PRODUCT KEY FACTS BOCHK RMB Fixed Income Fund

Transcription

1 PRODUCT KEY FACTS BOCHK RMB Fixed Income Fund a sub-fund of the BOCHK Investment Funds Issuer: BOCI-Prudential Asset Management Limited 30 April 2015 This statement provides you with key information about this product. This statement is a part of the offering document. You should not invest in this product based on this statement alone. Quick facts Fund Manager: Trustee and Registrar: Ongoing charges over a year # : Dealing frequency: Base currency: Distribution policy: Financial year end: Minimum investment: BOCI-Prudential Asset Management Limited (the Manager ) BOCI-Prudential Trustee Limited 0.36% Daily (Hong Kong business days, other than Saturdays) Renminbi ( RMB ) Semi-annually (30 September and 31 March of each year) at the Manager s discretion. 31 March Class A RMB: Initial: RMB10,000 Addition: RMB10,000 Class A HKD: Initial: HK$10,000 Addition: HK$10,000 Class A USD: Initial: US dollar equivalent amount of HK$10,000 Addition: US dollar equivalent amount of HK$10,000 # The ongoing charges figure is based on expenses for the period ended 30 September This figure may vary from year to year. Since Class A Units (including Class A RMB Units, Class A HKD Units and Class A USD Units) had the same fee structure, a single ongoing charges figure can be calculated and published. What is this product? BOCHK RMB Fixed Income Fund (the Sub-Fund ) is a sub-fund under the BOCHK Investment Funds, which is an umbrella unit trust established under the laws of Hong Kong. The Sub-Fund is a fixed income fund falling under Chapter 7 of the Code on Unit Trusts and Mutual Funds. The Sub-Fund is denominated in RMB. 1

2 Objectives and Investment Strategy The Sub-Fund seeks to provide investors with long-term capital appreciation through investing in a portfolio primarily (not less than 70% of its Net Asset Value) consisting of offshore RMB denominated and settled debt instruments which are issued or distributed outside Mainland China. Such debt instruments are issued by a variety of issuers such as government, quasi-governmental bodies, banks, financial institutions or other corporate entities which may or may not be established or incorporated in Mainland China. Such debt instruments may include government bonds, commercial papers, convertible bonds, bank certificate of deposit, negotiated term deposits, short-term bills and notes. The Sub-Fund seeks to invest in RMB denominated and settled fixed rate or floating rate debt securities, listed or unlisted, which may or may not be rated by rating agencies and may not be of investment grade. The Sub-Fund may also invest in other RMB denominated and settled deposits issued outside Mainland China such as bank certificates of deposit, negotiated term deposits with banks and bank deposits. Not less than 90% of the Sub-Fund s Net Asset Value will be invested in RMB denominated and settled assets. Not more than 10% of the Sub-Fund s Net Asset Value may be invested in offshore debt instruments issued by Chinese enterprises denominated and settled in other currencies, such as US dollars, and not RMB. The Sub-Fund will not invest in any debt instruments issued or distributed within Mainland China and will not invest in any debt securities or other securities issued in mainland China and it will not invest through any Qualified Foreign Institutional Investors (QFII) or RMB Qualified Foreign Institutional Investors (RQFII). The Manager will serve one (1) month s prior notice (or such shorter period of notice as the SFC may approve) to the Unitholders in the event of any change to this arrangement. The Sub-Fund will not invest in any structured deposits or products. Currently, the Sub-Fund will not invest in any derivatives for hedging or non-hedging purposes or be engaged in any securities lending activities, share repurchase agreement or similar OTC transactions. What are the key risks? Investment involves risks. Please refer to the offering document for details including the risk factors. 1. Investment risk The Sub-Fund is an investment fund. There is no guarantee of dividend or distribution payments. Investing in the Sub-Fund is not the same as deposits with a bank. There is no guarantee in respect of repayment of principal. Investors investment in the Sub-Fund may suffer losses. 2. RMB currency risk RMB is subject to policies of exchange controls and repatriation restrictions. The Sub-Fund is subject to the risk of the People s Republic of China (the PRC ) government s imposition of restrictions on the repatriation of funds out of China, which may limit the depth of the RMB market in Hong Kong and reduce the liquidity of the Sub-Fund. As a result, the Sub-Fund s ability to satisfy payment to investors may be affected. The exchange rate of the offshore Chinese Yuan (CNH) will be applied in calculating the value of non-rmb denominated or settled assets and the prices of non-rmb denominated classes of Units. Depending on market factors, the exchange rate of CNH may be at a discount or premium when compared with the onshore Chinese Yuan exchange rate. There is no guarantee that RMB will not depreciate or RMB will not be subject to devaluation. Any devaluation of RMB could adversely affect the value of the investors investments in the Sub-Fund. 2

3 3. Limited pool of investment risks The quantity of RMB debt securities issued or distributed outside Mainland China is currently limited. The credit quality of offshore RMB debt securities may be affected by such limited supply of debt securities and the excess demand of such debt securities in the market. This may have an adverse impact on the quality and pricing of such debt securities which in turn may have an adverse effect on the Sub-Fund s Net Asset Value. The Sub-Fund may invest in investment grade, non-investment grade and/or unrated bonds. Generally, non-investment grade and unrated bonds are considered to have a higher degree of counterparty risk, credit risk and liquidity risk. Further, the Sub-Fund may not be able to find suitable debt instruments to invest in and hold a significant portion of assets in RMB bank deposits or term deposits with substantial financial institutions if there are not sufficient RMB debt securities for the Sub-Fund to invest in. This may adversely affect the Sub-Fund s return and performance. 4. Credit/ insolvency risk of counterparties The Sub-Fund is exposed to the credit/ insolvency risk of issuers of debt instruments and deposits that the Sub-Fund may invest in. The credit quality and value of the debt instruments may be adversely affected if the issuer of debt instruments runs into financial difficulties. This may lead to greater price volatility of the instruments. In the event of the insolvency of the issuer, the Sub-Fund may experience delays in liquidating its positions and may, as a result, incur significant losses or the inability to redeem any gains on investment during the period in which the Sub-Fund is attempting to enforce its rights. 5. Credit rating risk Currently, most of the RMB debt instruments that the Sub-Fund invests in are unrated. Debt instruments that have a lower credit rating or that are unrated are generally more susceptible to the credit risk of the issuers. As lower-rated or unrated corporate bonds are more affected by investors perceptions, when economic conditions appear to be deteriorating, lower rated or unrated debt instruments may decline in market value. In the event of a default or credit rating downgrading of the issuers of the RMB debt instruments, the Sub-Fund s value will be adversely affected and investors may suffer a substantial loss as a result. 6. Liquidity risks There may not be a liquid or active market for the trading of RMB denominated debt instruments or deposits. The bid and offer spread of the price of RMB debt securities may be large. Therefore, the Sub-Fund may incur significant trading and realisation costs and may suffer significant losses when selling such investments. 7. Interest rate risk Changes in interest rate may affect the values of fixed income securities as well as the financial markets in general. The Sub-Fund may suffer a loss in disposing of fixed income securities before their maturity. 3

4 8. Currency and exchange rate risk As the Sub-Fund may invest up to 10% of its Net Asset Value in instruments that are denominated and settled in currency or currencies other than RMB, the Sub-Fund may be exposed to the currency and exchange rate risk and fluctuation. Further, the Sub-Fund will also be exposed to foreign exchange risk because Units can be subscribed and redeemed in a currency (i.e. HK$ or US$) other than in RMB which is the base currency of the Sub-Fund and in which the majority of the assets of the Sub-Fund are denominated. Funds in currency other than RMB will need to be converted into RMB for investment purposes prior to investment at the applicable exchange rate and subject to the applicable spread on currency conversion and transaction costs. Such foreign exchange risk and costs of conversion may result in capital loss to the Sub-Fund and its investors, including the RMB class investors. Under both scenarios above, investors should note that the exchange rates between RMB and HKD/ USD are susceptible to controls or movements based on external factors (for example, market or regulatory conditions) and this may affect the overall performance of the Sub-Fund. How has the fund performed? 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3.1% 2.2% 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 distributions reinvested. Class A RMB is selected as representative class because this class is mainly subscribed by Unitholders. These figures show by how much Class A RMB increased or decreased in value during the calendar year being shown. Performance data has been calculated in RMB including ongoing charges and excluding initial charge and redemption charge you might have to pay. Where no past performance is shown there was insufficient data available in that year to provide performance. The Sub-Fund and Class A RMB were launched in Only Class A Units (including Class A RMB Units, Class A HKD Units and Class A USD Units) are currently available. Is there any guarantee? The Sub-Fund does not provide any guarantees. You may not get back the full amount of money you invest. 4

5 What are the fees and charges? Charges which may be payable by you You may have to pay the following fees when dealing in the Class A Units of the Sub-Fund. Fee Initial Charge Switching fee (as a % of the issue price of the New Class of Units to be issued) Redemption Charge What you pay Maximum up to 3% of the issue price Class A RMB: N/A (Switching is currently not permitted) Class A HKD & Class A USD: For switching between Class A HKD Units and Class A USD Units relating to the Sub-Fund or switching into Units of another Sub-Fund which is not a Money Market Sub-Fund: 1% For switching into Units of a Money Market Sub-Fund: Nil Nil Ongoing fees payable by the Sub-Fund The following expenses will be paid out of the Sub-Fund. They affect you because they reduce the return you get on your investments. Management fee Trustee fee Performance fee Administration fee Annual rate (as a % of the Sub-Fund s Net Asset Value) 0.75%, up to a maximum of 2%* (The portion for investments in cash and deposit (excluding investment in certificates of deposit and commercial papers) is waived.) 0.125% on the first RMB 200 million; 0.10% on the next RMB 200 million; % on the remaining balance; Subject to a minimum monthly fee of RMB 20,000 and up to a maximum of 1%* Nil Nil * You should note that some fees may be increased, up to a specified permitted maximum, by giving Unitholders at least three (3) months prior notice. Other fees Please note that other fees and expenses may also be deducted from the Sub-Fund. For details, please refer to the section Charges and Expenses on pages 33 to 38 of the Explanatory Memorandum. 5

6 Additional Information BOCHK RMB Fixed Income Fund You generally buy and/or redeem Units of the Sub-Fund at the Sub-Fund s next determined Net Asset Value after the Manager receives your request in good order on or before 5:00pm (Hong Kong time) (the Dealing Deadline) on the relevant Dealing Day (which is generally Hong Kong Business Day (except Saturdays) or such other day or days as the Manager and the Trustee may agree from time to time). Applications could also be placed through other authorized fund distributors or through other authorized means as may from time to time specified by the Manager in the Manager s website ( and different dealing procedures, such as earlier application or payment cut-off time may be involved. Applicants should consult the relevant fund distributors or the Manager to find out the dealing procedures that are applicable to them. The Net Asset Value per Unit of the Sub-Fund is calculated and will be published on each Dealing Day in the South China Morning Post, the Hong Kong Economic Journal and the Hong Kong Economic Times. Information of the Sub-Fund can be found at the Manager s website ( Information contained in the website of the Manager has not been reviewed by the SFC. Important If you are in doubt, you should seek professional advice. The SFC takes no responsibility for the contents of this statement and makes no representation as to its accuracy or completeness. 6