Some characteristics of stocks and trading on the Hong Kong Stock Exchange as at 30 April 2012 per hkex.com.hk, hsi.com.hk and Goldswell's calculations are:

• There were 1,516 stocks with a total market capitalisation of $HK20,231 billion
• Market turnover for April 2012 was $HK864 billion
• At this rate, 51% of the Hong Kong market capitalisation turns over each year. Actually as almost all Hong Kong listed companies have a major controlling shareholder who doesn't trade their shares, the available market capitalisation turns over much faster than the 51% pa
• Average P/E was 10 for the Main Board and 19 for the GEM Board
• 62% of the Hong Kong market capitalisation of the top-48 stock Hang Seng Index (HSI) can be classified as Mainland China companies (50% or more of their sales are in Mainland China)
• 41% of the Hong Kong market capitalisation of the HSI is made up of financial stocks

Looking at the various Hang Seng total return indexes for the 12 months to 30 April 2012:

• The HSI is down 8%
• The HSML100 Mainland index is down 10% compared to the HSHK35 Hong Kong index down 8%
• The HSLI Large Company index is down 8% compared to the HSSI Small Company index down 25%
• The HSCI Industry indexes ranged from up 16% for Telecoms to down 37% for Materials

Within this environment Goldswell manages the following private investment funds:

• Hong Kong Small Cap fund benchmarked against the HSSI Small Cap total return index
• Hong Kong Large Cap fund benchmarked against the HSCI Composite total return index
• Hong Kong Utilities fund benchmarked against the HSCI Utilities total return subindex
• Hong Kong Mainland China fund benchmarked against the HSML100 Mainland total return index
• Hong Kong Value Timing fund benchmarked against the HSI total return index

A combination of these funds that suits Goldswell is 30% small caps, 28% large caps, 8% utilities, 28% Mainland China and 6% value timing... with 6-monthly rebalancing at 30 June and 31 December.

Goldswell's funds are fully invested in Hong Kong listed stocks except for minor cash balances. The funds are similar to their benchmark indexes but weighted towards industries and stocks with better value fundamentals. Goldswell charges these funds a 0.2% management fee per month except for the Market Timing fund which is charged 0.02% per month.

Following is a summary of these funds' performances and characteristics. Also to better understand how these funds have performed compared to some other Hong Kong investment possibilities, details are given for the Hang Seng Index, the Hang Seng Total Return Index, investing in gold via the Hong Kong listed SPDR Gold Trust, the HSBC $HK1m 1-year fixed bank deposit rate and the Hong Kong composite CPI inflation rate.

Goldswell's funds have all started on different dates. For the "Combination of funds" performance below we have used the funds' benchmark returns for the periods before the funds started.

Table 1 - Goldswell's Investment Summary as at 30 April 2012
Source of data - As calculated by Goldswell
	HK Small Cap fund	HK Large Cap fund	HK Utilities fund	HK Mainland China fund	HK Market Timing fund	Combination of funds	Hang Seng Index (HSI)	Hang Seng Total Return Index (HSITRI)	HK Listed SPDR Gold Trust	HSBC $HK1m 1-yr bank deposit	HK Composite CPI inflation rate
Fund weighting for Goldswell's combination of funds:
Current weighting	30.0%	28.5%	7.6%	27.6%	6.3%	100%
After 30-Jun and 31-Dec rebalancing	30%	28%	8%	28%	6%	100%
April 2012:
Net investment or index return	-1%	3%	-1%	0%	3%	1%	3%	3%	0%	0%	0%
12 months to 30 April 2012:
Net investment or index return	-24%	-10%	-7%	-18%	-8%	-16%	-11%	-8%	8%	0%	5%
Equivalent monthly compounding return	-2%	-1%	-1%	-2%	-1%	-1%	-1%	-1%	1%	0%	0%
Best month	16%	13%	7%	15%	13%	14%	13%	13%	13%	0%	2%
Worst month	-20%	-16%	-8%	-16%	-14%	-16%	-14%	-14%	-11%	0%	-1%
Various dates to 30 April 2012 - For the newer funds, the period before the fund started uses the fund's benchmark index performance
Since HK Market Timing fund started on 1 Sep 10 (20 months)	-10%	2%	-2%	-9%	7%	-4%	3%	7%	33%	0%	11%
Since HK Mainland China fund started on 1 Nov 09 (30 months)	8%	6%	1%	-7%	4%	3%	-3%	4%	58%	1%	11%
Since HK Utilities fund started on1 Mar 08 (50 months)	-22%	14%	-8%	-15%	-1%	-7%	-13%	-1%	68%	3%	13%
Since HK Large Cap fund started on 1 Apr 07 (61 months)	3%	40%	17%	24%	24%	26%	7%	24%	146%	6%	18%
Since HK Small Cap fund started on 1 Oct 04 (91 months)	80%	149%	70%	184%	104%	137%	61%	104%	293%	14%	24%
Since inception equivalent annual compounding % better/worse than the fund's benchmark index	2.1%	2.8%	-4.9%	-3.5%	0.0%	2.0%
Since inception equivalent annual compounding % better/worse than the fund's benchmark index excluding management fee	4.6%	5.3%	-2.6%	-1.1%	0.2%	4.3%
Investment Characteristics:
No of stocks invested in	36	45	13	47	1	90	48
No of HSI stocks invested in	0	16	4	11		17	48
Weighting of largest stock	8.1%	6.1%	14.1%	4.8%		2.2%	14.4%
Weighted ave stock market cap - HKDm's	6,024	281,415	183,923	232,277	51,722	252,911	1,044,684
Weighted ave stock market cap on HKEx - HKDm's	5,129	146,271	178,698	106,744	51,722	149,771	732,324
P/NTA	0.63	1.08	1.31	1.14	1.00	0.96	1.53
P/E	4	7	11	7		6	10
P/CFO	12	11	7	8		9	6
Dividend yield	4.1%	3.5%	3.3%	3.6%	3.0%	3.7%	3.4%
1-yr sales growth	30%	31%	22%	29%		29%	25%
1-yr profit growth	22%	10%	3%	17%		15%	7%
Profit margin (Profit/Sales)	19%	16%	14%	11%		15%	15%
Asset turnover (Sales/Assets)	48%	32%	29%	42%		37%	16%
Gearing (Assets/SHF)	196%	314%	280%	341%		294%	640%
Return on equity (Profit/SHF)	18%	16%	12%	16%		16%	15%
1-yr sustainable growth rate (ROExRR)	15%	12%	7%	12%		13%	10%
Implied return (D1/P0+G) ie the annual return equivalent to buying a stream of dividends, starting with the current yield and growing at the 1-yr sustainable growth rate	20%	16%	11%	15%		17%	14%
Geographical Sales:
% invested in companies with >50% sales in China	64%	60%	84%	100%	62%	74%	62%
Industry Allocations:
Energy	9%	17%		25%	11%	15%	11%
Materials	7%	4%		7%		5%
Industrial goods	12%	6%		8%		7%
Consumer goods	16%	12%		10%	5%	11%	5%
Services	15%	8%		14%	3%	10%	3%
Telecommunications		2%	8%	2%	17%	3%	17%
Utilities	9%	10%	92%	5%	4%	16%	4%
Financials		12%		9%	41%	10%	41%
Property and construction	21%	17%		9%	9%	14%	9%
Information technology	11%	4%		4%	4%	5%	4%
Conglomerates		8%		6%	6%	5%	6%
Total	100%	100%	100%	100%	100%	100%	100%