trustee fee payable 96,668 120,386 Amounts payable on redemption of units 13,081,913 12,301,894 Accruals and other payables 828,360 1,017,315

Liabilities (excluding net assets attributable to unitholders) 15,329,276 33,057,973

Net assets attributable to unitholders 739,776,619 916,329,859

30.6.2016 31.12.2015 Net asset value per unit – Class A RMB (CNH) with 9,454,929 (31.12.2015: 13,845,730) units outstanding CNH11.82 CNH13.24 – Class A USD Unhedged with 1,085,969 (31.12.2015: 1,362,604) units outstanding USD10.99 USD12.47 – Class A USD Hedged with 2,756,857 (31.12.2015: 2,507,083) units outstanding USD11.06 USD12.60 – Class A HKD Unhedged with 2,376,880 (31.12.2015: 2,570,885) units outstanding HKD11.01 HKD12.48 – Class A HKD Hedged with 10,548,247 (31.12.2015: 11,845,104) units outstanding HKD11.14 HKD12.73 – Class A GBP Unhedged with 39,191 (31.12.2015: 39,191) units outstanding GBP12.05 GBP12.42 – Class A GBP Hedged with 58,721 (31.12.2015: 35,416) units outstanding GBP10.67 GBP12.25 – Class A AUD Unhedged with 4,946 (31.12.2015: 21,996) units outstanding AUD10.49 AUD12.10 – Class A AUD Hedged with 688,046 (31.12.2015: 844,656) units outstanding AUD11.18 AUD12.68 – Class A CAD Hedged with 120,101 (31.12.2015: 167,879) units outstanding CAD10.44 CAD11.92 – Class A EUR Unhedged with 397 (31.12.2015: Nil) units outstanding EUR10.77 - – Class A EUR Hedged with 16,651 (31.12.2015: 16,651) units outstanding EUR11.04 EUR12.68 – Class A NZD Unhedged with 11,541 (31.12.2015: 11,542) units outstanding NZD9.63 NZD11.32 – Class A NZD Hedged with 93,053 (31.12.2015: 124,414) units outstanding NZD10.98 NZD12.46 – Class X RMB with 12,236,224 (31.12.2015: 12,236,224) units outstanding CNH13.13 CNH14.59

SEMI-ANNUAL REPORT 2016 For the six months ended 30 June 2016 7 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) INVESTMENT PORTFOLIO (UNAUDITED) AS AT 30 JUNE 2016

% of net Holdings Fair value assets CNH FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Listed Equity Securities China Aucma Co Ltd 1,000,000 7,050,000 0.95 Beijing Capital Development Co Ltd 2,000,000 22,240,000 3.01 Beijing Hualubaina Film & Tv Co Ltd 600,000 14,118,000 1.91 Beijing Shougang Co Ltd 1,200,000 4,440,000 0.60 China Fortune Land Development Co Ltd 711,600 17,348,808 2.34 China International Travel Service Corp Ltd 356,200 15,665,676 2.12 China Merchants Securities Co Ltd 1,707,338 28,171,077 3.81 China Nuclear Engineering Group Co 1,000 20,920 0.00 China Pacific Insurance (Group) Co Ltd 745,450 20,156,968 2.72 China Sports Industry Group Co Ltd 1,069,500 18,983,625 2.57 China Co Ltd 1,950,100 39,197,010 5.30 China Yangtze Power Co Ltd 1,756,800 21,942,432 2.97 Dhc Software Co Ltd 1,155,972 23,813,023 3.22 Fuyao Group Glass Industry Co Ltd 1,854,700 25,965,800 3.51 Inc 1,126,800 32,316,624 4.37 Hangzhou Digital Technology Co Ltd 1,713,750 36,777,075 4.97 Huadong Medicine Co Ltd 211,300 14,241,620 1.93 Huasu Holdings Co Ltd 1,000,000 6,140,000 0.83 Inner Mongolia Yili Industrial Group Co Ltd 1,641,800 27,368,806 3.70 Jangho Group Co Ltd 1,999,937 20,539,353 2.78 Jiangsu Hengrui Medicine Co Ltd 658,920 26,429,281 3.57 Kweichow Moutai Co Ltd 189,700 55,377,224 7.49 NARI Technology Co Ltd 1,623,647 21,708,160 2.93 New China Life Insurance Co Ltd 364,018 14,706,327 1.99 Ping An Insurance (Group) Co of China Ltd 1,148,202 36,788,392 4.97 Poly Real Estate Group Co Ltd 3,042,600 26,257,638 3.55 Tasly Pharmaceutical Group Co 624,560 22,334,266 3.02 Vatti Corp Ltd 1,777,060 43,502,429 5.88 Co Ltd 678,100 22,058,593 2.98 ZTE Corp 1,651,800 23,686,812 3.20

689,345,939 93.19

SEMI-ANNUAL REPORT 2016 8 For the six months ended 30 June 2016 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 30 JUNE 2016

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

Debt Securities Shanghai Baosteel Group (REG) Conv 1.5% 10 Dec 2017 7,701,000 8,942,660 1.21 Shanghai Electric Group (REG) Conv STP 02 Feb 2021 426,000 461,272 0.06

9,403,932 1.27 Currency Forwards 3,119,038 0.42

Total financial assets at fair value through profit or loss 701,868,909 94.88

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Currency Forwards (609,388) (0.08)

Total financial liabilities at fair value through profit or loss (609,388) (0.08)

Total investments, net 701,259,521 94.80

Total investments, at cost 658,653,721

SEMI-ANNUAL REPORT 2016 For the six months ended 30 June 2016 9 VALUE PARTNERS CHINA A-SHARE SELECT FUND A Sub-fund of Value Partners Fund Series (A Hong Kong umbrella unit trust) INVESTMENT PORTFOLIO MOVEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2016

% of net assets 30.6.2016 31.12.2015 Listed equity securities China 93.19 92.76 Debt securities 1.27 1.37 Currency forwards 0.34 0.21

Total investments, net 94.80 94.34

SEMI-ANNUAL REPORT 2016 10 For the six months ended 30 June 2016