CSOP China 5-year Treasury Bond ETF
(RMB Counter Stock Code:83199, HKD Counter Stock Code:3199)

  • Overview
  • Performance
  • Tracking Difference/ Error
  • Holdings
  • Distribution History
  • Documents
  • Index
  • FAQ
IMPORTANT INFORMATION about the CSOP China 5-Year Treasury Bond ETF (the “ETF”)

  • The ETF is an investment fund and may not be suitable for all investors. You may suffer losses from investing in the Sub-Fund, including the loss of your investment capital. Investors shall not make investment decisions by solely relying on the information contained in this material. Investors shall carefully read the Sub-Fund’s offering documents and Key Fact Statements (including product features and risk factors contained therein).
  • The ETF aims to provide investment results that, before fees and expenses, closely correspond to the performance of the ChinaBond 5-year Treasury Bond Index (the “Index”).
  • The ETF is a “physical” exchange traded fund (“ETF”) meaning it will hold actual PRC treasury bonds that are issued by the Ministry of Finance of the PRC (the “PRC Treasury Bonds”) through CSOP Asset Management Limited (the Manager)’s status as a Renminbi qualified foreign institutional investor (“RQFII”).
  • The ETF is one of the first PRC Treasury Bond ETF listed on the SEHK. As such the Manager, the trustee and certain service providers connected to the ETF have no operating experience with regard to a PRC Treasury Bond ETF. The listing, trading and settlement of RMB denominated Securities have not been done very much in Hong Kong and there is no assurance that there will not be problem with the systems or that other logistical problems will not arise. In case of any such problem, there can be no assurance that the listing, trading and settlement of Units will be capable of being implemented as envisaged.
  • The ETF will utilize the Manager’s RQFII quota. If the Manager is unable to obtain additional RQFII quota when the current quota is reached, the Manager may suspend creation of units and the trading price of a unit may be at a significant premium to the NAV of each unit.
  • The ETF has dual counter traded units which are traded and settled in both RMB and HKD. It may bring additional risks as the SEHK’s dual counter model in Hong Kong is relatively new. Investors without RMB accounts may only buy and sell HKD traded units. Such investors will not be able to buy or sell RMB traded units and should note that distributions are made in RMB only. Investors may suffer a foreign exchange loss and incur foreign exchange associated fees and charges to receive their dividend.
  • Retail investors can only buy or sell units on SEHK. The trading price of the units on SEHK is subject to market forces and may trade at a substantial premium or discount to the NAV per unit. As investors will have to pay certain charges (e.g. brokerage and trading fees) in dealing with the units on the SEHK, investors may pay more than the NAV per unit when buying units on the SEHK and may receive less than the NAV per unit when selling units on the SEHK.
  • The ETF invests in PRC Treasury Bonds which are sovereign debt securities and such investments involve special risks. A PRC governmental entity’s ability to repay principal and interest due in a timely manner may be affected by its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the PRC governmental entity’s policy towards the International Monetary Fund and the political constraints to which a PRC governmental entity may be subject.
  • The exposure of the ETF is concentrated in the PRC and may be more volatile than funds adopting a more diversified strategy. The Index is concentrated in PRC Treasury Bonds and so the ETF may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory event affecting the PRC generally.
  • The limited availability of RMB outside of the PRC may also affect the liquidity and trading price of the RMB traded units.
  • The Manager may, at its discretion, pay dividends out of capital. The Manager may also, at its discretion, pay dividends out of gross income while all or part of the fees and expenses of the ETF are charged to/paid out of the capital of the ETF, resulting in an increase in distributable income for the payment of dividends by the ETF and therefore, the ETF may effectively pay dividends out of the capital. Payment of dividends out of capital or effectively out of the capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any distributions involving payment of dividends out of the capital or effectively out of the capital of the ETF may result in an immediate reduction of the NAV per Unit.
  • The ETF only holds a representative sample of securities that represents the profile of the Index and may invest in bonds not included in the Index. The number of Index constituents invested by the ETF depends on the fund size of the ETF. The bonds held by the ETF may also be over or underweight relative to those PRC Treasury Bonds in the Index. It is therefore possible that the ETF may be subject to larger tracking error than other traditional ETFs that fully replicates the Index, other factors such as fees and expenses, and inability to rebalance the ETF’s holdings in response to changes to the Index may also cause tracking error.

Fund Objective and Investment Strategy

The ETF aims to provide investment results that, before fees and expenses, closely correspond to the performance of the ChinaBond 5-year Treasury Bond Index (the “Index”).

A representative sampling strategy involves investing in a representative sample of securities that collectively has an investment profile that reflects the profile of the Index.

It is intended that the ETF will invest not less than 80% of its NAV in the PRC Treasury Bonds included in the Index which have a term to maturity of over 4 years and less than 7 years, through the RQFII investment quota granted to the Manager by the State Administration of Foreign Exchange (the “SAFE”).

However the ETF may also invest not more than 20% of its NAV in debt securities that are not included in the Index which have a term to maturity of less than 10 years, provided that the sample closely reflects the overall characteristics of the Index which the Manager believes will help the Sub-Fund achieve its investment objective.

The ETF currently intends to invest in bonds via the inter-bank bond market.

The ETF’s portfolio will be rebalanced quarterly or upon each creation or redemption. And the Manager will adopt a pure fixed income strategy. The Sub-Fund will not seek to have any exposure to equity or convertible securities.

Intra-day Estimated NAV1 & Market Price2
Market Information 3, 4
Date Last Change4 Change4
(%)
Official NAV per Unit in RMB5 30 Mar, 2017 106.0468 0.0255 0.02
NAV per Unit in HKD**5 (for reference only) 30 Mar, 2017 119.8347 0.0257 0.02
Closing Price for RMB Traded Unit 30 Mar, 2017 104.60 -0.10 -0.10
Closing Price for HKD Traded Unit 30 Mar, 2017 117.80 -0.60 -0.51
**Exchange Rate of Renminbi (CNH) to Hong Kong Dollar:5 1.1300168 Data source: Reuters

Indicative Average Yield to Maturity Calculator*
RMB
Enter NAV
Calculated Yield ^**%
Enter Yield **%
Calculated NAV ***

HKD
Enter NAV
Calculated Yield ^**%
Enter Yield **%
Calculated NAV ***
^ The Calculated Yield may change periodically during events such as the rebalancing of the ETF's portfolio.
* This Indicative Average Yield to Maturity Calculator provides indicative data only, based on a theoretical calculation method and is dependent on the inputs being entered. It is intended to be used as a guidance tool only and should not be used as the basis for any investment decisions.
** The Calculated Yield means the ETF's Average Yield to Maturity at the Net Asset Value ("NAV") level entered by the user. Yield to Maturity is the discount rate that equates the present value of a bond's cash flows with its market price (including accrued interest). The ETF's Average Yield to Maturity is the weighted average of the fund's individual bond holding Yield to Maturities based upon the NAV. The measure does not include the fees and expenses and secondary market factors.
*** The NAV does not represent the actual trading price. As the actual price may trade at a discount or premium to the NAV due to secondary market factors.

* As of 30 Mar, 2017
Fund Information
SEHK Listing Date 19 February 2014
Financial Year 31 December
Asset Class Fixed Income
Domicile Hong Kong
Total NAV * 265,116,971.02
Outstanding Units * 2,500,000
Management Fee 0.49%
Ongoing Charges Over A Year# 0.56%
Base Currency Renminbi (CNH)
* As of 30 Mar, 2017

#The figure is an estimate based on the annualized projection of the actual expenses for the period between the Sub-Fund’s inception date and 30 June 2014, and represents the sum of the estimated ongoing expenses chargeable to the Sub-Fund expressed as a percentage of the Sub-Fund's average Net Asset Value. The actual figure may be different from this estimated figure and it may vary from year to year.
Underlying Index Information6
Underlying Index ChinaBond 5-year Treasury Bond Index
Index Provider China Central Depositary & Clearing Co., Ltd. China
Currency RMB (CNY)
Benchmark Level Type Total Return
Bloomberg Total Return Index CWTBTRID
Number of Constituents 60
Index Methodology6  
Trading Information
HKD Traded Unit RMB Traded Unit
Exchange Hong Kong Stock Exchange – Main Board Hong Kong Stock Exchange – Main Board
Date of Listing / Dealing 19 February 2014 19 February 2014
Primary Exchange Time Zone GMT+8 GMT+8
Exchange Ticker 3199 83199
Bloomberg Ticker 3199:HK 83199:HK
ISIN HK0000182987 HK0000182979
Trading Board Lot 20 Units 20 Units
Trading Currency HKD RMB
Asset Allocation
PRC Treasury Bonds 75.89%
Policy Bank Bonds 22.46%
* As of 30 Mar, 2017
Maturity
Less than 4Y 22.46%
4Y-5Y -
5Y-6Y 41.95%
6Y-7Y 33.94%
7Y-10Y -
Total 98.35%
* As of 30 Mar, 2017
Yield Information
Average Yield to Maturity8 3.28%
Distribution Frequency: Quarterly
Use of Income: Distributing
Flat Yield9 3.03%

Distribution History

* As of 30 Mar, 2017
Top 10 Holdings
CGB 2.95 06/16/23 18.98%
CGB 3.05 10/22/22 15.24%
CGB 2 3/4 09/01/23 14.96%
CGB 2 3/4 03/17/23 14.79%
CGB 3.54 04/16/22 11.93%
ADBCH 3.54 01/06/20 11.29%
EXIMCH 3.15 12/05/19 7.47%
SDBC 2.72 03/03/19 3.70%
Total 98.35%
* As of 30 Mar, 2017
Bond Credit Ratings7
Aa3 100.00%
* As of 30 Mar, 2017
Fundamentals & Risk
Weighted Average Maturity10 5.06yr
Effective Duration11 4.52
Weighted Average Coupon12 3.00%
Average Convexity13 0.28
* As of 30 Mar, 2017
Participating Dealers
ABN AMRO Clearing Hong Kong Limited
China Merchants Securities (HK) Co., Limited
Goldman Sachs (Asia) Securities Limited
KGI Securities (Hong Kong) Limited
Merrill Lynch Far East Limited
Nomura International (Hong Kong) Limited
SG Securities (HK) Limited
UBS Securities Hong Kong Limited
Yuanta Securities (Hong Kong) Company Limited
Market Makers
HKD RMB
Haitong International Securities Company Limited Haitong International Securities Company Limited
KGI Securities (Hong Kong) Limited KGI Securities (Hong Kong) Limited
Optiver Trading Hong Kong Limited Optiver Trading Hong Kong Limited
Performance
1 Month 3 Months 6 Months Year to date Since Inception#
CSOP China 5-year Treasury Bond ETF (83199)* -0.98% -2.69% -1.82% -0.98% 14.28%
ChinaBond 5 Year Treasury Bond Index ** -0.76% -2.16% -0.64% -0.76% 18.07%
# Cumulative performance is calculated since the inception date on 19 Feb 2014.
* Fund performance is calculated on NAV to NAV total return basis with dividend reinvested and the current unit class available for investors is only a distribution class without dividend reinvested.
Source: Bloomberg
** Performance of ChinaBond 5-year Treasury Bond Index is calculated based on total return.
Source: Bloomberg
chart by amcharts.com
As of 31 Jan, 2017
2014 2015 2016
CSOP China 5-year Treasury Bond ETF (83199)
(total return)
7.43% 6.87% 0.5%
ChinaBond 5 Year Treasury Bond Index
(total return)
7.85% 7.77% 2.31%
There is insufficient data to provide a useful indication of past performance to investors.
  • 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, with dividend reinvested.
  • These figures show by how much the fund increased or decreased in value during the calendar year being shown. Performance data has been calculated in RMB including ongoing charges and excluding your trading costs on SEHK.
  • Where no past performance is shown there was insufficient data available in that year to provide performance.
  • Fund launch date: 19 February, 2014
As of 31 Jan, 2017
Tracking Difference / Error

Tracking Difference (TD)

  • Tracking difference is the return difference between an ETF and its underlying benchmark/ index over a certain period of time.

Tracking Error (TE)

  • Tracking error measures how consistently an ETF follows its benchmark/ index. It is the volatility (measured by standard deviation) of that return difference.
Tracking Difference Tracking Error
As of 28 February 2017
Fund listing Date: 19 February 2014
Rolling 1-Year TD: -1.78% TD for calendar year 2015: -0.90%
TD for calendar year 2016: -1.81%
As of 28 February 2017
Fund listing Date: 19 February 2014
Rolling 1-Year TE^:0.76% ^Annualized based on the number of dealing days in the past year when daily TD is calculated
Graph for tracking Difference

ETF's performance is calculated on an NAV to NAV basis and assumes reinvestment of distributions.



chart by amcharts.com
Holdings
Total Net Asset Value (in RMB) Number of Securities Bonds (%)
265,116,971.02 8 98.35
As of 30 Mar, 2017
All Holdings
Total records: 8
% of NAV Name ISIN Bond Code Coupon Maturity Credit1
Rating
Market Price Yield to
Maturity
Effective
Duration
Sector
18.98 CGB 2.95 06/16/23 CND10000B7Z7 160014 2.95 06/16/2023 Aa3 98.3207 3.25 5.46 Sovereign
15.24 CGB 3.05 10/22/22 CND100008Z52 150026 3.05 10/22/2022 Aa3 99.6623 3.11 4.98 Sovereign
14.96 CGB 2 3/4 09/01/23 CND10000BRV7 160020 2.75 09/01/2023 Aa3 97.5419 3.18 5.70 Sovereign
14.79 CGB 2 3/4 03/17/23 CND100009N14 160006 2.75 03/17/2023 Aa3 97.8919 3.14 5.40 Sovereign
11.93 CGB 3.54 04/16/22 CND100008770 150007 3.54 04/16/2022 Aa3 102.0467 3.10 4.43 Sovereign
11.29 ADBCH 3.54 01/06/20 CND10000G750 170402 3.54 01/06/2020 Aa3 98.9703 3.93 2.57 Agency
7.47 EXIMCH 3.15 12/05/19 CND10000FW61 160315 3.15 12/05/2019 Aa3 98.0149 3.94 2.49 Agency
3.70 SDBC 2.72 03/03/19 CND100009KK6 160208 2.72 03/03/2019 Aa3 97.8589 3.89 1.83 Agency

    > Click here to view Full Holdings Details in Excel
    1The credit rating is due to the credit rating of bond issuer or bond issuance (if any) from Moody’s Investors Service or Standard & Poor’s or local rating agencies as specific stated.
    .
    Important information about Dividend out of capital / effectively out of capital
    • The Manager may, at its discretion, pay dividend out of capital. The Manager may also, at its discretion, pay dividend out of gross income while all or part of the fees and expenses of the ETF are charged to/paid out of the capital of the ETF, resulting in an increase in distributable income for the payment of dividends by the ETF and therefore, the ETF may effectively pay dividend out of capital.
    • Payments of dividends out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from capital gains attributed to that original investment. Any distributions involving payment of dividends out of the ETF’s capital or effectively out of capital may result in an immediate reduction in the Net Asset Value (“NAV”) per Unit.
    Distribution History
    Ex-Date Record Date Payable Date Dividend Per Share Dividend Paid Out
    of Net Distributable Income*
    for the month
    Dividend Paid Out
    of Capital
    2014-4-17 2014-4-22 2014-4-28 RMB 0.5 per share RMB 0.4 ** RMB 0.1 **
    2014-7-21 2014-7-22 2014-7-28 RMB 1.05 per share RMB 1.05 ** RMB 0.00 **
    2014-10-21 2014-10-22 2014-10-28 RMB 1.05 per share RMB 0.7055 RMB 0.3445
    2015-1-22 2015-1-23 2015-1-30 RMB 1.05 per share RMB 0.67 RMB 0.38
    2015-4-23 2015-4-24 2015-4-29 RMB 0.9 per share RMB 0.61 RMB 0.29
    2015-7-20 2015-7-21 2015-7-27 RMB 1.0 per share RMB 0.0 RMB 1.0
    2015-10-22 2015-10-23 2015-10-28 RMB 0.9 per share RMB 0.9 RMB 0.0
    2016-01-26 2016-01-27 2016-01-29 RMB 0.9 per share RMB 0.9 RMB 0.0
    2016-04-21 2016-04-22 2016-04-29 RMB 0.9 per share RMB 0.9 RMB 0.0
    2016-07-27 2016-07-28 2016-08-03 RMB 0.9 per share RMB 0.81 RMB 0.09
    2016-10-12 2016-10-13 2016-10-18 RMB 0.9 per share RMB 0.9 RMB 0.00
    2017-01-24 2017-01-25 2017-02-03 RMB 0.9 per share RMB 0.81 RMB 0.09
    *“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.
    ** Dividends were paid out before share consolidation on 1 September 2014 and has been adjusted accordingly to reflect the consolidation effect.
    Warning: Please note that a positive distribution yield does not imply a positive return. Investors should not make any investment decision solely based on information contained in the table above. There is no guarantee of distribution. Investors should read the relevant offering document (including the key facts statement) of the fund for further details including the risk factors.

    All dollar amounts are in RMB. All dates are in GMT+8 Time. Any exceptions are noted.

    Documents
    Monthly Newsletter
    Product Key Fact
    Prospectus
    For request of the fund literature hardcopies, please contact us.
    All documents are in PDF format.

    Download Acrobat Reader.
    Announcement
    Monthly Return
    Distribution Announcement
    Semi Annual Unaudited Accounts
    Changes to Trust Deed
    Audited Accounts
    Change of Application Unit Size
    Supplementary Information to Announcement in Relation to Trading Halt on 21 April 2015
    Change on Dividend Distribution Arrangement and Resumption of Trading
    Trading Halt
    Changes to the investment policy
    Change of the Trading Board Lot Size and Units Consolidation
    Foreign Account Tax Compliance Act (FATCA)
    Change in RQFII Quota Administration Policy
    The Increment of RQFII Quota
    Application for Increase of the RQFII Quota
    Changes to be made to the Prospectus dated 14 February 2014 in respect of PRC withholding tax provisioning approach on the gross unrealised and realised capital gains derived from disposal of PRC Securities of the Sub-Fund
    For request of the fund literature hardcopies, please contact us.
    All documents are in PDF format.

    Download Acrobat Reader.
    Financial Reports
    Semi Annual Report
    Audited Accounts
    For request of the fund literature hardcopies, please contact us.
    All documents are in PDF format.

    Download Acrobat Reader.
    Index Introduction

    ChinaBond 5-year Treasury Bond Index (the "Index") is an index compiled and published by China Central Depositary & Clearing Co., Ltd. ("CCDC")

    The Index comprises fixed-rate interest bearing PRC Treasury Bonds that has a term to maturity of over 4 years and less than 7 years. The Index is a total return index.

    With the approval of the State Council of the PRC, CCDC was set up to undertake the function of centralised depository and settlement for the inter-bank bond market.

    Index Methodology

    Market Information1
    Last Change Change (%)
    148.4824 0.0272 0.0183
    As of 30 Mar, 2017
    Index Profile
    Number of Constituents 60
    Rebalance Frequency Quarterly
    Weighted Average Coupon 3.40%
    Average Yield To Maturity 3.11%
    Effective Duration 4.64
    Bloomberg Total Return Index CWTBTRID
    * As of 30 Mar, 2017
    Maturity
    Years % of Weight
    Less than 4 -
    4-5 45.07%
    5-6 30.04%
    6-7 24.88%
    7-10 -
    * As of 30 Mar, 2017
    Top 10 Index Constituents
    % of Market Value Name Coupon Maturity Credit rating2 Sector
    4.96 CGB 2.65 07/14/21 2.65 07/14/2021 Aa3 Sovereign
    4.89 CGB 4.08 08/22/23 4.08 08/22/2023 Aa3 Sovereign
    4.61 CGB 2.58 04/14/21 2.58 04/14/2021 Aa3 Sovereign
    4.59 CGB 2.95 06/16/23 2.95 06/16/2023 Aa3 Sovereign
    4.35 CGB 3.36 05/24/22 3.36 05/24/2022 Aa3 Sovereign
    4.33 CGB 2 3/4 09/01/23 2.75 09/01/2023 Aa3 Sovereign
    4.16 CGB 3.05 10/22/22 3.05 10/22/2022 Aa3 Sovereign
    3.91 CGB 3.54 04/16/22 3.54 04/16/2022 Aa3 Sovereign
    3.91 CGB 4.33 04/03/21 4.33 04/03/2021 Aa3 Sovereign
    3.85 CGB 3.51 02/23/22 3.51 02/23/2022 Aa3 Sovereign
    As of 30 Mar, 2017
    1Index returns are for illustrative purposes only and should not be taken as an indication or guarantee of future performance. Management fees, transaction costs or other expenses are not reflected in index returns. Change indicates the change since the previous business day's closing index level. (Source: CCDC)
    2The credit rating cource may come from Moody’s Investors Service or Standard & Poor’s or local rating agencies as specific stated. the credit rating will be clearly stated to the bond issue or bond itself.
    FAQ
    ETF

    What is an ETF?

    An ETF is an open-ended fund that can be traded like a share on the security exchange. An index-tracking ETF is a listed collective investment scheme that aims to track the performance of the underlying index. The underlying index can be on a security market, a segment of the security market, or even bonds and securities.

    How does an ETF track the performance of its underlying index?

    Tracking is usually achieved by using full replication or representative sampling, or synthetic replication strategies.

    Using a full replication strategy means that an ETF will invest in the constituent securities of the underlying index in substantially the same weightings as these securities have in the index. Hence, the performance of the ETF will match the performance of the underlying index as closely as practicable. CSOP FTSE China A50 adapts the full replication strategy to represent the performance of FTSE China A50 Index.

    An ETF adopting a representative sampling strategy holds a sample of securities that have similar features such as market capitalisation, industry weights and liquidity to the underlying index. ETFs that use this strategy tend to have a higher risk of tracking error than those using a replication strategy. Due to the liquidity limit of China government bond, CSOP RQFII China Bond ETF adapts this representative sampling strategy to closely track the performance of The China 5-year Treasury Bond Index.

    A synthetic replication strategy means that the ETF will invest in financial derivative instruments to replicate the index performance. There are additional risks associated with such strategy that are not found in the above two strategies.

     


    RQFII & RQFII ETF

    What is RQFII scheme?

    RQFII is a new policy initiative of the Mainland authorities which allows qualified RQFII holders to channel RMB funds raised in Hong Kong to be invested into the PRC securities markets. RQFII holders may issue public or private fund or other investment products using their RQFII quotas. RQFII funds give retail investors access to invest in PRC securities markets as they can invest RMB directly into the PRC bond and equity markets (including the inter-bank bond and exchange-traded bond market) through the RQFII quotas. Subscriptions and redemptions of units in the fund must be settled and paid in RMB.

    What is RQFII ETF?

    RQFII ETF is a RMB-denominated physical ETF. Through the RQFII investment quota granted by Mainland authorities, an RQFII ETF seeks to track the performance of an index by channeling the RMB raised outside mainland China to invest directly in a portfolio of securities issued in China mainland. RQFII ETFs are traded on the Stock Exchange of Hong Kong (SEHK) like stocks. Like other ETFs listed on the SEHK, RQFII ETFs must be authorized by the SFC before they can be offered to the investing public. Investors are reminded that they should read the ETF's offering document(including Product Key Facts)carefully to understand its key features and risks before making an investment.


    PRC onshore Bond Market & China Treasury Bond Introduction

    What are the major types of bonds in PRC bond market?

    The major types of bonds available in the PRC inter-bank bond market can be grouped into six broad categories: (i) PRC Treasury Bonds issued by Ministry of Finance of the PRC; (ii) Central bank bills issued by the PBOC; (iii) Policy bank bonds issued by policy banks, including China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China; (iv) Financial bonds, including commercial bank bonds and non-bank financial institution bonds; (v) Non-financial credit bonds issued by non-financial institution corporates, including enterprise bonds, commercial papers (“CP”), and medium-term notes (“MTN”) and (vi) other types of bonds such as local government bonds. Bonds issued by Central Huijin Investment Limited, China Railway Corporation and Ministry of Railway, foreign bonds issued by foreign entities, asset-backed securities and mortgage-backed securities etc.

    What is the PRC Treasury Bond?

    PRC Treasury Bond is debt instrument issued by Ministry of Finance of the PRC.  As of 30 Novermber 2013,the outstanding amount of PRC Treasury Bonds in the inter-bank bond market is over RMB 7,500 billion. It has a wide range of tenors and is one of the most liquid types of bonds in the secondary market. For the period December 2012 to November 2013,the daily trading volume of PRC Treasury Bonds is approximately RMB 24 billion and the number of daily trades is about 164. With the approval of the National People's Congress, PRC Treasury Bonds are backed by the PRC sovereign credit.


    CSOP China 5-Year Treasury Bond ETF

    What is CSOP China 5-Year Treasury Bond ETF?

    CSOP China 5-Year Treasury Bond ETF is a "physical" exchange traded fund ("ETF") meaning it will hold actual PRC treasury bonds that are issued by the Ministry of Finance of the PRC (the "PRC Treasury Bonds") through the Renminbi Qualified Foreign Institutional Investor ("RQFII")investment quota granted to the Manger by the State Administration of Foreign Exchange.

    CSOP China 5-Year Treasury Bond ETF aims to provide investment results that, before fees and expenses, closely correspond to the performance of the ChinaBond 5-year Treasury Bond Index (the "Index").

    CSOP China 5-Year Treasury Bond ETF adopts a representative sampling strategy to achieve its investment objective. A representative sampling strategy involves investing in a representative sample of securities that collectively has an investment profile that reflects the profile of the Index.It is intended that the Sub-Fund will invest not less than 80% of its NAV in the PRC Treasury Bonds included in the Index which have a term to maturity of over 4 years and less than 7 years, through the RQFII investment quota granted to the Manager by the State Administration of Foreign Exchange (the "SAFE").

    What is ChinaBond 5-year Treasury Bond Index?

    ChinaBond 5-year Treasury Bond Index (the "Index") is an index compiled and published by the China Central Depositary & Clearing Co., Ltd  (“CCDC” or “Index Provider”).

    Although both the name of the Index and the ETF refer to “5-Year”, 5-year is only the average maturity of the bonds comprising in the Index. The Index comprises bonds with term to maturity ranging from 4 years to less than 7 years and the ETF may invest in bonds with term to maturity of less than 10 years.

    The Index comprises fixed-rate interest bearing PRC Treasury Bonds that has a term to maturity of over 4 years and less than 7 years. The Index was launched on 25 January 2013 with a base level of 100 on 31 December 2007. As at 17 January 2014, the Index had a total capitalisation of RMB 1,298.8 billion and 48 constituents. The Index is a total return index.

    The Index is compiled and published by CCDC.In order to build up a safe, efficient and low-cost bond market, People's Bank of China and the Ministry of Finance of the PRC jointly proposed to establish CCDC. With the approval of the State Council of the PRC, CCDC was set up to undertake the function of centralised depository and settlement for the inter-bank bond market.

    CCDC has been established for more than 10 years and has been using ChinaBond as its product brand name and the ChinaBond portal as its official website (http://www.chinabond.com.cn). The Index Provider’s English website was introduced in 2007. (http://www.chinabond.com.cn/Site/cb/en).

    The Index Provider introduced the ChinaBond indices in 2007. Since the PBOC, the CSRC, the China Banking Regulatory Commission (“CBRC”) and the China Insurance Regulatory Commission (“CIRC”) have endorsed the Index Provider’s valuation and calculation model in the domestic bond market, ChinaBond indices were soon extensively adopted by market participants for investment analysis, performance measurement and asset allocation. Many domestic leading asset managers work with the Index Provider to benchmark their investment performance for fixed income mutual funds. As at November 2013, the ChinaBond Index family has a total number of 44 indices and some of these indices were among the first to serve as underlying for domestic index tracking funds.

    The Manager (and each of its Connected Persons) is independent of the Index Provider.

    How will the dividends be paid out?

    The Manager intends to distribute income to Unitholders quarterly in January, April. July and October having regard to the ETF's net income after fees and costs. The Manager will make an announcement prior to any distribution in respect of the relevant distribution amount in RMB only. Each Unitholder will recieive distributions in RMB only (whether holding RMB traded Units or HKD traded Units).

    The Manager may, at its discretion, pay dividend out of capital. The Manager may also, at its discretion, pay dividend out of gross income while all or part of the fees and expenses of the ETF are charged to/paid out of the capital of the ETF, resulting in an increase in distributable income for the payment of dividends by the ETF and therefore, the ETF may effectively pay dividend out of capital. Payments of dividends out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from gains attributed to that original investment. Any distributions involving payment of dividends out of the ETF’s capital or effectively out of capital may result in an immediate reduction in the Net Asset Value per Unit.

    What is "dual-currency trading"?

    Investors can invest in this ETF using either HKD or RMB. If the broker can support Dual Counter trading, investor can buy units traded in one counter and sell them in the other counter as units traded in both counters are inter-transferable in real time. Units traded in RMB counter can be transferred to HKD counter by way of an inter-counter transfer and vice versa on a one to one real time basis. In general, for the purpose of affecting an inter-counter transfer, an investor would instruct their broker to submit an executed "Multi-Counter Transfer Instruction" to the Hong Kong Securities Clearing Company Limited(HKSCC).

    There is no limit on this conversion. Under the dual counter model with transferability, where an investor buys HKD-traded securities and subsequently converts them into RMB-traded securities and sells them on the RMB counter, the transactions do not actually involve a net increase of RMB funds in the offshore market. It only entails the transfer of RMB funds in the offshore market from one investor to another.

    HKSCC will charge HKD 5 dollars for each effected Multi-counter Transfer Instruction.

    Can I use the Renminbi Equity Trading Support Facility (“TSF”) to buy CSOP China 5-year Treasury bond ETF?

    Investors should note that the Renminbi Trading Support Facility (the “TSF”) launched by HKEx only supports stocks trading in RMB, ETFs related to capital stocks and REITs in this stage. Hence,.It is not made available for fixed income ETFs. As such, if an investor does not have sufficient RMB, it will need to source RMB from other channels or it will only be able to buy units of the ETF through the HKD counter.
     


    What are the main risk factors investing in CSOP China 5-year Treasury bond ETF?

    First PRC Treasury Bond ETF Risk

    The ETF is one of the first PRC Treasury Bond ETF listed on the SEHK. As such the Manager, the trustee and certain service providers connected to the ETF have no operating experience with regard to a PRC Treasury Bond ETF. The listing, trading and settlement of RMB denominated Securities have not been done very much in Hong Kong and there is no assurance that there will not be problem with the systems or that other logistical problems will not arise. In case of any such problem, there can be no assurance that the listing, trading and settlement of Units will be capable of being implemented as envisaged.

    RQFII Risk

    The ETF will utilize the Manager’s RQFII quota. If the Manager is unable to obtain additional RQFII quota when the current quota is reached, the Manager may suspend creation of units and the trading price of a unit may be at a significant premium to the NAV of each unit.

    Dual Counter Risk

    The ETF has dual counter traded units which are traded and settled in both RMB and HKD. It may bring additional risks as the SEHK’s dual counter model in Hong Kong is relatively new. Investors without RMB accounts may only buy and sell HKD traded units. Such investors will not be able to buy or sell RMB traded units and should note that distributions are made in RMB only. Investors may suffer a foreign exchange loss and incur foreign exchange associated fees and charges to receive their dividend.

    Secondary Market Trading Risk

    Retail investors can only buy or sell units on SEHK. The trading price of the units on SEHK is subject to market forces and may trade at a substantial premium or discount to the NAV per unit. As investors will have to pay certain charges (e.g. brokerage and trading fees) in dealing with the units on the SEHK, investors may pay more than the NAV per unit when buying units on the SEHK and may receive less than the NAV per unit when selling units on the SEHK.

    Sovereign Debt Risk

    The ETF invests in PRC Treasury Bonds which are sovereign debt securities and such investments involve special risks. A PRC governmental entity’s ability to repay principal and interest due in a timely manner may be affected by its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the PRC governmental entity’s policy towards the International Monetary Fund and the political constraints to which a PRC governmental entity may be subject.

    Single Country Risk

    The exposure of the ETF is concentrated in the PRC and may be more volatile than funds adopting a more diversified strategy. The Index is concentrated in PRC Treasury Bonds and so the ETF may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory event affecting the PRC generally.

    RMB Trading and Settlement of Units Risk

    The limited availability of RMB outside of the PRC may also affect the liquidity and trading price of the RMB traded units.

    Dividends Payable out of Capital Risk

    The Manager may, at its discretion, pay dividends out of capital. The Manager may also, at its discretion, pay dividends out of gross income while all or part of the fees and expenses of the ETF are charged to/paid out of the capital of the ETF, resulting in an increase in distributable income for the payment of dividends by the ETF and therefore, the ETF may effectively pay dividends out of the capital. Payment of dividends out of capital or effectively out of the capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any distributions involving payment of dividends out of the capital or effectively out of the capital of the ETF may result in an immediate reduction of the NAV per Unit.

    Representative Sampling Risk

    The ETF only holds a representative sample of securities that represents the profile of the Index and may invest in bonds not included in the Index. The number of Index constituents invested by the ETF depends on the fund size of the ETF. The bonds held by the ETF may also be over or underweight relative to those PRC Treasury Bonds in the Index. It is therefore possible that the ETF may be subject to larger tracking error than other traditional ETFs that fully replicates the Index, other factors such as fees and expenses, and inability to rebalance the ETF’s holdings in response to changes to the Index may also cause tracking error.

    Passive Investment Risk

    The Sub-Fund is not actively managed and will not adopt any temporary defensive position against any market downturn. Therefore when there is a decline in the Index, the Sub-Fund will also decrease in value. Investors may suffer significant losses accordingly

    The above risks are not exhaustive. Investors should refer to the ETF's Prospectus and the Product Key Facts for further details, including the product features and risk factors.

    Is there any difference between trading RQFII A-shares ETF & RQFII Bond ETF?

      RQFII A-share ETFs RQFII Bond ETFs
    Investment strategy Direct investment in the Mainland securities market through RQFII investment quota Direct investment in the Mainland bond market through RQFII investment quota
    Tracking methodology Full replication or represent the composition of the underlying A-share index Representative sampling
    Listing on SEHK Yes Yes
    Trading currency RMB / HKD RMB / HKD
    Dividends Transparent/ Definite Transparent/ Definite
    Disclaimer

    This website is owned and managed by CSOP Asset Management Limited (“CSOP”). CSOP reserves the right to change, modify, add or delete, any content and the terms & conditions of use of this website without notice. Users are advised to periodically review the contents of this website to be familiar with any modifications.

    The performance figures contained on this website are for informational purposes only. Past performance is not indicative of future performance. Investments involved risks and the ETF's NAV per unit may rise as well as fall. Persons interested in investing in the ETF should read the relevant fund offering documents (including the full text of the risk factors stated therein) in detail before making any investment decision.

    This webpage has been prepared by CSOP and has not been reviewed by the Securities and Futures Commission.

    1. IOPV Calculations are performed by Sumscope. The near real time estimated Net Asset Value per Unit in HKD, and the last closing Net Asset Value per unit in HKD, are indicative and for reference only. The near real time estimated Net Asset Value per Unit in HKD is updated during SEHK trading hours. The near real time estimated Net Asset Value per Unit in HKD uses a real time HKD:RMB foreign exchange rate - it is calculated using the near real time estimated Net Asset Value per Unit in RMB multiplied by a real time HKD:CNH foreign exchnage rate providing by Sumscope when the SEHK is open for trading.
    2. Market prices are provided on a 20-minute delayed basis by Sumscope.
    3. Performance is calculated on NAV to NAV basis in RMB and assumes dividend will be reinvested, although the fund intends to make quarterly distribution. Change of the official NAV per Unit in RMB and change of the NAV per Unit in HKD indicate the change of the NAV per Unit since previous Dealing Day, where which market(s) are opened for normal trading. Refer to the Prospectus for more information on determination of Net Asset Value. Source of NAV per Unit in RMB: HSBC Institutional Trust Services (Asia) Limited.
    4. Change of the closing price in RMB and HKD traded units indicate change of closing price since previous SEHK trading day.
    5. The last closing NAV per Unit in HKD is indicative and for reference purpose only and is calculated using the last closing NAV per Unit in RMB multiplied by an assumed foreign exchange rate using the CNH fixed offshore RMB ("CNH") exchange rate quoted by Reuters at 3:00 p.m. (Hong Kong time) as of the same Dealing Day. Dealing Day means each Business Day during the continuance of the CSOP China Treasury Bond ETF, and/or such other day or days as the Manager may from time to time determine with the approval of the Trustee. The last closing NAV per unit in RMB will not be updated when the interbank bond market is closed, the change to estimated NAV per Unit in HKD (if any) during such period is solely due to the change in the foreign exchange rate.
    6. Index returns are for illustrative purposes only and should not be taken as an indication or guarantee of future performance. Management fees, transaction costs or other expenses are not reflected in index returns. Change indicates the change since the previous business day's closing index level. (Source: CCDC). For information about the rules to construct the index (i.e. index methodology), please click the Index Methodology
    7. The credit rating is due to the credit rating of bond issuer or bond issuance (if any) from Moody’s Investors Service or Standard & Poor’s or local rating agencies as specific stated.
    8. Yield to Maturity is the discount rate that equates the present value of a bond’s cash flows with its market price (including accrued interest). The Fund Average YTM is the weighted average of the fund’s individual bond holding YTMs based upon Net Asset Value (“NAV”). The measure does not include the fees and expenses
    9. The flat yield is the coupon rate divided by the market price of the bond.
    10. The mean of the remaining term to maturity of the underlying bonds in a portfolio.
    11. A measure of the responsiveness of a bond or portfolio’s price to the changes in interest rates. Effective duration takes into account the possible changes in expected bond cash flows due to interest rates changes.
    12. An averaging of the internet payments made by bonds in the portfolio according to their weighting.
    13. The average convexity is weighted by the market capitalization of the respective bonds, where market capitalization is defined as the result of the dirty price of a bond multiplied by its amount outstanding.


    Disclaimer
    This website is owned and managed by CSOP Asset Management Limited ("CSOP"). CSOP reserves the right to change, modify, add or delete, any content and the terms & conditions of use of this website without notice. Users are advised to periodically review the contents of this website to be familiar with any modifications.

    The performance figures contained on this website are for informational purposes only. Past performance is not indicative of future performance. Investments involved risks and the ETF's NAV per unit may rise as well as fall. Persons interested in investing in the ETF should read the relevant fund offering documents (including the full text of the risk factors stated therein) in detail before making any investment decision.

    This website has been prepared by CSOP and has not been reviewed by the Securities and Futures Commission.