VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND
ANNUAL REPORT 2015 For the year ended 31 December 2015 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.com.hk
In the event of inconsistency, the English text of this 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 HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
CONTENTS
Pages
General information 2-3
Manager’s report 4-13
Statement of responsibilities of the Manager and the Trustee 14
Trustee’s report 15
Independent auditor’s report 16-17
Statement of financial position 18
Statement of comprehensive income 19
Statement of changes in net assets attributable to unitholders 20
Statement of cash flows 21-22
Notes to the financial statements 23-66
Investment portfolio (unaudited) 67-75
Investment portfolio movements (unaudited) 76-77
Performance record (unaudited) 78-80
ANNUAL REPORT 2015 1 For the year ended 31 December 2015 1 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
GENERAL INFORMATION
Manager Legal Advisors Value Partners Limited^ With respect to Cayman Islands law 9th Floor, Nexxus Building Maples and Calder^ 41 Connaught Road Central 53rd Floor, The Center Hong Kong 99 Queen’s Road Central Hong Kong Value Partners Hong Kong Limited# 9th Floor, Nexxus Building With respect to Hong Kong law 41 Connaught Road Central King&Wood Mallesons^ Hong Kong 13th Floor, Gloucester Tower The Landmark Directors of the Manager 15 Queen’s Road Central Dato’ Cheah Cheng Hye Hong Kong Mr Ho Man Kei, Norman Mr So Chun Ki Louis Deacons# 5th Floor, Alexandra House Trustee, Registrar, Administrator, 18 Chater Road and Principal Office Central Bank of Bermuda (Cayman) Limited^ Hong Kong P.O. Box 513 HSBC House Auditor 68 West Bay Road PricewaterhouseCoopers^ Grand Cayman KY1-1106 P.O. Box 259 Cayman Islands George Town Grand Cayman KY1-1104 Custodian, Registrar’s Agent and Cayman Islands Administrator’s Agent HSBC Institutional Trust Services PricewaterhouseCoopers# (Asia) Limited^ 22nd Floor, Prince’s Building 1 Queen’s Road Central 10 Chater Road Hong Kong Central Hong Kong Trustee, Registrar, Administrator, Custodian and Principal Office Information available from: HSBC Institutional Trust Services Value Partners Hong Kong Limited (Asia) Limited# 9th Floor, Nexxus Building 1 Queen’s Road Central 41 Connaught Road Central Hong Kong Hong Kong
Investor hotline : (852) 2143 0688 Fax : (852) 2565 7975 Email : [email protected] Website : www.valuepartners.com.hk
^ Status before 22 April 2016 # Status effective 22 April 2016
ANNUAL REPORT 2015 2 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
GENERAL INFORMATION (Continued)
Recent awards and achievements
Corporate awards
2016 • 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 – Caixin Media and Hexun.com 2015 • China Securities Golden Bauhinia Award – Best Fund House – China Securities Golden Bauhinia Award Organizing Committee and Tai Kung Pao • 2015 – Asia Hedge Fund 25 Value Partners was ranked no. 2 in 2015 and 2014, and was the largest Asian hedge fund firm from 2010 to 2013 – Institutional Investor’s Alpha Magazine, September 2015 • Forbes “Asia’s 200 Best Under A Billion” Value Partners Group was ranked among the top 200 leading listed companies in the Asia-Pacific with annual revenue between US$5 million and US$1 billion – Forbes Asia • The Asset Triple A, Investor and Fund Management Awards 2015 Fund Management Company of the Year (Hong Kong) – The Asset • Asset Management Awards for Excellence 2014/15 Best Fund Provider – China Equity – Asian Private Banker • 2015 Hong Kong’s Best Cross-Border Financial Institutions Outstanding Fund Management Business – Hong Kong Wen Wei Po
Value Partners High-Dividend Stocks Fund
2015 • Thomson Reuters Lipper Fund Awards 2016 Best Asia Pacific ex-Japan Equity (10 Years) – Thomson Reuters • Fund Selector Asia Singapore Awards 2016 Asia Pacific Equity – Platinum Winner – Fund Selector Asia • Asset Management Awards 2015 Best Retail Product – AsianInvestor • Investors Choice Awards 2015 (APAC) Asia ex-Japan Fund – Long Term Performance – HedgePo
ANNUAL REPORT 2015 3 For the year ended 31 December 2015 3 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT
Emerging out of the stockmarket correction in the third quarter of 2015, Asian ex-Japan equities stabilized in the fourth quarter. In the period, market sentiments were largely driven by mixed macro data and Asian central bankers’ policy decisions. Given global economic weaknesses, monetary policies in Asia remained accommodative with China and Taiwan cutting their policy rates during the quarter. We believe the prevailing low-rate environment will continue in Asia and benefit our high-dividend investment theme.
Our high-dividend investment strategy continued to demonstrate defensiveness amid extreme volatility. Value Partners High-Dividend Stocks Fund (the “Fund”) edged down slightly by 3.7% in the 12 months ended 31 December 2015. For reference, the MSCI AC Asia Pacific ex Japan Index was down 9.4% over the same period. Besides outperforming the index, the Fund’s one-, three-, five-, and ten-year returns were all ranked in the first quartile1 among its peers as at 31 December 2015.
China – Moderating growth but not a hard landing
The Chinese stockmarket went through a bumpy ride in 2015 and started the new year with a selling frenzy. The stockmarket suspensions in the first trading week sparked a new wave of global market panics and negative news flow. The current panic selling shows fears over a hard landing in China, as well as doubts that the country has to depreciate the renminbi to boost growth. We think the extreme pessimism is overdone.
It is true that China’s economy has weakened substantially and we continue to see fatigues in the “old economy” sectors – China’s National Bureau of Statistics’ manufacturing PMI remained in contractionary territory for the fifth-straight month in December, pointing to slowing industrial activities in China. However, there are increasing signs that activities may have started to stabilize, e.g. housing prices are steadying and retail sales are strengthening. Besides, new economic indicators including movie box office, the number of airline passengers, auto sales and 4G mobile subscriptions all pointed to an expanding “new economy” in China last year.
ANNUAL REPORT 2015 4 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
China – Moderating growth but not a hard landing (Continued)
While the year 2016 is looking like another volatile year, we believe stimulus spending will continue to support the Chinese economy – monetary policy is expected to stay accommodative in 2016 and the central government is anticipated to step up fiscal effort to stabilize the economy. As the government pushes ahead with the necessary reforms, the “old economy” sectors will continue to drag on China’s growth, and this is perhaps the price to pay for a more sustainable economy in the long term. Because of all the worries, China-related stocks have seldom been this cheap, and stock-pickers like us are spoilt for choice.
Korea – uneven path of recovery
Korean equities remained a key component of our portfolio. After a strong rebound in the third quarter of 2015, Korean equities fluctuated in a narrow range in the fourth quarter as uncertainties over economic growth lingered. Weak exports continued to be a drag on the economy, growing 13.8% in December from a year earlier reflecting the 12th consecutive month of slowing growth. This is attributed largely to lower crude oil prices and sluggish growth in China. Service sector output remained resilient albeit declining manufacturing production, rising 3.1% year-on-year thanks to the rise in financial and insurance activities as well as wholesale and retail trade.
In spite of the challenging external environment, the year 2016 may be a year of opportunity for Korean equities. As the government-led corporate governance reforms prompt companies to improve shareholder return, policies including dividend tax deductions and penalties for cash hoarding are set to be implemented in 2016. In addition, given the consistent current account surplus and low inflation rate, ministries are expected to deliver more monetary and fiscal stimuli to buoy the lagging economy in 2016. For instance, the government has announced plans to frontload 29.2% of its annual spending budget in the first quarter of 2016 to prevent a “consumption cliff”. In conjunction with policy initiatives aiming to boost domestic consumption, such as nationwide sales events and the easing of visa requirements for Chinese tourists, the Korean economy is expected to follow a path of gradual recovery.
ANNUAL REPORT 2015 5 For the year ended 31 December 2015 5 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
ASEAN – still in choppy water
The road ahead for ASEAN countries remains tough given sluggish external demand. We continue to execute caution on the ASEAN stockmarkets as the normalization of US monetary conditions and ongoing economic slowdown in China may pose more pressures on ASEAN currencies and asset prices. Structural issues such as large debt overhangs, deflation pressures and ageing population may further slacken ASEAN growth. As such, the Fund maintained a relatively low exposure to the ASEAN region.
Portfolio strategy
In 2015, our positions in high-quality dividend-paying companies demonstrated resilience amid market volatilities and contributed to the outperformance of the Fund. From a geographical perspective, our higher-than-index exposures in China A shares and South Korea contributed the most to our returns in 2015. Given our defensive positioning during the third quarter, we have trimmed our China A-share positions and increased a few defensive sector plays, which contributed positively when market volatility deepened during the period.
South Korea was the top regional contributor in our portfolio in 2015. Market sentiment was lifted as a series of shareholder-friendly policy initiatives aiming to improve corporate governance and capital return were announced during the period. These included increasing shares buyback, higher dividend payout ratios, and resolving mismatches between the controlling power of corporations and the economic interests of founding families by replacing vertical or circular corporate structures with a horizontal one. Samsung’s decision to increase shareholder returns made headline during November. In the massive shareholder return policy announced, the company pledged to increase shares buyback with a focus on preference shares. The news benefited our holdings in preference shares. Samsung’s announcement raised market anticipation that other companies will follow suit and increase shareholder returns. As a result, preference shares in South Korea rallied, narrowing the discount gap between preference shares and common shares.
ANNUAL REPORT 2015 6 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Portfolio strategy (Continued)
In the Hong Kong and Chinese markets, our position in CK Hutchison (“CKH”) was among the top contributors in 2015. The restructuring and divestiture of its property unit in 2015 is expected to unlock values for the group. CKH’s core business remained strong with steady earnings growth. The group’s ample liquidity and attractive dividend yield also bode well for our dividend strategy. In China’s A-share market, our investment in China Vanke, a leading property developer in China, was our key return contributor in 2015. The relaxation in home purchase policies, together with six interest rate cuts since November 2014 gave a boost to investors’ sentiments towards the sector.
Within the Asian region, we continue to see lackluster environment given the weak external demand, depressed commodity prices, persistent USD strength and pressurized return-on- equities ratios. From a single-country perspective, we see signs of bottoming in selective countries such as Indonesia and Taiwan, while valuations remain demanding in countries such as Malaysia and Thailand. Although we have an underweight call on ASEAN countries, we believe bottom-up opportunities still exist in the region. This calls for our vigorous fundamental research to unveil attractively-priced stocks for our investors.
Going forward, we maintain our views that growth will be scarce in the challenging investment environment and the trajectory of interest rates will stay low globally. As such, yield-seeking will remain a key investment theme which justifies our focus on dividend-paying equities.
Investment case studies – Amorepacific and China Vanke
The Fund continued to invest in Amorepacific, a leading cosmetics company in Korea with over 30% market share. With a comprehensive mix of popular brand names including Sulwhasoo, Laneige, Mamonde, and Iope, we believe the company is set to benefit from the rise of Asian consumers. Through product and customer service innovation, as well as a well-diversified brand and distribution portfolio, the company continued to strengthen its domestic business while achieving rapid overseas expansion with high sales growth in major developing markets including China and the ASEAN region. In addition to the company’s robust outlook, the other reason for our position in Amorepacific is the remarkable returns its preference shares contributed in 2015.
ANNUAL REPORT 2015 7 For the year ended 31 December 2015 7 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Investment case studies – Amorepacific and China Vanke (Continued)
China Vanke is also one of the Fund’s top holdings, a position that was a key contributor for 2015. The company is a leading developer in China with a well-diversified land bank, a strong brand and professional management team. The developer recorded a remarkable 20% annual growth in contracted sales in the first 11 months of 2015 while gearing remained low at 23% as of September 2015. Valuations were persistently low due to tight policy stances in the Chinese property market. We believe the company’s valuation has reached an attractive level. The company’s A shares were up 90% during the fourth quarter of 2015, driven by equity acquisitions under a hostile take-over attempt by Baoneng Group. Trading of the stock was later suspended due to a material asset restructuring plan announced on 18 December 2015. We took profit and exited all our A-share holdings in China Vanke before the trade suspension was effective.
A brief note on fixed income
In the fourth quarter of 2015, China credits outperformed the market as multiple rounds of policy easing targeted towards the housing sector started to revive the property market. During the period, both the average sales price (“ASP”) and sales volume started to pick up which has buoyed property credits. As the credit market had already shown strong performance in 2015, our strategy’s focus will be primarily in the stockmarket.
Corporate update
Value Partners continued its growth story in 2015, with our assets under management increased 21% to US$15.6 billion as of 31 December 2015 from a year earlier. Our growth in size has provided us with the necessary resources to strengthen our investment management team and enhance our infrastructure to create more value for our investors. Today, we are running an on-the-ground investment management team in Asia with over 60 professionals uncovering attractively valued stocks that are neglected by the market.
On top of winning support from our investors, Value Partners has won 20 new awards in 2015, extending our list of accolades to close to 120 since our establishment in 1993. To name a few, the company was awarded “Best Fund House” by the “China Securities Golden Bauhinia Awards 2015”; our company’s investment capabilities in Asia ex-Japan Equity have also won us the “Outstanding Achiever” title in the “Benchmark Fund of the Year Awards 2015”.
ANNUAL REPORT 2015 8 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Corporate update (Continued)
As we venture into 2016, we’d like to express our heartfelt gratitude to our investors who have been with us albeit market volatilities. We look forward to achieve another year of outperformance for our investors through our unwavering dedication to value investing disciplines.
Value Partners Hong Kong Limited 22 April 2016
1 Based on performance data as of 31 December 2015, among peer funds under Asia ex Japan Equity Morningstar Category.
Fund performance mentioned is referred to Value Partners High-Dividend Stocks Fund (Class A1). All performance figures are sourced from HSBC Institutional Trust Services (Asia) Limited and Bloomberg (Data computed in US$ terms on NAV-to-NAV basis with dividends reinvested) as at 31 December 2015. Performance data is net of all fees.
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 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.
ANNUAL REPORT 2015 9 For the year ended 31 December 2015 9 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Value Partners High-Dividend Stocks Fund: 10 biggest holdings of securities as at 31 December 2015
Valuation Stock Industry (2016 Estimates) Remarks Amorepacific Corp Cosmetics Price: Amorepacific is a leading cosmetics company in Korea (Code: 090435 KS) manufacturer KRW230,000.00 with over 30% market share. Key popular brands built by Preferred shares P/E: 18.8x the company include Sulwhasoo, Laneige, Mamonde, and P/B: 3.8x Iope. Amorepacific has an efficient channel mix including Market cap: Yield: 0.7% department stores, high-margin duty free shops (“DFS”) US$2.1 billion and digital channel. Through product and customer service innovation, as well as a well-diversified brand and distribution portfolio, the company has continued to strengthen its domestic business while achieving rapid overseas expansion with high sales growth in major growing markets including China and the ASEAN region. Bank of China Banks Price: HKD3.46 Bank of China is one of the big four state-owned banks in (Code: 3988 HK) P/E: 4.9x China, with advantages in international and forex-related P/B: 0.7x business. With 27.4% of its assets (in FY14) already Market cap: Yield: 6.5% exposed to fully deregulated interest rates and relatively US$167.6 billion more diversified income streams, it is better prepared to compete in an increasingly liberalized domestic market. China Construction Banks Price: HKD5.31 China Construction Bank (“CCB”) ranks second in China in Bank P/E: 4.6x terms of assets and deposits. Conservatively managed, CCB (Code: 939 HK) P/B: 0.7x has controlled risk weighted asset growth and built up loan Yield: 7.1% loss provision buffers over the past two years. It is one of Market cap: the best capitalized banks in the country. US$173.3 billion China Life Insurance Insurance Price: HKD25.05 China Life Insurance (“China Life”), together with its (Code: 2628 HK) P/EV*: 1.0x subsidiaries, is the largest integrated insurer in China. It has Yield: 2.4% the most extensive distribution and service network among Market cap: all insurance companies in China, covering life insurance, US$114.9 billion property and casualty insurance, pension plans (corporate annuity), asset management and industrial investment. Following its management’s efforts to scale down bancassurance and focus on growing agency over the past few years, China Life is finally able to execute on its much needed changes and restore its growth profile. Meanwhile, it is expected to benefit from better investment returns and improving business performance amidst rate cut cycles.
ANNUAL REPORT 2015 10 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Value Partners High-Dividend Stocks Fund: 10 biggest holdings of securities as at 31 December 2015 (Continued)
Valuation Stock Industry (2016 Estimates) Remarks China Overseas Real Estate Price: HKD27.20 China Overseas Land & Investment Ltd (“COLI”) operates Land & Investment P/E: 6.6x in three segments: property development, property (Code: 688 HK) P/B: 1.0x investment and other operations. As at end of June 2015, the Yield: 3.0% company has a comprehensive land bank of 40.74 million Market cap: square meters. China’s property sales value regained US$34.6 billion traction in 2015. In addition, the Chinese government named destocking the property sector as an important policy goal in 2016, both factors are favorable to the company’s performance. CK Hutchison Conglomerate Price: HKD104.60 CK Hutchison (“CKH”) is a leading Hong Kong-based (Code: 1 HK) P/E: 10.7x multi-national conglomerate which operates in over 50 P/B: 0.8x countries. In 2015, the company completed a reorganization Market cap: Yield: 3.1% which allows it to hold all the non-property business US$52.1 billion of property developer Cheung Kong Holdings and conglomerate Hutchison Whampoa Limited, while spinning off the real-estate assets into a separate company. The restructuring will increase operational efficiency and reduce unnecessary layering within the group, hence unlocking valuation of its property business which is trading at a discount versus its peers. Dividend payout of the company is also expected to see a gradual increase in the coming years. Gree Electric Air conditioner Price: CNY22.35 Gree Electric Appliances (“Gree Electric”) is the top leader Appliances manufacturer P/E: 7.8x of air conditioning brand in China with its own production (Code: 000651 CH) P/B: 2.1x capacity, research and development center and large-scale Yield: 6.4% sales distribution network. The company’s strong and Market cap: innovative research and development capabilities enable US$20.7 billion it to launch new products which are well received by the market, helping it to maintain its leading market position. In the foreseeable future, we believe the company is well- positioned to remain a strong leader in the industry. Longfor Properties Real Estate Price: HKD11.56 Longfor Properties Co. Ltd. (“Longfor Properties”) is (Code: 960 HK) P/E: 7.6x an investment holding company. Its subsidiaries are P/B: 1.0x principally engaged in property development, property Market cap: Yield: 3.0% investment and property management businesses in China. US$8.7 billion As a demonstration of the company’s financial strength, in November 2015, Longfor Properties successfully issued the third tranche of RMB 2 billion domestic corporate bonds with a term of 7 years and a coupon rate of 4.08%, setting a record low coupon rate for corporate bonds of the same tenor issued. China’s property market stabilized over the course of 2015, providing support for the company’s business performance.
ANNUAL REPORT 2015 11 For the year ended 31 December 2015 11 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Value Partners High-Dividend Stocks Fund: 10 biggest holdings of securities as at 31 December 2015 (Continued)
Valuation Stock Industry (2016 Estimates) Remarks Samsung Electronics Electronics Price: Samsung Electronics (“SEC”) is a global leading producer (Code: 005935 KS) manufacturer KRW1,091,000.00 of semiconductors, display panels, handsets, monitors, Preferred shares P/E: 7.7x and TVs and generates superior profit margins compared P/B: 0.9x to its peers. SEC has a solid balance sheet with more than Market cap: Yield: 2.8% KRW50 trillion (or over 30% of its equity) in net cash while US$21.1 billion generating solid free cash flow annually. Its continuous investment in research and development to maintain its market leadership position will help it compete amid ongoing changes in the industry. Samsung Fire & Insurance Price: Samsung Fire & Marine Insurance (“SFM”) has been a Marine Insurance KRW189,000.00 leader in the non-life insurance industry in Korea with a (Code: 000815 KS) P/E: 9.8x dominant market share backed by strong capital position. Preferred shares P/B: 0.8x The company offers auto, long-term insurance products, as Yield: 3.3% well as other commercial lines products such as fire, marine Market cap: and casualty insurance. With ongoing deregulation on US$0.5 billion product development and pricing sets to benefit the overall insurance industry in Korea, we believe strong capital position with prudent pricing track record will remain the key competitive advantage of SFM.
* EV = Embedded value
Note: The above investments made up 26.7% of Value Partners High-Dividend Stocks Fund as at 31 December 2015. The stock prices are based on the closing of 31 December 2015.
Individual stock performance/yield is not necessarily indicative of overall fund performance.
ANNUAL REPORT 2015 12 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
MANAGER’S REPORT (Continued)
Value Partners High-Dividend Stocks Fund – NAV as at 31 December 2015
Classes NAV per unit A1 USD USD71.86 A1 HKDß (for reference only) HKD556.9222 A2 MDis USD USD10.56 Z USD USD11.44 A2 MDis HKD HKD9.61 A2 MDis AUD Hedged AUD9.53 A2 MDis CAD Hedged CAD9.57 A2 MDis GBP Hedged GBP9.04 A2 MDis NZD Hedged NZD9.69 A Acc RMB Hedged RMB9.81 A Acc RMB Unhedged RMB11.65 A2 MDis RMB Hedged RMB9.01 A2 MDis RMB Unhedged RMB9.28
Since launch return compared to index From 2 September 2002 to 31 December 2015 900% Value Partners High-Dividend Stocks Fund 800% MSCI Asia Paci c (ex-Japan) Total Return Index 700%
600% +626.1%
500%
400%
300% +265.6% 200%
100%
0%
-100% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ß Investors should note that the base currency of the Fund is in USD. The HKD equivalent NAV per unit for the Fund is for reference only and should not be used for subscription or redemption purpose. Conversion to the base currency of the Fund will normally take place at the prevailing rate (as determined by the Fund’s trustee or Custodian) on the corresponding fund dealing day.
ANNUAL REPORT 2015 13 For the year ended 31 December 2015 13 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
STATEMENT OF RESPONSIBILITIES OF THE MANAGER AND THE TRUSTEE
Manager’s responsibilities
The Manager, Value Partners Hong Kong Limited, is required by the Code on Unit Trusts and Mutual Funds established by the Securities and Futures Commission of Hong Kong and the Trust Deed dated 7 August 2002 (as amended) and Deed of retirement and appointment of Manager dated 31 March 2016 to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of Value Partners High-Dividend Stocks Fund (the “Fund”) at the end of that period and of the transactions for the period then ended. In preparing these financial statements, the Manager is required to:
• select suitable accounting policies and then apply them consistently; • make judgements and estimates that are prudent and reasonable; and • prepare the financial statements on the basis that the Fund will continue in operation unless it is inappropriate to presume this.
The Manager is also required to manage the Fund in accordance with the Trust Deed dated 7 August 2002 (as amended) and Deed of retirement and appointment of Manager dated 31 March 2016 and take reasonable steps for the prevention and detection of fraud and other irregularities.
Trustee’s responsibilities
The Trustee, HSBC Institutional Trust Services (Asia) Limited, is required to:
• ensure that the Fund is managed by the Manager in accordance with the Trust Deed dated 7 August 2002 (as amended) and Deed of retirement and appointment of Manager dated 31 March 2016 and that the investment and borrowing powers are complied with; • satisfy itself that sufficient accounting and other records have been maintained; • safeguard the property of the Fund and rights attaching thereto; and • report to the unitholders for each annual accounting period on the conduct of the Manager in the management of the Fund.
ANNUAL REPORT 2015 14 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
TRUSTEE’S REPORT
We hereby confirm that, in our opinion, the Manager, Value Partners Hong Kong Limited, has, in all material respects, managed Value Partners High-Dividend Stocks Fund in accordance with the provisions of the Trust Deed dated 7 August 2002 (as amended) and Deed of retirement and appointment of Manager dated 31 March 2016 for the year ended 31 December 2015.
For and on behalf of HSBC Institutional Trust Services (Asia) Limited
Trustee 22 April 2016
ANNUAL REPORT 2015 15 For the year ended 31 December 2015 15 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE OF VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
Report on the financial statements
We have audited the accompanying financial statements of Value Partners High-Dividend Stocks Fund (the “Fund”) set out on pages 18 to 66, which comprise the statement of financial position as at 31 December 2015, and the statement of comprehensive income, statement of changes in net assets attributable to unitholders and statement of cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
The Trustee and the Manager (the “Management”) of the Fund are responsible for the preparation and fair presentation of financial statements in accordance with International Financial Reporting Standards, and are responsible for ensuring that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the Trust Deed dated 7 August 2002 (as amended) (the “Trust Deed”) and Appendix E of the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission of Hong Kong (the “SFC Code”), and for such internal control as the Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. We are also required to assess whether the financial statements of the Fund have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Trust Deed and the SFC Code.
ANNUAL REPORT 2015 16 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE OF VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (Continued) (A Cayman Islands Unit Trust)
Auditor’s responsibility (Continued)
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at 31 December 2015, and of its financial transactions and cash flows for the year then ended in accordance with International Financial Reporting Standards.
Report on other legal and regulatory disclosure requirements
In our opinion, the financial statements have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Trust Deed and the SFC Code.
PricewaterhouseCoopers Cayman Islands
22 April 2016
ANNUAL REPORT 2015 17 For the year ended 31 December 2015 17 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015
2015 2014 Note US$ US$
Assets Deposit with broker 189,475,446 289,350 Financial assets at fair value through profit or loss 3(d) 3,907,228,623 2,863,095,918 Amounts receivable on sales of investments 2,057,116 6,821,220 Amounts receivable on issue of units 6,678,712 14,632,640 Dividends, interest receivables and other receivables 1,345,578 2,116,669 Margin deposits 3,763 14,329,390 Bank balances 9,253,310 112,722,352
Total assets 4,116,042,548 3,014,007,539
Liabilities Financial liabilities at fair value through profit or loss 3(d) 20,653,523 51,191,055 Amounts payable on purchase of investments 20,395,592 12,912,009 Amounts payable on redemption of units 9,043,985 10,808,937 Management fees and performance fees payable 4,150,083 31,974,468 Distribution payable 12,689,572 7,327,455 Bank overdrafts 144,435,873 8,575,785 Accruals and other payables 725,964 801,352
Liabilities (excluding net assets attributable to unitholders) 212,094,592 123,591,061
Net assets attributable to unitholders 5 3,903,947,956 2,890,416,478
Signed by: Value Partners Hong Kong Limited, Manager
HSBC Institutional Services (Asia) Limited, Trustee
The notes on pages 23 to 66 are an integral part of these financial statements.
ANNUAL REPORT 2015 18 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014 Note US$ US$ Income Dividends 135,628,802 72,915,539 Interest on bank deposits 46,566 54,919 Net realised gains on investments 111,701,970 27,379,384 Change in unrealised gains/losses on investments (443,671,597) 120,321,305 Net foreign exchange losses (4,121,067) (2,950,843) Other income 6(f) 316,122 103,718
(200,099,204) 217,824,022
Expenses Management fees 6(a) (47,383,972) (25,224,287) Performance fees 6(b) (23,669) (28,808,679) Transaction costs (13,984,380) (8,370,995) Trustee fee 6(c) (5,194,640) (2,868,103) Safe custody and bank charges (1,334,433) (614,335) Legal and professional fees (231,990) (96,234) Auditor’s remuneration (31,001) (36,569) Dividends on securities borrowed (205,639) – Stock borrowing fee (243,926) (15,452) Written off of debt interest income (2,334,090) – Other operating expenses (1,395,241) (924,821)
(72,362,981) (66,959,475)
(Loss)/profit (272,462,185) 150,864,547 Withholding tax on dividends and other investment income 7(d) (8,264,397) (5,806,104)
(Loss)/profit after tax and before distributions (280,726,582) 145,058,443 Distributions to unitholders 8 (131,307,106) (44,475,491)
(Decrease)/increase in net assets attributable to unitholders from operations after distributions (412,033,688) 100,582,952
The notes on pages 23 to 66 are an integral part of these financial statements.
ANNUAL REPORT 2015 19 For the year ended 31 December 2015 19 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014 US$ US$
Net assets attributable to unitholders as at 1 January 2,890,416,478 1,751,619,761
Issue of units 3,942,735,616 2,305,334,357 Redemption of units (2,517,170,450) (1,267,120,592)
Net increase from unit transactions 1,425,565,166 1,038,213,765
(Loss)/profit after tax and before distributions (280,726,582) 145,058,443
Distributions to unitholders (131,307,106) (44,475,491)
(Decrease)/increase in net assets attributable to unitholders from operations after distributions (412,033,688) 100,582,952
Net assets attributable to unitholders as at 31 December 3,903,947,956 2,890,416,478
The notes on pages 23 to 66 are an integral part of these financial statements.
ANNUAL REPORT 2015 20 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014 US$ US$
Cash flows from operating activities (Decrease)/increase in net assets attributable to unitholders from operations (412,033,688) 100,582,952 Adjustments for: Dividends and interest on bank deposits (135,675,368) (72,970,458) Stock borrowing fee and dividends on securities borrowed 449,565 15,452 Distributions to unitholders 131,307,106 44,475,491 Withholding tax on dividends and other investment income 8,264,397 5,806,104
(407,687,988) 77,909,541 Increase in deposit with broker (189,186,096) (289,350) Increase in financial assets at fair value through profit or loss (1,044,132,705) (1,143,975,010) (Decrease)/increase in financial liabilities at fair value through profit or loss (30,537,532) 51,028,206 Decrease/(increase) in amounts receivable on sales of investments 4,764,104 (1,008,094) Increase in amounts payable on purchase of investments 7,483,583 9,653,125 Decrease in other receivables 9,718 176,800 Increase in bank overdrafts 135,860,088 8,575,193 Decrease/(increase) in margin deposits 14,325,627 (6,968,628) (Decrease)/increase in management fee and performance fee payable, accruals and other payables (27,899,778) 14,344,933
Cash used in operations (1,537,000,979) (990,553,284) Dividends and interest on bank deposits received 136,436,741 71,692,542 Stock borrowing fee and dividends on securities borrowed paid (449,565) (15,452) Withholding tax on dividends and other investment income paid (8,264,392) (5,806,106)
Net cash outflow from operating activities (1,409,278,195) (924,682,300)
The notes on pages 23 to 66 are an integral part of these financial statements.
ANNUAL REPORT 2015 21 For the year ended 31 December 2015 21 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
STATEMENT OF CASH FLOWS (Continued) FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014 US$ US$
Cash flows from financing activities Proceeds from issue of units 3,950,689,544 2,299,851,122 Payments on redemption of units (2,518,935,402) (1,262,273,254) Distributions paid to unitholders (125,944,989) (39,132,220)
Net cash inflow from financing activities 1,305,809,153 998,445,648
Net (decrease)/increase in cash and cash equivalents (103,469,042) 73,763,348
Cash and cash equivalents as at 1 January 112,722,352 38,959,004
Cash and cash equivalents as at 31 December, representing bank balances 9,253,310 112,722,352
The notes on pages 23 to 66 are an integral part of these financial statements.
ANNUAL REPORT 2015 22 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Value Partners High-Dividend Stocks Fund (the “Fund”) is an open-ended unit trust established by a Trust Deed dated 7 August 2002 (as amended). The Fund is registered under the Mutual Funds Law (revised) of the Cayman Islands, governed by the laws of the Cayman Islands and regulated by the Cayman Islands Monetary Authority. The Fund is authorised by the Securities and Futures Commission of Hong Kong and is required to comply with the Code on Unit Trusts and Mutual Funds established by the Securities and Futures Commission of Hong Kong (the “Code”).
The Fund’s investment objective is to provide capital appreciation and regular income to unitholders by investing primarily in a portfolio of relatively higher yielding debt and equity securities in the Asian region. The Fund’s investment activities are managed by Value Partners Limited (the “Manager”). The Fund’s administration is delegated to HSBC Institutional Trust Services (Asia) Limited, an affiliate of the Bank of Bermuda (Cayman) Limited (the “Trustee”). The principal office of the Fund is P.O. Box 513, HSBC House, 68 West Bay Road, Grand Cayman KY1-1106, Cayman Islands.
Refer to Note 10 for the change of domicile of the Fund subsequent to the reporting date.
2 SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
(a) Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). They have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities at fair value through profit or loss.
ANNUAL REPORT 2015 23 For the year ended 31 December 2015 23 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a) Basis of preparation (Continued)
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires the exercise of judgement in the process of applying the Fund’s accounting policies.
All references to net assets throughout this document refer to net assets attributable to unitholders unless otherwise stated.
Standards and amendments to existing standards effective 1 January 2015
There are no IFRSs or IFRIC Interpretations that are effective for the first time for the financial year beginning 1 January 2015 that have a material impact on the Fund.
Standards that are not yet effective and have not been early adopted by the Fund
IFRS 9 “Financial instruments”, addresses the classification, measurement and recognition financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income (“OCI”) and fair value through profit and loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. There were no changes to classification and measurement for financial liabilities at fair value through profit and loss, except for the requirement to recognize changes in own credit risk in other comprehensive income. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The Fund is yet to assess IFRS 9’s full impact.
There are no other IFRSs or IFRIC Interpretations that are not yet effective that would be expected to have material impact on the Fund.
ANNUAL REPORT 2015 24 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Investment entity
The Fund has been deemed to meet the definition of an investment entity per IFRS 10 “Consolidated Financial Statement” as the following conditions exist:
(i) The Fund has multiple investments.
(ii) The Fund obtained funding for the purpose of providing investors with investment management services.
(iii) The Fund’s business purpose, which was communicated directly to investors, is investing solely for returns from capital appreciation and investment income; and
(iv) The performance of investments made through the investee funds are measured and evaluated on a fair value basis.
The Fund meets all of the typical characteristics of an investment entity and management believes it is an investment entity. As a result, the Fund is exempted from the consolidation requirement in accordance with IFRS 10. The Fund is required to account for the unconsolidated structure entities at fair value through profit and loss.
(c) Interest in unconsolidated structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.
The Fund considers its investment in Investee Funds to be investment in unconsolidated structured entities. The Fund invests in Investee Funds whose objectives range from achieving medium to long term capital growth and whose investment strategy does not include the use of leverage. The Investee Funds are managed by a group company of the Manager who apply various investment strategies to accomplish the respective investment objectives of the Investee Funds.
The Fund’s investments in unconsolidated structured entities are shown as financial assets at fair value through profit and loss. The change in fair value of each Investee Fund is included in the statement of comprehensive income.
ANNUAL REPORT 2015 25 For the year ended 31 December 2015 25 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Financial assets and liabilities at fair value through profit or loss
(i) Classification
The Fund classifies its investments as financial assets or liabilities at fair value through profit or loss. These financial assets and liabilities are classified as held for trading.
The Fund makes short sales in which a borrowed security is sold in anticipate of a decline in the market value of that security, or it may use short sales for various arbitrage transactions. Short Sales are classified as financial liabilities at fair value through profit or loss.
(ii) Recognition/derecognition
Regular-way purchases and sales of investments are recognised on the trade date – the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.
(iii) Measurement
Financial assets and liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed in the statement of comprehensive income. Subsequent to initial recognition, all financial assets and liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the statement of comprehensive income in the year in which they arise.
Dividend on short sales of equity securities is included in the statement of comprehensive income within dividends on securities borrowed.
ANNUAL REPORT 2015 26 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Financial assets and liabilities at fair value through profit or loss (Continued)
(iv) Fair value estimation
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and trading securities) are based on last traded prices at the close of trading on the reporting date. An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Debt securities are fair valued based on quoted prices inclusive of accrued interest.
Investments in Investee Funds are stated at fair value based on the net asset value per unit/shares of the respective funds as determined by the administrators of the relevant funds or stated at last traded prices if the Investee Funds are listed or traded on an exchange.
Over-the-counter derivatives that are not traded in an active market is determined by using broker quotes or valuation techniques.
ANNUAL REPORT 2015 27 For the year ended 31 December 2015 27 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Income
Dividends are recognised when the right to receive payment is established.
Interest income on bank deposits is recognised in the statement of comprehensive income on a time-proportionate basis using the effective interest method.
Interest income on debt securities is recognised in the statement of comprehensive income within “Net realised gains on investments” and “Change in unrealised gains/losses on investments”, which depends on whether the Fund holds that debt security as at year end.
(f) Expenses
Expenses are accounted for on an accrual basis.
(g) Transaction costs
Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisers, brokers and dealers. Transaction costs, when incurred, are immediately recognized in the statement of comprehensive income as an expense.
(h) Distributions payable to unitholders
Proposed distributions to unitholders are recognised in the statement of comprehensive income when they are appropriately authorised and no longer at the discretion of the Fund. The distribution on the units is recognised as a finance cost in the statement of comprehensive income.
ANNUAL REPORT 2015 28 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(i) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position where the Fund currently has a legally enforceable right to set-off the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Fund or the counterparty.
(j) Foreign currency translation
The financial statements are presented in United States dollar, which is the Fund’s functional and presentation currency.
The Fund has adopted United States dollar as the functional currency of the Fund since the subscriptions and redemptions of the Fund are mainly transacted in United States dollars. In addition, performance measurement and reporting to the unitholders as well as settlement of fees and expenses are carried out in United States dollars.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
(k) Taxation
The Fund currently incurs withholding tax imposed by certain countries on investment income and capital gains. Such income is recorded gross of withholding tax in the statement of comprehensive income.
ANNUAL REPORT 2015 29 For the year ended 31 December 2015 29 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(l) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and exclude overdrafts with the broker as they are restricted for investment purposes. Bank overdrafts are shown in current liabilities in the statement of financial position.
(m) Collaterals
The Fund pledged investments as collateral at the reporting date. The party to whom the collateral is provided does not have the right to sell or re-pledge the collateral and the Fund classifies these pledged investments as financial assets at fair value through profit or loss in the statement of financial position.
Cash collaterals provided by the Fund are identified in the statement of financial position as margin deposits and are not included as a component of cash and cash equivalents.
(n) Redeemable units
The net asset value per unit is computed for each dealing day. The price at which units are issued or redeemed is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day.
Units of the Fund are redeemable at the options of the unitholders and are classified as financial liabilities in the statement of financial position which represents the net assets attributable to unitholders (or “net asset value” or “net assets” or “NAV”). The units are carried at the redemption amount that is payable at the reporting date if the unitholders exercise their right to redeem their units of the Fund.
ANNUAL REPORT 2015 30 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT
The Fund’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit and counterparty risk and liquidity risk.
The risks and respective risk management policies employed by the Fund to manage these risks are discussed below:
(a) Market risk
(i) Foreign exchange risk
The Fund may hold assets denominated in currencies other than the United States dollar, the functional currency, it may therefore be exposed to foreign exchange risk. The Fund’s overall currency positions are monitored on a daily basis by the Manager.
The tables below include both monetary and non-monetary assets and liabilities held in foreign currencies together with the percentage of reasonable possible change in foreign currencies and the estimated impact on net assets. Non-monetary investments include equity securities and derivatives and monetary investments include debt securities.
ANNUAL REPORT 2015 31 For the year ended 31 December 2015 31 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(a) Market risk (Continued)
(i) Foreign exchange risk (Continued)
Total net foreign currency exposures
Monetary Possible Estimated Non–monetary net assets/ Percentage impact on net assets (liabilities) change net assets US$ equivalent US$ equivalent % US$
As at 31 December 2015 Australian dollar 231,845 308,056,440 +/-5 +/-15,414,414 Canadian dollar – 67,288,024 +/-5 +/-3,364,401 Hong Kong dollar* 2,142,990,205 (18,247,815) +/-0 – Indonesian rupiah 23,022,663 375 +/-5 +/-1,151,152 Japanese yen 54,516,943 4,553 +/-5 +/-2,726,075 Korean won 625,582,532 (1,012,655) +/-5 +/-31,228,494 Malaysian ringgit 50,854,013 78,202 +/-5 +/-2,546,611 New Zealand dollar – 70,079,473 +/-5 +/-3,503,974 Pound sterling – 6,827,187 +/-5 +/-341,359 Philippine Peso 27,914,991 – +/-5 +/-1,395,750 Renminbi 38,809,820 20,417,846 +/-5 +/-2,961,383 Singapore dollar 255,681,632 999,490 +/-5 +/-12,834,056 Taiwan dollar 136,018,521 5,923,212 +/-5 +/-7,097,087 Thai baht 90,139,242 – +/-5 +/-4,506,962
3,445,762,407 460,414,332
ANNUAL REPORT 2015 32 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(a) Market risk (Continued)
(i) Foreign exchange risk (Continued)
Total net foreign currency exposures
Estimated Non–monetary Monetary Percentage impact on net assets net assets change net assets US$ equivalent US$ equivalent % US$
As at 31 December 2014 Australian dollar 884,352 159,446,653 +/-5 +/-8,016,550 Canadian dollar – 29,553,679 +/-5 +/-1,477,684 Hong Kong dollar* 1,409,709,915 559,061 +/-0 – Indonesian rupiah 22,626,851 18,707,690 +/-5 +/-2,066,727 Japanese yen 9,416,172 – +/-5 +/-470,809 Korean won 474,872,513 713,584 +/-5 +/-23,779,305 Malaysian ringgit 28,918,265 – +/-5 +/-1,445,913 New Zealand dollar – 61,214,837 +/-5 +/-3,060,742 Philippine Peso 472,158 – +/-5 +/-23,608 Renminbi 106,105,822 19,402,004 +/-5 +/-6,275,391 Singapore dollar 188,306,664 2,530 +/-5 +/-9,415,460 Taiwan dollar 113,282,204 2,986,310 +/-5 +/-5,813,426 Thai baht 49,833,856 – +/-5 +/-2,491,693
2,404,428,772 292,586,348
* The Hong Kong dollar is currently linked to the United States dollar, the functional currency, within a narrow range, and is therefore not exposed to significant foreign exchange risk.
(ii) Price risk
The Manager manages price risk primarily through diversification of the portfolio and through a careful selection of securities and other financial instruments within specified limits as stated in the Explanatory Memorandum. The Fund’s overall market positions are monitored on a daily basis by the Manager.
As at 31 December 2015 and 2014, the Fund had no exposure to a single security greater than 10% of net assets.
ANNUAL REPORT 2015 33 For the year ended 31 December 2015 33 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(a) Market risk (Continued)
(ii) Price risk (Continued)
The Fund’s overall market exposures at the reporting date were as follows:
% of net assets 2015 2014
Financial assets at fair value through profit or loss
Listed equity securities Australia 0.01 0.03 China 0.76 2.35 Hong Kong – “H” shares 21.87 23.90 – Red chips 9.50 7.86 – Others 23.24 16.43 Indonesia 0.59 0.78 Japan 1.40 0.33 Malaysia 1.30 1.00 Philippines 0.72 0.02 Singapore 6.55 6.51 South Korea 16.54 18.17 Taiwan 3.48 3.92 Thailand 2.31 1.72
88.27 83.02
Quoted debt securities Renminbi 0.17 0.24 United States dollar 3.72 5.27
3.89 5.51
Currency forwards 0.05 0.08
Participation notes 4.36 9.06
Unlisted investment funds 3.49 1.31
ANNUAL REPORT 2015 34 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(a) Market risk (Continued)
(ii) Price risk (Continued)
% of net assets 2015 2014
Financial assets at fair value through profit or loss
Unquoted debt security 0.01 0.05
Rights – 0.03
Listed equity warrants 0.01 –
100.08 99.06
Financial liabilities at fair value through profit or loss
Listed equity securities South Korea (0.52) (1.77)
Currency forwards (0.01) (0.00)
(0.53) (1.77)
ANNUAL REPORT 2015 35 For the year ended 31 December 2015 35 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(a) Market risk (Continued)
(ii) Price risk (Continued)
The table below shows the analysis of the net position of equity securities and derivatives on equity securities by industry.
2015 2014 % %
Financials 23.88 26.65 Industrials 17.10 13.10 Real estate 15.99 8.57 Consumer discretionary 15.06 17.81 Information technology 6.93 9.89 Utilities 5.74 5.00 Consumer staples 5.24 3.17 Energy 3.27 5.15 Telecommunication services 3.05 4.74 REITs 2.48 2.80 Materials 1.26 3.12
100.00 100.00
The Fund may sell securities of an issuer short. Short sales made by the Fund involve certain risks and special considerations. Possible losses from short sales differ from losses that could be incurred from a purchase of a security, because losses from short sales may be unlimited, whereas losses from purchases cannot exceed the total amount invested.
ANNUAL REPORT 2015 36 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(a) Market risk (Continued)
(ii) Price risk (Continued)
The table below summarises the sensitivity of the Fund’s portfolio of listed equity securities, participation notes and investment funds to equity price movements. The analysis is based on the assumptions that the MSCI Asia Pacific (ex-Japan) Index increased/decreased with all other variables held constant and that the fair value of the Fund’s portfolio of listed equity securities and notional value of the Fund’s derivatives moved according to their historical correlation with the index. The Manager does not manage price risk with reference to any market index. The index used below is for guidance and performance comparison purposes only.
Estimated impact Percentage change on net assets 2015 2014 2015 2014 % % US$ US$
MSCI Asia Pacific (ex-Japan) Index +/-30 +/-30 +/-1,047,731,200 +/- 681,563,039
(iii) Interest rate risk
The majority of the Fund’s financial assets are non-interest bearing except for overdrafts with brokers of US$144,435,873 (2014: US$8,575,785) at 31 December 2015. As at 31 December 2015, if the interest rates on interest bearing overdrafts with brokers had been 50 (2014: 50) basis points higher/lower with all other variables held constant, the net assets attributable to unitholders would have been approximately US$722,719 (2014: US$42,879) lower/higher.
Cash at banks is subject to interest rate risk as the return is derived from the current inter-bank lending rates. Debt securities are also subject to interest rate risk; however, the interest rate risk is not actively managed as it is not considered significant. As a result, no sensitivity analysis was deemed necessary.
ANNUAL REPORT 2015 37 For the year ended 31 December 2015 37 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(b) Credit and counterparty risk
The Fund limits its exposure to credit risk by transacting the majority of its securities and contractual commitment activities with broker-dealers, banks and regulated exchanges that the Manager considers to be well established. All transactions in listed securities are settled/ paid for upon delivery using approved and reputable brokers. The risk of default is considered minimal since delivery of securities sold is only made when the broker has received payment. In a purchase, payment is made when the securities have been received by the broker. If either party fails to meet its obligation, the trade will fail.
The table below shows the exposures to major counterparties at the reporting date. The credit ratings are issued by Moody’s.
2015 2014 Counterparty US$ US$
Cash and margin deposit with banks and brokers Aa2 9,253,310 – Aa3 – 127,047,983 A1 2,633 – A2 – 2,629 A3 1,130 1,130 Deposit with broker Unrated* 189,475,446 289,350 Investments placed with custodian Aa2 3,907,228,623 – Aa3 – 2,863,095,918 Amounts receivable on issue of units Unrated* 6,678,712 14,632,640
* The credit quality of deposit with broker and amounts receivable on issue of units that are neither past due nor impaired can be assessed by historical information about counterparties default rates. The Manager considers there is no significant risk on such deposits and amounts receivable at the reporting date as there was no default history on such deposit and accounts receivables in the past.
ANNUAL REPORT 2015 38 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(b) Credit and counterparty risk (Continued)
The table below summarises the credit quality of the Fund’s portfolio of debt securities at the reporting date. The credit ratings are issued by Moody’s.
2015 2014 Credit rating US$ US$
Ba1 – 9,521,161 Ba2 – – Ba3 54,080,892 6,582,364 B1 23,364,155 66,401,473 B2 25,698,103 22,584,354 B3 – 10,651,104 Unrated* 49,251,418 44,844,382
152,394,568 160,584,838
* In order to monitor the credit quality of the “Unrated” debt securities, the Manager, on the basis of internal research, prepares its own assessment. The Manager reviews the key financial metrics of the issue and structural features of the instruments and concludes these “Unrated” debt securities in general have a relatively low risk of default. The Manager considers there is no significant risk on the unrated debt securities at the reporting date as there was no default history on the unrated debt securities in the past. As at 31 December 2015 and 2014, the issuers of the unrated debt securities were not rated by Moody’s.
ANNUAL REPORT 2015 39 For the year ended 31 December 2015 39 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(c) Liquidity risk
The table below analyses the Fund’s non-derivative financial liabilities based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. The tables below reflect captions of the statement of financial position items and shows how much of the net assets can be redeemed if the Manager does not exercise the 10% redemption gate.
Less than 3 months 2015 2014 US$ US$
Net assets attributable to unitholders 3,903,947,956 2,890,416,478 Financial liabilities at fair value through profit or loss 20,301,250 51,176,807 Amounts payable on purchase of investments 20,395,592 12,912,009 Amounts payable on redemption of units 9,043,985 10,808,937 Management fee and performance fee payable 4,150,083 31,974,468 Distribution payable 12,689,572 7,327,455 Bank overdrafts 144,435,873 8,575,785 Accruals and other payables 725,964 801,352
4,115,690,275 3,013,993,291
ANNUAL REPORT 2015 40 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(c) Liquidity risk (Continued)
The table below analyses the Fund’s derivative financial instruments in a loss position for which the contractual maturities are considered to be essential to an understanding of the timing of cash flows based on the Fund’s investment strategy.
Less than 3 month 2015 2014 US$ US$
Net settled derivatives Currency forwards (352,273) (14,248)
Disclosure is required whenever there is a master netting arrangement irrespective of whether any balances have actually been offset in accordance with IAS 32 “Financial Instruments: Presentation”. As at 31 December 2015, the Fund was subject to one (2014: one) passive hedging arrangements with its derivative counterparty. The arrangement gives the Fund and the counterparts the legally enforceable right to set-off certain financial assets and liabilities.
The Fund and its counterparty have elected to settle all the financial assets and liabilities on a gross basis. Although, each party has the option to settle the financial assets and liabilities below on a net basis in the event of default of the other party. Accordingly, all the financial assets and liabilities has been recognised in the statement of financial position on a gross basis.
The following table presents the Fund’s financial assets and liabilities eligible to offsetting had the Fund elected to enforce the master netting agreement and similar agreements at the reporting date. The amount to be offset is limited to the absolute value of financial assets or financial liabilities within the same counterparty.
ANNUAL REPORT 2015 41 For the year ended 31 December 2015 41 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(c) Liquidity risk (Continued)
2015 2014 US$ US$
Financial assets Equity security pledged as collateral 23,571,224 43,711,806 Currency forwards 1,859,867 2,382,148 Margin deposits – 14,329,390
Financial liabilities Equity security (20,301,250) (51,176,807) Currency forwards (352,273) (14,248)
Net amount 4,777,568 9,232,289
As at 31 December 2015, the Fund provided financial collateral (including cash collateral) amounting to US$23,571,224 (2014: US$58,041,196).
Capital management
The capital of the Fund is represented by the net assets attributable to unitholders which is subject to daily subscriptions and redemptions of redeemable units. The Fund’s objective for capital management is to provide returns and long-term capital growth for unitholders.
In order to maintain the capital structure, the Manager performs the following:
– Monitor subscriptions and redemptions activities relative to liquid assets; – To protect the interest of unitholders and in exceptional circumstances, the Manager may limit the total number of units redeemed on any redemption day to 10% in aggregate of the total number of units in issue; and – Monitor fund investment guidelines and restrictions, in accordance with the Explanatory Memorandum.
ANNUAL REPORT 2015 42 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(c) Liquidity risk (Continued)
The markets in which the Fund invests may be relatively illiquid and the liquidity of these markets may fluctuate substantially over time. Investment of the Fund’s assets in relatively illiquid securities may restrict the ability of the Fund to dispose of its investments at a price and time that it wishes. The risk of illiquidity also arises in the case of over-the-counter transactions. As at 31 December 2015, the Manager considers that the amount of such illiquid investments is relatively insignificant compared to the net assets attributable to unitholders and the majority of the Fund’s asset can be realised within 7 days or less to generate cash inflows for managing liquidity risk.
Below presents a list of investors who held more than 10% of the net assets of the Fund:
Investor % of net assets
As at 31 December 2015 Investor 1 16.10 Investor 2 10.48
As at 31 December 2014 Investor 1 22.20 Investor 2 13.81
ANNUAL REPORT 2015 43 For the year ended 31 December 2015 43 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(d) Fair value estimation
The following table analyses within the fair value hierarchy the Fund’s financial assets and liabilities (by class) measured at fair value as at the reporting date.
Level 1 Level 2 Level 3 Total US$ US$ US$ US$
As at 31 December 2015
Financial assets held for trading Listed equity securities 3,445,538,654 – 552,703* 3,446,091,357 Quoted debt securities – 136,262,426 15,719,180 151,981,606 Currency forwards – 1,859,867 – 1,859,867 Participant notes – 170,114,280 – 170,114,280 Listed equity warrants 241,799 – – 241,799 Unlisted investment funds – 136,496,435 30,317 136,526,752 Unquoted debt security – – 412,962 412,962
3,445,780,453 444,733,008 16,715,162 3,907,228,623
Financial liabilities held for trading Listed equity securities (20,301,250) – – (20,301,250) Currency forwards – (352,273) – (352,273)
(20,301,250) (352,273) – (20,653,523)
ANNUAL REPORT 2015 44 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(d) Fair value estimation (Continued)
Level1 Level2 Level3 Total US$ US$ US$ US$
As at 31 December 2014
Financial assets held for trading Listed equity securities 2,398,955,112 – 773,255* 2,399,728,367 Quoted debt securities – 159,261,795 – 159,261,795 Currency forwards – 2,382,148 – 2,382,148 Equity linked notes – 25,664,238 – 25,664,238 Participant notes – 236,183,436 – 236,183,436 Rights – 808,885 – 808,885 Unlisted investment funds – 37,702,320 41,686 37,744,006 Unquoted debt security – – 1,323,043 1,323,043
2,398,955,112 462,002,822 2,137,984 2,863,095,918
Financial liabilities held for trading Listed equity securities (51,176,807) – – (51,176,807) Currency forwards – (14,248) – (14,248)
(51,176,807) (14,248) – (51,191,055)
* As at 31 December 2015, listed equity securities include one investment (2014: one) whose trading was suspended.
ANNUAL REPORT 2015 45 For the year ended 31 December 2015 45 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(d) Fair value estimation (Continued)
Investments whose values are based on quoted market prices in active markets, and therefore classified within level 1, include active listed equity securities and listed equity warrants. The Fund does not adjust the quoted price for these investments.
Financial instruments that trade in markets that are not considered to be active and are valued based on quoted market prices or broker quotes, or financial instruments for which there is no active market and are valued based on valuation models supported by observable inputs are classified within level 2.
Investments classified within level 3 have significant unobservable inputs, as they are traded infrequently.
Level 3 investments that amount to US$995,982 (2014: US$2,137,984) consists of suspended equity securities, unlisted investee fund, defaulted debt securities and unquoted debt security (2014: unlisted invested fund and unquoted debt security).
The Manager estimates that the amount of the level 3 investments is not significant to the Fund and changes in the inputs to the valuation models would not have a significant effect on the net asset value of the Fund. No quantitative analysis has been presented. The table below summarises the key unobservable inputs adopted by the Manager in determining the fair value.
ANNUAL REPORT 2015 46 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(d) Fair value estimation (Continued)
Fair value Valuation technique Unobservable inputs
At 31 December 2015
Equity security 552,703 Discounted last transacted Lack of marketability price from over–the-counter market
Quoted debt securities 15,719,180 Quoted price Defaulted on interest
Unlisted investment fund 30,317 NAV of fund Unquoted NAV
Unquoted debt security 412,962 Last transacted price from Lack of marketability over-the-counter market
As at 31 December 2014
Equity security 773,255 Last transacted price from Lack of marketability over-the-counter market
Unlisted investment fund 41,686 NAV of fund Unquoted NAV
Unquoted debt security 1,323,043 Last transacted price from Lack of marketability over-the-counter market
ANNUAL REPORT 2015 47 For the year ended 31 December 2015 47 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(d) Fair value estimation (Continued)
The following table presents the transfers between levels for the year ended 31 December 2015, which are related to the default of interest of debt securities in 2015. There was no transfer between levels for the year ended 31 December 2014.
Level 1 Level 2 Level 3 US$ US$ US$
2015 Transfer between level 2 and 3 – (10,651,104) 10,651,104
The following tables present the movement in level 3 investments for the year. Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period.
2015 2014 US$ US$
Opening balance 2,137,984 777,194 Purchase 2,951,111 1,318,095 Net gains recognised in profit and loss 974,963 42,695 Transfer from level 2 to level 3 10,651,104 –
Closing balance 16,715,162 2,137,984
Changes in unrealised gains/losses for the year included in the statement of comprehensive income for investments held at the end of the year 974,963 42,695
Other assets and liabilities are carried at amortised cost and their carrying values are a reasonable approximation of fair value.
ANNUAL REPORT 2015 48 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(e) Derivative financial instruments
The Fund’s derivative financial instruments at the reporting date are detailed below.
Notional Fair value amount Assets/ long/(short) (liabilities) US$
As at 31 December 2015
Currency forwards AUD423,520,425 1,567,553 Currency forwards CAD69,878 101 Currency forwards (GBP35,311) 33 Currency forwards NZD104,117,844 292,049 Currency forwards (NZD49,661) 131 Currency forwards (AUD73,360) (300) Currency forwards CAD93,802,404 (242,825) Currency forwards GBP4,619,278 (39,057) Currency forwards (NZD465,498) (1,826) Currency forwards RMB96,706,811 (68,265) Participation notes on China equities RMB406,024,119 170,114,280 Equity warrants on Malaysian equities MYR1,038,163 241,799
171,863,673
ANNUAL REPORT 2015 49 For the year ended 31 December 2015 49 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 FINANCIAL RISK MANAGEMENT (Continued)
(e) Derivative financial instruments (Continued)
Notional Fair value amount Assets/ long/(short) (liabilities) US$
As at 31 December 2014
Currency forwards AUD197,334,851 1,503,889 Currency forwards CAD34,696,405 51,072 Currency forwards NZD80,628,663 823,468 Currency forwards RMB19,790,940 3,719 Currency forwards USD1,419,708 (14,248) Equity linked notes on China equities RMB159,243,760 25,664,238 Participation notes on China equities RMB1,465,718,111 236,183,436 Rights on South Korea equities KRW5,718,737,900 808,885
265,024,459
ANNUAL REPORT 2015 50 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
4 INVESTMENTS IN UNCONSOLIDATED STRUCTURED ENTITIES
Unconsolidated structured entities consist of investments in Investee Funds which are subject to the terms and conditions of the respective Investee Funds’ offering documents and are susceptible to market price risk arising from uncertainties about future values of those structured entities. The Manager makes investment decisions after extensive due diligence of the underlying fund, its strategy and the overall quality of the underlying fund’s manager.
The Fund’s holding in Investee Funds, being Value Partners Asia Ex-Japan Equity Fund, Malabar India Fund Ltd, Value Partners Global Contrarian Fund, ICBC China Focus Stable Return Fund and Value Partners Strategic Equity Fund, as a percentage of the respective structured entity’s total net asset value, will vary from time to time dependent on the volume of subscriptions and redemptions at structured entities level. It is possible that the Fund may, at any point in time, hold a majority of a structured entity’s total shares in issue.
The below tables summaries the Fund’s holdings in Investee Funds as at 31 December 2015, the Investee Funds are not authorized in Hong Kong and are not available to the public generally Hong Kong:
% Ownership
Place of Investee Funds 2015 2014 Incorporation
Value Partners Global Contrarian Fund 55.17% 60.05% Cayman Islands
Value Partners Strategic Equity Fund 1.29% 1.29% Cayman Islands
Value Partners Asia Ex-Japan Equity Fund 100% Nil Ireland
ICBC China Focus Stable Return Fund 30.30% Nil Luxembourg
Malabar India Fund Ltd 14.10% Nil Mauritius
ANNUAL REPORT 2015 51 For the year ended 31 December 2015 51 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
4 INVESTMENTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)
Movements in the fair value of the Investee Funds’ portfolio and corresponding movements in the fair value of the Investee Funds may expose the Fund to a loss. The Fund’s maximum exposure to loss from its interests in structured entities is equal to the total fair value of its investments in structured entities. Once the Fund has disposed of its shares in a structured entity, the Fund ceases to be exposed to any risk from that structured entity.
The Fund invests into Investee Funds by purchasing their redeemable participating shares. Value Partners Asia Ex-Japan Equity Fund, ICBC China Focus Stable Return Fund, Value Partners Global Contrarian Fund and Malabar India Fund Ltd allow redemptions of their shares on a daily, weekly, bi-weekly and monthly basis respectively. The redemption of Value Partners Strategic Equity Fund is suspended. The Managers of the Investee Funds also have the ability to limit daily redemptions and withhold the requested amount. Under extraordinary circumstances, the Managers of Investee Funds also have the ability to suspend redemptions.
Total purchases and total sales in structured entities during the year ended 31 December 2015 were US$119,790,260 and US$Nil (2014: US$35,884,000 and US$Nil) respectively. As at 31 December 2015 there were no capital commitment obligations and no amounts due to structured entities for unsettled purchases (2014: Nil and Nil respectively).
During the year ended 31 December 2015, total net loss of US$19,805,800 (2014: gain US$1,856,217) was incurred on investments in Investee Funds.
ANNUAL REPORT 2015 52 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
4 INVESTMENTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)
The exposure to investments in Investee Funds at fair value is disclosed in the following table. These investments are included in financial assets at fair value through profit or loss in the statement of financial position.
Fair value % of net assets US$
As at 31 December 2015 Value Partners Asia Ex-Japan Equity Fund 60,970,000 1.56 Malabar India Fund Ltd 30,640,832 0.78 Value Partners Global Contrarian Fund 25,267,773 0.65 ICBC China Focus Stable Return Fund 19,617,830 0.50 Value Partners Strategic Equity Fund 30,317 0.00
136,526,752 3.49
As at 31 December 2014 Value Partners Global Contrarian Fund 37,702,320 1.31 Value Partners Strategic Equity Fund 41,686 0.00
37,744,006 1.31
ANNUAL REPORT 2015 53 For the year ended 31 December 2015 53 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5 REDEEMABLE UNITS
Units of the Fund are issued in 16 classes, Class A1, Class A2 MDis, Class Z, Class A2 MDis HKD, Class A2 MDis AUD Hedged, Class A2 MDis CAD Hedged, Class A2 MDis GBP Hedged, Class A2 MDis NZD Hedged, Class A Acc HKD Hedged, Class A Acc SGD Hedged, Class A2 MDis HKD Hedged, Class A2 MDis SGD Hedged, Class A Acc RMB Hedged, Class A Acc RMB Unhedged, Class A2 MDis RMB Hedged and Class A2 MDis RMB Unhedged. Class Z units are offered primarily for institutional investors. The Manager intends to create Class P Acc RMB and Class P MDis RMB for subscription to investors in the People’s Republic of China only. All units are subject to daily redemption. The management fees charged to each class of units are disclosed in note 6(a).
All classes of units are redeemable at the option of the unitholders and do not have identical features. The units can be put back to the Fund for cash equal to a proportionate share of the Fund’s net asset value.
The Manager may, in accordance with the Trust Deed dated 7 August 2002 (as amended), determine to make a distribution out of the income and/or capital (including unrealised capital gains or other unrealised profits during the relevant financial year and undistributed net income and undistributed net realised capital gains or profits brought forward from previous financial years) of the Fund to unitholders. Investors should note that the payment of dividends out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to the original investment. Such distributions may result in an immediate reduction of the net asset value per unit of the Fund.
The Manager may make distribution at its discretion for Class A1 units of the Fund. The Manager reviews the amount for dividend distribution once a year before determining whether dividends will be made. In respect of Class A2 MDis, Class A2 MDis HKD, Class A2 MDis AUD Hedged, Class A2 MDis CAD Hedged, Class A2 MDis GBP Hedged, Class A2 MDis NZD Hedged, Class A2 MDis HKD Hedged, Class A2 MDis SGD Hedged, Class A2 MDis RMB Hedged and Class A2 MDis RMB Unhedged, the Manager currently intends to make monthly dividends distribution to unitholders. In respect of Class Z, the Manager currently does not intend to make dividends distribution to unitholders. However, the Manager may consider not making distributions for the relevant class in any financial year, in its absolute discretion. Where distributions are made, the amount available for distribution in respect of each financial year will be determined and declared at such date(s) the Manager may, with the prior consent of the Trustee, determine.
ANNUAL REPORT 2015 54 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5 REDEEMABLE UNITS (Continued)
Number of units in issue
All issued units are fully paid and have no par value. Each unit carries one vote.
The movement of number of units in issue during the years was as follows:
As at Issue Redemption As at Number of units 1 January of units of units 31 December
2015 Class A1 16,911,860 9,113,839 (6,966,241) 19,059,458 Class A2 MDis 90,544,836 144,595,137 (95,760,332) 139,379,641 Class Z 1,163,952 319,332 (334,176) 1,149,108 Class A2 MDis HKD 220,720,377 490,009,789 (242,968,224) 467,761,942 Class A2 MDis AUD Hedged 18,726,784 63,668,607 (38,457,548) 43,937,843 Class A2 MDis CAD Hedged 3,283,159 12,865,064 (6,453,402) 9,694,821 Class A2 MDis GBP Hedged – 516,254 (14,951) 501,303 Class A2 MDis NZD Hedged 7,512,398 16,783,760 (13,743,233) 10,552,925 Class A Acc RMB Hedged 374,129 1,937,411 (144,845) 2,166,695 Class A Acc RMB Unhedged 5,193,548 – (2,430,000) 2,763,548 Class A2 MDis RMB Hedged 1,663,104 10,624,868 (4,005,028) 8,282,944 Class A2 MDis RMB unhedged 203,211 409,668 (214,765) 398,114
2014 Class A1 17,115,957 5,803,693 (6,007,790) 16,911,860 Class A2 MDis 46,265,559 96,441,624 (52,162,347) 90,544,836 Class Z 111,848 1,066,228 (14,124) 1,163,952 Class A2 MDis HKD 17,818,830 267,405,704 (64,504,157) 220,720,377 Class A2 MDis AUD Hedged 3,604,569 28,052,762 (12,930,547) 18,726,784 Class A2 MDis CAD Hedged 1,050,645 4,814,393 (2,581,879) 3,283,159 Class A2 MDis NZD Hedged 692,355 10,804,846 (3,984,803) 7,512,398 Class A Acc RMB Hedged – 374,129 – 374,129 Class A Acc RMB Unhedged – 5,324,096 (130,548) 5,193,548 Class A2 MDis RMB Hedged – 1,663,104 – 1,663,104 Class A2 MDis RMB unhedged – 203,211 – 203,211
ANNUAL REPORT 2015 55 For the year ended 31 December 2015 55 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
5 REDEEMABLE UNITS (Continued)
Number of units in issue (Continued)
Net asset value per unit 2015 2014
– Class A1 US$71.86 US$74.64
– Class A2 MDis US$10.56 US$11.56
– Class Z US$11.44 US$11.76
– Class A2 MDis HKD HK$9.61 HK$10.56
– Class A2 MDis AUD Hedged AUD9.53 AUD10.56
– Class A2 MDis CAD Hedged CAD9.57 CAD10.60
– Class A2 MDis GBP Hedged GBP9.04 –
– Class A2 MDis NZD Hedged NZD9.69 NZD10.57
– Class A Acc RMB Hedged RMB9.81 RMB9.94
– Class A Acc RMB Unhedged RMB11.65 RMB11.48
– Class A2 MDis RMB Hedged RMB9.01 RMB9.75
– Class A2 MDis RMB Unhedged RMB9.28 RMB9.75
ANNUAL REPORT 2015 56 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE TRUSTEE, THE MANAGER AND THEIR CONNECTED PERSONS
The following is a summary of significant related party transactions/transactions entered into during the period between the Fund and the Trustee, the Manager and their connected persons. Connected persons of the Trustee and the Manager are those as defined in the Code. All such transactions were entered into in the ordinary course of business and on normal commercial terms.
(a) Management fee
The Manager is entitled to receive a management fee which represents 1.25% per annum of the net asset value of the Fund for Class A, Class A1 and Class A2 units, and 0.75% per annum of the net asset value of the Fund for Class Z units. The management fee is calculated and accrued daily and payable monthly in arrears.
(b) Performance fee
The Manager is entitled to receive a performance fee which represents 15% of the product of the average number of units in issue during the year and the amount by which the net asset value per unit as at 31 December of each year (the “performance fee valuation day”) before accrual of performance fee and any dividend distribution declared or paid in respect of that performance period exceeds the higher of (i) the net asset value per unit of that class on the date of the initial issue of units and (ii) the highest value for the net asset value per unit as at the performance fee valuation day for any preceding year in which a performance fee was last calculated and paid (after payment of the performance fee and dividend distribution). The performance fee is calculated at the reporting date and payable yearly in arrears.
(c) Trustee fee
The Trustee is entitled to receive a trustee fee which represents a variable fee of (i) 0.17% per annum on the first US$400 million of the net asset value of the Fund; (ii) 0.15% per annum on the next US$400 million of the net asset value of the Fund; and (iii) 0.13% per annum thereafter, subject to a minimum of US$4,000 per month. The variable fee is calculated and accrued daily and payable monthly in arrears.
The Trustee is also entitled to a fixed fee of US$3,000 per annum payable quarterly in arrears.
ANNUAL REPORT 2015 57 For the year ended 31 December 2015 57 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE TRUSTEE, THE MANAGER AND THEIR CONNECTED PERSONS (Continued)
(d) Manager’s and its related parties’ holding in the Fund
The Manager and its related parties held units of the Fund as follows:
As at Issue Redemption As at 1 January of units of units 31 December
Year 2015
Class A1 Director of the Manager 67,622 25,874 – 93,496 Spouse of a director of the Manager 16,264 – – 16,264
Class A2 MDis HKD Director of the Manager – 615,345 – 615,345 Value Partners Limited* 8,359 444 – 8,803
Class A2 MDis AUD Hedged Value Partners Limited* 1,067 80 – 1,147
Class A2 MDis CAD Hedged Value Partners Limited* 1,051 61 – 1,112
Class A2 MDis NZD Hedged Value Partners Limited* 1,067 79 – 1,146
ANNUAL REPORT 2015 58 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE TRUSTEE, THE MANAGER AND THEIR CONNECTED PERSONS (Continued)
(d) Manager’s and its related parties’ holding in the Fund (Continued)
As at Issue Redemption As at 1 January of units of units 31 December
Year 2014
Class A1 Director of the Manager 121,544 49,525 (103,447) 67,622 Spouse of a director of the Manager 16,264 – – 16,264
Class A2 MDis HKD Value Partners Limited* 8,000 359 – 8,359
Class A2 MDis AUD Hedged Value Partners Limited* 1,000 67 – 1,067
Class A2 MDis CAD Hedged Value Partners Limited* 1,000 51 – 1,051
Class A2 MDis NZD Hedged Value Partners Limited* 1,000 67 – 1,067
* Value Partners Limited is the Manager.
ANNUAL REPORT 2015 59 For the year ended 31 December 2015 59 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE TRUSTEE, THE MANAGER AND THEIR CONNECTED PERSONS (Continued)
(e) Preliminary charges
The Manager is entitled to receive a preliminary charge on issue of units which represents up to 5% of the issue price. For the year ended 31 December 2015, total preliminary charges on issue of units, amounting to US$39,483,868 (2014: US$25,637,535), were received by the Manager. The preliminary charges are not reflected in the financial statements of the Fund.
(f) Investment in funds managed by a related party of the Manager
During the year ended 31 December 2015, the Fund invests in Value Partners Asia Ex-Japan Equity Fund, Value Partners Global Contrarian Fund and Value Partners Strategic Equity Fund (2014: Value Partners Global Contrarian Fund and Value Partners Strategic Equity Fund), which are managed by a group company of the Manager.
In accordance with the Funds’ Explanatory Memorandum, the Manager of the above mentioned funds invested by the Fund have waived the management fees payable by the Fund. This is recorded in the statement of comprehensive income as “other income”.
(g) Cross trades with funds managed by the Manager and/or its associates
During the year ended 31 December 2015 and 2014, the Fund has transacted with other funds which are also managed by the Manager and/or its associates. The Fund purchased and sold investments amounting to US$4,994,075 and US$9,125,157 (2014: US$325,372) from such fund. The transactions were carried out at fair value of the investments on the date of the transaction. The decisions were in the best interest of the Fund and fell within the investment objectives and policies of the Fund.
ANNUAL REPORT 2015 60 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
7 TAXATION
(a) Cayman Islands
The Fund has obtained an undertaking from the Governor-in-Council of the Cayman Islands that, in accordance with Section 81 of the Trusts Law (2001 Revision) of the Cayman Islands, for a period of 50 years from 27 August 2002, no laws thereafter enacted in the Cayman Islands imposing any tax or duty on income, capital assets, gains or appreciations will apply to the Fund.
(b) Hong Kong
No provision for Hong Kong profits tax has been made as the dividend and interest income and realised gains on sales of investments of the Fund are excluded from the charge to profits tax under Section 14, 26 or 26A of the Hong Kong Inland Revenue Ordinance.
(c) People’s Republic of China (“PRC”)
In preparing these financial statements, the Manager has made certain assumptions and used various estimates concerning the tax exposure which is dependent on what might happen in the future. The resulting accounting estimates may not equal the related actual results.
The Fund invests in various derivative instruments linked to “A” shares of companies listed in the PRC. Prior to 17 November 2014, a 10% tax was withheld by the relevant Qualified Foreign Institutional Investors (“QFIIs”) on all PRC sourced dividends and realised capital gains. With effect from 17 November 2014, a 10% tax is only withheld on all PRC sourced dividends.
ANNUAL REPORT 2015 61 For the year ended 31 December 2015 61 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
7 TAXATION (Continued)
(c) People’s Republic of China (“PRC”) (Continued)
The Fund directly invests in “B” shares of companies listed in the PRC for subscription by foreign investors and may be subject to PRC withholding tax of 10% on dividend income. A 10% withholding tax may also be payable on the capital gains derived from the sale of “B” shares. Under current PRC tax laws, gains derived from the transfer of shares of PRC companies by non-residents should be subject to a withholding tax of 10%, unless exempt under relevant tax treaties. The SAT has remained silent on the collection of withholding tax for capital gains and until further clarification is issued by the SAT, the Manager considers that there is significant uncertainty in respect of whether the Fund has any liability and the extent of such liability with respect to tax on capital gains derived from the sale of PRC “B” shares. In making this assessment, the Manager has considered (i) the current position of the SAT, (ii) the absence of a withholding mechanism of the relevant tax and (iii) current market practice. Accordingly, as at 31 December 2015 and 2014, the Fund had not made any provision for the tax on capital gains on “B” shares based on the above judgments made by the Manager.
(d) Other jurisdictions
Overseas withholding tax was charged on certain dividend and investment income received during the years ended 31 December 2015 and 2014.
8 DISTRIBUTION TO UNITHOLDERS
In accordance with the Explanatory Memorandum of the Fund, the Manager may determine to make a distribution out of the income and/or capital. During the year ended 31 December 2015. The Fund declared total distributions to unitholders of US$131,307,106 (2014: US$44,475,491).
ANNUAL REPORT 2015 62 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
8 DISTRIBUTION TO UNITHOLDERS (Continued)
The table below summarises the dividend distribution made during the reporting period. The distribution is included in the statement of comprehensive income.
Type 2015 2014 Frequency Ex-dividend dates1 Class A2 MDis US$0.0499 US$0.0365 Monthly Last business day of January to February Class A2 MDis US$0.0499 US$0.0365 Monthly Last business day of March to July Class A2 MDis US$0.0499 US$0.0499 Monthly Last business day of August to December Class A2 MDis HKD HK$0.0458 HK$0.0334 Monthly Last business day of January to July Class A2 MDis HKD HK$0.0458 HK$0.0458 Monthly Last business day of August to November Class A2 MDis HKD HK$0.0458 HK$0.0458 Monthly Last business day of December Class A2 MDis AUD Hedged AUD0.0639 AUD0.0510 Monthly Last business day of January to July Class A2 MDis AUD Hedged AUD0.0639 AUD0.0639 Monthly Last business day of August to November Class A2 MDis AUD Hedged AUD0.0639 AUD0.0639 Monthly Last business day of December Class A2 MDis CAD Hedged CAD0.0503 CAD0.0385 Monthly Last business day of January to July Class A2 MDis CAD Hedged CAD0.0503 CAD0.0503 Monthly Last business day of August to November Class A2 MDis CAD Hedged CAD0.0503 CAD0.0503 Monthly Last business day of December Class A2 MDis NZD Hedged NZD0.0641 NZD0.0511 Monthly Last business day of January to July Class A2 MDis NZD Hedged NZD0.0641 NZD0.0641 Monthly Last business day of August to November Class A2 MDis NZD Hedged NZD0.0641 NZD0.0641 Monthly Last business day of December
Class A2 MDis RMB Unhedged2 RMB0.0478 – Monthly Last business day of January Class A2 MDis RMB Unhedged2 RMB0.0520 – Monthly Last business day of February to September Class A2 MDis RMB Unhedged2 RMB0.0520 RMB0.0478 Monthly Last business day of October to December Class A2 MDis GBP Hedged GBP0.0478 – Monthly Last business day of March to December Class A2 MDis RMB Hedged2 RMB0.0478 – Monthly Last business day of January Class A2 MDis RMB Hedged2 RMB0.0520 – Monthly Last business day of February to September Class A2 MDis RMB Hedged2 RMB0.0520 RMB0.0478 Monthly Last business day of October to December
ANNUAL REPORT 2015 63 For the year ended 31 December 2015 63 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
8 DISTRIBUTION TO UNITHOLDERS (Continued)
1 Last business day of each month in 2015 are 30 January 2015, 27 February 2015, 31 March 2015, 30 April 2015, 30 May 2015, 30 June 2015, 31 July 2015, 31 August 2015, 30 September 2015, 30 October 2015, 30 November 2015 and 31 December 2015.
Last business day of each month in 2014 are 30 January 2014, 28 February 2014, 31 March 2014, 30 April 2014, 30 May 2014, 30 June 2014, 31 July 2014, 29 August 2014, 30 September 2014, 31 October 2014, 28 November 2014 and 31 December 2014.
2 Class A2 MDis RMB Hedged units and Class A2 MDis RMB Unhedged units were launched on 1 September 2014. First distribution was on 31 October 2014.
9 SOFT COMMISSION ARRANGEMENTS
The Manager and/or any company associated with it and its delegates may enter into soft dollars/ commission sharing arrangements with brokers through which brokerage transactions are entered on behalf of clients under management. The Manager may receive, and are entitled to retain, research products and services (known as soft dollar benefits) which are of demonstrable benefit to the Sub-fund (as may be permitted under applicable rules and regulations) from brokers and other persons through whom investment transactions are carried out (the “brokers”). Soft dollars may be received from them provided that the quality of transaction execution is consistent with best execution standards and brokerage rates are not in excess of the customary full-service brokerage rates.
Such soft dollar benefits may include research and advisory services; economic and political analysis; portfolio analysis, including valuation and performance measurement; market analysis, data and quotation services and software incidental to the above goods and services; clearing and custodian services and investment related publications. For the avoidance of doubt, soft dollar benefits do not include travel, accommodation, entertainment, general administrative goods and services, general office equipment or premises, membership fees, employee salaries or direct money payments.
ANNUAL REPORT 2015 64 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
9 SOFT COMMISSION ARRANGEMENTS (continued)
The Manager will consider many judgemental factors deemed relevant in determining whether a broker will provide best execution. In general, investment orders will be allocated to brokers based on the range and overall quality of services offered by the broker. The core factors in determining the quality of services are the execution performance and capability of the broker. Other factors, such as the quality and quantity of research and investment ideas offered, access to potential investee companies and commission rate charges, would also be taken into consideration. Soft dollar benefits received from brokers should not be a determinant factor on allocating orders among brokers. The Manager has implemented policies and procedures to ensure that transactions executed with brokers pursuant to a soft dollar commission sharing arrangement are conducted in the best execution standard. Soft dollars benefits received by the Manager are used to facilitate in the Manager’s investment management process, such benefits assist the Manager in fulfilling its overall duty to clients and may be used in servicing any or all of the Manager’s client accounts over which the Manager exercises investment discretion. The Manager does not usually attempt to allocate/attribute the soft dollar benefits to individual client account, as goods and services obtained may be beneficial to all clients in general, including those client accounts that do not generate credit to acquire the soft dollar benefits.
10 EVENTS AFTER THE REPORTING DATE
The Fund is an open-ended unit trust which was originally established by a Trust Deed dated 7 August 2002 (as amended) governed by the laws of the Cayman Islands. Pursuant to a Sixth Supplemental Deed dated 22 April 2016, the Trustee declared that with effect from and including 22 April 2016 the proper law of the Fund shall be the laws of Hong Kong and the forum of administration of the Fund shall be Hong Kong. With effect from 22 April 2016, the Fund changed domicile from the Cayman Islands to Hong Kong.
Pursuant to a Deed of Retirement and Appointment of the Trustee dated 31 March 2016, HSBC Institutional Trust Services (Asia) Limited was appointed as trustee in place of Bank of Bermuda (Cayman) Limited with effect from 22 April 2016. Pursuant to a Deed of Retirement and Appointment of the Manager dated 31 March 2016, Value Partners Hong Kong Limited was appointed as manager in place of Value Partners Limited with effect from 22 April 2016.
ANNUAL REPORT 2015 65 For the year ended 31 December 2015 65 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
10 EVENTS AFTER THE REPORTING DATE (continued)
The Fund is authorized by the Securities and Futures Commission of Hong Kong and is required to comply with the Code on Unit Trusts an Mutual Funds established by the Securities and Futures Commission of Hong Kong (the “Code”).
With effect from 22 April 2016, the Fund’s investment activities are managed by Value Partners Hong Kong Limited and the Fund’s administration is delegated to HSBC Institutional Trust Services (Asia) Limited. With effect from 22 April 2016, the principal office of the Fund is 1 Queen’s Road Central, Hong Kong.
11 APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the Trustee and the Manager on 22 April 2016.
ANNUAL REPORT 2015 66 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed equity securities
Australia United Overseas Australia Ltd 633,889 231,845 0.01
China Chongqing Changan Automobile Co Ltd 10,907,292 24,066,102 0.62 Daqin Railway Co Ltd 2,460,000 3,265,503 0.08 Luthai Textile Co Ltd 1,803,550 2,501,666 0.06
29,833,271 0.76
Hong Kong – “H” shares Agricultural Bank of China Ltd 133,045,000 54,418,995 1.39 Anhui Conch Cement Co Ltd 5,638,000 15,167,843 0.39 BAIC Motor Corporation Ltd 55,492,000 55,562,886 1.42 Bank of China Ltd 271,960,000 121,415,414 3.11 China BlueChemical Ltd 8,988,000 2,447,024 0.06 China Construction Bank Corporation 172,522,000 118,203,871 3.03 China Life Insurance Co Ltd 42,429,000 137,139,708 3.51 China Machinery Engineering Corporation 25,945,000 19,048,406 0.49 China Shenhua Energy Co Ltd 12,246,500 19,246,509 0.49 China Vanke Co Ltd 18,117,300 53,533,009 1.37 Dalian Wanda Commercial Properties Co Ltd 10,202,200 59,566,915 1.54 Dongfeng Motor Group Co Ltd 9,952,000 13,303,405 0.34 Huadian Power International Corporation Ltd 27,852,000 18,148,488 0.46 PetroChina Co Ltd 50,027,000 32,791,469 0.84 Qingdao Port International Co Ltd 81,406,000 36,343,371 0.93 Sinopec Engineering (Group) Co Ltd 74,672,500 63,783,945 1.63 Yangtze Optical Fibre & Cable Joint Stock Ltd Co 27,903,500 33,843,808 0.87
853,965,066 21.87
ANNUAL REPORT 2015 67 For the year ended 31 December 2015 67 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Listed equity securities (Continued)
Hong Kong – Red Chips BOC Hong Kong Holdings Ltd 20,697,500 63,293,474 1.62 China Overseas Land & Investment Ltd 30,084,000 105,583,773 2.70 China Power International Development Ltd 125,959,000 72,811,489 1.86 China Resources Cement Holdings Ltd 51,494,000 15,813,437 0.41 China Resources Power Holdings Co Ltd 39,138,507 76,154,977 1.95 China State Construction International Holdings Ltd 6,862,000 11,917,591 0.31 Far East Horizon Ltd 27,183,000 25,288,632 0.65
370,863,373 9.50
Hong Kong – Others Belle International Holdings Ltd 50,421,000 37,864,056 0.97 Cheung Kong Property Holdings Ltd 6,705,720 43,608,249 1.12 China High Speed Transmission Equipment Group Co Ltd 50,050,000 40,297,803 1.03 China Lilang Ltd 58,026,000 42,826,379 1.10 Chow Sang Sang Holdings International Ltd 14,290,500 23,528,313 0.60 CIFI Holdings (Group) Co Ltd 172,984,000 38,613,995 0.99 CK Hutchison Holdings Ltd 5,936,720 80,125,535 2.05 CSI Properties Ltd 759,670,000 25,975,478 0.66 EGL Holdings Co Ltd 30,178,000 10,046,224 0.26 Far East Consortium International Ltd 91,081,448 34,669,265 0.89 FSE Engineering Holdings Ltd 1,382,000 340,592 0.01 HKT Trust and HKT Ltd 32,641,000 41,695,707 1.07 Hopefluent Group Holdings Ltd 27,266,000 7,634,381 0.20 Hui Xian REIT 30,837,890 15,813,816 0.40 Jiangnan Group Ltd 295,558,000 57,966,757 1.48 Lee & Man Chemical Co Ltd 37,662,000 11,176,965 0.29 Longfor Properties Co Ltd 57,386,000 85,596,594 2.19 MGM China Holdings Ltd 10,770,800 13,480,698 0.35 Modern Beauty Salon Holdings Ltd 37,724,000 2,409,437 0.06
ANNUAL REPORT 2015 68 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Listed equity securities (Continued)
Hong Kong – Others (Continued) Oi Wah Pawnshop Credit Holdings Ltd 142,112,000 9,076,714 0.23 Pico Far East Holdings Ltd 51,644,000 13,993,677 0.36 Real Gold Mining Ltd 4,283,500 552,703 0.01 Shimao Property Holdings Ltd 12,940,500 23,008,747 0.59 Sino Land Co Ltd 18,687,610 27,392,066 0.70 Sinomax Group Ltd 61,605,000 6,438,633 0.16 SITC International Holdings Co Ltd 64,661,000 34,290,746 0.88 Skyworth Digital Holdings Ltd 91,884,270 59,990,762 1.54 Spring REIT 50,665,000 19,808,125 0.51 Springland International Holdings Ltd 40,570,000 9,370,240 0.24 Sun Hung Kai Properties Ltd 2,726,000 32,922,620 0.84 Time Watch Investments Ltd 67,638,000 9,425,561 0.24 TK Group (Holdings) Ltd 62,292,000 17,682,662 0.45 Welling Holding Ltd 43,854,000 8,431,176 0.22 Wonderful Sky Financial Group Holdings Ltd 50,742,000 13,618,322 0.35 Yuexiu REIT 14,410,000 7,734,816 0.20
907,407,814 23.24
Indonesia Bank Mandiri (Persero) Tbk 31,167,500 20,913,986 0.54 Nusa Raya Cipta (NRC) 46,505,600 2,108,523 0.05 Panin Financial 1,000 13 – Pelayaran Tempuran Emas Tbk 1,000 141 –
23,022,663 0.59
ANNUAL REPORT 2015 69 For the year ended 31 December 2015 69 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Listed equity securities (Continued)
Japan Japan Airlines Co Ltd 1,506,600 54,516,943 1.40
Malaysia AirAsia 66,073,400 19,852,029 0.51 Mah Sing Group 53,734,071 18,147,060 0.47 Signature International 5,596,000 2,398,193 0.06 UOA Development 21,290,200 10,214,932 0.26
50,612,214 1.30
Philippines Leisure & Resorts World Corporation 48,413,100 7,876,161 0.20 Premium Leisure Corporation 289,247,000 3,947,081 0.10 Semirara Mining and Power Corporation 5,528,960 16,091,749 0.42
27,914,991 0.72
Singapore AIMS AMP Capital Industrial REIT 5,386,200 5,243,204 0.13 Asian Pay Television Trust 33,142,100 15,016,598 0.38 Capitacommercial Trust 17,139,600 16,381,211 0.42 Capital and Retail China Trust 9,701,000 10,233,267 0.26 China Merchants Holdings Pacific Ltd 31,560,300 19,550,628 0.50 Croesus Retail Trust 28,369,354 16,268,444 0.42 DBS Group Holdings Ltd 5,314,800 62,799,301 1.61 Ezion Holdings Ltd 39,375,400 17,004,598 0.44 Frasers Commercial Trust (REIT) 21,407,100 19,247,446 0.49 Keppel Corporation 1,628,000 7,503,207 0.19
ANNUAL REPORT 2015 70 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Listed equity securities (Continued)
Singapore (Continued) Nam Cheong Ltd 83,888,400 8,017,652 0.21 Triyards Holdings Ltd 108,400 34,151 0.00 Wing Tai Holdings Ltd 13,076,900 16,247,759 0.42 Yangzijiang Shipbuilding Holdings Ltd 54,104,100 42,134,166 1.08
255,681,632 6.55
South Korea Amorepacific Corporation Pref 574,994 112,432,408 2.88 BGF Retail Co Ltd 237,749 34,664,360 0.89 Binggrae Co Ltd 60,016 3,495,087 0.09 CJ Cheiljedang Corporation Pref 83,890 15,583,392 0.40 Dongbu Insurance Co Ltd 1,002,660 59,925,184 1.53 GS Retail Co Ltd 880,258 40,261,747 1.03 Hyundai Motor Co 1 127 – Hyundai Motor Co Ltd 3rd Pfd 216,736 18,426,015 0.47 Korea Electric Power Corporation 922,492 39,213,262 1.00 Korea Ratings Corporation 65,556 2,808,946 0.07 LG Corporation 689,137 41,480,042 1.06 LG Corporation Prfd 284,387 11,351,303 0.29 Maeil Dairy Industry Co Ltd 57,420 2,157,674 0.06 Samsung Electronics Co Ltd 1 1,071 – Samsung Electronics Co Ltd Pfd 104,954 97,347,344 2.49 Samsung Fire & Marine Insurance Co Ltd 1 261 – Samsung Fire & Marine Insurance Co Ltd Pref 480,583 77,220,137 1.98 SK Hynix Inc 815,854 21,328,383 0.55 SK Telecom Co Ltd 372,181 68,187,039 1.75
645,883,782 16.54
ANNUAL REPORT 2015 71 For the year ended 31 December 2015 71 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Listed equity securities (Continued)
Taiwan Farglory Land Development Co Ltd 10,370,000 10,816,229 0.27 Johnson Health Tech Co Ltd 5,057,550 8,132,248 0.21 Largan Precision Co Ltd 516,000 35,670,737 0.91 Mega Financial Holding Co Ltd 33,149,165 21,452,013 0.55 Mercuries Life Insurance Co 14,105,206 7,731,940 0.20 Superalloy Industrial Co Ltd 3,673,993 13,605,310 0.35 Taiwan Semiconductor Manufacturing Co Ltd 8,866,000 38,610,044 0.99
136,018,521 3.48
Thailand AP Thailand Pcl (FR) 57,174,600 8,475,592 0.22 AP Thailand PCL NVDR 13,164,500 1,951,512 0.05 Bangchak Petroleum Pcl (FR) 42,982,100 30,071,987 0.77 Digital Telecommunication Infrastructure Fund (FR) 33,622,700 11,552,272 0.30 Jasmine Broadband Internet Infrastructure Fund (FR) 42,502,800 10,775,855 0.28 Namyong Terminal Pcl (FR) 1,068,900 467,958 0.01 Somboon Advance Technology Pcl (FR) 4,662,100 2,092,713 0.05 Star Petroleum Refining Pcl (FR) 10,040,400 2,517,751 0.06 Supalai Pcl (FR) 44,088,500 22,233,602 0.57
90,139,242 2.31
Quoted debt securities
Renminbi Times Property Hldg (REG) 10.375% 07/16/2017 42,000,000 6,759,038 0.17
ANNUAL REPORT 2015 72 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Quoted debt securities (Continued)
United States dollar Agile Property Hldgs Ltd VAR PERP 3,000,000 2,794,542 0.07 China Aoyuan Property GP (REG S) 13.875% 11/23/2017 4,000,000 2,171,692 0.05 Cifi Holdings Group (REG) 7.75% 06/05/2020 8,000,000 8,082,378 0.21 Kaisa Group Holdings Ltd (REG) 10.25% 01/08/2020 (defaulted) 13,000,000 8,843,120 0.23 Kaisa Group Holdings Ltd (REG) 9% 06/06/2019 (defaulted) 8,000,000 5,446,560 0.14 Kaisa Group Holdings Ltd 12.875% 09/18/2017 (defaulted) 2,000,000 1,429,500 0.04 KWG Property Holdings LT (REG S) (REG) 8.975% 01/14/2019 12,200,000 13,428,833 0.34 KWG Property Holdings LT (REG S) 8.625% 02/05/2020 15,000,000 16,110,138 0.41 KWG Property Holdings LT (REG) 8.25% 08/05/2019 10,600,000 11,365,408 0.29 LDK Solar Co Ltd Conv VAR 12/31/2018 65,371 – – Logan Property Holdings (REG S) (REG) 11.25% 06/04/2019 9,000,000 9,949,748 0.25 Pakuwon Prima 7.125% 07/02/2019 10,000,000 10,381,971 0.27 Shui On Development Hold (REG S) VAR PERP 31,350,000 33,119,276 0.85 Sunac China Holdings Ltd (REG S) 12.5% 10/16/2017 5,000,000 5,455,208 0.14 Times Property Hldg Ltd (REG) 11.45% 03/05/2020 6,000,000 6,748,647 0.17 Times Property Hldg Ltd (REG) 12.625% 03/21/2019 4,000,000 4,563,518 0.12 Yuzhou Properties Co (REG) 8.75% 10/04/2018 5,000,000 5,332,029 0.14
145,222,568 3.72
CURRENCY FORWARDS 1,859,867 0.05
UNLISTED EQUITY WARRANTS
Mah Sing Group CWts 02/21/2020 6,697,828 241,799 0.01
ANNUAL REPORT 2015 73 For the year ended 31 December 2015 73 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Participation notes
China BOCI Financial Products Ltd (Daqin Railway Co Ltd A Shrs) P Note 04/27/2016 14,863,568 19,730,501 0.51 CICC Financial Trading Ltd (Daqin Railway Co Ltd A Shrs) P Note 10/23/2017 14,938,439 19,823,309 0.51 CICC Financial Trading Ltd (Daqin Railway Co Ltd A Shrs) P Note 10/20/2017 2,546,325 3,378,973 0.09 CICC Financial Trading Ltd (Gree Electric Appliances Inc A Shrs) P Note 12/09/2017 4,279,260 14,729,213 0.38 CICC Financial Trading Ltd (Gree Electric Appliances Inc A Shrs) P Note 12/11/2017 23,046,240 79,325,158 2.03 CICC Financial Trading Ltd (Midea Group Co Ltd A Shrs) P Note 11/25/2017 6,291,820 31,798,858 0.81 Credit Suisse Nassau (Gree Electric Appliances Inc A Shrs) P Note 11/04/2018 385,900 1,328,268 0.03
170,114,280 4.36
UNLISTED INVESTMENT FUNDS ICBC China Focus Stable Return Fund 18,597 19,617,830 0.50 Malabar India Fund Ltd Cl 1 Shrs 18,249 30,640,832 0.78 Value Partners Global Contrarian Fund 3,688,726 25,267,773 0.65 Value Partners Strategic Equity Fund 189,480 30,317 0.00 Value Partners Asia Ex-Japan Equity Fund 7,000,000 60,970,000 1.56
136,526,752 3.49
ANNUAL REPORT 2015 74 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO (UNAUDITED) (Continued) AS AT 31 DECEMBER 2015
Holdings Fair value % of net US$ assets
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
Unquoted debt security
United States Dollar LDK Solar Co Ltd (BR) Conv 5.535% 31 December 2018 (PIK) 2,362,111 412,962 0.01
Total financial assets at fair value through profit or loss 3,907,228,623 100.08
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed equity securities
South Korea Amorepacific Corp (57,610) (20,301,250) (0.52)
Currency forwards (352,273) (0.01)
Total financial liabilities at fair value through profit or loss (20,653,523) (0.53)
Total investments, net 3,886,575,100 99.55
Total investments, at cost (inclusive of transaction cost) 4,132,583,255
* The trading of the equity security has been suspended.
ANNUAL REPORT 2015 75 For the year ended 31 December 2015 75 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO MOVEMENTS (UNAUDITED) FOR THE YEAR ENDED 31 DECEMBER 2015
% of net assets 2015 2014
Listed equity securities Australia 0.01 0.03 China 0.76 2.35 Hong Kong – “H” shares 21.87 23.90 – Red chips 9.50 7.86 – Others 23.24 16.43 Indonesia 0.59 0.78 Japan 1.40 0.33 Malaysia 1.30 1.00 Philippines 0.72 0.02 Singapore 6.55 6.51 South Korea 16.02 16.40 Taiwan 3.48 3.92 Thailand 2.31 1.72
87.75 81.25
Quoted debt securities Renminbi 0.17 0.24 United States dollar 3.72 5.27
3.89 5.51
ANNUAL REPORT 2015 76 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
INVESTMENT PORTFOLIO MOVEMENTS (UNAUDITED) (Continued) FOR THE YEAR ENDED 31 DECEMBER 2015
% of net assets 2015 2014
Currency forwards 0.04 0.08
Participation notes 4.36 9.06
Unlisted investment funds 3.49 1.31
Unquoted debt securities United States dollar 0.01 0.05
Rights – 0.03
Listed equity warrants 0.01 –
Total investments, net 99.55 97.29
ANNUAL REPORT 2015 77 For the year ended 31 December 2015 77 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
PERFORMANCE RECORD (UNAUDITED)
Net assets (at last traded price)
2015 2014 2013 US$ US$ US$
Net assets 3,903,947,956 2,890,416,478 1,751,619,761
Net asset value per unit Class A1 US$71.86 US$74.64 US$68.23 Class A2 MDis US$10.56 US$11.56 US$11.05 Class Z US$11.44 US$11.76 US$10.67 Class A2 MDis HKD HK$9.61 HK$10.56 HK$10.10 Class A2 MDis AUD Hedged AUD9.53 AUD10.56 AUD10.11 Class A2 MDis CAD Hedged CAD9.57 CAD10.60 CAD10.12 Class A2 MDis GBP Hedged GBP9.04 – – Class A2 MDis NZD Hedged NZD9.69 NZD10.57 NZD10.13 Class A Acc RMB Hedged RMB9.81 RMB9.94 – Class A Acc RMB Unhedged RMB11.65 RMB11.48 – Class A2 MDis RMB Hedged RMB9.01 RMB9.75 – Class A2 MDis RMB Unhedged RMB9.28 RMB9.75 –
ANNUAL REPORT 2015 78 For the year ended 31 December 2015 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
PERFORMANCE RECORD (UNAUDITED) (Continued)
Performance record for the past 10 years
Highest subscription price per unit Class A2 Class A2 Class A2 Class A2 MDis AUD MDis CAD Class A1 MDis Class Z MDis HKD Hedged Hedged US$ US$ US$ HK$ AUD CAD
2015 86.86 13.23 13.70 12.10 12.12 12.14 2014 76.85 12.10 12.14 11.10 11.07 11.09 2013 69.50 11.46 10.87 10.34 10.36 10.35 2012 63.09 10.72 – – – – 2011 61.21 – – – – – 2010 60.41 – – – – – 2009 45.84 – – – – – 2008 45.39 – – – – – 2007 49.50 – – – – – 2006 32.53 – – – – –
Highest subscription price per unit Class A2 Class A2 Class A Class A Class A2 Class A2 MDis GBP MDis NZD Acc RMB Acc RMB MDis RMB MDis RMB Hedged Hedged Hedged Unhedged Hedged Unhedged GBP NZD RMB RMB RMB RMB
2015 11.55 12.17 11.77 13.31 11.34 11.12 2014 – 11.11 9.99 10.09 9.95 10.09 2013 – 10.37 – – – – 2012 – – – – – – 2011 – – – – – – 2010 – – – – – – 2009 – – – – – – 2008 – – – – – – 2007 – – – – – – 2006 – – – – – –
ANNUAL REPORT 2015 79 For the year ended 31 December 2015 79 VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND (A Cayman Islands Unit Trust)
PERFORMANCE RECORD (UNAUDITED) (Continued)
Performance record for the past 10 years (Continued)
Lowest subscription price per unit Class A2 Class A2 Class A2 Class A2 MDis AUD MDis CAD Class A1 MDis Class Z MDis HKD Hedged Hedged US$ US$ US$ HK$ AUD CAD
2015 67.27 10.12 10.70 9.22 9.21 9.23 2014 63.83 10.30 9.99 9.43 9.43 9.43 2013 60.58 9.99 9.42 9.85 9.84 9.85 2012 51.14 9.96 - - - - 2011 45.95 - - - - - 2010 43.34 - - - - - 2009 23.23 - - - - - 2008 20.94 - - - - - 2007 31.84 - - - - - 2006 24.08 - - - - -
Lowest subscription price per unit Class A2 Class A2 Class A Class A Class A2 Class A2 MDis GBP MDis NZD Acc RMB Acc RMB MDis RMB MDis RMB Hedged Hedged Hedged Unhedged Hedged Unhedged GBP NZD RMB RMB RMB RMB
2015 8.69 9.32 9.05 10.77 8.55 8.74 2014 - 9.45 9.28 9.19 9.24 9.19 2013 - 9.77 - - - - 2012 ------2011 ------2010 ------2009 ------2008 ------2007 ------2006 ------
ANNUAL REPORT 2015 80 For the year ended 31 December 2015