HSBC Jintrust Large Cap Equity Securities Investment Fund

Transcription

1 HSBC Jintrust Large Cap Equity Securities Investment Fund Semi-Annual Report 2017 June 30, 2017

2 HSBC Jintrust Large Cap Equity Securities Investment Fund Semi-Annual Report for the First Half of 2017 June 30, 2017 Fund Manager: HSBC Jintrust Fund Management Company Limited Fund Custodian: Bank of Communications Co., Ltd. Issuance Date of the Report: August 26,

3 HSBC Jintrust Large Cap Equity Securities Investment Fund June 30, 2017 Fund Interim Report Information for Hong Kong Investors In the June 30, 2017 Fund Interim Report, except HSBC Jintrust Large Cap Equity Securities Investment Fund ( Fund ), HSBC Jintrust Dynamic Strategy Mixed Securities Investment Fund and HSBC Jintrust Stable Income Bond Securities Investment Fund (where applicable), other funds are not authorized by the Securities and Futures Commission in Hong Kong and not available to Hong Kong residents for investment purposes. SFC authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance. It does not mean the product is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. Only Class H units of HSBC Jintrust Large Cap Equity Securities Investment Fund are available to Hong Kong investors to subscribe. HSBC Investment Funds (Hong Kong) Limited Hong Kong Representative August 26,

4 1 Important Notice and Table of Contents 1.1 Important Notice The Board of Directors and directors of the Fund Manager warrant that there exist no false statements, misleading information or major omissions in this report, and will assume individual and joint responsibility for the truthfulness, accuracy and integrity of the content. This report has been approved by over two-thirds of the individual directors and has been signed off by the Chairman. Bank of Communications Co., Ltd., the Fund Custodian, reviewed the financial indicators, performance of Net Asset Value of the Fund and report of investment portfolio, etc. in this report on August 25, 2017 pursuant to the Fund Contract and guarantees that there exist no false statements, misleading information or major omissions in the content reviewed. The Fund Manager manages and operates the Fund s assets by the principles of honesty, credibility, prudence, diligence and conscientiousness, but does not guarantee that investment in the Fund will be profitable. Past results of the Fund are not indicative of its future performance. Investment involves risks, and investors should read the Prospectus of the Fund carefully before making investment decisions. Hong Kong Securities and Futures Commission s authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance. It does not mean the product is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. The financial information in this report has not been audited. The reporting period started from January 1, 2017 and ended on June 30,

5 1.2 Table of Contents 1. Important Notice and Table of Contents Important Notice Table of Contents Fund Overview Basic Information Product Description Fund Manager and Fund Custodian Designated Media of Information Disclosure Other Related Information Major Financial Indicators and Net Asset Value Performance Major Accounting Data and Financial Indicators Performance of the Net Asset Value of the Fund Fund Manager s Report Introduction to the Fund Manager and Portfolio Manager Fund Manager s Report on Compliance and Creditability of the Fund Operation in the Reporting Period Fund Manager s Special Report on Fair Trading in the reporting period Fund Manager s Report on Investment Strategy, Operation Analysis and Fund Performance in the Reporting Period Outlook on National Economy, Securities Market and Industrial Trends Fund Valuation Procedures in the Reporting Period Fund Manager s Report on Profit Distribution in the reporting period Warning regarding Number of Unitholders and Net Asset Value of the Fund in the Reporting Period Fund Custodian s Report Fund Custodian s Report on Compliance and Creditability in the Reporting Period Fund Custodian s Report on Compliance and Creditability of the Fund Operation, Fund Net Asset Calculation and Profit Distributions in the Reporting Period Fund Custodian s Report on the Truthfulness, Accuracy and Integrity of the Financial Statement in the Report Semi-Annual Financial Statements (Unaudited) Balance Sheet Income Statement Statement of Changes in Owners Equity (Fund Net Asset Value) Notes to the Financial Statements Report of Investment Portfolio of the Fund Fund Portfolio at the End of the Reporting Period Domestic Stock Portfolio by Industry at the end of the Reporting Period The Analysis of All Stocks Investments by Percentage of the Fair Value in the Net Asset Value of the Fund at the End of the Reporting Period Major Changes of Stock Investment Portfolio in the Reporting Period Bond Portfolio by Types of Bonds at the end of the Reporting Period Analysis of Top Five Bond Investments by Percentage of the Fair Value in the Net Asset Value of the Fund at the end of the Reporting Period The Analysis of Top Ten Asset-Backed Securities Investments by Percentage of the Fair Value in the Net Asset Value of the Fund at the End of the Reporting Period

6 7.8 The Analysis of Top Five Precious Metal Investments by Percentage of the Fair Value in the Net Asset Value of the Fund at the End of the Reporting Period The Analysis of Top Five Warrant Investments by Percentage of the Fair Value in the Net Asset Value of the Fund at the End of the Reporting Period The Details of Trading of Stock Index Futures Invested by the Fund at the End of the Reporting Period The Details of Trading of Treasury Bond Futures Invested by the Fund at the End of the Reporting Period Notes of the Investment Portfolio Report Investment Portfolio Report (for Hong Kong Investors) Information on Fund Unitholders Number and structure of Fund Unitholders at the End of the Reporting Period Fund Units Held by Employees of the Fund Manager at the End of the Reporting Period The Range of Fund Units Held by Fund Practitioners of the Company at the End of the Reporting Period Unit Change of the Open-Ended Fund Information Disclosure of Important Events The General Meeting of Unitholders Significant personnel changes at Fund Manager or the fund custodian department for the Fund Custodian Bank Litigations involving Fund Management Company, Fund assets and Fund custody business Change of Fund investment strategy Accounting Firm Inspection or penalty meted out by the regulators on the fund manager, fund custodian and senior management Details about the proprietary trading seats hired by the fund in securities companies Other Important Announcements Other Important Information Related to Investors Decision-Making The Holding of Fund Units by a Single Investor Reached or Exceeded 20% in the Reporting Period Other Important Information Related to Investors Decision-Making Documents Available for Inspection Documents Available for Inspection Depositary Location Document Access

7 2 Fund Overview 2.1 Basic Information Fund Name Fund abbreviation HSBC Jintrust Large Cap Equity Securities Investment Fund HSBC Jintrust Large Cap Equity Fund Fund primary code Operating method Open-ended contract-based Fund Contract Effective Date June 24, 2009 Fund Manager Fund Custodian Total Fund Units at the end of the reporting period Fund Duration HSBC Jintrust Fund Management Company Limited Bank of Communications Co., Ltd. 2,360,065, Units Indefinite Fund abbreviation of two classes HSBC Jintrust Large Cap Equity Fund Class A HSBC Jintrust Large Cap Equity Fund Class H Fund codes of two classes Total Fund Units of two classes at the end of the reporting period 2,272,856, Units 87,208, Units Notes: The H Share Class of HSBC Jintrust Large Cap Equity Securities Investment Fund under the Mutual Recognition of Scheme arrangement incepted on December 30,

8 2.2 Product Description Investment objectives Investment philosophy The Fund seeks to invest in large-cap blue chip companies that are in leading positions in various industries and are expected to generate sustainable profit growth. On the basis of rational risk control, the Fund aims to deliver strong investment returns and long-term capital proceeds while outperforming the benchmark consistently. 1. Asset allocation strategy With the Fund s investment philosophy of relatively high stock position, blue chip company investment and selective research and a stock selection strategy of research creates values, in its investment decision making process, the Fund makes wellproportioned asset allocations in different asset classes including equities, bonds, cash, etc., solely based on the relative changes of their risk-return characteristics. 2. Sector allocation strategy Sector researchers regularly provide investment ratings on sectors and allocation recommendations by analysing the characteristics of different sectors. Sector analysts make recommendations on key sector allocations based on internal and external research resources and with fundamental analysis, etc. 3. Equity investment strategy The Fund focuses on analysing large cap companies unique competitive advantages. The Fund Manager conducts a comprehensive value and growth analysis on the primarily selected stocks and further combines the research results with industry position analysis to select undervalued leading large-cap blue chip companies that enjoy sustainable and consistent profit growth. Benchmark for performance comparison Risk and return characteristics CSI 300 Index * 90% + Interbank deposit rate * 10%. The Fund is an equity fund, a type of fund with higher risks among open-ended funds, and its expected risk and return are higher than those of bond funds and mixed funds. The Fund mainly invests in large-cap concept stocks and is considered to be an investment product with a medium risk level among equity funds. 7

9 2.3 Fund Manager and Fund Custodian Item Fund Manager Fund Custodian Company Name HSBC Jintrust Fund Management Company Limited Bank of Communications Co., Ltd. Person-in-charge of information disclosure Name Gu Yun Lu Zhijun Tel Customer Service Tel Fax Registered address Office address 17/F, HSBC Building, Shanghai International Finance Centre, 8 Century Avenue, Pudong New District, Shanghai, China 17/F, HSBC Building, Shanghai International Finance Centre, 8 Century Avenue, Pudong New District, Shanghai, China 188 Middle Yincheng Road, Pudong New District, Shanghai, China. 188 Middle Yincheng Road, Pudong New District, Shanghai, China. Zip Code Legal Representative Yang Xiaoyong Niu Ximing 2.4 Designated Media of Information Disclosure Designated Newspapers for information disclosure Fund Manager s website containing full report Depositary location of Semi-Annual reports China Securities, Shanghai Securities, Securities Times. HSBC Jintrust Fund Management Company Limited: 17/F, HSBC Building, Shanghai International Finance Centre, 8 Century Avenue, Pudong New District, Shanghai, China; Bank of Communications Co., Ltd.: 188 Middle Yincheng Road, Pudong New District, Shanghai, China. 2.5 Other Related Information Item Company Name Office address Fund Registrar HSBC Jintrust Fund Management Company Limited 17/F, HSBC Building, Shanghai International Finance Centre, 8 Century Avenue, Pudong New District, Shanghai, China 8

10 3 Major Financial Indicators and Net Asset Value Performance 3.1 Major Accounting Data and Financial Indicators Fund Class Financial Indicators in the reporting period HSBC Jintrust Large Cap Equity Fund Class A Reporting period (from January 1, 2017 to June 30, 2017) HSBC Jintrust Large Cap Equity Fund Class H Reporting period (from January 1, 2017 to June 30, 2017) Income realized in the reporting period 264,184, ,722, Profit in the reporting period 821,571, ,232, Net profit per weighted average Fund unit in the reporting period Net profit return per weighted average Net Asset in the reporting period Net Asset Value Per Fund Unit Growth rate in the reporting period Financial Indicators at the end of the reporting period Distributable profit at the end of the reporting period Distributable profit per Unit at the end of the reporting period Net Asset Value of the Fund at the end of the reporting period Net Asset Value Per Fund Unit at the end of the reporting period Cumulative Financial Indicators at the end of the reporting period Cumulative Net Asset Value per Unit Growth Rate % 19.18% 17.29% 17.20% The End of the Reporting period (June 30, 2017) 3,603,458, ,312, ,874,916, ,555, The End of the Reporting period (June 30, 2017) % 23.33% Notes: 1. Income realized in the reporting period represents the balance of the Fund s interest income, investment return, and other income (not including income from change in fair value) after deducting relevant costs and fees; the profit in the reporting period represents the balance of the Fund s realized income in the reporting period adding the gain from change in fair value; 2. Distributable profit at the end of the reporting period refers to the lower of the undistributed profit and the realized income in the undistributed profit as at the end of the reporting period in the balance sheet (which should be the balance at the end of the reporting period instead of the current occurrence amount); 3. The above financial indicators of the Fund are exclusive of subscription fees or securities trading expenses (the subsequent subscription and redemption fees of the open-ended fund, dividend reinvestment fee, Fund switching fee, etc.), and the actual returns after the deduction of the fees are lower than the figures in the table above; 4. The H Share Class of HSBC Jintrust Large Cap Equity Securities Investment Fund under the Mutual Recognition of Scheme arrangement incepted on December 30,

11 3.2 Performance of the Net Asset Value of the Fund Comparison between the Net Asset Value Growth Rate of the Fund Units and the Yield Benchmark of Performance Comparison in the Reporting Period HSBC Jintrust Large Cap Equity Fund Class A Period Net asset value growth rate ➀ Standard deviation of net asset value growth rate ➁ Yield benchmark of performance comparison ➂ Standard deviation of yield benchmark of performance comparison ➃ The past month 5.51% 0.66% 4.49% 0.61% 1.02% 0.05% The past 3 months 10.38% 0.66% 5.51% 0.56% 4.87% 0.10% The past 6 months 17.29% 0.61% 9.74% 0.51% 7.55% 0.10% The past year 36.94% 0.68% 14.71% 0.60% 22.23% 0.08% The past 3 years % 1.75% 62.64% 1.58% % 0.17% Since Inception % 1.47% 17.60% 1.42% % 0.05% ➀ - ➂ ➁ - ➃ Notes: 1. The past month refers to the period started from June 1, 2017 and ended on June 30, The past 3 months refers to the period started from April 1, 2017 and ended on June 30, The past 6 months refers to the period started from January 1, 2017 and ended on June 30, The past year refers to the period started from July 1, 2016 and ended on June 30, The past 3 years refers to the period started from July 1, 2014 and ended on June 30, Since Inception refers to the period started from June 24, 2007 and ended on June 30, HSBC Jintrust Large Cap Equity Fund Class H Period Net asset value growth rate ➀ Standard deviation of net asset value growth rate ➁ Yield benchmark of performance comparison ➂ Standard deviation of yield benchmark of performance comparison ➃ The past month 5.44% 0.66% 4.49% 0.61% 0.95% 0.05% The past 3 months 10.28% 0.66% 5.51% 0.56% 4.77% 0.10% The past 6 months 17.20% 0.61% 9.74% 0.51% 7.46% 0.10% The past year 36.88% 0.68% 14.71% 0.60% 22.17% 0.08% Since Inception 23.33% 1.22% -2.16% 1.07% 25.49% 0.15% ➀ - ➂ ➁ - ➃ Notes: 1. The past month refers to the period started from June 1, 2017 and ended on June 30, The past 3 months refers to the period started from April 1, 2017 and ended on June 30, The past 6 months refers to the period started from January 1, 2017 and ended on June 30, The past year refers to the period started from July 1, 2016 and ended on June 30, Since Inception refers to the period started from December 30, 2015 and ended on June 30,

12 3.2.2 Comparison between the Cumulative Net Asset Value Growth Rate of the Fund and the Yield Benchmark of Performance Comparison for the Same Period since the Inception of the Fund HSBC Jintrust Large Cap Equity Security Investment Fund Chart of historical trend of comparison between the accumulated Fund Net Asset Value per Unit growth rate of and the yield benchmark of performance comparison 1. HSBC Jintrust Large Cap Equity Fund Class A (June 24, 2009 to June 30, 2017) 250% 200% 150% 100% 50% 0% -50% 2009/6/ /8/ /10/ /12/ /2/ /4/ /6/ /6/30 Accumulated net value growth rate of HSBC Jintrust Large Cap Fund Class A Growth rate of performance benchmark Notes: 1. As stipulated in the Fund Contract, the percentage and scope of stock investment of the Fund are that 85%- 95% of the Fund s assets can be invested therein, of which the Fund shall make at least 80% stock investment in domestic market for A shares of large-cap blue chips with continuously steady profit growth, underestimated market prices as well as leading positions in their respective industries. The percentage and scope of fixedincome security and cash investment of the Fund are that 5%-15% of the Fund assets can be invested therein. The Fund shall make an investment of at least 5% of the Fund s Net Asset Value in cash or government bonds with their maturity dates within one year. As agreed in the Fund Contract, the Fund shall complete the position building within 6 months from the effective date of the Fund Contract. As at December 24, 2009, all investment percentages of the Fund satisfied the percentages agreed in the Fund Contract. 2. In the reporting period, the Fund s benchmark of performance comparison = CSI 300 Index * 90% + Interbank deposit rate * 10%. 3. The above calculation of the accumulated Fund Net Asset Value per Unit growth rate has taken into account the income of dividends on shares invested by the Fund which were generated in the reporting period. The calculation of the yield benchmark of performance comparison for the same period has not taken into account any income of dividends on shares of constituent stocks of CSI 300 Index which were generated in the reporting period. 11

13 2. HSBC Jintrust Large Cap Equity Fund Class H (December 30, 2015 to June 30, 2017) 30% 20% 10% 0% -10% -20% -30% 2015/12/ /5/ /10/ /3/ /6/30 Accumulated net value growth rate of HSBC Jintrust Large Cap Fund Class H Growth rate of performance benchmark Notes: 1. As stipulated in the Fund Contract, the percentage and scope of stock investment of the Fund are that 85%- 95% of the Fund s assets can be invested therein, of which the Fund shall make at least 80% stock investment in domestic market for A shares of large-cap blue chips with continuously steady profit growth, underestimated market prices as well as leading positions in their respective industries. The percentage and scope of fixedincome security and cash investment of the Fund are that 5%-15% of the Fund assets can be invested therein. The Fund shall make an investment of at least 5% of the Fund s Net Asset Value in cash or government bonds with their maturity dates within one year. 2. In the reporting period, the Fund s benchmark of performance comparison = CSI 300 Index * 90% + Interbank deposit rate * 10%. 3. The above calculation of the accumulated Fund Net Asset Value Asset per Unit growth rate has taken into account the income of dividends on shares invested by the Fund which were generated in the reporting period. The calculation of the yield benchmark of performance comparison for the same period has not taken into account any income of dividends on shares of constituent stocks of CSI 300 Index which were generated in the reporting period. 4. The H Share Class of HSBC Jintrust Large Cap Equity Securities Investment Fund under the Mutual Recognition of Scheme arrangement incepted on December 30,

14 4 Fund Manager s Report 4.1 Introduction to the Fund Manager and Portfolio Manager Fund Manager s Profile and Fund Management Experience HSBC Jintrust Fund Management Company Limited, a joint-venture between Shanxi Trust Co., Ltd. and HSBC Global Asset Management (UK) Limited, was founded on November 16, 2005 with approval from the China Securities Regulatory Commission. It is registered in Shanghai and holds 200 million Yuan in registration capital. As at June 30, 2017, it has managed 18 open-ended funds of different types: HSBC Jintrust 2016 Lifecycle Securities Investment Fund (incepted on May 23, 2006), HSBC Jintrust Dragon Growth Equity Securities Investment Fund (incepted on September 27, 2006), HSBC Jintrust Dynamic Strategy Mixed Securities Investment Fund (incepted on April 9, 2007), HSBC Jintrust 2026 Lifecycle Securities Investment Fund (incepted on July 23, 2008), HSBC Jintrust Stable Income Bond Securities Investment Fund (incepted on December 3, 2008), HSBC Jintrust Large Cap Equity Securities Investment Fund (incepted on June 24, 2009), HSBC Jintrust Small-Mid Cap Equity Securities Investment Fund (incepted on December 11, 2009), HSBC Jintrust Carbon Awareness Equity Securities Investment Fund (incepted on June 8, 2010), HSBC Jintrust China Consumption Equity Securities Investment Fund (incepted on December 8, 2010), HSBC Jintrust China Technology Equity Securities Investment Fund (incepted on July 27, 2011), HSBC Jintrust China Money Market Securities Investment Fund (incepted on November 2, 2011), HSBC Jintrust Hang Seng China A Industry Top Index Securities Investment Fund (incepted on August 1, 2012), HSBC Jintrust Dual Core Mixed Asset Securities Investment Fund (incepted on November 26, 2014), HSBC Jintrust New Engine Mixed Securities Investment Fund (incepted on February 11, 2015), HSBC Jintrust China Manufacturing Equity Fund (incepted on September 30, 2015) and HSBC Jintrust China A Share Volatility Focused Equity Fund (incepted on March 11, 2016), HSBC Jintrust Total China Equity Fund (incepted on November 10, 2016) and HSBC Jintrust China Multi-Asset Pearl River Delta Focused Fund (incepted on June 2, 2017) Introduction to the Portfolio Manager (or the Group of Portfolio Managers) and Portfolio Manager Assistant(s) Name Position Tenure as the Portfolio Manager of the Fund Appointment Date Resignation Date Seniority in the securities industry Remarks Qiu Dongrong (Dolon Qiu) Head of Equity Investment Department, Portfolio Manager of the Fund and HSBC Jintrust Dual-Core Strategic Mixed Securities Investment Fund September 16, Mr. Qiu Dongrong holds a master s degree. He has worked as a researcher at Shanghai Representative Office of CSC International Holdings, as well as a researcher and senior researcher at HSBC Jintrust Fund Management Company Limited. He is currently the head of equity investment and the portfolio manager of the Fund and HSBC Jintrust Dual-Core Mixed Securities Investment Fund. Notes: 1. The appointment date represents the date that the Fund Manager announced Mr. Qiu Dongrong as the portfolio manager. 2. Seniority in the securities industry represents the number of years the Portfolio Manager has worked in the security investment field. 13

15 4.2 Fund Manager s Report on Compliance and Creditability of the Fund Operation in the Reporting Period The Fund Manager manages and operates the Fund assets on the principles of honesty, credibility, prudence, diligence and conscientiousness, with a premise of strict risk control in order to maximize the benefits of the Fund Unitholders in strict compliance with the Law of the People s Republic of China on Securities Investment Funds and other provisions, regulations formulated by the China Securities Regulatory Commission (the CSRC), and the Fund Contract in the reporting period. There were no activities that might jeopardize the interests of the Fund Unitholders in the reporting period. 4.3 Fund Manager s Special Report on Fair Trading in the reporting period The Implementation of the Fair Trading System To ensure that different investment portfolios managed by the Fund Manager are treated equally and to fully protect the legal rights of the Fund Unitholder, the Fund Manager stipulated the Fair Trading Policy of HSBC Jintrust Fund Management Company Limited (hereinafter referred to as the Fair Trading Policy ) in accordance with Law of the People s Republic of China on Securities Investment Fund, Administration Measures of the Operation of Open-ended Securities Investment Fund and Guiding Opinions on the Fair Trading Policy of Securities Investment Fund Management Companies. According to the Fair Trading Policy, different investment portfolios must be treated equally in the investment management process. Benefit transfers between different investment portfolios directly or through a third party s transaction arrangement are strictly prohibited. The Fair Trading Policy applies to the entire investment process and is used to regulate fund-investmentrelated activities involved in the investment management process, including authorisation, research and analysis, investment decision making, trade execution, conduct supervision and performance evaluation. Within the reporting period, the relevant departments of the Fund Manager carried out investment management, research and analysis, and trading in compliance with the Fair Trading Policy. In the meantime, the Fund Manager fulfilled its obligations of fair trading, including inspection, analyzing and evaluation, reporting, and kept the relevant records. There existed no unfair treatments against different investment portfolios or benefit transfers either directly or through a third party s transaction arrangement in the reporting period committed by the Fund Manager Special Report on Abnormal Trading The Fund Manager has stipulated the Abnormal Trading Monitoring and Reporting Policy of HSBC Jintrust Fund Management Company Limited (hereinafter referred to as the Abnormal Trading Monitoring and Reporting Policy ) to guard against a possible benefit transfer between different investment portfolios and to closely monitor any abnormal trading that might jeopardize the interests of the Fund Unitholders. In the reporting period, the Fund Manager monitored and analysed the trading of the same investment portfolio and different investment portfolios based on the Guiding Opinions on the Fair Trading Policy of Securities Investment Fund Management Companies and Abnormal Trading Monitoring and Reporting Policy. No abnormal trading was found in the reporting period. There exists no circumstance that each investment portfolio trading in a security listed on the open market in one day exceeded 5% of the total trading volume which has the less amount in two of the trading direction of that security on the same day in the reporting period. 14

16 4.4 Fund Manager s Report on Investment Strategy and Fund Performance in the Reporting Period Analysis of Fund Investment Strategy and Operation Analysis during the Reporting Period In the first half of 2017, in the context of tight liquidity, the economic performance remained robust, the economic growth still performed relatively strong, and the risk of hard landing continued to decline. Macroeconomic-related industries and sectors, especially cyclical sectors, undergone substantial adjustment, and valuation in these industries and sectors fell back to a more attractive level, due to the increase in market concerns about the slow-down of economic growth, in the context of purchase & mortgage restriction and deleveraging in the real estate industry. However, based on our bottom-up research, we believed that, fundamentals risk had been fully released, while the overall profitability in the second quarter of 2017, including those of cyclical industries, remained at high level. Based on our PB-ROE strategy, we believed that valuation-based investment was more attractive than fundamentals-based investment, so we still actively maintained a high allocation proportion of building materials, transportation, petroleum and petrochemical and other cyclical industries, and increased the allocation proportion of light industry, paper industry and other cyclical industries. As for liquidity and valuation, in late first quarter and early second quarter of 2017, due to financial deleveraging and other policy factors, the overall liquidity was tight and the overall interest rate rose, resulting decreased risk compensation of equity assets and adjusted stock price and valuation in related industries, including banking and non-banking finance. However, we believed that, after May and June, the interest rate was at a high level and the liquidity risk was fully released, so we increased the allocation proportion of finance sector, including banking and non-banking finance, as well as the allocation proportion of transportation, medicine, building materials, light industry, paper industry and other industries, and decreased the allocation proportion of home appliance, automobile, food & beverage, real estate and other industries undergoing substantial rise. At the same time, by actively paying attention to the fundamentals changes of companies with small and medium market value undergone large adjustment and the opportunities arising from valuation adjustment, based on PB-ROE strategy, we actively bought in the stocks of some undervalued high-quality companies with good fundamentals in growth sector and small and medium market value sector Fund Performance in the Reporting Period The Fund s Net Asset Value per Unit growth rate of Class A was 17.29% in the reporting period, whilst the performance benchmark was 9.74% in the same period. The Fund s performance of Class A exceeded the benchmark yield by 7.55%. The Fund s Net Asset Value per Unit growth rate of Class H was 17.20% in the reporting period, whilst the performance benchmark was 9.74% in the same period. The Fund s performance of Class H exceeded the benchmark yield by 7.46%. 4.5 Outlook on the National Economy, Securities Market and Industrial Trends Looking forward to the second half of the year, we expect that, the occurrence chance of further systemic risk in economy is low, and the profitability of some companies will continue to improve. Given that the overall dynamic valuation of CSI 300 Index is still below its historical average level and that the current risk compensation implied by the valuation of stocks with medium and large market value is still attractive, and taking account of the overall company profitability and the interest-rate and liquidity uncertainty risk, we will remain relatively optimistic about the A-share market, and seek new bottom-up opportunities. Nevertheless, in terms of risk, we will pay more attention to risks related to the profitability sustainability, growth potential, and stability of highly profitable industries and companies, especially industries and companies affected greatly by aftereffect of real-estate development. In terms of valuation, we will remain vigilant against valuation risks related to industries and companies with decreasing implied risk premium, especially industries and companies whose valuation has risen substantially. We will be cautious about industries and companies with risks related to both fundamentals and valuation. 15

17 4.6 Fund Valuation Procedures in the Reporting Period In order to valuate the net asset value of fund units timely, accurately, fairly and rationally and better protect fund holders legal interests, our fund manager has formulated the HSBC Jintrust Fund Management Company Limited - Rules of Procedure of Investment Evaluation Group about our fund valuation process. Approved by executives, this document is implemented in accordance with both the valuation agreement in the fund contract and relevant provisions issued by the Securities Association of China (SAC) in 2007 Guidelines on Accounting Business for Securities Investment Fund, the Notice on Issues Concerning the Valuation and the Calculation of Net Asset Value per Unit of Securities Investment Funds Pursuant to the Accounting Standards for Business Enterprises (Zheng Jian Kuai Ji Zi [2007] No. 21) and Guiding Opinions on Further Regulating the Valuation Business of Securities Investment Funds (CSRC Notice [2008] No. 38). According to the HSBC Jintrust Fund Management Company Limited - Rules of Procedure of Investment Evaluation Group: (1) The company has specifically established the Investment Evaluation Group to be the primary decision-making entity. The Investment Evaluation Group is responsible for offering suggestions about valuation, providing and assessing valuation technology and implementing valuation policy. The Investment Evaluation Group consists of the General Manager, Inspector, Chief Operation Offier, Chief Investment Officer, Head of Fund Operations, Head of Product Development, Head of Special Projects, Risk Control Manager and other related personnel sitting in thereon. The above members all hold Chinese fund industry practitioner qualifications and possess immense experience and expertise in their respective fields. There are no significant conflicts of interest between members. (2) The Investment Evaluation Group works in coordination with the following departments: Fund Operation Department, Fund Investment Department, Product Development Department and Risk Management Department and other relevant department. Below are their respective objectives I. Fund Operation Department 1. Promptly discover and report instances when the valuation is misrepresented or unfair. Confer with relevant personnel to propose changes and improvements, and execute the decision approved by the Investment Evaluation Group. 2. Strictly implement established valuation policies and procedures, unless it is necessary to update the valuation policy and procedure and such updates are approved by the Investment Evaluation Group. 3. When a fund is adopting new investment strategies or assets, submit to the Investment Evaluation Group a report on the applicability of existing valuation policies and procedures, and decide the valuation based on the report s results. II. Fund Investment Department Under the leadership of the portfolio manager, promptly discover and report instances when the valuation is misrepresented or unfair, subsequently proposing suggestions to the Investment Evaluation Group. However, the portfolio manager himself/herself does not participate in the final valuation decision. III. Product Development Department Provide comments and suggestions to the Investment Evaluation Group, if the valuation model has been adjusted significantly. IV. Risk Management Department Organize related departments in line with regulations, to timely disclose information about fund valuation; check and monitor the implementation of valuation-related tasks and regularly or irregularly report to the Investment Evaluation Group the performance of valuation policies and procedures in relevant departments(including but not limited to their consistency with existing policies and procedures when conducting valuations); provide comments or suggestions about how to further improve internal control of valuation. 16

18 V. Inspector Monitor and check the implementation of valuation-related tasks and submit to the Investment Evaluation Group an Examination Report on the legitimacy and compliance of valuation proposal. (1) Call the Investment Evaluation Group to meet once every 3 months; evaluate the valuation model, timely modify the valuation method when the validity and applicability of the valuation policy and procedure are affected. Revisions to valuation policies and procedures will be implemented only after the company s board of managers approves. (2) If the fund adopts new investment strategies or intends to invest in new asset classes, or when important or unexpected valuation-related events occur, convene an interim meeting; otherwise, the Investment Evaluation Group will attend a Risk Control Committee meeting to discuss and pass the aforementioned valuation items. In the reporting period, the Fund received China bond valuation services in accordance with the Services Agreement for End Users of China Bond Yield Curve and Valuation with the China Central Depository and Clearing Co., Ltd 4.7 Fund Manager s Report on Profit Distribution in the reporting period The Fund did not make any profit distributions, pursuant to the Fund s regulations, laws, Contract, and in accordance to the Fund operations in the reporting period. 4.8 Warning regarding Number of Unitholders and Net Asset Value of the Fund in the Reporting Period The Fund was not in any situation that the number of Unitholders was less than 200 for 20 consecutive Working Days or the Net Asset Value of the Fund was below RMB 50 million Yuan for 20 consecutive Working Days in the reporting period. 17

19 5 Fund Custodian s Report 5.1 Fund Custodian s Report on Compliance and Creditability in the Reporting Period The Fund Custodian has carried out its duties with due diligence and in strict compliance with the Law of Securities Investment Fund and other provisions, the Fund Contract, and the Fund Custodian Agreement in the reporting period. There existed no activities that might jeopardize the interests of the Fund Unitholders in the first half of Fund Custodian s Report on Compliance and Creditability of the Fund Operation, Fund Net Asset Value Calculation and Profit Distributions in the Reporting Period In the Fund Manager s operations and investment, Net Asset Value calculation, subscription and redemption price calculation and Fund expenditures, the Fund Custodian has not found any actions that might jeopardize the interests of the Fund Unitholders in the first half of There existed no profit distributions, pursuant to the Fund Contract in the reporting period. 5.3 Fund Custodian s Report on the Truthfulness, Accuracy and Integrity of the Financial Statement in the Report The Fund Custodian has reviewed the financial indicators, Net Asset Value performances, profit distributions, and other related content in the financial statement and portfolio report and has deemed them true, accurate and integral in the first half of

20 6 Semi-Annual Financial Statements (Unaudited) 6.1 Balance Sheet Reporting Entity: HSBC Jintrust Large Cap Equity Securities Investment Fund Reporting Date: June 30, 2017 Asset Number The end of the current reporting period (June 30, 2017) The End of last year (December 31, 2016) Assets Cash in bank ,382, ,722, Settlement deposit 162,731, ,865, Trading deposit 1,601, , Trading financial assets ,788,299, ,517,837, in which: stock investments 6,538,134, ,417,637, fund investments bond investments 250,165, ,200, asset-backed securities investments precious metal investment Derivative financial assets Financial assets purchased under agreements to resell Due from brokers 7,019, ,284, Interest receivable ,344, ,075, Dividend receivable Amounts receivable for issuance of units 30,410, ,959, Deferred tax assets Other assets Total assets 7,035,791, ,639,659,

21 Liabilities and owners equity Number The end of the current reporting period (June 30, 2017) The End of last year (December 31, 2016) Liabilities Short-term loan Trading financial liabilities Derivative financial liabilities Proceeds from financial assets sold under agreements to repurchase Due to brokers 8, Amounts payable for redemption of units 39,215, ,046, Management fee payable 8,407, ,443, Custodian fee payable 1,401, , Sales service fee payable Transaction costs payable ,929, ,230, Tax payable Interest payable Distribution payable Deferred tax liabilities Other liabilities , , Total liabilities 53,318, ,935, Owners equity Paid-in capital (at par) ,308,472, ,969, Retained earnings ,673,999, ,575,754, Total owners equity 6,982,472, ,573,723, Total liabilities and owners equity 7,035,791, ,639,659, Notes: As at June 30, 2017, the total number of units in issue was 2,272,856, and 87,208, for Class A and Class H respectively. The total number of units in issue was 2,360,065, for two Classes together. The Net Asset Value per unit amounted to RMB Yuan and RMB Yuan for Class A and Class H respectively. 20

22 6.2 Income Statement Reporting Entity: HSBC Jintrust Large Cap Equity Securities Investment Fund Reporting Period: January 1, 2017 to June 30, 2017 Item Number The current reporting period from January 1, 2017 to June 30, 2017 The same reporting period last year from January 1, 2016 to June 30, 2016 (1) Revenue 884,149, ,587, Interest income 4,921, ,039, in which: interest on deposits ,906, ,039, interest on bond investments 2,015, interest on asset-backed securities investments interest on financial assets purchased under agreements to resell other interest income 2. Investment income/(losses) 311,682, ,978, in which: realized gains on sale of stock investments ,362, ,496, realized gains on sale of fund investments realized gains on sale of bond investments , realized gains on sale of asset-backed security investments realized gains/(losses) on sale of precious metal investments realized gains on sale of derivative instruments dividend income ,115, ,475, Gains/(losses) from fair value change ,897, ,523, Exchange gains/(losses) 5. Other income ,648, ,

23 Item Number The current reporting period from January 1, 2017 to June 30, 2017 The same reporting period last year from January 1, 2016 to June 30, 2016 Minus: (2) Expenses 52,345, ,487, Management fee ,368, ,938, Custodian fee ,228, ,489, Sales service fee Transaction costs ,539, ,845, Interest expenses in which: interest on financial assets sold under agreements to repurchase 6. Other expenses , , (3) Total profit/(losses) 831,804, ,074, Minus: Income tax (4) Net profit/(losses) 831,804, ,074, Statement of Changes in Owners Equity (Fund Net Asset Value) Reporting Entity: HSBC Jintrust Large Cap Equity Securities Investment Fund Reporting Period: January 1, 2017 to June 30, 2017 Item The current reporting period from January 1, 2017 to June 30, 2017 Paid-in capital Retained earnings Total owners equity 1. Owners equity (Fund net assets) beginning of period 997,969, ,575,754, ,573,723, Changes in fund net assets from operations (total profit) 831,804, ,804, Changes in fund net assets from unit dealing 1,310,503, ,266,440, ,576,944, in which: subscription of units 2,063,982, ,630,861, ,694,843, redemption of units -753,478, ,364,420, ,117,899, Distributions to Unitholders 5. Owners equity (Fund net assets) end of period 2,308,472, ,673,999, ,982,472,

24 Item The same reporting period last year from January 1, 2016 to June 30, 2016 Paid-in capital Retained earnings Total owners equity 1. Owners equity (Fund net assets) beginning of period 767,687, ,092,144, ,859,831, Changes in fund net assets from operations (total profit) -122,074, ,074, Changes in fund net assets from unit dealing 200,477, ,279, ,756, in which: subscription of units 545,981, ,651, ,134,632, redemption of units -345,504, ,371, ,875, Distributions to Unitholders 5. Owners equity (Fund net assets) end of period 968,164, ,170,349, ,138,514, The accompanying notes form an integral part of the financial statement. The financial statement from 6.1 to 6.4 are approved by: Wang Dong Zhao Lin Yang Yang Person in charge of Fund Manager Person in charge of accounting Person in charge of accounting function department 6.4 Notes to Financial Statements Basic Fund Background HSBC Jintrust Large Cap Equity Securities Investment Fund ( the Fund ) was successfully launched by HSBC Jintrust Fund Management Company Limited in accordance with the Law of the People s Republic of China on Securities Investment Funds and the Fund Contract of HSBC Jintrust Large Cap Equity Securities Investment Fund, following the official approval from the China Securities Regulatory Commission ( the CSRC ) (Zhengjianxuke [2009] No. 343). The Fund is a contractual open-ended fund with an indefinite operating period. The initial public offering of the Fund raised aggregate net proceeds of RMB 2,884,896, excluding the interest on subscription proceeds. Relevant subscription proceeds were verified by an asset verification report (KPMG-B(2009)CR No.0031) issued by KPMG Huazhen LLP (a special general partnership), previously known as KPMG Huazhen Co., Ltd. The Fund Contract came into effect on June 24, 2009 upon completion of the filing with the CSRC, with total number of units being 2,885,554, on that day, including the conversion of interest on subscription proceeds during initial offering period into fund units of 658, The Fund has appointed HSBC Jintrust Fund Management Company Limited as its investment manager and Bank of Communications as its custodian. 23

25 In accordance with Announcement Concerning the Set-up of New Unit Class of HSBC Jintrust Large Cap Equity Securities Investment Fund and the Amendment of Fund Contract and the updated Prospectus of HSBC Jintrust Large Cap Equity Securities Investment Fund, starting from December 28, 2015, the Fund is divided into different unit classes. Class A Units are distributed in Mainland China for Mainland China investors while Class H Units are distributed in Hong Kong for Hong Kong market investors. Class A Units and Class H Units have separately designated fund codes, with their net asset value ( NAV ) per unit and accumulated NAV per unit being calculated and published separately. No switching is allowed between the two unit classes until the investment manager makes specific announcement as future conditions allow. In accordance with the Law of the People s Republic of China on Securities Investment Funds and the Fund Contract of HSBC Jintrust Large Cap Equity Securities Investment Fund, the Fund shall invest in financial instruments including listed stocks, government bonds, financial bonds, corporate bonds, Central bank bills, convertible bonds, warrants, ABS and other financial instruments authorized by the CSRC. The Fund s target asset allocation keep 85%-95% of its net assets in stocks, 0%-3% in warrants, and 5%-15% in fixed income securities and cash and cash equivalents, of which no less than 5% of net assets in cash or government bonds with maturity within one year. The Fund should invest more than 80% of its stock investments in China A share large cap blue-chip equities, which have sustainable growth in revenue, underestimated price and the leading position of various industries. The Fund s performance benchmark is CSI 300 Index 90% + Interbank deposit rate 10%. The financial statements were approved and issued by the Fund Manager on August 26, Basis of Preparation The financial statements of the Fund were prepared in accordance with the Basic Standards of the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance on February 15, 2006, and other relevant regulations and accounting standards issued thereafter (hereafter referred to as the Accounting Standard for Business Enterprises or CAS ), the CSRC Announcement XBRL Template of Information Disclosure for Securities Investment Fund No. 3 Annual and Semi-annual Report, the Guidance for the Accounting for Securities Investment Fund issued by the Asset Management Association of China ( AMAC ), the Fund Contract of HSBC Jintrust Large Cap Equity Securities Investment Fund and the current practice guidelines of the fund industry that are stated in the notes to the financial statements and allowed by the CSRC and the AMAC Statement of Compliance with the Accounting Standards for Business Enterprises and Other Relevant Regulations The financial statements of the Fund for the first half of 2017 fairly and completely presented the financial position of the Fund as at June 30, 2017, and the operating results and the change in fund s net asset value for the period ended June 30, 2017 in compliance with the Accounting Standards for Business Enterprises Explanations on the Accounting Policies and Accounting Estimates Consistent with Those of the Prior Year The accounting policies and accounting estimates were consistent with those adopted in the prior year Explanation on the Accounting Errors Correction There was no significant accounting error correction in the current reporting period. 24