MACQUARIE IPO CHINA GATEWAY FUND Initial Charge

MACQUARIE IPO CHINA GATEWAY FUND
FACTSHEET DECEMBER 2014
Fund Strategy
The objective of the Fund is to capture the growth of IPO securities from their offer
and during the early stages of listing. The Fund invests in securities that are or
will list in Greater China or Singapore or US. IPO securities not listed in Greater
China must derive a significant portion of their revenue from Greater China or
Singapore.
Important Risk Information
−
Fund Performance (A1 share class)*
−
140
Macquarie IPO China Gateway Fund A1
Indexed Perf ormance
120
100
−
80
60
−
40
−
20
0
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Sep-07
Jun-07
Fund information
Cumulative Performance %*
1mth
6 mths
1 yr
2 yrs
3 yrs
5 yrs
Since
inception**
A1
3.29%
20.01%
9.55%
30.21%
57.49%
16.26%
-4.67%
A2
3.30%
20.02%
9.56%
30.22%
57.50%
16.97%
27.15%
A3
3.34%
20.11%
9.60%
30.31%
57.20%
0.00%
0.51%
Benchmark
-1.10%
3.64%
7.51%
15.57%
42.46%
34.90%
38.36%
Calendar Year Performance %*
2007
2008
2009
2010
2011
2012
2013
2014
YTD
A1
3.86%**
-61.76%
106.47%
15.46%
-36.06%
20.95%
18.85%
9.55%
A2
N/A
N/A
8.70%**
15.21%
-35.53%
20.95%
18.85%
9.56%
A3
N/A
N/A
N/A
0.06%**
-36.10%
20.64%
18.90%
9.60%
Benchmark
18.13%
-48.80%
69.56%
15.78%
-18.21%
23.27%
7.50%
7.51%
Net Asset Value per Unit #
Manager
Key Contributors


A train maker in China gained 45% during the month on the
announcement that it is to merge with another major rail company.
A major Chinese insurance company was up 21% in the month of
December as Chinese diversified financial and insurance companies
gain on the Government’s announcements of monetary easing.
A bank climbed 21% in the month of December. Bullishness gripped
the sector as Chinese policymakers' accommodative stance turns
investors optimistic.
Key Detractors



A Chinese internet company declined 23% as analysts were cool
towards its plan to form a joint venture with a mobile phone
manufacturer.
A casino operator in Macau fell 16% following the announcement of
new efforts from the Chinese government to clamp down on
corruption with Macau in its targets.
Similar to the stock above, an auction house was down 9% with
concerns over the impact of the Government’s anti-corruption drive
on the company’s business.
A1 Class 8.750
A2 Class 12.715
A3 Class 100.508
Macquarie Funds Management Hong Kong Ltd
Trustee
Inception Date
HSBC Trustee (Cayman) Limited
A1(USD)
08/08/2007
Fund Denomination
A2(USD)
01/08/2009
A3(HKD)
20/12/2010
United States Dollars
Funds size # (USD
millions)
Benchmark
FTSE All World Greater China Index
Structure
Cayman Islands Domiciled Umbrella Trust
Liquidity
Daily
62.64
Fund codes and minimum investment amounts
Class of Units
A1 ^
* As at 31/12/2014. Past performance is not a reliable indicator of future
performance. Performance is quoted post fees.
** Performance is calculated from the inception date of the share class. Since
inception performance of the benchmark is calculated based on the inception
date of A1.

The Macquarie IPO China Gateway Fund (“Fund”) invests in
emerging market securities, primarily in the Greater China and
Singapore region which are exposed to higher risk of economic,
political and regulatory changes that may pose additional risk to
the Fund and securities linked to these markets are subject to
higher volatility and liquidity risks.
The Fund may invest in IPO securities - price performance of
these securities may be difficult to assess due to lack of trading
history.
The Fund may invest in small and medium sized companies
which may be more volatile than large sized companies.
Investment involves risk which may result in loss of part or
entire amount of your investment.
Investors should refer to the explanatory memorandum for more
information about risks. You must ensure that the intermediary
who sells it to you has advised you that the fund is suitable for
you.
A2
A3
ISIN
KYG5760E1272
KYG5760E1355
KYG5760E168
6
Bloomberg
MQIPOG KY
Equity
MQIP2A KY
Equity
MICHGA3 KY
Equity
Minimum initial
subscription
N/A^
USD3,000
HKD10,000
N/A^
USD1,000
HKD5,000
Minimum additional
subscription amount
Fund Charges
Initial Charge
Management Fee
Performance Fee
Fund Statistics^ *
Annualised Return
Annualised Volatility
Up to 5.0% of Subscription Amount
1.50% per annum
10% of returns over a 5% p.a. hurdle subject to a high
water mark.
1 yr
3 yrs
9.55%
12.15
16.35%
15.91
Sharpe Ratio
0.81
1.03
Tracking Error
10.59%
11.43%
^ For Class A1 only. Class A1 is now closed for new subscription. # As at
31/12/2014. * Past performance is not a reliable indicator of future performance.
Portfolio Changes

There were no new deals for the Fund this month.
MACQUARIE IPO CHINA GATEWAY FUND
IPO News


As the year draws to a close, the pipeline of deals in Asia with the
number of new IPO deals announced declining to 93 over the month.
The largest deal in the region during the month belonged to the
successful listing of Dalian Wanda Commercial Property on the Hong
Kong Stock Exchange, raising US$3.7 billion.
There were 163 new deals announced globally in the month of
December, declining from the previous month as we near the year-end.
Outlook



Top 5 Holdings ^
Chinese stocks continued its upward climb and enjoyed a strong
month of performance with the Hang Seng China Enterprises Index
jumping more than 7% in December as Chinese policymakers moved
to ease and support the economy, providing the impetus for investors
to turn more bullish on the economy’s outlook.
Investor sentiment remained buoyed by expectations that recent
moves by policymakers signal the beginning of a monetary easing
cycle and highlights the Government's political will to support and
maintain growth in line with historical trends. In addition to November's
surprise interest rate cut, the PBOC has shown that it intends to give
support to the real economy by changing a bank's calculation for its
loan-to-deposit ratio in a bid to loosen monetary conditions and kickstart credit growth. Many observers are now expecting a cut to the
required reserve ratio of banks, a move that will provide broad
monetary easing to the economy. It is for these reasons that Chinese
financial stocks, and banks in particular, enjoyed a month of very
strong performance.
December also saw renewed efforts by the Government to indicate its
seriousness in introducing reforms and tackling sensitive issues such
as corruption in the country by launching a new wave of anti-graft
measures. Macau in particular was in the crosshairs and its stocks
suffered as a result. This example highlights that while some shortterm pain may be experienced as a consequence of reform, these
adjustments are necessary should China evolve into a modern,
consumption-driven economy in the longer-term.
Company
Sector
Weight
Luye Pharma Group Ltd
China Cnr Corp Ltd-H
China Pacific Insurance Gr-H
Aia Group Ltd
China Minsheng Banking-H
Health Care
Industrials
Financials
Financials
Financials
8.24%
6.81%
6.06%
5.96%
5.94%
Portfolio Characteristics
Price to Earnings Ratio


Tend to be smaller, faster growing and relatively more volatile than
listed peers.
Are often discounted by the market because they are less researched,
less liquid and more volatile.
HSI
10.3
10.1
Price to Operating Cash Flow
8.2
7.0
Earnings per Share Growth
15.5%
9.6%
11.6%
Dividend Yield
2.4%
Net Debt (Cash) to Market Capitalisation
-3.3%
2.9%
Return on Equity
18.9%
13.8%
NB. All the above ratios are shown for illustrative purposes only and may not reflect
future portfolio characteristics. All ratios are based on consensus forecast data from
Bloomberg at 31/12/2014.


Strong earnings growth indicates future growth prospects are
undervalued. The relatively high return on equity indicates that
management has deployed capital and managed the business well.
Strong balance sheets illustrate that the companies tend to have the
resources to execute on their growth strategies and are less likely to
face financial stress or dilute.
Sector Weighting ^
5.47
Cash
33.25
Financials
5.15
Utilities
Characteristics of IPO securities
Fund
-
Telecommunication Services
1.48
Inf ormation Technology
24.11
Health Care
1.90
Consumer Staples
14.13
Consumer Discretionary
7.51
Industrials
6.39
Materials
The Fund aims to exploit these characteristics by holding securities over the
medium term to reap potential benefit from listing premium and also postlisting excess return potential.
0.61
Energy
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Geographical Weighting ^
Cash
5.47
Taiwan
1.12
Singapore
-
Hong Kong
9.77
China
83.63
-
10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00
^ Positions as at 31/12/2014, positions may vary over time
Source: Macquarie Funds Management Hong Kong Limited. The Macquarie IPO China Gateway Fund (“Fund”) is authorised by the Securities and Futures Commission
(“SFC”) in Hong Kong. Such authorisation does not imply official approval or recommendation by the SFC. This document has been prepared by Macquarie Funds
Management Hong Kong Limited (“Manager”). This document has not been reviewed or authorised by the SFC, and is neither an offer nor solicitation to purchase units in the
Fund. Investors should refer to the Fund’s Explanatory Memorandum (“EM”) for detailed information prior to subscription. Applications for units may only be made on forms
of application available with the EM. Past performance is not necessarily a reliable indicator of future performance. Macquarie Group, its employees and officers may act in
different, potentially conflicting, roles in providing the financial services referred to in this general advice. The Macquarie Group has conflict of interest policies which aim to
manage conflicts of interest. Macquarie will receive remuneration and pay commission to introducing advisers as described in the EM. Investments in the Fund are not
deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 (“Macquarie”) or any Macquarie Group company and are subject to investment risk, including
possible delays in repayment and loss of income and capital invested. None of Macquarie or any other Macquarie Group company guarantees the performance of the Fund,
the repayment of capital from the Fund or any particular rate of return. Investments in the Fund may not be suitable for all investors and prospective investors should consult
their professional advisers as to suitability, legal, tax and economic consequences of an investment in the Fund. Distribution of this document may be restricted in certain
jurisdictions; persons into whose possession this publication comes should inform themselves of and observe such restrictions. This document does not constitute the
distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such offer is nor authorised or to any person to whom it is
unlawful to distribute such a booklet or make such an offer or solicitation. US persons are not eligible. Performance figures are net of Fund level expenses but do not take
into account any sales or redemptions charges or taxes which would reduce an investor’s overall return. Performance figures in Class A1 reflect the reinvestment of
distributions.

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