Objective
The investment objective is to provide investment results
that, before fees and expenses, closely correspond to the performance of the
MSCI China A 50 Connect Index (the “Index”).
In order to achieve the
investment objective of the Sub-Fund, the Manager will adopt a physical
representative sampling strategy. The Sub-Fund will adopt a physical
representative sampling strategy by investing up to 100% of its NAV in
securities constituting the Index (“Index Securities”).
In pursuing a representative
sampling strategy, the Manager may cause the Sub-Fund to deviate from the Index
weighting on condition that the maximum deviation from the Index weighting of
any constituent will not exceed 3% or such other percentage as determined by
the Manager after consultation with the SFC.
For direct investments in Index Securities listed on the
Shanghai and Shenzhen stock exchanges, the Sub-Fund will invest primarily
through the Stock Connect and/or the Manager’s QFI status. The Manager may
invest up to 100% of the Sub-Fund’s NAV through the Stock Connect and less than
70% of the Sub-Fund’s NAV through QFI.
Other investments
The Manager may invest in
financial derivative instruments (“FDIs”) including futures and swaps
with no more than 15% of the Sub-Fund’s NAV for investment and hedging
purposes, where the Manager believes such investments will help the Sub-Fund
achieve its investment objective and are beneficial to the Sub-Fund. The swaps
which may be invested by the Sub-Fund will be funded total return swap
transaction(s) whereby the Sub-Fund will pass on the relevant portion of cash
to the swap counterparty(ies) and in return the swap counterparty(ies) will
provide the Sub-Fund with an exposure to the economic gain/loss in the performance
of the relevant Index Securities (net of indirect costs).
The Sub-Fund may also invest in
money market funds (subject to the investment restrictions as set out in
Chapter 7 of the Code), and in cash deposits and cash equivalents for cash
management purposes, up to 5% of its NAV.
Currently the Manager has no
intention to enter into securities lending transactions, sale and repurchase or
reverse repurchase transactions and other similar over-the-counter
transactions. The Manager will seek the prior approval of the SFC (if required)
and provide at least one month’s prior notice to Unitholders before the Manager
engages in any such investments , or if the Manager wishes to adopt an
investment strategy other than a physical representative sampling strategy.
The investment strategy of the Sub-Fund is subject to the
investment and borrowing restrictions set out in the Prospectus.
The Index is a net total return, free float market capitalisation weighted index. It is constructed from the MSCI China A Index (the “Parent Index”), which is a broad-based benchmark index which captures large and mid-cap A-Shares listed on the Shanghai and Shenzhen exchanges and accessible through the Northbound Stock Connect channel. The Index aims to reflect the performance of the 50 largest securities representing each Global Industry Classification Standard (GICS®) sector (including energy, materials, industrials, consumer discretionary, consumer staples, health care, financials, information technology, communication services, utilities and real estate) and reflect the sector weight allocation of the Parent Index.
The Manager (and its connected persons) is independent of MSCI Inc., the index provider.
The Index is calculated and disseminated in RMB. A net total return index means that its performance reflects the reinvestment of dividends and distributions, net of withholding tax, from the Index Securities. The Index was launched on 20 August 2021 and had a base level of 1,000 on 20 November 2012. As of 13 May 2022, the Index had a total free-float market capitalisation of RMB 4.68 trillion and 50 constituents.
You can obtain most updated list of the constituents of the Index and their respective weightings from the website of the Index Provider at https://www.msci.com/constituents (the contents of which has not been reviewed by the SFC) and additional information and other important news of the Index at https://www.msci.com/our-solutions/index-profiles/market-cap-weighted/china-a-50-connect (the contents of which has not been reviewed by the SFC).
Bloomberg Code: MXA50CNC