BEA Union Investment China Gateway Fund (CGF)

Capturing the Growth Opportunities in the China New Economy

Focuses on 3 key sectors

Technology adoption, healthcare, consumption premiumization

Flexible allocation to mitigate short term volatility and foster long term return

Dynamic allocation between equities and bonds to enhance the potential capital appreciation and yields

Aims to provide monthly dividends

Dividends are not guaranteed, and distributions may be paid out of income and/or capital (see important note 4)

Annualized dividend yield^I as of September 2020 for USD, HKD and RMB (Hedged) classes are 4.5%, 4.6% and 6.5% respectively.

Important note:

4. The manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of the Fund. Distributions paid out of capital amount to a return or withdrawal of part of the unitholder’s original investment or from any capital gains attributable to that original investment. Such distribution may result in an immediate reduction of the net asset value per unit.

I. Source: BEA Union Investment, as of 30 September 2020. Annualized dividend yield = (dividend of the current month x 12) / last month end NAV x 100%. Please refer to dividend notice available on website for dividend composition information and details. Dividend only applies to distributing classes and is not guaranteed. Past dividend record is not indicative of future dividend likely to be achieved. Please note that a positive distribution yield does not imply a positive return. The manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of the Fund. Distributions paid out of capital amount to a return or withdrawal of part of the unitholder’s original investment or from any capital gains attributable to that original investment. Such distribution may result in an immediate reduction of the net asset value per unit.

Focuses on 3 investment themes in China equities to capture opportunities in the new economy

COVID-19 has impacted many major economies. In contrast, the pandemic has been under control in China. The previously suppressed demand has been released. With the substantial policy support from the government, China took the lead in recovery and is in a better position for growth potential. Moreover, built upon its solid fundamentals, Chinese economy has transited from speed of growth to quality of growth. Chinese assets have become major choices for individual and institutional investors. From a medium-term perspective, we believe that the three major themes in the stock market include:

Labor cost savings fro adoption of advance industrial robots

Technology adoption

Chinese technology development has reached the world standard. Its industrial upgrading, e-commerce and internet sectors have become the market focus.

Industrial upgrading

The 14^th Five-Year Plan is having a greater emphasis on innovative technology and advanced manufacturing development.

In support of the move, China is expected to open up the market further to attract foreign capital and technical know-how, drive down the cost of production, tap to target client segments and hence grow the client base.

E-commerce and internet

The market size of e-commerce and internet in China is enormous. Many traditional businesses have transformed into e-commerce, speeding up the development and expansion of supply chain and prompting structural improvement.

Investment focus: high-end component manufacturing, large scale e-commerce, leading internet companies

Healthcare

The COVID-19 outbreak will lead to a gold era in the healthcare sector. The market in China is expected to exceed RMB 8 trillion in 2020 and will surge to RMB 16 trillion by 2030^II.

Investment focus: medical service, pharmaceutical, medical equipment

II. Source: "Healthy China 2030" initiative, 15 July 2019

Chinese citizen’s income growing rapidly Consumption upgrade is accelerating

Consumption premiumization

The trend of upgrading consumption continues to ferment among Chinese consumers, as the per capital income rises.

The pace is accelerating driven by the momentum of urbanization. The structure of consumption expenditures evolves rapidly.

The huge growth potential in mid to high-end consumption will serve as a major investment theme for the next five to ten years.

Investment focus: high-end wine, education institutions, retail brands

Chinese bonds offer attractive valuations with low default rate, providing investors with opportunities in the second half of 2020

Chinese high yield bonds offer attractive yield

The Chinese government has taken a multi-pronged approach by increasing fiscal expenditure, relaxing monetary policy and providing supportive measures to provide more long-term funding, increasing market liquidity, in return alleviating corporate default risks.

Offering low valuation and attractive yields, in addition to exhibiting a low correction with the oil price, Chinese high yield bonds have higher appeal than their US and European counterparts. Chinese bonds are expected to become one of the major asset classes for international investors, providing strong support for the fundamentals of Chinese bond market.

Investment focus: Chinese government bonds, policy bank bonds, property bonds

Dynamic allocation between equities and bonds Captures opportunities in the new economy

The Fund frequently adjusts the mix of China A shares , Hong Kong equities, American depositary receipts (ADRs), offshore bonds, onshore bonds and cash through dynamic allocation. We actively search for investment opportunities from more than 5,400 companies, and act swiftly in response to market movement to mitigate short-term volatility. The Fund aims to capture opportunities in China’s new economy for long term capital growth and stable return.

Dynamic allocation between equities and bonds Captures opportunities in the new economy

The Fund aims to capture capital appreciation through stocks, and to enhance yield as well as to lower the overall volatility through bond holdings and through dynamic asset allocation.

Dynamic asset allocation in multi-assets and cash

Investments in the fund are subject to investment risks, including the possible loss of the principal amount invested. For full details and risk factors of the fund, please refer to the explanatory memorandum of the fund. Investors should also read the explanatory memorandum of the fund for detailed information prior to any subscription. The information contained herein is only a brief introduction to the fund. Investors should be aware that the price of units may go down as well as up as the investments of the fund are subject to market fluctuations and to the risks inherent in all investments. Past performance is not indicative of future performance. The information contained in this document is based upon information which BEA Union Investment Management Limited considers reliable and is provided on an “as is” basis. This document does not constitute an offer, recommendation or solicitation to buy or sell any securities or financial instruments. The fund has been authorized by the Securities and Futures Commission (“SFC”) in Hong Kong. SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors, nor is it an endorsement of its suitability for any particular investor or class of investors. This material and company website have not been reviewed by the SFC in Hong Kong.

A China mixed-asset fund with investment in Hong Kong stocks, A-shares, ADRs, and Chinese bonds

Uses integrated channels, including the Shanghai and Shenzhen Stock Connects (northbound) and Bond Connect, to access China onshore securities

Aims to provide a monthly dividend (dividend is not guaranteed and distributions may be paid out of income and/or capital)*

Multiple currencies available (USD, HKD, AUD, and RMB)

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Main Distributors (In no particular order):

*Dividend only applies to distributing classes and is not guaranteed. Past dividend record is not indicative of future dividend likely to be achieved. The manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of the fund. Investors should note that the distributions paid out of capital amount to a return or withdrawal of part of the unitholder's original investment or from any capital gains attributable to that original investment. Such distribution may result in an immediate reduction of the net asset value per unit. Please note that a positive distribution yield does not imply a positive return. Investors should not make any investment decision solely based on the information above. You should read the relevant offering document (including the key facts statement) of the fund for further details including the risk factors.

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BEA Union Investment China Gateway Fund

BEA Union Investment China Gateway Fund (the “Fund”) seeks medium to long term capital growth and income through investing primarily in equity securities and/or debt securities, that are either (a) traded in China or (b) issued by entities incorporated in China or entities which have significant operations in or assets in, or derive significant portion of revenue or profits from China.
The Fund is subject to general investment risk, China market concentration risk, equity market risk, asset allocation risk, risks associated with stock connects, risks associated with China interbank bond market, China tax risk, risks of investing in other funds, emerging market risk and currency risk.
The Fund invests in debts securities and are subject to risks in interest rates, credit/counterparty, downgrading, below investment grade and non-rated securities, volatility and liquidity, valuation and sovereign debt, credit rating and credit rating agency risk, which may adversely affect the price of the debt securities.
The manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of the Fund. Distributions paid out of capital amount to a return or withdrawal of part of the unitholder’s original investment or from any capital gains attributable to that original investment. Such distribution may result in an immediate reduction of the net asset value per unit.
In terms of currency hedged class units, adverse exchange rate fluctuations between the base currency of the Fund and the class currency of the currency hedged class units may result in a decrease in return and/or loss of capital for unitholders. Over-hedged or under-hedged positions may arise and there can be no assurance that the currency hedged class units will be hedged at all times or that the manager will be successful in employing the hedge.
RMB is currently not a freely convertible currency as it is subject to exchange controls and restrictions. Non-RMB based (e.g. Hong Kong) investors are exposed to foreign exchange risk and there is no guarantee that the value of RMB against the investors’ base currencies (for example HKD) will not depreciate. Any depreciation of the RMB could adversely affect the value of investors’ investments.
The Fund may use financial derivative instruments for hedging and investment purposes which may not achieve the intended purpose and may result in significant losses. Risks associated with derivative instruments include counterparty/ credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk.
Investors should not make an investment decision based solely on this material.

BEA Union Investment Capital Growth Fund

BEA Union Investment Capital Growth Fund is an approved pooled investment fund umbrella which has within it different investment funds investing in equities or bonds, each with a different risk profile.
An investment fund which invests in a single market may be subject to higher concentration risk than investment funds which invest in a number of different markets.
Some of the investment funds investing in emerging markets are higher risk than those investing in more established markets. Emerging markets may involve additional market, currency, legal and regulatory and liquidity risks. The high volatility in such markets could result in the investors suffering substantial losses.

BEA Union Investment Series

BEA Union Investment Series as an umbrella fund has within it different sub-funds investing in equities and/or bonds, each with a different risk profile.
Sub-funds which invest in emerging markets may be subject to higher liquidity and volatility risks, while sub-funds which invest in a particular market or sector may be subject to higher concentration risk than funds following a more diversified policy.
Sub-funds which invest in lower-rated fixed income instruments, including below investment grade and non-rated debt securities, are subject to greater credit and liquidity risks than higher-rated securities.
Sub-funds may invest primarily in securities denominated in RMB or have exposure to RMB. It should be noted that the RMB is currently not a freely convertible currency as it is subject to foreign exchange control policies of the Chinese government. In addition, there can be no assurance that the RMB will not be subject to devaluation. Any devaluation of RMB could adversely affect the value of investors’ investments.
In terms of currency hedged class units of sub-funds, adverse exchange rate fluctuations between the base currency of the sub-fund and the class currency of the currency hedged class units may result in a decrease in return and/or loss of capital for unitholders. Over-hedged or under-hedged positions may arise and there can be no assurance that these currency hedged class units will be hedged at all times or that the manager will be successful in employing the hedge.
Investors may invest in RMB (Hedged) units of sub-funds. It should be noted that the RMB is currently not a freely convertible currency as it is subject to foreign exchange control policies of the Chinese government. There is also no assurance that the RMB will not be subject to devaluation. Any devaluation of the RMB could adversely affect the value of investors’ investments. There is no guarantee that the hedging strategy will be effective and investors may still be subject to the RMB currency exchange risk.
Sub-funds may enter into futures contracts and/or currency forward contracts for hedging and/or investment purposes. Given the leverage effect embedded in futures and currency forward contracts, a sub-fund may be exposed to significant losses.
The manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of certain sub-funds. Investors should note that the distributions paid out of capital amount to a return or withdrawal of part of the unitholder’s original investment or from any capital gains attributable to that original investment. Such distribution may result in an immediate reduction of the net asset value per unit.
BEA Union Investment China A-Share Equity Fund will invest at least 70% of its assets in China A-Shares, primarily through a qualified foreign institutional investors (“QFII”) which is subject to applicable regulations imposed by the PRC authorities, including among others, repatriation restrictions, which may subject the sub-fund to significant liquidity risk. In addition to the use of QFII quotas, the sub-fund may have direct exposure to certain eligible China A shares via the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect which is subject to different risks, including quota limitations, clearing and settlement risk. Investment in the sub-fund involves significant risks relating to the PRC, including, among others, emerging market risks, social, political and regulatory risks. Given the significant risks associated with investing in China A-Shares, the sub-fund may be exposed to significant losses.
BEA Union Investment China A-Share Equity Fund may be subject to the risks associated with changes in the PRC laws and regulations, including PRC tax laws, and such changes may have retrospective effect and adversely impact the sub-fund. The manager currently intends to make provisions for any PRC taxes payable by the Fund on (i) interests from RMB Bonds and (ii) dividends derived from PRC Equity Securities (including China A-Shares acquired through the Stock Connect), at a rate of 10%, if the relevant tax is not withheld at source. Such provisions may be excessive or inadequate to meet the actual tax liabilities. In case of any shortfall between the provisions and actual tax liabilities, which will be debited from the sub-fund's assets, the sub-fund's asset value will be adversely affected.

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The manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of funds. Investors should note that the distributions paid out of capital amount to a return or withdrawal of part of the unitholder’s original investment or from any capital gains attributable to that original investment. Such distribution may result in an immediate reduction of the net asset value per unit. “Net distributable income” means the net investment income (i.e. dividend income and interest income net of fees and expenses) attributable to the relevant share class and may also include net realised gains (if any) based on unaudited management accounts. However, “net distributable income” does not include net unrealised gains. Dividend only applies to distributing classes and is not guaranteed. Past dividend record is not indicative of future dividend likely to be achieved. Please note that a positive distribution yield does not imply a positive return. You should read the relevant offering document (including the key facts statement) of the fund for further details including the risk factors.

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