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UBS Asset Management

Hong Kong edition | End August 2020

Grow with
future leaders
in China
UBS (Lux) Equity Fund – yuan jian | foresight, vision

China Opportunity (USD)

Morningstar Rating™
As at 31-8-2020

Awards in Hong Kong

Fund Selector Asia Awards 2020 Benchmark Fund of the Year Awards 2019
Platinum award of Greater China/ Best-in-Class of China Equity category
China Equity category
Refinitiv Lipper Fund Award 2020
Best Fund over 3 years, Equity China
Best Fund over 5 years, Equity China
Morningstar Awards 2020
Best Greater China Equity Fund

Important information
1. The Fund, UBS (Lux) Equity Fund – China Opportunity (USD) (“UBS China Opportunity Equity Fund”) primarily invests in
shares of companies that are either domiciled in or with their main business in China. The aggregate exposure (whether direct or
indirect) to China A-Share and China B-Share markets for the Sub-Fund will be maintained at 20% or below of its total net asset value.
2. The Fund’s investments in emerging markets, e.g. PRC, may involve a greater risk than developed markets including sharp price
movements, liquidity risk and currency risk. The Fund’s investment in a single country may be subject to a higher level of risks
comparing to a fund investing in a more diversifed portfolio/strategy. Under extreme market circumstances, the Fund may suffer
substantial loss.
3. The Fund may use fnancial derivative instruments (“FDI”) for investment management and hedging purposes. Although fnancial
derivative instruments will not be used extensively for investment purposes, the use of derivatives may involve additional risks, e.g.
leverage, liquidity, counterparty risks.
4. Specifcally for the P-mdist share class, the Fund may at the discretion of the Management Company make distributions out of
capital or out of gross income while charging/paying all or part of the Fund’s fees and expenses to/out of capital of the Fund,
resulting in an increase in the payment of dividends by the Fund. Payment of dividends out of capital or on a gross-of-fee basis may
result in an immediate reduction of the net asset value per share.
5. Any distributions from the income and/or involving the Capital result in an immediate reduction of the net asset value per unit of
the fund. Payment of dividends out of Capital amounts to a return or withdrawal of part of an investor’s original investment or from
any capital gains attributable to that original investment.
6. Investors should not invest in the Fund solely based on this document and should read the relevant offering document.
Why invest in China Equity Market?
China is transforming its economy and creating opportunities
China will go through signifcant transformation that will reshape the economy, cement China’s position in the world
and create a wealth of opportunities for investors.

60%

Services
50% Sector
overtakes
40%

Manufacturing Sector
30%

20%

10%
Agriculture Sector

0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017

Key fundamental strategies Impact

Services and consumer-led growth: Reforms and growing

where services account for 56%1 of total GDP and consumer demand are
consumer demand overtakes investment as the principal supporting the emergence
driver of the economy. of the services sector

Source: National Bureau of Statistics, China GDP sectoral breakdown, data period 2003 – H1 2017.

New economy sectors take the lead

Increasing demands on Healthcare services when China’s internet sector has much more room for growth
ageing population rapidly increases

China’s expenditure in private healthcare is growing at high speed Mobile internet dominates the online shopping market
Online spending on Alibaba’s share of
a single day mobile sales
USD (bn)
30 100%
90%
US France Germany China 25 80%
70%
3.8% 3.7% 3.8% 16.4% 20
60%
15 50%
40%
10 30%
UK Japan 20%
5
1.7% 1.2% 10%
0 0%
2013 2014 2015 2016 2017
Black Friday (US) Cyber Monday (US) Alibaba Singles Day (China) Share of mobile sales

• Increasing private expenditure on health services is creating • Chinese consumers spending more time on mobile internet
a new breed of leading industry companies in the health and internet users are spending more online through the
sector innovative mobile-based apps
• Healthcare spending as of % of GDP in China is only 3-7% • China’s internet user base is the largest in the world, yet
and trails that of Japan, Australia, Europe and US (9-17%)2 penetration rates (53.2% in 2016) lag behind developed
markets3

Source: World Health Organization: Global Health Expenditure Database, average Source: Statista, 2018.
growth rate in 2005-2014.

1 China NDRC (National Development and Reform Council).

2 OECD data, 2014.
3 Internet Live Stats: Internet Users by Country, 2016.
Why invest in UBS China Opportunity Equity Fund?
Outstanding performance
5 years performance (rebased to 100)
Performance Fund Reference Peer Average:
400 (in USD, %) cumulative Index: MSCI China Equity
(net of fees) returns China 10/40
350
YTD4 23.49 16.27 22.61

300
1 Year 38.38 32.76 36.87

250
3 Years 66.95 26.27 34.30

200
5 Years 164.99 84.16 85.57

150 Source: UBS Asset Management, Morningstar, Bloomberg, data as of 31 August

2020, unless otherwise stated. UBS (Lux) Equity Fund – China Opportunity (USD)
fund inception: 15 November 1996. Repositioned to current strategy on 19 July
100 2010. Performance is calculated on NAV to NAV basis, with dividend reinvested,
based on P-acc (USD). Performance shown is net of fees. Annual performance of
UBS (Lux) Equity Fund – China Opportunity (USD) P-acc in the last f ve years: 2015
(+16.0%), 2016 (-2.3%), 2017 (+59.7%), 2018 (-14.8%) and 2019(+41.6%). Past
50
performance is not indicative of future results. Reference index changed from
MSCI China to MSCI China 10/40 with effect from 1 January 2018. Peer Group
average is the average fund performance of Morningstar China Equity universe (in
0 terms of USD).
Jul-10 Jan-13 Aug-15 Feb-18 Aug-20
UBS China Opportunity Equity fund Reference Index Peer Average 4 YTD: Year-to-date (since beginning of the year)

New economy sectors at the heart of the fund portfolio

Sector allocation Top 10 holdings Fund (%) Index (%)
35.0% Alibaba 9.95 9.55
30.0%
Tencent Holdings Ltd 9.61 8.09
25.0%
20.0% TAL Education Group 9.24 1.30
15.0% Ping An Insurance 6.31 3.26
10.0% Kweichow Moutai 5.01 0.91
5.0%
Yihai International Holding 4.77 0.34
0.0%
Consumer
Discretionary

Financials

Cash

Communication
Services
Consumer
Staples

Health Care

Real Estate

Industrials
Information
Technology

Utilities

Materials

Energy

Netease Inc 4.61 1.83

Hong Kong Exchanges & Clearing 3.54 -
New Oriental Edu & Tech Grp 2.66 0.96

UBS China Opportunity Equity Fund MSCI China 10/40 Index CSPC Pharmaceutical Group Ltd 2.66 0.57

Source: UBS Asset Management. MSCI, Corporate information. Data as of 31 August 2020.
This information should not be considered as recommendation to buy or sell any security.

Invest in up and coming industry future leaders

TAL Education Group Livzon Pharmaceutical

• One of the leading after-school tutoring services provider • A mid-cap biopharmaceutical with leading drug innovation
in China culture
• Actively developed its online education market, owning the • Livzon is estimated to be one of the biggest investors in
top-notch online teaching platform Products R&D in China’s healthcare sector
• Small class offerings and online channels are a hit with • Newly developed products include anti-ulcer, fertility and
Chinese students and parents anti-cancer drugs
• TAL offers exposure to increasing demand for tailored • Fertility drug is estimated to see a sales growth of 31%5
education services in China, where there is good prospects between 2017 and 2019
for long-term growth
5 Source: UBS Investment Bank, 2017.
 Fund information
Fund name UBS (Lux) Equity Fund – China Opportunity (USD)
Fund inception date 15 November 1996
(Repositioned to current strategy on 19 July 2010. Old sub-fund name
was UBS (Lux) Equity Fund – Hong Kong)

Base currency USD

Reference index MSCI China 10/40

Net asset value USD 13.12 billion (as of 31 August 2020)

Management fee 1.87% p.a. ; hedged share class: 1.91% p.a.

Dealing Daily

Available share classes ISIN Subscription Fee

(USD) P-acc LU0067412154

(HKD) P-acc LU1008478684 Up to 5%

(AUD hedged) P-acc LU1227825731

(USD) P-mdist* LU1152091168

(HKD) P-mdist* LU1152091754 Up to 5%1

(AUD hedged) P-mdist* LU1230129766

* The share classes with ”-mdist” aim to pay dividends on a monthly basis. Dividend is not guaranteed. Dividend may be paid out of capital.
1 Hong Kong distributors will currently only charge up to 5% of the subscription amount. However, investors should note that a maximum of up to 6% of the subscription
amount may be charged upon giving 1 month’s prior notice to affected investors.
2 Following the realignment of the UBS investment fund range, asset allocation for this fund was adjusted with effect from 19 July 2010. All performance details thus refer
to the date of the repositioning.
3 Share classes with “-mdist” in their name may make monthly distributions excluding fees and expenses. They may also make distributions out of capital and realized
capital gains, at the discretion of the Management Company, or pay distributions out of gross income while charging/paying all or part of a Subfund’s fees and expenses
to/out of the capital of the relevant Subfund, resulting in an increase in distributable income for the payment of distributions by the Subfund and therefore, the Subfund
may effectively pay distributions out of capital. Any distributions involving payment of dividends out of the fund’s capital or payment of dividends effectively out of the
fund’s capital (as the case may be) may result in an immediate reduction of the next asset value per share/unit.
4 A positive distribution yield does not imply a positive return. The share classes with “-mdist” and “-dist” aim to pay dividends on a monthly basis and annual basis
respectively. Dividend rate is not guaranteed. Distribution yield = (Dividend per unit on last record date x 12/Record Date NAV) x 100. The distribution yields shown here
are for reference only.

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Investment involves risks. Past performance is not indicative of future performance. Investors should read the relevant offering document for details including the product
features and risk factors, in particular those associated with investments in emerging markets and fnancial derivatives instruments. The value of the funds and income from
them can go up as well as down and consequently you may not get back the amount originally invested.
This document has not been reviewed by the Securities and Futures Commission in Hong Kong. This document is issued by UBS Asset Management (Hong Kong) Limited. A
number of comments in this document are based on current expectations and are considered “forward-looking statements”. Actual future results may prove to be different
from expectations and any unforeseen risk or event may arise in the future. The opinions expressed are a refection of UBS Asset Management’s judgment at the time this
document is compiled and any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise is disclaimed.
You are advised to exercise caution in relation to this document. The information in this document does not constitute advice and does not take into consideration your
investment objectives, legal, fnancial or tax situation or particular needs in any other respect. Investors should be aware that past performance of investment is not necessarily
indicative of future performance. Potential for proft is accompanied by possibility of loss. If you are in any doubt about any of the contents of this document, you should
obtain independent professional advice.
Source for all data and charts (if not indicated otherwise): UBS Asset Management. © Copyright UBS 2020. The key symbol and UBS are among the registered and
unregistered trademarks of UBS. All rights reserved.

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