Value Partners is recovering from the global financial crisis, and we believe this is only the beginning. Net profit for the first half of 2009 was HK$116.1 million, better than the HK$31.2 million profit made in the second half of 2008, and also improved from the HK$35.4 million profit seen in the first half of 2008.

But we are a long way from where we used to be. In 2007, during the last boom, net profit peaked at HK$1.4 billion (for the full year). We are hopeful the current recovery can gain pace, for several reasons, including the following:

Strong fund performance. Taking our flagship Value Partners Classic Fundφ as an example, net asset value per unit increased by 37.5% during the first six months of 2009, and indeed this and other funds under our management stood out as being among the leading performers in the market during this period. Going forward, the outlook for performance gains is optimistic. In particular, China's economy is on track for 8% growth this year, and possibly higher next year, a situation significantly better than many people thought possible just a few months ago. Consequently, the Greater China region is a prime candidate for attracting the world's excess liquidity, as money flows to those places with strong prospects, rather than to those places with troubled economies.

	Renewed growth in fund size. The Group's total assets under management, which declined to US$3.2 billion at the end of last year, has rebounded to US$4.0 billion, and we see potential for further expansion as investors return to markets in our region.
	New management initiatives. These are detailed in the accompanying report from the Chief Executive Officer. Briefly, they include new arrangements in product offerings and structures, and strengthening ties with clients and partners, adding significantly to the scope of our business.

New products include our first fundΔ that primarily invests in Asia-Pacific debt securities. We are also the designer of a new value-based methodology index, called the "FTSE Value-Stocks China Index," that applies the "fundamental indexing" approach to identify value-based China stocks and group them together in an index, which potentially could be used for such purposes as constructing exchange traded funds (ETFs) and derivative contracts.

In August 2009, after the close of this period, we announced a 50:50 joint venture with Ping An Insurance Group of China to develop the ETF business. The partnership will be effected through Ping An buying 50% of Sensible Asset Management Hong Kong Limited, which was wholly-owned by Value Partners. (Our strategy is to develop the ETF business through the Sensible Asset Management brand, which is separate from our core Value Partners brand.)

As always, we make the performance of our funds our highest priority. We consider this key to the long-term success of the business. Every effort is made to ensure that Value Partners' investment team remains in top form, and we are adding further depth with preparation to open our first research office in Shanghai. Our vision is that Value Partners should be a "Temple of Value-Investing" for financial markets in Asia Pacific.

A word about dividend policy. As a newly listed company, we recognize we should articulate a consistent and sustainable approach that takes into account the volatile nature of asset management income streams. We think it is best that a dividend (if any) should be declared once a year, upon completion of a full year's results. This year, we expect to pay a final dividend (but no interim dividend), barring any unexpected change in circumstances.

Finally, may I express my deepest thanks to clients, employees and shareholders for all their contributions and support for this dynamic and solid enterprise.

CHEAH Cheng Hye
Chairman & Chief Investment Officer
20 August 2009