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VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND

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

Value Partners Limited9th Floor, Nexxus Building 41 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

VALUE PARTNERS HIGH-DIVIDEND STOCKS FUND(A Cayman Islands Unit Trust)

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

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

Pages

General information 2-3

Manager’s report 4-12

Statement of responsibilities of the Manager and the Trustee 13

Trustee’s report 14

Independent auditor’s report 15-16

Statement of financial position 17-18

Statement of comprehensive income 19

Statement of changes in net assets attributable to unitholders 20

Statement of cash flows 21-22

Notes to the financial statements 23-48

Investment portfolio (unaudited) 49-58

Investment portfolio movements (unaudited) 59

Performance record (unaudited) 60

GENERAL INFORMATION


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



ManagerValue Partners Limited9th Floor, Nexxus Building41 Connaught Road CentralHong Kong

Directors of the ManagerMr Cheah Cheng HyeMr Ho Man KeiMr So Chun Ki Louis

Trustee, Registrar, Administrator and Principal OfficeBank of Bermuda (Cayman) LimitedP.O. Box 513 GTHSBC House68 West Bay RoadGrand Cayman KY1-1106Cayman Islands

Custodian and Registrar’s Agent HSBC Institutional Trust Services (Asia) Limited1 Queen’s Road CentralHong Kong

Legal AdvisorsWith respect to Cayman Islands lawMaples and Calder53rd Floor, The Center99 Queen’s Road CentralHong Kong

With respect to Hong Kong lawMallesons Stephen Jaques13th Floor, Gloucester TowerThe Landmark15 Queen’s Road CentralHong Kong

AuditorPricewaterhouseCoopersP.O. Box 258George TownGrand Cayman, KY1-1104Cayman Islands

Information available from:Value Partners Limited9th Floor, Nexxus Building41 Connaught Road CentralHong Kong

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


GENERAL INFORMATION (Continued)


33A N N U A L R E P O R T 0 1 1


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 of year end 2010.

Value Partners High-Dividend Stocks Fund

2012 • Lipper Fund Awards 2012 Best Asia Pacific (Ex-Japan) Equity – 5 Years – LipperΩ

2011 • Top 100 Funds of the Year 2010 – Asia Ex-Japan Equity – Benchmark Magazine#

2010 • Lipper Fund Awards 2010 Best Asia Pacific (Ex-Japan) Equity Fund over 3 years – Lipper

Ω Based on data as of year end 2011.# Based on fund size, track record, Morningstar's Star rating and one year absolute ranking as at month end

October 2010. Based on data as of year end 2009.

MANAGER’S REPORT


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



Value Partners High-Dividend Stocks Fund dropped 13.6% in 2011, a year marked by global market turmoil and high volatility. For reference, the MSCI Asia Pacific (ex-Japan) Index fell by 18.0% in 2011. While the market performance was lackluster in the year, there were only a handful of funds that beat the market indices and we are grateful that Value Partners is on this list of funds that outperformed. (Source: Morningstar, as at 31 December 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 10 years ago, the Fund has made a profit in 8 of the 10 years, with an annualized return of 18.9%. For reference, the MSCI Asia Pacific (ex-Japan) Index saw 7 years of positive return over the same period. (For a table of the annual returns of Value Partners High-Dividend Stocks Fund as well as the MSCI Asia Pacific (ex-Japan) 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.

Value Partners High-Dividend Stocks Fund: Biggest contributors to 2011 return(Fund size: US$547 million end-2011; US$453 million end-2010)

Gain in 2011 % return in 2011 (in US$ million) (including dividends)China National Building Material (Construction materials) 5.77 up 64.0%Brilliance China Automotive (Auto manufacturing) 5.00 up 28.5%Great Wall Motor (Auto manufacturing) 3.64 up 27.8%Loco London Gold 2.57 up 4.6%Chow Sang Sang (Jewellery chain) 2.49 up 23.5%

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)


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


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.



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



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




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


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.

Taiwan-related stocks (constituting 5% of the portfolio), are often overlooked considering their

solid fundamentals – domestic consumption in Taiwan being driven by positive sentiment and

supported by improved income. As the first in a host of leadership changes this year, Taiwan’s

elections brought positive news to the region with President Ma Ying-jeou being reelected. The

result sent a very positive signal to the market – President Ma Ying-jeou won his second term by

7%, a wider-than expected margin, while his Kuomingtang Party (KMT) also managed to secure

a majority in the legislative council. The renewed victory of President Ma removed the market

overhang, since it indicates the general approval of Ma’s open-up policy in cross-strait relations

and pro-economic growth stance.

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.



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



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 prospectus

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.




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


Appendix I: Performance of Value Partners High-Dividend Stocks Fund and MSCI Asia Pacific (ex-Japan) Index – 2 September 2002 to 31 December 2011

Value PartnersHigh-Dividend

Stocks FundMSCI Asia Pacific

(ex-Japan) Index

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 11%

up 81%

up 8%

up 12%

up 36%

up 43%

down 47%

up 84%

up 27%

down 14%

up 18.9%

21.0%

0.79

down 5%

up 44%

up 19%

up 17%

up 29%

up 33%

down 53%

up 68%

up 15%

down 18%

up 9.9%

24.8%

0.31

^ From 2 September 2002.

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.



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



Appendix II: Value Partners High-Dividend Stocks Fund: 5 biggest holdings of securities as at 31 December 2011

Stock IndustryValuation(2012 Estimates) Remarks

China ShenhuaEnergy(Code: 1088 HK)

Market cap:US$86.3 billion

Coal mining Price: HK$33.70P/E: 10.6xP/B: 2.0xYield: 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.

Hutchison Whampoa(Code: 13 HK)


Conglomerate Price: HK$65.05P/E: 12.6xP/B: 0.8xYield: 3.4%

Hutchison Whampoa Ltd (“HWL”) is an investment holding company. Its operations consist of five businesses: ports and related services; property and hotels; retail; energy and telecommunications. Hutchison is a market leader in most of its businesses and what distinguishes Hutchison from other Hong Kong and China conglomerates is its management’s skill at deal making and efficient operations. Not only is Chairman Li Ka-Shing known for his entrepreneurial spirit, his track record in entering or exiting businesses is solid. Hutchison is one of the largest and most efficient port operators in the world; its retail and property businesses have strong brand presence in Asia and Europe; it also holds valuable oil investments and electricity businesses in Europe and Hong Kong which are effectively duopolies. Hutchison’s telecommunication’s divisions are no longer a drag on its earnings. After years of start-up losses, Hutchison’s European 3G operations reached EBIT breakeven last year, while much of the Asian operations have been streamlined. We believe Hutchison will continue to deliver substantial value to its shareholders.




1 11 1A N N U A L R E P O R T 2 0 1 1


Stock IndustryValuation(2012 Estimates) Remarks

Industrial & Commercial Bank of China(Code: 1398 HK)


Banking Price: HK$4.61P/E: 5.9xP/B: 1.2xYield: 6.0%

Industrial & Commercial Bank of China (“ICBC”) is the largest commercial bank in China in terms of assets, loans and deposits. An extensive network of 16,487 branches and a huge customer base gives ICBC scale advantage in building a consumer banking franchise, allowing it to rely less heavily on interest income in the long run. Already, a quarter of the bank’s income comes from fees and so despite its low loan-to-asset ratio, its return on assets and return on equity are among the best in the industry.

PetroChina(Code: 857 HK)


Energy Price: HK$9.67P/E: 8.2xP/B: 1.3xYield: 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.

Shenzhou International Group(Code: 2313 HK)


Consumer durables and apparel

Price: HK$10.54P/E: 5.4xP/B: 1.4xYield: 6.1%

Shenzhou International is one of the largest garment manufacturers in China, with major customers such as Uniqlo, Nike and Adidas on an OEM basis. Its key competitive advantage is quick order turnaround time, a key performance indicator which is very important to brand owners, especially in today’s fast-paced fashion world. Due to a vertically integrated model (from yarn spinning, fabrics knitting, dyeing, printing, to final garment completion), its delivery time is significantly shorter than its peers. The company enjoys lower procurement costs due to bulk purchases. It is still growing while smaller players are closing down.

Note: The above investments made up 24.5% of Value Partners High-Dividend Stocks 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.

Appendix II: Value Partners High-Dividend Stocks Fund: 5 biggest holdings of securities as at 31 December 2011 (Continued)



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


Value Partners High-Dividend Stocks FundNAV per unit = US$50.38 (as at 31 December 2011)

Since launch return compared to indexFrom 2 September 2002 to 31 December 2011

+403.8%

+141.0%

-100%

0%

100%

200%

300%

400%

500%

600%

8/02 12/03 4/05 8/06 12/07 4/09 8/10 12/11

Value Partners H igh-D ividend S tocks Fund

M SC I Asia Pacific (ex-Japan) Index

Statement of reSponSibilitieS of the manager and the truStee


1 31 3A N N U A L R E P O R T 2 0 1 1


manager’s responsibilities

The Manager, Value Partners Limited, is required by the Code on Unit Trusts and Mutual Funds

established by the Securities and Futures Commission of Hong Kong and the Trust Deed dated

7 August 2002 (as amended) to prepare financial statements for each annual accounting period

which give a true and fair view of the financial position of Value Partners High-Dividend Stocks

Fund (the “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 Fund will continue in operation

unless it is inappropriate to presume this.

The Manager is also required to manage the Fund in accordance with the Trust Deed dated 7

August 2002 (as amended) and take reasonable steps for the prevention and detection of fraud

and other irregularities.

trustee’s responsibilities

The Trustee, Bank of Bermuda (Cayman) Limited, is required to:

• ensure that the Fund is managed by the Manager in accordance with the Trust Deed

dated 7 August 2002 (as amended) 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 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 Fund.

TrusTee’s reporT


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


We hereby confirm that, in our opinion, the Manager, Value Partners Limited, has, in all material

respects, managed Value Partners High-Dividend Stocks Fund in accordance with the provisions

of the Trust Deed dated 7 August 2002 (as amended) for the year ended 31 December 2011.

For and on behalf of

Bank of Bermuda (Cayman) Limited

Trustee

26 April 2012

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE AND THE UNITHOlDERS OF VAlUE PARTNERS HIGH-DIVIDEND STOCKS FUND


1 51 5A N N U A L R E P O R T 2 0 1 1


Report on the financial statements

We have audited the accompanying financial statements of Value Partners High-Dividend Stocks

Fund (the “Fund”) set out on pages 17 to 48, which comprise the statement of financial position

as of 31 December 2011, and the statement of comprehensive income, statement of changes in

net assets attributable to unitholders and statement of cash flows for the year then ended, and a

summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

The Trustee and the Manager (the “Management”) of the Fund are responsible for the preparation

and fair presentation of financial statements in accordance with International Financial

Reporting Standards, and are responsible for ensuring that the financial statements have been

properly prepared in accordance with the relevant disclosure provisions of the Trust Deed dated

7 August 2002 (as amended) (the “Trust Deed”), and the relevant financial statements disclosure

provisions specified in Appendix E of the Code on Unit Trusts and Mutual Funds established by

the Securities and Futures Commission of Hong Kong (the “SFC Code”), and for such internal

control as the Management determines is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

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

We conducted our audit in accordance with International Standards on Auditing. 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 AUDITOR’S REPORT TO THE TRUSTEE AND THE UNITHOlDERS OF VAlUE PARTNERS HIGH-DIVIDEND STOCKS FUND (Continued)


1 6A N N U A L R E P O R T 2 0 1 1


Auditor’s 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 the auditor’s judgment,

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

due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the Fund’s preparation and fair presentation of financial statements 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 Fund’s internal control. An audit also includes evaluating

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

made by management, 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 accompanying financial statements present fairly, in all material respects, the

financial position of the Fund as of 31 December 2011, and its financial performance and its cash

flows for the year then ended in accordance with International Financial Reporting Standards.

Report on other legal and regulatory disclosure requirements

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

relevant disclosure provisions of the Trust Deed and the relevant financial statements disclosure

provisions specified in the SFC Code.

PricewaterhouseCoopersCayman Islands

26 April 2012

STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2011


1 71 7A N N U A L R E P O R T 2 0 1 1


2011 2010 Note US$ US$

AssetsFinancial assets at fair value through profit or loss 3(d) 521,525,308 446,266,751Amounts receivable on sales of investments 2,206,678 699,986Amounts receivable on issue of units 1,279,311 499,250Dividends and interest receivables 191,221 297,884Other receivables 4,233 –Margin deposits 4,275,497 113Bank balances 52,089,989 35,255,691

Total assets 581,572,237 483,019,675

LiabilitiesFinancial liabilities at fair value through profit or loss 3(d) 29,114,725 310,000Amounts payable on purchase of investments 5,554,624 5,729,116Amounts payable on redemption of units 1,252,645 1,321,869Management fee and performance fee payable 582,252 11,189,626Accruals and other payables 234,623 156,614

Total liabilities 36,738,869 18,707,225

Net assets attributable to unitholders 5 544,833,368 464,312,450

The notes on pages 23 to 48 are an integral part of these financial statements.

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


1 8A 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) 5 547,544,265 465,770,042– Adjustment for different bases adopted by the Fund in arriving at the net assets attributable to unitholders 5 (2,710,897 ) (1,457,592 )

Net asset value per unit (at last traded prices) with 10,867,474 (2010: 7,983,977) units outstanding 50.38 58.34

Signed by:Value Partners Limited, Manager

Bank of Bermuda (Cayman) Limited, Trustee

The notes on pages 23 to 48 are an integral part of these financial statements.

STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2011


1 91 9A N N U A L R E P O R T 2 0 1 1


2011 2010 Note US$ US$

IncomeDividends 16,094,486 8,007,386Interestonbankdeposits 49,861 6,185Netrealisedgainoninvestments 3,070,478 45,377,904Changeinunrealisedgain/lossoninvestments (96,461,615) 38,462,791Otherincome 208,049 410,669Netforeignexchange(loss)/gain (883,774) 439,491

Total net (loss)/income (77,922,515) 92,704,426

ExpensesPerformancefee 6(b) – 10,679,025Managementfee 6(a) 7,074,216 3,947,661Transactioncosts 3,040,440 1,505,176Trusteefee 6(c) 983,796 574,091Stockborrowingfee 288,375 149,584Safecustodyandbankcharges 141,308 81,354Dividendsonsecuritiesborrowed 89,385 55,900Auditor’sremuneration 35,300 27,790Legalandprofessionalfees 32,364 4,053Otheroperatingexpenses 152,602 68,708

Total operating expenses 11,837,786 17,093,342

(Loss)/profit before tax (89,760,301) 75,611,084

Withholdingtaxondividendsandother investmentincome (1,151,592) (591,857)

Total comprehensive (loss)/income (90,911,893) 75,019,227

Thenotesonpages23to48areanintegralpartofthesefinancialstatements.

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERSFOR 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$

Net assets attributable to unitholders as at 1 January 464,312,450 247,507,307

Issueofunits 363,979,243 208,516,038

Redemptionofunits (192,546,432) (66,730,122)

Net increase from unit transactions 171,432,811 141,785,916

Totalcomprehensive(loss)/income (90,911,893) 75,019,227

Net assets attributable to unitholders as at 31 December 544,833,368 464,312,450


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2011


2 12 1A N N U A L R E P O R T 2 0 1 1


2011 2010 US$ US$

Cash flows from operating activitiesTotalcomprehensive(loss)/income (90,911,893) 75,019,227

Adjustmentsfor:

Dividendsandinterestonbankdeposits (16,144,347) (8,013,571)

Stockborrowingfeeanddividendson

securitiesborrowed 377,760 205,484

Withholdingtaxondividendsandother

investmentincome 1,151,592 591,857

(105,526,888) 67,802,997

Increaseinfinancialassetsatfairvalue

throughprofitorloss (75,258,557) (214,243,042)

Increaseinfinancialliabilities

atfairvaluethroughprofitorloss 28,804,725 310,000

(Increase)/decreaseinamountsreceivable

onsalesofinvestments (1,506,692) 581,506

(Decrease)/increaseinamountspayableon

purchaseofinvestments (174,492) 5,305,470

(Increase)/decreaseinotherreceivables (4,233) 10,466

(Increase)/decreaseinmargindeposits (4,275,384) 1,678,688

(Decrease)/increaseinmanagementfeeandperformance

feepayable,accrualsandotherpayables (10,536,606) 10,988,847


STATEMENT OF CASH FLOWS (Continued)FOR THE YEAR ENDED 31 DECEMBER 2011


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


2011 2010 US$ US$

Cashusedinoperations (168,478,127) (127,565,068)

Dividendsandinterestonbankdepositsreceived 16,251,010 8,064,441

Stockborrowingfeeanddividendson

securitiesborrowedpaid (377,760) (205,292)

Withholdingtaxondividendsandother

investmentincomepaid (1,144,351) (584,621)

Net cash outflow from operating activities (153,749,228) (120,290,540)

Cash flows from financing activitiesProceedsfromissueofunits 363,199,182 208,021,787

Paymentsonredemptionofunits (192,615,656) (65,758,551)

Net cash inflow from financing activities 170,583,526 142,263,236

Net increase in cash and cash equivalents 16,834,298 21,972,696

Cashandcashequivalentsasat1January 35,255,691 13,282,995

Cash and cash equivalents as at 31 December, representing bank balances 52,089,989 35,255,691


NOTES TO THE FINANCIAL STATEMENTS


2 32 3A N N U A L R E P O R T 2 0 1 1


1 GENErAL INFOrMATION

Value Partners High-Dividend Stocks Fund (the “Fund”) is an open-ended unit trust

established by the Trust Deed dated 7 August 2002 (as amended). The Fund is registered

under the Mutual Funds Law (revised) of the Cayman Islands, governed by the laws of

the Cayman Islands and regulated by the Cayman Islands Monetary Authority. Besides,

the Fund is authorised by the Securities and Futures Commission of Hong Kong and is

required to comply with the Code on Unit Trusts and Mutual Funds established by the

Securities and Futures Commission of Hong Kong (the “Code”).

The Fund’s investment objective is to provide capital appreciation and regular income

to unitholders by investing primarily in a portfolio of relatively higher yielding debt

and equity securities in the Asian region. The Fund’s investment activities are managed

by Value Partners Limited (the “Manager”). The Fund’s administration is delegated to

Bank of Bermuda (Cayman) Limited (the “Trustee”). The principal office of the Fund is

PO Box 513 GT, HSBC House, 68 West Bay Road, Grand Cayman KY1-1106, Cayman

Islands.

2 SIGNIFICANT ACCOuNTING pOLICIES

The principal accounting policies applied in the preparation of these financial statements

are set out below. These policies have been consistently applied to all years presented,

unless otherwise stated.

(a) Basis of preparation

The financial statements have been prepared in accordance with International

Financial Reporting Standards (“IFRS”). They have been prepared under the

historical cost convention, as modified by the revaluation of financial assets and

liabilities at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use

of accounting estimates. It also requires the exercise of judgement in the process

of applying the Fund’s accounting policies.

NOTES TO THE FINANCIAL STATEMENTS (Continued)


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



2 SIGNIFICANT ACCOuNTING pOLICIES (Continued)

(a) Basis of preparation (Continued)

All references to net assets throughout this document refer to net assets

attributable to unitholders unless otherwise stated.

Standards and amendments to existing standards effective 1 January 2011

IAS 24, “Related party disclosures”, clarifies the definitions of a related party.

The new definition clarifies in which circumstances persons and key management

personnel affect related party relationships of an entity. The adoption of the

amendment did not have any impact on the financial position or performance

of the Fund.

Standards that are not yet effective and have not been early adopted by

the Fund

IFRS 13, “Fair value measurements” (effective from 1 January 2013). The

standard improves consistency and reduces complexity by providing a precise

definition of fair value and a single source of fair value measurement and

disclosure requirements for use across IFRS. The requirements do not extend the

use of fair value accounting but provide guidance on how it should be applied

where its use is already required or permitted by other standards within IFRS.

If an asset or a liability measured at fair value has a bid price and an ask price,

the standard requires valuation to be based on a price within the bid-ask spread

that is most representative of fair value and allows the use of mid-market pricing

or other pricing conventions that are used by market participants as a practical

expedient for fair value measurement within a bid-ask spread. The Manager is

still assessing the impact on the Fund’s financial statements.




2 52 5A N N U A L R E P O R T 2 0 1 1



(a) Basis of preparation (Continued)

Standards that are not yet effective and have not been early adopted by

the Fund (Continued)

IFRS 9, “Financial instruments Part 1: Classification and measurement”

(effective from 1 January 2015). IFRS 9 specifies how an entity should classify

and measure financial assets and liabilities, including some hybrid contracts.

The standard improves and simplifies the approach for classification and

measurement of financial assets compared with the requirements of IAS 39.

Most of the requirements in IAS 39 for classification and measurement of

financial liabilities were carried forward unchanged. The standard applies a

consistent approach to classifying financial assets and replaces the numerous

categories of financial assets in IAS 39, each of which had its own classification

criteria. The standard is not expected to have a significant impact on the Fund’s

financial position or performance, as it is expected that the Fund will continue

to classify its financial assets and liabilities (both long and short) as being at fair

value through profit or loss.

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

(i) Classification

The Fund classifies its investments in debt and equity securities, and related derivatives, as financial assets or liabilities at fair value through profit or loss. These financial assets and liabilities are classified as held for trading.

The Fund makes short sales in which a borrowed security is sold in anticipation of a decline in the market value of that security, or it may use short sales for various arbitrage transactions. Short sales are classified as financial liabilities at fair value through profit or loss.



2 6A N N U A L R E P O R T 2 0 1 1




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

(ii) Recognition/derecognition

Regular-way purchases and sales of investments are recognised on the

trade date – the date on which the Fund commits to purchase or sell

the investment. Investments are derecognised when the rights to receive

cash flows from the investments have expired or the Fund has transferred

substantially all risks and rewards of ownership.

(iii) Measurement

Financial assets and liabilities at fair value through profit or loss are

initially recognised at fair value. Transaction costs are expensed in the

statement of comprehensive income. Subsequent to initial recognition,

all financial assets and liabilities at fair value through profit or loss are

measured at fair value. Gains and losses arising from changes in the fair

value of financial assets and liabilities at fair value through profit or loss

are presented in the statement of comprehensive income in the year in

which they arise. Dividend income from financial assets at fair value

through profit or loss is recognised in the statement of comprehensive

income within dividend income when the Fund’s right to receive

payments is established.

Dividend expense on short sales of equity securities is included in the

statement of comprehensive income within dividends on securities

borrowed.




2 72 7A N N U A L R E P O R T 2 0 1 1



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

(iv) Fair value estimation

The fair value of financial instruments traded in active markets (such

as publicly traded derivatives and trading securities) is based on quoted

market prices at the year end date. The quoted market price used for

financial assets held by the Fund is the current bid price; while the

quoted market price for financial liabilities is the current ask price.

The fair value of financial assets and liabilities that are not traded in an

active market (for example, over-the-counter derivatives) is determined

by using broker quotes or valuation techniques. Details of the fair value

estimation of these securities are discussed in note 3(d).

Investments in unlisted funds are fair valued at their closing net asset

value as provided by the respective administrators.

(c) Income

Dividend income is recognised when the right to receive payment is

established.

Interest income is recognised in the statement of comprehensive income on a

time-proportion basis using the effective interest method.

(d) Expenses

Expenses are accounted for on an accrual basis.



2 8A N N U A L R E P O R T 2 0 1 1




(e) Foreign currency translation

The financial statements are presented in United States dollar, which is the Fund’s functional and presentation currency.

The Fund has adopted United States dollar as the functional currency of the Fund since the subscriptions and redemptions of the Fund are mainly transacted in United States dollars. In addition, performance measurement and reporting to the unitholders as well as settlement of fees and expenses are carried out in United States dollars.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of assets and liabilities denominated in

foreign currencies are recognised in the statement of comprehensive income.

(f) Taxation

The Fund currently incurs withholding tax imposed by certain countries

on investment income and capital gains. Such income is recorded gross of

withholding tax in the statement of comprehensive income.

(g) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks,

other short-term highly liquid investments with original maturities of 3 months

or less.

3 FINANCIAL rISk MANAGEMENT

The Fund’s activities expose it to a variety of financial risks: market risk (including

foreign exchange risk, price risk and interest rate risk), credit and counterparty risk and

liquidity risk.




2 92 9A N N U A L R E P O R T 2 0 1 1


3 FINANCIAL rISk MANAGEMENT (Continued)

The risks and respective risk management policies employed by the Fund to manage

these risks are discussed below:

(a) Market risk

(i) Foreign exchange risk

The Fund may hold assets denominated in currencies other than the United States dollar, the functional currency, it may therefore be exposed to foreign exchange risk. The Fund’s overall currency positions are monitored on a daily basis by the Manager.

The tables below include both monetary and non-monetary assets and liabilities held in foreign currencies together with the percentage of reasonable possible change in foreign currencies and the estimated impact on net assets.

Total net foreign currency exposures Non- Estimated monetary Monetary percentage impact on net assets net assets change net assets US$ US$ % US$ equivalent equivalent

As at 31 December 2011Australian dollar – 1,012,945 +/-5 +/-50,647Hong Kong dollar1 395,488,608 40,327,142 +/-0 –Indonesian rupiah 15,383,166 3,548,142 +/-5 +/-946,565Japanese yen 8,470,466 – +/-5 +/-423,523Korean won – 75 +/-5 +/-4Malaysian ringgit 7,990,635 – +/-5 +/-399,532Philippine peso 4,742,719 3,257,594 +/-5 +/-400,016Renminbi – 21,333,259 +/-5 +/-1,066,663Singapore dollar 6,422,590 2,486,756 +/-5 +/-445,467Taiwan dollar 27,289,702 10,857,229 +/-5 +/-1,907,347Thailand Baht 16,295,937 – +/-5 +/-814,797

482,083,823 82,823,142



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




(a) Market risk (Continued)

(i) Foreign exchange risk (Continued)

Total net foreign currency exposures Non- Estimated monetary Monetary percentage impact on net assets net assets change net assets US$ US$ % US$ equivalent equivalent

As at 31 December 2010Australian dollar – 2,168 +/-5 +/-108Hong Kong dollar1 277,759,433 8,287,219 +/-0 –Indonesian rupiah 6,128,188 – +/-5 +/-306,409Korean won 20,623,317 140,737 +/-5 +/-1,038,203Malaysian ringgit 5,058,682 – +/-5 +/-252,934Philippine peso – 4,003,672 +/-5 +/-200,184Renminbi – 4,987,870 +/-5 +/-249,394Singapore dollar 10,659,322 2,020,810 +/-5 +/-634,007Taiwan dollar 31,580,658 8,077,070 +/-5 +/-1,982,886Thailand Baht 7,793,083 – +/-5 +/-389,654

359,602,683 27,519,546

1 The Hong Kong dollar is currently linked to the United States dollar, the functional currency, within a narrow range, and is therefore not exposed to significant foreign exchange risk.




3 13 1A N N U A L R E P O R T 2 0 1 1




(ii) Price risk

The Manager manages price risk primarily through diversification of the portfolio and through a careful selection of securities and other financial instruments within specified limits as stated in the Explanatory Memorandum. The Fund’s overall market positions are monitored on a daily basis by the Manager.

The Fund’s overall market exposures were as follows:

% of net assets 2011 2010

Financial assets at fair value through profit or loss

Listed equity securitiesChina 1.35 4.27Hong Kong– “H” shares 21.59 17.54– Red chips 8.17 10.12– Others 23.51 28.51Indonesia 2.82 1.32Japan 1.55 –Malaysia 1.47 1.09Philippines 0.87 –Singapore 1.70 4.72South Korea – 4.20Taiwan 5.01 6.80Thailand 2.99 1.68

71.03 80.25

Quoted debt securitiesAustralian dollar 0.19 –Hong Kong dollar 0.90 1.04Indonesian rupiah 0.65 –Philippine peso 0.60 0.86Renminbi 3.92 1.07Singapore dollar 0.26 0.58United States dollar 9.00 8.59

15.52 12.14



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





(ii) Price risk (Continued)


Listed equity warrants – 0.00

put options 0.00 –

Listed investment funds – 0.25

unlisted investment funds 0.03 0.05

Gold securities 9.14 3.42

Total financial assets at fair value through profit or loss 95.72 96.11

Financial liabilities at fair value through profit or loss

Listed equity securitiesHong Kong– “H” shares (0.67 ) –– Red chips (2.63 ) –– Others (1.76 ) –Singapore (0.24 ) (0.07 )

(5.30 ) (0.07 )

Futures contracts (0.04 ) –

Total financial liabilities at fair value through profit or loss (5.34 ) (0.07 )




3 33 3A N N U A L R E P O R T 2 0 1 1





The table below shows the analysis of equity securities by industry.

2011 2010 % %

Energy 24.05 8.09

Consumer discretionary 21.09 21.36

Financials 18.24 12.45

Industrials 9.46 11.59

Consumer staples 7.40 10.53

Information technology 6.01 13.13

REITs 2.98 5.58

Healthcare 0.43 4.72

Others 10.34 12.55

100.00 100.00

The Fund may sell securities of an issuer short. Short sales made by the Fund

involve certain risks and special considerations. Possible losses from short sales

differ from losses that could be incurred from a purchase of a security, because

losses from short sales may be unlimited, whereas losses from purchases cannot

exceed the total amount invested.

The table below summarises the sensitivity of the Fund’s portfolio of listed

equity securities to equity price movements. The analysis is based on the

assumptions that the MSCI Asia Pacific (ex-Japan) Index increased/decreased

with all other variables held constant and that the fair value of the Fund’s

portfolio of listed equity securities and notional values of the Fund’s futures

contracts moved according to their historical correlation with the index. The

Fund is not directly correlated with any Asian market indices. The index should

be used for guidance and performance comparison purposes only. The Manager

does not manage price risk with reference to any market index.



3 4A N N U A L R E P O R T 2 0 1 1






Estimated impact on

percentage change net assets

2011 2010 2011 2010

% % US$ US$

MSCI Asia Pacific

(ex-Japan) Index +/-30 +/-30 +/– 80,414,016 +/– 102,563,470

As at 31 December 2011 and 2010, the Fund also invested in gold

securities and was therefore exposed to commodity price risk. The table

below summarises the sensitivity of the Fund’s investments in gold

securities to gold price movements.

Estimated impact on

percentage change net assets

2011 2010 2011 2010

% % US$ US$

Gold price +/-5 +/-5 +/– 2,490,396 +/– 794,360

(iii) Interest rate risk

The majority of the Fund’s financial assets and liabilities are non-interest

bearing. As a result, the Fund is not subject to significant amounts of

risk due to fluctuations in the prevailing levels of market interest rates.

Cash at banks is subject to interest rate risk as the return is derived from

the current inter-bank lending rates; however, the interest rate risk is

not actively managed as it is not considered significant. Debt securities

are also subject to interest rate risk; however, the interest rate risk is

not actively managed as it is not considered significant. As a result, no

sensitivity analysis was deemed necessary.




3 53 5A N N U A L R E P O R T 2 0 1 1



(b) Credit and counterparty risk

The 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 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.

The table below shows the exposures to major counterparties at the year end date. The credit ratings are issued by Moody’s.

Counterparty 2011 2010 US$ US$

Cash with banks and brokers Aa1 – 113 Aa2 52,699,597 35,190,086 A1 3,600,298 – A3 65,591 65,605Investments placed with custodian Aa2 492,632,206 445,956,751 A2 8,738 –

The table below summarises the credit quality of the Fund’s portfolio of debt securities at the year end date. The credit ratings are issued by Moody’s.

Credit rating 2011 2010 US$ US$

Baa3 1,365,765 –Ba2 1,000,967 –Ba3 6,531,496 7,206,427B1 5,209,271 2,122,964B2 11,423,485 4,876,187Unrated* 58,962,549 42,165,169

84,493,533 56,370,747

* The Manager considers there is no significant risk on the unrated debt securities at the year end date as there was no default history on the unrated debt securities in the past.



3 6A N N U A L R E P O R T 2 0 1 1




(b) Credit and counterparty risk (Continued)

The table below summarises the unrated debt securities as stated in the table

above by their issuers’ credit rating as at the year end date.

Credit rating 2011 2010 US$ US$

Aaa 3,529,971 –Aa1 3,562,283 –Baa3 – 4,435,645Ba3 1,810,189 –B1 3,280,673 3,996,281Ca 2,058,000 –Unrated 44,721,433 33,733,243

58,962,549 42,165,169

Assets deposited as margin with executing brokers need not be segregated from

the brokers’ own assets. Such assets may therefore be available to the creditors

of such persons in the event of the brokers’ insolvency.

The maximum exposure to credit risk at the year end date is the carrying amount

of the financial assets, excluding equity securities, as shown in the statement of

financial position.

(c) Liquidity risk

The Fund is exposed to daily cash redemptions of units. The Manager considered

that there is no significant liquidity risk on redemption of units as according to

the Trust Deed dated 7 August 2002 (as amended), the Manager may limit the

total number of units redeemed on any dealing day to 10% in aggregate of the

total number of units in issue.




3 73 7A N N U A L R E P O R T 2 0 1 1



(c) Liquidity risk (Continued)

The tables below analyse the Fund’s non-derivative financial liabilities based on

the remaining period at the year end date to the contractual maturity date. The

amounts disclosed in the tables are the contractual undiscounted cash flows.

Balances due within 12 months equal their carrying balances as the impact of

discounting is not significant. The tables below reflect captions of the statement

of financial position items and shows how much of the net assets can be redeemed

if the Manager does not exercise the 10% redemption gate.

2011 2010

Less than No stated Less than No stated

3 months maturity 3 months maturity

US$ US$ US$ US$

Financial liabilities at fair

value through profit or loss – 28,884,364 – 310,000

Amounts payable on purchase

of investments 5,554,624 – 5,729,116 –

Amounts payable on

redemption of units 1,252,645 – 1,321,869 –

Management fee and

performance fee payable 582,252 – 11,189,626 –

Accruals and other payables 234,623 – 156,614 –

7,624,144 28,884,364 18,397,225 310,000

The table below analyses the Fund’s derivative financial instruments in a loss

position for which the contractual maturities are considered to be essential to

an understanding of the timing of cash flows based on the Fund’s investment

strategy.



3 8A N N U A L R E P O R T 2 0 1 1




(c) Liquidity risk (Continued)

Less than 1 month 2011 2010 US$ US$

Net settled derivativesFutures contracts 230,361 –

The markets in which the Fund invests may be relatively illiquid and the

liquidity of these markets may fluctuate substantially over time. Investment

of the Fund’s assets in relatively illiquid securities may restrict the ability of

the 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. The

Manager monitors the liquidity of the Fund by conducting liquidity testing

on the investment portfolio on a monthly and ad-hoc basis. The objective of

testing is to monitor the liquidity of financial assets to meet the cash outflows on

financial liabilities. As at 31 December 2011, the Fund held investments in listed

equity securities of US$385,820,525 (2010: listed equity securities and listed

investment funds of US$373,776,418) and other liquid assets, representing bank

balances and amounts receivable on sales of investments, of US$54,296,667

(2010: US$35,955,677) that are expected to be able to realise within 7 days or

less to generate cash inflows for managing liquidity risk.

Below presents a list of investors who held more than 10% of the net assets of

the Fund:

Investor % of net assets

As at 31 December 2011Investor 1 30.11

Investor 2 12.89

Investor 3 10.10

As at 31 December 2010Investor 1 34.80

Investor 4 12.21




3 93 9A N N U A L R E P O R T 2 0 1 1



(d) Fair value estimation

The following table analyses within the fair value hierarchy the Fund’s financial assets and liabilities (by class) measured at fair value as at the year end date.

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

As at 31 December 2011

AssetsListed equity securities 385,820,525 – 1,212,691* 387,033,216Quoted debt securities – 84,493,533 – 84,493,533Put options – 8,738 – 8,738Unlisted investment funds – – 181,901 181,901Gold securities 49,807,920 – – 49,807,920

Total assets 435,628,445 84,502,271 1,394,592 521,525,308

LiabilitiesListed equity securities 28,884,364 – – 28,884,364Futures contracts 230,361 – – 230,361

Total liabilities 29,114,725 – – 29,114,725

As at 31 December 2010

AssetsListed equity securities 372,636,330 – – 372,636,330Quoted debt securities – 56,370,747 – 56,370,747Listed equity warrants 12,589 – – 12,589Listed investment funds 1,140,088 – – 1,140,088Unlisted investment funds – – 219,797 219,797Gold securities 15,887,200 – – 15,887,200

Total assets 389,676,207 56,370,747 219,797 446,266,751

LiabilitiesListed equity securities 310,000 – – 310,000

Total liabilities 310,000 – – 310,000



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




(d) Fair value estimation (Continued)

* As at 31 December 2011, listed equity securities include an investment whose trading was suspended. The corresponding fair value is based on the market value of the suspended investment just before its suspension, with a 75% discount taken into consideration.

Investments whose values are based on quoted market prices in active markets,

and therefore classified within level 1, include active listed equity securities,

listed investment funds and derivatives. The Fund does not adjust the quoted

price for these investments.

Financial instruments that trade in markets that are not considered to be active

and are valued based on quoted market prices or broker quotes, or financial

instruments for which there is no active market and are valued based on valuation

models supported by observable inputs are classified within level 2. These

include quoted debt securities and over-the-counter derivatives. The quotes are

periodically reviewed by the Manager.

Investments classified within level 3 have significant unobservable inputs, as

they trade infrequently.

As the amount of the level 3 investments is not significant to the Fund, changes

in the inputs to the valuation models do not have a significant effect on the net

asset value of the Fund.




4 14 1A N N U A L R E P O R T 2 0 1 1



(d) Fair value estimation (Continued)

The following tables present the movement in level 3 investments for the year:

unlisted investment funds 2011 2010 US$ US$

Opening balance 219,797 168,637Net (losses)/gains recognised in profit and loss (37,896 ) 51,160

Closing balance 181,901 219,797

Net (losses)/gains for the year included in the statement of comprehensive income for investments held at the end of the year (37,896 ) 51,160

Listed equity securities 2011 2010 US$ US$

Opening balance – –Transfers into level 3 7,447,266 –Net losses recognised in profit and loss (6,234,575 ) –

Closing balance 1,212,691 –

Net losses for the year included in the statement of comprehensive income for investments held at the end of the year (6,234,575 ) –



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



4 DErIvATIvE FINANCIAL INSTruMENTS

The Fund’s derivative financial instruments at year end are detailed as follows:

Notional Fair value amount Assets Liabilities US$ US$

As at 31 December 2011Put options on currencies US$128,500,000 8,738 –Futures contracts on Hang Seng Index HK$213,280,538 – 230,361

8,738 230,361

As at 31 December 2010Listed equity warrants HK$1,245,288 12,589 –

5 rEDEEMABLE uNITS

The Fund issues redeemable units, which are redeemable at the holder’s option, are the

most subordinate units in issue, and are therefore classified as equity in accordance with

IFRS.

Net assets attributable to unitholders are stated at assets less liabilities in the statement

of financial position and accounted for in accordance with IFRS. For the purpose

of determining the net asset value per unit for subscriptions and redemptions, the

subscription/redemption price is calculated in accordance with the provisions of the

Trustee Deed dated 7 August 2002 (as amended), which may be different from the

accounting policies under IFRS.




4 34 3A N N U A L R E P O R T 2 0 1 1


5 rEDEEMABLE uNITS (Continued)

In accordance with the provisions of the Fund’s Trust Deed dated 7 August 2002 (as

amended), investment positions are valued based on the last traded market price for the

purpose of determining the net asset value per unit for subscriptions and redemptions

and for fees calculation. However, as stated in note 2(b)(iv), the accounting policies of

the Fund for the purpose of compliance with IFRS are to value investment positions at

bid/ask price.

At the year end date, the difference between the net asset value as reported in the

statement of financial position and the net asset value as determined for the purpose of

calculating the net asset value per unit for processing subscription and redemption is

reconciled below.

2011 2010 US$ US$

Net assets attributable to unitholders, as per statement of financial position 544,833,368 464,312,450Adjustment for different bases adopted by the Fund in arriving at the net asset value for processing subscription and redemption

– Adjustment from bid/ask market prices to last traded market prices 2,710,897 1,457,592

Net assets attributable to unitholders (in accordance with the Trust Deed) 547,544,265 465,770,042

The Fund is exposed to daily redemption of units. The Manager may limit the total

number of units redeemed on any dealing day to 10% of the total number of units

in issue in accordance with the Trust Deed dated 7 August 2002 (as amended). The

Fund endeavours to invest the subscriptions received in appropriate investments while

remaining sufficient liquidity to meet redemptions, such liquidity being augmented by

disposal of listed securities where necessary.



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



5 rEDEEMABLE uNITS (Continued)

Number of units in issue

All issued units are fully paid and have no par value. Each unit carries one vote. Units are entitled to dividends and payment of a proportionate share based on the Fund’s net asset value per unit on the redemption date.

The movement of number of units in issue during the year was as follows:

Number of units 2011 2010

As at 1 January 7,983,977 5,422,874Issue of units 6,394,011 3,843,184Redemption of units (3,510,514 ) (1,282,081 )

As at 31 December 10,867,474 7,983,977

6 rELATED pArTy TrANSACTIONS/TrANSACTIONS wITH THE TruSTEE, THE MANAGEr AND THEIr CONNECTED pErSONS

The following is a summary of significant related party transactions/transactions entered into during the period between the Fund and the Trustee, the Manager and their connected persons. Connected persons of the Trustee and the Manager are those as defined in the Code. All such transactions were entered into in the ordinary course of business and on normal commercial terms.

(a) Management fee

The Manager is entitled to receive a management fee which represents 1.25% per annum of the net asset value of the Fund. The management fee is calculated weekly, accrued daily and payable monthly in arrears.

(b) performance fee

The Manager is entitled to receive a performance fee which represents 15% of the product of the average number of units in issue during the year and the amount by which the net asset value per unit as at 31 December of each year (the “performance fee valuation day”) before accrual of performance fee exceeds the higher of (i) US$10.00 and (ii) the highest value for the net asset value per unit as at the performance fee valuation day for any preceding year in which a performance fee was last calculated and paid (after payment of the performance fee). The performance fee is calculated and accrued daily and payable yearly in arrears.




4 54 5A N N U A L R E P O R T 2 0 1 1


6 rELATED pArTy TrANSACTIONS/TrANSACTIONS wITH THE TruSTEE, THE MANAGEr AND THEIr CONNECTED pErSONS (Continued)

(c) Trustee fee

The Trustee is entitled to receive a trustee fee which represents a variable fee of

(i) 0.2% per annum on the first US$100 million of the net asset value of the Fund;

(ii) 0.18% per annum on the next US$100 million of the net asset value of the

Fund; and (iii) 0.165% per annum thereafter, subject to a minimum of US$4,000

per month. The variable fee is calculated and accrued daily and payable monthly

in arrears. The Trustee is also entitled to a fixed fee of US$3,000 per annum

payable quarterly in arrears.

(d) Manager’s and its related parties’ holding in the Fund

The Manager and its related parties held units of the Fund as follows:

As at Issue of redemption As at

1 January units of units 31 December

year 2011 and 2010

Mr Cheah Cheng Hye* 103,447 – – 103,447

Mr Ho Man Kei** 18,097 – – 18,097

Ms To Hau Yin*** 16,264 – – 16,264

Value Partners Limited**** 40,025 – – 40,025

* Mr Cheah Cheng Hye is a director of the Manager.** Mr Ho Man Kei is a director of the Manager.*** Ms To Hau Yin is the spouse of Mr Cheah Cheng Hye, who is a director of

the Manager.**** Value Partners Limited is the Manager.



4 6A N N U A L R E P O R T 2 0 1 1



6 rELATED pArTy TrANSACTIONS/TrANSACTIONS wITH THE TruSTEE, THE MANAGEr AND THEIr CONNECTED pErSONS (Continued)

(e) preliminary charges

The Manager is entitled to receive a preliminary charge on issue of units which represents up to 5% of the issue price. For the year ended 31 December 2011, total preliminary charges on issue of units, amounting to US$291,881 (2010: US$234,840), were received by the Manager. The preliminary charges are not reflected in the financial statements of the Fund.

(f) Investment in a fund managed by a related party of the Manager

As at 31 December 2011, the Fund held 189,480 (2010: 189,480) shares of Value Partners Strategic Equity Fund with a total fair value of US$181,901 (2010: US$219,797). Value Partners Strategic Equity Fund is managed by a fellow subsidiary of the Manager. Value Partners Strategic Equity Fund is not authorised in Hong Kong and is not available to the public generally in Hong Kong.

7 TAxATION

(a) Cayman Islands

The Fund has obtained an undertaking from the Governor-in-Council of the Cayman Islands that, in accordance with Section 81 of the Trusts Law (2001 Revision) of the Cayman Islands, for a period of 50 years from 27 August 2002, no laws thereafter enacted in the Cayman Islands imposing any tax or duty on income, capital assets, gains or appreciations will apply to the Fund.

(b) Hong kong

No provision for Hong Kong profits tax has been made as the dividend and interest income and realised gains on sales of investments of the Fund are excluded from the charge to profits tax under Section 14, 26 or 26A of the Hong Kong Inland Revenue Ordinance.




4 74 7A N N U A L R E P O R T 2 0 1 1


7 TAxATION (Continued)

(c) people’s republic of China (“prC”)

The Fund directly invests in “B” shares of companies listed in the PRC for

subscription by foreign investors and may be subject to PRC withholding tax of

10% on dividend income. A 10% withholding tax may also be payable on the

capital gains derived from the sale of “B” shares. Under current PRC tax laws,

gains derived from the transfer of shares of PRC companies by non-residents

should be subject to a withholding tax of 10%, unless exempt under relevant tax

treaties. The People’s Republic of China State Administration of Taxation (the

“SAT”) has remained silent on the collection of withholding tax for capital gains

and until further clarification is issued by the SAT, the Manager considers that

there is significant uncertainty in respect of whether the Fund has any liability

and the extent of such liability with respect to tax on capital gains derived

from the sale of PRC “B” shares. In making this assessment, the Manager has

considered (i) the current position of the SAT, (ii) the absence of a withholding

mechanism of the relevant tax and (iii) current market practice. Accordingly, as

at 31 December 2011, the Fund had not made any provision for the tax on capital

gains on “B” shares based on the above judgments made by the Manager.

(d) Other jurisdictions

Overseas withholding tax was charged on certain dividend and investment

income received during the year.

8 DISTrIBuTION

No distribution statement is prepared as no distribution has been made.



4 8A N N U A L R E P O R T 2 0 1 1


9 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 Fund (as may be permitted under applicable rules and regulations) from brokers and other persons through whom investment transactions are carried out (“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 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 and, economic factors and trends. The 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 cases where execution, research and other services can be unbundled, the 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 Fund to pay brokerage commissions 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 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.

10 ApprOvAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Trustee and the Manager on 26 April 2012.

INVESTMENT PORTFOLIO (UNAUDITED)As At 31 DECEMBER 2011


4 94 9A N N U A L R E P O R T 2 0 1 1


% of net Holdings Fair value assets Us$

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securities

ChinaChina Vanke Co Ltd 4,721,135 4,574,779 0.84Shanghai Friendship Group Inc Ltd 2,169,468 2,772,580 0.51

7,347,359 1.35

Hong Kong – “H” sharesChina Bluechemical Ltd 12,380,000 9,287,907 1.70China Rongsheng Heavy Industries Group Holdings Ltd 2,564,000 702,791 0.13China Shenhua Energy Co Ltd 6,741,500 29,149,056 5.35CITIC Securities Co Ltd 1,538,000 2,529,390 0.46Great Wall Motor Co Ltd 591,500 860,126 0.16Industrial and Commercial Bank of China Ltd 35,438,980 21,023,781 3.86Longfor Properties 2,622,500 2,946,174 0.54PetroChina Co Ltd 41,103,000 51,148,002 9.39

117,647,227 21.59

Hong Kong – Red chipsBOC Hong Kong (Holdings) Ltd 3,848,000 9,111,325 1.67Brilliance China Automotive Holdings Ltd 13,600,000 14,665,997 2.69China Overseas Land & Investment Ltd 4,554,000 7,583,261 1.39CNOOC Ltd 3,080,000 5,382,440 0.99Shougang Fushan Resources Group Ltd 23,250,000 7,779,022 1.43

44,522,045 8.17

INVESTMENT PORTFOLIO (UNAUDITED) (Continued)As At 31 DECEMBER 2011


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




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

Listed equity securities (Continued)

Hong Kong – OthersAnta Sports Products Ltd 7,059,000 8,384,430 1.54Elec & Eltek International Co Ltd 2,165,000 4,680,539 0.86Emperor International Holdings Ltd 69,618,000 10,750,570 1.97Evergrande Real Estate Group Ltd 29,150,000 12,078,781 2.22Hang Ten Group Holdings Ltd 5,958,000 2,031,772 0.37Hilong Holdings Ltd 2,535,000 450,180 0.08Hutchison Telecommunications Hong Kong Holdings Ltd 29,970,000 11,492,955 2.11Hutchison Whampoa Ltd 2,114,000 17,723,443 3.25Kingboard Laminates Holding Ltd 1,030,000 469,212 0.09Kingmaker Footwear Holdings Ltd 2,992,000 396,577 0.07Lung Kee (Bermuda) Hldgs Ltd 5,402,000 2,446,955 0.45NagaCorp Ltd 17,990,000 4,537,492 0.83Real Gold Mining Ltd* 4,283,500 1,212,691 0.22Royale Furniture Holdings Ltd 8,561,107 2,104,224 0.39Shenzhou International Group 11,440,000 15,516,555 2.85Sinoref Holdings Ltd 30,728,000 2,135,289 0.39Swire Pacific Ltd 717,500 8,651,475 1.59Texwinca Holdings Ltd 5,370,000 5,887,658 1.08XTEP International Holdings Ltd 8,500,500 2,690,966 0.50Yuexiu Real Estate Investment Trust 24,175,000 10,670,611 1.96Yue Yuen Industrial (Holdings) Ltd 839,500 2,646,765 0.49Zhongsheng Group Holdings Ltd 668,500 1,106,295 0.20

128,065,435 23.51




5 15 1A N N U A L R E P O R T 2 0 1 1





IndonesiaErajaya Swasembada Tbk PT 18,935,000 2,044,238 0.37Indomobil Sukses Internasional Tbk PT 3,162,500 4,069,522 0.75Mayora Indah Tbk PT 1,491,000 2,276,337 0.42Perusahaan Perkebunan London Sumatra Indonesia Tbk PT 10,895,000 2,643,553 0.48Salim Ivomas Pratama Tbk PT 27,114,000 3,370,771 0.62Tiga Pilar Sejahtera Food Tbk 18,316,500 978,745 0.18

15,383,166 2.82

JapanK’S Holdings Corp 101,000 3,960,784 0.72Ryohin Keikaku Co Ltd 93,100 4,509,682 0.83

8,470,466 1.55

MalaysiaKulim Malaysia BHD 1,856,700 2,464,698 0.45Sime Darby BHD 1,941,100 5,525,937 1.02

7,990,635 1.47

PhilippinesUniversal Robina Corp 4,336,200 4,742,719 0.87



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






SingaporeARA Asset Management Ltd 3,635,500 3,380,431 0.62Beyonics Technology Ltd 1,563,000 306,282 0.06CSE Global Ltd 7,007,000 4,038,462 0.74Tianjin Zhong Xin Pharmaceutical Group Corp Ltd 3,305,000 1,553,350 0.28

9,278,525 1.70

TaiwanAcer Inc 5,431,000 6,280,944 1.15Aten International Co Ltd 1,392,000 2,328,650 0.43Clevo Co 2,481,000 3,921,203 0.72Feng Tay Enterprise Co Ltd 2,531,000 2,175,489 0.40Sporton International Inc 1,512,781 3,069,787 0.56Teco Electric & Machinery Co Ltd 6,915,000 4,072,747 0.75Uni-President Enterprises Corp 1,221,000 1,772,660 0.33Yungtay Engineering Co Ltd 2,438,000 3,668,222 0.67

27,289,702 5.01

ThailandAdvanced Info Service Pcl 1,192,600 5,121,943 0.94Khon Kaen Sugar Industry Pcl 11,945,700 5,035,747 0.92Siam Makro Pcl 810,300 6,138,247 1.13

16,295,937 2.99




5 35 3A N N U A L R E P O R T 2 0 1 1




Quoted debt securities

Australian dollarWestern Areas NL (REG) Conv 6.375% 2 July 2014 1,000,000 1,012,944 0.19

Hong Kong dollarHK Govt Bond Programme (Ser 4208) FRN 28 July 2014 25,320,000 3,562,283 0.65Mingfa Group Intl Co Ltd Conv 5.25% 23 May 2016 15,000,000 1,332,223 0.25

4,894,506 0.90

Indonesian rupiahEuropean Bk Recon & Dev (Ser GMTN) 6.5% 17 March 2014 31,000,000,000 3,529,971 0.65

Philippine pesoPetron Corp 7% 10 November 2017 145,000,000 3,257,594 0.60



5 4A N N U A L R E P O R T 2 0 1 1





Quoted debt securities (Continued)

RenminbiBig Will Investments Ltd (Ser HK) 7% 29 April 2014 29,000,000 3,458,992 0.63Bright North Ltd (REG) Conv 1.25% 13 April 2016 14,000,000 1,844,476 0.34China Power International Development Ltd (REG) Conv 2.25% 17 May 2016 16,200,000 2,494,384 0.46Evergrande Real Estate G (REG S) 9.25% 19 January 2016 30,000,000 3,431,952 0.63Evergrande Real Estate G 7.5% 19 January 2014 20,000,000 2,548,351 0.47Kaisa Group Holdings Ltd (Ser 1638) (REG) Conv 8% 20 December 2015 28,600,000 3,280,673 0.60LDK Solar Co Ltd 10% 28 February 2014 15,000,000 1,285,693 0.23Shui On Land Ltd (REG) Conv 4.5% 29 September 2015 21,000,000 2,988,738 0.55

21,333,259 3.92

Singapore dollarOSIM International Ltd Conv 2.75% 05 July 2016 2,000,000 1,422,764 0.26




5 55 5A N N U A L R E P O R T 2 0 1 1





United States dollarAayan First Sukuk (REG) FRN 20 September 2011 (Defaulted) 2,000,000 620,000 0.11Asia Cement Corp Conv 0% 27 January 2016 3,000,000 2,778,180 0.51BLD Investment (REG) Conv 8.625% 23 March 2015 7,500,000 5,677,234 1.04Bumi Capital Pte Ltd (REG S) (REG) 12% 10 November 2016 2,500,000 2,581,675 0.47Core Projects & Technologies Ltd Conv 7% 07 May 2015 1,000,000 787,184 0.15Country Garden Holding Co (REG S) 11.75% 10 September 2014 3,000,000 3,012,898 0.55Country Garden Holdings Co 10.5% 11 August 2015 1,000,000 936,923 0.17Davomas International Finance (REG S) STP 08 December 2014 4,500,000 2,058,000 0.38Enercoal Resources Ptd Ltd (REG) Conv 9.25% 05 August 2014 1,800,000 1,810,189 0.33ENN Energy Holdings Ltd (REG S) 6% 13 May 2021 1,500,000 1,365,765 0.25Excel Step Investments Conv STP 16 November 2012 1,460,000 1,580,450 0.29EZRA Holdings (REG) Conv 4% 25 November 2014 3,000,000 2,659,440 0.49Hynix Semiconductor Inc (REG) Conv 2.65% 14 May 2105 1,000,000 977,310 0.18Jinkosolar Holding Co Ltd (144A) (REG) Conv 4% 15 May 2016 4,087,000 1,610,937 0.30



5 6A N N U A L R E P O R T 2 0 1 1






United States dollar (Continued)KWG Property Holdings LT (REG S) 12.75% 30 March 2016 1,400,000 1,160,683 0.21Listrindo Capital (REG S) (REG) 9.25% 29 January 2015 900,000 1,000,967 0.18Lumena Resources Corp (REG S) 12% 27 October 2014 3,000,000 2,644,000 0.49Olam International Ltd (REG) Conv 6% 15 October 2016 3,000,000 3,193,250 0.59Paladin Energy Ltd (REG) Conv 3.625% 04 November 2015 5,000,000 3,986,398 0.73Renhe Commercial Holdings Co (REG S) (REG) 13% 10 March 2020 2,000,000 1,440,547 0.26Renhe Commercial Holdings Co (REG S) 11.75% 18 May 2015 1,500,000 1,031,677 0.19Shimao Property Holdings Ltd 9.65% 03 August 2017 2,000,000 1,576,364 0.29Star Energy Geothermal Wayang Windu Ltd (REG S) (REG) 11.5% 12 February 2015 2,500,000 2,799,182 0.51Videocon Industries Ltd (REG) Conv 6.75% 16 December 2015 1,400,000 958,342 0.18Welspun Gujarat Stahl (REG) Conv 4.5% 17 October 2014 1,000,000 794,900 0.15

49,042,495 9.00




5 75 7A N N U A L R E P O R T 2 0 1 1




Put optionsUSD Put/HKD Call 7.5 17 February 2012 128,500,000 8,738 0.00

Unlisted investment fundsValue Partners Strategic Equity Fund 189,480 181,901 0.03

Gold securitiesLoco London Gold securities 31,600 49,807,920 9.14

Total financial assets at fair value through profit or loss 521,525,308 95.72

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed equity securities

Hong Kong – “H” sharesChina Rongsheng Heavy Industries Group Holdings Ltd (2,564,000 ) (709,390 ) (0.13 )Longfor Properties (2,622,500 ) (2,956,299 ) (0.54 )

(3,665,689 ) (0.67 )

Hong Kong – Red chipsChina Overseas Land & Investment Ltd (8,586,000 ) (14,341,489 ) (2.63 )



5 8A N N U A L R E P O R T 2 0 1 1



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


Hong Kong – OthersASM Pacific Technology Ltd (228,500 ) (2,562,609 ) (0.47 )China Liansu Group Holdings Ltd (6,005,000 ) (2,604,183 ) (0.48 )Want Want China Holdings Ltd (4,414,000 ) (4,407,809 ) (0.81 )

(9,574,601 ) (1.76 )

SingaporeOlam Intl Ltd (795,800 ) (1,302,585 ) (0.24 )

Futures ContractsHang Seng Index Fut 30 January 2012 (233 ) (230,361 ) (0.04 )

Total financial liabilities at fair value through profit or loss (29,114,725 ) (5.34 )

Total investments, net 492,410,583 90.38

Total investments, at cost 511,819,996

* The trading of this equity security has been suspended.

INVESTMENT PORTFOLIO MOVEMENTS (UNAUDITED)FOR THE YEAR ENDED 31 DECEMBER 2011


5 95 9A N N U A L R E P O R T 2 0 1 1



Listed equity securitiesChina 1.35 4.27HongKong–“H”shares 20.92 17.54–Redchips 5.54 10.12–Others 21.75 28.51Indonesia 2.82 1.32Japan 1.55 –Malaysia 1.47 1.09Philippines 0.87 –Singapore 1.46 4.65SouthKorea – 4.20Taiwan 5.01 6.80Thailand 2.99 1.68

65.73 80.18

Quoted debt securitiesAustraliandollar 0.19 –HongKongdollar 0.90 1.04Indonesianrupiah 0.65 –Philippinepeso 0.60 0.86Renminbi 3.92 1.07Singaporedollar 0.26 0.58UnitedStatesdollar 9.00 8.59

15.52 12.14

Listed equity warrants – 0.00

Futures contracts (0.04) –

Put options 0.00 –

Listed investment funds – 0.25

Unlisted investment funds 0.03 0.05

Gold securities 9.14 3.42

Total investments, net 90.38 96.04

PERFORMANCE RECORD (UNAUDITED)


6 0A N N U A L R E P O R T 2 0 1 1


Net assets (at last traded prices)

2011 2010 2009 US$ US$ US$

Net assets 547,544,265 465,770,042 248,287,799

Net asset value per unit 50.38 58.34 45.79

Performance record since inception

Lowest Highest redemption issue price price per unit per unit US$ US$

2011 61.21 45.95

2010 60.41 43.34

2009 45.84 23.23

2008 45.39 20.94

2007 49.50 31.84

2006 32.53 24.08

2005 24.00 21.51

2004 22.46 18.75

2003 (since inception) 19.86 9.81

Note: TheFundhaselectedtopreparethefinancialstatementsinaccordancewithIFRS.TherearenomaterialvariationsonaccountingtreatmentbetweenIFRSandUSGAAP.

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