china select fund - a sub-fund of citi investment trust ... · we conducted our audit in accordance...

China Select Fund - a sub-fund of

Citi Investment Trust (Cayman) II

31 December 2015

China Select Fund - a sub-fund of Citi Investment Trust (Cayman) II

Year ended 31 December 2015

Contents Page(s) Administration and management 1 - 2 Manager’s report 3 Trustee’s report to unitholders 4 Independent auditors’ report to unitholders 5 - 6 Statement of financial position 7 - 8 Statement of comprehensive income 9 Statement of changes in net assets attributable to unitholders 10 Statement of cash flows 11 - 12 Notes to the financial statements 13 - 41 Supplementary information (unaudited) − Investment portfolio 42 - 47 − Statement of movements in portfolio holdings 48 − Performance table 49 - 51



1

Administration and management

Manager Citigroup First Investment Management Limited 50/F, Citibank Tower, Citibank Plaza 3 Garden Road Central, Hong Kong Telephone No. : +852 2868 8811 Fax No. : +852 3018 7322

Directors of the Manager Cyrille Troublaiewitch Song Li

Sub-Manager China Asset Management (Hong Kong) Limited 37/F, Bank of China Tower 1 Garden Road Central, Hong Kong Telephone No. : +852 3406 8688 Fax No. : +852 3406 8500

Trustee, Administrator and Principal Office Cititrust (Cayman) Limited 27 Hospital Road Grand Cayman Cayman Islands

Current Transfer Agent (effective from 31 December 2015) Citicorp Financial Services Limited 9/F, Two Harbourfront, 18-22 Tak Fund Street, Hunghom, Kowloon Hong Kong



2

Administration and management (continued)

Former Transfer Agent Citi Fund Services (Asia) Limited 50/F, Citibank Tower, Citibank Plaza 3 Garden Road Central, Hong Kong

Custodian and Sub-Administrator Citibank, N.A. Hong Kong Branch 50/F, Citibank Tower, Citibank Plaza 3 Garden Road Central, Hong Kong

Legal Counsel to the Manager as to matters of Hong Kong law Simmons & Simmons 13th Floor, One Pacific Place 88 Queensway Hong Kong as to matters of Cayman Islands law Harney Westwood & Riegels 3601 Two Exchange Square 8 Connaught Place Central, Hong Kong

Auditors KPMG Century Yard, Cricket Square Grand Cayman, KY1-1106 Cayman Islands

ABCD KPMG PO Box 493 Telephone: +1 345 949-4800 Century Yard Fax: +1 345 949-7164 Grand Cayman KY1-1106 Internet: www.kpmg.ky CAYMAN ISLANDS

KPMG, a Cayman Islands partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Independent auditors’ report to unitholders China Select Fund - a sub-fund of Citi Investment Trust (Cayman) II

We have audited the accompanying financial statements of China Select Fund (the “Sub-Fund”) - a sub-fund of Citi Investment Trust (Cayman) II set out on pages 7 to 41, which comprise the statement of financial position as at 31 December 2015, and the statements of comprehensive income, of changes in net assets attributable to unitholders and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

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

The Manager and the Trustee are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and for such internal control as the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In addition, the Manager and the Trustee also have a responsibility to ensure that the financial statements comply with the relevant disclosure provisions of the Trust Deed, as amended, and the relevant disclosure requirements set out in Appendix E to the Hong Kong Code on Unit Trusts and Mutual Funds issued by the Hong Kong Securities and Futures Commission (the “Code”).

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with 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.

ABCD

Independent auditors’ report to unitholders China Select Fund - a sub-fund of Citi Investment Trust (Cayman) II (continued)

Auditors’ responsibility (continued)

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Sub-Fund’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Sub-Fund’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager and the Trustee, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Sub-Fund as at 31 December 2015, and of its transactions and cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on disclosure requirements under the Code

We report that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the Trust Deed, as amended, and the relevant disclosure requirements set out in the Code.

27 April 2016


Financial statements for the year ended 31 December 2015

7

Statement of financial position as at 31 December 2015 (Expressed in United States dollars)

Note 2015 2014 Assets

Current assets

Cash and cash equivalents 11(g) $ 7,330,595 $ 5,449,824 Financial assets at fair value through

profit or loss 3 112,717,895 128,208,489 Amounts due from brokers 5 2,369,173 2,005,192 Subscription receivable 4 39,505 602,351 Dividend receivable - 48,699

Total assets $ 122,457,168 $ 136,314,555 -------------------- --------------------

Liabilities

Current liabilities

Amounts due to brokers 5 $ 3,583,945 $ - Redemption payable 4 1,540,406 1,603,203 Accruals and other payables 11 954,769 1,290,309

Total liabilities (excluding net assets attributable to unitholders) $ 6,079,120 $ 2,893,512

-------------------- --------------------

Net assets attributable to unitholders 12(a), 12(c) $ 116,378,048 $ 133,421,043



9

Statement of comprehensive income for the year ended 31 December 2015 (Expressed in United States dollars)

Note 2015 2014 Interest income 7, 11(g) $ 3,237 $ 1,955 Dividend income 8 1,791,687 2,802,398 Net (loss)/gain on financial instruments at

fair value through profit or loss 9 (11,118,783) 11,725,534 Net foreign exchange loss (62,136) (26,642)

Total (loss)/gain $ (9,385,995) $ 14,503,245 -------------------- --------------------

Transaction cost 11(h) $ (4,863,650) $ - Management fee 11(a) (2,250,014) (2,039,349) Performance fee 11(b) (725,246) (1,033,299) Administration fee 11(c) (93,751) (84,973) Audit fee (31,467) (37,863) Trustee fee 11(d) (9,945) (10,027) Custodian fee 11(e) (45,948) (33,665) Financial statements preparation fee 11(f) (11,000) (11,000) Legal fee (23,006) - Bank charges 11(g) (416) (507) Interest expense (789) - Others (9,443) (12,013)

Total operating expenses $ (8,064,675) $ (3,262,696) -------------------- --------------------

(Loss)/gain before tax $ (17,450,670) $ 11,240,549 Withholding tax expenses 6(a) (65,520) (163,304)

Change in net assets attributable to unitholders from operations and total comprehensive income for the year $ (17,516,190) $ 11,077,245

The notes on pages 13 to 41 form part of these financial statements.



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Statement of changes in net assets attributable to unitholders for the year ended 31 December 2015 (Expressed in United States dollars)

2015 2014 Balance at 1 January $ 133,421,043 $ 90,826,891 -------------------- --------------------

Transactions with unitholders Subscription of units − AUD units $ 2,007,747 $ 713,937 − EUR units 115,563 46,196 − GBP units 162,898 - − HKD units 1,498,232 5,066,952 − SGD units 1,007,894 2,106,970 − USD units 108,374,379 74,921,600

$ 113,166,713 $ 82,855,655 -------------------- --------------------

Redemption of units − AUD units $ (1,249,904) $ (293,249) − EUR units (599,466) (539,575) − GBP units (100,253) (348,732) − HKD units (6,366,662) (3,682,612) − SGD units (4,410,704) (3,023,279) − USD units (99,966,529) (43,451,301)

$ (112,693,518) $ (51,338,748)

-------------------- --------------------

Total transactions with unitholders $ 473,195 $ 31,516,907 -------------------- --------------------

Change in net assets attributable to

unitholders from operations and total comprehensive income for the year $ (17,516,190) $ 11,077,245

-------------------- --------------------

Balance at 31 December $ 116,378,048 $ 133,421,043




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Statement of cash flows for the year ended 31 December 2015 (Expressed in United States dollars)

Note 2015 2014 Operating activities Change in net assets attributable to

unitholders from operations and total comprehensive income for the year $ (17,516,190) $ 11,077,245

Adjustments for:

Interest income 7 (3,237) (1,955) Dividend income 8 (1,791,687) (2,802,398) Withholding tax expenses 6(a) 65,520 163,304

Operating (loss)/gain before changes in working capital $ (19,245,594) $ 8,436,196

Decrease/(increase) in financial assets at

fair value through profit or loss 15,490,594 (35,657,732) Increase in amounts due from brokers (363,981) (2,005,192) Increase/(decrease) in amounts due to

brokers 3,583,945 (3,355,591) Decrease in accruals and other payables (335,540) (980,355) Interest received 3,237 1,955 Dividend received 1,840,386 2,753,699 Withholding tax paid (65,520) (485,666)

Net cash generated from/(used in) operating activities $ 907,527 $ (31,292,686)

-------------------- --------------------

Financing activities Proceeds from unit subscriptions $ 113,729,559 $ 82,513,011 Payments on unit redemptions (112,756,315) (49,819,518)

Net cash generated from financing activities $ 973,244 $ 32,693,493

-------------------- --------------------



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Statement of cash flows for the year ended 31 December 2015 (continued) (Expressed in United States dollars)

Note 2015 2014 Net increase in cash and cash

equivalents $ 1,880,771 $ 1,400,807 Cash and cash equivalents at

1 January 5,449,824 4,049,017

Cash and cash equivalents at 31 December 11(g) $ 7,330,595 $ 5,449,824




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Notes to the financial statements (Expressed in United States dollars, unless otherwise indicated)

1 Background

China Select Fund (the “Sub-Fund”) is a sub-fund of Citi Investment Trust (Cayman) II (the “Trust”), which is an open-ended unit trust established under the laws of the Cayman Islands pursuant to a Trust Deed dated 7 October 2010 (the “Trust Deed”), as amended, between Citigroup First Investment Management Limited as manager (the “Manager”) and Cititrust (Cayman) Limited as trustee (the “Trustee”) (jointly “the Management”). The Trust was registered under the Mutual Funds Law of the Cayman Islands on 1 November 2010. The Sub-Fund is authorised by the Hong Kong Securities and Futures Commission (the “SFC”) under Section 104 of the Hong Kong Securities and Futures Ordinance, and governed by the Hong Kong Code on Unit Trusts and Mutual Funds (the “Code”) issued by the SFC. The Sub-Fund was authorised by the SFC on 1 November 2010 and the first dealing day was 10 December 2010.

The investment objective of the Sub-Fund is to provide unitholders with long term capital growth through exposure to China-related companies by investing in their equities and equity related instruments traded both in onshore and offshore China.

The equity portion of the Sub-Fund’s portfolio is invested directly or indirectly in equity securities issued by companies which are listed, or being offered in an initial public offering, on an official stock exchange in China (A Share and B Share markets), Hong Kong, the United States, Singapore and other countries. The Sub-Fund gains access to the China A Share markets through China A Share access products or the Shanghai-Hong Kong Stock Connect (the “Stock Connect”).

The China A Share access products are participation certificates, participation notes or covered warrants whose pay-off synthetically replicate the economic benefit of the underlying China A Shares issued by one or more Qualified Foreign Institutional Investors (“QFIIs”) or their affiliates (collectively the “AP Issuers”).

The Stock Connect is a securities trading and clearing linked program developed by the Hong Kong Exchanges and Clearing Limited, Shanghai Stock Exchange and China Securities Depository and Clearing Co, Ltd., with an aim to achieve mutual stock market access between mainland China and Hong Kong. The Sub-Fund commenced trading through the Stock Connect during the year ended 31 December 2015.

As at 31 December 2015 and 2014, the Trust and the Sub-Fund had no employees. The Manager has appointed China Asset Management (Hong Kong) Limited as the sub-manager (the “Sub-Manager”) for managing the investment portfolio of the Sub-Fund. The custodian and administration functions are delegated to Citibank, N.A. Hong Kong Branch (the “Custodian” and the “Sub-Administrator”).



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2 Significant accounting policies

(a) Statement of compliance

The financial statements of the Sub-Fund have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual IFRSs, International Accounting Standards (“IASs”) and Interpretations issued by International Accounting Standards Board (“IASB”), the relevant disclosure provisions of the Trust Deed, as amended, and the relevant disclosure provisions of the Code issued by the SFC. A summary of the significant accounting policies adopted by the Sub-Fund is set out below.

The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current accounting period of the Sub-Fund. However, none of these developments are relevant to the Sub-Fund’s financial statements. The Sub-Fund has not applied any new standard or interpretation that is not yet effective for the current accounting period (see note 17).

(b) Basis of preparation of the financial statements

The functional and presentation currencies of the financial statements are the United States dollars (rounded to the nearest United States dollar) and not the local currency of the Cayman Islands reflecting the fact that the Sub-Fund’s performance is measured in United States dollar terms.

The measurement basis used in the preparation of the financial statements is the historical cost basis except that certain financial instruments are stated at their fair value as explained in the accounting policies, note 2(e) below. Other financial assets and liabilities are stated at amortised cost or redemption amount (redeemable units).

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

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

Judgements made by the Management in the application of IFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in note 16.



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2 Significant accounting policies (continued)

(c) New accounting pronouncement

The IASB has issued a number of amendments to IFRSs that are first effective for the current accounting period of the Sub-Fund. Of these, Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle are relevant to the Sub-Fund’s financial statements and the impact of the adoption of these amended IFRSs are discussed below.

− Annual Improvements to IFRSs 2010-2012 Cycle

− Annual Improvements to IFRSs 2011-2013 Cycle

Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle

These two cycles of annual improvements contain amendments to nine standards with consequential amendments to other standards. Among them, IAS 24, Related party disclosures has been amended to expand the definition of a “related party” to include a management entity that provides key management personnel services to the reporting entity, and to require the disclosure of the amounts incurred for obtaining the key management personnel services provided by the management entity. These amendments do not have an impact on the Sub-Fund’s related party disclosures as the Sub-Fund does not obtain key management personnel services from management entities.

The Sub-Fund has not applied any new standard or interpretation that is not yet effective for the current accounting period (see note 17).



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(d) Foreign currency translation

Transactions in foreign currencies are translated into United States dollars at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at the exchange rate at the reporting date.

Foreign currency differences arising from translation are recognised in profit or loss as net foreign exchange gain or loss, except for those arising from financial instruments at fair value through profit or loss, which are recognised as a component of the net gain or loss on financial instruments at fair value through profit or loss.

(e) Financial instruments

(i) Classification

All of the Sub-Fund’s investments in equity securities and China A Share access products are acquired principally for trading. The Sub-Fund classifies all its investments as financial assets at fair value through profit or loss.

Financial assets that are classified as loans and receivables include cash and cash equivalents, amounts due from brokers, subscription receivable and dividend receivable.

Financial liabilities that are not designated at fair value through profit or loss include amounts due to brokers, redemption payable, accruals and other payables and financial liabilities arising from redeemable units.

(ii) Recognition

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

A regular way purchase or sale of financial assets and financial liabilities at fair value through profit or loss is recognised using trade date accounting.

(iii) Measurement

Financial instruments are measured initially at fair value. Transaction costs on financial assets at fair value through profit or loss are expensed immediately, while on other financial instruments they are amortised.

Subsequent to initial recognition, all instruments classified at fair value through profit or loss are measured at fair value with changes in their fair value recognised in profit or loss.

Financial assets classified as loans and receivables are carried at amortised cost using the effective interest rate method.



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(e) Financial instruments (continued)

(iii) Measurement (continued)

Financial liabilities other than those at fair value through profit or loss are measured at amortised cost using the effective interest rate method. Financial liabilities arising from redeemable units issued by the Sub-Fund are carried at the redemption amount representing the investor’s right to a residual interest in the Sub-Fund’s assets.

(iv) Fair value measurement principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date as principal, or in its absence, the most advantageous to which the Sub-Fund has access at that date. The fair value of a liability reflects its non-performance risk.

When applicable, the Sub-Fund measures the fair value of a financial instrument using the quoted price in an active market for that instrument without any deduction for estimated future selling costs. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no publicly available latest traded or mid-market price nor a quoted market price on a recognised stock exchange or a price from a broker/dealer for non-exchange-traded financial instruments, or if the market for it is not active, the fair value of the instrument is estimated using valuation techniques that provide a reliable estimate of prices which could be obtained in actual market transactions.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Sub-Fund determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that used only data from observable markets, the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is supported wholly by observable market data or the transaction is closed out.

Where discounted cash flow techniques are used, estimated future cash flows are based on the Management’s best estimates and the discount rate used is a market rate at the end of the reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used, inputs are based on market data at the end of the reporting period.



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(e) Financial instruments (continued)

(iv) Fair value measurement principles (continued)

The Sub-Fund recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(v) Impairment

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

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years.

(vi) Derecognition

A financial asset is derecognised when the contractual rights to receive the cash flows from the financial assets expire or where the financial asset together with substantively all the risks and rewards of ownership, have been transferred.

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

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

(f) Cash and cash equivalents

Cash and cash equivalents comprise deposits with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.



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(g) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Sub-Fund and the revenue and costs if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:

(i) Interest income is recognised in profit or loss as it accrues using the effective interest rate method.

(ii) Dividend income from listed investments is recognised when the share price of the investment goes ex-dividend. Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established.

(h) Expenses

All expenses of the Sub-Fund are recognised in profit or loss on an accrual basis.

(i) Taxation

Taxation comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. Current tax also includes withholding taxes on investment income and capital gains.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that is probable that future taxable profits will be available against which the asset can be utilised, are recognised.

(h) Net gain or loss from financial instruments at fair value through profit or loss

Net gain or loss from financial instruments at fair value through profit or loss includes all realised and unrealised fair value changes and foreign exchange differences, but exclude interest and dividend income.



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(i) Related parties

(a) A person, or a close member of that person’s family, is related to the Sub-Fund if that person:

(i) has control or joint control over the Sub-Fund;

(ii) has significant influence over the Sub-Fund; or

(iii) is a member of the key management personnel of the Sub-Fund or the Sub-Fund’s parent.

(b) An entity is related to the Sub-Fund if any of the following conditions applies:

(i) The entity and the Sub-Fund are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Sub-Fund or an entity related to the Sub-Fund.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Sub-Fund or the Sub-Fund’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the Sub-Fund.

(j) Units in issue

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



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(j) Units in issue (continued)

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

(i) it entitles the holder to a pro rata share of the Sub-Fund’s net assets in the event of the Sub-Fund’s liquidation;

(ii) it is in the class of instruments that is subordinate to all other classes of instruments;

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

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

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

The Sub-Fund has multiples classes of redeemable units in issue. All the classes are the most subordinate classes of financial instruments in the Sub-Fund and rank pari passu in all material respects and have the same terms and conditions other than that different classes of unit are denominated in different currencies. The redeemable units provide unitholders with the right to require redemption for cash at a value proportionate to the unitholders’ share in the net assets of the applicable class of units of the Sub-Fund at the redemption date, and also in the event of the Sub-Fund’s liquidation.

The redeemable units of the Sub-Fund are classified as financial liabilities and are measured at the present value of the redemption amounts.

(k) Segment reporting

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



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3 Financial assets at fair value through profit or loss 2015 2014 China A Share access products: − Listed $ 5,605,260 $ 35,530,680 − Unlisted 19,575,172 9,216,077

$ 25,180,432 $ 44,746,757 Listed equity securities 87,537,463 83,461,732

$ 112,717,895 $ 128,208,489

As at the reporting date, China A Share access products held by the Sub-Fund included participation certificates, participation notes or covered warrants with their performance linked to China A Shares.

4 Subscription receivable/redemption payable

The balances represent the amounts receivable from/(payable to) unitholders for subscribed/(redeemed) units and are expected to be settled within one month.

5 Amounts due from/(to) brokers 2015 2014 Transactions awaiting settlement $ 2,369,173 $ 2,005,192

Transactions awaiting settlement $ (3,583,945) $ -

The balances represent amounts receivable/(payable) for transactions of investments but not yet settled as at the reporting date. The balances are expected to be settled within one month.



23

6 Taxation

(a) Taxation in the statement of comprehensive income represents: 2015 2014 Current tax - overseas Withholding tax on: − Dividend income $ 65,520 $ 179,717 − Realised gain on China A Share access products

(note 6(b)(iii)) - 305,949

$ 65,520 $ 485,666 Deferred tax - overseas Withholding tax on unrealised gain on China A

Share access products (note 6(b)(iii)) - (322,362)

$ 65,520 $ 163,304

(b) Deferred tax liabilities in the statement of financial position represent: 2015 2014 Balance at 1 January $ - $ 322,362 Deferred tax liabilities arising from withholding

tax on unrealised gains on China A Share access products (note 6(b)(iii))

− Credited to profit or loss - (322,362)

Balance at 31 December $ - $ -

(i) Cayman Islands

Under the current taxation regime in the Cayman Islands, the Sub-Fund is exempt from paying taxes on income, profits or capital gains. The Trust has received an undertaking from the Governor in Cabinet of the Cayman Islands exempting it from tax for a period of 50 years from the date of the creation of the Trust. Accordingly, no provision for income taxes is included in these financial statements.



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6 Taxation (continued)

(b) Deferred tax liabilities in the statement of financial position represent: (continued)

(ii) Hong Kong

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

(iii) PRC

The Manager and the Trustee intend to manage and operate the Sub-Fund in such a manner that the Sub-Fund should not be treated as a tax resident enterprise of the PRC or a non-tax resident enterprise with an establishment or place of business in the PRC for Corporate Income Tax (“CIT”) purposes. As such, it is expected that the Sub-Fund should not be subject to CIT on an assessment basis and would only be subject to CIT on a withholding basis to the extent the Sub-Fund directly derives PRC sourced income, although this cannot be guaranteed.

Under the current general provision of the PRC Corporate Income Tax Law and published tax circulars, foreign corporate investors would be subject to PRC withholding tax at the rate of 10% in respect of certain types of their PRC sourced income earned, such as capital gains, dividend income and interest income.

On 14 November 2014, The Ministry of Finance (the “MoF”), the State Administration of Taxation (the “SAT”) and the China Securities Regulatory Commission (the “CSRC”) promulgated the “Notice on the temporary exemption of Corporate Income Tax on capital gains derived from the transfer of PRC equity investment assets such as PRC domestic stocks by QFIIs and Renminbi Qualified Foreign Institutional Investors (“RQFIIs”)” (the “Notice No. 79”).

According to the Notice No. 79, it states that (i) CIT is imposed on capital gains derived by QFIIs and RQFIIs from the transfer of PRC equity investment assets including China A Shares prior to 17 November 2014 in accordance with laws; and (ii) QFIIs and RQFIIs without an establishment or place of business in the PRC is temporarily exempt from CIT on capital gains derived from the transfer of PRC equity investment assets including China A Shares effective from 17 November 2014. In light of the notice, the AP Issuers have generally agreed not to withhold any amounts representing CIT in respect of capital gains realised from 17 November 2014 onwards on an actual sale of the notional underlying China A Shares of any access products.



25

6 Taxation (continued)

(b) Deferred tax liabilities in the statement of financial position represent: (continued)

(iii) PRC (continued)

The Notice No. 81 promulgated by the MoF, the SAT and the CSRC states that CIT is temporarily exempted on capital gains derived by Hong Kong and overseas investors including the Sub-Fund on the trading of China A Shares through the Stock Connect.

It should be noted that both Notice No. 79 and Notice No. 81 state that the exemptions are temporary only and when the PRC authorities announce the expiration of such exemptions, the AP Issuers and the Sub-Fund may need to recommence provisioning for future potential tax liabilities.

Nonetheless, the Sub-Fund has ceased to provide for PRC withholding tax at 10% on realised capital gains from trading of China A Share access products on or after 17 November 2014. The deferred tax liabilities in relation to unrealised capital gains of China A Share access products brought forward from prior year had been released on 17 November 2014. No PRC withholding tax provision had been made on the unrealised capital gains as at 31 December 2015.

7 Interest income 2015 2014 Interest income from bank balances $ 3,237 $ 1,955

8 Dividend income 2015 2014 Dividend income $ 1,791,687 $ 2,802,398 Withholding tax (note 6(a)) (65,520) (179,717)

Net dividend income $ 1,726,167 $ 2,622,681



26

9 Net (loss)/gain on financial instruments at fair value through profit or loss 2015

Net loss

(pre-tax) Withholding

tax Net loss (net of

withholding tax) Non-derivative financial

instruments: − China A Share access

products $ (4,292,964) $ - $ (4,292,964) − Listed equity securities (6,825,819) - (6,825,819)

$ (11,118,783) $ - $ (11,118,783)

Representing: Net realised (loss) $ (951,146) $ - $ (951,146) Net unrealised (loss) (10,167,637) - (10,167,637)

$ (11,118,783) $ - $ (11,118,783)

2014

Net gain (pre-tax)

Withholding tax

Net gain (net of withholding tax)

Non-derivative financial instruments:

− China A Share access products $ 9,250,882 $ 16,413 $ 9,267,295

− Listed equity securities 2,474,652 - 2,474,652

$ 11,725,534 $ 16,413 $ 11,741,947

Representing: Net realised gain $ 8,313,062 $ (305,949) $ 8,007,113 Net unrealised gain 3,412,472 322,362 3,734,834

$ 11,725,534 $ 16,413 $ 11,741,947

10 Soft commission

No soft commission arrangements were entered into with brokers during the current year and prior year.



27

11 Related party transactions

The following is a summary of significant transactions with related parties for the year. All such transactions were entered into in the ordinary course of business and on normal commercial terms.

(a) Management fee

The fee payable to the Manager is calculated at 1.8% per annum of the net asset value of the Sub-Fund. It is accrued daily and payable monthly in arrears. The Manager is responsible for paying the fee of the Sub-Manager out of its management fee. The management fee charged for the year and the amount payable by the Sub-Fund as at 31 December 2015 amounted to $2,250,014 (2014: $2,039,349) and $174,576 (2014: $207,111) respectively.

(b) Performance fee

The Manager is also entitled to a performance fee. The performance fee is calculated and is payable according to the provisions as stipulated in the Sub-Fund’s Explanatory Memorandum. The Manager is responsible for paying the Sub-Manager’s performance fee out of its performance fee.

The performance fee charged for the year and the amount payable by the Sub-Fund as at 31 December 2015 amounted to $725,246 (2014: $1,033,299) and $725,246 (2014: $1,033,299) respectively.

(c) Administration fee

The fee payable to the Sub-Administrator is calculated at 0.075% per annum of the net asset value of the Sub-Fund, subject to a minimum fixed fee of $5,500 per month. It is accrued daily and payable monthly in arrears. The administration fee charged for the year and the amount payable by the Sub-Fund as at 31 December 2015 amounted to $93,751 (2014: $84,973) and $7,274 (2014: $8,630) respectively.

(d) Trustee fee

The fee payable to the Trustee is $10,000 per annum. It is accrued daily and payable in arrears on a monthly basis. The trustee fee charged for the year and the amount payable by the Sub-Fund as at 31 December 2015 amounted to $9,945 (2014: $10,027) and $849 (2014: $904) respectively.

(e) Custodian fee

The fee payable to the Custodian is calculated at 0.03% per annum of the net asset value of the Sub-Fund. It is accrued daily and payable in arrears on a monthly basis. The custodian fee charged for the year and the amount payable by the Sub-Fund as at 31 December 2015 amounted to $45,948 (2014: $33,665) and $2,910 (2014: $3,452) respectively



28

11 Related party transactions (continued)

(f) Financial statements preparation fee

The Sub-Administrator is entitled to a financial statements preparation fee of $11,000 per annum. The financial statements preparation fee charged for the year amounted to $11,000 (2014: $11,000).

(g) Cash and cash equivalents

Cash and cash equivalents represent bank balance maintained with the Sub-Administrator. As at 31 December 2015, the balances amounted to $7,330,595 (2014: $5,449,824). During the year, the interest earned from these bank balances and the bank charges amounted to $3,237 (2014: $1,955) and $416 (2014: $507) respectively.

(h) Transaction cost

In the purchases and sales of investments, the Sub-Fund utilises the brokerage services of fellow subsidiaries of the Manager. Details of transactions effected through this entity are as follows: 2015 2014 Commission paid for the year $ 1,087,025 $ 658,332 Average rate of commission 0.32% 0.24% Total aggregate value of such transactions

for the year $ 336,275,395 $ 270,575,787 Percentage of such transactions in value to total

transactions for the year 41.62% 78.81% For the year ended 31 December 2015, transaction cost of $4,863,650 was incurred by the Sub-Fund, of which, $1,087,025 and $3,776,625 were paid to fellow subsidiaries of the Manager and third party respectively, and presented as transaction cost in the statement of comprehensive income.

For the year ended 31 December 2014, the total amount of transaction cost of $1,829,888 was included in net gain or loss on financial instruments at fair value through profit or loss in the statement of comprehensive income, with $658,332 and $1,171,556 being paid to a fellow subsidiary of the Manager and third party respectively

(i) China A Share access products with a total market value of $Nil (2014: $12,661,121) as at 31 December 2015 were issued by an intermediate holding company of the Manager and transacted through a fellow subsidiary of the Manager.

(j) Three unitholders (2014: two unitholders) of the Sub-Fund are fellow subsidiaries of the Manager. These fellow subsidiaries held a total of 16.92% (2014: 34.48%) of the units in the Sub-Fund as at 31 December 2015.



29

12 Net assets attributable to unitholders

(a) Units issued and redeemed

Number of units: 2015 AUD EUR GBP HKD SGD USD units units units units units units At 1 January 2015 61,801 47,554 - 8,282,802 601,875 8,307,431 Subscription of units during the year 150,252 6,606 10,713 771,334 92,006 7,879,376 Redemption of units during the year (101,017) (33,780) (5,825) (3,620,035) (409,195) (7,331,345)

At 31 December 2015 111,036 20,380 4,888 5,434,101 284,686 8,855,462

2014 AUD EUR GBP HKD SGD USD units units units units units units At 1 January 2014 26,063 77,798 19,304 7,393,273 697,828 5,743,170 Subscription of units during the year 60,681 2,724 - 3,226,977 225,739 6,081,490 Redemption of units during the year (24,943) (32,968) (19,304) (2,337,448) (321,692) (3,517,229)

At 31 December 2014 61,801 47,554 - 8,282,802 601,875 8,307,431



30

12 Net assets attributable to unitholders (continued)

(a) Units issued and redeemed (continued)

The Trust and the Sub-Fund do not have any externally imposed capital requirements. As at 31 December 2015, the Sub-Fund had net assets attributable to unitholders of $116,378,048 (2014: $133,421,043). The Sub-Fund strives to invest funds received from the issuance of redeemable units in investments that meet the Sub-Fund’s investment objectives while maintaining sufficient liquidity to meet the funding needs when unitholders redeem their units.

The Manager may from time to time permit unitholders to convert some or all of their units of any Class into units of any other Class whether in respect of the Sub-Fund or any other sub-funds of the Trust which have been authorised by the SFC.

(b) Distributions 2015 2014 Distributable income at the beginning of

the year $ 27,742,746 $ 16,665,501 (Loss incurred)/income earned during the year (17,450,670) 11,240,549 Withholding tax (65,520) (163,304)

Distributable income at the end of the year $ 10,226,556 $ 27,742,746

The Sub-Fund does not intend to pay dividends or other distributions for the current year.

(c) Reconciliation of net assets

In accordance with the Sub-Fund’s offering memorandum, the net assets of the Sub-Fund are computed using the pre-determined cut-off time for all transactions. Transactions after the offering memorandum based cut-off time are recorded on the next day. Under the IFRSs requirements, these transactions are recorded on the same day to comply with recognition and derecognition criteria for the financial instruments. Therefore, this approach creates a timing difference between the IFRSs net assets and units issued and the offering memorandum net assets and units issued.



31

12 Net assets attributable to unitholders (continued)

(c) Reconciliation of net assets (continued)

A reconciliation of the net assets between the amounts computed for valuation purposes and the amounts computed in accordance with IFRSs as reported is as follows: 2015 AUD units EUR units GBP units HKD units SGD units USD units Total Net assets attributable to

unitholders for valuation purposes $ 1,178,685 $ 316,586 $ 50,963 $ 8,297,022 $ 2,568,257 $ 104,270,545 $116,682,058

Adjustment for timing difference 28 7 1 (27,686) 61 (276,421) (304,010)

Net assets attributable to unitholders as reported in the financial statements $ 1,178,713 $ 316,593 $ 50,964 $ 8,269,336 $ 2,568,318 $ 103,994,124 $ 116,378,048



32

12 Net asset attributable to unitholders (continued)

(c) Reconciliation of net assets (continued) 2014 AUD units EUR units GBP units HKD units SGD units USD units Total Net assets attributable to

unitholders for valuation purposes $ 765,092 $ 838,280 $ - $ 14,318,779 $ 6,170,440 $ 110,800,477 $ 132,893,068

Adjustment for timing difference (19) (21) - (361) (156) 528,532 527,975

Net assets attributable to unitholders as reported in the financial statements $ 765,073 $ 838,259 $ - $ 14,318,418 $ 6,170,284 $ 111,329,009 $ 133,421,043



33

12 Net asset attributable to unitholders (continued)

(c) Reconciliation of net assets (continued)

A reconciliation of the units issued between the number used for valuation purposes and the number recorded in accordance with IFRSs is as follows:

Number of units

2015 AUD units EUR units GBP units HKD units SGD units USD units Units issued for valuation purposes 111,036 20,380 4,888 5,452,424 284,686 8,879,211 Adjustment for timing difference - - - (18,323) - (23,749)

Units issued as reported in the financial statements 111,036 20,380 4,888 5,434,101 284,686 8,855,462

Number of units

2014 AUD units EUR units GBP units HKD units SGD units USD units Units issued for valuation purposes 61,801 47,554 - 8,282,802 601,875 8,267,782 Adjustment for timing difference - - - - - 39,649

Units issued as reported in the financial statements 61,801 47,554 - 8,282,802 601,875 8,307,431



34

13 Financial instruments and associated risks

The Sub-Fund’s investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests according to the investment strategy. The risks that the Sub-Fund is exposed to are market risk, credit risk and liquidity risk. Market risk includes price risk, interest rate risk and currency risk.

The Sub-Fund maintains an investment portfolio in a variety of listed equity securities and China A Share access products as dictated by its investment management strategy.

The nature and extent of the financial instruments outstanding at the end of the reporting period and the risk management policies employed by the Sub-Fund are discussed below.

(a) Market risk

All investments held by the Sub-Fund are measured at fair value through profit or loss, and all changes in market conditions directly affect profit or loss. Market risk is the risk that the value of the investments will fluctuate as a result of changes in prices, interest rates or exchange rates.

(i) Price risk

Price risk is the risk that value of the instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.

The Sub-Fund is exposed to price risk arising from changes in market price of listed equity securities and China A Share access products.

Price sensitivity

As at 31 December 2015, it is estimated that an increase/decrease of 5% (2014: 5%) in equity prices would have increased/decreased the net assets attributable to unitholders by approximately $5,635,895 (2014: $6,410,424) with all other variables held constant at the end of the reporting period.

(ii) Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect the future cash flows or the fair value of financial instruments and therefore result in a potential gain or loss to the Sub-Fund. Except for bank deposits, all the financial assets and liabilities of the Sub-Fund are non-interest bearing. As a result, the Sub-Fund has limited exposure to interest rate risk.



35

13 Financial instruments and associated risks (continued)

(a) Market risk (continued)

(iii) Currency risk

The Sub-Fund may invest in financial instruments and enter into transactions that are denominated in currencies other than its functional currency. Consequently, the Sub-Fund is exposed to risks that the exchange rate of its functional currency relative to other foreign currencies may change in a manner that has an adverse effect on the fair value of that portion of the Sub-Fund’s financial assets or liabilities denominated in currencies other than the United States dollars (“USD”). The Manager monitors the Sub-Fund's foreign currency exposures on an ongoing basis.

Currency sensitivity

As at the reporting date, had the USD weakened by 5% in relation to respective currencies, with all other variables held constant, net assets attributable to unitholders and total comprehensive income for the year would have increased by the amounts shown below. 2015 2014

Currencies Net

exposure

Change in net assets

attributable to unitholders

if USD weakened

by 5% Net

exposure

Change in net assets

attributable to unitholders

if USD weakened

by 5% Australian Dollars $ 57,342 $ 2,867 $ 1,015 $ 51 Euros 38 2 1,607 80 Chinese Yuan 3,310,798 165,540 48,699 2,435 British Pounds 73,164 3,658 3,700 185 Singapore Dollars 7,806 390 121,616 6,081

Total $ 3,449,148 $ 172,457 $ 176,637 $ 8,832

A 5% strengthening of the USD against the above currencies would have resulted in an equal but opposite effect on the financial statements, on the basis that all other variables remain constant.

The net exposure in Hong Kong dollars (“HKD”) as at 31 December 2015 was $76,678,896 (2014: $79,944,873). As the HKD is pegged to the USD, the Sub-Fund does not expect any significant movement in USD/HKD exchange rate.



36


(b) Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Sub-Fund. The Sub-Fund’s exposure to credit risk is monitored by the Manager on an ongoing basis. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. This relates to financial assets carried at amortised cost, as they have short term to maturity.

The Sub-Fund is also subject to credit and counterparty risk associated with each AP Issuer and may suffer losses potentially equal to the full value of the China A Share access products issued by an AP Issuer if such AP Issuer fails to perform its obligations under the China A Share access products.

The Manager mitigates the counterparty risk associated with the Sub-Fund by putting in place appropriate counterparty risk management procedures.

The table below sets out the net exposure of the Sub-Fund, in relation to China A Share access products, to counterparties as at 31 December 2015 and 2014 together with their credit ratings provided by Standard & Poor’s rating services: 2015 2014

Credit rating

Net exposure to

counterparties Credit rating

Net exposure to

counterparties AP Issuers − BOCI Financial

Products Limited No rating $ 9,535,858 No rating $ 7,333,984 − Citigroup Global

Markets Holdings Inc - - A-

12,661,121

− Standard Chartered Bank (Hong Kong) Limited - - A- 12,151,883

− Standard Chartered Bank A+ 5,302,650 - -

− Merrill Lynch International & Co C.V. - - A 12,599,769

− UBS AG A 10,341,924 - -



37


(c) Liquidity risk

As the unitholders may redeem units on the redemption date, the Sub-Fund is exposed to liquidity risk of meeting unitholder redemptions. Any amount payable to unitholders in respect of the redemption of units shall normally be paid within one month.

The Manager monitors the current and expected liquidity requirements regularly to ensure that the Sub-Fund maintains sufficient reserves of cash and readily realisable marketable securities to meet its liquidity requirements in the short and long term.

Analysis of liability by remaining maturity

The following table details the remaining contractual maturities of the Sub-Fund’s liabilities as at 31 December 2015 and 2014: 2015

Total Repayable on demand

Within 1 month

Over 1 month

to 3 months

Over 3 months to 1 year

No specific

date Non-trading liabilities Amount due to brokers $ 3,583,945 $ - $ 3,583,945 $ - $ - $ - Redemption payable 1,540,406 - 1,540,406 - - - Accruals and other payables 954,769 - 910,855 - 43,914 - Net assets attributable to

unitholders 116,378,048 - 116,378,048 - - -

$ 122,457,168 $ - $ 122,413,254 $ - $ 43,914 $ -

2014

Total Repayable on demand

Within 1 month

Over 1 month

to 3 months

Over 3 months to 1 year

No specific

date Non-trading liabilities Redemption payable $ 1,603,203 $ - $ 1,603,203 $ - $ - $ - Accruals and other payables 1,290,309 - 220,098 1,070,211 - - Net assets attributable to

unitholders 133,421,043 - 133,421,043 - - -

$ 136,314,555 $ - $ 135,244,344 $ 1,070,211 $ - $ -



38

14 Fair value information

(a) Financial instruments carried at fair value

The following table presents the fair value of the Sub-Fund’s financial instruments measured at the end of the reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in IFRS 13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

− Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date

− Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available

− Level 3 valuations: Fair value measured using significant unobservable inputs 2015 Level 1 Level 2 Level 3 Total China A Share access

products $ - $ 25,180,432 $ - $ 25,180,432 Listed equity securities 87,537,463 - - 87,537,463

$ 87,537,463 $ 25,180,432 $ - $ 112,717,895

2014 Level 1 Level 2 Level 3 Total China A Share access

products $ - $ 44,746,757 $ - $ 44,746,757 Listed equity securities 83,461,732 - - 83,461,732

$ 83,461,732 $ 44,746,757 $ - $ 128,208,489

During the year ended 31 December 2015 and 2014, there were no transfers among instruments in Level 1, Level 2 and Level 3.



39

14 Fair value information (continued)

(b) Fair values of financial instruments carried at other than fair value

The financial instruments not measured at fair value through profit or loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

The following table sets out the fair value of financial instruments not measured at fair value and analyses it by the level in the fair value hierarchy into each fair value measurement is categorised. 2015 Level 1 Level 2 Level 3 Total Financial assets Cash and cash

equivalents $ - $ 7,330,595 $ - $ 7,330,595 Amounts due from

brokers - 2,369,173 - 2,369,173 Subscription receivable - 39,505 - 39,505

$ - $ 9,739,273 $ - $ 9,739,273

Financial liabilities Amounts due to brokers $ - $ (3,583,945) $ - $ (3,583,945) Redemption payable - (1,540,406) - (1,540,406) Accruals and other

payables - (954,769) - (954,769)

$ - $ (6,079,120) $ - $ (6,079,120)



40

14 Fair value information (continued)

(b) Fair values of financial instruments carried at other than fair value (continued) 2014 Level 1 Level 2 Level 3 Total Financial assets Cash and cash

equivalents $ - $ 5,449,824 $ - $ 5,449,824 Amounts due from

brokers - 2,005,192 - 2,005,192 Subscription receivable - 602,351 - 602,351 Dividend receivable - 48,699 - 48,699

$ - $ 8,106,066 $ - $ 8,106,066

Financial liabilities Redemption payable $ - $ (1,603,203) $ - $ (1,603,203) Accruals and other

payables - (1,290,309) - (1,290,309)

$ - $ (2,893,512) $ - $ (2,893,512)

15 Segment information

The Manager makes the strategic resource allocation on behalf of the Sub-Fund and has determined the operating segments based on the internal reports reviewed which are used to make strategic decisions. The Manager considers that the Sub-Fund has one single operating segment based on one single investment strategy.

All revenues generated by the Sub-Fund are from listed equities securities and China A Share access products. The segment information provided to the Manager is the same as that disclosed in the statement of comprehensive income and the statement of financial position.



41

16 Key sources of estimation uncertainty

Estimation of fair values

The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques as described in note 2(e)(iv). For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

17 Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 31 December 2015

Up to the date of issue of these financial statements, the IASB has issued a number of amendments and new standards which are not yet effective for the year ended 31 December 2015 and which have not been adopted in these financial statements. These include the following which may be relevant to the Sub-Fund.

Effective for accounting periods

beginning on or after Amendments to IFRS 10, IFRS 12 and IAS 28, Investment entities: Applying the consolidation exception

1 January 2016

Annual improvements to IFRSs 2012-2014 cycle 1 January 2016 Amendments to IAS 1, Disclosure initiative 1 January 2016 IFRS 9, Financial instruments 1 January 2018

The Sub-Fund is in the process of making an assessment of what the impact of these amendments and standards is expected to be in the period of initial application.



42

Investment portfolio as at 31 December 2015 (unaudited) (Expressed in United States dollars)

Holdings Market

value % of total net assets

Listed China A Share access products1 SC SP -CW16 CHINA ZH 214,800 $ 818,689 0.70 SC SP -CW16 GLARUN TECHNO 111,700 1,059,072 0.91 SC SP -CW16 NANFENG VENTI 245,000 993,206 0.85 SC SP -CW16 SICHUAN DANFU 34,200 343,867 0.30 SC SP -CW16 ZIBO WANCHANG 163,200 865,123 0.74 SC SP -CW16 MIRACLE AUTOM 386,500 1,222,693 1.06 UBS AG 78,600 302,610 0.26 (China Zhenhua Group Science &

Technology Co Ltd)

$ 5,605,260 4.82 ---------------- -----------



43

Investment portfolio as at 31 December 2015 (unaudited) (Expressed in United States dollars)

Holdings Market


Unlisted China A Share access products BOCI FINL PRODUCT LTD 206,999 $ 824,270 0.71 (Zhejiang Huayou Cobalt Co Ltd) BOCI FINL PRODUCT LTD 455,500 1,433,914 1.23 (Zhejiang Asia-Pacific Mechanical &

Electronic Co Ltd)

BOCI FINL PRODUCT LTD 174,000 659,425 0.57 (Zhejiang Vie Science & Technology Co

Ltd)

BOCI FINL PRODUCT LTD 204,000 984,504 0.85 (Inspur Electronic Information Industry Co

Ltd)

BOCI FINL PRODUCT LTD 110,000 463,430 0.40 (Leaguer Stock Co Ltd) BOCI FINL PRODUCT LTD 201,908 817,122 0.70 (Nanfeng Ventilator Co Ltd) BOCI FINL PRODUCT LTD 77,200 939,910 0.81 (Sinodata Co Ltd) BOCI FINL PRODUCT LTD 96,900 533,628 0.46 (Lida Optical & Electronic Co Ltd) BOCI FINL PRODUCT LTD 61,000 328,363 0.28 (Wuhan Zhongyuan Huadian Science &

Technology Co Ltd)

BOCI FINL PRODUCT LTD 131,000 626,049 0.54 (Beijing TRS Information Technology Co

Ltd)

BOCI FINL PRODUCT LTD 94,500 905,121 0.78 (Jiang Genfeng Lithium Co Ltd) BOCI FINL PRODUCT LTD 93,800 1,020,122 0.88 (Taiji Computer Corp Ltd) UBS AG 293,700 1,305,790 1.12 (Shanghai Zhangjiang High-Tech Park

Development Co Ltd)

UBS AG 255,074 1,142,987 0.98 (Shenzhen Tianyuan Dic Information

Technology Co Ltd)

UBS AG 109,000 463,767 0.40 (Leaguer Stock Co Ltd) UBS AG 67,258 952,575 0.82 (Dawning Information Industry Co Ltd) UBS AG 95,200 966,851 0.83 (Taihai Manoir Nuclear Equipment Co Ltd)



44

Investment portfolio as at 31 December 2015 (unaudited) (continued) (Expressed in United States dollars)

Holdings Market


Unlisted China A Share access products (continued)

UBS AG 248,600 $ 947,432 0.81 (Datang Telecom Technology Co Ltd) UBS AG 257,000 622,454 0.53 (Fujian Newchoice Pipe Technology Co

Ltd)

UBS AG 94,907 593,359 0.51 (Zhejiang Crystal-Optech Co Ltd) UBS AG 186,600 624,177 0.54 (Sanlux Co Ltd) UBS AG 94,200 560,867 0.48 (Shenzhen Deren Electronic Co Ltd) UBS AG 114,575 914,194 0.78 (Sichuan Chengfa Aero-Science &

Technology Co Ltd)

UBS AG 173,465 944,861 0.81 (Wuhan Zhongyuan Huadian Science &

Technology Co Ltd)

$ 19,575,172 16.82 ---------------- -----------



45


Holdings Market


Hong Kong listed equities AVICHINA INDUSTRY & TECH CO 'H' 700,000 $ 550,958 0.47 BANK OF CHINA LTD - H 4,000,000 1,785,775 1.53 BEIJING ENTERPRISES WATER GR 4,326,000 3,030,938 2.60 BEIJING TONG REN TANG CHINESE

MEDICINE C 1,333,000 1,699,330 1.46 CHINA AIRCRAFT LEASING GROUP 2,103,000 2,170,801 1.87 CHINA HARMONY NEW ENERGY AUT 1,500,000 1,058,691 0.91 CHINA LIFE INSURANCE CO-H 'H' 400,000 1,292,881 1.11 CHINA MERCHANTS HLDGS INTL 550,000 1,749,324 1.50 CHINA MOBILE (HK)LTD 300,000 3,387,038 2.91 CHINA RESOURCES LAND LTD SHS 1,374,000 4,006,691 3.44 CHINA SHIPPING DEVELOPMENT-H 2,250,000 1,495,135 1.28 CHINA SINGYES SOLAR TECH 2,073,000 1,489,859 1.28 CHINA TAIPING INSURANCE HOLDIN 870,000 2,694,146 2.31 CHINA TRAVEL INTL INV HK 2,800,000 1,177,786 1.01 CHINA ZHENGTONG AU 2,781,500 1,281,262 1.10 CONCORD NEW ENERGY GROUP LTD 31,200,000 1,871,967 1.61 COWELL E HOLDINGS INC 1,900,000 789,406 0.68 CSPC PHARMACEUTICAL GROUP LTD 3,846,000 3,930,295 3.38 FOSUN INTERNATIONAL 1,151,500 1,797,794 1.54 FUYAO GLASS INDUSTRY GROUP-H 1,000,000 2,410,280 2.07 GUANGZHOU R&F PROPERTIES - H 900,000 1,109,013 0.95 HAITONG SECURITIES 'H' 961,600 1,699,831 1.46



46


Holdings Market


Hong Kong listed equities (continued) IMAX CHINA HOLDING INC 460,300 $ 3,245,801 2.79 IND & COMM BK OF CHINA-H 6,213,000 3,751,785 3.22 LENOVO GROUP LTD 1,250,000 1,269,333 1.09 LIVZON PHARMACEUTICAL GROU-H 380,000 1,828,871 1.57 PEOPLE'S INSURANCE 'H'CNY1 3,400,000 1,667,068 1.43 PING AN INSURANCE GROUP CO-H 'H' 680,000 3,772,837 3.25 SHANGHAI PHARMACEU 'H'CNY1 1,545,700 3,346,631 2.88 TENCENT HOLDINGS LTD ORD 451,600 8,886,167 7.65 XINYI SOLAR HLDGS HKD0.10 7,000,000 2,863,176 2.47

$ 73,110,870 62.82 ---------------- ----------- United States listed equities BAIDU.COM - ADR SPON ADR REP A 14,800 $ 2,797,792 2.40 CTRIP.COM INTERNATIONAL-ADR

ADS EA REP 1 117,800

824,674

0.71 IKANG HEALTHCARE GROUP-ADR

IKANG HEALTHC 105,500

2,156,420

1.85 JD.COM INC-ADR JD.COM INC-ADR 96,200 3,103,893 2.67

$ 8,882,779 7.63 ---------------- -----------



47


Holdings Market


China listed equities CHONGQING CHANGAN AUTOMOBI-B 1,016,000 $ 2,241,716 1.93 GEZHOUBA CO LTD-A 500,000 599,029 0.51 HUATAI SECURITIES CO LTD-A 358,000 1,074,714 0.92 NEW CHINA LIFE INSURANCE C-A 161,000 1,279,625 1.10 SHANGHAI TUNNEL ENGINEERIN-A 215,300 348,730 0.30

$ 5,543,814 4.76 ---------------- -----------

Total investments $ 112,717,895 96.85 (Total cost of investments: $106,850,079) Other net assets 3,660,153 3.15

Total net assets $ 116,378,048 100.00

1 The access products are listed in Ireland and Luxembourg and the underlying securities of these access products are A Shares listed in mainland China.



48

Statement of movements in portfolio holdings for the year ended 31 December 2015 (unaudited)

% of total net assets

% of total net assets

2015 2014 Listed China A Share access products 4.82 26.62 Unlisted China A Share access products 16.82 6.91 Hong Kong listed equity securities 62.82 62.57 United States listed equity securities 7.63 - China listed equity securities 4.76 -

Total investments 96.85 96.10 Other net assets 3.15 3.90

Total net assets 100.00 100.00



49

Performance table (unaudited) (Expressed in United States dollars, unless otherwise indicated)

2015 2014 2013 Total net asset value for valuation purposes

(calculated in accordance with the Explanatory Memorandum) $ 116,682,058 $ 132,893,068 $ 90,955,676

Net asset value per unit in unit denomination currency (calculated in accordance with the Explanatory Memorandum)

− AUD units AUD 14.591 AUD 15.128 AUD 12.862 − EUR units EUR 14.300 EUR 14.568 EUR 11.920 − GBP units GBP 7.074 - GBP 11.844 − HKD units HKD 11.793 HKD 13.406 HKD 12.329 − SGD units SGD 12.798 SGD 13.585 SGD 11.962 − USD units USD 11.743 USD 13.401 USD 12.332



50

Performance table (unaudited) (continued) (Expressed in United States dollars, unless otherwise indicated)

Price record in unit denomination currency during the year/period (calculated in accordance with the Explanatory Memorandum) 2015 2014 2013 2012 20111

Lowest net asset value

per unit

Highest net asset value

per unit


per unit


per unit


per unit


per unit


per unit


per unit


per unit


per unit AUD units 13.115 20.676 10.986 15.128 10.049 12.862 8.501 9.861 8.397 10.218 EUR units 12.066 20.831 10.657 14.568 10.526 12.086 9.157 10.373 8.373 10.426 GBP units2 5.946 12.151 10.397 12.199 10.499 12.344 8.997 10.246 8.729 10.554 HKD units 10.325 17.503 11.001 13.406 10.416 12.329 8.819 10.332 8.775 10.948 SGD units 11.088 18.011 10.562 13.585 10.072 11.962 8.606 9.856 8.549 10.391 USD units 10.281 17.459 11.007 13.401 10.429 12.332 8.823 10.330 8.759 10.995

1 The financial period of the Sub-Fund extended from 28 October 2010 (date of inception) to 31 December 2011.

2 The units of GBP class were fully redeemed on 4 September 2014 and reissued at GBP10 per unit on 15 January 2015. The highest and lowest net asset value per unit of 2014 and 2015 represented the values in the period from 1 January 2014 to 4 September 2014 and 15 January 2015 to 31 December 2015 respectively.



51

Performance table (unaudited) (continued) (Expressed in United States dollars)

2015 2014 2013 Net investment return during the year/period − AUD units -3.55% 17.62% 30.43% − EUR units -1.84% 22.21% 14.91% − GBP units1 -29.26% 3.00% 17.34% − HKD units -12.03% 8.73% 19.33% − SGD units -5.79% 13.57% 23.29% − USD units -12.37% 8.67% 19.12%

The net investment return for the above reporting year/period was calculated by reference to the difference between the net asset value per unit for valuation purposes of the Sub-Fund at the year/period end date and its beginning of the year/period date price, divided by the beginning of the year/period date price to obtain the return in percentage

1 The units of GBP class were fully redeemed on 4 September 2014 and reissued at GBP10 per unit on 15 January 2015. The net investment return of 2014 was calculated by reference to the difference between the net asset value per unit for valuation purposes of the Sub-Fund on 4 September 2014 and its beginning of the year date price, divided by the beginning of the year date price to obtain the return in percentage.

The net investment return of 2015 was calculated by reference to the difference between the net asset value per unit for valuation purposes of the Sub-Fund on 31 December 2015 and the reissued price at GBP10 per unit on 15 January 2015, divided by the reissued price at GBP10 per unit on 15 January 2015 to obtain the return in percentage.

china select fund - a sub-fund of citi investment trust ... · we conducted our audit in accordance...

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