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GaveKal UCITS Funds Newsletter October 2013
Page 1
www.gavekal.com
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Louis-Vincent Gave
Contact
Suite 3101, Central Plaza
18 Harbour Road, Wanchai
Hong Kong
Tel: +852 3987 6255
Fax: +852 2877 5083
Fund Website:
http://www.gavekal.com/gcl-asia/
http://www.gavekalcapital.com/ucitsfund.php
Today’s key investment trends
From 2002 to 2011, investors only needed to have one idea to be
successful beyond their wildest dreams. And that idea was to simply buy
whatever Chinese people wanted to buy. With that single brain-wave, one
could build a portfolio of high-end Hong Kong or Vancouver real estate,
Bordeaux wines, gold, copper and oil, dairies in New Zealand, timber in
Canada, Chinese modern art, Hermes, LVMH, Caterpillar and Porsche
shares. In other words, put together a ‘diversified’ portfolio, which
nonetheless rotated mostly around two very important macro trends:
a) a 200m productive worker increase in China’s labor force and b) a
massive expansion in China’s balance sheets, starting with the central
government’s and trickling down to individual consumers’.
Unfortunately, with the Chinese labor force and Chinese balance sheets
no longer growing, the above investment thesis has now stalled and
investors have to structure portfolios around other key trends. For us, the
key trends of the coming years include:
Zero interest rate policies to stay in place for longer than people
expect, and the big question is whether this is inflationary, or
deflationary, for the global economy. At first glance, most investors
would probably assume that too low a cost of capital leads to high
money supply growth and, from there, to inflation. But what if,
simultaneously, too low a cost of capital allows zombie companies to
stay afloat, thereby lowering returns on capital for everyone? Or what
if no-cost capital encourages companies to replace ever more workers
with robots and machinery, thereby triggering long-term
unemployment amongst the unskilled and semi-skilled workforce? Or,
worse yet, what if the zero cost of money encourages companies to
leverage up in order to buy out their competitors and/or their own
shares, creating an economy with more leverage, and more
concentration of asset ownership, thereby leaving it prone to trip at the
slightest outside shock? For all these reasons, it seems that zero-
interest rate policies could actually end up being more deflationary,
and thus self-sustaining, then most expect?
The rapid internationalization of the renminbi, a frequent topic in
these pages, is increasingly encouraging Chinese exports to move up
the value chain. Combine this with China’s growing ability to finance
its emerging market customers’ purchases of machine tools,
excavators, roads, oil-rigs, ships etc… and increasingly China is
allowing the rest of the emerging world to industrialize ‘on the cheap’.
If nothing else, this means that capitalism’s deflationary ability to
produce more goods at cheaper costs is alive and well.
Commodity prices are falling. As we write, the CRB index is flirting
with a three-year low while the oil price stands at a four month low.
This is terrific news for a number of economies whose large current
account deficits—typically the direct result of high commodity
prices—have in recent months worried investors (whether India,
Southern Europe etc). At the same time, it is bad news for a lot of
emerging market indices where commodity-related equities are simply
too large a component in the index. As more commodity output
GaveKal UCITS Funds Newsletter October 2013
Page 2
www.gavekal.com
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Louis-Vincent Gave
continues to come on stream, commodity prices will likely continue to
drag most countries’ inflation data lower, and will also rebalance trade
data that currently seems out of whack (for example, the US and
Canada trade deficit linked to energy is likely to continue shrinking
from the US$ 500bn per annum reached in 2007 to less than US$300bn
today and probably less than US$100bn by the end of the decade! )
Aggressive monetary policy under Abenomics entails that Japanese
private savers, with more than JPY 800 trillion sitting at the bank in
cash earning 0%, will continue to chase yield opportunities around the
world.
Putting it all together, it seems unlikely that the current global
deflationary trends will reverse in the coming quarters. Instead, investors
will likely return to chasing steady yield wherever that may be found; in
fact, we may be back to investors dreaming of portfolios that deliver
equity-like returns with bond-like volatility. Today, this is what we aim to
achieve, coming at the issue from different angles, in our various UCITS
funds.
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 3
GaveKal Asian Opportunities UCITS Fund
The Fund’s Philosophy: Investing in Asia presents two major challenges for foreign investors: greater individual
company risk and abrupt changes in policies by governments whose processes are very different than those that
prevail in Western democracies. As a result, country risk tends to be a primary driver of return. Against this
landscape, we believe that two strategies fundamentally make sense for investors aiming to deliver better risk-
adjusted returns than equity benchmarks: a) a deep-value, bottom-up driven strategy or b) a strategy which aims to
identify where in Asia bull markets are the most likely to unfold, and then overweight the more aggressive, higher-
beta growth stocks in those countries. Of course, the downside of a focus on high-beta growth stocks is that when
equity bear markets occur, these can prove very damaging. This is why, in the GaveKal Asian Opportunities
UCITS Fund, we keep some of the fund’s capital invested in Asian fixed income. Through the combination of
these three books, the GaveKal Asian Opportunities UCITS fund aims to outperform the Asia-Pacific MSCI index
with a lower volatility. The fund offers daily liquidity with US$, Euro and GBP share classes.
Annualized Volatility and Returns Since Inception Historical Performance against Asia-Pacific MSCI
Review of the past month: As markets sold off yield instruments (whether bonds or dividend-paying stocks)
aggressively in the May-September period, the fund struggled and underperformed. Fortunately, this trend came to an
end in October and the fund outperformed the Asia MSCI by 94 basis points. Behind this outperformance, one finds: a)
the strong rebound in Philippines stocks (+7.92% for the MSCI Philippines) which helped contribute 75bp of relative
outperformance; b) a positive stock selection effect in Japan which contributed 25bp of outperformance. The fund has
now taken profits on some of the names that ran up the most (Softbank, Nomura) though maintains exposure to names
such as Panasonic (which should continue to curry investor favor as Tesla’s battery supplier), and other blue chips
(Honda, Toyota, Mitsubishi-UFJ, etc.). The fund’s very significant overweight on Chinese equity markets was not a
meaningful contributor to outperformance, though stock selection did contribute an addition +0.34% relative gain.
Against that, the fund’s underweight in Australia once again was a drag (-44bp), as were the minimal exposure to
Taiwan, Malaysia and Indonesia.
GaveKal Asian Opportunities UCITS Fund - Euro share class
Inception date: January 2006
Latest NAV (EUR A) 161.50 Annualized returns since inception 6.31%
Monthly % change 3.23% Annualized volatility since inception 13.25%
12m % change 6.61% Number of equity positions 50
Returns since inception 61.50% Information ratio 0.46
Fund AUM EUR 457m Firm AUM USD 1.6b
50
70
90
110
130
150
170
190
Jan-0
6
May-0
6
Sep-0
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Jan-0
7
May-0
7
Sep-0
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Jan-0
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May-0
8
Sep-0
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May-1
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2
May-1
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GAOUF (EUR) Since Inception
GAOUF (EUR) MSCI ASIA TR (EUR)
GAOUF (EUR), 13.25%, 6.31%
MSCI ASIA TR (EUR), 15.00%,
2.20%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
12.00% 13.00% 14.00% 15.00% 16.00% 17.00% 18.00%
An
nu
alize
d R
etu
rn
Annualized Volatility
GAOUF (EUR)
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 4
GaveKal Asian Opportunities UCITS Fund
Market Cap Exposure in US$ as % of Total NAV Fixed Income Allocation by Country as % of Total NAV
Equity Allocation by Country as % of Total NAV Top Ten Equity Positions
Currency Exposure as % of Total NAV Asset Allocation Over the Past Two Years
0
10
20
30
40
50
60
70
80
90
100
Nov-1
1
Dec-1
1
Jan-1
2
Feb-1
2
Mar-1
2
Apr-1
2
May-1
2
Jun-1
2
Jul-1
2
Aug-1
2
Sep-1
2
Oct-1
2
Nov-1
2
Dec-1
2
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
3
May-1
3
Jun-1
3
Jul-1
3
Aug-1
3
Sep-1
3
Oct-1
3
EQUITIES (Including Futures) BONDS CASH
HKD, 26.80%
USD, 15.43%
CNY, 13.32%
PHP, 10.76%
SGD, 10.12%
KRW, 7.97%
MYR, 5.67%
AUD, 3.51%
INR, 2.94%
TWD, 1.02%
THB, 1.01%EUR, 0.84%
IDR, 0.53%
JPY, 0.13%
GBP, -0.04%
EQUITY % of NAV
CK Infrastructure 2.80%
Hutchison Whampoa Ltd 2.57%
Samsung Electronics 2.48%
Megaworld 2.43%
Guangdong Investment Ltd 2.30%
Panasonic Corp 2.23%
Techtronic 2.09%
Metro Bank And Trust 1.89%
Hyundai Heavy Industries Co., Ltd. 1.88%
Tencent Holdings Ltd 1.86%
Total 22.53%
Singapore, 9.02%
China, 7.69%
Malaysia, 6.01%
Hong Kong, 3.22%
Indonesia, 0.53%
Korea, 0.40%
India, 0.16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
<1bn 1-5bn >5bn
% N
AV
Market Cap in US$
China, 20.25%
Japan, 16.83%
Philippines, 9.81%
Korea, 7.97%
Hong Kong, 7.46%
Australia, 3.50%
India, 2.94%
Singapore, 1.42%
Taiwan, 1.02%Thailand, 1.01%
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 5
GaveKal Asian Opportunities UCITS Fund
Fund Share Class Details
Fund Management and Service Providers Fund Terms
Launch Date 11 January 2006
Domicile Ireland
Share Classes A and B (Institutional), C (Retail)
Denomination EUR/USD/GBP (Income & Accumulation Shares)
Issue Price €100/$100/£100
Minimum Subscription A & B €250,000/$250,000/£250,000
Minimum Subscription C €10,000/$10,000/£10,000
Fees A & B 1.5% management fee p.a., no performance fee
Fees C 2% management fee p.a., no performance fee
Dealing Day Daily (every day that is a Business Day in Dublin and Hong Kong)
Valuation Day The Business Day prior to the relevant Dealing Day
Subscription and
Redemption Deadline5pm (Irish time); 2 Business Days prior to the relevant Valuation Day
Redemption Fee None
Fund Reporting Status Yes (Share Class B GBP only)
Investment Advisor GaveKal Capital Limited
Auditor Deloitte & Touche
Administrator Societe Generale Securities Services, SGSS (Ireland) Limited
Custodian Societe Generale
Legal Advisor Dillon Eustace (Ireland)
GAOUF (EURO A Share Class)
Inception Date: 11 Jan 2006
Net Performance % -0.31% 1.18% -1.25% -1.15% -4.51% -0.18% 1.23% 1.09% 1.87% 3.67% 2.49% 3.53% 7.63% 7.63%
MSCI ASIA PAC TR (EURO) Return 0.21% 2.02% 0.26% 0.64% -7.94% -0.37% 0.01% 2.00% 0.69% 2.29% -0.60% 3.67% 2.44% 2.44%
Net Performance % 1.75% -1.48% 2.98% 3.29% 6.38% 5.75% 4.18% -4.19% 5.86% 7.00% -6.76% 0.10% 26.57% 36.23%
MSCI ASIA PAC TR (EURO) Return 1.53% 0.94% -0.39% -1.03% 4.60% 1.21% 0.99% -1.85% 3.14% 3.29% -6.91% -1.68% 3.36% 5.88%
Net Performance % -11.88% 0.49% -9.42% 4.30% -3.01% -9.35% 0.96% -0.67% -4.53% -7.19% 1.72% -0.28% -33.71% -9.69%
MSCI ASIA PAC TR (EURO) Return -10.62% 0.75% -8.90% 9.41% 0.38% -9.83% -2.13% 1.03% -10.59% -11.19% -3.52% -1.23% -39.22% -35.64%
Net Performance % 4.92% -1.55% -1.46% 9.52% 6.72% 3.43% 8.14% -3.53% 5.12% -0.74% 3.09% 5.83% 46.14% 31.98%
MSCI ASIA PAC TR (EURO) Return 0.99% -8.58% 4.03% 12.66% 5.21% 1.80% 7.09% 0.91% 2.32% -1.89% -0.45% 7.03% 33.96% -13.79%
Net Performance % -0.78% 1.62% 5.25% 2.68% 3.20% 1.00% -1.25% 0.74% 0.66% 1.16% 5.01% -0.20% 20.56% 59.12%
MSCI ASIA PAC TR (EURO) Return 0.12% 3.35% 6.99% 2.68% -2.42% -0.15% -0.62% 0.86% 1.48% 0.26% 6.30% 4.49% 25.46% 8.17%
Net Performance % -2.57% -2.41% -1.97% -0.78% 1.46% -2.52% 2.47% -5.47% -1.42% -0.22% -0.32% 2.83% -10.66% 42.15%
MSCI ASIA PAC TR (EURO) Return -3.14% 0.11% -3.54% -1.58% 1.08% -1.71% 2.42% -8.53% -2.46% 4.71% -3.90% 4.12% -12.45% -5.30%
Net Performance % 2.82% 2.29% -0.52% 0.56% -1.83% -0.57% 4.73% -3.58% 3.41% -0.63% 3.56% 1.00% 11.47% 58.45%
MSCI ASIA PAC TR (EURO) Return 7.08% 2.91% -1.19% -0.16% -3.54% 2.05% 4.28% -2.58% 2.09% -1.10% 2.10% 2.33% 14.69% 8.61%
Net Performance % 2.03% 4.57% 2.22% 2.33% -0.86% -6.81% -3.21% -1.69% 0.64% 3.23% 1.92% 61.50%
MSCI ASIA PAC TR (EURO) Return 0.09% 5.45% 2.76% 2.32% -3.45% -3.15% -0.60% -0.79% 4.33% 2.23% 9.15% 18.55%
GAOUF (GBP Share Classes)
Class A Inception Date: 2 Feb 2010
Class B Inception Date: 1 Dec 2009
GBP B Share Class - Net Performance % 3.27% 3.27% 3.27%
MSCI ASIA PAC TR (GBP) Return B 3.91% 3.91% 3.91%
GBP A Share Class - Net Performance % 4.68% 5.88% 1.25% 2.41% -0.30% -1.71% 0.54% 0.71% 1.15% 4.68% 1.08% 22.05% 22.05%
GBP B Share Class - Net Performance % -3.13% 5.03% 5.86% 1.26% 2.41% -0.30% -1.70% 0.53% 0.70% 1.15% 4.69% 1.07% 18.60% 22.48%
MSCI ASIA PAC TR (GBP) Return B -2.14% 6.37% 6.76% 0.10% -4.93% -3.33% 0.86% 0.36% 6.23% 0.59% 2.38% 7.05% 21.20% 25.94%
GBP A Share Class - Net Performance % -2.67% -3.18% 2.20% -0.31% -0.37% 0.79% -0.66% -4.52% -3.99% 1.74% -2.83% 0.35% -12.91% 6.29%
GBP B Share Class - Net Performance % -2.67% -3.18% 2.19% -0.31% -0.37% 0.79% -0.67% -4.52% -3.98% 1.73% -2.84% 0.36% -12.92% 6.66%
MSCI ASIA PAC TR (GBP) Return B -3.48% -0.54% 0.39% -1.05% -0.50% 1.54% -0.75% -7.47% -5.32% 7.00% -6.35% 1.66% -14.66% 7.47%
GBP A Share Class - Net Performance % 2.11% 3.25% -0.99% -1.65% -3.24% 0.14% 1.74% -2.66% 3.82% 0.32% 4.49% 0.95% 8.23% 15.04%
GBP B Share Class - Net Performance % 2.11% 3.25% -1.00% -1.64% -3.25% 0.14% 1.73% -2.65% 3.82% 0.32% 4.50% 0.94% 8.22% 15.43%
MSCI ASIA PAC TR (GBP) Return B 6.35% 3.92% -1.70% -2.41% -5.07% 2.65% 1.52% -1.70% 2.70% -0.26% 3.00% 2.52% 11.51% 19.85%
GBP A Share Class - Net Performance % 7.69% 5.19% 0.38% 2.50% 0.04% -6.58% -1.09% -4.32% -1.31% 4.50% 6.34% 22.33%
GBP B Share Class - Net Performance % 7.69% 5.19% 0.37% 2.50% 0.05% -6.58% -1.08% -4.32% -1.31% 4.50% 6.32% 22.73%
MSCI ASIA PAC TR (GBP) Return B 5.41% 6.17% 0.68% 2.63% -2.52% -2.97% 1.52% -3.24% 2.25% 3.59% 13.81% 36.40%
* Note: MSCI Asia Pac TR (GBP) returns based off of 1 December 2009 start date
GAOUF (USD A Share Class)
Inception Date: 9 Mar 2010
Net Performance % 1.25% 0.18% 2.55% -0.03% 5.02% -1.72% 8.12% 2.99% -1.65% 2.85% 20.89% 20.89%
MSCI ASIA PAC TR (USD) Return 2.23% 0.70% -9.61% -0.45% 5.79% -1.92% 8.92% 2.44% -0.40% 7.11% 14.43% 14.43%
Net Performance % -0.43% -1.69% 0.72% 3.73% -1.69% -1.68% 1.56% -5.29% -8.13% 5.43% -5.34% -0.84% -13.56% 4.50%
MSCI ASIA PAC TR (USD) Return -0.74% 0.80% -0.75% 2.83% -2.05% -0.73% 1.51% -8.35% -8.97% 10.26% -8.75% 0.34% -15.11% -2.86%
Net Performance % 3.68% 4.52% -0.96% -0.05% -8.29% 2.04% 1.64% -1.31% 5.54% 0.09% 3.95% 2.38% 13.21% 18.30%
MSCI ASIA PAC TR (USD) Return 8.00% 5.16% -1.37% -0.93% -9.85% 4.42% 1.44% -0.48% 4.57% -0.38% 2.35% 3.86% 16.78% 13.44%
Net Performance % 5.05% 0.71% 0.41% 5.06% -2.55% -6.56% -1.13% -2.37% 3.32% 3.69% 5.08% 24.31%
MSCI ASIA PAC TR (USD) Return 3.02% 1.56% 0.71% 5.01% -4.82% -2.90% 1.47% -1.32% 6.91% 2.75% 12.47% 27.59%
Nov DecCalendar
Year
Perf. Since
InceptionJun Jul Aug Sep OctJan Feb Mar Apr May
MayPerf. Since
InceptionJun Jul Aug Sep Oct
2010
Nov DecCalendar
YearJan Feb Mar
Jun Jul
2010
2007
2008
2009
Jan Feb
2006
Mar Apr MayPerf. Since
Inception
Calendar
YearAug Sep Oct Nov Dec
2011
2012
2012
2009
2010
2011
2013
2013
2013
Apr
2011
2012
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 6
GaveKal Knowledge Leaders UCITS Fund
The Fund’s Philosophy: The fund was launched on the belief that the world’s most undervalued asset was the
knowledge embedded in so many of the Western world’s leading companies. And the reason that “knowledge” is
undervalued is that all too often spending on research, development, branding, staff training, delivery processes,
big data, etc… is simply treated as expenses, run through the income statement, and not capitalized properly on the
balance sheet. The fund’s premise is thus that, by going through a given company’s R&D spending, branding
expenses and other key, yet poorly accounted for, investments, one can get an idea of a company’s “intangible
capital” net worth and a better picture of what should constitute fair value.
Companies with a large stock of unrecognized and undervalued intangible capital should typically generate
recurrent cash flows with a lower volatility than companies which depend on a stock of physical capital to generate
cash-flows. As such, the share price performance of what we have come to call “platform companies” and
“knowledge leaders” should prove less volatile than that of the overall market. And a well-diversified, non-
concentrated, portfolio of “knowledge leaders” should, over the life of cycle, deliver better risk-adjusted returns
then that of the global equity markets.
GaveKal Knowledge Leaders Fund - USD share class
Inception date: September 2006
Latest NAV 151.53 Annualized returns since inception 6.02%
Monthly % change 3.15% Average monthly returns 0.59%
12m % change 14.87% 12m volatility 7.55%
Returns since inception 51.53% Sharpe ratio (12 months) 1.96%
Fund AUM USD 161m Firm AUM USD 1.6b
Annualized Volatility and Returns Since Inception Historical Performance against MSCI World
Review of the past month: As stable, cash-flow generating and dividend payment companies once again gained
the market’s favor (after a tough May to September period), October was a better month for the Knowledge
Leaders UCITS fund. The fund gained +3.15% against a gain the World MSCI of +3.91%. Behind this mild under-
performance, a few key factors, not least of which was the allocation to cash & treasury bill ETF (-128bp drag).
Still, with stocks continuing to display very high levels of correlations, diversification through cash remains the
only way to genuinely cushion volatility. The second largest source of underperformance was to be found in the
-55bp stock selection effect in the Information Technology sector. Indeed, in October, the MSCI World Info Tech
Index rose +3.6% but Apple accounted for more than 30% of that return. Unfortunately, the fund did not own
Apple. Against this, the fund’s overweight to the healthcare sector was rewarded as the sector bounced back,
allowing the fund to trim position and take profits on such names as Zimmer Holding, Medtronic & Bristol-Myers
Squibb. As a group, the allocation to healthcare stocks contributed 96bp of relative outperformance.
50
70
90
110
130
150
170
Sep-0
6
Jan-0
7
May-0
7
Sep-0
7
Jan-0
8
May-0
8
Sep-0
8
Jan-0
9
May-0
9
Sep-0
9
Jan-1
0
May-1
0
Sep-1
0
Jan-1
1
May-1
1
Sep-1
1
Jan-1
2
May-1
2
Sep-1
2
Jan-1
3
May-1
3
Sep-1
3
GKLF (USD) Since Inception
GKLF (USD) MSCI DAILY TR NET WORLD (USD)
GKLF (USD), 15.47%, 6.02%
MSCI DAILY TR NET WORLD
(USD), 18.35%, 4.41%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
15.00% 15.50% 16.00% 16.50% 17.00% 17.50% 18.00% 18.50%
An
nu
alize
d R
etu
rn
Annualized Volatility
GKLF (USD)
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 7
GaveKal Knowledge Leaders UCITS Fund
Currency Exposure as % of Total NAV Market Cap Exposure as % of Total NAV
Sector Exposure as % of Equity Positions
Country Exposure as % of Equity Positions
Asset Allocation Over the Past Two Years
Top Ten Equity Positions
0
10
20
30
40
50
60
70
80
90
100
Nov-1
1
Dec-1
1
Jan-1
2
Feb-1
2
Mar-1
2
Apr-1
2
May-1
2
Jun-1
2
Jul-1
2
Aug-1
2
Sep-1
2
Oct-1
2
Nov-1
2
Dec-1
2
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
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May-1
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Sep-1
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Oct-1
3
EQUITIES CASH
EQUITY % of NAV
Bristol Myers Squibb Co 2.14%
Henry Schein Inc 2.10%
Koninklijke Ahold Nv 2.10%
St Jude Medical Inc 2.08%
Qiagen Nv 2.04%
Illinois Tool Works Inc 2.04%
Stryker Corp 2.02%
Medtronic Inc 1.99%
Pepsico Inc 1.95%
Zimmer Holding Inc 1.94%
Total 20.42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
<1bn 1bn-5bn >5bn
% N
AV
Market Cap in US$
USD, 70.68%
JPY, 9.52%
EUR, 9.38%
GBP, 5.74%
CHF, 3.31% SEK, 1.36%
United States, 57.46%Cash, 19.27%
Netherlands, 5.62%
United Kingdom,
4.37%
Japan, 4.15%
Switzerland, 3.43%
Germany, 3.38%
Ireland, 1.25%
France, 1.07%
Health Care, 31.81%
Information Technology, 21.21%
Cash, 19.27%
Consumer Staples, 9.91%
Consumer Discretionary, 9.37%
Industrials, 7.36%
Telecommunication, 1.07%
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 8
GaveKal Knowledge Leaders UCITS Fund
Fund Share Class Details
Fund Management and Service Providers Fund Terms
Investment Advisor GaveKal Capital Limited Non-discretionary Sub Advisor GaveKal Capital, LLC
Auditor Deloitte & Touche
Administrator Societe Generale Securities Services, SGSS (Ireland) Limited Custodian Societe Generale Legal Advisor Dillon Eustace (Ireland)
Launch Date 1 September 2006 Domicile Ireland
Share Classes A and B
Denomination USD/GBP
Issue Price $100/£100 Minimum Subscription A $20,000 or its equivalent
Fees A & B 2% management fee p.a., no performance fee Dealing Day Daily (every day that is a Business Day in Dublin and Hong Kong) Valuation Day The Business Day prior to the relevant Dealing Day Subscription and Re-
demption Deadline 5pm (Irish time); 2 Business Days prior to the relevant Valuation
Day Redemption Fee None
Share Class ISIN Share Class A USD IE00B1DS1042 Share Class B GBP IE00B895LT75
Net Performance % 0.16% 2.84% 0.96% 2.16% 6.24% 6.24%
MSCI WORLD (USD) Return 0.72% 3.67% 2.45% 2.03% 9.15% 9.15%
Net Performance % 2.94% -0.07% 2.84% 2.72% 2.62% 1.71% 0.29% -1.11% 8.14% 6.59% -4.59% 0.78% 24.67% 32.45%
MSCI WORLD (USD) Return 1.18% -0.52% 1.83% 4.41% 2.80% -0.77% -2.21% -0.08% 4.76% 3.07% -4.09% -1.29% 9.04% 19.02%
Net Performance % -12.14% -0.10% -1.07% 4.12% 1.20% -7.01% 2.72% 0.10% -6.71% -17.65% -7.91% 3.16% -36.16% -15.44%
MSCI WORLD (USD) Return -7.64% -0.58% -0.96% 5.26% 1.52% -7.98% -2.44% -1.40% -11.89% -18.96% -6.47% 3.21% -40.71% -29.44%
Net Performance % -7.33% -8.44% 6.36% 7.23% 3.53% 1.58% 8.30% 0.68% 5.36% -1.93% 3.76% 3.43% 23.05% 4.05%
MSCI WORLD (USD) Return -8.76% -10.24% 7.54% 11.22% 9.06% -0.45% 8.47% 4.13% 3.99% -1.78% 4.09% 1.80% 29.99% -8.28%
Net Performance % -4.09% 2.01% 5.72% 1.90% -7.68% -3.82% 5.92% -4.11% 8.71% 3.77% -1.56% 4.18% 9.95% 14.40%
MSCI WORLD (USD) Return -4.13% 1.41% 6.19% 0.01% -9.54% -3.47% 8.11% -3.73% 9.32% 3.73% -2.16% 7.35% 11.76% 2.51%
Net Performance % -0.20% 3.14% -0.61% 4.20% 1.00% -0.15% -0.37% -3.90% -1.50% 5.99% -2.07% 0.89% 6.18% 21.47%
MSCI WORLD (USD) Return 2.26% 3.50% -0.99% 4.25% -2.07% -1.58% -1.81% -7.05% -8.64% 13.69% -8.91% 3.89% -5.54% -3.17%
Net Performance % 4.39% 1.57% 2.55% -0.70% -3.94% 2.65% 0.49% 1.79% 1.90% -2.12% 0.59% -1.23% 7.90% 31.07%
MSCI WORLD (USD) Return 5.02% 5.21% 0.97% -1.14% -8.63% 5.10% 1.29% 2.54% 2.75% -0.68% 1.28% 1.88% 15.83% 12.16%
Net Performance % 3.77% 1.01% 3.70% 1.87% -0.86% -0.38% 3.21% -2.91% 2.28% 3.15% 15.61% 51.53%
MSCI WORLD (USD) Return 5.09% 0.17% 2.35% 3.14% 0.04% -2.46% 5.26% -2.13% 5.00% 3.91% 21.89% 36.70%
NovGKLF (USD A Share Class)
Jan Feb Mar Apr Jun Jul Aug Sep OctMay
2013
Dec
2008
2009
2010
2011
2012
Calendar
Year
Perf. Since
InceptionInception Date: 1 Sept 2006
2006
2007
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
The Fund’s Philosophy: The 2008 crisis, along with the aggressive quantitative easing policies which ensued,
were a wake-up call for most emerging markets, not least of which was China. Basically, relying on an uncertain
US dollar to finance the rapidly growing intra-emerging market trade no longer made sense. Just as Europe had to
start embracing the deutschmark as a means of exchange in the 1970s, emerging markets have begun to embrace
the renminbi. For China, transforming the RMB into a trading currency presents some risk (namely the gradual loss
of control over the domestic financial industry), but it is also key in helping China move up the export value chain,
away from high volume and low margin consumer goods, and towards high margin capital goods. Indeed, in order
to help boost capital goods exports, China needs to be able to offer financing terms; and one would always rather
do this in one’s own currency rather than that of the competitor’s. Thus, the internationalization of the RMB is key
to China’s continued export growth. But this internationalization can only occur if the RMB is perceived as being a
strong currency, and if the RMB bond market is seen as stable. This is why, in recent years, the Chinese
government has proven itself willing to sacrifice the Chinese equity market, and even growth, to ensure stability in
the fixed income and exchange rate markets. The RMB bond market offers one of the more attractive risk-reward
investment propositions today.
Page 9
GaveKal China Fixed Income UCITS Fund
GaveKal China Fixed Income Fund - USD share class
Inception date: March 2012
Latest NAV 113.49 60-Day Realized Daily Volatility 1.66%
Monthly % change 1.75% Weighted Modified Duration 2.34
12m % change 9.32% Weighted Yield to Maturity 4.68%
Returns since inception 13.49% Number of positions 53
Fund AUM USD 181m Sharpe Ratio 2.32
Strategy AUM USD 335m Firm AUM USD 1.6b
Annualized Volatility and Returns Since Inception Historical Performance vs. Benchmark
Review of the past month: Another very solid month for the GaveKal China fixed income UCITS fund. In fact,
since June of 2012 (when Christine Cheung joined GaveKal as PM of the Asian fixed income books), the fund has
recorded 16 months of positive monthly performance (out of 17) and 15 months (out of 17) of relative
outperformance. The pictures below tell the story best: how many asset classes have delivered, in the past two years,
roughly 8% annualized returns with a volatility below 3.5%? Indeed, as the chart on the right illustrates, Chinese
offshore bonds have, in the past two years, not only provided higher returns than either short-dated, or long-dated,
US treasuries, but have in fact provided better diversification for portfolios.
As our reader might recall, this was the core belief that led us to launch the GaveKal China Fixed Income UCITS
fund. Indeed, as China looks to internationalize the RMB, and move its exports up the value chain, delivering a
strong currency, and a stable bond market, is essential. In turn, this offers a great opportunity to investors.
GCFIF (USD), 3.35%, 7.89%
HSBC OFFSHORE
RMB INVESTMENT
GRADE BOND (USD), 2.83%,
4.46%3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2.80% 3.00% 3.20% 3.40% 3.60% 3.80%
An
nu
alize
d R
etu
rn
Annualized Volatility
GCFIF (USD)
90
95
100
105
110
115
Fe
b-1
2
Ma
r-1
2
Ap
r-1
2
Ma
y-1
2
Ju
n-1
2
Ju
l-1
2
Au
g-1
2
Se
p-1
2
Oct-
12
No
v-1
2
De
c-1
2
Ja
n-1
3
Fe
b-1
3
Ma
r-1
3
Ap
r-1
3
Ma
y-1
3
Ju
n-1
3
Ju
l-1
3
Au
g-1
3
Se
p-1
3
Oct-
13
GCFIF (USD) Since Inception
GCFIF (USD)
HSBC Offshore RMB Investment Grade Total Return (USD)
Barclays US Aggregate Government - Long - Index
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 10
GaveKal China Fixed Income UCITS Fund
Top Ten Positions
Duration Exposure
Ratings Breakdown vs. Benchmark
Underlying Country Exposure
Sector Exposure Currency Exposure
BONDS % of NAV
GLOBAL LOGISTIC PROPERTI (GLPSP 4 05/11/18) 5.28%
BANCO BTG PACTUAL/CAYMAN (BTGPBZ 4.1 03/26/16) 4.95%
CHINA GENERAL NUCLEAR (CHGDNU 3 3/4 11/01/15) 4.51%
CIFI HOLDINGS GRP (CIFIHG 12 1/4 04/15/18) 4.47%
AVIC INTL FINANCE INVEST (CATIC 4.8 07/09/15) 3.66%
SUNAC CHINA HOLDINGS LTD (SUNAC 9 3/8 04/05/18) 3.28%
BP CAPITAL MARKETS PLC (BPLN 3.95 10/08/18) 3.24%
VEOLIA ENVIRONNEMENT (VIEFP 4 1/2 06/28/17) 2.84%
YUZHOU PROPERTIES CO (YUZHOU 8 3/4 10/04/18) 2.84%
SK GLOBAL CHEMICAL INVES (SKGLCH 4 1/8 09/26/16) 2.77%
Total 37.83%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
Fund Benchmark
China, 39.25%
Latin America, 10.94%
India, 10.13%
Singapore, 7.73%
UK, 5.38%
France, 4.04%
Russia, 3.59%
Korea, 2.77%
Hong Kong, 2.44%
Germany, 2.10%
Japan, 1.89%USA, 1.85% Malaysia,
1.19%Middle East,
0.47%
CNH75.02%
USD22.76%
EUR2.19%
SGD0.03%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
0-1 1-2 2-3 3-4 4-5 10-11
Duration Exposure of GCFIF
0% 5% 10% 15% 20% 25% 30%
Water
Transportation
Telecommunications
Real Estate
Oil&Gas Services
Oil&Gas
Multi-National
Miscellaneous Manufactur
Machinery-Diversif ied
Insurance
Home Furnishings
Electric
Diversif ied Finan Serv
Commercial Services
Chemicals
Banks
Auto Manufacturers
Aerospace/Defense
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Page 11
GaveKal China Fixed Income UCITS Fund
Fund Share Class Details
Fund Management and Service Providers Fund Terms
Launch Date 1 March 2012 Domicile Ireland Share Classes A
Denomination USD/EUR Issue Price $100/€100 Minimum Subscription A $50,000 Fees A & B 0.5% management fee p.a., no performance fee Dealing Day Daily (every day that is a Business Day in Dublin and Hong Kong) Valuation Day The Business Day prior to the relevant Dealing Day
Subscription and Re-
demption Deadline 5pm (Irish time); 2 Business Days prior to the relevant Valuation
Day 5pm (Irish time); 5 Business Days prior to the relevant Valuation
Redemption Fee None
Share Class Bloomberg Ticker ISIN
Share Class A USD GACHFIU ID IE00B734TY42
Share Class A EURO GACHFIE ID IE00B7LZ3N65
Investment Advisor GaveKal Capital Limited
Auditor Deloitte & Touche
Administrator Societe Generale Securities Services, SGSS (Ireland) Limited
Custodian Societe Generale
Legal Advisor Dillon Eustace (Ireland)
Net Performance % -0.69% -0.17% -1.28% 0.80% 0.72% 0.85% 1.63% 1.94% 1.41% 0.92% 6.24% 6.24%
HSBC Offshore Renminbi Investment
Grade Total Return (USD)0.02% 0.08% -1.15% 0.60% -0.06% 0.24% 0.64% 1.59% 0.74% 0.48% 3.20% 3.20%
Net Performance % 1.15% 0.49% 0.38% 1.59% 0.56% -1.91% 0.73% 0.92% 1.01% 1.75% 6.82% 13.49%
HSBC Offshore Renminbi Investment
Grade Total Return (USD)1.03% 0.17% 0.67% 1.29% 0.58% -2.18% 0.70% 0.43% 0.38% 1.09% 4.21% 7.54%
Net Performance % -0.58% 0.44% 5.68% -1.79% 3.79% -1.48% -0.42% 1.21% 1.03% -0.44% 7.43% 7.43%
HSBC Offshore Renminbi Investment
Grade Total Return (EUR)-0.10% 0.86% 5.77% -1.69% 2.75% -1.87% -1.74% 0.85% 0.50% -1.00% 4.14% 4.14%
Net Performance % -1.76% 4.34% 2.20% -1.05% 2.30% -2.19% -1.40% 1.64% -1.61% 1.30% 3.60% 11.30%
HSBC Offshore Renminbi Investment
Grade Total Return (EUR)-1.84% 4.00% 2.72% -1.29% 2.03% -2.43% -1.36% 0.98% -2.05% 0.58% 1.12% 5.31%
Perf. Since
Inception
2012
Nov DecCalendar
YearInception Date: 1 March 2012Jun Jul Aug Sep Oct
GCFIF (EUR A Share Class)
Jan Feb Mar
2013
2013
Perf. Since
InceptionInception Date: 1 March 2012
2012
Jun Jul Aug Sep Oct Nov
GCFIF (USD A Share Class)
Jan Feb DecCalendar
YearMar Apr May
Apr May
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
GaveKal Dynamic Futures Fund - USD share class
Inception date: February 2013
Latest NAV 129.09 VaR (99%,20 days) as of 29 October 2013 10.43%
Monthly % change 4.17% Gross Exposure at month end 145.4%
3m % change 5.44% Net Exposure at month end +112.8%
Returns since inception 29.09% Number of Positions 12
Fund AUM USD 19.72m Firm AUM USD 1.5b
Review of the past month: With global equity market
positive momentum gaining traction following a tough
summer, the month of October was rewarding for most
CTA strategies, including the GaveKal Dynamic Futures
UCITS Fund. Indeed, the fund posted its ninth positive
month in a row, with an encouraging +4.17% gain. This
helped bring returns to almost 30% since launch in
February. For the month, positions in the S&P500 futures,
the Booster Eurozone and the FTSE 100 were the largest 3
positive contributors to performance.
The Fund’s Philosophy: The Fund’s objective is to achieve capital growth by investing in, or gaining exposure to diversified portfolio of international equity indices primarily through the use of futures. The Fund uses futures contracts to take a directional view on particular equity indices, whether by (i) being short futures in order to benefit from anticipated downward corrections in the pricing of equity indices; or (ii) being long futures in order to benefit from upwards movements in the pricing of equity indices. In order to identify trends, and shifts in trends, the Fund relies on technical and quantitative indicators and models. Those indicators/models include data or signals related to prices, volume, breadth, investor sentiment and volatility. In a first place, the manager identifies a trend. In the second place, the manager will estimate the probability for the trend to continue by using a series of indicators. If a trend is anticipated to continue with a good degree of probability, the manager takes a position in a corresponding futures.
October Contribution
Topix
Hang Seng
CAC 40
DAX 30
EuroStoxx 50
FTSE 100
SMI 30
S&P 500
DJIA 30
Nasdaq 100
Russell 2000
Booster EZ
Booster US
October Top 10 Active Position
DJIA 30 Futures +19.3 %
S&P500 E-mini Fut. + 19.2 %
SP500 Futures + 17.4 %
FTSE 100 Futures + 16.5 %
Nasdaq 100 Fut. + 12.4 %
SMI Futures + 10.2 %
EURO STOXX 50 Fut. -9.8 %
Topix Futures + 8.4 %
DAX 30 Futures + 6.0 %
Hang Seng Fut. + 5.2 %
Exposure: By the end of October, the Fund had a long
position, having kept a moderately leveraged position
the whole month. 0.02%
0.03%
0.24%
0.23%
0.46%
0.56%
0.08%
0.83%
0.43%
0.34%
0.20%
0.63%
0.12%
Page 12
GaveKal Dynamic Futures UCITS Fund
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Launch Date 21 February 2013 Domicile Ireland Denomination USD Issue Price $100 Minimum Subscription $20,000 Fees 0% management fee p.a., 20% performance fee with High Water
Mark Dealing Day Weekly (every Wednesday that is a Business Day in Dublin) Valuation Day The Business Day prior to the relevant Dealing Day Subscription and Re-
demption Deadline 4pm (Irish time); 3 Business Days prior to the relevant Valuation
Day Redemption Fee None
Investment Advisor GaveKal Capital Limited Sub Investment Advisor GaveKal Investments Auditor Deloitte & Touche Administrator Societe Generale Securities Services, SGSS (Ireland) Limited Custodian Societe Generale Legal Advisor Dillon Eustace (Ireland)
Fund Management and Service Providers Fund Terms
Share Class Bloomberg Ticker ISIN Share Class A USD GAVDYNA ID IE00B7LBLW93
Fund Share Class Details
Leverage is double-edged sword which, when mis-
managed, can destroy a good performance in a few
days. Still, when carefully integrated, leverage helps
improve returns while keeping overall risk under con-
trol. Of course, under control does not mean zero risk,
as the fund can testify! In the chart on the right, the
red circles represent bad weekly performance num-
bers linked to being in the wrong direction, made
worse through the use of leverage.
The use of leverage must be controlled and timely.
Since the inception of the fund nine months ago, lev-
erage has been used only part of the time and most of
the time with accuracy and with positive results.
After the late October rally, what’s next?
Trend: Trends gained momentum in most markets.
Without a formal reversal, the “trend is your friend”.
Sentiment: We are approaching the warning level of
over confidence. Sentiment should be the key element
to spot the next correction.
Exhaustion/Technicals: While oscillators like the
weekly RSI remain within the typical range of a bull
market, small negative divergences arose in October.
Breadth: The Global Breadth measure (the percent of
indices above their 100-day MA—see chart) shows
gradual progression of higher highs and higher lows.
This indicates a reasonably healthy environment,
though it does not rule out small corrections.
Focus On The Leverage
What’s Next?
Jan Feb Mar May Jun Jul Aug Sep GDFF
Inception Date: 21 Feb 2013 Nov Dec Oct
Calendar
Year
Perf. Since
Inception Apr
Net Performance %
2013 0.47% 3.13% 7.19% 2.62% 4.36% 0.74% 0.47% 4.17% 29.09% 29.09% 2.93%
NAV 100.47 103.61 114.32 117.32 122.43 123.34 123.92 129.09 106.65
Page 13
GaveKal Dynamic Futures UCITS Fund
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
GaveKal Dynamic Futures Euro Currency Fund - EUR share class
Inception date: September 2013
Latest NAV 102.61 VaR (99%,20 days) as of 29 October 2013 10.61%
Monthly % change 4.00% Gross Exposure at month end 143.8%
3m % change N/A Net Exposure at month end +112.8%
Returns since inception 2.61% Number of Positions 12
Fund AUM EUR 18.44m Firm AUM USD 1.5b
Review of the past month: With global equity markets
gaining momentum, October was a rewarding for most
CTA type strategies, including the GaveKal Dynamic
Futures (Euro) UCITS Fund which gained + 4.0%. In term
of indices, the S&P500, the Booster Eurozone and the
Footsie 100 were the top 3 performers.
The Fund’s Philosophy: The Fund’s objective is to achieve capital growth by investing in, or gaining exposure to diversified portfolio of international equity indices primarily through the use of futures. The Fund uses futures contracts to take a directional view on particular equity indices, whether by (i) being short futures in order to benefit from anticipated downward corrections in the pricing of equity indices; or (ii) being long futures in order to benefit from upwards movements in the pricing of equity indices. In order to identify trends, and shifts in trends, the Fund relies on technical and quantitative indicators and models. Those indicators/models include data or signals related to prices, volume, breadth, investor sentiment and volatility. In a first place, the manager identifies a trend. In the second place, the manager will estimate the probability for the trend to continue by using a series of indicators. If a trend is anticipated to continue with a good degree of probability, the manager takes a position in a corresponding futures.
October Contribution
Topix
Hang Seng
CAC 40
DAX 30
EuroStoxx 50
FTSE 100
SMI 30
S&P 500
DJIA 30
Nasdaq 100
Russell 2000
Booster EZ
Booster US
October Top 10 Active Position
DJIA 30 Futures +19.3 %
S&P500 E-mini Fut. + 19.2 %
SP500 Futures + 17.4 %
FTSE 100 Futures + 16.5 %
Nasdaq 100 Fut. + 12.4 %
SMI Futures + 10.2 %
EURO STOXX 50 Fut. -9.8 %
Topix Futures + 8.4 %
DAX 30 Futures + 6.0 %
Hang Seng Fut. + 5.2 %
Exposure: By the end of October, the Fund had a long
position. It actually kept a moderately leveraged
position the whole month. That allowed the fund to
deliver a good performance for October. 0.02%
0.03%
0.24%
0.23%
0.46%
0.54%
0.08%
0.80%
0.40%
0.31%
0.17%
0.63%
0.09%
Page 14
GaveKal Dynamic Futures (Euro) UCITS
Fund
Data Source: GaveKal Capital Limited/SGSS (Ireland) Limited/Morgan Stanley Capital International Inc. (“MSCI”)
Please see final pages for Important Disclosures
Launch Date 3 September 2013 Domicile Ireland Denomination EUR Issue Price €100 Minimum Subscription €20,000 Fees 0% management fee p.a., 20% performance fee with High Water
Mark Dealing Day Weekly (every Wednesday that is a Business Day in Dublin) Valuation Day The Business Day prior to the relevant Dealing Day Subscription and Re-
demption Deadline 4pm (Irish time); 3 Business Days prior to the relevant Valuation
Day Redemption Fee None
Investment Advisor GaveKal Capital Limited Sub Investment Advisor GaveKal Investments Auditor Deloitte & Touche Administrator Societe Generale Securities Services, SGSS (Ireland) Limited Custodian Societe Generale Legal Advisor Dillon Eustace (Ireland)
Fund Management and Service Providers Fund Terms
Share Class Bloomberg Ticker ISIN Share Class A EUR GAVDYNE ID IE00BBX47710
Fund Share Class Details
Jan Feb Mar May Jun Jul Aug Sep GDFFEC
Inception Date: 3 Sep 2013 Nov Dec Oct
Calendar
Year
Perf. Since
Inception Apr
Net Performance %
2013 -1.34% 4.00% 2.61% 2.61%
NAV 98.66 102.61
Page 15
GaveKal Dynamic Futures (Euro) UCITS
Fund
Page 16
GaveKal UCITS Funds Newsletter
Important Disclaimers
This Newsletter has been approved by GaveKal Capital Limited for information purposes only and may only be communicated to persons who are of a kind
to whom unregulated collective investment scheme may be promoted. It does not constitute an offer or solicitation to any person in any jurisdiction to
purchase or sell any investment. No information in this document should be construed as providing financial, investment or other professional advice.
The GaveKal Asian Opportunities UCITS Fund, the GaveKal Knowledge Leaders UCITS Fund, the GaveKal Greater China Fund, the GaveKal Asian Growth
UCITS Fund, the GaveKal China Fixed Income UCITS Fund and the GaveKal Dynamic Futures UCITS Fund (the “Funds”) are sub-funds of the GaveKal UCITS Fund, an open-ended umbrella unit trust established as an undertaking for collective investment in transferable securities pursuant to the European Communities
(Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended). The GaveKal Knowledge Leaders Fund is a sub-fund of
GaveKal Multi-Fund PLC, an open-ended umbrella variable investment company established as an undertaking for collective investment in transferable securities
pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended). GaveKal Capital
Limited has been appointed as investment adviser to the GaveKal UCITS Fund and the GaveKal Multi-Fund PLC. The distribution of the prospectuses relating to the
Funds (each the “Prospectus”) is restricted in certain jurisdictions and accordingly it is the responsibility of any person or persons wishing to make an application to invest therein to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. The information below is for general guidance
only and further information is available in the Prospectus. The taxation implications of investing in the Funds will depend on individual financial circumstances and
the investor’s country of residence. Application to invest in the Funds must only be made on the basis of the Prospectus and subscription documentation.
United Kingdom: The GaveKal Asian Opportunities UCITS Fund is authorised as a UCITS scheme and has been recognised in the UK for the purposes of section
264 of the Financial Services and Markets Act 2000. The promotion of the Fund and the distribution of the Prospectus is restricted by law. Many of the protections provided by the United Kingdom’s regulatory regime will not apply to investors in the Fund, including access to the Financial Ombudsman Service and the Financial
Services Compensation Scheme.
United States: The shares of the Funds (the “Shares”) have not been and will not be registered under the Securities Act 1933 of the United States (as amended) (the
“1933 Act”), or the securities laws of any of the States of the United States. The Shares may not be offered, sold or delivered directly or indirectly in the United States
or to or for the account or benefit of any “US Person“ as defined in Regulation S under the 1933 Act except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the 1933 Act and any applicable State laws. The Fund has not been and will not be registered under the United States
Investment Company Act of 1940 (as amended) (the “1940 Act”) since Shares will only be sold to United States persons who are “qualified purchasers”, as defined in the 1940 Act. There has not been and will not be any public offering of the Shares in the United States.
Investment Risks Investment in the Funds carries substantial risk. There can be no assurance that the investment objectives of the Funds will be achieved and investment results may
vary substantially over time. Investment in the Funds is not intended to be a complete investment programme for any investor. Investment in the Funds is intended for
experienced investors who are able to understand and accept the risks involved. The value of all investments and the income derived there from can decrease as well as increase. This may be due, in part, to exchange rate fluctuations in
investments that have an exposure to currencies other than the base currency of the Funds. Past performance is no guide to or guarantee of future performance. The
value of commodity and derivative investments such as options and futures can be extremely volatile. The Funds may invest in securities of distressed companies, illiquid securities and non-publicly traded securities.
Persons considering investing in the Funds should read the risk disclosure in the Prospectus.
Copyright and Other Rights The copyright, trademarks and all similar rights of this Newsletter and the contents, including all information, graphics, code, text and design, are owned by GaveKal Capital Limited. Information contained in this Newsletter must not be reproduced, copied or redistributed in whole or in part.
Limitation of Liability and Indemnity GaveKal Capital Limited does not warrant the accuracy, adequacy or completeness of the information and data contained herein and expressly disclaims liability for
errors or omissions in this information and data. No warranty of any kind, implied, expressed or statutory, is given in conjunction with the information and data.
GaveKal Capital Limited accepts no liability for any loss or damage arising out of the use or misuse of or reliance on the information provided including, without limitation, any loss of profits or any other damage, direct or consequential.
You agree to indemnify and hold harmless GaveKal Capital Limited and its affiliates, and the partners and employees of GaveKal Capital Limited and its affiliates from and against any and all liabilities, claims, damages, losses or expenses, including legal fees and expenses, (together, “Losses”) arising out of your access to or
use of the information in this Newsletter, save to the extent that such Losses may not be excluded pursuant to relevant law or regulation.
Any opinions contained in this Newsletter may be changed after issue at any time without notice.
GaveKal Capital Limited, whose registered address is: Suite 3101, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, is licensed by the Securities and Futures
Commission of Hong Kong.