Bosera FTSE China A50 Index ETF (the “ETF”) aims to provide investment results that, before fees and expenses, closely correspond to the performance of FTSE China A50
Index (the “Index”). The ETF is subject to concentration risk as a result of tracking the performance of a single geographical region (PRC). It may likely be more volatile than a
broad-based fund, such as a global equity fund, as it is more susceptible to fluctuations in values of the Index resulting from the adverse conditions in the PRC.
The ETF is passively managed and the ETF will decrease in value for any decline in the Index. Bosera Asset Management (International) Co., Limited. (the "Manager") will not
adopt any temporary defensive position against any market downturn.
The trading price of the ETF’s units (the “Units”) on the Stock Exchange of Hong Kong Limited (the “SEHK”) will be subject to market forces and may trade at a substantial
premium/discount to their Net Asset Value (the “NAV”), and may deviate significantly from the NAV per Unit.
The ETF is a physical RQFII, RMB denominated exchange traded fund investing directly in A-shares. The relative novelty and relatively untested nature of RQFII makes the
ETF riskier than traditional exchange traded funds investing in markets other than the PRC.
The RQFII policies and rules are novel in nature and are subject to change and interpretation of the PRC authorities. Any new restrictions on repatriation of the invested
capital and net profits may impact the ETF’s ability to meet with redemption request. There is also no assurance that the Manager will continue to maintain its RQFII status or
be able to acquire additional RQFII quota. The ETF may not have sufficient RQFII quotas to meet all subscription requests, which may result in a rejection of applications and
a suspension of dealings of the ETF.
The ETF has Units traded in both RMB and HKD. The relative novelty and untested nature of dual counter may bring additional risks for investment in the ETF and may make
such investment riskier than investment in single counter ETFs. Not all stockbrokers or custodians may be ready and able to carry out trading and settlement of the RMB
The market price of RMB and HKD traded Units may deviate significantly due to different factors such as market liquidity, supply and demand in each counter and the
exchange rate between RMB and HKD (in both onshore and offshore markets). As such investors may pay more or receive less when buying or selling HKD traded Units on
the SEHK than in respect of RMB traded Units and vice versa.
If there is a suspension of the inter-counter transfer or units between the RMB counter and the HKD counter, unitholders will only be able to trade their units in the relevant
counter on the SEHK. Investors without RMB accounts may buy and sell HKD traded units only.
Investors should note that HKD traded Units may be subject to currency exchange risk as the assets of the ETF are denominated in RMB. Distributions are made in RMB only.
As such, investors dealing in HKD traded Units may suffer a foreign exchange loss and incur foreign exchange associated fees and charges to receive their dividends.
Not all brokers and CCASS participants may be familiar with and able to buy Units in one counter and to sell Units in the other or to carry out inter-counter transfers of Units
or to trade both counters at the same time. This may inhibit or delay an investor dealing in both HKD traded Units and RMB traded Units and may mean an investor can only
trade in one currency.
Investing in emerging markets, such as the PRC, and in PRC-related companies involves a greater risk of loss than investing in more developed markets due to, among other
factors, greater political, tax, economic, foreign exchange, liquidity and regulatory risks. Any restrictions in PRC on foreign ownership or holding of any Index constituents
may also cause tracking error and, at worst, the ETF may not be able to achieve its investment objective.
There are risks and uncertainties associated with the current PRC tax laws, regulations and practice in respect of capital gains realised by RQFIIs on its investments in the
PRC (which may have retrospective effect). After careful consideration of the Manager’s assessment and having taken and considered independent professional tax advice
regarding the application of the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on Income (the “China-HK Arrangement”), the Manager considers, in accordance with such advice, that the Bosera
A50 ETF should be able to enjoy a PRC withholding income tax exemption on capital gains derived from trading of A-shares issued by non-immovable properties-rich PRC
tax resident companies and has determined to change the tax provisioning approach in respect of the Bosera A50 ETF effective from 14 July 2014 so that it does not make
any withholding income tax provision for the account of the Bosera A50 ETF in respect of any potential PRC tax liability on gross unrealised and realised capital gains derived
from trading of A-Shares (other than in respect of gross unrealised and realised capital gains derived from trading of A-Shares issued by PRC “immovable properties-rich
companies” on which it makes a 10% provision). “Immovable properties-rich companies” refers to PRC tax resident companies in which 50% or more of their assets are
comprised, directly or indirectly, of immovable properties situated in the PRC.
It is possible that the applicable tax laws, regulations and practice may be changed, that the PRC tax authorities may hold a different view or that the assessment of “immovable
properties-rich companies” by the Manager may be incorrect. It is also possible that the PRC tax authorities require the Bosera A50 ETF to provide a Hong Kong Tax
Resident Certificate (“HKTRC”) in order to enjoy the relief under the China-HK Arrangement (the Bosera A50 ETF has not currently obtained a HKTRC) and the Manager
may not be able to obtain a HKTRC on behalf of the Bosera A50 ETF. In the event that actual tax is collected by the PRC tax authorities and no provision had been made, the
Bosera A50 ETF will ultimately have to bear the full amount of the tax liabilities and the Net Asset Value of the Bosera A50 ETF will be adversely affected. In this case, existing
and subsequent investors will be disadvantaged as they will bear a disproportionately higher amount of tax liabilities as compared to the liability at the time of investment in
the Bosera A50 ETF. On the other hand, the actual tax liabilities may be lower than the tax provision made. In that case, persons who have already redeemed their Units in
the Bosera A50 ETF before the actual tax liabilities are determined will not be entitled or have any right to claim any part of such overprovision.
In the event of any default or bankruptcy of the custodian (directly or through its delegate) or the PRC brokers, the ETF may encounter delays in recovering its asset and may
be adversely affected in the execution of any transaction.
The ETF is denominated in RMB. RMB is currently not freely convertible and is subject to exchange controls and restrictions. There is no guarantee that the value of RMB
against the investors’ base currencies (for example HKD) will not depreciate.
Governments and regulators may intervene in the financial markets, such as by the imposition of trading restrictions, a ban on “naked” short selling or the suspension of short
selling for certain stocks. This may affect the operation and market making activities of the ETF, and may have an unpredictable impact on the ETF. Such market interventions
may also have a negative impact on market sentiment which may in turn affect the performance of the Index and as a result the performance of the ETF.
The ETF is subject to tracking error risks due to factors such as fees and expenses of the ETF and the liquidity of the market etc.
Although the Manager intends to distribute dividends to Unitholders from net income, in limited circumstances dividends on Units may be distributable out of capital or
effectively out of capital (i.e. where the ETF pays dividends out of gross income and charges/pays all or part of the fees and expenses to/out of capital resulting in an increase
in distributable income). Payment 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 any capital gains attributable to that original investment. Any distributions involving payment of dividends out of capital or effectively out of capital may result in an
immediate reduction of the NAV per Unit. The Manager may amend its distribution policy subject to the SFC’s prior approval and by giving not less than 1 month’s prior
notice to Unitholders.
The ETF is an investment fund and may not be suitable for everyone. Your investment in the ETF may suffer losses, including the loss of principal.
Investor should not make any investment decision solely based on the information provided on this material. Investors should refer to the ETF’s prospectus and product key
facts statement for further details, including the product features and risk factors before making any investment decisions.
Investment involves risk, including the loss of principal. Past performance is not indicative of future performance. This material has not been reviewed by the Securities and
Investment involves risk. Past performance is not indicative of future performance. Investments are subject to risk and there is no guarantee that these investment objectives will be achieved. Please refer to the relevant offering documents for details, including the risk factors.
This website is issued by Bosera Asset Management (International) Co., Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.