CHINA CONVERGENCE FUND - Value Partners...in the world. On top of that, unlike the case in some other parts of the world, we have quite a number of Asia-Pacific governments that remain

CHINA CONVERGENCE FUNDA Sub-fund of Value Partners Intelligent Funds

中華匯聚基金智者之選基金之子基金

A N N U A L R E P O R T 2 0 1 1For the year ended 31 December 2011

年報 2 0 1 1截至二零一一年十二月三十一日止年度

CH

INA

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NV

ERGEN

CE FU

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中華匯聚基金 A

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L REPORT 2011

年報

2011

Value Partners Limited9th Floor, Nexxus Building41 Connaught Road Central, Hong KongTel: (852) 2880 9263 Fax: (852) 2565 7975Email: [email protected]: www.valuepartners.com.hk

In the event of inconsistency, the English text of this Annual Report shall prevail over the Chinese text.

Contents


(A Cayman Islands Unit Trust)

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Fo r t h e y ea r ended 3 � Decembe r 20 ��

Pages

General information 2-3

Manager’s report 4-11

Statement of responsibilities of the Manager and the Trustee 12

Trustee’s report to the unitholders 13

Independent auditors’ report to the unitholders 14-15

Audited financial statements

– Statement of financial position 16-17

– Statement of comprehensive income 18

– Statement of changes in equity 19

– Statement of cash flows 20

– Notes to the financial statements 21-47

Investment portfolio (unaudited) 48-52

Statement of movements in portfolio holdings (unaudited) 53

Performance record (unaudited) 54

general information

CHINA CONVERGENCE FUNDA Sub-fund of Value Partners Intelligent Funds(A Cayman Islands Unit Trust)

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Fo r t h e y ea r ended 31 Decembe r �011



managerValue Partners Limited

9th Floor, Nexxus Building

41 Connaught Road Central

Hong Kong

Directors of the managerMr Cheah Cheng Hye

Mr Ho Man Kei

Mr So Chun Ki Louis

trustee, registrar, administrator and Principal officeBank of Bermuda (Cayman) Limited

PO Box 513 GT

HSBC House

68 West Bay Road

Grand Cayman KY1-1106

Cayman Islands

Custodian and registrar’s agentHSBC Institutional Trust Services (Asia) Limited

1 Queen’s Road Central

Hong Kong

legal advisorsWith respect to Cayman Islands law:

Maples and Calder

53/F The Center


Hong Kong

With respect to Hong Kong law:

Mallesons Stephen Jaques

13th Floor, Gloucester Tower

The Landmark


Hong Kong

auditorsKPMG

PO Box 493

Century Yard

Cricket Square

Grand Cayman KY1-1106

Cayman Islands

information available from:Value Partners Limited

9th Floor, Nexxus Building

41 Connaught Road Central

Hong Kong

Telephone : (852) 2880 9263Fax : (852) 2565 7975Email : [email protected] : www.valuepartners.com.hk




3A N N U A L R E P O R T � 0 1 1

Fo r t h e y ea r ended 31 Decembe r �011

recent awards and achievements

Corporate awards

2012 • lipper fund awards 2012 Best equity group – 3 Years

– Lipper #

• 2011 Best of the Best region awards Cio of the Year in asia Co-Winner: Cheah Cheng Hye and louis So (Value Partners’ Co-Cios) – Asia Asset Management 2011 • 2011 – asia Hedge fund 25 Value Partners was ranked no.1 in 2011 asia Hedge fund 25 – Institutional Investor, July 2011 • 2011 – Hedge fund 100 Value Partners was ranked as asia’s largest hedge fund manager, and 58th worldwide – Institutional Investor, May 2011 • lipper fund awards 2011 – Hong Kong Best equity group – 3 Years – Lipper *

• Best overall fund management firm – asia Value Partners was recognized as one of the top-three fund management

companies – Thomson Reuters Extel Asia Pacific Survey 2010

# Based on data as of year end 2011.* Based on data as at year end 2010.

China Convergence fund

2011 • morningstar 2010 fund awards (Hong Kong) Best greater China equity fund – Morningstar

• top 100 funds of the Year 2010 – China equity – Benchmark Magazine▲

▲ Based on fund size, track record, Morningstar’s star rating and one year absolute ranking as at month end October 2010.

general information (Continued)


manager’s report

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Fo r t h e y ea r ended 31 Decembe r 2011



China Convergence Fund dropped 22.4% in 2011, a year marked by global market turmoil and high volatility. For reference, the MSCI China Index fell by 18.4% in 2011.

As a value investor, we tend to focus on the medium to long-term performance of the Fund, and this remains very strong. Since inception 12 years ago, the Fund has made a profit in 10 of the 12 years, with an annualized return of 22.9%. For reference, the MSCI China Index saw 7 years of positive return over the same period. (For a table of the annual returns of China Convergence Fund as well as the MSCI China Index, please refer to Appendix I as attached.)

As in the past years, we provide a list of the biggest contributors to the Fund’s return in 2011, in terms of the absolute dollar amount of return contributed and also the percentage return achieved on these investments.

China Convergence Fund: Biggest contributors to 2011 return(Fund size: US$194.4 million end-2011; US$282.0 million end-2010)

Gain in 2011 % return in 2011 (in US$ million) (including dividends)

Brilliance China Automotive (Auto manufacturing) 7.2 up 40.8%China National Building Material (Construction materials) 3.0 up 42.9%Loco London Gold 2.0 up 9.3%Great Wall Motor (Auto manufacturing) 1.9 up 24.2%Chow Sang Sang (Jewellery chain) 1.0 up 14.4%

Valuation at attractive levels

Asia-Pacific stocks have become very cheap. The cyclically-adjusted price-earnings ratio (PE) of the Hang Seng Index for 2012 was at 10.3 times and the Hang Seng China Enterprises Index was at 8.2 times by year-end, while historical average for the past 5 years was 14.2 times and 13.8 times respectively. We now have an unusual situation where dividend yields are generally

higher than bond yields in our region (see chart below) － history tells us that it is likely to last for only a short while before going back to normal again.


manager’s report (Continued)



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MSCI Asia ex-Japan dividend vs 10-year Asian bond yields

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Jun-98 Jan-00 Oct-01 Jun-03 Jan-05 Oct-06 Jun-08 Feb-10 Oct-11

Asia FE ex-JP div yield

Weighted average 10Y bond yield

(%)

Source: CLSA Asia Pacific Markets, Bloomberg as at 30 November 2011

Dividend yield > 10Y bond yield

We fully expect financial markets to remain very volatile in 2012, influenced by huge macro-

forces affecting global economics and politics. To do well, an investor must have access to

original and accurate research and strong convictions, and stick to his convictions despite wild

swings in market sentiment. The alternative is to be whipsawed, and this is what happened to

many of our competitors in 2011. In 2012, we expect investors in China-related markets would

enjoy one advantage: the country’s tightening cycle came to an end in late 2011, and from here

on, we see the beginning of a new business cycle characterized by selective easing measures,

including reductions in bank reserve requirements, thus expanding liquidity in the economy.

This is generally good for the stockmarket.

To us, the China story is clearly intact, and with every passing month, we see further indications that the economy can avoid the much-feared “hard landing.” Nor will there be a property crash with local governments already rolling out initiatives to attract buying. Underlying demand for housing is very strong. In fact, the current poor performance of China markets is hard to justify, with fundamentals remaining healthy, as reliance on exports continues to decline (net exports estimated to contribute -0.2% of GDP growth in 2011) and strong domestic demand will keep driving economic growth (consumption’s percentage of GDP in 2011 estimated at 42%) despite external headwinds. The actual implementation of policy relating to the 12th Five-Year Plan next year might surprise on the upside.



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About once a decade, China’s top leadership changes, and in 2012, President Hu Jintao is expected to retire, with Vice-Premier Xi Jinping becoming the new leader, in a smooth transition. The size of China’s economy is expected to overtake that of the United States within this decade, and we continue to see many attractive investment opportunities.

a quick note

A remarkable new development is that companies are increasingly viewed as being safer than governments. The world’s best companies are well-run, profitable and with prudent balance sheets. On the other hand, all too many governments are dangerously indebted, inefficient and controlled by politicians whose only priority seems to be ensuring their own re-election. So we end up with a two-tier world, of healthy corporates and unhealthy governments.

We’ve reached the point, in 2011, where the conventional wisdom of preferring government-issued paper to corporate paper is being overturned. Thus, for example, the Wall Street Journal of 22 December 2011, reported that it had become cheaper to insure against default by such companies as Nestle, Exxon Mobil and Coca-Cola than against countries such as Switzerland, Britain, Germany and Japan.

This really supports the case for buying stocks and corporate bonds, rather than leaving money in paper currencies or government bonds. We see that investors are still reacting in knee-jerk fashion; faced with unhealthy governments and a sovereign-debt crisis in Europe and some other parts of the world, investors respond by selling everything. Eventually, people are going to realize that a big disconnect is happening, and a better alternative is to invest in strong corporations.

Here in the Asia-Pacific region, we have some of the fastest-growing, most healthy companies in the world. On top of that, unlike the case in some other parts of the world, we have quite a number of Asia-Pacific governments that remain in strong health, with many lessons learnt from the Asian financial crisis of 1998. Undoubtedly, the world faces a difficult economic outlook, but savings have to be invested somewhere, and we are convinced that investors will re-discover the merits of putting money to work through the stockmarket, especially in still-dynamic regions such as Asia.

– – Cheah Cheng Hye, Chairman & Co-Chief Investment Officer





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a defensive portfolio strategy

Generally, we maintain a well-diversified portfolio focused on our core competence: stock-picking (our Investment Team carries out more than 2,500 company visits a year, excluding phone calls). From time to time, to add to the defensive characteristics of the Fund, the portfolio is hedged either by short-selling of index futures or by shorting individual stocks. The current portfolio has a bias towards energy-related investments, which has worked out well as we anticipated correctly that the Chinese authorities will start to reform the pricing mechanism for natural gas. This most likely will benefit PetroChina, one of our biggest holdings, as the company is the dominant producer of natural gas in China.

Also, as noted in previous reports, the Fund started buying gold from 2004, in various forms, including gold bullion, holding the precious metal as a form of “emergency reserve.” In previous years, gold typically formed about 5% of the fund, but lately, the level has risen to 9% due partly to outperformance. Even after a 20% price fall from its September peak, gold was still the best performing major commodity in 2011.

Value partners: Corporate update

Over the year, we have added to our investment team to strengthen our research capabilities. Our investment management team grew by 12 individuals in 2011 to become one of the largest investment teams in Asia with 40 investment professionals focusing on Greater China region. Following the acquisition of our new fund management joint venture in Taiwan, called Value Partners Concord Asset Management, our on-the-ground research capability for Taiwan-related stocks is further enhanced.

Finally, our heartfelt appreciation to our investors – with your support, Value Partners Group still enjoyed a significant net inflow of subscriptions in 2011, despite the market difficulties. We are ever mindful of the challenges ahead, and will continue to do our best.

Value partners Limited26 April 2012

All performance figures are sourced from HSBC Institutional Trust Services (Asia) Limited and Bloomberg (Data computed in US$ terms on NAV-to-NAV basis with dividends reinvested) as at 31 December 2011. Performance data is net of all fees.

Individual stock performance is not indicative of fund performance.

Investors should note that investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors, in particular those associated with investment in emerging markets. This document has not been reviewed by the Securities and Futures Commission. Issuer: Value Partners Limited.



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appendix I: performance of China Convergence Fund and msCI China Index – 14 July 2000 to 31 December 2011

China Convergence Fund msCI China Index

2000^

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Annualized return

(since inception years)

Volatility▽

(since inception years annualized)

Sharpe ratio#

(since inception years annualized)

up 9%

up 71%

up 1%

up 92%

up 1%

up 3%

up 88%

up 57%

down 45%

up 87%

up 21%

down 22%

up 22.9%

27.9%

0.73

down 35%

down 25%

down 14%

up 88%

up 2%

up 20%

up 83%

up 66%

down 51%

up 62%

up 5%

down 18%

up 6.2%

29.4%

0.12

^ From 14 July 2000.

▽ Volatility is a measure of the theoretical risk in terms of standard deviation; in general, the lower the number, the less risky the investment, and vice versa.

# Sharpe ratio is a risk-adjusted measure of a portfolio’s performance, calculated by using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance. The risk-free rate is currently based on one-month Eurodollar deposit rate.





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appendix II: China Convergence Fund: 5 biggest holdings of securities as at 31 December 2011

stock IndustryValuation (2012 estimates) remarks

Brilliance China Automotive(Code: 1114 HK)

Market cap:US$5.4 billion

Automanufacturing

Price: HK$8.38 P/E: 14.0x P/B: 3.3x Yield: 0.2%

The company manufactures and distributes minibuses and MPVs in China, and has an equally owned joint venture with BMW (“BMW JV”) to produce sedans in China. In recent years, BMW JV has accelerated capacity expansion and new-model launches, which would help fuel sales growth. With the increase in local content ratios and lower component costs due to larger scale, gradual margin improvement in the medium term could be expected. The low penetration of luxury cars in China, as well as the country’s rising middle-class would continue to support demand growth for luxury cars in China in the coming three to five years. We believe it remains attractive, given the company’s strong long-term earnings growth potential.

China ShenhuaEnergy(Code: 1088 HK)

Market cap: US$86.3 billion

Coal mining Price: HK$33.70 P/E: 10.6x P/B: 2.0x Yield: 3.6%

China Shenhua Energy (“CSE”) is the world’s largest coal-mining company. The company has a few structural advantages against peers, firstly it benefits from an integrated business model with an integrated coal transportation network consisting of dedicated rail and port facilities. The integrated transportation network endows CSE with a monopoly in shipping coal from Inner Mongolia to the coastal regions, where the demand is high. Secondly, as one of the largest miners, the company benefits from significant scalability compared to peers and strong bargaining power. Thirdly, CSE’s coal is high quality which generates above average margins compared to peers. Finally, like most coal miners, CSE has a significant proportion of sales at key contract prices which are set by government at below market prices. Over time, we believe the market trend would continue and the company will benefit from the price increase.

China Vanke(Code: 200002 CH)


Real estate Price: HK$7.68 P/E: 5.8x P/B: 1.1x Yield: 2.7%

China Vanke is China’s largest developer of residential properties in terms of contract sales. They have about 300 projects that are located in over 40 cities in mainland China. Given its strong brand recognition and seasoned management, China Vanke is well positioned to benefit from China’s long-term secular growth of housing demand, which is supported by sustainable household income growth and the rapid pace of urbanization. We see China Vanke’s land bank as one of the most diversified one among its peers. Coupled with its excellent project execution and development ability, we believe they can outperform and gain market share under the tough market environment, and sustain further growth. With solid balance sheet and ample cash on hand, the company is well-prepared to carry out more land acquisitions and further solidify its leadership.



1 0A N N U A L R E P O R T 2 0 1 1




appendix II: China Convergence Fund: 5 biggest holdings of securities as at 31 December 2011 (Continued)

stock IndustryValuation (2012 estimates) remarks

Evergrande Real Estate(Code: 3333 HK)


Real estate Price: HK$3.22 P/E: 3.5x P/B: 1.0x Yield: 6.7%

Evergrande Real Estate (“Evergrande”) is the largest property developer in China in term of size of land bank, and is currently developing about 180 projects in over 80 cities. Given its large and diversified exposure to lower second-tier and third-tier cities in China, where housing demand is mainly driving by continuous urbanization, Evergrande is well positioned to achieve long-term sales growth. With its focus on mass market products targeting first-time home buyers, they have achieved outstanding sales performance even under the tough market environment in 2011 and has been able to grab market share from smaller peers. We think in 2012 it is likely to see policy fine-tuning to promote demand from first-time homebuyers and with better liquidity environment, Evergrande would be one of the key beneficiaries.

PetroChina(Code: 857 HK)

Market cap: US$227.9 billion

Energy Price: HK$9.67 P/E: 8.2x P/B: 1.3x Yield: 4.8%

PetroChina is the largest integrated oil company in Asia. Exploration and production assets consist of crude reserves of over 11 billion barrels, and gas reserves of over 65 billion cubic feet. This is complemented by a pipeline network of over 50,000 km in China. Its downstream assets consist of refining, with a crude throughput capacity of over 1 billion tons, and a service-station marketing network of over 18,000 stations. In 2010, the company produced 857 million barrels of oil (“BOE”) and 2.2 billion cubic feet of gas, mostly in China, while its overseas assets in South America, Africa and Central Asia produced 102 million BOE of oil and gas, representing 16% of the total. Crude production grew by 1.7% and gas production grew by 5% over the same period. Gas should drive growth over the next five years, supplemented by pipeline investments. Overseas investments, such as the US$1.7 billion investment in Canada’s Athabasca Oil Sands Corp in 2009, and the US$3 billion joint bid with Shell for Australia’s Arrow Energy also give PetroChina a good avenue for future growth.

Note: The above investments made up 33.0% of China Convergence Fund as at 31 December 2011. The stock prices are based on the closing of 31 December 2011.

Individual stock performance/yield is not necessarily indicative of overall fund performance.





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China Convergence FundnaV per unit = Us$107.32 (as at 31 December 2011)

since launch return compared to indexFrom 14 July 2000 to 31 December 2011

-200%

0%

200%

400%

600%

800%

1,000%

1,200%

1,400%

China Convergence Fund

MSCI China Index

+973.2%

+99.3%

7/00 1/02 7/03 1/05 7/06 1/08 7/09 1/11 12/11

STATEMENT OF RESPONSIBILITIES OF THE MANAGER AND THE TRUSTEE


1 2A N N U A L R E P O R T 2 0 1 1


Manager’s responsibilities

The Manager of the China Convergence Fund (the “Sub-fund”) is required by the Hong Kong

Code on Unit Trusts and Mutual Funds established by the Hong Kong Securities and Futures

Commission and the Trust Deed to prepare financial statements for each annual accounting

period which give a true and fair view of the financial position of the Sub-fund at the end of that

period and of the transactions for the period then ended. In preparing these financial statements

the Manager is required to:

– select suitable accounting policies and then apply them consistently;

– make judgements and estimates that are prudent and reasonable; and

– prepare the financial statements on the basis that the Sub-fund will continue in operation

unless it is inappropriate to presume this.

The Manager is also required to manage the Sub-fund in accordance with the Trust Deed and

take reasonable steps for the prevention and detection of fraud and other irregularities.

Trustee’s responsibilities

The Trustee of the Sub-fund is required to:

– ensure that the Sub-fund is managed by the Manager 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-fund and rights attaching thereto; and

– report to the unitholders for each annual accounting period on the conduct of the Manager

in the management of the Sub-fund.

TRUSTEE’S REPORT TO THE UNITHOLDERS OFVALUE PARTNERS INTELLIGENT FUNDS –CHINA CONVERGENCE FUND



1 3A N N U A L R E P O R T 2 0 1 1


We hereby confirm that, in our opinion, the Manager has in all material respects, managed the

China Convergence Fund (the “Sub-fund”) in accordance with the provisions of the Trust Deed

dated 21 June 2000 and supplemental Trust Deeds dated 22 October 2001, 3 November 2003,

10 November 2003 and 10 December 2004 and the Deed of Substitution dated 31 May 2005 and

supplemental Trust Deed to the Deed of Substitution dated 30 March 2007 and 24 June 2011 of

the Sub-fund for the year ended 31 December 2011.

For and on behalf of

Bank of Bermuda (Cayman) Limited

Trustee,

26 April 2012

INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OFVALUE PARTNERS INTELLIGENT FUNDS – CHINA CONVERGENCE FUND(A Cayman Islands Unit Trust)


1 4A N N U A L R E P O R T 2 0 1 1




We have audited the accompanying financial statements of China Convergence Fund (the “Sub-

fund”), a sub-fund of Value Partners Intelligent Funds (the “Trust”), set out on pages 16 to 47,

which comprise the statement of financial position as at 31 December 2011, and the statement of

comprehensive income, statement of changes in equity and cash flow statement for the year then

ended, and notes, comprising a summary of significant accounting policies and other explanatory

information.

Manager’s and Trustee’s responsibilities for the financial statements

The Manager and the Trustee of the Sub-fund are responsible for the preparation of financial

statements that give a true and fair view in accordance with International Financial Reporting

Standards and for such internal control as the Manager and the Trustee determine is necessary

to enable the preparation of financial statements that are free from material statement, whether

due to fraud or error.

In addition, the Manager and the Trustee also have a responsibility to ensure that the financial

statements comply with the relevant disclosure provisions of the Trust Deed, as amended, and

the relevant disclosure requirements set out in Appendix E to the Hong Kong Code on Unit

Trusts and Mutual Funds issued by the Hong Kong Securities and Futures Commission (“the

Code”).

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. This

report is made solely to you, as a body, in accordance with the terms of our engagement, and for

no other purpose. We do not assume responsibility towards or accept liability to any other person

for the contents of this report.

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the

Hong Kong Institute of Certified Public Accountants. Those standards require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free from material misstatement.


INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OFVALUE PARTNERS INTELLIGENT FUNDS – CHINA CONVERGENCE FUND (Continued)(A Cayman Islands Unit Trust)



1 5A N N U A L R E P O R T 2 0 1 1


Auditors’ responsibility (Continued)

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on our judgement,

including the assessment of the risks of material misstatement of the financial statements,

whether due to fraud or error. In making those risk assessments, we consider internal control

relevant to the entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by the Manager and the Trustee, as well as evaluating the overall presentation of

the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the

Sub-fund as at 31 December 2011, and of its transactions and cash flows for the year then ended

in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

We report that the financial statements have been properly prepared in accordance with the

relevant disclosure provisions of the Trust Deed, as amended, and the relevant disclosure

requirements set out in the Code.

KPMGCayman Islands

26 April 2012

STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2011


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2011 2010 Note US$ US$

AssetsCash and cash equivalents 4, 11(c) 14,145,049 15,323,514

Commodity 17,968,680 13,617,600

Financial assets at fair value through

profit or loss 6 171,300,719 265,049,804

Interest and other receivables 592 385

Amounts due from unitholders 130,125 6,774,269

Amounts due from brokers 5 679,778 348,579

Total assets 204,224,943 301,114,151

LiabilitiesFinancial liabilities at fair value through

profit or loss 6 8,165,136 –

Amounts due to unitholders 674,445 3,765,925

Amounts due to brokers 5 1,805,221 4,083,777

Management fees payable 9, 11(a) 209,207 311,510

Performance fees payable 11(a) – 7,952,520

Trustee fees payable 8, 11(b) 25,954 38,230

Accrued expenses and other payables 65,654 445,955

Total liabilities 10,945,617 16,597,917

Total equity 193,279,326 284,516,234

The notes on pages 21 to 47 form part of these financial statements.


STATEMENT OF FINANCIAL POSITION (Continued)AS AT 31 DECEMBER 2011



1 7A N N U A L R E P O R T 2 0 1 1


2011 2010 Note US$ US$

Represented by:– Net assets attributable to unitholders

(at last traded prices) 194,202,340 285,013,480

– Adjustment from last traded prices to

bid/ask-market prices (923,014 ) (497,246 )

Net asset value per unit at last traded prices based on 1,809,571 (31 December 2010: 2,059,737) units outstanding 11(d), 12 107.32 138.37

Approved and authorised for issue by the Manager and the Trustee on 26 April 2012.

Signed by:

Value Partners Limited, Manager

Bank of Bermuda (Cayman) Limited, Trustee


STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2011


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2011 2010 Note US$ US$

Interestincome 11(c) 746 10,701

Dividendincome 4,839,978 3,442,305

Netgainoncommodity 2,026,940 3,042,365

Net(loss)/gainfromfinancialassetsandfinancial

liabilitiesatfairvaluethroughprofitorloss 7 (63,663,704) 50,238,628

Netforeignexchange(loss)/gain (42,495) 89,337

Otherincome 11(c) 83,488 177

Net investment (loss)/income (56,755,047) 56,823,513

Managementfees 9, 11(a) (3,205,014) (2,931,544)

Transactionfees (2,282,547) (1,506,079)

Trusteefees 8, 11(b) (394,602) (361,785)

Bankcharges 11(c) (41,595) (25,833)

Auditors’remuneration (27,421) (32,981)

Professionalfees (22,761) (1,985)

Commissionexpenses (5,773) (3,925)

Annualfees (3,357) (2,638)

Performancefees 11(a) – (7,952,520)

Dividendexpenses – (44,933)

Otheroperatingexpenses 11(c) (206,474) (430,797)

Operating expenses (6,189,544) (13,295,020)

(Loss)/profit and total comprehensive income for the year (62,944,591) 43,528,493

Thenotesonpages21to47formpartofthesefinancialstatements.

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2011



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2011 2010 Note US$ US$

Balance as at 1 January 284,516,234 213,726,055

(Loss)/profitandtotalcomprehensive

incomefortheyear (62,944,591) 43,528,493

Issueofredeemableunits 12 29,653,403 69,033,710

Redemptionofredeemableunits 12 (57,945,720) (41,772,024)

Net(redemption)/subscription (28,292,317) 27,261,686

Balance as at 31 December 193,279,326 284,516,234

Thenotesonpages21to47formpartofthesefinancialstatements.

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2011


2 0A N N U A L R E P O R T 2 0 1 1


2011 2010 US$ US$

Operating activitiesInterest received 1,012 17,337

Dividends received 4,839,978 3,442,305

Other income received 83,015 177

Proceeds from sale of investments 291,542,773 207,959,932

Purchase of investments (258,226,152 ) (228,975,703 )

Operating expenses paid (14,679,438 ) (5,902,234 )

Cash flows generated from/(used in) operating activities 23,561,188 (23,458,186 )

Financing activitiesProceeds from issue of redeemable units 36,297,547 62,808,970

Payments on redemption of redeemable units (61,037,200 ) (39,622,332 )

Cash flows (used in)/generated from financing activities (24,739,653 ) 23,186,638

Net decrease in cash and cash equivalents (1,178,465 ) (271,548 )

Cash and cash equivalents as at 1 January 15,323,514 15,595,062

Cash and cash equivalents as at 31 December 14,145,049 15,323,514


NOTES TO THE FINANCIAL STATEMENTS



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1 GENERAL

Value Partners Intelligent Funds (the “Trust”) is an open-ended umbrella unit trust established under the laws of the Cayman Islands pursuant to a Trust Deed dated 21 June 2000 (as amended). The Trust was registered under the Mutual Funds Law of the Cayman Islands on 30 June 2000.

The Trust is able to issue redeemable units in various sub-funds and as at 31 December 2011, the China Convergence Fund, JA-VP China New Century Fund, Chinese Mainland Focus Fund and JA-VP Chugokutairiku Focus Fund have been launched. The China Convergence Fund, JA-VP China New Century Fund, Chinese Mainland Focus Fund and JA-VP Chugokutairiku Focus Fund commenced operations on 17 July 2000, 7 March 2002, 27 November 2003 and 2 September 2004, respectively. The JA-VP China New Century Fund and JA-VP Chugokutairiku Focus Fund are not authorised in Hong Kong and not available to the public generally in Hong Kong.

Each separate sub-fund may be represented in whole or in part by a separate portfolio and be maintained with separate accounting records. However, notwithstanding the operation of separate sub-funds and/or portfolios, the Trust may be treated as one entity. Thus all of the assets of the Trust may be available to meet all of the liabilities of the Trust, regardless of the separate sub-fund or portfolio to which such assets or liabilities are attributable. In practice, cross-unit liability will usually only arise where any sub-fund becomes insolvent or exhausts its assets and is unable to meet all of its liabilities. In this case, all of the assets of the Trust attributable to the other sub-funds may be applied to cover the liabilities of the insolvent sub-fund.

The accompanying financial statements have been prepared for the Value Partners Intelligent Funds – China Convergence Fund (the “Sub-fund”). The financial statements of JA-VP China New Century Fund, Chinese Mainland Focus Fund and JA-VP Chugokutairiku Focus Fund have been prepared individually and consequently are not included in these financial statements.

NOTES TO THE FINANCIAL STATEMENTS (Continued)


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1 GENERAL (Continued)

As at 31 December 2011 and 2010, the combined net assets of the Trust are as follows:

Combined net assetsName of sub-funds 2011 2010 US$ US$

China Convergence Fund 193,279,326 284,516,234Chinese Mainland Focus Fund 127,844,100 162,885,214JA-VP China New Century Fund 17,135,521 22,539,098JA-VP Chugokutairiku Focus Fund 3,254,417 7,759,585

Value Partners Intelligent Funds 341,513,364 477,700,131

The investment activities of the Sub-fund are managed by Value Partners Limited (the “Manager”) and the administration of the Sub-fund is handled by Bank of Bermuda (Cayman) Limited (the “Administrator”) which has delegated its role to HSBC Institutional Trust Services (Asia) Limited.

The Sub-fund is authorised by the Hong Kong Securities and Futures Commission under Section 104 of the Hong Kong Securities and Futures Ordinance. The Sub-fund is also recognised by the Monetary Authority of Singapore as a restricted scheme under paragraph 3 of the Sixth Schedule of the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005.

2 SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB), the relevant disclosure provisions of the Trust Deed, as amended, and the relevant disclosure requirements of the Hong Kong Code on Unit Trusts and Mutual Funds issued by the Hong Kong Securities and Futures Commission. A summary of the significant accounting policies adopted by the Sub-fund is set out below.





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2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

(a) Statement of compliance (Continued)

The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current accounting period of the Sub-fund. Note 2(d) provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the sub-fund for the current and prior accounting periods reflected in these financial statements.

(b) Basis of preparation

The measurement currency of the financial statements is United States dollars (“USD”) and not Cayman Islands dollars reflecting the fact that most of the transactions are denominated in Hong Kong dollars (“HKD”) which is pegged to the USD. Units of the Sub-fund are issued in USD and distributions to investors are also made in USD.

The financial statements are presented in USD.

The financial statements are prepared on a fair value basis for financial instruments at fair value through profit or loss and derivative financial instruments. Other financial assets and financial liabilities are stated at amortised cost.

The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of financial position, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of financial position that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.



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(c) Foreign currency translation

Transactions in foreign currencies are translated at the foreign currency exchange rate ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to USD at the foreign currency closing exchange rate ruling at the date of the statement of financial position. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are recognised in the statement of comprehensive income.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to USD at the foreign currency exchange rates ruling at the dates that the values were determined. Foreign currency exchange differences relating to trading investments are included in gains and losses on investments. All other foreign currency exchange differences relating to monetary items, including cash and cash equivalents are presented separately in the statement of comprehensive income.

(d) Changes in accounting policies

The IASB has issued amendments to IFRSs that are first effective for the current accounting period of the Sub-fund. Of these, the following developments are relevant to the Sub-fund’s financial statements:

– IAS 24 (revised 2009), Relatedpartydisclosures

– Improvements to IFRSs (2010)

The Sub-fund has not applied any new standard or interpretation that is not yet effective for the current accounting period.

The impacts of the develoments are discussed below:

– IAS 24 (revised 2009) revises the definition of a related party. As a result, the Sub-fund has re-assessed the identification of related parties and concluded that the revised definition does not have any material impact on the Sub-fund’s related party disclosures in the current and previous period. IAS 24 (revised 2009) also introduces modified disclosure requirements for government-related entities. This does not impact the Sub-fund because the Sub-fund is not a government-related entity.





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(d) Changes in accounting policies (Continued)

– Improvements to IFRSs (2010) omnibus standard introduces a number of amendments to the disclosure requirements in IFRS 7, Financialinstruments:Disclosures. The disclosures about the Sub-fund’s financial instruments in note 13 have been conformed to the amended disclosure requirements. These amendments do not have any material impact on the classification, recognition and measurements of the amounts recognised in the financial statements in the current and previous periods.

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

(i) Classification

The Sub-fund designates all its equity securities, options, futures, participation notes and certificate and warrants into the financial assets and financial liabilities at fair value through profit or loss category. The category of financial assets and financial liabilities at fair value through profit or loss comprises financial instruments held for trading and financial instruments designated at fair value through profit or loss upon initial recognition.

All derivatives in a net receivable position (positive fair value), as well as options purchased, are reported as financial assets held for trading. All derivatives in a net payable position (negative fair value), are reported as financial liabilities held for trading.

Financial assets that are classified as loans and receivables include balances due from unitholders and brokers and accounts receivables.

Financial liabilities that are not held for trading include balances due to unitholders and brokers and accounts payables.



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(e) Financial assets and financial liabilities at fair value through profit or loss (Continued)

(ii) Recognition

The Sub-fund recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instrument.

A regular way purchase of financial assets is recognised using trade date accounting. From this date any gains and losses arising from changes in fair value of the financial assets or financial liabilities are recorded.

Financial liabilities are not recognised unless one of the parties has performed their obligations under the contract or the contract is a derivative contract not exempted from the scope of International Accounting Standard 39 (“IAS 39”).

(iii) Measurement

Financial instruments are measured initially at fair value (transaction price). Transaction costs on financial instruments held for trading are expensed immediately, while on other financial instruments they are amortised.

Subsequent to initial recognition, all trading instruments are measured at fair value with changes in their fair value recognised in the statement of comprehensive income.

Financial assets classified as loans and receivables are carried at amortised cost using the effective interest rate method, less impairment losses, if any.

Financial liabilities are measured at amortised cost using the effective interest rate.

(iv) Fairvaluemeasurementprinciples

The fair value of financial instruments is based on their quoted market price at the date of the statement of financial position without any deduction for estimated future selling costs. Financial assets are priced at current bid prices, while financial liabilities are priced at current asking prices.





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(e) Financial assets and financial liabilities at fair value through profit or loss (Continued)

(iv) Fairvaluemeasurementprinciples(Continued)

If a quoted market price is not available on a recognised stock exchange or from a broker/dealer for non-exchange-traded financial instruments, the fair value of the instrument is estimated using valuation techniques, including use of recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions. Where other pricing models are used, inputs are based on market data at the date of the statement of financial position.

The fair value of derivatives that are not exchange-traded is estimated at the amount that the Sub-fund would receive or pay to terminate the contract at the date of the statement of financial position taking into account current market conditions (volatility, appropriate yield curve) and the current creditworthiness of the counterparties. Specifically, the fair value of an option contract is determined by applying the binomial valuation model.

Investments in other unlisted investment funds are recorded at the net asset value per share as reported by the managers of such funds.

(v) Derecognition

The Sub-fund derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition in accordance with IAS 39.

The Sub-fund uses the weighted average method to determine realised gains and losses on derecognition.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.



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(f) Other financial assets

Financial assets that are stated at cost or amortised cost are reviewed at the date of each statement of financial position to determine whether there is objective evidence of impairment. If any such indication exists, an impairment loss is recognised in the statement of comprehensive income as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the statement of comprehensive income.

(g) Specific instruments

Cashandcashequivalents

Cash comprises current deposits with banks. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

Futurescontracts

A futures contract is an agreement between two parties to buy and sell a security or currency at a specific price or rate at a future date. The daily change in contract value is recorded as an unrealised gain or loss and the Sub-fund recognises a realised gain or loss when the contract is closed. Unrealised gains and losses on futures contracts are recognised in the statement of comprehensive income.

Options

When the Sub-fund purchases an option, an amount equal to the premium paid (or received) by the Sub-fund is reflected as an asset or an equivalent liability. The amount of the asset or liability is subsequently marked to market to reflect the current market value of the option. When a security is purchased or sold through the exercise of an option, the related premium paid (or received) is added to (or deducted from) the cost of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Sub-fund enters into a closing transaction), the Sub-fund realises a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received).





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(g) Specific instruments (Continued)

Securitiessoldshortandassociatedsecuritiesborrowing

Securities sold short are those positions where the Sub-fund has sold a security that it does not own in anticipation of a decline in the market value of the security and are classified as liabilities held for trading. To enter a short sale, the Sub-fund may need to borrow the security for delivery to the buyer. On each day, obligations to deliver securities borrowed by the Sub-fund to fulfil its short sale contracts are marked to market and an unrealised gain or loss is recorded in gains and losses on investments in the statement of comprehensive income. While the transaction is open the Sub-fund will also incur an expense for any dividends or interest that will be paid to the lender of the securities.

(h) Commodity

Commodity comprises gold bullion. Gold bullion is stated at the gold price prevailing at the close of business at the date of the statement of financial position. Differences arising from changes in gold prices are dealt with in the statement of comprehensive income.

(i) Interest income

Interest income is recognised in the statement of comprehensive income as it accrues, using the original effective interest rate of the instrument calculated at the acquisition or origination date. Interest income includes the amortisation of any discount or premium, transaction costs or other differences between the initial carrying amount of an interest-bearing instrument and its amount at maturity calculated on an effective interest rate basis.

(j) Dividend income and expense

Dividend income relating to exchange-traded equity securities and dividend expense relating to securities sold short are recognised in the statement of comprehensive income on the ex-dividend date.

In some cases, the Sub-fund may receive or choose to receive dividends in the form of additional shares rather than cash. In such cases the Sub-fund recognises the dividend income for the amount of the cash dividend alternative with the corresponding debit treated as an additional investment.

(k) Expenses

All expenses, including management fees, performance fees, trustee fees and custodian fees, are recognised in the statement of comprehensive income on an accrual basis.



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(l) Foreign exchange gains and losses

Foreign exchange gains and losses on financial instruments held for trading are recognised together with other changes in the fair value. Included in the statement of comprehensive income line item, net foreign exchange gain/(loss) are foreign exchange gains and losses on monetary financial assets and financial liabilities other than those classified as held for trading.

(m) Taxation

Under the current system of taxation in the Cayman Islands, the Sub-fund is exempt from paying taxes on income, profits or capital gains. The Trust has received an undertaking from the Governor in Cabinet of the Cayman Islands exempting it from tax for a period of 50 years since inception of the Trust.

Dividend and interest income received by the Sub-fund may be subject to withholding tax imposed in the country of origin. Investment income is recorded gross of such taxes and the withholding tax is recognised in the statement of comprehensive income as incurred.

(n) Redeemable units

The Sub-fund classifies financial instruments issued as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instruments.

The Sub-fund has only one class of redeemable units in issue and they are the most subordinate class of financial instrument in the Sub-fund. The redeemable units provide investors with the right to require redemption for cash at a value proportionate to the investor’s share in the Sub-fund’s net assets at each redemption date and also in the event of the Sub-fund’s liquidation.

A puttable financial instrument that includes a contractual obligation for the Sub-fund to repurchase or redeem that instrument for cash or another financial asset is classified as equity if it meets all of the following conditions:

– it entitles the holder to a pro rata share of the Sub-fund’s net assets in the event of Sub-fund’s liquidation;

– it is in the class of instruments that is subordinate to all other classes of instruments;

– all financial instruments in the class of instruments that is subordinate to all other classes of instruments have identical features;





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(n) Redeemable units (Continued)

– apart from the contractual obligation for the Sub-fund to repurchase or redeem the instrument for cash or another financial asset, the instrument does not include any other features that would require classification as a liability; and

– the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Sub-fund over the life of the instrument.

The Sub-fund’s redeemable units meet these conditions and are classified as equity.

Incremental costs directly attributable to the issue or redemption of redeemable units are recognised directly in equity as a deduction from the proceeds or part of the acquisition cost.

Repurchaseofredeemableunits

When redeemable units recognised as equity are redeemed, the amount paid on the redemption of the units is presented as a deduction from total equity.

(o) Related parties

For the purpose of these financial statements, parties are considered to be related to the Sub-fund if they have the ability, directly or indirectly, to control or exercise significant influence over the Sub-fund in making financial and operating decisions. Related parties may be individuals or entities.



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(p) Segment reporting

An operating segment is a component of the Sub-fund that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relates to transactions with any of the Sub-fund’s other components, whose operating results are reviewed regularly by the chief operating decision maker to make decisions about resources allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The chief operating decision maker of the Sub-fund is identified as the Manager.

3 FINANCIAL RISK MANAGEMENT

The investment objective of the Sub-fund is to provide unitholders with long-term capital appreciation by investing primarily in A, B and H shares. A Shares and B Shares are shares listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange in the People’s Republic of China (“PRC”). A Shares are quoted in Renminbi and B Shares are quoted in USD and HKD. H Shares are shares listed on the Hong Kong Stock Exchange and are denominated in HKD.

The Sub-fund invests in listed and unlisted commodity, equity securities, futures, option, participation notes and certificate and warrants and therefore is exposed to market risk (including foreign exchange risk, cash flow interest rate risk, fair value interest rate risk and price risk), credit risk and liquidity risk arising from the financial instruments held.

The Sub-fund’s overall financial risk management program focuses on the analysis, evaluation and management of financial risks and seeks to minimise potential adverse effects on the Sub-fund’s financial performance.





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3 FINANCIAL RISK MANAGEMENT (Continued)

The risk and respective risk management policies employed by the Sub-fund to manage these risks are discussed below:

(a) Market risk

(i) Foreignexchangerisk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The Sub-fund’s overall currency positions are monitored on a daily basis by the Manager.

As at 31 December 2011, had the USD weakened by 0.5% (2010: 0.5%) in relation to respective currencies, with all other variables held constant, the operating profit and the equity would have increased by the amounts shown below. The analysis was performed on the same basis for net foreign currency exposures as at 31 December 2010.

Change in equity Net foreign if the USD currency exposures weakened by 0.5% US$ US$

As at 31 December 2011Indonesian rupiah 513,788 2,569Malaysian ringgit 2,266,059 11,330

2,779,847 13,899

US$ US$

As at 31 December 2010Indonesian rupiah 602,311 3,012Taiwan dollar 2,704,496 13,522

3,306,807 16,534



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(a) Market risk (Continued)

(i) Foreignexchangerisk(Continued)

As the HKD is pegged to the USD, the Sub-fund does not expect any significant movements in HKD/USD exchange rate. A 0.5% (2010: 0.5%) appreciation of the USD against the above currencies would have resulted in an equal but opposite effect on the financial statements on the basis that all other variables remain constant.

(ii) Pricerisk

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-fund trades in financial instruments, taking positions in traded and over-the-counter instruments, including derivatives, to take advantage of market movements.

All securities investments present a risk of loss of capital. The Manager moderates this risk through a careful selection of securities and other financial instruments within specified limits stated in the Explanatory Memorandum. The Sub-fund’s overall market positions are monitored on a daily basis by the Manager.

As at 31 December, the Sub-fund’s overall market exposures and estimated market sensitivity were as follows:

Reasonably possible Estimated Relevant change of the change in benchmark relevant operating index for benchmark profit and Fair value the Sub-fund index total equity US$ US$

As at 31 December 2011 163,214,909 MSCI China Index +/– 20% +/– 28,482,574

As at 31 December 2010 265,049,804 MSCI China Index +/– 20% +/– 43,463,817





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(a) Market risk (Continued)

(iii) Interestraterisk

The majority of the Sub-fund’s financial assets and liabilities are non-interest bearing. As a result, the Sub-fund is not subject to significant amount of risk due to fluctuations in the prevailing levels of market interest rates.

The Sub-fund’s interest rate risk arises from bank balances of US$14,145,049 (2010: US$15,323,514). As at 31 December 2011, the maturity dates of the majority of interest-bearing assets are within 3 months. The bank balances expose the Sub-fund to cash flow interest rate risk and the fixed-rate debt instruments expose the Sub-fund to fair value interest rate risk.

As at 31 December 2011, if the interest rate had been 50 basis points (2010: 50 basis points) higher or lower with all other variables held constant, the operating profit and total equity would have been approximately US$70,725 (2010: US$76,618) higher or lower, gross of fees, for the year ended 31 December 2011, as a result of higher or lower interest income on bank balances and a decrease or increase in the fair value of the fixed-rate debt instruments.

(b) Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Sub-fund. Financial assets which potentially subject the Sub-fund to concentrations of credit risk consist principally of financial assets held with custodians, bank balances and receivables.

The Sub-fund limits its exposure to credit risk by transacting the majority of its securities and contractual commitment activities with broker-dealers, banks and regulated exchanges with high credit ratings and that the Manager considers to be well established. All transactions in listed securities are settled/paid for upon delivery using approved and reputable brokers. The risk of default is considered minimal since delivery of securities sold is only made when the broker has received payment. In a purchase, payment is made when the securities have been received by the broker. If either party fails to meet its obligation, the trade will fail. Accordingly, there is no significant concentration of credit risk.



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(b) Credit risk (Continued)

The table below shows the major counterparties at the date of the statement of financial position. The credit ratings are issued by Standard & Poor’s:

Counterparty Credit rating 2011 2010 US$ US$

Bank A AA– 12,830,161 15,322,928Custodian A AA– 181,183,589 278,667,404

194,013,750 293,990,332

The Sub-fund may invest in debt instruments which are unrated or rated with low credit ratings. These securities are subject to greater risk of loss of principal and interest than securities with higher credit ratings. The Sub-fund may also invest in emerging markets where the clearing, settlement and registration systems available to effect trades are less developed than those in more mature markets. These can result in delays and other difficulties in settling trades and registering transfers of securities.

(c) Liquidity risk

Liquidity risk is the risk that the Sub-fund will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to the Sub-fund.

The markets in which the Sub-fund invests may be relatively illiquid and the liquidity of these markets generally has fluctuated substantially over time. Investment of the Sub-fund’s assets in relatively illiquid securities may restrict the ability of the Sub-fund to dispose of its investments at a price and time that it wishes. The risk of illiquidity also arises in the case of over-the-counter transactions. There is no regulated market for such transactions, and the prices will be established solely by dealers in those transactions. The Manager monitors the liquidity of the Sub-fund by conducting liquidity testing on the investment portfolio on a monthly and ad-hoc basis.





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(c) Liquidity risk (Continued)

The Sub-fund is exposed to daily cash redemption of units. The Manager considered that there is no significant liquidity risk on redemption of units as, according to the provisions of the Trust Deed dated 21 June 2000 (as amended) of the Sub-fund, the Manager may limit the total number of units redeemed on any dealing day to 10% of the total number of units in issue. The contractual maturity of all other liabilities is less than one month.

4 CASH AND CASH EQUIVALENTS

2011 2010 US$ US$

Current deposits with banks 14,145,049 15,323,514

5 AMOUNTS DUE FROM/TO BROKERS

2011 2010 US$ US$

Balance due from brokersSales awaiting settlement 679,778 348,579

Balance due to brokersPurchases awaiting settlement 1,805,221 4,083,777

In accordance with the Sub-fund’s policy of trade date accounting for regular way sale and purchase transactions, sales/purchases awaiting settlement represent amounts receivable/payable for securities sold/purchased, but not yet settled.



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6 FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH

PROFIT OR LOSS

2011 2010 US$ US$

Financial assets at fair value through profit or lossListed equity securities 154,151,423 238,437,308Participation notes and certificate 11,962,917 17,423,811Option 4,711 –Warrants 5,181,668 9,188,685

171,300,719 265,049,804

Financial liabilities at fair value through profit or lossListed equity securities sold short (8,081,099 ) –Futures (84,037 ) –

(8,165,136 ) –

7 NET (LOSS)/GAIN FROM FINANCIAL ASSETS AND FINANCIAL

LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

2011 2010 US$ US$

Net (loss)/gain from financial assets and financial liabilities at fair value through profit or lossNet realised gain 20,136,000 24,292,796Change in unrealised gain or loss (83,799,704 ) 25,945,832

(63,663,704 ) 50,238,628





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8 TRUSTEE FEES

Bank of Bermuda (Cayman) Limited, the Trustee of the Sub-fund, is entitled to trustee fees which are determined based on the bi-weekly net asset value of the Sub-fund as below:

Trustee fee per annum shown as % of net asset value

Net asset value

First US$20 million 0.18%Next US$20 million 0.17%Thereafter 0.15%

The trustee fees are subject to a monthly minimum of US$3,000 (2010: US$3,000).

Under the terms of the Trust Deed (as amended), the Trustee is also entitled to a fixed annual fee of US$3,000 (2010: US$3,000).

9 MANAGEMENT FEES

The Manager receives management fees of 1.25% per annum of net asset value of the Sub-fund. The Manager is also entitled to a performance fee and the details are described in note 11(a).

10 TAXATION

There are no taxes on income or gains in the Cayman Islands as the Trust has received an undertaking from the Governor in Cabinet of the Cayman Islands exempting it from all local income, profits and capital taxes until 2050. Accordingly, no provision for income taxes is included in these financial statements.

No provision for Hong Kong Profits Tax has been made in the financial statements as the Trust is exempt from taxation under section 26A(1A) of the Hong Kong Inland Revenue Ordinance.



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11 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE

TRUSTEE, THE MANAGER AND THEIR CONNECTED PERSONS

In addition to the transactions and balances disclosed elsewhere in these financial statements, the Sub-fund entered into the following material related party transactions for the year. All such transactions were entered into in the ordinary course of business and on normal commercial terms.

(a) The Sub-fund appointed the Manager, an investment management company incorporated in British Virgin Islands, to implement the investment strategy as specified in the Explanatory Memorandum. Under the Investment Management Agreement, the Manager receives a management fee monthly in arrears at an annual rate of 1.25% of the total net asset value on each valuation day as defined in the Explanatory Memorandum. Management fees of US$3,205,014 (2010: US$2,931,544) were charged to the statement of comprehensive income during the year. Included in liabilities as at 31 December 2011 are management fees payable of US$209,207 (2010: US$311,510).

Under the Investment Management Agreement, the Manager is also entitled to a performance fee, calculated at a high-on-high basis, if the net asset value per unit as at the last valuation day of a financial year (prior to the accrual of any performance fee for that financial year) exceeds the higher of:

(i) the net asset value per unit as at the close of business on the last valuation day in the last financial year in respect of which a performance fee was paid to the Manager in respect of the Sub-fund, after payment of such performance fee; and

(ii) the initial offer price at which the units were first offered.

The rate of performance fee payable is 15% and is calculated by multiplying this fee rate by the product of the excess of the net asset value per unit (calculated as stated above) and the average of the number of units in issue immediately after each valuation day in the relevant financial year.

Nil performance fee (2010: US$7,952,520) was charged to the statement of comprehensive income during the year. Nil performance fee payable is included in liabilities as at 31 December 2011 (2010: US$7,952,520).





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11 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE TRUSTEE,

THE MANAGER AND THEIR CONNECTED PERSONS (Continued)

(b) The Sub-fund appointed the Trustee, a licensed trust company incorporated in Cayman Islands, to implement the responsibilities as specified in the Explanatory Memorandum. The Trustee is entitled to receive a trustee fee calculated on the basis described in note 8. Trustee fees of US$394,602 (2010: US$361,785) were charged to the statement of comprehensive income during the year. Included in liabilities as at 31 December 2011 are trustee fees payable of US$25,954 (2010: US$38,230).

(c) The Sub-fund maintains bank accounts and cash deposits which are held as collateral for transactions involving borrowed securities with The Hongkong and Shanghai Banking Corporation Limited, which is a group company of the Trustee, Registrar, Administrator and Custodian of the Sub-fund. Cash deposits of US$8,467,067 were held as collateral as at 31 December 2011 (2010: Nil). Information relating to the bank accounts and borrowed securities is set out below:

2011 2010 US$ US$

Bank accountsBank balance 14,145,049 15,322,928Interest income 746 1,892Bank charges (4,922 ) (3,658 )

Borrowed securitiesRebate income 83,488 177Stock lending expenses (127,910 ) (110,369 )



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11 RELATED PARTY TRANSACTIONS/TRANSACTIONS WITH THE TRUSTEE,

THE MANAGER AND THEIR CONNECTED PERSONS (Continued)

(d) As at 31 December 2011, 19,744 units (2010: 19,744 units) of the Sub-fund were held by the Manager. Units held by the related parties of the Manager are listed out below:

Number of units 2011 2010

Mr. Cheah Cheng Hye* 32,649 32,649Ms. To Hau Yin** 1,670 1,670

* Mr.CheahChengHyeisadirectoroftheManager** Ms.ToHauYinisthespouseofMrCheahChengHye,whoisadirectorof

theManager

12 REDEEMABLE UNITS IN ISSUE

Number of units 2011 2010

As at 1 January 2,059,737 1,878,674Issue of redeemable units 225,934 525,413Redemption of redeemable units (476,100 ) (344,350 )

As at 31 December 1,809,571 2,059,737

The rights attaching to each unit are as follows:

The holders of the units have the right to receive notice of, attend and vote at meetings of the Sub-fund. The holder of each such unit has the right to one vote for each such unit registered in his name. The holders are entitled to receive all dividends declared and paid by the Sub-fund. Upon winding up, the holders are entitled to a return of capital based on the net asset value per unit of the Sub-fund.





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12 REDEEMABLE UNITS IN ISSUE (Continued)

Any distributable profits of the Sub-fund may be accumulated or distributed by the Manager, in its absolute discretion. Where distributions are made, unless unitholders indicate otherwise to the Manager, any such distributions will automatically be reinvested in further units in the Sub-fund to be issued to such unitholders in proportion to the number of units held by them on the distribution date as defined in the Trust Deed (as amended).

The Trust and the Sub-fund do not have any externally imposed capital requirements.

13 FAIR VALUE INFORMATION

Many of the Sub-fund’s financial instruments are carried at fair value on the statement of financial position. Usually the fair value of the financial instruments can be reliably determined within a reasonable range of estimates. For certain other financial instruments, including amounts due from/to brokers and unitholders, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the immediate or short-term nature of these financial instruments.

(i) Financial instruments carried at fair value

The Sub-fund’s accounting policy on fair value measurements is described in note 2(e)(iv).

The Sub-fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

– Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

– Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques for which all significant inputs are directly or indirectly observable from market data.

– Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.



4 4A N N U A L R E P O R T 2 0 1 1




13 FAIR VALUE INFORMATION (Continued)

(i) Financial instruments carried at fair value (Continued)

The table below analyses financial instruments, measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorised:

Level 1 Level 2 Level 3 Total US$ US$ US$ US$

As at 31 December 2011Financial assets at fair value through profit or lossListed equity securities 154,151,423 – – 154,151,423Option – 4,711 – 4,711Participation notes and certificate – 11,962,917 – 11,962,917Warrants 4,461,732 719,936 – 5,181,668

158,613,155 12,687,564 – 171,300,719

Financial liabilities at fair value through profit or lossListed equity securities sold short (8,081,099 ) – – (8,081,099 )Futures (84,037 ) – – (84,037 )

(8,165,136 ) – – (8,165,136 )

As at 31 December 2010Financial assets at fair value through profit or lossListed equity securities 238,437,308 – – 238,437,308Participation notes – 17,423,811 – 17,423,811Warrants 8,580,046 608,639 – 9,188,685

247,017,354 18,032,450 – 265,049,804

During the current year, there were no significant transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy.





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13 FAIR VALUE INFORMATION (Continued)

(ii) Financial instruments carried at other than fair value

The carrying amounts of all the Sub-fund’s financial assets and financial liabilities at the date of the statement of financial position approximated their fair values.

14 SEGMENT REPORTING

The Manager makes strategic resource allocation and assesses performance on behalf of the Sub-fund and has determined the operating segments based on the reports reviewed which are used to make strategic decisions.

The Manager considers that the Sub-fund has a single operating segment which is investing in a diversified portfolio of commodity, equity securities, option, participation notes and certificate, futures and warrants with the objective as stated in the investment objective and policies of the Sub-fund.

The segment information provided to the Manager is the same as that disclosed in the statement of comprehensive income and statement of financial position.

The Sub-fund is established and domiciled in the Cayman Islands. The majority of the Sub-fund’s investment income is derived from its investments domiciled in the Greater China (2011: 75%; 2010: 79%), with the remaining investments domiciled in other countries.

The Sub-fund has no assets classified as non-current as at 31 December 2011 and 2010.

The Sub-fund regards its unitholders as customers, as it relies on their funding for continuing operations and meeting its objectives. As at 31 December 2011, there were two unitholders who each held more than 10% of the Sub-fund’s net asset value. Their holdings were 16% and 12% (2010: 14% and 12%) respectively.



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15 SOFT COMMISSION ARRANGEMENTS

The Manager and/or any company associated with it and its delegates may receive, and are entitled to retain, research products and services (known as soft dollar benefits) which are of demonstrable benefit to the Sub-fund (as may be permitted under applicable rules and regulations) from brokers and other persons through whom investment transactions are carried out (the “brokers”) provided that the quality of transaction execution is consistent with best execution standards. The Manager will consider many judgemental factors deemed relevant in determining whether a broker will provide best execution, which may include the provision of research products and investment ideas, introductory services to potential investee companies, access to investment opportunities and initial public offerings and placements which are for the benefit of the Sub-fund. The commission rates charged by brokers in these circumstances may be higher than those charged by other brokers who do not offer such services or by the same broker if it only provides execution services. Examples of research products and services that the Manager may receive from brokers include analyses and reports concerning industries, securities, economic factors and trends. The Sub-fund generally will pay customary full service brokerage rates where execution, research and other services cannot be unbundled for the same commission rate.

In particular case where execution, research and other services can be unbundled, the Sub-fund will pay a brokerage commission that is discounted from customary full service brokerage rates if no research or other services are provided in addition to brokerage execution. In addition, the Manager has the discretion to cause the Sub-fund to pay brokerage commission in excess of discounted rates, and up to full service brokerage rates, for quality brokerage execution and the provision of research or other appropriate services that the Manager determines to be beneficial to the Sub-fund.

The Manager may pay brokers commissions for effecting portfolio transactions in excess of amounts other brokers would have charged for effecting similar transactions if the Manager determines in good faith that such amounts are reasonable in relation to the value of the research and other services provided, viewed in terms of the particular transaction or the Manager’s overall duty to its clients.





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16 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND

INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE

YEAR ENDED 31 DECEMBER 2011

Up to the date of issue of these financial statements, the IASB has issued an amendment and two new standards which are not yet effective for the year ended 31 December 2011 and which have not been adopted in these financial statements. These include the following which may be relevant to the Sub-fund.

Effective for accounting periods beginning on or after

Amendments to IFRS 7, Financialinstruments: Disclosures–Transfersoffinancialassets 1 July 2011

IFRS 13,Fairvaluemeasurement 1 January 2013

IFRS 9,Financialinstruments 1 January 2015

The Sub-fund is in the process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Sub-fund’s results of operations and financial position.

INVESTMENT PORTFOLIOAS AT 31 DECEMBER 2011 (UNAUDITED)


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% of net Holdings Fair value assets US$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securities

ChinaChina National Accord Medicines Co Ltd B Shares 982,650 1,795,626 0.93China Vanke Co Ltd B Shares 7,188,281 6,965,442 3.60Inner Mongolia Eerduosi Cashmere Product Co Ltd Cl B Shares 3,099,900 3,332,392 1.72Lao Feng Xiang Co Ltd B Shares 747,463 1,428,402 0.74Shandong Chenming Paper Holdings Ltd B Shares 1,329,100 651,645 0.34Shanghai Friendship Group Inc B Shares 1,273,389 1,627,391 0.84Yantai Changyu Pioneer Wine Co B Shares 273,784 2,993,307 1.55

18,794,205 9.72

Hong Kong – H sharesBeijing Jingkelong Co Ltd H Shares 848,000 698,400 0.36CITIC Securities Co Ltd H Shares 699,500 1,150,396 0.60China BlueChemical Ltd H Shares 6,232,000 4,675,464 2.42China Coal Energy Co Ltd H Shares 3,504,000 3,769,633 1.95China Communication Services Corp H Shares 1,734,000 776,528 0.40China Oilfield Services Ltd H Shares 646,000 1,010,869 0.52China Shenhua Energy Co Ltd H Shares 3,031,500 13,107,671 6.78Chongqing Rural Commercial Bank Co Ltd H Shares 4,903,000 2,530,084 1.31Great Wall Motor Co Ltd H Shares 209,000 303,916 0.16


INVESTMENT PORTFOLIO (Continued)AS AT 31 DECEMBER 2011 (UNAUDITED)



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FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Listed equity securities (Continued)

Hong Kong – H shares (Continued)Industrial and Commercial Bank of China Ltd H Shares 10,902,320 6,467,680 3.35PetroChina Co Ltd H Shares 15,494,000 19,280,518 9.98Shandong Chenming Paper Holdings Ltd H Shares 4,382,400 2,131,731 1.10Zhuzhou CSR Times Electric Co Ltd H Shares 1,143,000 2,500,483 1.29

58,403,373 30.22

Hong Kong – Red ChipsBrilliance China Automotive Holdings Ltd 12,976,000 13,993,087 7.24CNOOC Ltd 1,149,000 2,007,930 1.04Lenovo Group Ltd 8,030,000 5,342,380 2.76

21,343,397 11.04

Hong Kong – OtherAsian Citrus Holdings Ltd 2,623,000 1,367,042 0.71China Flooring Holding Co Ltd 1,923,000 346,446 0.18China Overseas Land & Investment Ltd 1,782,000 2,967,363 1.54China Qinfa Group Ltd 164,000 27,858 0.01China Rongsheng Heavy Industries Group Holdings Ltd 931,000 255,187 0.13China Shineway Pharmaceutical Group Ltd 348,000 492,607 0.25China ZhengTong Auto Services Holdings Ltd 2,104,500 2,055,509 1.06Chu Kong Petroleum & Natural Gas Steel Pipe Holdings Ltd 3,428,000 904,322 0.47Digital China Holdings Ltd 309,000 477,960 0.25ERA Mining Machinery Ltd 7,792,000 842,281 0.44Evergrande Real Estate Group Ltd 25,246,000 10,461,095 5.41Hontex Int’l Holdings Co Ltd 2,512,000 332,955 0.17Hutchison Whampoa Ltd 632,000 5,298,588 2.74International Mining Machinery Holdings Ltd 2,763,000 3,040,015 1.57Kingboard Chemical Holdings Ltd 1,834,000 5,380,998 2.79Lijun International Pharmaceutical (Holding) Co Ltd 3,440,000 393,983 0.20



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Listed equity securities (Continued)

Longfor Properties Co Ltd 979,500 1,100,392 0.57Meike International Holdings Ltd 1,640,000 135,068 0.07Mongolian Mining Corp 2,433,000 1,837,845 0.95Peace Mark (Holdings) Ltd 1,912,000 – –Real Gold Mining Ltd 3,046,000 862,345 0.45Royale Furniture Holdings Ltd 3,344,192 821,965 0.43Sany Heavy Equipment International Holdings Co Ltd 221,500 179,574 0.09Shougang Fushan Resources Group Ltd 3,372,000 1,128,209 0.58Sinoref Holdings Ltd 15,280,000 1,061,808 0.55Tao Heung Holdings Ltd 662,000 252,161 0.13Techtronic Industries Co Ltd 3,127,000 3,199,070 1.66Xiangyu Dredging Holdings Ltd 836,000 199,024 0.10XTEP International Holdings Ltd 3,957,000 1,252,650 0.65Zhongsheng Group Holdings Ltd 236,500 391,382 0.20

47,065,702 24.35

Hong Kong 126,812,472 65.61

IndonesiaPerusahaan Perkebunan London Sumatra Indonesia Tbk PT 2,117,500 513,788 0.27

Malaysia Sime Darby BHD 796,000 2,266,059 1.17

SingaporeTianjin Zhong Xin Pharmaceutical Group Corp Ltd 9,912,000 4,658,640 2.41

United StatesCharm Communications Inc ADR (1 ADR Reps 2 Cl A Ord Shares) 124,593 1,024,154 0.53Syswin Inc Spon ADS (1 ADS Reps 4 Ord Shares) 88,685 82,105 0.04

1,106,259 0.57

Total listed equity securities 154,151,423 79.75





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OptionUSD Put/HKD Call 7.5 02/17/2012 69,400,000 4,711 0.00

Participation notes and certificate

Credit Suisse Nassau (Anhui Conch Cement Co Ltd A Shares) P Note 11/11/2015 1,996,440 4,953,168 2.56Credit Suisse Nassau (Xiamen C & D Inc A Shares) P Note 11/10/2014 1,272,000 1,285,992 0.67Standard Bank Plc (Anhui Conch Cement Co Ltd A Shares) P Note 02/10/2012 22,400 55,574 0.03Standard Bank Plc (Suning Appliance Co Ltd A Shares) Part Cert 06/20/2012 1,969,494 2,635,183 1.36Standard Bank Plc (Xiamen C & D Inc A Shares) P Note 04/17/2012 3,000,000 3,033,000 1.57

11,962,917 6.19

Warrants

Citigroup (Anhui Conch Cement Co Ltd A Shares) CWts 01/20/2015 331,974 823,628 0.43Citigroup (Hefei Department Store Group Co Ltd A Shares) CWts 01/20/2015 321,400 719,936 0.37Standard Chartered Bank (Anhui Conch Cement Co Ltd A Shares) CWts 05/23/2012 625,350 1,551,493 0.80Standard Chartered Bank (Suning Appliance Co Ltd A Shares) CWts 06/22/2012 1,559,500 2,086,611 1.08

5,181,668 2.68

Total financial assets at fair value through profit or loss 171,300,719 88.62



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FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securities sold short

Hong Kong – OtherASM Pacific Technology Ltd (80,300 ) (900,558 ) (0.47 )China Overseas Land & Investment Ltd (3,208,000 ) (5,358,432 ) (2.77 )China Rongsheng Heavy Industries Group Holdings Ltd (931,000 ) (257,583 ) (0.13 )Longfor Properties Co Ltd (979,500 ) (1,104,173 ) (0.57 )Want Want China Holdings Ltd (461,000 ) (460,353 ) (0.24 )

(8,081,099 ) (4.18 )

Futures

Hang Seng Index Futures Jan 12 01/30/2012 (85 ) (84,037 ) (0.04 )

Total financial liabilities at fair value through profit or loss (8,165,136 ) (4.22 )

Commodity

Loco London Gold 11,400 17,968,680 9.30

Total investments 181,104,263 93.70

Cash and cash equivalents 14,145,049 7.32Other net liabilites (1,969,986 ) (1.02 )

Total net assets 193,279,326 100.00

Total investments, at cost 195,456,703

STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGSFor the year ended 31 december 2011 (UnaUdIted)



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% of net assets 2011 2010

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securitiesChina 9.72 13.41HongKong 65.61 63.26Indonesia 0.27 0.21Malaysia 1.17 –Singapore 2.41 5.37Taiwan – 0.79UnitedStates 0.57 0.76

79.75 83.80

Option – –

Participation notes and certificate 6.19 6.13

Warrants 2.68 3.23

Total financial assets at fair value through profit or loss 88.62 93.16

Listed equity securities sold short

HongKong (4.18) –

Futures (0.04) –

Total financial liabilities at fair value through profit or loss (4.22) –

Commodity 9.30 4.78

Total investments 93.70 97.94

Cashandcashequivalents 7.32 5.39Othernetliabilities (1.02) (3.33)

Total net assets 100.00 100.00

PERFORMANCE RECORDFor the year ended 31 december 2011 (UnaUdIted)


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Net asset values (at last traded prices)

Net asset value per unit Net asset value US$ US$

As at– 31 December 2011 107.32 194,202,340– 31 December 2010 138.37 285,013,480– 31 December 2009 114.03 214,220,653

Highest issue and lowest redemption prices (at last traded prices)

Highest Lowest issue price redemption price “A” unit “A” unit US$ US$

Financial year ended

– 31 December 2011 143.50 97.34

– 31 December 2010 143.94 107.04

– 31 December 2009 114.29 57.62

– 31 December 2008 104.64 55.10

– 31 December 2007 132.22 73.43

– 31 December 2006 70.97 40.66

– 31 December 2005 40.71 36.73

– 31 December 2004 40.01 33.27

– 31 December 2003 36.26 20.41

– 31 December 2002 21.40 18.23

Documents

CHINA CONVERGENCE FUND - Value Partners...in the world. On top of that, unlike the case in some other parts of the world, we have quite a number of Asia-Pacific governments that remain