Notification of changes to the underlying funds of L51 Value Partners Greater China High Yield Income & P40 Value Partners High-Dividend Stocks

29 November 2019

We have received notification from Value Partners Group Limited (“The Company”) of amendments to the investment policies of the underlying funds of the above named funds. These changes will come into effect from 01 January 2020 (the “Effective Date”).

The Company have confirmed the below:

 

L51 Value Partners Greater China High Yield Income

The following amendments/enhanced disclosures will be made to the investment policies of the underlying fund of L51 Value Partners Greater China High Yield Income:

• Currently, the debt securities in which the underlying fund may invest are across all ratings and thus, such debt securities may be rated or unrated or rated below investment grade credit rating, such as below Moody’s “Baa3” or below Standard & Poor’s “BBB-”. With effect from the Effective Date, the debt securities (or the issuers of such debt securities) in which the underlying fund may invest are across all ratings and thus, such debt securities (or the issuers of such debt securities) may be rated or unrated or rated below investment grade credit rating, such as below Moody’s “Baa3” or below Standard & Poor’s “BBB-”.

• Enhanced disclosures that the underlying fund may invest less than 30% of its Net Asset Value in instruments with loss-absorption features (“LAPs”) such as contingent convertible bonds issued by financial institutions, non-preferred senior debt instruments, certain Additional Tier 1 and Tier 2 capital instruments, and external loss-absorbing capacity (“LAC”) debt instruments. These instruments may be subject to contingent write-down or contingent conversion to ordinary shares on the occurrence of trigger event(s). Additional disclosures are also made on the risks associated with investments in LAPs.

• The underlying fund currently does not intend to use financial derivative instruments extensively for hedging or investment purposes. The underlying fund may invest in index and currency swaps and currency forwards (which are normally traded over-the-counter) for hedging purposes only. Further, the underlying fund may also, invest in, commodities, futures contracts, options, depository receipts, warrants, units in any unit trust or shares in any mutual fund corporation or any other collective investment scheme (including those managed by the Manager or its Connected Persons), currencies and interest rates and may hold cash, short-term deposits, and other money instruments (as considered appropriate by the Manager). Currently, the underlying fund does not intend to invest more than 10% of its latest Net Asset Value in such instruments. With effect from the Effective Date, the investment policies of the underlying fund will be amended to provide that the underlying fund may use financial derivative instruments (such as futures contracts, options and warrants) for hedging and investment purposes. Consequently, futures contracts, options and warrants will be removed from the aforesaid 10% limit. Enhanced disclosures will be made to provide that the underlying fund’s net derivative exposure may be up to 50% of the underlying fund’s Net Asset Value.

 

P40 Value Partners High-Dividend Stocks

The following amendments will be made to the investment policies of the underlying fund of P40 Value Partners High-Dividend Stocks:

• Currently, the Manager may invest in debt securities that are below investment grade (i.e. a credit rating of BB+ or below from Standard & Poor’s, Ba1 or below from Moody’s or an equivalent rating from an internationally recognized rating agency) or unrated. With effect from the Effective Date, the Manager may invest in debt securities which (or the issuers of which) are below investment grade or unrated. A debt security which is rated below investment grade is defined as a debt security which (or the issuer of which) is rated below BBB-/Baa3 by an internationally recognised credit rating agency (such as Standard & Poor’s, Moody’s and/or Fitch); and an “unrated” debt security is defined as a debt security which neither the security itself nor its issuer has a credit rating.
• Currently, the underlying fund may, on an ancillary basis, invest less than 30% of its Net Asset Value in futures contracts, options, depository receipts, warrants, convertible bonds and units in any unit trust or shares in any mutual fund corporation or any other collective investment scheme. For the purposes of hedging market and currency risks, the underlying fund may invest in index and currency swaps and currency forwards. Enhanced disclosures will be made to provide that the underlying fund’s net derivative exposure may be up to 50% of the underlying fund’s Net Asset Value provided that for so long as the underlying fund is registered for public distribution in Taiwan, the underlying fund shall, unless otherwise approved by the Taiwan Financial Supervisory Commission, comply with local Taiwanese regulation in respect of net derivative exposure, which currently requires the total value of the underlying fund’s non-offset position in derivatives held for:

  (i) any purposes other than hedging, and in any derivatives held for hedging purposes in excess of the position limit stated in the paragraph below, not to exceed 40% of its Net Asset Value (or such other percentage as the Taiwan regulator may stipulate from time to time); and

  (ii) hedging purposes, not to exceed the total market value of the relevant securities held by the Trust.

Please refer to the Prospectus of the underlying funds of the above named funds for further information.

Should you have any questions regarding these changes, please contact International Funds & Investments.