1. Dacheng Fund Management Co., Ltd., the Fund Manager of the Dacheng Domestic Demand Growth Mixed Fund ("the Fund"), accepts full responsibility for the accuracy of the information contained in the Prospectus, this Hong Kong Covering Document and the Product Key Facts Statement of the Fund, and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement in these documents misleading.
2. However, neither the delivery of the Prospectus, this Hong Kong Covering Document or the Product Key Facts Statement of the Fund nor the offer or issue of Units shall under any circumstances constitute a representation that the information contained therein is correct as of any time subsequent to the date of publication. These documents may from time to time be updated.
3. The Fund is an open-ended contract-type investment fund established under a Fund Contract taking effect from 14 June 2011 (and as amended from time to time) between the Fund Manager and the Fund Custodian. The Fund has been registered with and is subject to the on-going supervision of the China Securities Regulatory Commission.
4. The Fund has been authorized by the Securities and Futures Commission in Hong Kong under Section 104 of the Securities and Futures Ordinance of Hong Kong and is available for sale to the public in Hong Kong. Such authorisation is not a recommendation or endorsement of the Fund nor does it guarantee the commercial merits of the Fund or its performance. It does not mean the Fund is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
5. This Hong Kong Covering Document is prepared for distribution in Hong Kong only. This Hong Kong Covering Document contains additional details of the Fund in connection with its authorisation for distribution in Hong Kong. It must be read in conjunction with the Fund's latest available Prospectus and the Product Key Facts Statement.
6. Units are offered only on the basis of the information contained in the Prospectus, this Hong Kong Covering Document and the Product Key Facts Statement, which are valid only if accompanied by a copy of the Fund's latest annual report and, if published thereafter, the Fund's latest semi-annual report and quarterly report.
7. The Hong Kong Representative is Da Cheng International Asset Management Company Limited. The Hong Kong Representative has been appointed by the Dacheng Fund Management Co., Ltd. in accordance with the Code on Unit Trusts and Mutual Funds. The fees (if any) of the Hong Kong Representative are borne by the Fund Manager.
8. SFC authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance. It does not mean the product is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
9. Investors may access the website of the Hong Kong Representative at http://www.dcfund.com.hk for further information on the Fund, including the offering documents and the financial reports, latest net asset value per Unit and notices to Hong Kong investors. This website has not been reviewed by the Securities and Futures Commission.

Investment involves risks and there is no guarantee of the repayment of principal. Please refer to the offering document for details including the risk factors.

1. Risks associated with the Mainland-Hong Kong Mutual Recognition of Funds ("MRF") arrangement
- Quota restrictions: The MRF scheme is subject to an overall quota restriction. Subscription of units in the Fund may be suspended at any time if such quota is used up.
- Failure to meet eligibility requirements: If the Fund ceases to meet any of the eligibility requirements under the MRF, it may not be allowed to accept new subscriptions. In the worst scenario, the SFC may even withdraw its authorisation for the Fund to be publicly offered in Hong Kong for breach of eligibility requirements. There is no assurance that the Fund can satisfy these requirements on a continuous basis.
- Mainland China tax risk: Currently, certain tax concessions and exemptions are available to the Fund and/or its corporate and individual investors in Hong Kong under the MRF regime. There is no assurance that such concessions and exemptions or Mainland tax laws and regulations will not change. Any change to the existing concessions and exemptions as well as the relevant laws and regulations may adversely affect the Fund and/or its investors and they may suffer substantial losses as a result.
- Different market practices: Market practices in Mainland China and Hong Kong may be different. In addition, operational arrangements of the Fund and other public funds offered in Hong Kong may be different in certain ways. For example, subscription or redemption of units of the Fund may only be processed on a day when both Mainland China and Hong Kong markets are open, or it may have different cut-off times or dealing day arrangements versus other SFC-authorised funds. Investors should ensure that they understand these differences and their implications.
2. Investment risk
- The Fund is an investment fund. There is no guarantee of the repayment of principal or payment of dividend or distribution. Further, there is no guarantee that the Fund will be able to achieve its investment objectives and there is no assurance that the stated strategies can be successfully implemented.
- The Fund invests in equity securities and fixed income securities. These securities may fall in value. Investors may suffer losses as a result. The purchase of the Fund's Units is not the same as investing directly in equity securities or fixed income securities.
3. Concentration risk / Mainland China market risk
- The Fund invests primarily in securities related to the Mainland China market and may be subject to additional concentration risk. Investing in the Mainland China market may give rise to different risks including political, policy, tax, economic, foreign exchange, legal, regulatory and liquidity risks.
4. RMB currency and conversion risks
- RMB is currently not freely convertible and is subject to exchange controls and restrictions.
- Non-RMB based 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 RMB could adversely affect the value of investor's investment in the Fund.
- Investors may not receive RMB upon redemption of investments and/or dividend payment or such payment may be delayed due to the exchange controls and restrictions applicable to RMB.
5. Mainland China Equity risk
- Market risk: The Fund's investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors. The uncertainty of continuous Chinese economic growth may significantly affect the industries supported by growth of domestic demand. This may lead to high volatility of the Net Asset Value of the Fund.
- Volatility risk: High market volatility and potential settlement difficulties in the Mainland China equity markets may also result in significant fluctuations in the prices of the securities traded on such markets and thereby may adversely affect the value of the Fund.
- Policy risk: Securities exchanges in Mainland China typically have the right to suspend or limit trading in any security traded on the relevant exchange. The government or the regulators may also implement policies that may affect the financial markets. All these may have a negative impact on the Fund.
- Risk associated with small-capitalisation / mid-capitalisation companies: The stock of small-capitalisation / mid-capitalisation companies may have lower liquidity and their prices are more volatile to adverse economic developments than those of larger capitalisation companies in general.
- High valuation risk: The stocks listed on the Mainland China stock exchanges may have a higher price-earnings ratio; and such high valuation may not be sustainable.
- Liquidity risk: Securities markets in Mainland China may be less liquid than the other developed markets. The Fund may suffer substantial losses if it is not able to dispose of investments at a time it desires.
6. Risks relating to ChiNext stocks:
- The Fund may have substantial exposure to ChiNext Stocks. ChiNext is a board of the Shenzhen Stock Exchange (SZSE) and it aims to offer a capital platform for enterprises engaged in independent innovation and other growing venture enterprises.
(1) Risk associated with fluctuation in stock prices: Since the companies listed on the ChiNext market usually have a smaller scale and shorter operating history, their stock prices may experience a higher fluctuation. Hence, they are subject to higher market volatility and risks and higher turnover ratios than companies listed on the main board. In extreme circumstances where the trading price of the stock has hit the trading band limit, trading of the stock will be suspended. This would render it impossible for the Fund to liquidate positions and subject the Fund to significant losses.
(2) Risk relating to the differences in regulations: The rules and regulations regarding securities in the ChiNext market are less stringent in terms of profitability and share capital than those in the main board market.
(3) Delisting risk: Because of a relatively shorter operating history, companies listed on ChiNext have a shorter track record of profitability. Compared to companies listed on the main board, it may be more common for companies listed on ChiNext to delist within a short period after listing. The Fund may be adversely impacted if companies it invests in are delisted.
(4) Emerging nature and technical failures of ChiNext companies: Given the emerging nature of companies listed on the ChiNext market and they generally focus on scientific development and innovation, any failures in the process of the scientific development which such companies are involved in and/or any major adverse events happening in the industries or their development may result in losses in such companies and hence may have an adverse impact on the Fund.
(5) Valuation method risks: Conventional valuation methods may not be entirely applicable to companies listed on the ChiNext market due to the risky nature of the industries that these companies operate in. There are fewer circulating shares on the ChiNext market, hence stock prices may be relatively more easily manipulated and may experience higher fluctuation upon market speculation.
(6) Risk relating to overvaluation of stocks: Currently, stocks listed on ChiNext are generally considered overvalued. Such exceptionally high valuation may not be sustainable.
- Investment in the ChiNext market may result in substantial losses for the Fund.
7. Mainland China debt securities risk
- Volatility and liquidity risks: The Mainland China debt securities markets may be subject to higher volatility and lower liquidity compared to more developed markets. The prices of securities traded in such markets may be subject to fluctuations.
- Counterparty risk: The Fund is exposed to the credit/default risk of issuers of the debt securities that the Fund may invest in.
- Interest rate risk: Investment in the Fund is subject to interest rate risk. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise.
- Downgrading risk: The credit rating of a debt instrument or its issuer may subsequently be downgraded. In the event of such downgrading, the value of the Fund may be adversely affected. The Fund Manager may or may not be able to dispose of the debt instruments that are being downgraded.
- Credit rating agency risk: The credit appraisal system in Mainland China and the rating methodologies employed in Mainland China may be different from those employed in other markets. Credit ratings given by Mainland China rating agencies may therefore not be directly comparable with those given by other international rating agencies.
8. Risks relating to repurchase / reverse repurchase transactions
- Repurchase transaction risks: The Fund Manager may enter into repurchase transactions for the account of the Fund. For repurchase transaction, the Fund may suffer substantial loss as there may be delays and difficulties in recovering collateral pledged with the counterparty or the cash originally received may be less than the collateral pledged with the counterparty due to inadequate valuation of the collateral and market movements upon default of the counterparty.
- Reverse repurchase transaction risks: The Fund Manager may enter into reverse repurchase transactions for the account of the Fund. The collateral pledged under the reverse repurchase transactions in the interbank market may not be marked to market. In addition, the Fund may suffer substantial loss when engaging in reverse repurchase transactions as there may be delays and difficulties in recovering the cash placed out or realizing the collateral, or proceeds from the sale of the collateral may be less than the cash placed with the counterparty due to inadequate valuation of the collateral and market movements upon default of the counterparty.
9. Distribution out of capital risk
- Investors should note that the payment of distributions out of capital or effectively out of capital represents a return or a withdrawal of part of the amount they originally invested or from any capital gain attributable to that amount. Any distributions involving payment of dividends out of capital or effectively out of capital may result in an immediate decrease in the net asset value per Unit.

The investment objective of the Fund is to achieve long-term steady capital appreciation of the Fund's assets by investing mainly in listed Mainland China corporations in industries benefiting from domestic demand growth.

The Fund may invest in financial instruments with good liquidity, including Mainland China stocks (including ChiNext and small and medium Mainland China enterprise stocks and other stocks approved by CSRC for listing), bonds, warrants, stock index futures and other financial instruments allowed by laws, regulations or regulatory authorities.
The equity assets of the Fund range from 60%-95% of the Net Asset Value of the Fund; fixed income assets and cash investments such as bonds, asset-backed securities and reverse repurchase of bonds shall range from 5%-40% of the Net Asset Value of the Fund; investment in cash or government bonds which will mature within one year shall not be less than 5% of the Net Asset Value of the Fund; the investment exposure limits of warrants, stock index futures and other financial instrument investments shall be subject to the laws and regulations or the rules of the regulatory authorities; the Fund will invest over 80% of its equity assets in Mainland China corporations in industries benefiting from domestic demand growth.
The Fund will not invest in any urban investment bonds or any debt securities that is unrated or rated BB+ or below by a Mainland China credit rating agency. The Fund will not invest in asset-backed commercial papers.
Where the Fund invests in financial derivative instruments (including warrants and stock index futures), such instruments will be used for hedging purpose only.
For details relating to the investment objectives and strategies of the Fund, please refer to p.59 to 71 of the Prospectus.
The total extent of leverage of the Fund will not exceed 40% of the Net Asset Value of the Fund (i.e. the total asset value will not exceed 140% of the net asset value) and leverage will be achieved by way of repurchase transactions only.
The Fund Manager does not intend to engage in securities lending. Provided that the minimum investment requirements for meeting the Fund's investment objectives and strategies and the other applicable regulatory requirements are complied with, the Fund may enter into "pledged" repurchase transactions ("repo") for up to 40% of Net Asset Value of the Fund and reverse repurchase transactions ("reverse repo") for up to 35% of Net Asset Value of the Fund at the Mainland China exchange and / or inter-bank markets. Prior regulatory approval will be sought and at least one month's prior notice will be given to Unitholders if there is a change in this policy. For details relating to the securities lending and/or repo transactions of the Fund, please refer to p.6 to 9 of the Hong Kong Covering Document.

The Sub-Fund's net derivative exposure may be up to 50% of its Net Asset Value.

- Past performance information is not indicative of future performance. Investors may not get back the full amount invested.
- The computation basis of the performance is based on the calendar year end, NAV-To-NAV.
- Class H Units has been selected as the representative unit class of the Fund for the purpose of presenting past performance information by the Manager on the basis that this is the only unit class open for investment by Hong Kong retail investors.
- These figures show by how much the Fund increased or decreased in value during thecalendar year being shown. Performance data has been calculated in RMB including ongoing charges and excluding subscription fee and redemption fee you might have to pay.
- Where no past performance is shown there was insufficient data available in that year to provide performance.
- Fund launch date: 2011
- Class H Units launch date: 2016