China Convergence Fund A Sub-Fund of Value Partners Intelligent Funds NAV per unit : Class A USD - USD289.08 Fund size : USD273.7 million HHHH Morningstar RatingTM* As at 30-06-2021 June 2021

• Convergence Fund (The “Fund”) primarily invests in A and B-shares listed on the stock exchanges of Shanghai and as well as in H-shares listed in Hong Kong. • The Fund invests in China and therefore is subject to emerging market risks. Generally, investments in emerging markets are more volatile than investments in developed markets due to additional risks relating to political, social, economic and regulatory uncertainty. • The Fund is also subject to concentration risk due to its concentration in China-related companies. Adverse development in such region may affect the value of the underlying securities in which the Fund invests. • The Fund may directly invest in A-shares and other eligible securities through the qualified foreign institutional investors (“QFII”) quota. Investors will be subject to certain risks including repatriation risk, custodial risk, regulatory risk. In addition, the QFII policy and rules are subject to change. All these may adversely impact the Fund. • The Fund may also invest in derivatives which can involve material risks, e.g. counterparty default risk, insolvency or liquidity risk, and may expose the Fund to significant losses. • You should not make investment decision on the basis of this material alone. Please read the explanatory memorandum for details and risk factors.

Investment objective NAVs & codes Classes 2 NAV ISIN Bloomberg The Fund aims to achieve long-term capital appreciation by investing Class A USD 289.08 KYG9317Q1047 VAPAICB KY primarily in equity securities of China-related companies. This includes Class A AUD Hedged 17.73 KYG9317Q1385 VAPAAHD KY securities listed on a Mainland China stock exchange, the Hong Kong Stock Exchange and major stock exchanges in other jurisdictions. The Class A CAD Hedged 19.75 KYG9317Q1468 VAPACAH KY investable universe covers, but is not limited to A, B and H-shares as Class A NZD Hedged 20.44 KYG9317Q1534 VAPANZH KY well as American Depositary Receipts.

Performance since launch % The Fund (Class A USD) 3,200 MSCI China Index 1 2,800 +2,790.8% 2,400 2,000 1,600 1,200 800 400 +417.9% 0 -200

2000 2003 2005 2007 2009 2011 2013 2015 20172019 2021

Performance update Class A USD MSCI China Index 1 Year-to-date -0.3% +1.8% One month -2.7% +0.1% One year +42.8% +27.4% Three years +56.9% +34.4% Five years +133.2% +115.4% Total return since launch +2,790.8% +417.9% Annualized return since launch ^ +17.4% +8.1%

The Fund – Class A USD: Monthly performance from 1 Jan 2012 to 30 Jun 2021 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual 2012 +7.6% +6.6% -5.5% +1.0% -8.4% -3.8% -3.5% +0.6% +5.8% +2.7% +0.1% +7.4% +9.3% 2013 +7.5% -2.0% -2.9% -0.6% +2.7% -9.9% +3.5% +1.8% +2.2% +3.9% +5.6% -1.8% +9.2% 2014 -5.6% +1.0% -3.6% -1.0% +1.2% +3.4% +8.8% +1.3% -1.2% +3.2% +1.6% +5.4% +14.6% 2015 +1.8% +1.3% +6.7% +19.8% +1.7% -8.1% -12.6% -12.5% +1.5% +5.5% -3.8% +2.4% -0.5% 2016 -16.6% -0.9% +8.5% -2.1% -2.5% -1.1% +4.8% +6.7% +0.4% -1.8% +1.1% -3.5% -8.7% 2017 +5.9% +2.3% +3.8% +0.3% +2.9% +3.7% +1.8% +3.1% +1.6% +5.5% +1.3% +2.9% +41.3% 2018 +10.5% -6.0% -2.0% -0.4% +3.3% -6.7% -1.5% -5.1% +3.4% -9.4% +5.6% -4.0% -13.2% 2019 +7.7% +7.8% +2.8% -1.4% -10.3% +4.9% +0.8% -2.5% -0.9% +3.9% +0.7% +6.5% +20.2% 2020 -10.1% +4.6% -7.5% +6.8% +0.2% +10.6% +12.8% +7.4% -3.8% +4.5% +7.3% +9.6% +47.5% 2021 (YTD) +4.0% +1.5% -7.1% +2.4% +1.9% -2.7% -0.3%

^ Annualized return is calculated from inception based on published NAV. 43rd Floor, The Center, 99 Queen’s Road Central, Hong Kong Hotline: Hong Kong (852) 2143 0688 | Singapore (65) 6718 0380 Email: [email protected] www.valuepartners-group.com Follow us on China Convergence Fund | June 2021

Top holdings Fund facts Name Industry 3 % Manager: Value Partners Limited Holdings Ltd Media & entertainment 8.4 Base currency: USD Pharmaceuticals, 7.4 Trustee: HSBC Trustee (Cayman) Limited Co Ltd biotechnology & life sciences Custodian: HSBC Institutional Trust Services (Asia) Limited Co Ltd Banks 7.2 Launch date: Class A USD - 14 Jul 2000 Co Ltd Banks 5.8 Class A AUD Hedged - 27 Oct 2015 Co Ltd Consumer durables & apparel 5.4 Class A CAD Hedged - 7 Jan 2016 NetEase Inc Media & entertainment 4.2 Class A NZD Hedged - 7 Jan 2016 Co Ltd Food, beverage & tobacco 4.1 Li Ning Co Ltd Consumer durables & apparel 4.1 Fee structure Shenzhen Mindray Bio- Health care equipment & services 4.0 Medical Electronics Co Ltd Minimum subscription USD10,000 or equivalent Minimum subsequent AIA Group Ltd Insurance 3.8 USD5,000 or equivalent subscription These securities constitute 54% of the Fund. Subscription fee Up to 5% Management fee 1.25% p.a. Portfolio characteristics Performance fee 8 15% of profit (High-on-high principle) Redemption fee Nil As at 30 Jun 2021 4 Price/earnings ratio 16.8 times Dealing day Daily Price/book ratio 2.3 times Portfolio yield 1.7% Senior investment staff Class A USD MSCI China Index 1 Annualized volatility (3 years) 5 20.7% 19.9% Co-Chairmen & Co-Chief Investment Officers: Cheah Cheng Hye; Louis So Norman Ho, CFA; Renee Hung 6 Senior Investment Directors: Geographical exposure by listing Investment Directors: Chung Man Wing; Yu Chen Jun; Michelle Yu, CFA Senior Fund Managers: Lillian Cao; Anthony Chan, CFA; Kelly Chung, CFA; China A-shares 49% Doris Ho; Glenda Hsia; Amy Lee, CFA, CAIA; Luo Jing, CFA; Frank Tsui Hong Kong 35% H-shares 4% United States 4% Key awards Red Chips 3% Cash 7 5% Best Total Return - Greater China Equity Fund (5-year) - 2nd Runner-up 9 ~ HKCAMA and Bloomberg, Offshore China Fund Awards 2018 Sector exposure 3, 6 Value Partners: Consumer discretionary 22% Asia ex-Japan Equity House: Best-in-Class 10 Health care 19% Greater China Equity House: Outstanding Achiever 10 Banks 16% ~ Benchmark Fund of the Year Awards 2018, Hong Kong Communication services 15% Consumer staples 8% Offshore China Equity (10-year) 11 Materials 5% ~ Insight & Mandate, Professional Investment Insurance 4% Awards 2018 Industrials 3% Real estate 3% Cash 7 5%

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Source: HSBC Institutional Trust Services (Asia) Limited and Bloomberg, data as at the last valuation date of the month as stated above, unless stated otherwise. Performance is calculated on NAV to NAV in base currency with dividend reinvested and net of fees. All indices are for reference only. Our portfolio disclosure policy can be obtained from the Investment Manager upon request to email [email protected]. * © Morningstar 2021. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 1. MSCI China Index (Price Return) since inception to 29 Mar 2001, thereafter it is the MSCI China Index (Total Net Return). 2. Each hedged share class will hedge the Fund’s base currency back to its currency of denomination on a best efforts basis. However, the volatility of the hedged classes measured in the Fund’s base currency may be higher than that of the equivalent class denominated in the Fund’s base currency. The hedged classes may be suitable for investors who wish to reduce the impact of changes in exchange rates between their local currency and the Fund’s base currency. 3. Classification is based on Global Industry Classification Standard (GICS). 4. The profile is based on market consensus forecast as derived from FactSet and Bloomberg. Harmonic mean methodology is applied to calculate the forecast P/E ratio and P/B ratio. Portfolio yield is the weighted average of the total dividend yield of all securities in the portfolio. 5. Volatility is a measure of the theoretical risk in terms of standard deviation, based on monthly return over the past 3 years. 6. Exposure refers to net exposure (long exposure minus short exposure). Derivatives e.g. index futures are calculated based on P/L instead of notional exposure. 7. Cash includes receivables and payables (except cash for collaterals and margins). 8. Performance fee will only be charged if the NAV at the end of the financial year or upon realization of units exceeds the “high watermark”, which is the all-time year-end high of the Fund’s NAV. If in any one year, the Fund suffers a loss, no performance fee can be charged in subsequent years until the loss is recovered fully (the high-on-high principle). 9. The award reflects the fund’s 5-year performance up to 30 Sep 2018. 10. The award reflects performance up to 30 Sep 2018. 11. The award reflects performance up to 31 Dec 2017. 12. For Hong Kong investors only. Investors should note investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Information in this report has been obtained from sources believed to be reliable but Value Partners Limited does not guarantee the accuracy or completeness of the information provided by third parties. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. For Singapore investors: The Fund is registered as a restricted foreign scheme in Singapore and will only be distributed to (i) institutional investors and (ii) accredited investors and certain other persons in Singapore in accordance with section 304 and 305 of the Securities and Futures Act. Value Partners Asset Management Singapore Pte Ltd, Singapore Company Registration No. CCF_Master+SG_202106 200808225G. This advertisement has not been reviewed by the Monetary Authority of Singapore. FollowThis document us has on not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Limited. 2

China Convergence Fund Commentary / Second Quarter 2021

 China Convergence Fund (The “Fund”) primarily invests in A and B shares listed on the stock exchanges of Shanghai and Shenzhen as well as in H shares listed in Hong Kong.  The Fund invests in China and therefore is subject to emerging market risks. Generally, investments in emerging markets are more volatile than investments in developed markets due to additional risks relating to political, social, economic and regulatory uncertainty.  The Fund is also subject to concentration risk due to its concentration in China-related companies. Adverse development in such region may affect the value of the underlying securities in which the Fund invests.  The Fund may directly invest in A Shares and other eligible securities through the qualified foreign institutional investors (“QFII”) quota.  Investors will be subject to certain risks including repatriation risk, custodial risk, regulatory risk. In addition, the QFII policy and rules are subject to change. All these may adversely impact the Fund.  The Fund may also invest in derivatives which can involve material risks, e.g. counterparty default risk, insolvency or liquidity risk, and may expose the Fund to significant losses.  You should not make investment decision on the basis of this material alone. Please read the explanatory memorandum for details and risk factors.

The encouraging results from the first quarter indicated that China’s economic recovery was on track during the second quarter, supporting Chinese equities. However, inflation and tapering concerns continued to loom the asset class towards the end of June. During the second quarter, the China Convergence Fund (the “Fund”) returned 1.6%, while the MSCI China Index performed 2.3%1.

Inflation dampens sentiment, but recovery to continue

The expected gradual reopening of the global economy this year has led to a swift pick up of inflation expectations at the beginning of 2021, leading to fears of monetary tightening, which may form headwinds for equity markets.

In April, the U.S. Federal Reserve maintained a dovish tone and emphasized that inflation is only transitory. However, during an FOMC meeting in June, it raised its expectations for inflation this year and expects that rate hikes could come as soon as 2023, after saying in March that it may not increase rates until 2024.

In China, several indicators have also pointed towards a more targeted policy. For example, China’s total social financing (TSF), which is an indicator of the country’s liquidity levels, dropped to RMB 1.85 trillion in April from RMB 3.3 trillion in March2. In May, this was slightly up, at RMB 1.9 trillion. China’s fixed asset investment (FAI) has also started to slow down. In May, month-on-month FAI growth rate was only 0.17%, which compares with the 0.93% and 0.77% growth rates in April and March, respectively3.

After the robust recovery post-pandemic, we expect economic growth in China will continue but moderate in the second half of the year.

Policies will remain accommodative

Meanwhile, China’s kept its stance unchanged as maintaining economic stability continues to be a key item on its agenda. It reiterated that it will properly manage the timing, intensity and effectiveness of monetary policy to keep liquidity at a reasonable level, keep the money supply and TSF generally in line with GDP growth, and maintain a stable macro leverage ratio. We believe that these should help China’s economy to be on track with its recovery.

43rd Floor, The Center, 99 Queen’s Road Central, Hong Kong Hotline: (852) 2143 0688 Email: [email protected] www.valuepartners-group.com

Portfolio strategy review

Our holdings in consumer names, particularly in sportswear and automobile, were among the top contributors during the second quarter as they continue to benefit from China’s economic recovery and consumer upgrade. Within autos, the sector also had a good run towards the end of the quarter thanks to strong shipment. At the same time, our holding of an electric vehicle battery manufacturer also rose on increasing demand of electronic vehicles.

On the other hand, our exposure in both the real estate and healthcare sectors detracted amid policy headwinds. For example, one of our core holdings in a pharmaceuticals company detracted due to some negative impact of the group purchasing organization (GPO). However, we only see this as temporary and continue to have a positive outlook of the healthcare industry as we view that reform should unlock the sector’s growth potential.

Outlook

We view the potential earlier-than-expected tightening driven by the change in inflation expectations could pose risks on the equities markets. At the same time, growth moderation may entail a lackluster environment for equities. However, we remain cautiously optimistic on China equities, favoring companies that are riding on the structural growth cycle and have visibility in earnings. We believe that it is crucial that have to be selective in our bottom-up picking approach and choose quality names that will be rewarded in the current environment.

Value Partners Investment Team 15 July 2021

Sources: 1. MSCI, 30 June 2021 2. People’s 3. National Bureau of Statistics of China, 1 July 2021

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 30 June 2021. 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 Limited only and are subject to change based on market and other conditions. The information provided does not constitute investment advice and it should not be relied on as such. All materials have been obtained from sources believed to be reliable, but their accuracy is not guaranteed. This material contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Investors should note that investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you.

For Singapore investors: The Fund is registered as a restricted foreign scheme in Singapore and will only be distributed to (i) institutional investors and (ii) accredited investors and certain other persons in Singapore in accordance with section 304 and 305 of the Securities and Futures Act. Value Partners Asset Management Singapore Pte Ltd, Singapore Company Registration No. 200808225G.

This commentary has not been reviewed by the Securities and Futures Commission. Issuer: Value Partners Limited.

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China Convergence Fund: Top 5 securities holdings as at 30 June 2021

Stock Industry Valuation Remarks (2022 Estimates) Tencent Holdings Media and Price: HKD584.0 Tencent is a leading provider of online games, premium messaging services, internet value-added (Code: 700 HK) entertainment P/E: 24.1x services, and advertising and e-commerce services in China. By leveraging its large active user P/B: 4.1x base, it offers good long-term monetization potential. Tencent’s largest online user platform Market cap: Yield: 0.4% allows it to monetize other services such as payment and performance ads, while its strength in US$721.5 billion mobile and PC gaming offers long-term growth opportunities.

Jiangsu Hengrui Pharmaceuticals, Price: CNY68.0 Jiangsu Hengrui Medicine focuses on the development, manufacturing, and commercialization of Medicine biotechnology and P/E: 41.5x innovative, high quality healthcare products. With the largest research and development team in (Code: 600276 CH) life sciences P/B: 8.6x China, it has an outstanding track record in the development of oncology drugs, imaging agents Yield: 0.4% and anesthesia. The policy backdrop and the industry’s long-term development are beneficial to the company. In the future, the approval of innovative drugs is expected to accelerate, benefiting Market cap: the like of Jiangsu Hengrui that possesses a strong pipeline of innovative medical products. The US$67.3 billion company’s new product range will gradually squeeze out the older generations of drugs produced by small and medium-sized pharma companies. China Merchants Bank Banks Price: CNY54.2 Founded in 1987, China Merchants Bank is one of the largest banking groups in China and is (Code: 600036 CH) P/E: 9.8x based in Shenzhen. CMB has over 70,000 employees worldwide as at the end of 2018 and more P/B: 1.5x than 1,800 branches globally. Market cap: Yield: 3.3% Since its inception as a commercial bank, CMB has since evolved into a comprehensive banking US$212.3 billion group, with operations in commercial banking, financial leasing, fund management, life insurance and investment banking. Ping An Bank Banks Price: CNY22.6 Ping An Bank, which is headquartered in Shenzhen, has around 101 branches (including the (Code: 000001 CH) P/E: 10.6x Hong Kong branch) and 35,000 employees. It offers a full range of commercial banking services, including retail and corporate banking, and investment banking services. P/B: 1.1x Market cap: Yield: 1.3% US$68.0 billion

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Stock Industry Valuation Remarks (2022 Estimates) Midea Group Consumer durables Price: CNY71.4 Midea Group is known to be the largest home appliance manufacturers in China. Besides home (Code: 000333 CH) and apparel P/E: 14.4x appliances, it has other businesses, including providing heating, ventilation and air conditioning P/B: 3.1x (HVAC), elevators and energy control technologies for residential and commercial buildings, Market cap: Yield: 3.1% robotics and automation solutions, as well as digital transformation services. US$77.9 billion

Note: The above investments made up 34.2% of China Convergence Fund as at 30 June 2021. The stock prices are based on the closing of 30 June 2021.

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

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