€ FUND MANAGER'S COMMENT 31/08/2021 FIXEDHKD INCOME AXA WF Asian High Yield Bonds A (H) m HKD Fund manager's report The Asian High Yield Bond Fund’s (or “AHY”) gross return was 2.46%, while JACI HY was 2.07%. Performance was supported by stable carry generated by underlying bonds and spread tightening driven the overall risk-on sentiment in the market. The outperformance was driven by our underweight in weak and highly leveraged single-B property credits. We don’t think the recovery and growth outlook is negated by the Delta – and possibly other – variant(s), but there could be some “air-pockets” in the data and in investor sentiment as a result. And for many, inflation and the prospect of tapering will need to be taken into account in managing portfolios. For monetary policy, now is not the time to tighten yet. Inflation has jumped higher but the ex-post look at price indices is likely to show a one-step jump in the level of prices during the COVID-era rather than a steepening of the price curve (inflation). The Jackson Hole speech from Jay Powell suggested that there are two decisions to make about tapering and rate increases. The tapering decision is based on progress towards the Fed’s economic targets – which there is. This allows some flexibility in terms of the timing and scale of running down asset purchases. For rate hikes, we need to see full employment and clear evidence that inflation is running at the Fed’s target. Those conditions are some way off while the path of GDP expansion has become a little bit more volatile. In the China property space, companies have recently reported their 1H2021 earnings. As expected, we have seen more credit divergence among developers. This will likely continue as the policy and funding environment remains tight for developers in the second half given the recent shift in growth models. As we expect sales to slow in the 2H2021, we remain highly selective in the sector. In the current policy environment resulting in very tight funding, developers with short landbank lifespans and weak liquidity profiles are likely to suffer. In addition, we have reduced our exposure to issuers with a high reliance on public bond markets as they are highly subject to bond market volatility. However, any spillover impact on quality issuers may provide an attractive entry point. Outside of China property, the situation is generally quiet, stable, and expensive. That is, excepting Sri Lanka of course. Speculation around the likelihood, and even the need, of IMF funding keeps investors guessing on fair value and curve positioning for the USD complex. As a result, front end volatility will continue while a resolution remains uncertain making Sri Lanka relevant for Asian credit investors. Performance evolution (in HKD) Annualized performance 1 Y. 3 Y. 5 Y. 8 Y. Launch Portfolio* -0.30% 4.58% - - 3.86% Benchmark** 1.89% 5.13% - - 4.57% Cumulative performance 1 M. 3 M. YTD 1 Y. 3 Y. 5 Y. 8 Y. Launch Portfolio* 2.33% -2.28% -1.70% -0.30% 14.40% - - 13.18% Benchmark** 2.15% -2.68% -0.08% 1.89% 16.21% - - 15.75% The figures provided relate to previous months or years and past performance is not a reliable indicator as to future performance. * 1st NAV date: 25/05/2018 ** Benchmark : Please refer to the Benchmark section in the characteristics/disclaimers part of the document. Source(s): AXA Investment Managers as at 31/08/2021 Editor: AXA Investment Managers Paris www.axa-im.com € FUND MANAGER'S COMMENT 31/08/2021 FIXEDHKD INCOME AXA WF Asian High Yield Bonds A (H) m HKD Objective and investment strategy 1 2 3 4 5 6 7 The Sub-Fund investment objective is to seek performance through dynamic exposure to the Asian fixed Income market by investing at least The risk category is calculated using historical performance data 70% of its net assets in debt securities issued in the Asian debt universe and may not be a reliable indicator of the Sub-Fund's future risk over a medium- term period. profile. The Share Class aims at hedging the foreign exchange risk resulting from the divergence between the reference currency of the Sub-Fund and the The risk category shown is not guaranteed and may shift over time. currency of this Share Class by using derivatives instruments whilst The lowest category does not mean risk free. retaining the exposure to Investment Policy of the Sub-Fund. Why is this Sub-Fund in this category? The capital of the Sub-Fund is not guaranteed. The Sub-Fund is The Sub-Fund is actively managed in order to capture opportunities in invested in financial markets and uses techniques and instruments transferable debt securities issued in the Asian fixed income market, by which are subject to some levels of variation, which may result in mainly investing in securities that are part of the JP Morgan Asia Credit gains or losses. Non Investment Grade benchmark index (the “Benchmark”) universe. As part of the investment process, the Investment Manager has broad Significant risks not taken account by the risk indicator discretion over the composition of the Sub-Fund's portfolio and can take, Counterparty Risk: Risk of bankruptcy, insolvency, or payment or based on its investment convictions, exposure to companies, countries or delivery failure of any of the Sub-Fund's counterparties, leading to a sectors not included in the Benchmark or take different positioning in payment or delivery default. Liquidity Risk: risk of low liquidity level in terms of duration, geographical allocation and/or sector or issuer certain market conditions that might lead the Sub-Fund to face selection compared to the Benchmark, even though the Benchmark difficulties valuing, purchasing or selling all/part of its assets and constituents are generally representative of the Sub-Fund's portfolio. Thus, resulting in potential impact on its net asset value. Credit Risk: Risk the deviation from the Benchmark is likely to be significant.The following that issuers of debt securities held in the Sub-Fund may default on investment decisions are undertaken after comprehensive macroeconomic their obligations or have their credit rating downgraded, resulting in a and microeconomic analysis of the market:- geographical allocation- credit decrease in the Net Asset Value. Impact of any techniques such as curve positioning (the credit curve illustrates the relationship between derivatives: Certain management strategies involve specific risks, investment term and the credit yield)- issuer selection- instrument such as liquidity risk, credit risk, counterparty risk, legal risk, selectionThe Investment Manager will seek to achieve the objective of the valuation risk, operational risk and risks related to the underlying Sub-Fund by investing at least 70% of its net assets in transferable debt assets.The use of such strategies may also involve leverage, which securities issued by Asian countries governments, corporations, public or may increase the effect of market movements on the Sub-Fund and private companies and supra-national entities in hard currency (hard may result in significant risk of losses. currencies are globally traded major currencies) rated sub-investment grade (to be understood as "high yield") i.e. rated lower than BBB- by Standard & Poor's or Fitch or lower than Baa3 by Moody's or, if unrated, General characteristics then deemed to be so by the Investment Manager.The Sub-Fund may invest less than 30% of its net assets in such transferable debt securities Legal form SICAV rated investment grade including bonds in local currency and bonds Legal country Luxembourg denominated in CNY (through the RQFII Quota, if available, or indirectly Launch date 16/11/16 through investment in other Sub-Funds) and Money Market Instruments. The Sub-Fund may also invest less than 30% of its total net assets in Fund currency USD Money Market Instruments. Shareclass currency HKD Benchmark Valuation Daily Share type Income 100% JP Morgan Asia Credit Non Investment Grade from ISIN code LU1398136009 29/06/16 Bloomberg Code AXAADHH LX Equity Risk characteristics Maximum initial fees 3% Ongoing charges 1.54% Financial management fee* 1.25% Recommended Investment Time Horizon : This Sub-Fund may not be suitable for investors who plan to withdraw their contribution within 5 Maximum management fees 1.25% years. Performance fee : none Management company AXA Funds Management S.A. Delegation of account State Street Bank International GmbH Lower risk Higher risk administration (Luxembourg Branch) ◄ ► Potentially lower reward Potentially higher reward State Street Bank International GmbH Custodian (Luxembourg Branch) Guarantor .Not Applicable *As disclosed in the most recent Annual Report, the ongoing charges calculation excludes performance fees, but includes management and applied services fees. The effective Applied Service Fee is accrued at each calculation of the Net Asset Value and included in the ongoing charges of each Share Class. www.axa-im.com € FUND MANAGER'S COMMENT 31/08/2021 FIXEDHKD INCOME AXA WF Asian High Yield Bonds A (H) m HKD Subscription / Redemption AXA Investment Managers Paris, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6, Place de la Pyramide 92908 Paris - La Défense cedex – France, registered with The subscription, conversion or redemption orders must be received by the the Nanterre Trade and Companies Register under number 353 534 506, Registrar and Transfer Agent on any Valuation Day no later than 3 p.m. a Portfolio Management Company, holder of COB approval no. GP 92-08, Luxembourg time. Orders will be processed at the Net Asset Value issued on 7 April 1992. applicable to the following Valuation Day. The investor's attention is drawn to the existence of potential additional processing time due to the AXA Funds Management, a société anonyme organized under the laws of possible involvement of intermediaries such as Financial Advisers or Luxembourg with the Luxembourg Register Number B 32 223RC, and distributors.The Net Asset Value of this Sub-Fund is calculated on a daily whose registered office is located at 49, Avenue J.F.