HARVEST RMB FIXED INCOME FUND (A SUB-FUND OF HARVEST FUNDS (HONG KONG)) UNAUDITED SEMI-ANNUAL REPORT 30 JUNE

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1 HARVEST RMB FIXED INCOME FUND (A SUB-FUND OF HARVEST FUNDS (HONG KONG)) UNAUDITED SEMI-ANNUAL REPORT 30 JUNE

2 Contents ADMINISTRATION... 2 MANAGER'S REPORT... 3 STATEMENT OF FINANCIAL POSITION (UNAUDITED)... 5 STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)... 7 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (UNAUDITED)... 8 INVESTMENT PORTFOLIO (UNAUDITED)... 9 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS (UNAUDITED) PERFORMANCE TABLE (UNAUDITED)

3 ADMINISTRATION Manager Directors of the Manager Harvest Global Investments Limited ZHAO Xuejun 31/F, One Exchange Square CHOY Peng Wah 8 Connaught Place LI Ming Central WANG Wei Hong Kong SUN Chen KWAN Thomas Investment Adviser Harvest Fund Management Co., Ltd. Room 1702, Aurora Plaza No. 99 Fu Cheng Road Pudong New Area Shanghai Peoples Republic of China Trustee and Registrar BOCI-Prudential Trustee Limited 12/F & 25/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong Custodian RQFII Custodian Bank of China (Hong Kong) Limited Bank of China Limited 14/F, Bank of China Tower No. 1, Fuxingmen Nei Dajie 1 Garden Road Beijing Hong Kong China Auditors Solicitors to the Manager PricewaterhouseCoopers Deacons 21/F Edinburgh Tower 5/F, Alexandra House 15 Queen s Road Central 18 Chater Road Hong Kong Central Hong Kong 2

4 MANAGER'S REPORT Based on the added value of industrial output, the economy grew at 6.0% in April and May and 6.2% in June, better than the 5.8% cumulative growth rate in the first quarter. CPI growth (YoY) slowed down slightly in the second quarter (2.3%, 2.0% and 1.9% for April, May and June respectively), while PPI growth (YoY) continued to improve (-3.4%, -2.8% and -2.6% for April, May and June respectively). Urban investments in fixed assets also slowed down in the second quarter. Overall economic data remained relatively stable, but it is still worrisome that investments in the manufacturing industry remained low, and it may be challenging for real estate investment growth to accelerate. In terms of quarterly returns, the overall performance of major bond types was quite divergent in the second quarter. Risk-free bonds were range-bound, while spreads of credit bonds widened (more so for medium and low grade credit bonds than high grade ones). In the meantime, shortend yields rose, further decreasing term spreads to historical low levels, and market liquidity remained relatively stable without major impact from traditional seasonal factors at the end of the first half-year. Over the second quarter, the China Bond Aggregate Index and the China Bond Corporate Bond Index rose by 0.42% and 0.48% respectively, while the CSI 300 Index and the S&P/CITIC Convertible Bond Index dropped by 1.99% and 4.16% respectively. At the end of 2015, we substantially reduced our allocation to equities which helped avoid certain losses during the market downturn at the beginning of However, some of our equity allocations still suffered losses. We maintained a relatively low allocation to equities as the market downturn continued, and only increased it slightly when the market recovered in the second quarter by investing in stocks with high dividends and stable growths. In bonds, we structured the portfolio with consideration of both asset yields and liquidity. We maintained a relatively high allocation to high grade bonds while remaining flexible in seizing investment opportunities presented by risk-free bonds. Our overall economic outlook for the third quarter is that: slight downward pressure on economic growth will remain; real estate dividend will be approaching an inflection point; infrastructural development will remain stable; the downturn of the manufacturing industry will continue; and the total social financing will remain at high levels but with lower transmission efficiency. Other fundamental factors in the second half of 2016 include: inflationary pressure will remain subdued due to economic downturn; exchange rate volatility will continue but with a less negative impact due to higher market acceptance; and monetary policy will remain prudent with the probability of rate cuts decreasing further, the effect of previous easing beginning to marginally decrease and the availability of credit stabilizing. We believe the overall bond market will enter a better tactical investment period in the third quarter as economic momentum slows down, inflation expectation stabilizes and expectation on external rate hikes increases. However, as there will not be any changes in fundamental trends and investors are already extremely pessimistic about the long-term economic growth, the overall bond market will only present short-term trading opportunities. Credit default risk will remain, and 3

5 medium and low grade credit bonds will enter the peak of maturities in the third quarter. As the overall yields of the bond market continue to decrease, we believe their attractiveness is relatively limited at this stage, especially for credit bonds. Thus, we will maintain a relatively short duration while focusing more on trading opportunities presented by risk-free bonds. For the equity market, we believe its recovery may enter the mid-to-late stage and speculations in certain sectors are already excessive, leading to increased risks in the future. As such, we will maintain a relatively low allocation to equities and focus on stocks with high dividends and low valuations. 4

6 STATEMENT OF FINANCIAL POSITION (UNAUDITED) As at 30th June 2016 As at 30th June 2016 RMB As at 31st December 2015 RMB ASSETS Current assets Financial assets at fair value through profit or loss 53,880,841 81,874,003 Interest receivable on deposits Interest receivable on bonds 931,052 2,454,633 Amount receivable on sale of investment - 2,342,099 Other deposit - 5,045 Cash and cash equivalents 8,899,239 4,609,796 TOTAL ASSETS 63,711,869 91,285,992 LIABILITIES Non-current liabilities Deferred tax liability 20, ,547 Current Liabilities Management fee payable 60,128 84,319 Trustee fee payable 35,000 35,000 Amount payable on redemption of units 75,049 71,853 Amount payable on purchase of investment 123,701 2,550 Other payable 164, ,142 Provision for taxation 2,173,292 8,398,285 Total liabilities excluding net assets attributable to unitholders 2,652,922 8,972,696 Net assets attributable to unitholders 61,058,947 82,313,296 NUMBER OF UNITS IN ISSUE (CLASS A) 571, , NUMBER OF UNITS IN ISSUE (CLASS I)

7 NET ASSET VALUE PER UNIT (CLASS A) NET ASSET VALUE PER UNIT (CLASS I)

8 STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the Period from 1st January 2016 to 30th June 2016 INCOME 1st January 2016 to 30th June 2016 RMB 1st January 2015 to 31st December 2015 RMB Dividends income 11,997 91,048 Interest on bonds 1,586,771 5,132,741 Interest on bank deposits 11,557 26,625 Net change in fair value on financial assets at fair value through profit or loss (2,504,581) 4,286,476 Net foreign exchange loss (2,329) (9,556) Total investment income (896,585) 9,527,334 EXPENSES Management fee (395,895) (1,294,260) Trustee fee (210,000) (420,000) Custodian fee (149,910) (194,418) Auditors' remuneration (87,338) (169,859) Investment transaction costs (164,256) (413,809) Legal and other professional fee (163,595) (80,989) Other operation expenses (684,314) (151,203) Total expenses (1,855,308) (2,724,538) Profit before taxation (2,751,893) 6,802,796 Finance cost Distribution to unitholders (861,649) (1,396,296) Profit / (Loss) after distribution and before tax (3,613,542) 5,406,500 Taxation 4,472,084 (485,326) Increase in net assets attributable to unitholders 858,542 4,921,174 7

9 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (UNAUDITED) For the Period from 1st January 2016 to 30th June st January 2016 to 30th June 2016 RMB 1st January 2015 to 31st December 2015 RMB Net assets attributable to unitholders at the beginning of the period/year 82,313, ,157,328 Proceeds on issue of units 173, ,640 Payments on redemption of units (22,286,233) (79,988,846) Net (decrease) increase from unit transcations (22,112,891) (79,765,206) Increase in net assets attributable to unitholders 858,542 4,921,174 Net assets attributable to unitholders at the end of the period/year 61,058,947 82,313,296 8

10 INVESTMENT PORTFOLIO (UNAUDITED) As at 30th June 2016 Market % of Holding Value net RMB asset Listed Equities China ANGEL YEAST CO LTD-A 3,000 53, % CENTRE TESTING INTL SHENZHEN CO LTD-A 10, , % FUJIAN SUNNER DEVELOPMENT CO LTD-A 5, , % GUANGDONG HAID GROUP CO LTD-A 2,000 31, % GUOXUAN HIGH-TECH CO LTD-A 2,000 78, % HANGZHOU ROBAM APPLIANCES CO LTD-A 1,500 55, % HUBEI DINGLONG CHEMICAL CO LTD-A 5, , % HUBEI JUMPCAN PHARMACEUTICAL CO LTD-A 3,000 77, % HUBEI XINYANGFENG FERTILIZER CO LTD-A 10, , % JIANGSU KANGDE XIN COMPOSITE MATERIAL CO LTD-A 3,994 68, % JIANGSU YANGHE BREWERY JOINT-STOCK CO LTD-A , % KWEICHOW MOUTAI CO LTD-A , % MIDEA GROUP CO LTD-A 3,000 71, % SHANDONG HIMILE MECHANICAL SCIENCE & TECHNOLOGY CO LTD-A 3,000 64, % SHANDONG SUN PAPER INDUSTRY JOINT STOCK CO LTD-A 15,000 73, % VATTI CORP LTD-A 2,056 50, % WULIANGYE YIBIN CO LTD-A 1,000 32, % WUXI LITTLE SWAN CO LTD-A 1,000 32, % ZHEJIANG SEMIR GARMENT CO LTD-A % ZHEJIANG WANLIYANG CO LTD-A 10, , % ZHENGZHOU YUTONG BUS CO LTD-A 3,000 59, % Fixed Income Securities China BYD CO LTD 5.25% A 19JUN ,583 3,433, % CHANGDE CITY CONSTRUCTION INVESTMENT GROUP CO LTD 6.5% A 25FEB2020 9, , % CHANGZHOU HI-TECH INDUSTRIAL DEVELOPMENT ZONE GENERAL DEVELOPMENT INC 6.2% A 04JUN2019 CHENZHOU URBAN CONSTRUCTION INVESTMENT OPERATION CO LTD 7.1% A 21JAN ,000 4,357, % 1, , % CHINA GOVT BOND 2.16% A 10AUG ,000 4,999, % CHINA GOVT BOND 2.31% A 21SEP ,000 4,997, % CHINA NATIONAL PETROLEUM CORP 4.8% A 15MAR ,000 5,373, % HEFEI CONSTRUCTION INVESTMENT & HLDG GROUP CO LTD 7.2% A 29APR2024 KASHI URBAN CONSTRUCTION INVESTMENT GROUP CO LTD 7.18% A 27NOV2019 NANCHANG CITY CONSTRUCTION INVESTMENT DEVELOPMENT 6.13% A 30APR ,000 1,156, % 13,890 1,172, % 50,000 5,135, % SHANDONG CHENMING PAPER HLDGS LTD 5.95% A 06JUL ,589 2,659, % 9

11 SHANGHAI BUND INVESTMENT GROUP CO LTD 6.2% A 11MAR ,000 4,151, % SINOCHEM INTL CORP 4.99% A 05MAR ,000 5,262, % WUHAN STATE-OWNED ASSET MANAGEMENT CO 5.9% A 17JUN ,000 3,417, % WUXI COMMUNICATIONS INDUSTRY GROUP CO LTD 5.58% A 08JUL ,000 2,000, % YONGZHOU CITY CONSTRUCTION INVESTMENT & DEVELOPMENT CO LTD 8.4% A 05DEC2021 1, , % ZHEJIANG GEELY HLDG GROUP CO LTD 5.9% A 24JAN ,000 3,098, % TOTAL LISTED/QUOTED INVESTMENTS 53,880, % OTHER NET ASSETS 7,178, % NET ASSETS AS AT 30TH JUNE ,058, % TOTAL INVESTMENTS, AT COST 53,537,138 10

12 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS (UNAUDITED) For the Period ended 30th June 2016 Listed/Quoted investments 30th June st December 2015 % % Listed Equities China 2.37% 7.53% FIXED INTEREST SECURITIES China 85.87% 91.94% TOTAL INVESTMENTS 88.24% 99.47% Other net assets 11.76% 0.53% Net assets at the end of the period % % 11

13 PERFORMANCE TABLE (UNAUDITED) Net Asset Values Highest issue price per unit (RMB) Lowest redemption price per unit (RMB) Class A Class I Class A Class I Financial period ended as at 30th June Financial period ended as at 31st December

14 PERFORMANCE TABLE (UNAUDITED) Net Asset Values (Continued) NUMBER OF UNITS IN ISSUE NET ASSET VALUE PER UNIT RMB Class A Class I Class A Class I Financial period ended as at 30th June , Financial period ended as at 31st December ,