asia frontier equity fund china equity fund...asia frontier equity fund china equity fund (each a...

ASIA FRONTIER EQUITY FUND

www.harvestglobal.com.hk

CHINA EQUITY FUND (EACH A SUB-FUND OF HARVEST FUNDS SERIES (HONG KONG))（PREVIOUSLY NAMED AS “EACH A SUB-FUND OF HARVEST FUNDS

(CAYMAN)”)

REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED

31 DECEMBER 2019

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Asia Frontier Equity Fund and China Equity Fund (each a Sub-Fund of Harvest Funds Series (Hong Kong)) REPORT AND FINANCIAL STATEMENTS

For the financial year ended 31 December 2019

Asia Frontier Equity Fund and China Equity Fund (Each a Sub-Fund of Harvest Funds Series (Hong Kong))

CONTENTS

Page Directory 1 Manager's Report 2 Trustee's Report 4 Statement of Responsibilities of the Manager and the Trustee 5 Independent Auditor's Report 6 Statement of Financial Position 9 Statement of Comprehensive Income 10 Statement of Changes in Net Assets Attributable to Unitholders 11 Statement of Cash Flows 12 Notes to the Financial Statements 13 Investment Portfolio (Unaudited) 46 Statement of Movements in Investment Portfolio (Unaudited) 51 Performance table (Unaudited) 56


1

DIRECTORY

DIRECTORS OF THE MANAGER

ZHAO Xuejun WANG Wei JING Lei KWAN Chi Wang LU Lingfei TENG Gang (Appointed on 9 April 2019) LI Ming (Resigned on 9 April 2019) SUN Chen (Resigned on 4 November 2019) MANAGER AND DISTRIBUTOR

Harvest Global Investments Limited 31/F, One Exchange Square 8 Connaught Place Central, Hong Kong TRUSTEE

BNP Paribas Trust Services (Hong Kong) Limited 21/F, PCCW Tower Taikoo Place 979 King’s Road Quarry Bay Hong Kong ADMINISTRATOR AND CUSTODIAN

BNP Paribas Securities Services, operating through its Singapore Branch 20 Collyer Quay #01-01 Singapore 049319 REGISTRAR AND TRANSFER AGENT

BNP Paribas Securities Services, operating through its Hong Kong Branch 21/F, PCCW Tower Taikoo Place 979 King’s Road Quarry Bay Hong Kong AUDITOR

PricewaterhouseCoopers 21/F, Edinburgh Tower 15 Queen’s Road, Central Hong Kong LEGAL ADVISER TO THE MANAGER

Deacons

5th Floor, Alexandra House 18 Chater Road Central Hong Kong


2

MANAGER'S REPORT

Asia Frontier Equity Fund Annual 2019 Market Overview The Asian markets overall index capped 2019 strongly, despite challenges of the on/off rhetoric from the US/China trade war. Markets rode 2019 helped by policy easing by US and subsequent easing from other Asian central banks. However, the market performance of Asia and Asia Frontier markets were much divided. Most of the gains were seen in the larger North Asian markets, namely China, Korea and Taiwan. China A-shares rose strongly with the MSCI index inclusion while Korea and Taiwan rode the technology cycle demand with the roll out of 5G. ASEAN and Asia Frontier markets underperformed its larger peers in 2019 due to the lack of technology sector exposure. Policy easing from the USD led to some strengthening of Asian currencies which also helped some returns. Markets had a booster again towards the end of the year as details of an impending phase 1 trade deal between US and China was to be signed. Although not many details are out, the lower trade tariffs and abolishment of some was indeed a positive surprise to the market. Policy easing statements from China’s annual Central Economic Work Conference also provided some comfort to investors. For the Frontier markets, it was overall lackluster performance. Bangladesh continued to suffer from political will to intervene to rid the liquidity issue that is plaguing its banking system. Vietnam’s gain were largely carried by the Vingroup of companies where gains in these few companies made up most of the index gains. However, that too faltered towards the end of the year where heavy profit taking was seen. Sri Lanka was on firmer footing recovering from the April terrorist attacks and saw its stock market given a boost from President Gota’s win. Investment Strategy & Outlook 2019 was a good year for the bigger Asian markets despite numerous challenges. However, that was not the case for Frontier markets. Frontier markets bore the brunt on lack of investor interest fueled by concerns of US/China trade war and domestic policy issues. Despite these challenges, the economic growth of Frontier markets remained very strong. We believe due to lack of investor interest, the strong economic profile has yet to be reflected in the stock market. For 2020, central bankers have become more accommodative and the likelihood of a phase 1 trade deal to be concluded soon provides a more conducive environment for equity investors. For most of 2019, investors were only focused on sectors like technology and consumption where there was growth certainty. However, if a trade deal is in place, we think investors may be more willing to broaden their horizon to re-look at Frontier markets. We continue to be vigilant and would take profits if fundamentals do not support our view and will look to buy into weaknesses. The strategy mantra remains to be “buy on weakness, sell on strength”. Fresh into the new year, broader Asian markets have tended to perform better historically. We are hopeful that such trends can repeat. Longer term, we also continue to see trade diversion with Vietnam and Bangladesh’s exports to US rising rapidly, vindicating our view that factories will diversify to ASEAN and frontier countries regardless of trade deal outcome.


3

MANAGER'S REPORT

China Equity Fund Annual 2019 Market Review China’s equity market rallied in 2019, making it one of the best-performing stock markets in the world, despite of the US-China trade war, sanctions against publicly Chinese tech companies and slower economic growth. In December, phase-one trade agreement between US and China was widely expected to be signed in January, which boosted market sentiment substantially. Chinese government also implemented some policy easing, including financing local government projects, loosening restrictions on property market, lowering market interest rates etc. Sector performance was diverse during the year, with growth sectors strongly outperforming those with lackluster growth outlook. Consumer stocks rallied the most, especially food and beverage companies with strong brand name and market position (e.g. leading Chinese liquor and home appliance brands), as well as leading E-commerce and education companies. Property stocks rebounded strongly from very cheap valuations thanks to government’s relaxation of restrictions on property purchase in the second half of the year. IT stocks also outperformed on better earnings outlook as investors expected 5G to bring increasing demand for tech products in the coming years. Healthcare names recovered from sell-off in the second half of 2018 as pricing pressure was largely priced in. Defensive sectors such as utilities and telecom, as well as sectors with lower growth such as energy, industrial, and banks underperformed the most during market rally. Our overweight in consumer, healthcare and property sectors, and underweight in telecom and banks contributed substantially to the outperformance of the fund during the year. Portfolio review The Sub-Fund outperformed index by 630 bps in 2019 and ranked in top 39% in morning star period group. The Sub-Fund has strict limits of 1) 70% invested stocks has to be listed in HKEX and 2) no more than 10% A share investments. We tried our best to work within the constraints to deliver excellent performance. The majority of the outperformance came from stock selection, while sector allocation had a slight drag due to cash allocation. During the period, we overweighed insurance, consumer discretionary and consumer staples, healthcare, tech and industrials to achieve alpha for the portfolio. Industrials, real estate, financials and healthcare contributed the most to the outperformance. Stocks such as Baidu, Hengrui and Gree contributed significantly to the portfolio. Outlook Annual 2019 Looking forward, the economy in 2020 and 2021 will highly depend on the epidemic curve. Currently it seems hard to completely control COVID-19 until there is vaccine or specific medicine. The spread of COVID-19 globally will also weigh on China’s external demand. In several politburo meetings, the government alerted that epidemic prevention and control policy would become normal in the rest of the year, which means economy would be hard to recover to the previous growth rate. We expect China’s fiscal policy to take the lead in supporting economic growth. We expect the augmented fiscal deficit will increase by 1.4% (previously 1.0%) of GDP in 2020, with special local government bond to be lifted to around 3.5 trillion yuan (about 3.4% of GDP) and with budgetary fiscal deficit for the first time exceeding the 3% threshold (at around 3.2% of GDP). On monetary policy, we expect PBOC to deliver more Required-Reserve-Ratio cuts and market interest-rate cuts in 2020, with targeted credit support for the corporate sector and small-to-medium enterprises. Our strategy is to continue to overweight good-quality leaders in domestic markets, as well as the beneficiaries of government’s policies. New-economy sectors will remain our key investment themes, such as technology, advanced manufacturing, consumption upgrade and healthcare. The Manager of the Sub-Funds will continue to closely monitor the market situation and will take further appropriate action where necessary.


4

TRUSTEE'S REPORT

We hereby confirm that, in our opinion, the Manager of Asia Frontier Equity Fund and China Equity Fund (the "Sub-Funds"), the sub-funds of Harvest Funds Series (Hong Kong) (the "Trust") has, in all material respects, managed the Sub-Funds in accordance with the provisions of the Trust Deed dated 29 August 2011, as amended, for the year ended 31 December 2019.

For and on behalf of the Trustee BNP Paribas Trust Services (Hong Kong) Limited

Trustee 23 April 2020

Asia Frontier Equity Fund and China Equity Fund (Each a Sub-fund of Harvest Funds Series (Hong Kong))

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STATEMENT OF RESPONSIBILITIES OF THE MANAGER AND THE TRUSTEE

Manager’s Responsibilities

The Manager of Asia Frontier Equity Fund and China Equity Fund (the “Sub-Funds”), the sub-funds of Harvest Funds Series (Hong Kong), is required by the Code of Unit Trusts and Mutual Funds established by the Securities & Futures Commission of Hong Kong (the “SFC Code”) and the Trust Deed dated 29 August 2011, as amended from time to time (the “Trust Deed”) to cause to be made up the financial statements for each annual accounting year which give a true and fair view of the financial position of the Sub-Funds at the end of that year and of the transactions for the year ended. In preparing these financial statements the Manager is required to:-

- select suitable accounting policies and as agreed with the Trustee then apply them consistently; - make judgements and estimates that are prudent and reasonable; and - cause to be made up the financial statements on the basis that the Sub-Funds will continue in operation

unless it is inappropriate to assume this. The Manager is also required to manage the Sub-Funds in accordance with the Trust Deed and take reasonable steps for the prevention and detection of fraud and other irregularities. Harvest Funds Series (Hong Kong) (the “Trust”) is an open-ended umbrella unit trust governed by its Trust Deed. As at 31 December 2019, the Trust has established two sub-funds, namely, Asia Frontier Equity Fund and China Equity Fund. Trustee’s Responsibilities

The Trustee of the Sub-Funds is required to -

- ensure that the Sub-Funds, in all material respect, are managed in accordance with the Trust Deed 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 Sub-Funds and rights attaching thereto; and - report to the unitholders for each annual accounting year should the Manager not managing the

Sub-Funds in accordance to the Trust Deed.

6

Independent Auditor’s Report To the Unitholders of Asia Frontier Equity Fund and China Equity Fund (the Sub-Funds of Harvest Funds Series (Hong Kong))

Report on the Audit of the Financial Statements Opinion

What we have audited

The financial statements of Asia Frontier Equity Fund and China Equity Fund, each a separate sub-funds of Harvest Funds Series (Hong Kong) (the “Trust”) (referred to individually or collectively as the “Sub-Funds”), set out on pages 9 to 45, which comprise:

the statement of financial position as at 31 December 2019;

the statement of comprehensive income for the year then ended;

the statement of changes in net assets attributable to unitholders for the year then ended;

the statement of cash flows for the year then ended; and

the notes to the financial statements, which include a summary of significant accounting policies.

Our opinion

In our opinion, the financial statements give a true and fair view of the financial position of each of the Sub-Funds as at 31 December 2019, and of each of their financial transactions and their cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”). Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Sub-Funds in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (the “IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. Other Information

The Trustee and the Manager (the “Management”) of the Sub-Funds are responsible for the other information. The other information comprises all of the information included in the annual report other than the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Responsibilities of the Management for the Financial Statements

The Management of the Sub-Funds is responsible for the preparation of the financial statements that give a true and fair view in accordance with IFRSs, 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.

In preparing the financial statements, the Management of the Sub-Funds is responsible for assessing the Sub-Funds' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Sub-Funds or to cease operations, or have no realistic alternative but to do so.

In addition, the Management of the Sub-Funds is required to ensure that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the Trust Deed dated 29 August 2011, as amended, (“Trust Deed”) and Appendix E of the Code on Unit Trusts and Mutual Funds issued by the Hong Kong Securities and Futures Commission (the “SFC Code”). Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our responsibilities are to express an opinion on these financial statements based on our audit and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to assess whether the financial statements of the Sub-Funds have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Trust Deed and Appendix E of the SFC Code. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit 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 Sub-Funds' internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Sub-Funds' ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Sub-Funds to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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Report on Matters under the Relevant Disclosure Provisions of Trust Deed and Appendix E of the SFC code

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 Appendix E of the SFC Code. PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 23 April 2020

Asia Frontier Equity Fund and China Equity Fund (Each a Sub-Fund of Harvest Funds Series (Hong Kong)) STATEMENT OF FINANCIAL POSITION As at 31 December 2019

The accompanying notes form an integral part of these financial statements 9

Asia Frontier Equity Fund China Equity Fund Note 2019 2018 2019 2018 US$ US$ HK$ HK$ Assets Current assets Financial assets at fair value through profit or loss 3(a) 16,954,066 16,968,742 506,256,232 319,205,146 Account due from brokers - 30 - 2,859 Due from unitholders - - 1,980,000 - Other receivable 90,496 34,101 232,465 - Cash and cash equivalents 526,466 917,095 14,664,461 23,698,977

Total assets 17,571,028 17,919,968 523,133,158 342,906,982

Liabilities Current liabilities Trustee fee payable 9(b) 1,340 2,768 37,190 53,598 Management fee payable 9(a) 9,688 29,844 357,007 682,383 Administration fee payable 9(c) 1,117 2,307 27,798 41,999 Audit fee payable 26,551 33,881 230,501 222,190 Professional fee payable 8,531 - - - Due to unitholders - - 3,870,895 - Other payables 22,195 23,199 7,843 15,711

Total liabilities (excluding net assets attributable to unitholders)

69,422 91,999 4,531,234 1,015,881

Net assets attributable to unitholders 8 17,501,606 17,827,969 518,601,924 341,891,101

The financial statements were approved and authorised for issue by the Trustee and the Manager on 23 April 2020 and were signed on their behalf. BNP Paribas Trust Services (Hong Kong) Limited Harvest Global Investments Limited as Trustee as Manager

Asia Frontier Equity Fund and China Equity Fund (Each a Sub-Fund of Harvest Funds Series (Hong Kong)) STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 31 December 2019


Asia Frontier Equity Fund China Equity Fund Note 2019 2018 2019 2018 US$ US$ HK$ HK$ Income Net (loss)/gain on financial assets and

liabilities at fair value through profit or loss 7 (481,755) (3,527,809) 99,661,766 (76,847,482)

Net exchange losses (26,464) (41,270) (454,020) (93,363) Dividend income 372,496 381,572 9,104,832 9,067,821 Interest income 11,928 10,475 41,633 36,326

Total investment (losses)/income (123,795) (3,177,032) 108,354,211 (67,836,698)

Expenses Trustee fee 9(b) 8,368 9,309 188,780 211,103 Management fee 9(a) 122,479 136,287 3,396,409 3,593,094 Administration fee 9(c) 6,967 7,755 144,475 156,517 Transaction cost 63,055 77,081 2,738,759 3,779,565 Custody fee 9(d) 36,839 35,182 139,281 139,627 Audit fee 15,830 24,281 230,310 233,937 Legal and professional fee 12,799 5,953 33,483 46,568 Other expenses 7,885 8,499 73,132 72,600

Total operating expenses 274,222 304,347 6,944,629 8,233,011

Operating (loss)/profit (398,017) (3,481,379) 101,409,582 (76,069,709)

Finance costs - (5) (9,090) (332)

(Loss)/profit before tax (398,017) (3,481,384) 101,400,492 (76,070,041) Withholding tax on dividends and other investment income 10 (28,933) (27,922) (557,267) (638,279)

(Loss)/profit after tax (426,950) (3,509,306) 100,843,225 (76,708,320)

(Decreases)/increase in net assets attributable to unitholders (426,950) (3,509,306) 100,843,225 (76,708,320)

Asia Frontier Equity Fund and China Equity Fund (Each a Sub-Fund of Harvest Funds Series (Hong Kong)) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS For the financial year ended 31 December 2019


Asia Frontier Equity Fund 31 December 2019 31 December 2018

US$

US$

Net assets attributable to unitholders at the beginning of year 17,827,969 20,528,310 Subscriptions of units 551,280 2,310,615 Redemption of units (450,693) (1,501,650)

Net increases from units transaction 100,587 808,965 Decreases in net assets attributable to unitholders (426,950) (3,509,306)

Net assets attributable to unitholders at the end of year

17,501,606

17,827,969

China Equity Fund 31 December 2019 31 December 2018

HK$

HK$

Net assets attributable to unitholders at the beginning of year 341,891,101 515,701,094 Subscriptions of units 102,523,011 8,426,521 Redemption of units (26,655,413) (105,528,194)

Net increases/(decreases) from units transaction 75,867,598 (97,101,673) Increases/decreases in net assets attributable to unitholders 100,843,225 (76,708,320)

Net assets attributable to unitholders at the end of year

518,601,924

341,891,101

Asia Frontier Equity Fund and China Equity Fund (Each a Sub-Fund of Harvest Funds Series (Hong Kong)) STATEMENT OF CASH FLOWS For the financial year ended 31 December 2019


Asia Frontier Equity Fund China Equity Fund 2019 2018 2019 2018 US$ US$ HK$ HK$ Cash flows from operating activities (Loss)/profit before tax (398,017) (3,481,384) 101,400,492 (76,070,041) Adjustments for: - Dividend income (372,496) (381,572) (9,104,832) (9,067,821) - Interest income (11,928) (10,475) (41,633) (36,326) - Interest expense - 5 9,090 332 - Net exchange losses 26,464 41,270 454,020 93,363

Operating cash flow before working capital changes (755,977) (3,832,156) 92,717,137 (85,080,493) - Decrease/(increase) in financial assets at fair value through profit or loss 14,676 2,622,547 (187,051,086) 187,489,637 - Increase in professional fee payable 8,531 - - - - Decrease/(increase) in amount due from brokers 30 (30) 2,859 (2,859) - (Decrease)/increase in administration fee payable (1,190) 538 (14,201) (564) - (Decrease)/increase in audit fee payable (7,330) 1,101 8,311 11,788 - (Decrease)/increase in management fee payable (20,156) 8,805 (325,376) 35,138 - (Decrease)/increase in trustee fee payable (1,428) 646 (16,408) (3,546) - (Decrease)/increase in other payables (1,004) 495 (7,868) 3,898

Cash (used in)/generated from operations (763,848) (1,198,054) (94,686,632) 102,452,999 - Dividend income and interest income received 328,029 397,232 8,914,000 9,104,147 - Interest paid - (5) (9,090) (332) - Withholding tax paid (28,933) (27,922) (557,267) (638,279)

Net cash (used in)/generated from operating activities (464,752) (828,749) (86,338,989) 110,918,535 Cash flows generated from financing activities Proceeds from subscriptions of units 551,280 2,576,926 100,543,011 8,426,521 Payments of redeemable units (450,693) (1,502,284) (22,784,518) (105,585,794)

Net cash generated from/(used in) in financing activities 100,587 1,074,642 77,758,493 (97,159,273) Net (decrease)/increase in cash and cash equivalents (364,165) 245,893 (8,580,496) 13,759,262 Cash and cash equivalent at beginning of the year 917,095 712,471 23,698,977 10,033,078 Net exchange losses (26,464) (41,270) (454,020) (93,363)

Cash and cash equivalent at end of the year 526,466 917,095 14,664,461 23,698,977


NOTES TO THE FINANCIAL STATEMENTS

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1. General Information Harvest Funds Series (Hong Kong) (the “Fund”), is an umbrella unit trust governed by its trust deed dated 29 August 2011 as amended, (the “Trust Deed”) made between Harvest Global Investments Limited (the “Manager”) and BNP Paribas Trust Services (Hong Kong) Limited (the “Trustee”). The terms of the Trust Deed are governed by the laws of Hong Kong. The Fund is authorized by the Securities and Futures Commission of Hong Kong (the “SFC”) under 104(1) of the Hong Kong Securities and Futures Ordinance. The Fund has been established as an umbrella fund and accordingly the assets of the Fund will be separated into different sub-funds. As at 31 December 2019, the Fund has two sub-funds, Asia Frontier Equity Fund and China Equity Fund (together, the "Sub-Funds"). BNP Paribas Trust Services (Hong Kong) Limited ("the Trustee") has been appointed as the Trustee of the Trust. Units of each Sub-Fund may be issued in different classes of units. The Manager may issue one or more sub-funds and/or a new class or classes of units related thereto from time to time subject to the Trustee's acceptance of a notice of establishment given to the Trustee by the Manager as provided for in the Trust Deed. The assets of a sub-fund will be invested and administered separately from the assets of the other sub-funds issued. The Sub-Funds have different investment objectives and policies.

Date of constitution

Asia Frontier Equity Fund 29 August 2011 China Equity Fund 10 February 2012 Asia Frontier Equity Fund

The investment objective of the Sub-Fund is to provide long-term capital appreciation by investing primarily in equity and equity related securities of corporations whose predominant business will benefit from or is related to the growth in Asia Frontier Markets. The term “Asia Frontier Markets” shall refer to developing emerging markets or economies in Asia which are considered to be smaller, less developed and less accessible than more developed emerging markets in Asia including but not limited to Bangladesh, Kazakhstan, Mongolia, Sri Lanka, Vietnam and western Chinese provinces. Western Chinese provinces shall include, but not be limited to, Inner Mongolia, Tibet, Xinjiang and Yunnan. China Equity Fund

The investment objective of the Sub-Fund is to provide capital appreciation over the medium to long term by investing primarily in equity and equity-related securities of companies which are incorporated in, have their area of primary activity in or which are related to the growth of the People’s Republic of China (“PRC”). Manager

Harvest Global Investments Limited (the "Manager") has been appointed as the Manager of the Sub-Funds with responsibility for the selection of investments and day-to-day management of the Sub-Funds. The Manager was established in Hong Kong on 23 September 2008 and is a wholly owned subsidiary of Harvest Fund Management Co., Ltd, a company registered in the People's Republic of China. The Manager is licensed and regulated by the SFC to conduct Type 1 regulated activity (dealing in securities), Type 4 regulated activity (advising on securities) and Type 9 regulated activities (asset management).



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2. Summary of 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 the year presented, unless otherwise stated. All references to net asset value (“NAV”) throughout these financial statements refer to net assets attributable to unitholders (after amortisation of preliminary expenses adjustment) unless otherwise stated.

(a) Basis of preparation

The financial statements of the Sub-Funds have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The financial statements are prepared under the historical cost convention as modified by the fair valuation of financial assets and financial liabilities (including derivative instruments) held at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Sub-Funds' accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4. Standards and amendments to existing standards effective 1 January 2019 There are no standards, amendments to standards or interpretations that are effective for annual period beginning 1 January 2019 that have a material impact on the financial statements of the Sub-Funds. New standards, amendments and interpretations effective after 1 January 2019 and have not been early adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2019, and have not been early adopted in preparing these financial statements. None of these are expected to have a material effect on the financial statements of the Sub-Funds.

(b) Financial assets and liabilities at fair value through profit or loss

(i) Classification

The Sub-Funds classify its investments based on both the Sub-Funds' business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Sub-Funds are primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The Sub-Funds have not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. The contractual cash flows of the Sub-Funds' debt securities are solely principal and interest, however, these securities are neither held for the purpose of collecting contractual cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is only incidental to achieving the Sub-Funds' business model’s objective. Consequently, all investments are measured at fair value through profit or loss. As such, the Sub-Funds classify all of its investment portfolio as financial assets or liabilities as fair value through profit or loss. The Sub-Funds' policy requires the Manager and the Board of Directors to evaluate the information about these financial assets and liabilities on a fair value basis together with other related financial information.


NOTES TO THE FINANCIAL STATEMENTS 2. Summary of significant accounting policies (continued)

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(ii) Recognition, derecognition and measurement

Regular purchases and sales of investments are recognised on the trade date – the date on which the Sub-Funds commit to purchase or sell the investment. Financial assets and financial liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed as incurred in the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Sub-Funds have transferred substantially all risks and rewards of ownership. Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the ‘financial assets or financial liabilities at fair value through profit or loss’ category are presented in the statement of comprehensive income within other net changes in fair value of financial assets and liabilities at fair value through profit or loss in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income within dividend income when the Sub-Funds' right to receive payments is established. Interest on debt securities at fair value through profit or loss is recognised in the statement of comprehensive income. Dividend expense on short sales of equity securities is included within other net changes in fair value on financial assets and financial liabilities at fair value through profit or loss.

(c) Derivative financial instruments

Derivative financial instruments are recognised at fair value on the date on which a derivative contract is entered into and subsequently are re-measured at their fair value. Fair values are obtained from quoted market prices in active markets. All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in fair values of derivatives are included in the statement of comprehensive income.

(d) Fair value estimation

Fair value is the price that would be received to sell an asset or pay 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 are based on quoted market price at the close of trading on the reporting date. The quoted market prices used for the financial assets and financial liabilities held by the Sub-Funds were the last traded market price which falls within the bid-ask spread.

(e) Transfer between levels of fair value hierarchy

Transfers between levels of fair value hierarchy are deemed to have occurred at the end of the reporting year.

(f) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.



16

(g) 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, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity often has some or all of the following features or attributes: (a) restricted activities, (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors, (c) insufficient equity to permit the structured entity to finance its activities without subordinated financial support and (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches). The Sub-Funds consider all of its investments in other funds ("lnvestee Funds") to be investments in unconsolidated structured entities. The Sub-Funds invest in lnvestee Funds whose objectives range from achieving medium to long term capital growth and whose investment strategy does not include the use of leverage. The lnvestee Funds apply various investment strategies to accomplish their respective investment objectives. The lnvestee Funds finance their operations by issuing redeemable shares which are puttable at the holder's option and entitles the holder to a proportional stake in the respective fund's net assets. The Sub-Funds hold redeemable shares in each of its lnvestee Funds. The change in fair value of each lnvestee Fund is included in the statement of comprehensive income in "Net gain/(loss) on financial assets at fair value through profit or loss".

(h) Due from and due to brokers and other receivables

Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the statement of financial position date respectively. The due from brokers balance is held for collection. These amounts are recognised initially at fair value and subsequently measured at amortised cost. At each reporting date, the Sub-Funds shall measure the loss allowance on amounts due from broker and other receivables at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Sub-Funds shall measure the loss allowance at an amount equal to 12-month expected credit losses. Significant financial difficulties of the counterparties, probability that the counterparties will enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a loss allowance may be required. If the credit risk increases to the point that it is considered to be credit impaired, interest income will be calculated based on the gross carrying amount adjusted for the loss allowance. A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due. Any contractual payment which is more than 90 days past due is considered credit impaired.

(i) Income and expenses

Interest income and expenses are recognised on a time-proportionate basis using the effective interest method. It includes interest income from cash and cash equivalents at fair value through profit or loss. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income when the Sub-Funds' right to receive payment is established with the corresponding foreign withholding taxes recorded as a taxation charge. Dividend received on securities borrowed and sold short belongs to the stock lenders and represents a liability of the Sub-Funds. Accordingly, dividend received on securities borrowed is recognised as an expense in the statement of comprehensive income. Expenses are accounted for on an accrual basis.



17

(j) 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, brokers and dealer. Transaction costs when incurred, are immediately recognised in profit or loss as an expense.

(k) Foreign currency translation

(i) Functional and presentation currency

Items included in each of the Sub-Funds' financial statements are measured using the currency of the primary economic environment in which they operate (the “functional currency”). This is the United States dollar (the “US$”) for Asia Frontier Equity Fund and the Hong Kong dollar (the "HK$") for China Equity Fund, which reflects the primary capital raising market. The U.S. dollar for Asia Frontier Equity Fund, the HK dollar for China Equity Fund is also their presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency, using the exchange rate prevailing at the financial position date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of all assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. The Sub-Funds do not isolate that portion of gains or losses on trading securities and derivative financial instruments which is due to changes in foreign exchange rates from that which is due to changes in the market price of securities. Such fluctuations are included in the net gain or loss on financial assets and financial liabilities at fair value through profit or loss in the statement of comprehensive income.

(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 three months or less, and bank overdrafts. Bank overdrafts, if any, are shown as liabilities in the statement of financial position.

(m) Redeemable units

Units are redeemable at the unitholder’s option. Units can be redeemed by the unitholders at any time, subject to redemption terms, for cash equal to a proportionate share of each Sub-Fund’s net asset value. Units are issued and redeemed at the holder’s option at prices based on each Sub-Fund’s net asset value per unit at the time of issue or redemption. Each Sub-Fund’s net asset value per unit is calculated by dividing the net assets attributable to the unitholders of each series of class of unitholders with the total number of outstanding units. Units are carried at the redemption amounts that are payable at the statement of financial position date if the holder exercises his rights to redeem the units.



18

(m) Redeemable units (continued)

As at year ended 31 December 2019 and 2018, each of the Sub-Funds issued more than one classes of redeemable units, which are redeemable at the holder’s option and do not have identical rights. Such units are classified as financial liabilities. Units are classified as financial liabilities when there are more than one series of class of units outstanding for a Sub-Fund as at the statement of financial position date as these units are subject to different rates for management fee calculation and therefore do not meet all the conditions under IAS 32 (Amendment) “Financial Instruments: Presentation” and IAS 1 (Amendment) “Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation” for classification as equity. Units are classified as equity when there is only one series of class of units outstanding for a Sub-Fund as at the statement of financial position date and these units meet all the other conditions of equity classification under IAS 32 (Amendment) “Financial Instruments: Presentation” and IAS 1 (Amendment) “Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation”, including the condition that these units were the most subordinated units in issue in that Sub-Fund.

(n) Taxation

The Sub-Funds currently incur withholding taxes imposed by certain countries on investment income and capital gains. Such income or gains are recorded gross of withholding taxes in the statement of comprehensive income. Withholding taxes are shown as a separate item in the statement of comprehensive income.

(o) Preliminary expenses

The preliminary expenses of the Trust and the Sub-Funds are borne by the Sub-Funds. The preliminary expenses incurred in the establishment of the Trust and the Sub-Funds are recognised as expenses of the Sub-Funds in the period in which they arise.

(p) Comparative figures

Certain comparative figures in the financial statements have been reclassified to confirm with current

year’s presentation. 3. Financial risk management

The Sub-Funds' activities expose them to a variety of risk, including but not limited to market price risk, interest rate risk, currency risk, credit risk and liquidity risk arising from the financial instruments held. The financial instruments are held in accordance with the published investment policies of the Sub-Funds and managed accordingly to achieve the investment objectives. The risks and the respective risk management policies employed by the Sub-Funds to manage these risks are discussed below:


NOTES TO THE FINANCIAL STATEMENTS 3. Financial risk management (continued)

19

(a) Market price risk

Market price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or factors affecting all instruments in the market. The Sub-Funds take long and short positions in traded instruments, including derivatives, to take advantage of short-term market movements. The Sub-Funds' equity securities and derivative financial instruments are susceptible to market price risk arising from uncertainties about future prices of the instruments. The Sub-Funds' market price risk are managed through diversification of the investment portfolio and monitored by the Manager on a regular basis. Options and futures contracts on equity indices are also used to reduce market price risk on equity investments. In addition, the Sub-Funds may sell securities of an issuer short. Short sales made by the Sub-Funds 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. As at reporting date the overall market exposures are as follows: Asia Frontier Equity Fund 2019 2018

US$ US$ Listed equity securities 13,805,581 14,476,766 Unlisted/quoted equity securities 1,695,458 1,165,596 Depository receipt 1,453,027 1,281,577 Derivatives - Warrants - 44,803

Total financial assets at fair value through profit or loss 16,954,066 16,968,742

China Equity Fund 2019 2018

HK$ HK$ Listed equity securities 445,530,876 269,111,655 Depository receipt 54,495,068 38,620,716 Derivatives - Warrants - 6,607,337 Listed investment fund 6,230,288 4,865,438

Total financial assets at fair value through profit or loss 506,256,232 319,205,146



(a) Market price risk (continued)

20

The following table discloses the net market exposure by country of operation of the Sub-Funds in various markets.

Asia Frontier Equity Fund

2019

US$ % of NAV Financial assets at fair value through profit or loss Listed equity securities BANGLADESH Agriculture 801,226 4.58 Building Materials 146,226 0.84 Chemicals 461,333 2.64 Pharmaceuticals 438,102 2.50 Retail 258,023 1.47 Telecommunications 446,315 2.55

Total 2,551,225 14.58

BRITAIN Mining 447,316 2.56

CHINA Apparel 1,026,178 5.86 Beverages 186,830 1.07 Electronics 654,597 3.74 Home Furnishings 363,199 2.08 Internet 708,914 4.05

Total 2,939,718 16.80

HONG KONG SAR Internet 438,615 2.51

SRI LANKA Agriculture 353,340 2.02 Lodging 295,815 1.69 Retail 365,856 2.09 Telecommunications 316,733 1.81

Total 1,331,744 7.61

THAILAND Real Estate 417,026 2.38

VIETNAM Airlines 1,624,342 9.28 Beverages 930,596 5.32 Engineering and Construction 92,485 0.53 Food 1,507,107 8.61 Pharmaceuticals 550,757 3.15 Real Estate 701,495 4.01 Telecommunications 273,155 1.54

Total 5,679,937 32.44

Total listed equity securities 13,805,581 78.88




21


2019

US$ % of NAV Financial assets at fair value through profit or loss (continued) Unlisted/quoted equity securities VIETNAM Engineering and Construction 972,273 5.56 Machinery-Diversified 723,185 4.13

1,695,458 9.69

Total unlisted/quoted equity securities 1,695,458 9.69

Depository receipts CHINA Software 172,356 0.98

SINGAPORE Software 494,935 2.83

THAILAND Engineering and Construction 530,963 3.03 Food 254,773 1.46

Total 785,736 4.49

Total depository receipts 1,453,027 8.30

Total 16,954,066 96.87




22


2018

US$ % of NAV Financial assets at fair value through profit or loss Listed equity securities BANGLADESH Agriculture 986,821 5.54 Building Materials 300,500 1.68 Chemicals 430,653 2.41 Pharmaceuticals 554,286 3.11 Retail 418,723 2.35 Telecommunications 505,959 2.84

Total 3,196,942 17.93

BRITAIN Mining 806,495 4.52

CANADA Mining 302,118 1.69

CHINA Apparel 555,440 3.12 Computers 505,394 2.83 Engineering and Construction 773,190 4.34 Internet 360,948 2.02

Total 2,194,972 12.31

HONG KONG SAR Lodging 405,958 2.28

PHILIPPINES Engineering and Construction 183,399 1.03

SRI LANKA Agriculture 450,610 2.53 Lodging 296,711 1.66 Oil and Gas 90,260 0.51 Retail 327,665 1.84 Telecommunications 257,913 1.44

Total 1,423,159 7.98




23


2018

US$ % of NAV Financial assets at fair value through profit or loss (continued) Listed equity securities (continued) VIETNAM Airlines 1,331,956 7.47 Beverages 1,014,528 5.69 Computers 810,528 4.55 Engineering and Construction 92,692 0.52 Food 1,550,879 8.70 Pharmaceuticals 554,243 3.11 Real Estate 608,897 3.42

Total 5,963,723 33.46


Unlisted/quoted equity securities VIETNAM Engineering and Construction 1,165,596 6.54

Total unlisted/quoted equity securities 1,165,596 6.54

Depository receipts CHINA Software 546,529 3.07

THAILAND Engineering and Construction 551,137 3.09 Retail 183,911 1.03

Total 735,048 4.12


Derivatives LUXEMBOURG Banks 44,803 0.25

Total derivatives 44,803 0.25

Total 16,968,742 95.18




24

China Equity Fund

2019

HK$ % of NAV Financial assets at fair value through profit or loss (continued) Listed equity securities CHINA Agriculture 3,267,884 0.63 Apparel 19,157,980 3.69 Banks 64,282,480 12.40 Beverages 9,053,386 1.75 Electrical Component & Equipment 5,620,753 1.08 Engineering and Construction 10,230,560 1.97 Healthcare-Services 5,080,475 0.98 Home Furnishings 10,301,444 1.99 Insurance 46,379,020 8.94 Internet 80,336,360 15.49 Mining 5,221,965 1.01 Miscellaneous Manufacture 10,495,220 2.02 Oil and Gas 9,072,000 1.75 Oil and Gas Services 9,512,045 1.83 Pharmaceuticals 11,477,522 2.21 Real Estate 35,309,271 6.81 Retail 8,662,850 1.67 Telecommunications 7,132,594 1.38

Total 350,593,809 67.60

HONG KONG SAR Beverages 11,464,600 2.22 Food 16,726,500 3.23 Hand/Machine Tools 10,136,225 1.95 Lodging 9,872,800 1.90 Real Estate 15,272,120 2.94 Telecommunications 4,569,560 0.88 Transportation 6,935,000 1.34

Total 74,976,805 14.46

TAIWAN Semiconductors 19,960,262 3.85





25

China Equity Fund 2019

HK$ % of NAV Financial assets at fair value through profit or loss (continued)

Depository receipt CHINA Biotechnology 5,053,911 0.97 Commercial Services 16,121,875 3.11 Internet 33,319,282 6.43

Total 54,495,068 10.51

Total depository receipt 54,495,068 10.51

Listed investment fund HONG KONG SAR Equity Fund 6,230,288 1.20

Total listed investment fund 6,230,288 1.20

Total 506,256,232 97.62




26

China Equity Fund

2018

HK$ % of NAV Financial assets at fair value through profit or loss Listed equity securities CHINA Airlines 3,178,120 0.93 Apparel 9,052,500 2.64 Banks 41,495,820 12.14 Biotechnology 3,928,300 1.15 Building Materials 4,503,000 1.32 Coal 4,967,820 1.44 Diversified Financial Services 6,453,000 1.89 Engineering and Construction 19,032,900 5.57 Food 7,124,800 2.08 Gas 3,514,170 1.03 Insurance 12,377,850 3.62 Internet 34,791,200 10.18 Mining 5,767,725 1.69 Oil and Gas 16,414,320 4.80 Real Estate 8,178,300 2.39 Telecommunications 5,120,000 1.50

Total 185,899,825 54.37

HONG KONG SAR Beverages 6,837,500 2.00 Commercial Services 3,158,400 0.93 Diversified Financial Services 3,512,300 1.03 Electric 3,433,680 1.00 Holding Companies-Diversified 4,812,800 1.41 Insurance 17,344,800 5.07 Real Estate 13,321,400 3.90 Retail 2,916,690 0.85 Telecommunications 20,582,100 6.02 Transportation 206,640 0.06 Water 7,085,520 2.07

Total 83,211,830 24.34


Depository receipt

CHINA Commercial Services 2,552,401 0.75 Internet 30,263,490 8.85 Software 5,804,825 1.70

Total 38,620,716 11.30

Total depository receipt 38,620,716 11.30




27

China Equity Fund 2018

HK$ % of NAV Financial assets at fair value through profit or loss (continued) Derivatives LUXEMBOURG Electronics 5,164,016 1.51 Pharmaceuticals 1,443,321 0.42

Total 6,607,337 1.93

Total derivatives 6,607,337 1.93

Listed investment fund HONG KONG SAR Equity Fund 4,865,438 1.42


Total 319,205,146 93.36




28

The analysis shown below summarises the impact on the Sub-Funds' net assets attributable to unitholders in response to theoretical increases/decreases of the key market index to which the Sub-Funds are exposed. The analysis is based on the assumption that the index had increased/decreased by the respective percentage with all other variables held constant and each of the Sub-Funds' investments moved in line with the historical correlation with the movement of the index, which may not be the case. The sensitivity analysis is presented gross of the impact, if any, of performance fees. Changes in market index percentage are revised annually depending on directors’ current view of market volatility and other relevant factors. The Manager uses some benchmark indices for the Sub-Funds as a reference point for deriving the sensitivity analysis presented above. However, the Manager does not manage the Sub-Funds' investment strategy to track the benchmark indices or any other indices or external benchmark. The sensitivity analysis presented below is based upon the portfolio composition of the Sub-Funds as at year end date and the historical correlation of the investments comprising the portfolio in the Sub-Funds to the benchmark indices. The composition of the Sub-Funds' investment portfolio, including the use of leverage, and the correlation thereof to the benchmark index, is expected to change over time. Accordingly, the sensitivity analysis below is not necessarily indicative of the effect on the Sub-Funds' net assets attributable to unitholders of future movements in the level of the benchmark indices. Disclosures below are shown in absolute terms, changes and impacts could be positive or negative. Changes in market index % are revised annually depending on the Manager’s current view of market volatility and other relevant factors. Some limitations of sensitivity analysis are: • It is based on historical data and cannot take into account the fact that future market price

movements, correlations between markets and levels of market liquidity in conditions of market stress may bear no relation to historical patterns.

• Market price risk information is an approximate estimate of risk rather than a precise and accurate

number. • Market price information represents a hypothetical outcome and is not intended to be taken literally

and future market conditions could vary significantly from those experienced in the past. • The investment strategy of each Sub-Fund is not to track any stock exchange. Asia Frontier Equity Fund

The Sub-Fund invests primarily in equity and equity related securities of corporations whose predominant business will benefit from or is related to the growth in Asia Frontier Markets, where the term “Asia Frontier Markets” shall refer to developing emerging markets or economies in Asia which are considered to be smaller, less developed and less accessible than more developed emerging markets in Asia including but not limited to Bangladesh, Kazakhstan, Mongolia, Sri Lanka, Vietnam and western Chinese provinces. Western Chinese provinces shall include, but not be limited to, Inner Mongolia, Tibet, Xinjiang and Yunnan. The Manager is of the view that the price risk that the Sub-Fund is subject to is best reflected by movements in its benchmark using local indices of the Vietnam Ho Chi Minh Stock Index, Sri Lanka Colombo Index, Kazakhstan KASE Stock Index, MSE Top 20 Index and Dhaka Stock Exchange General Index (the "Asia Frontier Equity Fund Index"). Each of the market indices is weighted by its market capitalisation and rebalanced on a monthly basis. As of 31 December 2019, an increase/decrease of the Asia Frontier Equity Fund Index by 5% (2018: 5%), with all other variables remaining constant, the net assets attributable to unitholders for the year would increase/decrease by approximately US$848,560 (2018: US$622,834).




29

China Equity Fund

(i) Equity investments As the Sub-Fund invests primarily in equity and equity-related securities of companies which are incorporated in, have their area of primary activity in or which are related to the growth of the People’s Republic of China (“PRC”), the MSCI China Total Return Index is chosen as the Manager considers this closely represents the geographical allocation of the Sub-Fund's portfolio investments. As of 31 December 2019, an increase/decrease of the MSCI China Total Return Index by 5% (2018: 5%), with all other variables remaining constant, the net assets attributable to unitholders for the year would increase/decrease by approximately HK$21,656,992 (2018: HK$15,192,237). (ii) Investment in investee funds

2019 2018

Listed/quoted investment funds

Number of Investee Funds

Net Asset Value of Investee Fund

HK$

Fair value HK$

% of net assets

Fair value HK$

% of net assets

Exchange traded funds

1 922 million 6,230,288 1.20% 4,865,438 1.42%

6,230,288 1.20% 4,865,438 1.42%

The Sub-Fund's investments in investee funds are subject to the terms and conditions of the respective investee fund's offering documentation and are susceptible to market price risk arising from uncertainties about future values of those investee funds. 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. All of the investee funds in the investment portfolio are managed by portfolio managers who are compensated by the respective investee funds for their services. Such compensation generally consists of an asset based fee and is reflected in the valuation of the Sub-Fund's investments in each of the investee funds. The Sub-Fund has right to request redemption of its investments in investee funds on a daily basis. The Sub-Fund's holding in a third party investee fund, as a percentage of the investee fund's total net asset value, will vary from time to time dependent on the volume of subscriptions and redemptions at the investee fund level. It is possible that the Sub-Fund may, at any point in time, hold a majority of an investee fund's total units in issue. The Sub-Fund's maximum exposure to loss from its interests in investee funds is equal to the total fair value of its investments in investee funds.

As at 31 December 2019 and 31 December 2018 there were no capital commitment obligations. There were no amounts due to investee funds for unsettled purchases as at 31 December 2019 and 31 December 2018. During the year ended 31 December 2019, total net gain incurred on investments in investee fund was HK$1,364,850 (2018: total net loss of HK$3,547,626).



30

(b) Interest rate risk

Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rates on the fair value of financial assets and liabilities and future cash flows. Asia Frontier Equity Fund and China Equity Fund

The financial assets and liabilities of Asia Frontier Equity Fund and China Equity Fund are mostly non-interest bearing. Hence, they are not subjected to risk of fluctuations in the prevailing levels of market interest rate. The cash at banks in Asia Frontier Equity Fund and China Equity Fund are exposed to interest rate risk which is considered to be minimal by the Manager as they are short-term instruments with maturities of less than one month. At 31 December 2019, the China Equity Fund has bank balances of RMB14,664,461 (2018: RMB23,698,977). If the interest rates had been 10 basis points higher or lower with all variables held constant, net assets attributable to unitholders would have been higher or lower by RMB14,664 (2018: RMB23,699) for China Equity Fund as a result of higher or lower interest income.

(c) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The table below summaries the exposure to currency risks of Asia Frontier Equity Fund as at 31 December 2019 and 2018.


As at 31 December 2019

USD US$

HKD US$

LKR US$

BDT US$

GBP US$

VND US$

Others US$

Total US$

Assets Monetary assets 426,015 12 - 7,241 4,383 171,408 7,903 616,962 Non-monetary assets 667,291 2,374,431 1,331,744 2,551,225 447,316 7,375,395 2,206,664 16,954,066

Total assets 1,093,306 2,374,443 1,331,744 2,558,466 451,699 7,546,803 2,214,567 17,571,028

Liabilities Monetary liabilities (17,571,028) - - - - - - (17,571,028)

Net currancy exposure (16,477,722) 2,374,443 1,331,744 2,558,466 451,699 7,546,803 2,214,567


USD US$

HKD US$

LKR US$

BDT US$

GBP US$

VND US$

Others US$

Total US$

Assets

Monetary assets 356,719 42 - 13,070 4,214 569,074 8,107 951,226 Non-monetary assets 893,450 2,240,774 1,423,159 3,196,942 806,495 7,129,319 1,278,603 16,968,742

Total assets 1,250,169 2,240,816 1,423,159 3,210,012 810,709 7,698,393 1,286,710 17,919,968

Liabilities Monetary liabilities (17,919,968) - - - - - - (17,919,968)

Net currancy exposure (16,669,799) 2,240,816 1,423,159 3,210,012 810,709 7,698,393 1,286,710



(c) Currency risk (continued)

31

The following table shows the sensitivity to major foreign currencies exposure in respect of both monetary and non-monetary net assets of the Asia Frontier Equity Fund with all other variables held constant. Changes in foreign exchange rate are revised annually depending on the Manager's current view of market volatility and other relevant factors. Asia Frontier Equity Fund 2019 2018 Increase/decrease in

reasonable possible shift in rate

%

Movement in

value US$

Increase/decrease in reasonable possible

shift in rate %

Movement in

value US$

LKR - Monetary 1 - 1 - - Non-monetary 1 13,317 1 14,232 BDT - Monetary 1 72 1 131 - Non-monetary 1 25,512 1 31,969 GBP - Monetary 1 44 1 42 - Non-monetary 1 4,473 1 8,065 VND - Monetary 1 1,714 1 5,691 - Non-monetary 1 73,754 1 71,293 China Equity Fund


HKD HK$

USD HK$

CNY HK$

TWD HK$

Total HK$

Assets Monetary assets 16,435,924 208,537 113,367 119,098 16,876,926 Non-monetary assets 387,933,074 54,495,068 43,867,828 19,960,262 506,256,232

Total assets 404,368,998 54,703,605 43,981,195 20,079,360 523,133,158

Liabilities Monetary liabilities (523,133,158) - - - (523,133,158)

Net currancy exposure (118,764,160) 54,703,605 43,981,195 20,079,360


HKD HK$

USD HK$

Total HK$

Assets Monetary assets 23,496,487 205,349 23,701,836 Non-monetary assets 273,977,093 45,228,053 319,205,146

Total assets 297,473,580 45,433,402 342,906,982

Liabilities Monetary liabilities (342,906,982) - (342,906,982)

Net currancy exposure (45,433,402) 45,433,402



(c) Currency risk (continued)

32

The following table shows the sensitivity to major foreign currencies exposure in respect of both monetary and non-monetary net assets of the China Equity Fund with all other variables held constant. Changes in foreign exchange rate are revised annually depending on the Manager's current view of market volatility and other relevant factors.

As at 31 December 2019 and 31 December 2018, China Equity Fund held assets and liabilities which were mainly denominated in United States dollar and Hong Kong dollar. As Hong Kong dollar is linked currency of United States dollar, the functional currency of the Sub-Fund, the Sub-Fund had no significant exposure to currency risk. The Manager considered that asset and liabilities denominated in other currencies were immaterial and therefore they did not pose a significant currency risk exposure. China Equity Fund As at 31 December 2019 Increase/decrease in reasonable

possible shift %

Increase/decrease in net assets

HK$ CNY - Monetary 1 1,134 - Non-monetary 1 438,678 TWD - Monetary 1 1,191 - Non-monetary 1 199,603



33

(d) Credit risk

Credit risk is the risk a counterparty to a financial instrument fails to discharge its obligations and causes the Sub-Funds to incur a financial loss. The Sub-Funds seek to minimise the risk of loss by careful choice of counterparties and by minimising the reliance placed on individual counterparties. The Sub-Funds take on exposure to credit risk. Cash and cash equivalents are held with BNP Paribas (the “Bank”). The Sub-Funds are also exposed to the risk that their assets held with the custodian may not be recoverable in the event of default by the custodian. Credit risk also arises from cash and cash equivalents held with financial institutions. The table below summarises the credit rating of banks and custodians in which the Sub-Funds' assets are held as at 31 December 2019 and 31 December 2018:

Asia Frontier Equity Fund As at 31 December 2019 Bank and financial institution

Credit rating* Source of credit rating US$

BNP Paribas Securities Services operating through its Singapore Branch A+ Standard & Poor's 526,466

Custodian BNP Paribas Securities Services operating

through its Singapore Branch A+ Standard & Poor's 16,954,066

As at 31 December 2018 Bank and financial institution

Credit rating* Source of credit rating US$

BNP Paribas Securities Services operating through its Singapore Branch A Standard & Poor's 917,095


through its Singapore Branch A Standard & Poor's 16,968,742



(d) Credit risk (continued)

34

China Equity Fund As at 31 December 2019 Bank and financial institution

Credit rating* Source of credit rating HK$

BNP Paribas Securities Services operating through its Singapore Branch A+ Standard & Poor's 14,664,461


through its Singapore Branch A+ Standard & Poor's 506,256,232

As at 31 December 2018 Bank and financial institution

Credit rating* Source of credit rating HK$

BNP Paribas Securities Services operating through its Singapore Branch A Standard & Poor's 23,698,977


through its Singapore Branch A Standard & Poor's 319,205,146

*The credit ratings are based on the Long-Term Local Issuer Ratings published by the rating agency for BNP Paribas S.A., which is the parent company BNP Paribas Securities Services operating through its Singapore Branch. The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets. Financial assets subject to IFRS 9’s impairment requirements

The Sub-Funds measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management consider both historical analysis and forward looking information in determining any expected credit loss. At 31 December 2019 and 31 December 2018, all other receivables, due from unitholders, amounts due from brokers, cash and short-term deposits are held with counterparties with a credit rating of A or above and are due to be settled within 1 month. Management consider the probability of default to be close to zero as the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12-month expected credit losses as any such impairment would be wholly insignificant to the Sub-Funds.



35

(e) Liquidity risk Liquidity risk is the risk that the Sub-Funds may not be able to generate sufficient cash resources to settle their obligations in full as they fall due or can only do so on terms that are materially disadvantageous. The Sub-Funds are exposed to periodic cash redemptions by redeeming unitholders. The table below analyses the Sub-Funds' financial liabilities into relevant maturity groupings based on the remaining period from the period end date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant. Asia Frontier Equity Fund Less than 3 months 2019

US$ 2018 US$

Professional fee payable 8,531 - Administration fee payable 1,117 2,307 Audit fee payable 26,551 33,881 Management fee payable 9,688 29,844 Trustee fee payable 1,340 2,768 Other payables 22,195 23,199 Net assets attributable to unitholders 17,501,606 17,827,969

Total liabilities 17,571,028 17,919,968

China Equity Fund Less than 3 months 2019

HK$ 2018 HK$

Administration fee payable 27,798 41,999 Audit fee payable 230,501 222,190 Management fee payable 357,007 682,383 Trustee fee payable 37,190 53,598 Due to unitholders 3,870,895 - Other payables 7,843 15,711 Net assets attributable to unitholders 518,601,924 341,891,101

Total liabilities 523,133,158 342,906,982

Units are redeemed on demand at the unitholder’s option. As at 31 December 2019, there was 1 unitholder holding 100% (2018:100%) of Class J (JPY), which represented more than 90% (2018: more than 90%) of the net asset value of Asia Frontier Fund. As at 31 December 2019, there was 1 unitholder holding 100% (2018:100%) of Class I, which represented more than 90% (2018: more than 90%) of the the net asset value of China Equity Fund.



36

3. Financial risk management (continued)

(e) Liquidity risk (continued)

The Sub-Funds manage their liquidity risk by investing predominantly in securities that they expect to be able to liquidate within 1 month or less. The following table illustrates the expected liquidity of assets held:

Asia Frontier Equity Fund Less than 1 month 2019

US$

2018 US$

Total assets 17,571,028 17,919,968

China Equity Fund Less than 1 month 2019

HK$

2018 HK$

Total assets 523,133,158 342,906,982

(f) Capital risk management

The Sub-Funds' capital are represented by the units in the Sub-Funds and shown as net assets attributable to unitholders on the statement of financial position. In order to achieve the investment objectives, the Sub-Funds endeavour to invest their capital in accordance with the investment policies as outlined in Note 3, whilst maintaining sufficient liquidity to meet redemption requests. Such liquidity is augmented by the holding of liquid investments.

4 Critical accounting estimates and assumptions

The Manager makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

Fair value of unlisted investments

The fair value of unlisted investments may be determined by the Sub-Funds using reputable pricing sources (such as pricing agencies). Broker quotes as obtained from the pricing sources may be indicative and not executable or binding. The Sub-Funds would exercise judgement and estimates on the quantity and quality of pricing sources used. Where no market data is available, the Sub-Funds may value positions using its own models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. The inputs into these models are primarily earning multiples and discounted cash flows. The models used to determine fair values are validated and periodically reviewed by experienced personnel of the Manager. Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments. As at 31 December 2019, Asia Frontier Equity Fund held two unlisted equities of US$1,695,458, represented 0.10% of the net asset value of the Sub-Fund. As at 31 December 2018, the Sub-Fund held one unlisted equity of US$1,165,596 and one derivative in total of US$44,803, represented 0.07% of the net asset value of the Sub-Fund.

As at 31 December 2018, China Equity Fund held one derivative of US$6,607,337, represented 1.93%

of the net asset value of the Sub-Fund.



37

5. Fair value estimation

The fair value of financial assets and liabilities traded in active markets (such as trading securities) are based on quoted market prices at the close of trading on the year end date. The Sub-Funds utilise the last traded market price as its fair valuation inputs for both financial assets and financial liabilities. 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. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The Sub-Funds have adopted IFRS 13 which requires the Sub-Funds to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3 - Inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs). For the purpose of determining the appropriate level in the fair value hierarchy, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability. The determination of what constitutes "observable" requires significant judgment by the Sub-Funds. The Sub-Funds consider observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.


NOTES TO THE FINANCIAL STATEMENTS 5. Fair value estimation (continued)

38

The following ta ble analyses within the fair value hierarchy the Sub-Funds' financial assets and liabilities measured at fair value at year end date: Asia Frontier Equity Fund As at 31 December 2019

Level 1 US$

Level 2 US$

Level 3 US$

Total US$

Financial assets at fair value through profit or loss

Listed equity securities 13,805,581 - - 13,805,581 Unlisted/quoted equity securities 1,695,458 1,695,458 Depository receipts 1,453,027 - - 1,453,027

Total 15,258,608 1,695,458 - 16,954,066


Level 1 US$

Level 2 US$

Level 3 US$

Total US$


Listed equity securities 14,476,766 - - 14,476,766 Unlisted equity/quoted securities - 1,165,596 - 1,165,596 Depository receipts 1,281,577 - - 1,281,577 Derivatives - Warrants - 44,803 - 44,803

Total 15,758,343 1,210,399 - 16,968,742

China Equity Fund As at 31 December 2019

Level 1 HK$

Level 2 HK$

Level 3 HK$

Total HK$


Listed equity securities 445,530,876 - - 445,530,876 Depository receipts 54,495,068 - - 54,495,068 Listed investment funds 6,230,288 - - 6,230,288

Total 506,256,232 - - 506,256,232


Level 1 HK$

Level 2 HK$

Level 3 HK$

Total HK$


Listed equity securities 269,111,655 - - 269,111,655 Depository receipts 38,620,716 - - 38,620,716 Derivatives - Warrants - 6,607,337 - 6,607,337 Listed investment funds 4,865,438 - - 4,865,438

Total 312,597,809 6,607,337 - 319,205,146


NOTES TO THE FINANCIAL STATEMENTS 5. Fair value estimation (continued)

39

Investments that are valued based on quoted market prices in active markets, such as active listed equities and listed futures contracts, are classified within level 1. The Sub-Funds do not adjust the quoted prices for these investments. Investments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs, such as unlisted debt securities and over-the-counter derivatives, are classified within level 2. There is no level 3 investments for the Sub-Funds as at 31 December 2019 and 31 December 2018. The Manager assessed that there is no movements between Level 1, 2 and 3 during the year ended 31 December 2019 and 31 December 2018 for Sub-Fund, Asia Frontier Equity Fund and China Equity Fund.

6. Financial instruments by category

Financial assets Apart from financial assets of investments as disclosed in the statement of financial position which are classified as at fair value through profit or loss, all other financial assets as disclosed in the statement of financial position, including other receivables, amounts due from broker and cash and cash equivalents, are categorised as “amortised cost". Financial liabilities Apart from financial liabilities of investments as disclosed in the statement of financial position which are classified as fair value through profit or loss, all financial liabilities as disclosed in the statement of financial position, including administration fee payable, management fee payable, trustee fee payable, audit fee payable, amounts due to broker, other payables and net assets attributable to unitholders are categorised as “other financial liabilities”.

7. Net (loss)/gain on financial assets and liabilities at fair value through profit or loss

Asia Frontier Equity Fund China Equity Fund 2019 2018 2019 2018 US$ US$ HK$ HK$ Net realised gain/(loss) on investments (395,372) 1,263,404 28,382,031 49,136,247 Net change in unrealised gain/(loss) on investments (86,383) (4,791,213) 71,279,735 (125,983,729)

Total (481,755) (3,527,809) 99,661,766 (76,847,482)

8. Redeemable units in issue For Asia Frontier Equity Fund and China Equity Fund, net assets attributable to unitholders represent a liability in the statement of financial position, carried at the redemption amount that would be payable at the statement of financial position date if the unitholders exercised the right to redeem the units.



8. Redeemable units in issue (continued)

40

For Asia Frontier Equity Fund, there are 2 classes of units in issue as at 31 December 2019 and 31 December 2018. Class J units are offered to investors that are established as "fund of funds" type of investment vehicles with dealings done in Japanese Yen ("JPY"). Class A units are offered to general investors. The movements of the redeemable units are as follows: Class J Class A 2019 2018 2019 2018 Number of units in issue at the

beginning of year 876,405 860,630 14,724 2,319 Units issued 26,388 87,850 228 12,585 Units redeemed (13,245) (72,075) (12,047) (180)

Number of units in issue at the end of year 889,548 876,405 2,905 14,724

Net asset value per unit currency JPY 2,133.182 JPY 2,205,491 USD 13.802 USD 14.289

For China Equity Fund, there are 2 classes of units in issue as at 31 December 2019 and 31 December 2018. Class I units are offered to institutional investors. Class A units are offered to general investors. The movements of the redeemable units are as follows: Class I Class A 2019 2018 2019 2018 Number of units in issue at the

beginning of year 2,583,348 3,269,306 72,614 44,744 Units issued 366,281 - 302,325 49,459 Units redeemed (104,499) (685,958) (68,071) (21,589)

Number of units in issue at the end of year 2,845,130 2,583,348 306,868 72,614

Net asset value per unit currency USD 20.973 USD 16.407 HKD 174.803 HKD 138.431

9. Transactions with the Trustee, Manager and Manager's connected persons

The following is a summary of significant related party transactions/transactions entered into during the year between each of the Sub-Funds and the Trustee, the Manager and their connected persons ("Connected Persons") respectively. Connected Persons of the Manager are those defined in the Code on Unit Trusts and Mutual Funds established by the Securities & Futures Commission of Hong Kong (the "SFC Code"). All transactions entered into during the year between each of the Sub-Funds and the Manager and its Connected Persons were carried out in the normal course of business and on normal commercial terms. To the best of the Manager's knowledge, the Sub-Funds do not have any other transactions with Connected Persons and the Trustee and its affiliates, except for those disclosed below.

(a) Management fee The Manager will receive a management fee for the different classes of units for each Sub-Fund at the following rates per annum:

Sub-Fund and Class

Management Fee (% of Net Asset Value)

Asia Frontier Equity Fund (Class I) Up to 1.25% Asia Frontier Equity Fund (Class J) Up to 0.65% Asia Frontier Equity Fund (Class A) Up to 1.75% China Equity Fund (Class I) Up to 0.75% China Equity Fund (Class A) Up to 1.50%



41

9. Transactions with the Trustee, Manager and Manager's connected persons (continued)

(a) Management fee (continued)

At the discretion of the Manager, the management fee may be waived whether in part or in whole and whether generally or in respect to a particular unitholder. Management fee of US$122,479 (2018: US$136,287) was charged for Asia Frontier Equity Fund for the year ended 31 December 2019 and HK$3,396,409 (2018: HK$3,593,094) for China Equity Fund for the year ended 31 December 2019, of which US$9,688 (2018: US$29,844) for Asia Frontier Equity Fund and HK$357,007 (2018: HK$682,383) for China Equity Fund was outstanding at 31 December 2019.

Administration, Custodian, Registrar and Transfer Agent and Trustee fees The Sub-Funds will pay administration, custodian, registrar and transfer agent and trustee fees at rates agreed from time to time. In addition, all parties are entitled to recover out-of-pocket expenses in performing its services.

(b) Trustee fee of US$8,368 (2018: US$9,309) was charged for Asia Frontier Equity Fund for the year ended 31 December 2019 and HK$188,780 (2018: HK$211,103) for China Equity Fund for the year ended 31 December 2019, of which US$1,340 (2018: US$2,768) for Asia Frontier Equity Fund and HK$37,190 (2018: HK$53,598) for China Equity Fund was outstanding as at 31 December 2019.

(c) Administration fee of US$6,967 (2018: US$7,755) was charged for Asia Frontier Equity Fund for the

year ended 31 December 2019 and HK$144,475 (2018: HK$156,517) for China Equity Fund for the year ended 31 December 2019, of which US$1,117 (2018: US$2,307) for Asia Frontier Equity Fund and, HK$27,798 (2018: HK$41,999) for China Equity Fund was outstanding as at 31 December 2019.

(d) Custodian fee of US$36,839 (2018: US$35,182) was charged for Asia Frontier Equity Fund for the year

ended 31 December 2019 and HK$139,281 (2018: HK$139,627) for China Equity Fund for the year ended 31 December 2019.

(e) Registrar and transfer agent fee of US$3,169 (2018: US$3,178) was charged for Asia Frontier Equity

Fund for the year ended 31 December 2019 and HK$29,224 (2018: HK$24,317) for China Equity Fund for the year ended 31 December 2019, of which US$334 (2018: US$669) for Asia Frontier Equity Fund and HK$2,612 (2018: HK$5,236) for China Equity Fund was outstanding at 31 December 2019.

(f) Financial reporting fee

Financial reporting fee of US$3,998 (2018: US$3,995) was charged for Asia Frontier Equity Fund for the year ended 31 December 2019 and HK$31,326 (2018: HK$31,320) for China Equity Fund for the year ended 31 December 2019, of which US$669 (2018: US$1,337) for Asia Frontier Equity Fund and HK$5,231 (2018: HK$10,471) for China Equity Fund was outstanding as at 31 December 2019.



42

9. Transactions with the Trustee, Manager and Manager's connected persons (continued) Financial assets

The Sub-Funds had the following transactions with the Trustee and its related parties during the year: (i) As at 31 December 2019, the Sub-Funds placed bank deposits with related companies of the Trustee.

Interest income has been earned by the Sub-Funds.

Bank deposits with related companies of the Trustee

2019 2018

US$ US$

Asia Frontier Equity Fund 526,466 917,095

2019 2018

HK$ HK$

China Equity Fund 14,664,461 23,698,977

For the year ended 31 December 2019, interest income amounted to US$11,928 (2018: US$10,475) for Asia Frontier Equity Fund and HK$41,633 (2018: HK$36,326) for China Equity Fund. There is no interest expense for the year ended 31 December 2019 (2018: US$5) for Asia Frontier Equity Fund. Interest expense amounted to HK$9,090 (2018: HK$332) for China Equity Fund.

All related party transactions were entered into in the ordinary course of business and on normal commercial terms. Holdings in each of the Sub-Funds

The Sub-Funds allows the Manager, its connected persons and other funds managed by the Manager to subscribe for and redeem units in the Fund. The holdings in each Sub-Fund by the Manager and its connected persons as at the year end were as follows.


2019 1 January Net Subscribed/

(Redeemed) 31 December

Share Class No. of units No. of units No. of units

Harvest International Securities Company Limited (Formerly known as: iGoldenbeta Securities Company Limited) (Note 1)

Class A (USD) 10,733,768 (10,733,768) -

1 January Net Subscribed/

(Redeemed) 31 December 2018 Share Class No. of units No. of units No. of units

iGoldenbeta Securities Company Limited

(Note 1) Class A

(USD) - 10,733,768 10,733,768



43

9. Transactions with the Trustee, Manager and Manager's connected persons (continued)

China Equity Fund

2019 1 January Net Subscribed/

(Redeemed) 31 December

Share Class No. of units No. of units No. of units

Harvest International Securities Company Limited (Formerly known as: iGoldenbeta Securities Company Limited) (Note 1)

Class A (HKD) 6,416,137 (6,416,137) -

1 January Net Subscribed/

(Redeemed) 31 December 2018 Share Class No. of units No. of units No. of units

iGoldenbeta Securities Company Limited

(Note 1) Class A

(HKD) - 6,416,137 6,416,137

Investment transactions with connected persons of the Manager

During the year ended 31 December 2019 and 2018, certain investment transactions of the Sub-Funds were executed through the connected persons of the Manager who act as the brokers of the Sub-Funds. The investment transactions with connected persons of the Manager during the year were as follows.

Aggregate value of purchase and sales of

securities

Total commission

paid

% of Sub-Fund’s total

transactions during the year

Average commission

rate 2019 (Asia Frontier

Equity Fund) USD USD % % Deutsche Bank AG, London (Note 2) 39,356 - 0.18 -

2019 (China Equity Fund)

Deutsche Bank AG, London (Note 2) 2,196,572 4,393 1.59 0.20


NOTES TO THE FINANCIAL STATEMENTS 9. Transactions with the Trustee, Manager and Manager's connected persons (continued)

44

Aggregate value of purchase and

sales of securities

Total commission

paid

% of Sub-Fund’s total

transactions during the year

Average commission

rate 2018 (Asia Frontier Equity Fund) USD USD % %

iGoldenbeta Securities Company Limited (Note 1) 248,637 1,170 0.83 0.47

Deutsche Bank AG, London (Note 2) 141,479 1,327 0.47 0.94

2018 (China Equity Fund)

iGoldenbeta Securities Company Limited (Note 1) 2,591,119 1,553 1.38 0.06

Deutsche Bank AG, London (Note 2) 2,039,822 4,092 1.09 0.20

Note 1: Harvest International Securities Company Limited, subsidiary of the Manager, had holdings in

the Sub-Funds in its capacity as nominee of its underlying clients.

Note 2: Deutsche Bank AG, London is the foreign shareholder and affiliate of the Manager’s holding company.

10. Taxation

No provision for Hong Kong profits tax has been made for the Sub-Fund as it was authorised as collective investment schemes under Section 104 of the Hong Kong Securities and Futures Ordinance and is therefore exempt from profits tax under Section 26A(1A) of the Hong Kong Inland Revenue Ordinance. The Sub-Funds invest in shares of companies in the Peoples’ Republic of China (“PRC”) listed on overseas stock exchanges including the H-shares listed on the Hong Kong Stock Exchange (“H-shares”). Under the PRC Corporate Income Tax Law, the Sub-Funds may be liable to pay PRC tax on the capital gains realised in the trading of H-shares. However, no provision was made for taxation from such gains in the financial statements as the Management believes that the Sub-Funds can sustain a position for not filing a tax return based on the existing tax regulations and that the enforcement of China tax on capital gains is not probable. The Sub-Funds currently incur withholding taxes imposed by certain countries on investment income. Such income is recorded gross of withholding taxes in the statement of comprehensive income. Withholding taxes are shown as a separate item in the statement of comprehensive income. For all of the above exposures this represents the Manager’s best estimate, but the estimated value could differ from the amount ultimately payable.



45

11. Soft commission arrangements

The Manager has entered into soft commission arrangements with some brokers under which certain goods and services used to support investment decision making are obtained from third parties and are paid for by the brokers out of the commissions they receive. These may include, for example, research and advisory services; economic and political analysis; portfolio analysis, including valuation and performance measurement; market analysis, data and quotation services; clearing, registrar and custodial services and investment-linked publications; computer hardware and software incidental to the above goods and services.

12. Security lending arrangements

During the year ended 31 December 2019 and 2018, the Sub-Funds did not enter into any security lending arrangements.

13. Negotiability of assets

As at 31 December 2019 and 2018, there were no statutory or contractual requirements restricting the negotiability of the assets of the Sub-Funds.

14. Commitments

The Sub-Funds had no commitments as at 31 December 2019 and 2018. 15. Contingent liabilities

The Sub-Funds had no contingent liabilities as at 31 December 2019 and 2018.

16. Distributions

No distribution statement is required as income of each Sub-Fund will be accumulated and no distributions will be made out of the assets of any Sub-Funds.

17. Approval of financial statements

The financial statements were approved and authorised for issue by the Trustee and the Manager on 23 April 2020.


INVESTMENT PORTFOLIO (unaudited) As at 31 December 2019

46


Holdings at 31 December

2019

Fair value at 31 December

2019

Percentage of total net assets attributable to unitholders at 31 December

2019 %

Financial assets at fair value through profit or loss Listed equities securities BANGLADESH BATA SHOE COMPANY BANGLADESH LIMITED 31,468 258,023 1.47 BRITISH AMERICAN TOBACCO BANGLADESH

COMPANY LIMITED 70,131 801,226 4.58 GRAMEENPHONE LIMITED 132,575 446,315 2.55 HEIDELBERGER CEMENT BANGLADESH LIMITED 75,327 146,226 0.84 LINDE BANGLADESH LIMITED 30,150 461,333 2.64 SQUARE PHARMACEUTICALS LIMITED 195,751 438,102 2.50

2,551,225 14.58

BRITAIN KAZ MINERALS PUBLIC LISTED COMPANY 63,305 447,316 2.56

447,316 2.56

CHINA AAC TECHNOLOGIES HOLDINGS

INCORPORATED 23,000 200,724 1.15 ALIBABA GROUP HOLDING LIMITED 6,900 183,485 1.05 GOERTEK INCORPORATED 158,700 453,873 2.59 KWEICHOW MOUTAI COMPANY LIMITED 1,100 186,830 1.07 MIDEA GROUP COMPANY LIMITED 43,429 363,199 2.08 SHENZHOU INTERNATIONAL GROUP HOLDINGS

LIMITED 70,200 1,026,178 5.86 TENCENT HOLDINGS LIMITED 10,900 525,429 3.00

2,939,718 16.80

HONG KONG SAR HYPEBEAST LIMITED 2,670,000 438,615 2.51

438,615 2.51

SRI LANKA CEYLON COLD STORES PUBLIC LISTED

COMPANY 83,468 365,856 2.09 CEYLON TOBACCO COMPANY PUBLIC LISTED

COMPANY 58,245 353,340 2.02 DIALOG AXIATA PUBLIC LISTED COMPANY 4,670,521 316,733 1.81 JOHN KEELLS HOLDINGS PUBLIC LISTED

COMPANY 322,825 295,815 1.69

1,331,744 7.61

THAILAND ASSET WORLD CORPORATION PUBLIC

COMPANY LIMITED 2,135,300 417,026 2.38

417,026 2.38



47



2019


2019


2019 % Financial assets at fair value through profit or

loss (continued) Listed equities securities (continued) VIETNAM DHG PHARMACEUTICAL JSC 139,480 550,757 3.15 FPT DIGITAL RETAIL JSC 300,698 273,155 1.54 NO VA LAND INVESTMENT GROUP

CORPORATION 273,200 701,495 4.01 SAI GON GROUND SERVICES JSC 24,080 92,485 0.53 SAIGON BEER ALCOHOL BEVERAGE

CORPORATION 94,580 930,596 5.32 VIETJET AVIATION JSC 257,456 1,624,342 9.28 VIETNAM DAIRY PRODUCTS JSC 299,772 1,507,107 8.61

5,679,937 32.44

Total listed equities securities 13,805,581 78.88

Depository receipts CHINA HUYA INCORPORATED 9,602 172,356 0.98

SINGAPORE SEA LIMITED 12,321 494,935 2.83

THAILAND AIRPORTS OF THAILAND PUBLIC COMPANY

LIMITED 214,200 530,963 3.03

TAOKAENOI FOOD & MARKETING PUBLIC COMPANY LIMITED 726,800 254,773 1.46

785,736 4.49




48



2019


2019


2019

% Financial assets at fair value through profit or

loss (continued)

Unlisted/quoted equities securities

VIETNAM

AIRPORTS CORPORATION OF VIETNAM JSC 300,400 972,273 5.56

VIETNAM ENGINE & AGRICULTURAL MACHINERY CORPORATION 372,400 723,185 4.13

1,695,458 9.69

Total unlisted/quoted equities securities 1,695,458 9.69

Total investment, net 16,954,066 96.87 Other net assets 547,540 3.13

Net asset attributable to unitholders 17,501,606 100.00

Total investment, at cost 15,683,349



49

China Equity Fund


2019


2019


2019 %

Financial assets at fair value through profit or loss Listed equities securities CHINA ALIBABA GROUP HOLDING LIMITED 124,500 25,796,400 4.97

CHANGZHOU XINGYU AUTOMOTIVE LIGHTING SYSTEMS COMPANY LIMITED 52,900 5,620,753 1.08

CHINA CONSTRUCTION BANK CORPORATION 4,241,000 28,541,930 5.50

CHINA LIFE INSURANCE COMPANY LIMITED 483,000 10,456,950 2.02

CHINA MERCHANTS BANK COMPANY LIMITED 457,000 18,302,850 3.53

CHINA OILFIELD SERVICES LIMITED 448,000 5,474,560 1.06

CHINA PACIFIC INSURANCE GROUP COMPANY LIMITED 223,600 6,864,520 1.32

CHINA TOWER CORPORATION LIMITED 5,948,000 10,230,560 1.97

CNOOC LIMITED 700,000 9,072,000 1.75

CSPC PHARMACEUTICAL GROUP LIMITED 378,000 7,023,240 1.35

GREE ELECTRIC APPLIANCES INCORPORATION OF ZHUHAI 68,144 4,999,260 0.96

HAIER SMART HOME COMPANY LIMITED 243,060 5,302,184 1.02

INDUSTRIAL & COMMERCIAL BANK OF CHINA LIMITED 2,492,000 14,952,000 2.88

JIANGSU HENGRUI MEDICINE COMPANY LIMITED 45,495 4,454,282 0.86

KWEICHOW MOUTAI COMPANY LIMITED 6,841 9,053,386 1.75

LI NING COMPANY LIMITED 371,000 8,662,850 1.67

LONGFOR GROUP HOLDINGS LIMITED 281,500 10,274,750 1.98

MEITUAN DIANPING 52,000 5,298,800 1.02

MUYUAN FOODSTUFF COMPANY LIMITED 32,900 3,267,884 0.63

PING AN INSURANCE GROUP COMPANY OF CHINA LIMITED 315,500 29,057,550 5.60

POLY PROPERTY DEVELOPMENT COMPANY LIMITED 240,600 11,248,050 2.17

POSTAL SAVINGS BANK OF CHINA COMPANY LIMITED 469,000 2,485,700 0.49

SHENZHEN SUNWAY COMMUNICATION COMPANY LIMITED 140,500 7,132,594 1.38

SHENZHOU INTERNATIONAL GROUP HOLDINGS LIMITED 168,200 19,157,980 3.69

SUNAC CHINA HOLDINGS LIMITED 238,000 11,078,900 2.14

SUNNY OPTICAL TECHNOLOGY GROUP COMPANY LIMITED 77,800 10,495,220 2.02

TENCENT HOLDINGS LIMITED 131,100 49,241,160 9.50

TIMES NEIGHBORHOOD HOLDINGS LIMITED 558,262 2,707,571 0.52

WUXI BIOLOGICS CAYMAN INCORPORATED 51,500 5,080,475 0.98

YANTAI JEREH OILFIELD SERVICES GROUP COMPANY LIMITED 97,650 4,037,485 0.78

ZHAOJIN MINING INDUSTRY COMPANY LIMITED 606,500 5,221,965 1.01

350,593,809 67.60



50

China Equity Fund


2019


2019


2019 %

Financial assets at fair value through profit or loss (continued) Listed equities securities (continued) HONG KONG SAR CHINA JINMAO HOLDINGS GROUP LIMITED 2,516,000 15,272,120 2.94

CHINA MENGNIU DAIRY COMPANY LIMITED 531,000 16,726,500 3.23

CHINA RESOURCES BEER HOLDINGS COMPANY LIMITED 266,000 11,464,600 2.22

CITIC TELECOM INTERNATIONAL HOLDINGS LIMITED 1,609,000 4,569,560 0.88

GALAXY ENTERTAINMENT GROUP LIMITED 172,000 9,872,800 1.90

SITC INTERNATIONAL HOLDINGS COMPANY LIMITED 730,000 6,935,000 1.34

TECHTRONIC INDUSTRIES COMPANY LIMITED 159,500 10,136,225 1.95

74,976,805 14.46

TAIWAN TAIWAN SEMICONDUCTOR MANUFACTURING

COMPANY LIMITED 232,000 19,960,262 3.85

19,960,262 3.85

Total listed equities securities 445,530,876 85.91

Depository receipts

ALIBABA GROUP HOLDING LIMITED 13,983 23,109,975 4.46

BAIDU INCORPORATED 10,366 10,209,307 1.97

BEIGENE LIMITED 3,913 5,053,911 0.97

TAL EDUCATION GROUP 42,927 16,121,875 3.11

54,495,068 10.51


Listed investment fund

HONG KONG SAR

ICBC CSOP S&P NEW CHINA SECTORS ETF 84,250 6,230,288 1.20


Total investment, net 506,256,232 97.62 Other net assets 12,345,692 2.38

Net assets attributable to unitholders 518,601,924 100.00



STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO (unaudited) As at 31 December 2019

51

Listed equity securities Asia Frontier Equity Fund

31/12/2018 Additions Disposals 31/12/2019

361 DEGREES INTERNATIONAL - 864,000 864,000 - AAC TECHNOLOGIES HOLDINGS IN - 50,500 27,500 23,000 AIRPORTS OF THAILAND PC-NVDR 279,300 - 65,100 214,200 ALIBABA GROUP HOLDING LTD - 6,900 - 6,900 ASSET WORLD CORP PCL-FOREIGN - 2,135,300 - 2,135,300 BATA SHOE CO (BANGLADESH) 31,468 - - 31,468 BRITISH AMERICAN TOBACCO BAN 23,377 46,754 - 70,131 CEYLON COLD STORES PLC 83,468 - - 83,468 CEYLON TOBACCO CO PLC 58,245 - - 58,245 CHEVRON LUBRICANTS LANKA PLC 226,766 - 226,766 - CHINA COMMUNICATIONS CONST-H 437,000 - 437,000 - CHINA INTERNATIONAL CAPITA-H - 91,600 91,600 - CP ALL PCL-NVDR 87,100 67,000 154,100 - DEUTSCH CW 12/05/2028 VIETNAM

TEC 40,200 -

40,200

-

DHG PHARMACEUTICAL JSC 162,730 - 23,250 139,480 DIALOG AXIATA PLC 4,670,521 - - 4,670,521 FPT DIGITAL RETAIL JSC 261,477 39,221 - 300,698 GEELY AUTOMOBILE HOLDINGS LT - 333,000 333,000 - GLOBETRONICS TECHNOLOGY BHD - 211,900 211,900 - GOERTEK INC -A - 220,500 61,800 158,700 GRAMEENPHONE LTD 115,573 17,002 - 132,575 HANGZHOU HIKVISION DIGITAL-A - 99,675 99,675 - HEIDELBERGER CEMENT BANGLADE 75,327 - - 75,327 HUYA INC-ADR - 24,071 14,469 9,602 HYPEBEAST LTD - 3,895,000 1,225,000 2,670,000 IMAX CHINA HOLDING INC - 79,500 79,500 - JOHN KEELLS HOLDINGS PLC 339,815 - 16,990 322,825 KAZ MINERALS PLC 119,027 63,305 119,027 63,305 KOOLEARN TECHNOLOGY HOLDING - 134,000 134,000 - KWEICHOW MOUTAI CO LTD-A - 4,200 3,100 1,100 LENOVO GROUP LTD 748,000 - 748,000 - LINDE BANGLADESH LTD 30,150 - - 30,150 MEGAWIDE CONSTRUCTION CORP 521,300 - 521,300 - MIDEA GROUP CO LTD-A - 68,129 24,700 43,429 NETEASE INC-ADR 2,322 - 2,322 - NO VA LAND INVESTMENT GROUP 219,990 53,210 - 273,200 Q TECHNOLOGY GROUP CO LTD - 254,000 254,000 - RAZER INC 4,967,000 4,967,000 - SAI GON GROUND JSC 17,200 6,880 - 24,080 SAIGON BEER ALCOHOL BEVERAGE 87,970 6,610 - 94,580 SEA LTD-ADR - 24,965 12,644 12,321 SHANGHAI INTERNATIONAL AIR-A 48,747 - 48,747 - SHANGRI-LA ASIA LTD 274,000 - 274,000 - SHENZHOU INTERNATIONAL GROUP 49,000 21,200 - 70,200 SQUARE PHARMACEUTICALS LTD 182,945 12,806 - 195,751



52

Listed equity securities Asia Frontier Equity Fund 31/12/2018 Additions Disposals 31/12/2019

TAOKAENOI FOOD & MARKETING-R - 2,018,300 1,291,500 726,800 TENCENT HOLDINGS LTD 9,000 10,300 8,400 10,900 TONGDA GROUP HOLDINGS LTD - 3,470,000 3,470,000 - TURQUOISE HILL RESOURCES LTD 183,102 183,102 - VIETJET AVIATION JSC 257,456 - - 257,456 VIETNAM DAIRY PRODUCTS JSC 299,772 - - 299,772 VIETNAM TECHNOLOGICAL & COMM - 50,000 50,000 - XIAOMI CORP-CLASS B - 239,000 239,000 - Unlisted/quoted equity securities 31/12/2018 Additions Disposals 31/12/2019

AIRPORTS CORP OF VIETNAM JSC 300,400 - - 300,400 VIETNAM ENGINE & AGRICULTURA - 372,400 - 372,400



53

Listed equity securities

China Equity Fund


3SBIO INC - 628,000 628,000 - AAC TECHNOLOGIES HOLDINGS IN - 53,000 53,000 - AIA GROUP LTD 220,800 14,600 235,400 - AIR CHINA LTD-H 466,000 - 466,000 - ALIBABA GROUP HOLDING LTD - 124,500 - 124,500 ALIBABA GROUP HOLDING-SP ADR 28,200 9,925 24,142 13,983 ANHUI CONCH CEMENT CO LTD-H 118,500 - 118,500 - BAIDU INC - SPON ADR - 10,366 - 10,366 BEIGENE LTD-ADR - 3,913 - 3,913 BNP PAR PN 01/07/2021 GREE

ELECTR - 83,005

83,005 -

BNP PAR PN 02/12/2019 HANGZHOU HI

176,181 -

176,181 -

BNP PAR PN 25/10/2019 JIANGSU HEN 24,047 - 24,047 - BNP PAR PN 27/01/2020 MIDEA

GROUP - 77,800

77,800 -

BUDWEISER BREWING CO APAC LT - 138,000 138,000 - CHANGZHOU XINGYU AUTOMOTIV-A - 52,900 - 52,900 CHINA COMMUNICATIONS SERVI-H 600,000 - 600,000 - CHINA CONSTRUCTION BANK-H 4,562,000 - 321,000 4,241,000 CHINA EDUCATION GROUP HOLDIN 329,000 - 329,000 - CHINA GALAXY SECURITIES CO-H - 694,500 694,500 - CHINA GAS HOLDINGS LTD - 383,800 383,800 - CHINA JINMAO HOLDINGS GROUP 1,660,000 1,408,000 552,000 2,516,000 CHINA LIFE INSURANCE CO-H - 483,000 - 483,000 CHINA MEDICAL SYSTEM HOLDING - 556,000 556,000 - CHINA MENGNIU DAIRY CO 292,000 239,000 - 531,000 CHINA MERCHANTS BANK-H 419,000 38,000 - 457,000 CHINA MOBILE LTD 231,000 73,500 304,500 - CHINA OILFIELD SERVICES-H - 448,000 - 448,000 CHINA OVERSEAS LAND & INVEST 278,000 - 278,000 - CHINA PACIFIC INSURANCE GR-H - 223,600 - 223,600 CHINA PETROLEUM & CHEMICAL-H 880,000 316,000 1,196,000 - CHINA RAILWAY CONSTRUCTION-H 527,000 - 527,000 - CHINA RESOURCES BEER HOLDING 250,000 16,000 - 266,000 CHINA RESOURCES CEMENT - 466,000 466,000 - CHINA RESOURCES POWER HOLDIN 228,000 - 228,000 - CHINA SHENHUA ENERGY CO-H 289,500 - 289,500 - CHINA TAIPING INSURANCE HOLD 139,200 37,400 176,600 - CHINA TELECOM CORP LTD-H 1,280,000 - 1,280,000 - CHINA TOWER CORP LTD-H 6,366,000 7,968,000 8,386,000 5,948,000 CHINA UNICOM HONG KONG LTD - 424,000 424,000 - CITIC SECURITIES CO LTD-H 478,000 425,500 903,500 -



54

Listed equity securities China Equity Fund


CITIC TELECOM INTERNATIONAL 1,155,000 454,000 - 1,609,000 CK HUTCHISON HOLDINGS LTD 64,000 - 64,000 - CNOOC LTD 412,000 428,000 140,000 700,000 CSPC PHARMACEUTICAL GROUP LT - 378,000 - 378,000 CTRIP.COM INTERNATIONAL-ADR - 29,629 29,629 - DAQO NEW ENERGY CORP-ADR - 12,184 12,184 - ENN ENERGY HOLDINGS LTD 50,600 - 50,600 - GALAXY ENTERTAINMENT GROUP L - 172,000 - 172,000 GREE ELECTRIC APPLIANCES I-A - 157,044 88,900 68,144 GUANGDONG INVESTMENT LTD 468,000 666,000 1,134,000 - GUANGZHOU AUTOMOBILE GROUP-H - 620,000 620,000 - HAIER SMART HOME CO LTD-A - 243,060 - 243,060 HANG SENG BANK LTD - 32,800 32,800 - HANGZHOU HIKVISION DIGITAL-A - 110,200 110,200 - HENGAN INTL GROUP CO LTD - 105,500 105,500 - HONG KONG EXCHANGES & CLEAR 15,500 53,100 68,600 - HOPE EDUCATION GROUP CO LTD - 5,102,000 5,102,000 - HUANENG RENEWABLES CORP-H - 3,358,000 3,358,000 - ICBC CSOP S&P NEW CHINA SECT 84,250 - - 84,250 IND & COMM BK OF CHINA-H - 2,492,000 - 2,492,000 INNOVENT BIOLOGICS INC 163,000 56,000 219,000 - IQIYI INC-ADR - 22,009 22,009 - JD.COM INC-ADR - 28,069 28,069 - JIANGSU HENGRUI MEDICINE C-A - 170,395 124,900 45,495 JS GLOBAL LIFESTYLE CO LTD - 90,000 90,000 - KINGBOARD LAMINATES HLDG LTD - 518,500 518,500 - KOOLEARN TECHNOLOGY HOLDING - 265,000 265,000 - KWEICHOW MOUTAI CO LTD-A - 6,841 - 6,841 LI NING CO LTD - 371,000 - 371,000 LONGFOR GROUP HOLDINGS LTD 349,500 130,500 198,500 281,500 MEITUAN DIANPING-CLASS B - 52,000 - 52,000 MIDEA GROUP CO LTD-A - 73,129 73,129 - MMG LTD - 1,108,000 1,108,000 - MOMO INC-SPON ADR - 14,266 14,266 - MUYUAN FOODSTUFF CO LTD-A - 32,900 - 32,900 NETEASE INC-ADR 3,150 526 3,676 - NEW CHINA LIFE INSURANCE C-H - 116,900 116,900 - NEW WORLD DEVELOPMENT - 259,000 259,000 - PETROCHINA CO LTD-H 1,334,000 - 1,334,000 - PINDUODUO INC-ADR - 40,343 40,343 - PING AN INSURANCE GROUP CO-H 179,000 190,000 53,500 315,500 POLY PROPERTY DEVELOPMENT -H - 240,600 - 240,600 POSTAL SAVINGS BANK OF CHI-H - 469,000 - 469,000 SANY HEAVY INDUSTRY CO LTD-A - 905,188 905,188 - SEMICONDUCTOR MANUFACTURING - 1,001,000 1,001,000 - SHANGHAI KINDLY INSTRUMENT-H - 3,800 3,800 - SHENGYI TECHNOLOGY CO LTD -A - 162,064 162,064 - SHENZHEN SUNWAY COMMUNICAT-A - 140,500 - 140,500 SHENZHOU INTERNATIONAL GROUP 102,000 66,200 - 168,200 SINO BIOPHARMACEUTICAL - 444,000 444,000 - SITC INTERNATIONAL HOLDINGS 28,000 702,000 - 730,000 SUN ART RETAIL GROUP LTD

365,500 - 365,500 -



55

Listed equity securities China Equity Fund 31/12/2018 Additions Disposals 31/12/2019

SUNAC CHINA HOLDINGS LTD - 383,000 145,000 238,000 SUNNY OPTICAL TECH - 77,800 - 77,800 TAIWAN SEMICONDUCTOR MANUFAC - 232,000 - 232,000 TAL EDUCATION GROUP- ADR

12,219 42,927 12,219 42,927

TECHTRONIC INDUSTRIES CO LTD - 159,500 - 159,500 TENCENT HOLDINGS LTD

110,800 46,200 25,900 131,100

TIMES CHINA HOLDINGS LTD - 634,000 634,000 - TIMES NEIGHBORHOOD HOLDINGS - 558,262 - 558,262 WH GROUP LTD - 588,000 588,000 - WULIANGYE YIBIN CO LTD-A - 33,132 33,132 - WUXI BIOLOGICS CAYMAN INC - 155,500 104,000 51,500 XINJIANG GOLDWIND SCI&TEC-H - 392,200 392,200 - YANTAI JEREH OILFIELD-A - 97,650 - 97,650 ZHAOJIN MINING INDUSTRY - H

725,500 606,500 725,500 606,500

ZTE CORP-H - 208,800 208,800 -


56

PERFORMANCE TABLE (UNAUDITED) FOR THE FINANCIAL YEAR 2019 Asia Frontier Equity Fund J Class

2019 2018 2017

Total net asset value* US$ 17,464,613 17,609,914 20,505,208 Published net asset value per unit* JPY 2,133.616 2,204.503 2,683.998 A Class

2019 2018 2017

Total net asset value* US$ 40,104 210,309 39,719 Published net asset value per unit* US$ 13.804 14.283 17.124 China Equity Fund A Class

2019 2018 2017

Total net asset value* HK$ 57,512,417 10,066,704 7,549,351 Published net asset value per unit* HK$ 174.803 138.631 168.722 I Class

2019 2018 2017

Total net asset value* HK$ 464,959,320 332,317,900 508,011,281 Published net asset value per unit* US$ 20.973 16.430 19.877 Asia Frontier Equity Fund J Class A Class

Highest

issue price

Lowest redemption price of the units/shares

Highest issue price


JPY JPY US$ US$

2019 2,402.428 2,120.536 15.335 13.678 2018 2,813.355 2,190.588 18.379 13.907 2017 2,683.998 1,905.546 17.125 11.959 2016 2,019.256 1,600.266 12.533 11.426 2015 2,537.202 1,979.633 15.125 12.251 2014 2,201.253 1,688.942 14.631 9.536 2013 1,673.166 1,213.929 - - Financial period from 29 August 2011 (date of inception) to 31 December 2012 1,239.075 847.067 - - China Equity Fund A Class I Class

Highest

issue price


Highest issue price


HK$ HK$ US$ US$

2019 175.818 134.520 21.107 15.939 2018 187.783 134.152 22.133 15.850 2017 175.370 108.539 20.661 12.791 2016 118.325 86.349 13.918 10.066 2015 151.647 99.520 17.666 11.622 2014 122.653 99.356 14.216 11.485 2013 112.574 83.559 12.975 9.592 Financial period from 29 August 2011 (date of inception) to 31 December 2012

- - 10.961 8.757

Note: The total net asset value and published net asset value per unit presented represent the dealing net asset value and dealing net asset value per unit of each of the Sub-Funds respectively.

ASIA FRONTIER EQUITY FUND

www.harvestglobal.com.hk

CHINA EQUITY FUND (EACH A SUB-FUND OF HARVEST FUNDS SERIES (HONG KONG))（PREVIOUSLY NAMED AS “EACH A SUB-FUND OF HARVEST FUNDS

(CAYMAN)”)

UNAUDITED SEMI-ANNUAL REPORT30 JUNE 2019

helpdesk-hk02

打字机文本

helpdesk-hk02

打字机文本

Asia Frontier Equity Fund and China Equity Fund (each a Sub-fund of Harvest Funds Series (Hong Kong)) (Previously named as "each a Sub-Fund of Harvest Funds (Cayman)")

REPORT AND FINANCIAL STATEMENTS

For the financial period ended 30 June 2019 (Unaudited)


CONTENTS

Page

Directory 1

Manager's Report 2

Statement of Financial Position (Unaudited) 4

Statement of Comprehensive Income (Unaudited) 5

Statement of Changes in Net Assets Attributable to Unitholders (Unaudited) 6

Investment Portfolio (Unaudited) 7

Statement of Movements in Investment Portfolio (Unaudited) 11


1

DIRECTORY

DIRECTORS OF THE MANAGER

ZHAO Xuejun WANG Wei JING Lei SUN Chen KWAN Chi Wang LU Lingfei TENG Gang (Appointed on 9 April 2019) LI Ming (Resigned on 9 Aril 2019)

MANAGER AND DISTRIBUTOR

Harvest Global Investments Limited 31/F, One Exchange Square 8 Connaught Place Central, Hong Kong

TRUSTEE

BNP Paribas Trust Services (Hong Kong) Limited 21/F, PCCW Tower Taikoo Place 979 King’s Road Quarry Bay Hong Kong

ADMINISTRATOR AND CUSTODIAN

BNP Paribas Securities Services, operating through its Singapore Branch 20 Collyer Quay #01-01 Singapore 049319

REGISTRAR AND TRANSFER AGENT

BNP Paribas Securities Services, operating through its Hong Kong Branch 21/F, PCCW Tower Taikoo Place 979 King’s Road Quarry Bay Hong Kong

AUDITOR

PricewaterhouseCoopers 22

ndFloor, Prince's Building

Central Hong Kong

LEGAL ADVISERS TO THE MANAGER

Deacons

5th Floor, Alexandra House 18 Chater Road Central Hong Kong


2

MANAGER'S REPORT


Market Overview

The broader Asian markets in 1H2019 was a tale of 2 quarters. For 1Q2019, markets were on a firmer ground led by trade war optimism and better macroeconomic data. In addition, local elections in India, Thailand and Indonesia all saw outcomes as predicted which also aided the market’s strength. However, markets took a turn with the Sell in May curse. Markets were spooked by President Trump’s move to blacklist Huawei as well as his intentions to increase tariffs on China. However, sentiment improved again by mid-June following easing trade tensions with the confirmation of a Trump-Xi meeting during the G20 in Osaka. Despite the rebound in June, markets failed to surpass the April peak and ended the 2Q2019 weaker.

Frontier markets lagged the performance of its larger peers in Asia as investor interest remained low. Sri Lanka was among the worst performing market largely due to the terrorist attacks took place during Easter week at a church and hotels, killing and injuring hundreds. The market took a beating following these attacks. Vietnam continued to register strong GDP growth but it failed to lift sentiment on the local market. Vietnam had some domestic concerns like slower growth of the banking sector and the adoption of Basel II capital requirements. Sentiment in Vietnam was further hurt with headlines that US may increase tariffs and label the country as a currency manipulator. A positive in Vietnam had signed a free trade agreement with European Union after years of negotiation. Bangladesh was among the better performing Frontier markets with signs of improving liquidity in the banking sector. Bangladesh announced reforms to its value added taxes and higher taxes if listed companies do not pay higher dividends, a move welcomed by investors. Kazakhstan welcomed a new President Kassym-Jomart Tokayev, a former United Nations diplomat.


3

MANAGER'S REPORT

China Equity Fund

Market Review

The MSCI China Index rose significantly in the 1Q, buoyed by a great amount of inflow from overseas markets which resulted from a series of stimulating economic policies from the Central government and interest rate cuts by the Federal Reserve. In addition, MSCI index increase of A share’s inclusion factor also helped to boost market confidence. Subsequently the shift in US-China trade negotiations from May concerned investors that the US would impose tariffs on China’s remaining US$300 billion worth of products, resulting in a market slump. In June, the market significantly rebounded due to expectation of a US rate reduction and possible relief of US-China trade tensions during the G20 meeting. Overall, MSCI China Index fell by approximately 4% during the 2Q. Sectors negatively affected by the trade war, such as technology, 5G, and optional consumers, were sluggish and underperformed the Index, while strong defensive sectors such as consumer staples, utilities and financials outperformed.

In the first half of this year, the global monetary policy remained marginally loose as the Fed maintained interest rates ranging from 2.25% to 2.50%. According to the Dot Matrix Group, eight officials expect an interest rate reduction by the end of this year, which is not in accordance with previous expectations of unchanged rates held earlier this year. Fed FOMC adjusted the economic descriptions from “stable” to “slow down”, and the economic outlook from “growing uncertainties” to “inflation remained relatively low”. The euro economy showed downward pressure, prompting the European Central Bank to consider loosened monetary measures. Mario Draghi even suggested that inflation would be over 2% in the short term to compensate for lower-than-expected inflation in the long run.

We had gradually reduced the cash level in our portfolio from December last year and overweighed consumers, diversified financials, and insurance, which positively contribute to our portfolio. We lowered our position in the beginning of May and reduced the risk allocation of our current position so as to achieve positive results during the market drop. We started to buy on weakness in June, and overweighed leading sectors such as aviation, property, securities, and 5G, and bought in A share ETF, lowered the position and participated in the market rebound in a timely manner.

Outlook

With the official implementation of US$200 billion tariffs in the 3Q, economic growth might still face headwind. The US-China trade issue remains a risk factor for China. One thing is clear though is the domestic policies – both monetary and fiscal, will remain positive to support growth. We do expect interest rate cuts and RRR rate cuts in the second half of the year. The expectation of rate cut by Fed Reserve might also lead to preference for risk assets later on, which is also positive for china market.

China market valuation has come to again very low level compared to historical level or compared to other emerging markets. A lot of risk factors have been discounted in the price. We remain constructive on the secular growth thesis for China and remain fully invested.

Stock wise, we would continue to focus on high quality growth stocks as our core holdings, while continue to underweight sectors such as energy, banks and commodities. We also try to increase our A share exposure to take advantage of exciting domestic growth stories.


STATEMENT OF FINANCIAL POSITION (unaudited) As at 30 June 2019

4

Asia Frontier Equity Fund China Equity Fund 30 June

2019 31 December

2018 30 June

2019 31 December

2018 US$ US$ HK$ HK$

Assets

Current assets Financial assets at fair value through profit or loss 18,641,732 16,968,742 408,191,160 319,205,146 Account due from brokers - 30 - 2,859 Other receivable 13,828 34,101 1,068,267 - Cash and cash equivalents 1,115,650 917,095 6,779,480 23,698,977

Total assets 19,771,210 17,919,968 416,038,907 342,906,982

Liabilities

Current liabilities Administration fee payable 1,701 2,307 33,608 41,999 Audit fee payable 12,051 33,881 114,419 222,190 Management fee payable 10,233 29,844 266,336 682,383 Account due to brokers 98,457 - - - Trustee fee payable 3,481 2,768 43,553 53,598 Other payables 33,436 23,199 11,477 15,711

Total liabilities (excluding net assets attributable to unitholders) 159,359 91,999 469,393 1,015,881

Net assets attributable to unitholders 19,611,851 17,827,969 415,569,514 341,891,101

Represented by: Net assets attributable to holders of unitholders 19,611,851 17,827,969 415,569,514 341,891,101

Number of units in issue-Class I - - 2,583,348 2,583,348 Number of units in issue-Class J 902,794 876,405 - - Number of units in issue-Class A 13,497 14,724 214,605 72,614 Net assets attributable to unitholders per unit per

fund currency-Class I for dealing - - 147.833 128.453 Net assets attributable to unitholders per unit per

fund currency-Class J for dealing 21.493 20.102 - - Net assets attributable to unitholders per unit per

fund currency-Class A for dealing 15.195 14.289 158.725 138.431


STATEMENT OF COMPREHENSIVE INCOME (unaudited) For the period ended 01 January 2019 to 30 June 2019

5

Asia Frontier Equity Fund China Equity Fund 01 January

2019 to 30 June 2019

01 January 2018 to 30 June

2018


2019


2018 US$ US$ HK$ HK$

Income Net gains/(loss) on financial assets and

liabilities at fair value through profit or loss 1,215,516 (760,098) 51,257,641 2,131,820

Dividend income 190,900 194,140 4,000,716 4,714,043 Interest income 7,610 3,734 14,565 11,087

Total investment income/(losses) 1,414,026 (562,224) 55,272,922 6,856,950

Expenses Administration fee 3,471 4,124 68,675 86,512 Audit fee 12,110 12,636 114,227 121,936 Custody fee 18,360 20,906 66,794 81,639 Legal and professional fee 3,662 5,247 28,744 41,022 Management fee 61,287 72,203 1,587,597 2,035,042 Other expenses 3,572 5,172 38,633 42,187 Transaction cost 33,204 42,787 1,143,956 2,181,367 Trustee fee 4,160 4,947 89,066 120,070 Interest expense - 5 9,090 -

Total operating expenses 139,826 168,027 3,146,782 4,709,775

Gains/(loss) before tax 1,274,200 (730,251) 52,126,140 2,147,175

Withholding tax on dividends and other investment income (19,815) (15,534) (176,540) (287,449)

Gains/(loss) after tax 1,254,385 (745,785) 51,949,600 1,859,726

Increases/(decrease) in net assets attributable to unitholders 1,254,385 (745,785) 51,949,600 1,859,726


STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (unaudited) For the period ended 01 January 2019 to 30 June 2019

6

Asia Frontier Equity Fund 01 January 2019 to 30 June 2019 01 January 2018 to 30 June 2018 Number of units US$ Number of units US$

Net assets attributable to unitholders at the beginning of period 891,129 17,827,969 862,949 20,528,310

Subscriptions of units 26,475 549,292 77,805 1,844,682 Redemption of units (1,313) (19,795) (180) (3,244)

Net Increases from units transaction 25,162 529,497 77,625 1,841,438

Gain/(loss) after tax - 1,254,385 - (745,785)

Increase in net assets attributable to unitholders - 1,783,882 - 1,095,653

Net assets attributable to unitholders at the end of period 916,291 19,611,851 940,574 21,623,963

China Equity Fund 01 January 2019 to 30 June 2019 01 January 2018 to 30 June 2018 Number of units HK$ Number of units HK$

Net assets attributable to unitholders at the beginning of period 2,655,962 341,891,101 3,314,050 515,701,094

Subscriptions of units 152,038 23,244,994 30,712 5,507,695 Redemption of units (10,049) (1,516,181) (48,550) (8,166,678)

Net increase/(decrease) from units transaction 141,989 21,728,813 (17,838) (2,658,983)

Gains after tax - 51,949,600 - 1,859,726

Increase/decrease in net assets attributable to unitholders - 73,678,413 - (799,257)

Net assets attributable to unitholders at the end of period 2,797,951 415,569,514 3,296,212 514,901,837


7

INVESTMENT PORTFOLIO (unaudited) As at 30 June 2019


Holdings at 30 June 2019

Fair value at 30 June 2019

Percentage of total net assets attributable to unitholders at 30 June 2019

US$ % Financial assets at fair value through profit or loss

Listed equities securities

BANGLADESH

BATA SHOE COMPANY BANGLADESH LIMITED 31,468 381,968 1.95 BRITISH AMERICAN TOBACCO BANGLADESH

COMPANY LIMITED 70,131 1,134,116 5.78 GRAMEENPHONE LIMITED 132,575 571,514 2.91 HEIDELBERGER CEMENT BANGLADESH LIMITED 75,327 215,652 1.10 LINDE BANGLADESH LIMITED 30,150 430,190 2.19 SQUARE PHARMACEUTICALS LIMITED 182,945 571,541 2.92

3,304,981 16.85

BRITAIN

KAZ MINERALS PUBLIC LISTED COMPANY 119,027 914,055 4.66

CHINA

KOOLEARN TECHNOLOGY HOLDING LIMITED 134,000 157,112 0.80 KWEICHOW MOUTAI COMPANY LIMITED 3,500 501,093 2.56 MIDEA GROUP COMPANY LIMITED 25,100 189,392 0.97 SHENZHOU INTERNATIONAL GROUP HOLDINGS

LIMITED 70,200 965,051 4.92 TENCENT HOLDINGS LIMITED 13,500 609,291 3.10

2,421,939 12.35

HONG KONG SAR

GEELY AUTOMOBILE HOLDINGS LIMITED 111,000 189,818 0.97

LUXEMBOURG

VIETNAM TECHNOLOGICAL & COMMERCIAL JOINT STOCK BANK 40,200 34,829 0.18

SINGAPORE

RAZER INCORPORATED 2,320,000 498,891 2.54 SEA LIMITED 18,585 617,580 3.15

1,116,471 5.69

SRI LANKA

CEYLON COLD STORES PUBLIC LISTED COMPANY 83,468 269,612 1.37 CEYLON TOBACCO COMPANY PUBLIC LISTED

COMPANY 58,245 422,412 2.15 CHEVRON LUBRICANTS LANKA PUBLIC LISTED

COMPANY 226,766 75,805 0.39 DIALOG AXIATA PUBLIC LISTED COMPANY 4,670,521 238,164 1.21 JOHN KEELLS HOLDINGS PUBLIC LISTED COMPANY 322,825 253,695 1.30

1,259,688 6.42


8






US$ % Financial assets at fair value through profit or loss (continued)

Listed equities securities (continued)

THAILAND

AIRPORTS OF THAILAND PUBLIC COMPANY LIMITED 279,300 669,391 3.41 CP ALL PUBLIC COMPANY LIMITED 154,100 432,138 2.21

1,101,529 5.62

VIETNAM

AIRPORTS CORPORATION OF VIETNAM JSC 300,400 1,250,324 6.38 DHG PHARMACEUTICAL JSC 139,480 652,363 3.33 FPT DIGITAL RETAIL JSC 261,477 718,066 3.66 NO VA LAND INVESTMENT GROUP CORPORATION 273,200 698,679 3.56 SAIGON GROUND SERVICES JSC 24,080 90,410 0.46 SAIGON BEER ALCOHOL BEVERAGE CORPORATION 87,970 1,038,050 5.29 VIVEJET AVIATION JSC 257,456 1,414,047 7.21 VIETNAM DAIRY PRODUCTS JSC 299,772 1,582,148 8.07 VIETNAM ENGINE & AGRICULTURAL MACHINERY

CORPORATION 326,300 810,675 4.13 VIETNAM TECHNOLOGICAL & COMMERCIAL JOINT

STOCK BANK 50,000 43,660 0.22

8,298,422 42.31

Total Quoted Equities 18,641,732 95.05

Total investment, net 18,641,732 95.05 Other net assets 970,119 4.95




9

INVESTMENT PORTFOLIO (unaudited) As at 30 June 2019 China Equity Fund




HK$ % Financial assets at fair value through profit or loss Listed equities securities CHINA ALIBABA GROUP HOLDING LIMITED 30,415 40,257,104 9.69 CHINA CONSTRUCTION BANK CORPORATION 4,241,000 28,541,930 6.87 CHINA MEDICAL SYSTEM HOLDINGS LIMITED 556,000 3,980,960 0.96 CHINA MERCHANTS BANK COMPANY LIMITED 419,000 16,320,050 3.93 CHINA PETROLEUM & CHEMICAL CORPORATION 1,196,000 6,350,760 1.53 CHINA TOWER CORPORATION LIMITED 2,020,000 4,141,000 1.00 CITIC SECURITIES COMPANY LIMITED 230,500 3,752,540 0.90 CNOOC LIMITED 579,000 7,735,440 1.86 CTRIP.COM INTERNATIONAL LIMITED 29,629 8,543,800 2.06 GREE ELECTRIC APPLIANCES INCORPORATION OF

ZHUHAI 157,044 9,818,162 2.36 HUANENG RENEWABLES CORPORATION LIMITED 3,358,000 7,219,700 1.74 JD.COM INCORPORATED 28,069 6,642,266 1.60 JIANGSU HENGRUI MEDICINE COMPANY LIMITED 124,419 9,334,193 2.25 KOOLEARN TECHNOLOGY HOLDING LIMITED 265,000 2,427,400 0.58 LONGFOR GROUP HOLDINGS LIMITED 419,000 12,339,550 2.97 MIDEA GROUP COMPANY LIMITED 73,129 4,310,904 1.04 PING AN INSURANCE GROUP COMPANY OF CHINA

LIMITED 242,000 22,699,600 5.46 SANY HEAVY INDUSTRY COMPANY LIMITED 828,288 12,315,024 2.96 SHENZHOU INTERNATIONAL GROUP HOLDINGS

LIMITED 102,000 10,954,800 2.64 SUNAC CHINA HOLDINGS LIMITED 132,000 5,068,800 1.22 TENCENT HOLDINGS LIMITED 113,000 39,843,800 9.59 WULIANGYE YIBIN COMPANY LIMITED 33,132 4,442,135 1.07 WUXI BIOLOGICS CAYMAN INCORPORATED 54,500 3,823,175 0.92 XINJIANG GOLDWIND SCIENCE & TECHNOLOGY

COMPANY LIMITED 392,200 3,349,388 0.81

274,212,481 65.98


10


China Equity Fund




HK$ % Financial assets at fair value through profit or loss (continued)

Listed equities securities (continued)

HONG KONG SAR

AIA GROUP LIMITED 186,400 15,704,200 3.78 CHINA GAS HOLDINGS LIMITED 296,200 8,604,610 2.07 CHINA JINMAO HOLDINGS GROUP LIMITED 3,068,000 14,573,000 3.51 CHINA MENGNIU DAIRY COMPANY LIMITED 292,000 8,833,000 2.13 CHINA MOBILE LIMITED 283,500 20,171,025 4.85 CHINA RESOURCES BEER HOLDINGS COMPANY

LIMITED 266,000 9,868,600 2.37 CHINA RESOURCES CEMENT HOLDINGS LIMITED 466,000 3,527,620 0.85 CITIC TELECOM INTERNATIONAL HOLDINGS LIMITED 1,609,000 4,987,900 1.20 GALAXY ENTERTAINMENT GROUP LIMITED 80,000 4,212,000 1.01 HONG KONG EXCHANGES & CLEARING LIMITED 61,000 16,823,800 4.05 SITC INTERNATIONAL HOLDINGS COMPANY LIMITED 730,000 5,810,800 1.40 TECHTRONIC INDUSTRIES COMPANY LIMITED 159,500 9,538,100 2.29

122,654,655 29.51

LUXEMBOURG

HANGZHOU HIKVISION DIGITAL TECHNOLOGY COMPANY LIMITED 176,181 5,523,412 1.33

Total Quoted Equities 402,390,548 96.82

Listed Quoted Investment Fund

HONG KONG SAR

ICBC CSOP S&P NEW CHINA SECTORS ETF 84,250 5,800,612 1.40

Total Quoted Investment Fund 5,800,612 1.40

Total investment, net 408,191,160 98.22 Other net assets 7,378,354 1.78




11

STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO (unaudited)

As at 30 June 2019

Listed equity securities Asia Frontier Equity Fund

Name 01/01/2019 Additions Disposals 30/06/2019

AAC TECHNOLOGIES HOLDINGS IN - 13,750 13,750 - AIRPORTS CORP OF VIETNAM JSC 300,400 300,400 300,400 300,400 AIRPORTS OF THAILAND PC-NVDR 279,300 - - 279,300 BATA SHOE CO (BANGLADESH) 31,468 - - 31,468 BRITISH AMERICAN TOBACCO BAN 23,377 46,754 - 70,131 CEYLON COLD STORES PLC 83,468 - - 83,468 CEYLON TOBACCO CO PLC 58,245 - - 58,245 CHEVRON LUBRICANTS LANKA PLC 226,766 - - 226,766 CHINA COMMUNICATIONS CONST-H 218,500 - 218,500 - CHINA INTERNATIONAL CAPITA-H - 45,800 45,800 - CP ALL PCL-NVDR 87,100 67,000 - 154,100 DELETED - 163,150 163,150 - DEUTSCH CW 12/05/2028 VIETNAM TEC 40,200 - - 40,200 DHG PHARMACEUTICAL JSC 162,730 - 23,250 139,480 DIALOG AXIATA PLC 4,670,521 - - 4,670,521 FPT DIGITAL RETAIL JSC 261,477 - - 261,477 GEELY AUTOMOBILE HOLDINGS LT - 333,000 222,000 111,000 GRAMEENPHONE LTD 115,573 17,002 - 132,575 HEIDELBERGER CEMENT BANGLADE 75,327 - - 75,327 JOHN KEELLS HOLDINGS PLC 339,815 - 16,990 322,825 KAZ MINERALS PLC 119,027 - - 119,027 KOOLEARN TECHNOLOGY HOLDING - 134,000 - 134,000 KWEICHOW MOUTAI CO LTD-A - 4,200 700 3,500 LENOVO GROUP LTD 374,000 - 374,000 - LINDE BANGLADESH LTD 30,150 - - 30,150 MEGAWIDE CONSTRUCTION CORP 260,650 - 260,650 - MIDEA GROUP CO LTD-A - 25,100 - 25,100 NETEASE INC-ADR 1,161 - 1,161 - NO VA LAND INVESTMENT GROUP 219,990 53,210 - 273,200 Q TECHNOLOGY GROUP CO LTD - 127,000 127,000 - RAZER INC - 4,382,000 2,062,000 2,320,000 SAI GON GROUND JSC 17,200 6,880 - 24,080 SAIGON BEER ALCOHOL BEVERAGE 87,970 - - 87,970 SEA LTD-ADR - 18,585 - 18,585 SHANGHAI INTERNATIONAL AIR-A 24,374 - 24,374 - SHANGRI-LA ASIA LTD 137,000 - 137,000 - SHENZHOU INTERNATIONAL GROUP 49,000 21,200 - 70,200 SQUARE PHARMACEUTICALS LTD 182,945 - - 182,945 TENCENT HOLDINGS LTD 9,000 4,500 - 13,500 TONGDA GROUP HOLDINGS LTD - 1,735,000 1,735,000 - TURQUOISE HILL RESOURCES LTD 91,551 - 91,551 - VIETJET AVIATION JSC 257,456 - - 257,456 VIETNAM DAIRY PRODUCTS JSC 299,772 - - 299,772 VIETNAM ENGINE & AGRICULTURA - 326,300 - 326,300 VIETNAM TECHNOLOGICAL & COMM - 50,000 - 50,000 XIAOMI CORP-CLASS B - 119,500 119,500 -


12


As at 30 June 2019

Listed equity securities China Equity Fund


3SBIO INC - 314,000 314,000 - AIA GROUP LTD 220,800 - 34,400 186,400 AIR CHINA LTD-H 233,000 - 233,000 - ALIBABA GROUP HOLDING-SP ADR 28,200 6,596 4,381 30,415 ANHUI CONCH CEMENT CO LTD-H 59,250 - 59,250 - BNP PAR PN 01/07/2021 GREE ELECTR - 41,503 41,503 - BNP PAR PN 02/12/2019 HANGZHOU HI 176,181 - - 176,181 BNP PAR PN 25/10/2019 JIANGSU HEN 12,024 - 12,024 - BNP PAR PN 27/01/2020 MIDEA GROUP - 38,900 38,900 - CHINA COMMUNICATIONS SERVI-H 300,000 - 300,000 - CHINA CONSTRUCTION BANK-H 4,562,000 - 321,000 4,241,000 CHINA EDUCATION GROUP HOLDIN 164,500 - 164,500 - CHINA GALAXY SECURITIES CO-H - 347,250 347,250 - CHINA GAS HOLDINGS LTD - 296,200 - 296,200 CHINA JINMAO HOLDINGS GROUP 1,660,000 1,408,000 - 3,068,000 CHINA MEDICAL SYSTEM HOLDING - 556,000 - 556,000 CHINA MENGNIU DAIRY CO 292,000 - - 292,000 CHINA MERCHANTS BANK-H 419,000 - - 419,000 CHINA MOBILE LTD 231,000 73,500 21,000 283,500 CHINA OVERSEAS LAND & INVEST 139,000 - 139,000 - CHINA PETROLEUM & CHEMICAL-H 880,000 316,000 - 1,196,000 CHINA RAILWAY CONSTRUCTION-H 263,500 - 263,500 - CHINA RESOURCES BEER HOLDING 250,000 16,000 - 266,000 CHINA RESOURCES CEMENT - 466,000 - 466,000 CHINA RESOURCES POWER HOLDIN 114,000 - 114,000 - CHINA SHENHUA ENERGY CO-H 144,750 - 144,750 - CHINA TAIPING INSURANCE HOLD 69,600 18,700 88,300 - CHINA TELECOM CORP LTD-H 640,000 - 640,000 - CHINA TOWER CORP LTD-H 6,366,000 2,020,000 6,366,000 2,020,000 CHINA UNICOM HONG KONG LTD - 212,000 212,000 - CITIC SECURITIES CO LTD-H 478,000 230,500 478,000 230,500 CITIC TELECOM INTERNATIONAL 1,155,000 454,000 - 1,609,000 CK HUTCHISON HOLDINGS LTD 32,000 - 32,000 - CNOOC LTD 412,000 307,000 140,000 579,000 CTRIP.COM INTERNATIONAL-ADR - 29,629 - 29,629 DAQO NEW ENERGY CORP-ADR - 6,092 6,092 - ENN ENERGY HOLDINGS LTD 25,300 - 25,300 - GALAXY ENTERTAINMENT GROUP L - 80,000 - 80,000 GREE ELECTRIC APPLIANCES I-A - 157,044 - 157,044 GUANGDONG INVESTMENT LTD 234,000 50,000 284,000 - GUANGZHOU AUTOMOBILE GROUP-H - 310,000 310,000 - HANG SENG BANK LTD - 16,400 16,400 - HONG KONG EXCHANGES & CLEAR 15,500 53,100 7,600 61,000 HOPE EDUCATION GROUP CO LTD - 2,551,000 2,551,000 - HUANENG RENEWABLES CORP-H - 3,358,000 - 3,358,000 ICBC CSOP S&P NEW CHINA SECT 84,250 - - 84,250 INNOVENT BIOLOGICS INC 81,500 28,000 109,500 - IQIYI INC-ADR - 11,005 11,005 - JD.COM INC-ADR - 28,069 - 28,069 JIANGSU HENGRUI MEDICINE C-A - 124,419 - 124,419 KINGBOARD LAMINATES HLDG LTD - 259,250 259,250 - KOOLEARN TECHNOLOGY HOLDING - 265,000 - 265,000 LONGFOR GROUP HOLDINGS LTD 349,500 130,500 61,000 419,000


13


As at 30 June 2019

Listed equity securities (continued) China Equity Fund


MIDEA GROUP CO LTD-A - 73,129 - 73,129 MMG LTD - 554,000 554,000 - MOMO INC-SPON ADR - 7,133 7,133 - NETEASE INC-ADR 1,575 263 1,838 - NEW CHINA LIFE INSURANCE C-H - 58,450 58,450 - PETROCHINA CO LTD-H 667,000 - 667,000 - PINDUODUO INC-ADR - 20,172 20,172 - PING AN INSURANCE GROUP CO-H 179,000 63,000 - 242,000 SANY HEAVY INDUSTRY CO LTD-A - 905,188 76,900 828,288 SEMICONDUCTOR MANUFACTURING - 269,500 269,500 - SHENZHOU INTERNATIONAL GROUP 102,000 - - 102,000 SITC INTERNATIONAL HOLDINGS 28,000 702,000 - 730,000 SUN ART RETAIL GROUP LTD 182,750 - 182,750 - SUNAC CHINA HOLDINGS LTD - 145,000 13,000 132,000 TAL EDUCATION GROUP- ADR 6,110 - 6,110 - TECHTRONIC INDUSTRIES CO LTD - 159,500 - 159,500 TENCENT HOLDINGS LTD 110,800 19,000 16,800 113,000 WULIANGYE YIBIN CO LTD-A - 33,132 - 33,132 WUXI BIOLOGICS CAYMAN INC - 54,500 - 54,500 XINJIANG GOLDWIND SCI+TEC-H - 392,200 - 392,200 ZHAOJIN MINING INDUSTRY - H 362,750 - 362,750 -

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