A Sub-Fund of CIFMHK Funds INTERIM REPORT FOR THE PERIOD ENDED 31 MARCH 2018 (UNAUDITED)
Contents MANAGEMENT AND ADMINISTRATION....................................... 2 REPORT OF THE MANAGER.................................................. 3 STATEMENT OF FINANCIAL POSITION (UNAUDITED)........................... 4 STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)...................... 5 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (UNAUDITED).............................................. 6 STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO (UNAUDITED)....... 7 INVESTMENT PORTFOLIO (UNAUDITED)...................................... 8 PERFORMANCE TABLE (UNAUDITED)........................................ 10 1
MANAGEMENT AND ADMINISTRATION Manager CIFM Asset Management (Hong Kong) Limited 7/F, No. 33 Des Voeux Road Central Hong Kong Directors of the Manager Chang She-Lin Wu Chi Keung Chang Shu-Wan Guo Peng Yang Hong Investment Adviser China International Fund Management Co., Ltd. 25/F, Aurora Building No. 99 Fu Cheng Road Pudong Shanghai, P.R.C. 200120 Solicitors to the Manager Deacons 5/F, Alexandra House 18 Chater Road Central Hong Kong Trustee and Registrar BOCI-Prudential Trustee Limited 12/F & 25/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong Custodian Bank of China (Hong Kong) Limited 14/F, Bank of China Tower 1 Garden Road Central Hong Kong RQFII Custodian Bank of China Limited No. 1, Fuxingmen Nei Dajie Beijing 100818 China Auditor PricewaterhouseCoopers 21/F, Edinburgh Tower 15 Queen s Road Central Hong Kong 2
Report of the Manager Introduction CIFM (HK) China A Focus Fund (the Sub-Fund ) is a sub-fund of CIFMHK Funds, an umbrella unit trust established under the laws of Hong Kong. Through the Renminbi Qualified Foreign Institutional Investor ( RQFII ) quota of 800 million obtained by the Manager, the Sub-Fund primarily (i.e. not less than 70% of its net assets) invest in China A-shares (including up to 10% in equity funds which primarily invests in China A-shares) which are denominated and settled in. The top 30 holdings of the Sub-Fund shall account for no less than 70% of the Sub-Fund s investments in equities (mainly China A-Shares). Market Review For the six months ended March 2018, the CSI300 Index was up 1.62% whereas the ChiNext Composite Index fell 6.36%. Among the sectors, Health Care, Consumer Staples, IT and Consumer Discretionary outperformed the market whereas Telecoms, Materials, Industrials, Energy, Utilities, Financials underperformed. Market saw a strong rally in January 2018 as sentiment was boost by the steady economic growth and better than expected real estate sales in 2017 and early 2018. Yet, we saw corrections in both February and March as market raised its expectation on an accelerated rate hike in the United States in early February and was later concerned about a trade war between the United States and China. Against this background, market risk appetite fell and was further exacerbated by the tightened liquidity situation towards the quarter end in March. Market Outlook Market s concern about a trade war between China and the United States intensified in March 2018 while market gradually stabilized more recently. We believe the future development of the negotiation between the two parties will be the key to monitor. For China, we believe the recent market correction is caused by the rapid change of investors risk appetite. From the fundamental perspective, we think the macro economy remains stable with companies earnings in general still on an improving trend. Also, in the earlier NPC and CPPCC meetings, the GDP growth target for this year has been set at around 6.5%, which reflects that the government still aims at achieving a stable economic growth. Overall, we will continue to focus on structural opportunities in the A share market amid the market uncertainties and focus on sectors seeing sustainable earnings growth. Portfolio Strategy Our portfolio strategy is to focus on industries and companies that we think can deliver sustainable growth, in particular those that benefit from China s structural reform and policy direction. We also maintain our preference on sectors and companies that have better cash generating capability as we expect market liquidity to remain relatively tight. By end of March, 2018, we mainly overweight Consumer, Healthcare, IT and Materials sectors. 3
Statement of financial position (unaudited) As at 31 March 2018 (Unaudited) Assets As at 31 March 2018 As at 30 September 2017 Non-Current Assets Deposit reserve 10,720 9,180 Current Assets Cash and cash equivalents 4,687,496 4,874,806 Amount due from brokers 114,244 745,250 Subscription receivables 1,287,000 861,713 Dividend receivables 3,991 Interest receivables 295 248 Financial assets at fair value through profit or loss 40,119,324 49,196,656 Prepayments and other accounts receivables 7,996 2,395 46,216,355 55,685,059 Total Assets 46,227,075 55,694,239 Liabilities Current Liabilities Amount due to broker 257,414 700,153 Audit fee payable 134,013 189,545 Custodian fee payable 2,229 2,689 Management fee payable 58,664 64,706 Trustee and administration fee payable 40,052 40,000 Redemption payable 1,121,154 Withholding tax provision 29 416 Other accounts payables 5,600 6,867 1,619,155 1,004,376 Total Liabilities (excluding net assets attributable to unitholders) 1,619,155 1,004,376 Net assets attributable to unitholders (before fair value adjustment) 44,607,920 54,689,863 Fair value adjustment of units of the Sub-Fund Net assets attributable to unitholders (after fair value adjustment) 44,607,920 54,689,863 4
Statement of comprehensive income (unaudited) For the period ended 31 March 2018 (Unaudited) Half-year ended 31 March 2018 Half-year ended to 31 March 2017 Income Interest income 8,120 6,105 Net changes in fair value on investments 3,454,132 8,664 Net foreign exchange (loss)/gain (266,360) 1,499,265 Total net income 3,195,892 1,514,034 Expenses Management fee (496,105) (290,024) Trustee and administration fee (240,052) (240,000) Transaction costs (390,364) (255,780) Audit fee (57,882) (93,181) Safe custody and bank charges (19,151) (11,656) Other operating expenses (11,711) (10,640) Total operating expenses (1,215,265) (901,281) Operating gain 1,980,627 612,753 Finance cost Distributions to unitholders Profit after distributions and before tax 1,980,627 612,753 Taxation (528) (384) 1,980,099 612,369 Change in cumulative difference arising from the fair value adjustment of units of the sub-fund (732) (133,210) Increase in net assets attributable to unitholders and total comprehensive income 1,979,367 479,159 5
Statement of changes in net assets attributable to unitholders (unaudited) For the period ended 31 March 2018 (Unaudited) Half-year ended 31 March 2018 Half-year ended to 31 March 2017 Net assets attributable to unitholders at the beginning of the period 54,689,863 43,073,834 Subscription of units: Class A 22,862,919 1,200,982 Class P 16,013,740 41,222 Class X 95,982 21,589 38,972,641 1,263,793 Redemption of units Class A (28,343,608) (2,736,148) Class P (13,797,792) (3,742,553) Class X (8,892,551) (1,930,129) (51,033,951) (8,408,830) Net increase/(decrease) from unit transactions (12,061,310) (7,145,037) Increase in net assets attributable to unitholders and total comprehensive income 1,979,367 479,159 Net assets attributable to unitholders at the end of the period 44,607,920 36,407,956 6
Statement of movements in investment portfolio (unaudited) For the period ended 31 March 2018 and year ended 30 September 2017 (Unaudited) Listed/Quoted Investments Percentage of total net assets at 31 March 2018 Percentage of total net assets at 30 September 2017 Equity Securities China 79.50% 82.81% Hong Kong 10.44% 7.15% 89.94% 89.96% Other net assets 10.06% 10.04% Net assets attributable to unitholders 100.00% 100.00% 7
Investment portfolio (unaudited) As at 31 March 2018 (Unaudited) Listed/Quoted Investments Holding Fair Value % of Net assets Equity Securities China (79.50%) ANHUI CONCH CEMENT CO LTD 16,000 513,440 1.15 BEIJING NEW BUILDING MATERIALS PLC 37,000 923,890 2.07 BOE TECHNOLOGY GROUP CO LTD 50,000 268,500 0.60 CHINA CONST BK 98,000 751,660 1.69 CHINA EASTERN AIRLINES CORP LTD 91,000 649,740 1.46 CHINA GEZHOUBA GROUP CO LTD 32,000 277,120 0.62 CHINA INTL TRAVEL SERVICE CORP LTD 27,000 1,450,170 3.25 CHINA MEHECO CO LTD 22,000 508,420 1.14 CHINA MERCH BK 52,000 1,524,120 3.42 CHINA PACIFIC INSURANCE (GROUP) CO LTD 11,800 414,888 0.93 GOSUNCN TECHNOLOGY GROUP CO LTD 14,000 191,660 0.43 GREE ELECTRIC APPLIANCES INC 41,500 1,954,650 4.38 HAN S LASER TECHNOLOGY INDUSTRY GROUP CO LTD 20,000 1,058,000 2.37 ICBC 140,000 852,600 1.91 INNER MONGOLIA YILI INDUSTRIAL GROUP CO LTD 58,000 1,622,840 3.64 JIANGSU HENGRUI MEDICINE CO LTD 15,917 1,317,928 2.95 KWEICHOW MOUTAI CO LTD 3,000 2,067,300 4.63 LEPU MEDICAL TECHNOLOGY BEIJING CO LTD 50,000 1,591,000 3.58 LUXSHARE PRECISION INDUSTRY CO LTD 47,000 1,144,450 2.57 MIDEA GROUP CO LTD 19,000 1,050,700 2.36 PING AN INSURANCE GROUP CO OF CHINA LTD 45,500 3,020,745 6.78 SANAN OPTOELECTRONICS CO LTD 19,000 440,420 0.99 SANY HEAVY INDUSTRY CO LTD 55,265 436,041 0.98 SHANDONG HUALU HENGSHENG CHEMICAL CO LTD 27,000 440,370 0.99 SHANGDONG NEW BEIYANG INFORMATION TECHNOLOGY CO LTD 32,985 520,833 1.17 SHANGHAI FOSUN PHARMACEUTICAL GROUP CO LTD 22,000 924,880 2.07 SHANGHAI CONANT OPTICS CO LTD 20,000 359,000 0.80 SHENZHEN O-FILM TECH CO LTD 66,000 1,326,600 2.97 SUNGROW POWER SUPPLY CO LTD 39,000 733,590 1.64 TASLY PHARMACEUTICAL GROUP CO LTD 10,000 429,900 0.96 WANGFUJING GROUP CO LTD 37,000 737,410 1.65 WULIANGYE YIBIN CO LTD 17,000 1,147,500 2.57 8
Listed/Quoted Investments Holding Fair Value % of Net assets WUXI LEAD INTELLIGENT EQUIPMENT CO LTD 18,000 1,331,280 2.98 YONGHUI SUPERSTORES CO LTD 63,000 627,480 1.41 ZHEJIANG DAHUA TECHNOLOGY CO LTD 51,000 1,298,970 2.91 ZHEJIANG HUAYOU COBALT CO LTD 13,500 1,553,850 3.48 35,461,945 79.50 Hong Kong (10.44%) CHINA CONST BK 266,000 1,714,739 3.85 CHINA PACIFIC INSURANCE (GROUP) CO LTD 8,000 224,904 0.50 CHONGQING RURAL 80,000 384,544 0.86 CSPC PHARMACEUTICAL GROUP LTD 54,000 900,495 2.03 HUATAI SECURITIES CO LTD 30,000 362,309 0.81 ICBC 104,000 559,796 1.25 PING AN INSURANCE GROUP CO OF CHINA LTD 8,000 510,592 1.14 4,657,379 10.44 Total Equities Securities 40,119,324 89.94 Total Listed/Quoted Investments 40,119,324 89.94 Other Net Assets 4,488,596 10.06 Net Assets Attributable to Unitholders 44,607,920 100.00 Total Investments, At Cost 34,692,443 9
Performance table (unaudited) Net asset value As at 31 March 2018 Total (in class currency) Class A 131.36 13,544,082 Class P USD 130.75 4,000,366 Class X HKD 132.35 7,450,966 As at 31 March 2017 Total (in class currency) Class A 108.22 10,132,899 Class P USD 98.28 1,822,897 Class X HKD 98.49 15,512,502 As at 31 March 2016 Total (in class currency) Class A 105.16 13,584,509 Class P USD 101.59 2,209,183 Class X HKD 101.61 23,490,743 As at 31 March 2015 Total (in class currency) Class A 110.78 2,572,270 Class I 110.86 5,542,842 Class P USD 111.56 1,006,868 Class X HKD 111.56 21,379,030 10
Highest/lowest net asset value For the period ended 31 March 2018 Highest Lowest Class A 144.86 125.44 Class P USD 141.91 121.03 Class X HKD 143.10 121.83 For the period ended 31 March 2017 Highest Lowest Class A 110.04 100.55 Class P USD 100.46 91.59 Class X HKD 100.54 91.60 For the period ended 31 March 2016 Highest Lowest Class A 124.22 91.80 Class P USD 120.85 86.82 Class X HKD 120.79 87.24 From 11 February 2015 to 31 March 2015 Highest Lowest Class A 110.78 99.37 Class I 110.86 99.40 Class P USD 111.56 98.93 Class X HKD 111.56 98.98 11