华宝兴业基金管理有限公司

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Benchmark

80% CSI 300 index +20% SSE Treasury Bond Index

Investment Objective

The fund actively identifies events that may have significant impact to the current or future value of the listed companies, catches the event driven investment opportunities, and use flexible investment strategy in different market conditions, aiming for stable capital growth.

Investment Strategy

1. Large assets allocation strategy

In the large assets allocation level, the fund mainly analyze macroeconomics, fiscal policy and capital market. This provide a thorough understanding of the stock and bond market. And along with the change of the market risk, the ratio of large assets will be changed to optimize the investment portfolio.

2.    Stock investment strategy

Event investment strategy conducts analysis of a specific event influence on the value and share price of listed companies, to seek investment opportunities. This fund will  focused research the five types of event-driven strategy, constitute the whole event driven investment strategy, and many more strategies can be expanded in the future.

1) M&A strategy

Corporate M&A includes merger and acquisition. Merger means that one company purchases the stocks or assets of another  company with its cash or securities, to obtain the ownership of the target company’s all or some assets, or the control power over the target company. Acquisition means two or more independent companies combine into one company. Normally it’s one company with advantage on the aspects such as capital, technology and marketing that acquires one or more other companies. Acquisition is an important way in which company quickly expand the business scale, optimize the resource allocation, achieve growth target.

Restructure means the adjustment among asset, liability and owner equity of a corporation and other entity. Asset restructure is the important adjustment of the asset structure, which bring the profound influence  to company’s operation, including increase production efficiency, lower production cost, channel integration, improve the corporate governance. Due to the adjustment to capital structure and operation model,  the valuation of the company will change significantly after restructuring

2) Equity Incentive Strategy

Equity incentive include equity option, ESOP (Employee Stock Ownership Plan) , MBO and etc. Equity incentive plan offers the manager some economic rights with equities, makes them participate decision making, profit and risk sharing as shareholders, which encourages them to dutifully and diligently serve the company for long-term growth. From the company management practice, equity incentive plays very positive role to improve corporate governance, lower agency cost, increase management efficiency, enhance market competition. The fund conducts analysis on the companies which implement the equity incentive plan, considers the quality and the option terms of company, and then builds up the portfolio  

3) Private Placement Strategy

Private placement means the direct finance action that the listed company non-publicly offers the shares to a few specified investors. The listed company raises the fund by the means of private placement, in order to invest in project, acquire assets, explore business, which is useful to the company’s business development. The fund conducts analysis on the size, classification and profitability of the private placement, and then constructs the investment portfolio.

4) Important shareholder increase the holding

It includes management increase share holding and company increase share holding. The action tells management and the share holders are positive on the company’s share price in the future, and secondary market will react to the message. The fund filters by holding increase amount and ratio, and construct the portfolio.

5) Performance above expectation Strategy

Short-term investment opportunities will normally appear, when the anticipated net profit preannounced by the listed company significantly increases compared with one of the previous period. The fund filters by quarter-on-quarter growth of the listed companies’ net profit, and constructs the investment portfolio.

3.  The investment strategy of fixed return investment tools

The fund take the top-down strategy to determine the duration of the fixed income portfolio, and take the bottom-up strategy to select single bonds to build up the fixed income portfolio.

First, the fund will closely monitor the onshore and offshore economic trend and the national fiscal and monetary policies, forecast the future interest rate movement, and determine the duration of the investment portfolio.

Second, Building and adjusting a fixed income portfolio is a top down process. It involves the evaluation of the value-determination factors such as bond yield, volatility, tenor, coupon, tax treatment, liquidity, credit rating and the structure of the bond holders. At the same time, the fund will use the quantitative analysis and strict investment management policy to mange the risk. The risk will be controlled at a reasonable level by considering the duration, average credit rating, concentration indicator. Based on the risk control, the fund targets to achieve a higher return by executing various active investment strategies.

4. The investment strategy of Index Futures

The fund may participate in index futures. According to the risk management policies, the fund will choose to invest in those liquid, active futures contracts. In order the manage the overall risk of the portfolio, The fund will hedge in the futures market by analyzing the trend of equity market and futures market.

5. Other financial tools investment strategy

Under the rules of law, the fund will cautiously use warrant and other financial tools to manage the fund’s portfolio in order to improve investment efficiency, to supervise the level of risk of the portfolio achieving the fund’s goal better.

DISCLAIMER & DECLARATION

Fortune SG Fund Management Co.,Ltd. 58/F Shanghai World Financial Center,100 Century Avenue,ShangHai,China 200120

TEL:+86 21 38505888Office Fax:+86 21 38505777Hot Line:400-700-5588Customer Service Fax:+86 21 38924555

Website:www.fsfund.com