CSOP MSCI T50 ETF
(HKD Counter Stock Code:3021)

  • Overview
  • Performance
  • Tracking Difference/ Error
  • Holdings
  • Documents
IMPORTANT INFORMATION about the CSOP MSCI T50 ETF (the "ETF")

IMPORTANT: Investment involves risks. Investment value may rise or fall. Past performance information presented is not indicative of future performance. Investors should refer to the Prospectus and the Product Key Facts Statement for further details, including product features and risk factors. Investors should not base on this material alone to make investment decisions.

  • CSOP MSCI T50 ETF (the “Sub-fund”) is a physical index tracking exchange traded fund and it aims to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the underlying index, namely, MSCI China and USA Internet Top 50 Equal Weighted Index (the “Index”).
  • The Index is an equal weighted index designed to reflect the performance of the 50 largest internet software and services and internet retail entities selected by full market capitalization (i.e. 2% for each issuer) listed in the United States and Hong Kong markets. The Sub-Fund by tracking an equal weighted index may have relatively large holdings in companies with relatively smaller market capitalization than it would have held if the Index is a capitalization weighted index.
  • Companies in the internet industry may have a relatively short operating history and may face dramatic and unpredictable changes in growth rates and competition for the services of qualified personnel. Investments in this market may be subject to higher volatility.
  • There may be substantial government intervention in the internet industry. The internet business is subject to complex laws and regulations which are subject to change and uncertainty.
  • The Sub-Fund primarily invests in securities listed in the US and Hong Kong markets, with focus in internet sector and may therefore be more volatile than a broad-based fund.
  • Differences in trading hours between the US stock exchanges and the Stock Exchange Hong Kong (“SEHK”) may also lead to unavailability of the market prices of index constituents listed on US stock exchanges and the Index level. This may increase the level of premium/ discount of the price of units of the Sub-Fund to its NAV.
  • Retail investors can only trade units of the Sub-Fund on the SEHK. The trading price of the units may be different from the Sub-Fund’s NAV.

The material has not been reviewed by the SFC.

Fund Objective and Investment Strategy
  • The investment objective of the CSOP MSCI T50 ETF is to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the Underlying Index, namely, MSCI China and USA Internet Top 50 Equal Weighted Index.

  • In order to achieve the investment objective of the Sub-fund, the Manager will primarily use a full replication strategy by directly investing all, or substantially all, of the assets of Sub-fund in Index Securities constituting the Underlying Index in substantially the same weightings (i.e. proportions) as these Index Securities have in the Underlying Index.
Intra-day Estimated NAV1 & Market Price2
Market Information3,4
Date Last Change Change
(%)
Official NAV per Unit in USD 19 Oct, 2017 0.6602 -0.0064 -0.9601
NAV per Unit in HKD* (for reference only) 19 Oct, 2017 5.1507 -0.0540 -1.0375
Closing Price for Trading unit in HKD 19 Oct, 2017 5.1600 - -
* Exchange rate of USD to Hong Kong Dollar5 quoted by Reuters: 7.80175

Fund information
SEHK Listing Date 28 January 2015
Financial Year 31 December
Asset Class Equity
Domicile Hong Kong
Total NAV 990,231.00
Outstanding Units 1,500,000
Ongoing Charges over a year 1.04%*
Base Currency USD
Number of Holdings 50
* As the Sub-Fund is newly set up, this figure is a best estimate only and represents the sum of the estimated ongoing charges expressed as a percentage of the estimated average net asset value (“NAV”). It may be different upon actual operation of the Sub-Fund and may vary from year to year.
* As of 19 Oct, 2017
Underlying Index Information
Underlying Index MSCI China and USA Internet Top 50 Equal Weighted Index
Index Provider MSCI Inc.
Currency USD
Benchmark Level Type Total Return
Bloomberg Total Return Index M1CXCU50
Trading Information
Exchange Hong Kong Stock Exchange – Main Board
Date of Listing / Dealing 28 January 2015
Primary Exchange Time Zone GMT+8
Exchange Ticker 03021
Bloomberg Ticker 3021HK
ISIN HK0000233988
Trading Board Lot 300 Units
Trading Currency HKD
Participating Dealers
ABN AMRO Clearing Hong Kong Limited Goldman Sachs (Asia) Securities Limited
Haitong International Securities Company Limited Merrill Lynch Far East Limited
Nomura International (Hong Kong) Limited Oriental Patron Securities Limited
Market Makers
HKD
Commerz Securities Hong Kong Limited
KGI Securities (Hong Kong) Limited
Optiver Trading Hong Kong Limtied
Why CSOP MSCI T50 ETF?

1. Most awards granted RMB investment product
CSOP MSCI T50 ETF won 4 awards in "Asia Asset Management 2012 Best of the Best Awards", namely, Best RQFII Product in Hong Kong, Best RQFII ETF in Hong Kong, Best RMB Product in Asia and Best New ETF in Asia.

2. Largest and most actively traded RQFII ETF
As of 30 June, 2013, CSOP MSCI T50 ETF is the largest (with AUM of RMB 15.3 billion) and most actively traded (with average daily turnover of RMB 0.623 billion since inception) physical ETF directly investing into China A share market. (Source: Bloomberg)

3. Tracking FTSE China A50 Index
The FTSE China A50 Index is a free float-adjusted market capitalization-weighted index compiled and published by FTSE International Limited ("FTSE"). FTSE China A50 Index is a real-time, tradable index comprising the 50 largest listed companies in China by market capitalization. The index offers an optimal balance between representativeness and liquidity for China's A-share market, including stocks listed on Shanghai and Shenzhen stock exchanges.

4. An innovative and flexible RMB investment instrument
Denominated in RMB, traded in both RMB and HKD.

5. Transparent dividend policy
Intending to distribute dividends annually having regard to the Fund's net income after fees and costs.

Why RQFII A-share ETFs instead of Synthetic A-share ETFs?
RQFII A-share ETFs Synthetic A-share ETFs
Underlying Instruments Physical, direct investment in China
A-share market
Synthetic, derivative instruments with
China A-share exposure
QFII / RQFII Quota Provider ETF Manager Various Third Parties
Derivatives Counterparty Risk No No
Derivatives Costs No No
Trading Currency RMB / HKD HKD /USD
Tracking Error Relatively Low Relatively High
Dividends Net income after fees and costs Distributions are contingent on synthetic
dividends paid on underlying, such as
CAAPs (China A-Share Access Products)
Performance
1 Month 6 Months 1 Year 3 Year Since Inception#
CSOP MSCI T50 ETF
(3021)*
0.35% 19.24% 22.92% - 20.64%
MSCI China and USA Internet Top 50 Equal Weighted Index** 1.22% 22.14% 28.67% - 32.68%
# Cumulative performance is calculated since the inception date on 28 Jan 2015 .
* Fund performance is calculated on NAV to NAV basis with dividend reinvested.
** Performance of Index is calculated based on total return.
As of 30 Jun, 2017
2015 20161
MSCI China and USA Internet Top 50 Equal Weighted Index
(total return)
9.06% -0.39%
CSOP MSCI T50 ETF
(3021)
(total return)
5.06% -3.70%
  • 1Calculated since the listing date of 28 January 2015.
  • 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 USD 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.
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 30 September 2017
Fund listing Date: 28 January 2015 Rolling 1-Year TD: -6.61% TD for calendar year 2016: -3.31%
As of 30 September 2017
Fund listing Date: 28 January 2015 Rolling 1-Year TE^: 1.27% ^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.



Holdings
Total Net Asset Value
(in USD)
Number of Securities1 Securities (%)2
990,231.00 50 91.93
As of 19 Oct, 2017
Overnight Big Movers
Top 5 Winners Top 5 Losers
Name Daily Change
(%)
Name Daily Change
(%)
LOGMEIN INC 1.36 CTRIP.COM INTERNATIONAL-ADR -8.24
AKAMAI TECHNOLOGIES INC 1.27 BITAUTO HOLDINGS LTD-ADR -3.99
NEW RELIC INC 1.27 SOHU.COM INC -3.79
TRIPADVISOR INC 1.17 MOMO INC-SPON ADR -3.44
LIBERTY INTERACTIVE CORP Q-A 0.83 VIPSHOP HOLDINGS LTD - ADR -3.21
Breakdowns
As of 19 Oct, 2017
All Holdings
Sort by Total records: 50
Weighting (%) Name Exchange Ticker Trading Exchange Average Cost
(USD)3
Market Price
(USD)
Shares Held Market Value
(USD)
Sector Country
2.38 BITAUTO HOLDINGS LTD-ADR BITA US XNYS 26.3479 50.54 466 23,551.64 Information Technology US
2.18 2U INC TWOU US 50.115 60.49 357 21,594.93 Information Technology
2.18 ENVESTNET INC ENV US XNYS 44.4633 53.4 404 21,573.60 Information Technology US
2.16 GROUPON INC GRPN US XNGS 3.98753 4.95 4330 21,433.50 Consumer Discretionary US
2.13 YY INC-ADR YY US XNGS 59.8508 92.77 227 21,058.79 Information Technology US
2.12 CIMPRESS NV CMPR US XNGS 81.0646 107.8 195 21,021.00 Information Technology US
2.12 SOHU.COM INC SOHU US XNGS 48.6424 66.6 315 20,979.00 Information Technology US
2.08 BAIDU INC - SPON ADR BIDU US XNGS 202.373 264.52 78 20,632.56 Information Technology US
2.07 IAC/INTERACTIVECORP IAC US XNGS 65.152 124.14 165 20,483.10 Information Technology US
2.05 NETFLIX INC NFLX US XNGS 76.9025 195.13 104 20,293.52 Consumer Discretionary US
2.01 AKAMAI TECHNOLOGIES INC AKAM US XNGS 55.0471 51.65 386 19,936.90 Information Technology US
1.97 CORNERSTONE ONDEMAND INC CSOD US XNGS 34.1198 39.49 495 19,547.55 Information Technology US
1.96 SINA CORP SINA US XNGS 49.2057 111.6 174 19,418.40 Information Technology US
1.95 PRICELINE GROUP INC/THE PCLN US XNGS 1096.84 1927.86 10 19,278.60 Consumer Discretionary US
1.95 NEW RELIC INC NEWR US XNYS 35.8728 51.65 373 19,265.45 Information Technology US
1.94 TWITTER INC TWTR US XNYS 24.1978 17.89 1074 19,213.86 Information Technology US
1.91 SHUTTERFLY INC SFLY US XNGS 45.9483 48.69 389 18,940.41 Consumer Discretionary US
1.91 LIBERTY INTERACTIVE CORP Q-A QVCA US XNGS 21.0885 23.09 820 18,933.80 Consumer Discretionary US
1.91 VERISIGN INC VRSN US XNGS 62.4282 108.19 175 18,933.25 Information Technology US
1.91 HSN INC HSNI US XNGS 39.6973 38.3 494 18,920.20 Consumer Discretionary US
1.90 EBAY INC EBAY US XNGS 38.6298 37.29 505 18,831.45 Information Technology US
1.90 ALARM.COM HOLDINGS INC ALRM US 44.9335 47.51 395 18,766.45 Information Technology
1.89 LIBERTY EXPEDIA HOLD-A LEXEA US XNGS 40.8132 56.51 331 18,704.81 Consumer Discretionary US
1.88 YELP INC YELP US XNYS 34.0161 44.44 418 18,575.92 Information Technology US
1.87 GODADDY INC - CLASS A GDDY US XNYS 32.587 44.2 418 18,475.60 Information Technology US
1.86 ZILLOW GROUP INC - C Z US XNGS 31.7574 41.19 448 18,453.12 Information Technology US
1.84 EXPEDIA INC EXPE US XNGS 66.6264 153.4 119 18,254.60 Consumer Discretionary US
1.84 STAMPS.COM INC STMP US XNGS 110.568 219.85 83 18,247.55 Information Technology US
1.84 58.COM INC-ADR WUBA US XNYS 48.5453 67.48 270 18,219.60 Information Technology US
1.83 ALIBABA GROUP HOLDING-SP ADR BABA US XNYS 93.4363 177.93 102 18,148.86 Information Technology US
1.83 LOGMEIN INC LOGM US XNGS 74.9885 118.95 152 18,080.40 Information Technology US
1.82 FACEBOOK INC-A FB US XNGS 85.6024 174.56 103 17,979.68 Information Technology US
1.79 AMAZON.COM INC AMZN US XNGS 349.346 986.61 18 17,758.98 Consumer Discretionary US
1.79 TENCENT HOLDINGS LTD 700 HK XHKG 30.1218 44.3747 400 17,749.86 Information Technology HK
1.79 J2 GLOBAL INC JCOM US XNGS 67.5729 74.59 237 17,677.83 Information Technology US
1.78 WAYFAIR INC- CLASS A W US XNYS 40.5147 67.15 262 17,593.30 Consumer Discretionary US
1.76 NETEASE INC-ADR NTES US XNGS 154.423 276.71 63 17,432.73 Information Technology US
1.76 COSTAR GROUP INC CSGP US XNGS 197.895 280.475 62 17,389.45 Information Technology US
1.75 TRIPADVISOR INC TRIP US XNGS 56.4294 40.48 427 17,284.96 Consumer Discretionary US
1.72 MERCADOLIBRE INC MELI US XNGS 155.376 236 72 16,992.00 Information Technology US
1.67 CTRIP.COM INTERNATIONAL-ADR CTRP US XNGS 32.0055 49.8 332 16,533.60 Consumer Discretionary US
1.67 JD.COM INC-ADR JD US XNGS 27.2491 39.38 419 16,500.22 Consumer Discretionary US
1.66 GRUBHUB INC GRUB US XNYS 34.0441 51.77 318 16,462.86 Information Technology US
1.66 LIBERTY VENTURES - SER A LVNTA US XNGS 36.3365 57.2 287 16,416.40 Consumer Discretionary US
1.63 PANDORA MEDIA INC P US XNYS 11.6456 7.59 2131 16,174.29 Information Technology US
1.61 AUTOHOME INC-ADR ATHM US XNYS 33.23 60.06 266 15,975.96 Information Technology US
1.53 VIPSHOP HOLDINGS LTD - ADR VIPS US XNYS 13.9958 8.13 1867 15,178.71 Consumer Discretionary US
1.27 MOMO INC-SPON ADR MOMO US XNGS 24.9674 32.81 383 12,566.23 Information Technology US
1.01 ALPHABET INC-CL A GOOGL US XNGS 556.017 1001.84 10 10,018.40 Information Technology US
0.89 ALPHABET INC-CL C GOOG US XNGS 549.901 984.45 9 8,860.05 Information Technology US

    > Click here to view Full Holdings Details in Excel
    As of 19 Oct, 2017

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

    1. The "Number of Holdings" represents the number of underlying securities held by the Fund.
    2. May include dividends booked but not yet received.
    3. The Average Cost is the average purchasing price of each fund’s constituent stock. This is indicative and for reference purposes only.
    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
    2013-12-06 2013-12-09 2013-12-18 RMB 0.12 per share RMB 0.12 RMB 0.00
    2014-10-07 2014-10-08 2014-10-27 RMB 0.28 per share RMB 0.127 RMB 0.153
    *“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.
    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 Facts
    Prospectus
    Brochure
    For request of the fund literature hardcopies, please contact us.
    All documents are in PDF format.

    Download Acrobat Reader.
    Announcement
    Monthly Return
    Semi Annual Unaudited Accounts
    AUDITED ACCOUNTS
    Updated Disclosure on Liquidity Risk Management and Automatic Exchange of Financial Account Information
    Changes to trust deed
    Change of Application Unit Size
    Audited Accounts as at 31 December 2015
    Change of NAV Publication Time
    PD agent announcement
    Change of Implementation Arrangement of Securities Lending and Repurchase Transactions
    For request of the fund literature hardcopies, please contact us.
    All documents are in PDF format.

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

    Download Acrobat Reader.
    FAQ
    (A) BASIC ETF KNOWLEDGE
     

    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.

    What is the aim of investing in ETFs?

    By investing in ETFs, investors may receive a return that replicates (usually not 100%) the performance of the index without physical ownership of the index constituent 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.

    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 constituent securities of the underlying index. ETFs that use this strategy tend to have a higher risk of tracking error than those using a replication strategy.

    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.

    Management of ETFs

    Most ETFs are passively managed by managers who will invest in the constituent securities of the underlying index according to its respective weightings in the underlying index.

    When a constituent security itself or its weighting in the underlying index changes, managers are responsible for implementing the necessary adjustments to the ETF's portfolio of securities to ensure that the composition and weightings of the securities held by the ETF closely corresponds to that of the underlying index.

    Market price of ETFs

    The market price of each ETF unit is largely based on its net asset value ("NAV") per unit. However, as ETF units are traded on the security exchange, there may be a disparity between the market price and the ETF’S NAV due to market forces, such as supply and demand. With the presence of the creation and redemption mechanism, such divergence should be minimal under normal circumstances.

    Comparison between ETFs vs. shares vs. funds

      ETF Shares Traditional open-ended investment funds
    Trading Channel Exchange Exchange Fund Manager or Distributor
    Trading Period Intraday during exchange trading hours Intraday during exchange trading hours Subscription and redemption applications before the cut-off time on the fund's dealing day
    Diversification High Low Medium-High
    Minimum Trading Size Low Low Medium-High

     

    How to invest in ETFs?

    In Secondary Market:
    An investor can invest in an ETF by simply opening an account with an authorised stock broker and start investing in an ETF in a process similar to purchasing and selling securities.

    In Primary Market:
    If an investor intends to invest a substantial amount in an ETF, he or she may contact one of the ETF's Participating Dealers (“PD”). The PD can assist the investor in creating ETF units with the ETF's manager, with applicable transaction fees and brokerage commission agreed upon between the investor and the PD.

     

    What are the general investment risks?

    The risks of investing in ETFs include but are not limited to the following points:

    • To the extent that the underlying index concentrates in the securities of a particular industry or group of industries, the performance of ETFs could be more volatile than the performance of less concentrated funds?
    • Like other index-tracking funds, an ETF is not actively managed meaning the manager does not have the discretion to select securities individually or to take defensive positions in declining markets. Hence, any fall in the underlying index will result in a corresponding fall in the value of the ETF. On the other hand, no assurance can be given that the performance of an ETF will be identical to the performance of the underlying index due to many factors?
    • Although ETF units will be listed on a security exchange, there can be no assurance that active trading in the ETF units can be maintained.

    In general, an investor should consider if an investment in ETFs is a suitable investment for himself or herself in terms of his or her financial situation, investment experience and investment objectives. The investor should read the offering documents of the relevant ETF (including the full text of the risk factors stated therein) in detail before making any investment decision. It should be noted that investment involves risks (including the possibility of loss of the capital invested), that prices of ETF units may go up as well as down and past performance information is not indicative of future performance.


    (B) FOCUSING ON THE CONCEPT OF RQFII ETF
     

    GENERAL

    What is RQFII?

    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. Like other funds, RQFII funds must be authorized by the SFC before they can be marketed to the public in Hong Kong. RQFII is granted to Hong Kong subsidiaries of qualified Mainland asset management and securities firms which allows them to channel RMB raised in Hong Kong to invest in the Mainland securities markets.

    What is RQFII A-share ETF?

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

    Why invest in RQFII ETF?

    An RQFII ETF will invest RMB solely and directly into the PRC securities markets through its RQFII quota. This means that investors are fully exposed to the RMB currency and PRC domestic securities markets. It should be noted that not all issuers of RMB funds issued in Hong Kong have the pre-approved RQFII investment quota to invest RMB directly in securities and bonds issued in the PRC. In such cases, the issuer may be able to invest in only either offshore RMB denominated investments (e.g. dim sum bonds) or in non-RMB assets.

    What are the key differences between RQFII A-share ETFs and other existing RQFII retail funds currently available to Hong Kong investing public?

      RQFII A-share ETFs RQFII retail funds
    RQFII quota requirement
    Listing on SEHK
    Underlying investment A-shares traded in the Mainland markets At least 80% in RMB bonds and bond funds issued in mainland China, not more than 20% in China A-shares and other equity investments

    Description of the Underlying Index

    The FTSE China A50 Index is a free float-adjusted market capitalisation-weighted index compiled and published by FTSE International Limited (“FTSE”) and is a real-time, tradable index comprising of the largest 50 A-Share companies by full market capitalisation. The index offers the optimal balance between representativeness and tradability for China’s A-Share market. It is a price return index and includes securities listed on both the Shanghai and Shenzhen security exchanges.

    Salient terms of the CSOP A50 ETF

    Investors will be informed that the minimum trading size of the CSOP A50 ETF is 200 units, that the ETF operating cost includes Management Fee, Trustee Fee and other expenses of which full details can be found in the ETF’s prospectus.

    Investors will also be informed that prior to making an investment in the ETF, they will be required to consult with their stock broker or financial adviser for account set-up details to trade RMB products.

    Who should invest in an RQFII ETF?

    Investors who want to retain their RMB (CNH) holding and who are positive about the China A-Share market should invest in the ETF. However, investors should consider the product specific risks outlined below. Investors should also read the offering document and the product key facts statement (Product KFS) of the Fund carefully to understand the key features and risks of the RQFII fund and contact their intermediaries before making any investment.

    What are the key differences in structure and trading between RQFII A-share ETFs and other A-share ETFs currently traded on the SEHK?

      RQFII A-share ETFs Other A-share ETFs
    Investment strategy and replication/ tracking method
    • Physical full replication or representative sampling
    • Direct investment in the Mainland securities markets through RQFII investment quota
    • Invest directly in A-shares that replicate or represent the composition of the underlying A-share index
    • Synthetic replication
    • No direct investment in or holding of Mainland securities
    • Invest in derivative instruments to replicate the underlying index performance
    Trading currency RMB and HK dollar HK dollar

    Is there any specific condition on RQFII A-share ETFs that may lead to the suspension of new unit creation?

    RQFII A-share ETFs may suspend the creation of new units when, among others:

    • the RQFII investment quota is used up, and
    • the RQFII holder cannot obtain additional quota in a timely manner.

    In such event, the units of RQFII A-share ETFs may trade at a significant premium to their NAV.

    What are the risks involved in RQFII funds in general?

    The risks of investing in RQFII funds include but not limited to the following points:

    RQFII regime risk

    The RQFII policy and rules have only been recently announced and there may be uncertainty as to its implementation and such policy and rules are subject to change and interpretation by PRC authorities. The uncertainty and change of the laws and regulations in the PRC (including the RQFII policy and rules) may adversely impact the RQFII fund.

    Risks relating to Mainland markets

    The concentration of RQFII fund's investment in securities and bonds issued in mainland China may result in greater volatility than portfolios which comprise of broad-based global investments.

    Investing in PRC-related companies and in the PRC markets involve certain risks and special considerations not typically associated with investment in more developed economies or markets, such as greater political, tax, economic, foreign exchange, liquidity and regulatory risks.

    There are risks and uncertainties associated with the current Chinese tax laws applicable to investments made by an RQFII fund. Although some RQFII funds may have made tax provision in respect of potential tax liability that may arise from their investments, the provision may not be sufficient or may even be excessive. Any shortfall between the reserves and actual tax liabilities may have to be covered by the fund's assets and may adversely affect the fund's asset value.

    Currency risk

    Since an RQFII fund is denominated in RMB, Hong Kong dollar-based investors are therefore exposed to fluctuations in the RMB exchange rate against the Hong Kong dollar. Like any currency, the exchange rate of the RMB may rise or fall. The RMB is currently not freely convertible and is subject to exchange controls and restrictions.

    Market/Investment risk

    An RQFII fund is an investment fund product and not a bank deposit. In general, there is no guarantee of the repayment of principal or dividend payment.

    The underlying investments of an RQFII fund may fall in value and therefore investment in the fund may suffer loss even if RMB appreciates.

    Reliance on market maker risk

    Market makers may not be as interested in making a market in ETF units denominated in RMB. Any disruption to the availability of RMB may adversely affect the capability of market makers in providing liquidity for the units of RQFII A-share ETFs. The liquidity of the ETF may be adversely affected if there is no market maker for the fund or if the market making activities are not effective.

    Other specific risks from investing in the PRC:

    China market risk

    By investing in the China market, investors will be exposed to both emerging markets risks and risks specific to the China marker.

    Any significant change in PRC’s political, social or economic policies may have a negative impact on investments in the China market and this will affect the value of the Fund. The regulatory and legal framework for capital markets and joint security companies in the PRC may not be as well developed as those of developed countries. Chinese accounting standards and practices may also deviate significantly from international accounting standards. The settlement and clearing system of the Chinese securities markets may not be well tested and as such, may be subject to increased risks of error or inefficiency.

    As the number of PRC securities and their combined total market value are relatively small compared to more developed markets, investments in these securities may be subject to increased price volatility and lower liquidity. The PRC securities market has in the past experienced substantial price volatility, and there is no assurance that such volatility will not occur in future.

    Investors should also be aware that changes in the PRC taxation legislation could affect the amount of income which may be derived and the amount of capital returned from an investment into a RQFII ETF.

    Foreign exchange control risk

    The PRC government may also impose restrictions on the repatriation of RMB out of China. This will in turn limit the depth of the RMB market in Hong Kong, thus reducing the liquidity of the Fund. The Chinese government’s policies on exchange control and repatriation restrictions are also subject to changes which may affect the fund’s positions.

    Government intervention and restrictions risk

    The operation and market making activities of RQFII A-share ETFs may be affected by interventions by the governments and regulators in the financial markets, such as an imposition of trading restrictions, a ban on "naked" short selling or the suspension of short selling for certain stocks.


    (C ) CROSS-BORDER KNOWLEDGE
     

    How is the CSOP A50 ETF a cross-border ETF?

    The CSOP A50 ETF aims to track the performance of the underlying index by directly investing in the constituent securities of the underlying index which are solely A-Shares. However, the ETF itself is listed on the Hong Kong Exchanges and Clearing Limited. A cross-border flow of money will thus occur in the investment process.

    Brief description of the A-share market:

    The PRC has two security exchanges - the Shanghai Security Exchange (“SSE”) which was established in November 26, 1990 and the Shenzhen Security Exchange (“SZSE”) which was established in December 1, 1990.  The two exchanges are under the direct management of the CSRC. The main functions include providing premises and facilities for securities trading, developing the business rules of the exchanges, organising and supervising securities trading and regulating exchange members and listed companies amongst others.

    Since establishment, both the SSE and SZSE have made great achievements in terms of the quantity and types of products listed on them. Currently listed products include A-Shares, B-Shares, funds and bonds. As of May 31, 2012, the number of listed companies amounted to 2412, of which 933 were listed in Shanghai and 1479 were listed in Shenzhen. The combined market capitalization of both the SSE and SZSE amounts to 23.9 trillion Yuan.

    Differences between the A-Share and H-Share markets

    Trading Hours:

    The A-share market opens at 09:30 and closes at 11:30 for the morning trading session. The afternoon trading session opens at 13:00 and closes at 15:00.

    The Hong Kong Security Exchange opens at 09:30 and closes at 12:00 for the morning trading session. The afternoon session opens at 13:00 and closes at 16:00.

    The A-share and Hong Kong markets also have a different holiday schedule.

    “T+ 0” vs. “T+1” Trading Rule:

    The A-share market has the T+1 trading rule which means a security bought on T day can only be sold on T+1. Short-selling is prohibited with an exception made for instruments covered by a pilot program. No such rule exists in the Hong Kong market, save that short-selling is only permitted in securities which meet certain requirements.

    Settlement cycle:

    The A-share market settles on a T+1 basis, while the Hong Kong market settles on a T+2 basis.

    CNH vs. CNY

    Following the introduction of a series of policies by the PRC authorities, a RMB market outside the PRC has developed and has expanded rapidly since 2009. RMB traded outside the PRC is often referred as “offshore RMB” or “CNH”. In contrast, RMB that is traded in the PRC is often referred to as “onshore RMB” or “CNY”.

    Both onshore and offshore RMB are the same currency but are traded in different markets. Since the two RMB markets operate independently, with much restriction placed on the flow between them, both onshore and offshore RMB are traded at different rates. Due to the strong demand for CNH, CNH was previously traded at a premium compared to CNY, although occasional discounts are observed. The relative strength of both the onshore and offshore RMB may change significantly within a short period of time.

    Cross Border Investment Risks

    Offshore RMB/CNH market risk

    Although it is expected that the offshore RMB market will continue to grow in depth and size, its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange. There is no assurance that new PRC regulations or arrangements will not be promulgated, terminated or amended in the future which will have the effect of restricting the availability of offshore RMB. The limited availability of RMB outside the PRC may affect the liquidity of the CSOP A50 ETF.

    Offshore RMB/CNH Remittance Risk

    The RMB is currently not freely convertible and is subject to exchange control imposed by the PRC government. There is no assurance that new PRC regulations will not be promulgated in the future which have the effect of restricting or eliminating the remittance of RMB into or outside the PRC. Such an event could have a severe adverse effect on the operations of the CSOP A50 ETF.

    Risks relating to RMB trading and settlement of units

    It is likely that not all intermediaries are prepared to carry out trading and settlement of RMB-denominated securities. In addition, the liquidity and trading price of the units of RQFII A-share ETFs may be adversely affected by the limited availability of RMB outside mainland China and the restrictions on the conversion between foreign currency and RMB.

    Although the SEHK has launched the RMB Equity Trading Support Facility (TSF) to enable investors who have insufficient RMB to buy RMB-traded shares, the TSF only supports secondary trading of RMB shares currently and not other types of securities. Therefore, investors cannot use this facility to buy RQFII A-share ETFs.

    Trading differences risk

    While A-shares are subject to trading bands which restrict increases and decreases in the trading price, trading of RQFII A-share ETFs listed on the SEHK is not subject to such restrictions. This difference may affect the level of premium or discount of the trading price of the ETF's units to its NAV.

    Mainland brokerage risk

    Only one brokerage can be appointed for each market (the Shenzhen Stock Exchange and the Shanghai Stock Exchange) to execute transactions (i.e. trading of A-shares) for the RQFII A-share ETF in mainland China. As such the RQFII A-share ETF will rely on only one brokerage for each market, which may be the same brokerage. If the manager of the RQFII A-share ETF is unable to use its designated brokerage in mainland China, the operation of the RQFII A-share ETF will be adversely affected and may cause the units of the RQFII A-share ETF to trade at a premium or discount to the RQFII A-share ETF's NAV or the RQFII A-share ETF may not be able to track the underlying index.

    Reliance on parent company risk

    The manager of RQFII A-share ETFs may not be experienced in managing ETFs and may heavily leverage on the expertise and systems of its Mainland parent company to support the RQFII A-share ETF's investments in the A-share markets. Any disruption in the assistance from the Mainland parent company may adversely affect the operations of the RQFII A-share ETF.

    Risks in light of the cross-border nature of the CSOP A50 ETF

    The CSOP A50 ETF is subject to operational and settlement risks due to its cross-border nature. Operational risks may also be present in the form of communication and trading systems failure. As the CSOP A50 ETF transacts in the China A-Share market, the CSOP A50 ETF may also be exposed to cross-border settlement risks. This may affect the ability to ascertain the value of the CSOP A50 ETF’s portfolio and this may adversely affect the CSOP A50 ETF.

     

    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 involves 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.

    1. Intra-day Estimated NAV per unit Calculations are performed by Sumscope. The near real time estimated NAV per unit in USD and HKD is updated during Hong Kong Stock Exchange trading hours. They are indicative and for reference purpose only. The near real time estimated NAV per unit in HKD uses a real time HKD: USD foreign exchange rate - it is calculated using the near real time estimated NAV per unit in USD multiplied by a real time HKD: USD foreign exchange rate provided by Sumscope when the SEHK is opened for trading. The near real time estimated NAV per unit in HKD is updated every 15 seconds throughout the SEHK trading hours.
    2. Market prices are provided on a 20-minute delayed basis by Sumscope.
    3. Change of the official NAV per Unit in USD and change of the NAV per Unit in HKD indicate the change of the NAV per Unit since previous Dealing Day where the SEHK market is open for normal trading. Refer to the Prospectus for more information on determination of Net Asset Value. Source of NAV per Unit in USD: HSBC Institutional Trust Services (Asia) Limited.
    4. Change of the closing price in USD and HKD traded units indicate change of closing price since previous SEHK trading day. (Source: Bloomberg)
    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 USD multiplied by an assumed foreign exchange rate using the USD exchange rate quoted by Reuters at 3:00 p.m. (Hong Kong time) as of the same Dealing Day.


    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. Investment involves 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.