e fund sicav · 2018-05-03 · e fund sicav annual report and audited financial statements for the...

E FUND SICAV Société d’investissement à capital variable (SICAV)

Audited Annual Report

For the year ended December 31, 2017

R.C.S number: B 199284

E FUND SICAV Annual report and audited financial statements

for the year ended December 31, 2017

1

TABLE OF CONTENTS

Directory ............................................................................................................................................................................ 2

The Sub-Funds’ objectives ............................................................................................................................................... 3

Management’s report ....................................................................................................................................................... 6

Schedule of investments as at December 31, 2017 – E FUND GREATER CHINA HIGH DIVIDEND EQUITY

FUND ................................................................................................................................................................................. 7

Statement of net assets as at December 31, 2017 ............................................................................................................ 9

Statement of operations and changes in net assets for the year ended December 31, 2017........................................ 10

Statistical information as at December 31, 2017 ............................................................................................................ 11

Notes to the financial statements as at December 31, 2017 ........................................................................................... 12

Other information to shareholders (unaudited) ............................................................................................................. 19

Audit report ...................................................................................................................................................................... 20

No subscriptions can be received on the basis of this financial report. Subscriptions are only valid if made on the

basis of the current prospectus, the key investor information document (“KIID”) supplemented by the latest audited

annual report and the most recent semi-annual report, if published thereafter. The information contained in this

report is historical and not necessarily indicative of future performance.



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Directory

Registered office of the Fund

80, route d’Esch

L-1470 Luxembourg

Grand Duchy of Luxembourg

Board of Directors

Gaohui Huang (Chairman) (until November 29, 2017)

E Fund Management (Hong Kong) Co., Limited

Suites 3501-02, 35F

Two International Finance Centre

8 Finance Street, Central

Hong Kong

Chen Hong Chu Craig (Chairman) (since December 6, 2017)


Suites 3501-02, 35F



Hong Kong

Ross Thomson

FundRock Management Company S.A. (Ireland Branch)

9 Upper Pembroke Street

Dublin 2

Ireland

Guangdong Qi


Suites 3501-02, 35F



Hong Kong

Management Company

FundRock Management Company S.A.

33, rue de Gasperich

L-5826 Hespérange


Legal adviser as to matters of Luxembourg law

Arendt & Medernach SA

41A, avenue J.F. Kennedy

L-2082 Luxembourg


Depositary

Brown Brothers Harriman (Luxembourg) S.C.A.

80, route d’Esch

L-1470 Luxembourg


Administrator


80, route d’Esch

L-1470 Luxembourg


Paying Agent


80, route d’Esch

L-1470 Luxembourg


Investment Manager


Suites 3501-02, 35F



Hong Kong

Global Distributor


Suites 3501-02, 35F



Hong Kong

Auditor

PricewaterhouseCoopers, Société cooperative

2, rue Gerhard Mercator

B.P. 1443

L-2182 Luxembourg




3

The Sub-Funds’ objectives

E FUND SICAV – E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND (THE “SUB-

FUND”) (Liquidated on 2 August 2017)

Investment Objective

The investment objective of the Sub-Fund is to achieve long term capital growth in RMB terms through investment

in a portfolio consisting primarily of onshore RMB (CNY) denominated fixed income debt securities issued or

distributed within the People’s Republic of China (the “PRC”) which aim to generate a steady flow of income in

addition to capital appreciation for the Sub-Fund.

The Sub-Fund intends to invest at least 80% of its Net Asset Value in RMB (CNY) denominated fixed income

securities which may consist in, but will not be limited to, bonds, fixed rate or floating rate debt securities,

convertible bonds, commercial papers, short term bills and notes, which are listed or traded on a Regulated Market

or on Other Regulated Market, such as the China interbank bond market (the “CIBM”) (hereinafter “RMB Fixed

Income Securities”).

RMB Fixed Income Securities referred to above may be issued by PRC central and local government and

quasi-governments including policy banks (China Development Bank, Export-Import Bank of China and

Agriculture Development Bank of China) and other entities backed by governments (hereinafter “PRC Government

Bonds”). Local government financing vehicles (“LGFVs”) are separate legal entities established by local

governments and/or their affiliates to raise financing for local development, public welfare investment and

infrastructure projects. Bonds issued by LGFVs are considered as credit bonds.

RMB Fixed Income Securities may also be issued by PRC state-owned enterprises, PRC banks and financial

institutions and PRC private enterprises, companies or corporations which have their registered offices located in the

PRC and/or either (i) carry out a predominant proportion of their business activities in these markets, or (ii) are

holding companies which predominantly own companies with registered offices in the PRC (hereinafter “PRC

Corporate Bonds”).

The Sub-Fund will not invest in PRC Government Bonds, LGVFs and PRC Corporate Bonds which do not have a

minimum credit rating of AA or above, as rated by one of the credit rating agencies in the PRC at the time the

relevant RMB Fixed Income Securities are invested, or any unrated RMB Fixed Income Securities (i.e. debt

instruments which have not been assessed by rating agencies and the Manager will assess the debt instruments with

reference to the credit rating of the issuer).

The Sub-Fund may also invest, not more than 20% of its Net Asset Value, in other RMB (CNY or CNH)

denominated cash equivalent instruments issued within or outside the PRC, such as bank certificates of deposit,

bank deposits and negotiated term deposits with banks (hereinafter “RMB Cash Instruments”).

The Sub-Fund may also invest, not more than 10% of its Net Asset Value, in investment funds or collective

investment schemes which are authorised by the China Securities Regulatory Commission (“CSRC”) for offer to the

retail public in the PRC, which invest in RMB Fixed Income Securities or RMB Cash Instruments (hereinafter

“RMB Funds”).

The Sub-Fund may also invest, not more than 10% of its Net Asset Value, in RMB (CNH) denominated fixed

income securities issued by private enterprises, companies or corporations based outside the PRC.

The Sub-Fund will not invest in any derivatives for investment, efficient portfolio management or hedging purposes

(other than currency hedging) and will not invest in structured deposits or products. The Manager will not enter into

any securities lending, repurchase or reverse repurchase transactions in respect of the Sub-Fund.



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The investment in such RMB Fixed Income Securities, RMB Fixed Income Funds and RMB Cash Instruments by

the Investment Manager, requires the latter to be granted a licence as a "Renminbi qualified foreign institutional

investor" (hereinafter "R-QFII") by the CSRC. The Investment Manager holds a R-QFII licence since 2011

December and has received RQFII quotas by the PRC State Administration of Foreign Exchange in relation to

investments in the PRC.

The Investment Manager will receive investment advice from Collabrium Investment Advisors LLP (“Collabrium

Investment Advisors”), a subsidiary of Collabrium Capital (Guernsey) Limited (“Collabrium Capital”), which

operates out of London and Chongqing in the PRC. Collabrium Investment Advisors is authorised and regulated in

the UK by the Financial Conduct Authority. Collabrium Capital is a specialist emerging markets investment house

that provides corporate finance, advisory services and fund management advice with a strong focus in emerging

markets, with a geographical bias towards Asia. The investment advisory fee to Collabrium Investment Advisors

will be paid by the Investment Manager out of its own Management Fee.

E FUND SICAV – E FUND GREATER CHINA HIGH DIVIDEND EQUITY FUND (THE “SUB-

FUND”)

Investment Objective

The investment objective of the Sub-Fund is to achieve capital appreciation and income generation by investing

primarily in high yield equity securities issued by issuers based in, or having a significant exposure to, the People’s

Republic of China (the “PRC”) and the Hong Kong S.A.R. (hereinafter “Hong Kong”), as further described below.

The portfolio construction is based on the Investment Manager’s fundamental view of the equity markets and is

independent from broad market benchmarks. In particular the Sub-Fund’s performance will not be measured against

any benchmark, since there is no benchmark available which appropriately reflects the strategy implemented by the

Sub-Fund.

To achieve this investment objective, the Sub-Fund will invest primarily (i) in China A-Shares listed on the

Shanghai Stock Exchange or the Shenzhen Stock Exchange, (ii) in units, shares or other equity securities issued by

PRC open ended collective investment schemes investing in China A-Shares referred to in (i) (hereinafter “China

A-Shares Funds”), approved by the CSRC and offered to the public in the PRC, (iii) China B-Shares (listed on the

Shanghai Stock Exchange or Shenzhen Stock Exchange and traded in USD or in HKD) as well as (iv) equity

securities listed on the Hong Kong, Taiwan and Singapore Stock Exchanges.

The Sub-Fund may also invest in American depository receipts ("ADRs") and global depository receipts ("GDRs")

to gain exposure to the above equity securities instead of investing directly therein in circumstances where, due to

local restrictions or quota limitations, it is not possible to hold these directly or where it is otherwise advantageous to

the Sub-Fund to do so.

The Sub-Fund will use Stock Connect and the “Renminbi qualified foreign institutional investor” (hereinafter

“R-QFII”) program in order to invest in securities referred to in (i) above and the R-QFII to invest in securities

referred to in (ii) above. In this respect, the Investment Manager holds a R-QFII licence since December 2011 and

has received R-QFII quotas by the PRC State Administration of Foreign Exchange in relation to investments in the

PRC.

The Investment Manager, when using Stock Connect, will be limited to investments in China A-Shares listed on the

Shanghai Stock Exchange. To the extent the Stock Connect programme would be extended by Hong Kong and PRC

authorities to China A-Shares listed on the Shenzhen Stock Exchange, and provided that the Board of Directors of

the Fund and the Depositary are both satisfied that the conditions and risks for such investments do not differ from

those in relation to investments on the Shanghai Stock Exchange, the Investment Manager may elect to invest in

China A-Shares dealt on the Shenzhen Stock Exchange using Stock Connect.

The Sub-Fund will also invest on an ancillary basis in equities of companies listed on stocks exchanges of

Singapore, the United States or any Regulated Markets or Other Regulated Markets, which have their registered



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offices located in the PRC or Hong Kong, and companies which do not have their registered offices in the PRC or

Hong Kong but either (i) carry out a predominant proportion of their business activities in these markets, or (ii) are

holding companies which predominantly own companies with registered offices in the PRC or Hong Kong.

The Sub-Fund may also invest no more than 30% of its assets in other eligible investment instruments, including

convertible bonds having as underlying, or investing in, China A-Shares.

The Sub-Fund may also invest, on an ancillary basis, in units, shares or other securities of collective investment

schemes having their registered office either in Hong Kong, Luxembourg or the United States for cash management

purpose.

Investments in units, shares or other equity securities of China A-Shares Funds as referred to above together with

units, shares or other equity securities of other collective investment scheme referred to in the paragraph above shall

not in aggregate exceed 10% of the net assets of the Sub-Fund.

In times of extreme volatility of the markets or during severe adverse market conditions, the Investment Manager

may hold a substantial portion of the Sub-Fund’s assets in cash or cash equivalents, or invest in short-term money

market instruments to preserve the value of the assets in the investment portfolio of the Sub-Fund.

The Sub-Fund may also enter into repo and reverse repo transactions, regarding transferable securities traded outside

the PRC, for efficient portfolio management purposes in accordance with the 2010 Law.

The Sub-Fund may also invest in financial derivatives instruments for hedging and efficient portfolio management

purposes in accordance with the 2010 Law. The Investment Manager may in particular utilize a variety of financial

derivative instruments and strategies to hedge against interest rate, credit and currency fluctuations. The Sub Fund

may for example enter into futures, swaps, forwards for hedging and interest rate/currency exposure management

purpose.

The Sub-Fund may also enter into China A-Shares index futures traded outside of the PRC for hedging and/or

investment purposes.

There will be no constraints on portfolio cash levels within the limits set by the 2010 Law.

The attention of the Shareholders is drawn to the fact that the liquidity of the securities in which the Sub-Fund may

invest may be temporarily limited.



6

Management’s report

E FUND SICAV – E FUND GREATER CHINA HIGH DIVIDEND EQUITY FUND (THE “SUB-

FUND”)

Global equity market experienced a golden age in 2017. The recovery of China’s macro economy successfully

translated into corporates’ profitability growth. PPI raised significantly due to supply-side reform and demand

recovery, benefiting major upstream companies whose production quality were higher than industry average. Strong

recovery was also seen in mid-downstream companies due to solid domestic growth and strong foreign demand. For

financial sector, higher interest rate was positive for banks and insurance, and a stronger economy eased banks’ NPL

pressure.

Reviewing Chinese economy as a whole, we believe China has entered a new phase of development – the era of

growth quality. In the old days when demand was everywhere, companies had the opportunity to grow rapidly as

long as they were aggressive and bold enough. The cost of regulation violation was quite low compared to the

potential benefit one could earn. However, with slower economy growth, more selective customers, higher cost of

regulation violation, and higher interest rate, leading companies have a better chance to outperform the industry.

And this is what happened in 2017. We saw market consolidation in many industries including automobile, real

estate, pharma, mobile games.

Combined with a reasonable valuation, huge in flow was seen both from overseas investors as well as on shore

investors in 2017. Meanwhile, the volatility of the stock market stayed at a level of historical low. The market hardly

had a major correction last year.

The Sub-Fund seeks to achieve capital appreciation and income generation by investing primarily in high yield

equity securities issued by issuers based in, or having a significant exposure to, the People’s Republic of China and

the Hong Kong S.A.R.

Fund Performance

For the annual period ended December 31, 2017, the total return of E FUND GREATER CHINA HIGH DIVIDEND

EQUITY FUND was 37.38%. By comparison, the Hang Seng High Dividend Yield Index delivered a 35.02%

return.

Top 5 Holdings

Name % NAV

CHINA MERCHANTS BANKS-H /HKD/ 6.69

MINTH GROUP LTD/HKD/ 5.83

WYNN MACAU LTD /HKD/ 5.14

IND & COMM BK OF CHINA-H /HKD/ 4.82

CHINA PACIFIC INSURANCE GR-H /HKD/ 4.75



7

Schedule of investments as at December 31, 2017

E FUND GREATER CHINA HIGH DIVIDEND EQUITY FUND

Security Description Currency

Quantity

('000)

Market

Value

USD

% of

Net Assets

Transferable securities admitted to an official exchange listing or dealt in on other regulated markets

COMMON STOCKS

CHINA

3SBio Inc 144A HKD 87 169,775 3.57

Autohome Inc USD 2 112,160 2.36

Baozun Inc USD 3 95,708 2.01 BeiGene Ltd USD 1 141,883 2.98

China Construction Bank Corp HKD 50 46,061 0.97

China Merchants Bank Co Ltd HKD 80 318,334 6.69 China Pacific Insurance Group Co Ltd HKD 47 225,808 4.75

CSPC Pharmaceutical Group Ltd HKD 54 109,027 2.29

Fuyao Glass Industry Group Co Ltd 144A HKD 37 155,144 3.26 Guangzhou Automobile Group Co Ltd HKD 94 222,741 4.68

Industrial & Commercial Bank of China Ltd HKD 285 229,365 4.82

Minth Group Ltd HKD 46 277,506 5.83 NetEase Inc USD 0* 148,729 3.13

Ping An Insurance Group Co. of China Ltd HKD 16 161,332 3.39

Shenzhou International Group Holdings Ltd HKD 13 123,751 2.60 Sunny Optical Technology Group Co Ltd HKD 3 38,346 0.80

Weibo Corp USD 1 103,704 2.18

2,679,374 56.31

HONG KONG

ASM Pacific Technology Ltd HKD 16 225,723 4.74 China Unicom Hong Kong Ltd HKD 142 191,860 4.03

Galaxy Entertainment Group Ltd HKD 20 160,446 3.37

Hong Kong Exchanges & Clearing Ltd HKD 7 202,500 4.26 WH Group Ltd 144A HKD 136 153,476 3.23

934,005 19.63

MACAU

MGM China Holdings Ltd HKD 38 113,776 2.39

Wynn Macau Ltd HKD 77 244,469 5.14

358,245 7.53

UNITED KINGDOM

HSBC Holdings Plc HKD 21 216,863 4.56

TOTAL COMMON STOCKS 4,188,487 88.03

CLOSE ENDED FUNDS

HONG KONG

E Fund Yuanta Hang Seng Index Daily -1x Inverse Product HKD 227 141,665 2.98 E Fund Yuanta Hang Seng Index Daily 2x Leveraged Product HKD 101 94,375 1.98

TOTAL CLOSE ENDED FUNDS 236,040 4.96

Total Transferable securities admitted to an official exchange listing or dealt in on other regulated

markets 4,424,527 92.99

The accompanying notes form an integral part of the financial statements.

Financial derivative instruments, if any, are disclosed in note 7.



8

Schedule of investments as at December 31, 2017 (continued)

E FUND GREATER CHINA HIGH DIVIDEND EQUITY FUND (continued)

Market

Value

USD

% of

Net Assets

Total Investments 4,424,527 92.99

(Cost USD 3,404,425)

Other assets less liabilities 333,310 7.01

Total Net Assets 4,757,837 100.00

*Quantity of shares is less than five hundred.

The accompanying notes form an integral part of the financial statements. Financial derivative instruments, if any, are disclosed in note 7.



9

Statement of net assets as at December 31, 2017

E FUND GREATER

CHINA HIGH

DIVIDEND EQUITY

FUND

E FUND SICAV

TOTAL

Notes USD USD

ASSETS

Investments at market value 2 4,424,527 4,424,527

Cash and cash equivalents 2 408,180 408,180 Formation expenses 3,4 8,817 8,817

Receivable for investments sold 30 30

Total Assets 4,841,554 4,841,554

LIABILITIES

Investment management fees payable 4 45,892 45,892

Accrued expenses and other payables 18,247 18,247

Administration and depositary fees payable 4 15,118 15,118 Management Company fees payable 4 4,344 4,344

Taxe d'abonnement payable 5 116 116

Total Liabilities 83,717 83,717

TOTAL NET ASSETS 4,757,837 4,757,837




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Statement of operations and changes in net assets for the year ended December 31, 2017

E FUND

COLLABRIUM

HIGH QUALITY

RMB BOND

FUND*

E FUND GREATER

CHINA HIGH

DIVIDEND EQUITY

FUND E FUND SICAV TOTAL

Notes CNH USD USD

INCOME

Dividends 2 – 97,143 97,143

Interest income, net of withholding taxes 2 156,931 – 24,077 Bank interest 2 10,500 224 1,835

Other income 117,245 – 17,988

Total Income 284,676 97,367 141,043

EXPENSES

Professional fees 778,738 10,024 129,502

Administration and depositary fees 4 388,269 32,718 92,289

Investment management fees 4 55,196 40,000 48,469

Directors fees 4 147,300 17,898 40,498 Management Company fees 4 62,737 17,347 26,972

Transaction costs 4 1,362 14,577 14,786

Amortisation of formation expenses 3,4 – 1,020 1,020 Taxe d'abonnement 5 344 416 469

Bank interest charges 1,156 11 188

Other expenses 207,249 9,537 41,334

Total Expenses 1,642,351 143,548 395,527

NET INVESTMENT INCOME (1,357,675) (46,181) (254,484)

Net realised appreciation/(depreciation) on:

- Investments (564,176) 257,677 171,118

- Forward foreign exchange contracts (440,018) – (67,510)

- Foreign exchange transactions (23,193) (1,644) (5,203)

NET INVESTMENT INCOME AND REALISED

APPRECIATION / (DEPRECIATION) (2,385,062) 209,852 (156,079)

Net change in unrealised appreciation/(depreciation) on: - Investments 473,192 1,083,205 1,155,805

- Forward foreign exchange contracts (95,803) – (14,699)

- Foreign exchange transactions (36,147) 1,676 (3,870)

RESULT OF OPERATIONS FOR THE YEAR (2,043,820) 1,294,733 981,157

CAPITAL TRANSACTIONS

Received on subscription of shares 6,144 – 943

Paid on redemption of shares (24,041,532) – (3,688,596)

TOTAL INCREASE / (DECREASE) IN NET ASSETS

FOR THE YEAR (26,079,208) 1,294,733 (2,706,496)

Currency translation adjustment 2 – – 267,146

Net assets at the beginning of the year 26,079,208 3,463,104 7,197,187

TOTAL NET ASSETS AT THE END OF THE YEAR – 4,757,837 4,757,837

* The Sub-Fund was liquidated on August 2, 2017.




11

Statistical information as at December 31, 2017

Shares Outstanding

Sub-Fund December 31, 2017 December 31, 2016

E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND*

- Class A (EUR) dis. - 50,000

- Class I (USD) acc. - 200,000

- Class I (USD) acc. (hedged) - 135,500



- Class I (USD) acc. 356,534 356,534

Total Net Assets


E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND* CNH - 26,079,208**

- Class A (EUR) dis. EUR - 501,993

- Class I (USD) acc. USD - 1,874,640

- Class I (USD) acc. (hedged) USD - 1,331,874


E FUND GREATER CHINA HIGH DIVIDEND EQUITY FUND USD 4,757,837 3,463,104

- Class I (USD) acc. USD 4,757,837 3,463,104

Net Asset Value per Share


E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND*

- Class A (EUR) dis. EUR - 10.04

- Class I (USD) acc. USD - 9.37

- Class I (USD) acc. (hedged) USD - 9.83



- Class I (USD) acc. USD 13.34*** 9.71


** Net Asset Value presented in these Financial Statements differs from published Net Asset Value due to reimbursement of anti-dilution levy to an investor.

*** Due to a Net Asset Value error linked to an over-accrual of expenses, the Net Asset Value per Share has been adjusted from USD 12.69 to

USD 13.34.



12

Notes to the financial statements as at December 31, 2017

1. GENERAL INFORMATION

The E FUND SICAV (the “Fund”) is a public limited company (société anonyme) incorporated under the laws of

the Grand Duchy of Luxembourg as an investment company with variable share capital (Société d'Investissement

à Capital Variable). The Fund is subject to Part I of the Luxembourg law of December 17, 2010 relating to

undertakings for collective investment, as amended or supplemented from time to time.

As at December 31, 2017 the Fund is comprised of E FUND GREATER CHINA HIGH DIVIDEND EQUITY

FUND (a “Sub-Fund”).

The Fund has been incorporated on August 4, 2015 and is registered with the Luxembourg Trade and Companies

Register under number B 199284. The latest version of the Articles of Association was published in the Mémorial C,

Recueil des Sociétés et Associations of the Grand Duchy of Luxembourg on September 7, 2015.

The Sub-Funds offer a number of different classes of shares. Certain classes are available to any type of investors

while other classes may be available only to institutional investors as well as issued irrespective to investors’

location or issued for investors of certain location. These classes may be sub-divided into accumulation of income or

distribution of income categories as further detailed in the Prospectus.

As at December 31, 2017, the Fund had the following classes in issue:


Active Class Currency

Class I (accumulating) shares USD

The Sub-Fund E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND has been liquidated on August 2,

2017:

- Class A (distributing) shares and Class I (accumulating) shares were liquidated on February 16, 2017,

- Class I Hedged (accumulating) shares was liquidated on August 2, 2017.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Fund.

(A) Basis of presentation of the financial statements

The financial year of the Fund begins on January 1 of each year and ends on December 31 of the same year. The

financial statements have been prepared in accordance with generally accepted accounting principles in

Luxembourg, legal and regulatory requirements applicable in Luxembourg and are presented in USD.

(B) Valuation of Assets

1) The value of any cash on hand or on deposit, bills or notes payable, accounts receivable, prepaid expenses, cash

dividends and interest accrued but not yet received shall be equal to the entire nominal or face amount thereof,

unless the same is unlikely to be paid or received in full, in which case the value thereof shall be determined after

making such discount as the Board of Directors may consider appropriate in such case to reflect the true value

thereof.

2) Transferable Securities and Money Market Instruments which are quoted, listed or traded on an exchange or

regulated market will be valued, unless otherwise provided under paragraphs 3) and 6) below, at the last available

market price or quotation, prior to the time of valuation, on the exchange or regulated market where the securities or

instruments are primarily quoted, listed or traded. Where securities or instruments are quoted, listed or traded on



13

more than one exchange or regulated market, the Board of Directors will determine on which exchange or regulated

market the securities or instruments are primarily quoted, listed or traded and the market prices or quotations on

such exchange or regulated market will be used for the purpose of their valuation. Transferable Securities and

Money Market Instruments for which market prices or quotations are not available or representative, or which are

not quoted, listed or traded on an exchange or regulated market, will be valued at their probable realisation value

estimated with care and in good faith by the Board of Directors using any valuation method approved by the Board

of Directors.

3) Notwithstanding paragraph 2) above, where permitted under applicable laws and regulations, Money Market

Instruments may be valued using an amortisation method whereby instruments are valued at their acquisition cost as

adjusted for amortisation of premium or accrual of discount on a constant basis until maturity, regardless of the

impact of fluctuating interest rates on the market value of the instruments. The amortisation method will only be

used if it is not expected to result in a material discrepancy between the market value of the instruments and their

value calculated according to the amortisation method.

4) Financial derivative instruments which are quoted, listed or traded on an exchange or regulated market will be

valued at the last available closing or settlement price or quotation, prior to the time of valuation, on the exchange or

regulated market where the instruments are primarily quoted, listed or traded. Where instruments are quoted, listed

or traded on more than one exchange or regulated market, the Board of Directors will determine on which exchange

or regulated market the instruments are primarily quoted, listed or traded and the closing or settlement prices or

quotations on such exchange or regulated market will be used for the purpose of their valuation. Financial derivative

instruments for which closing or settlement prices or quotations are not available or representative will be valued at

their probable realisation value estimated with care and in good faith by the Board of Directors using any valuation

method approved by the Board of Directors.

5) Financial derivative instruments which are traded “over-the-counter” (OTC) will be valued daily at their fair

market value, on the basis of valuations provided by the counterparty which will be approved or verified on

a regular basis independently from the counterparty. Alternatively, OTC financial derivative instruments may be

valued on the basis of independent pricing services or valuation models approved by the Board of Directors which

follow international best practice and valuation principles. Any such valuation will be reconciled to the counterparty

valuation on a regular basis independently from the counterparty, and significant differences will be promptly

investigated and explained.

6) Notwithstanding paragraph 2) above, shares or units in target investment funds (including UCITS and UCI) will

be valued at their latest available official net asset value, as reported or provided by or on behalf of the investment

fund or at their latest available unofficial or estimated net asset value if more recent than the latest available official

net asset value, provided that the Board of Directors is satisfied of the reliability of such unofficial net asset value.

The Net Asset Value calculated on the basis of unofficial net asset values of the target investment fund may differ

from the Net Asset Value which would have been calculated, on the same Valuation Day, on the basis of the official

net asset value of the target investment fund. Alternatively, shares or units in target investment funds which are

quoted, listed or traded on an exchange or regulated market may be valued in accordance with the provisions of

paragraph 2) above.

7) The value of any other asset not specifically referenced above will be the probable realisation value estimated

with care and in good faith by the Board of Directors using any valuation method approved by the Board of

Directors.

(C) Foreign Currency Translation

Cash at banks, other net assets and liabilities and the market value of the securities in portfolio expressed in

currencies other than the currency of the Sub-Fund are converted into this currency at the exchange rate prevailing

on the date of the report. Income and expenses expressed in currencies other than the currency of the Sub-Fund are

converted into this currency at the exchange rate prevailing on the date of the transaction. Exchange gains or losses

are recorded in the Statement of Operations and Changes in Net Assets.



14

As at December 31, 2017, the exchange rates used were as follows:

1 EUR = 7.7904 CNH

1 USD = 6.5178 CNH

1 USD = 6.5118 CNY

1 USD = 7.8157 HKD

(D) Income

Dividend income is recorded at the ex-date, net of any withholding tax.

Interest income accrued and payable is recorded on a daily basis, net of any withholding tax. Discounts are accreted

and premiums are amortised as adjustments to interest on bonds and other debt instruments.

(E) Swing Pricing/Dilution Levy

In certain circumstances, subscriptions, redemptions, and conversions in a Sub-Fund may have a negative impact on

the Net Asset Value per Share. Where subscriptions, redemptions, and conversions in a Sub-Fund cause the Sub-

Fund to buy and/or sell underlying investments, the value of these investments may be affected by bid/offer spreads,

trading costs and related expenses including transaction charges, brokerage fees, and taxes. This investment activity

may have a negative impact on the Net Asset Value per Share called “dilution”. In order to protect existing or

remaining investors from the potential effect of dilution, the Fund may apply an anti-dilution levy as further

explained below. The anti-dilution levy is not expected to apply at the same time to subscription and/or redemption

orders in respect of the same Valuation Day, except in extraordinary market circumstances as determined by the

Board of Directors.

An extra charge may be levied by the Fund on investors subscribing or redeeming Shares to account for the

aggregate costs of buying and/or selling underlying investments related to such subscriptions or redemptions (called

the Anti-Dilution Levy). The rate of the Anti-Dilution Levy will be set by the Board of Directors from time to time

for each Sub-Fund so as to represent the estimated bid-offer spread of the assets in which the Sub-Fund invests and

estimated tax, trading costs, and related expenses that may be incurred by the Sub-Fund as a result of buying and/or

selling underlying investments. A periodical review will be undertaken in order to verify the appropriateness of the

Anti-Dilution Levy in view of market conditions.

The Board of Directors will determine if the Anti-Dilution Levy will apply to all investors subscribing or redeeming

Shares on a Valuation Day or if the Anti-Dilution Levy will apply only on a Valuation Day where net subscriptions

or redemptions in a Sub-Fund exceed a certain threshold set by the Board of Directors from time to time for each

Sub-Fund (called the Anti-Dilution Threshold). The Anti-Dilution Levy will have the following effect on

subscriptions or redemptions:

1) on a Sub-Fund experiencing levels of net subscriptions on a Valuation Day (i.e. subscriptions are greater in

value than redemptions) (in excess of the Anti-Dilution Threshold, if applicable) the Anti-Dilution Levy

will be added as a premium to the Subscription Price; and

2) on a Sub-Fund experiencing levels of net redemptions on a Valuation Day (i.e. redemptions are greater in

value than subscriptions) (in excess of the Anti-Dilution Threshold, if applicable) the Anti-Dilution Levy

will be deducted as a discount to the Redemption Price.

The Anti-Dilution Levy will be allocated to the assets of the Sub-Fund and will, therefore, benefit the existing or

remaining investors.



15

On February 15, 2017 a Circular Resolution was issued by the Board of Directors of the Company in reference to

the application of a anti-dilution levy that was applied to a investor that was fully redeeming out of the fund on

November 2, 2016 for the E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND. The Board has decided

to reimburse the investor a portion of the dilution levy which exceeded the actual costs incurred as a result of

disposal of the assets. The above reimbursement is reflected in Net Assets Value of the Sub-fund presented in these

Financial Statements. The dilution levy of CNH 823,136 was reimbursed to the investor on February 24, 2017.

As of December 31, 2017 the Anti-Dilution Levy did not apply.

(F) Capital Gains

Investments in securities are accounted for on a trade date basis. Realized gains and losses on sales of investments in

securities are calculated on the average cost basis.

3. ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables are mainly composed of director fees.

4. FEES AND EXPENSES

Management Fee

The Management Company will be entitled to an annual fee calculated as a percentage of the Net Asset Value of

each Sub-Fund or Share Class and paid out of the assets of the Fund and allocated to each Sub-Fund and Share

Class. The Management Fee will accrue on each Valuation Day and will be payable monthly.

For the avoidance of doubt, the Management Fee does not cover administration, portfolio management, marketing

and distribution services performed respectively by the Administrator, the Investment Manager and the Global

Distributor and/or their delegates. The Fund pays separate fees to the Administrator, the Investment Manager and

the Global Distributor.

The fee paid out monthly in arrears and based on the Net Asset Value of the Sub-Fund at each month end will not

exceed 0.05% of the Net Asset Value of each Sub-Fund per annum. However, a minimum monthly fee of EUR

1,250 for the Sub-Fund will apply if the basis point fee for the Sub-Fund using Commitment Approach does not

reach the minimum fee applicable.

Investment Manager Fee

The Investment Manager will be entitled to an annual fee equal to a percentage of the Net Asset Value of each Sub-

Fund or Share Class consistent with market practice, subject to maximum annual rates as set out in the table below.

The Investment Manager fee will accrue on each Valuation Day and will be payable monthly in arrears.

E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND

Class A (distributing ) shares* up to 1.50% per annum

Class I (accumulating) shares* up to 0.75% per annum

Class I Hedged (accumulating) shares** up to 0.75% per annum


Class I (accumulating) shares up to 1.00% per annum

* Class A (distributing) shares and Class I (accumulating) shares were liquidated on February 16, 2017.

** Class I Hedged (accumulating) shares was liquidated on August 2, 2017.



16

Performance Fee

The Investment Manager may be entitled to receive a Performance Fee with respect to certain Sub-Fund or Share

Classes. The Performance Fee is calculated and accrued at each Valuation Day on the basis of the Net Asset Value

after deducting all fees and expenses, including the Management Fee and the Investment Manager Fee (but not the

Performance Fee) and adjusting for subscriptions and redemptions during the performance period so these will not

affect the calculation of the Performance Fee. The Performance Fee is paid out of the assets of the Fund and

allocated to the relevant Sub-Funds and Share Classes.

For E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND and E FUND GREATER CHINA HIGH

DIVIDEND EQUITY FUND there will be no Performance Fees applicable to any Class of Shares.

Fees of the Depositary and the Administrator

The Depositary will be entitled to an annual fee equal to a percentage of the Net Asset Value of each Sub-Fund or

Share Class consistent with market practice in Luxembourg, subject to a maximum rate expected to amount to 9 bps

per annum. The Depositary fee will accrue on each Valuation Day and will be payable monthly in arrears. Fees paid

to the Depositary may vary depending on the nature of the investments of each Sub-Fund and the countries and/or

markets in which the investments are made.

The Administrator for the fund accounting, fund administration including domiciliation, depositary, fund

compliance and transfer agency will be entitled to an annual fee equal to a percentage of the Net Asset Value of each

Sub-Fund or Share Class consistent with market practice in Luxembourg subject to a maximum annual rate expected

to amount to 3.75 bps per annum for fund accounting and administration (including compliance). Transfer agency

and domiciliation charges are fixed amounts plus transaction charges fees charged on the basis of the investments

made by each Sub-Fund consistent with market practice in Luxembourg. The Administration Agent fee will accrue

on each Valuation Day and will be payable monthly in arrears. Further fees may be payable to the Depositary and

the Administrator in consideration of ancillary services rendered to the Fund and relating to the core services of the

Depositary and the Administrator.

Fund Accounting and Administration

The following asset charges will be charged per sub-fund based on the Total Net Asset Value of the denoted tiers.

Market Value Annual Asset Charge

(basis points) for daily NAV

First Tier Value less than or equal to USD 500 million 3.0

Second Tier Value greater than USD 500 million and less than or equal to

USD 1 billion 2.5

Third Tier Value greater than USD 1 billion 2.0

The annual Fund Accounting and Administration fee is subject to a monthly minimum per Sub-Fund. Should the

monthly asset charges generated not exceed the monthly minimum; the minimum will apply.

Type Monthly Minimum

per Sub-Fund (USD)

Monthly Minimum per Sub-Fund 2,800



17

Depositary Fees

The annual basis point charges that are applied monthly to the settled positions, on loan positions and transaction

volume as reflected in the Depositary’s system at month end are as follows:

Market Annual Asset Charge

(basis points) Transaction Charge (USD)

China A share 9.0 50

Hong Kong 3.0 18

Hong Kong Stock Connect 5.0 30

United Kingdom 2.0 20

United States 0.6 5

Safekeeping charges are subject to a monthly minimum per sub-fund. Should the monthly asset charges generated

not exceed the monthly minimum; the minimum will apply.

Type Monthly Minimum

per Sub-Fund (USD)

Monthly Minimum per Sub-Fund 1,700

Distribution Fees

The Global Distributor shall not be entitled to a distribution fee. However, distribution fees may be charged to the

Fund by Sub-distributor(s).

Directors’ fees and expenses

The members of the Board of Directors are entitled to receive a fee in consideration for their function. However,

members of the Board of Directors who are also directors, officers or employees of manager or its affiliates will be

requested to waive their fees.

Transaction Costs

Each Sub-Fund bears the costs and expenses arising from buying and selling portfolio assets and entering into other

transactions in securities or other financial instruments, such as brokerage fees and commissions and all other fees,

expenses, commissions, charges, premiums and interest paid to banks, brokers, execution agents or securities

lending agents and/or incurred in participating in any repurchase, reverse repurchase and securities lending

programs, collateral management fees and associated costs and charges, exchange fees, taxes, levies and stamp

duties chargeable in connection with transactions in securities or other financial, and any other transaction-related

expenses approved by the Investment Manager.

Formation Expenses

Cost related to the establishment of the Fund or a new Sub-Fund will be borne by the Fund or such Sub-Fund and

may be amortised over a period of up to five (5) years from the date of incorporation. New Sub-Funds created after

the incorporation and launch of the Fund will participate in the non-amortised formation expenses of the Fund.

5. TAXATION

The SICAV is subject to the “Taxe d'abonnement” at a rate of 0.05% per annum (reduced to 0.01% on Classes

comprising only institutional investors) based on the Net Asset Value of the Fund at the end of the relevant quarter,

calculated and paid quarterly. The tax is not applicable for the portion of the assets invested in other Luxembourg

undertakings for collective investment already subject to the “Taxe d'abonnement”.



18

6. SECURITIES FINANCING TRANSACTION REGULATION (“SFTR”)

As at December 31, 2017, the SICAV does not use any instruments or transactions falling into the scope of SFTR.

7. INVESTMENTS IN DERIVATIVE CONTRACTS

The Fund may use financial derivative instruments such as options, futures, forwards and swaps or any variation or

combination of such instruments, for hedging or investment purposes, in accordance with the conditions set out in

the Prospectus and the investment objectives and policy of the relevant Sub-Fund set out in its Supplement. The use

of financial derivative instruments may not, under any circumstances, cause a Sub-Fund to deviate from its

investment objectives.

The types of derivative transactions that each of the Sub-funds can enter into are outlined in detail in the

Supplements to the Prospectus.

As at December 31, 2017, the Fund did not hold derivatives instruments.

8. STATEMENT OF CHANGES IN PORTFOLIO COMPOSITION (Unaudited)

The statement the changes in the schedule of investments for the period ended December 31, 2017, can be obtained

free of charge upon investor’s request at the registered office of the Management Company.

9. SIGNIFICANT EVENTS

Gaohui Huang was the Chairman of E FUND SICAV until December 5, 2017. Since December 6, 2017, Chen Hong

Chu Craig became the new Chairman of E FUND SICAV.

10. SUBSEQUENT EVENTS

Mr Feng SHI was nominated to the position of the E FUND SICAV Board Member as of March 22, 2018.



19

OTHER INFORMATION TO SHAREHOLDERS (UNAUDITED)

REMUNERATION

FundRock Management Company S.A. (“FundRock”) has established and applies a remuneration policy in

accordance with the principles laid out under the AIFMD and UCITS V directive, and any related legal & regulatory

provisions applicable in Luxembourg. The remuneration policy is aligned with the business strategy, objectives,

values and interests of the Management Company and the Funds that it manages and of the investors in such Funds,

and which includes, inter alia, measures to avoid conflicts of interest; and it is consistent with and promotes sound

and effective risk management and does not encourage risk taking which is inconsistent with the risk profiles, rules

or instruments of incorporation of the Funds that the Management Company manages.

As an independent management company relying on a full-delegation model (i.e. delegation of the collective

portfolio management function), FundRock ensures that its remuneration policy adequately reflects the

predominance of its oversight activity within its core activities. As such, it should be noted that FundRock’s

employees who are identified as risk-takers under UCITS V are not remunerated based on the performance of the

funds under management.

A paper version of the remuneration policy is made available free of charge to investors at FundRock’s registered

office.

The amount of remuneration for the financial year ending December 31, 2016

paid by the FundRock to its staff EUR 5,598,600

Fixed remuneration EUR 5,425,050

Variable remuneration EUR 173,550

Number of beneficiaries 61

The aggregated amount of remuneration for the financial year ending December 31, 2016 paid by FundRock to

Identified staff/ risk takers is as follows:

Identified staff/risk takers EUR 1,736,085

Other risk takers EUR Nil

The total amount of remuneration is based on a combination of the assessment of the performance of the individual,

the overall results of FundRock, and when assessing individual performance, financial as well as non-financial

criteria are taken into account.

The Policy is subject to annual review by the Compliance Officer and the update is performed by HR department of

FundRock and is presented for review to the Remuneration Committee and approval by the Board of FundRock.

The policy was last updated in December 2016, to reflect the additional requirements of the “UCITS V” Directive.

Global exposure calculation method in accordance with the provisions of CSSF Circular 11/512.

Commitment approach:

The global risk on derivatives has been determined according to the commitment approach during the financial year

ending December 31, 2017 for the following Sub-Funds:

- E FUND COLLABRIUM HIGH QUALITY RMB BOND FUND*

- E FUND GREATER CHINA HIGH DIVIDEND EQUITY FUND


PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg T : +352 494848 1, F : +352 494848 2900, www.pwc.lu Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256) R.C.S. Luxembourg B65 477 - TVA LU25482518

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Audit report

To the Shareholders of E FUND SICAV

Our opinion

In our opinion, the accompanying financial statements give a true and fair view of the financial position of E FUND SICAV and of each of its sub-funds (the “Fund”) as at 31 December 2017, and of the results of their operations and changes in their net assets for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements.

What we have audited

The Fund’s financial statements comprise:

the statement of net assets as at 31 December 2017;

the schedule of investments as at 31 December 2017;

the statement of operations and changes in net assets for the year then ended;

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

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under those Law and standards are further described in the “Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the financial statements” section of our report.

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

We are independent of the Fund in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the financial statements. We have fulfilled our other ethical responsibilities under those ethical requirements.

Other information

The Board of Directors of the Fund is responsible for the other information. The other information comprises the information stated in the Annual report but does not include the financial statements and our audit report thereon.

21

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

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors of the Fund for the financial statements

The Board of Directors of the Fund is responsible for the preparation and fair presentation of the financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as the Board of Directors of the Fund determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors of the Fund is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors of the Fund either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the financial statements

The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

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

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obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Fund's internal control;

evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the Board of Directors of the Fund;

conclude on the appropriateness of the Board of Directors of the Fund's use of the going concern basisof accounting and, based on the audit evidence obtained, whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on the Fund's ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in ouraudit t'eport to the related disclosures in the financial statements or, if such disclosures are inadequate,to rnodi$r our opinion. Our conclusions are based on the audit evidence obtained up to the date of ouraudit report. However, future events or conditions may cause the Fund to cease to continue as a goingconcerlr;

. evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identiff during our audit.

rhouseCoopers, Soci6td coop6rative Luxembourg, Bo April zor8by

V Arnold

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