IMPORTANT: If you are in any doubt about the contents of this Prospectus, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser for independent financial advice. HARVEST FUNDS (HONG KONG) ETF (a Hong Kong umbrella unit trust authorised under Section 104 of the Securities and Futures Ordinance (Cap. 571) of Hong Kong) Harvest MSCI China A Index ETF (RMB Counter Stock Code: 83118 HKD Counter Stock Code: 03118) Harvest MSCI China A 50 Index ETF (RMB Counter Stock Code: 83136 HKD Counter Stock Code: 03136) PROSPECTUS Manager Harvest Global Investments Limited Investment Adviser Harvest Fund Management Co., Ltd. Listing Agent Deutsche Bank AG, Hong Kong Branch 30 May 2013 Hong Kong Exchanges and Clearing Limited ( HKEx ), The Stock Exchange of Hong Kong Limited (the SEHK ), Hong Kong Securities Clearing Company Limited ( HKSCC ) and the Hong Kong Securities and Futures Commission (the SFC ) take no responsibility for the contents of this Prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Prospectus. The Trust and the Sub-Funds have each been authorised as collective investment schemes by the SFC. SFC authorisation is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
Important: If you are in any doubt about the contents of this Addendum, you should consult your stockbroker, bank manager, solicitor, accountant and other financial adviser for independent financial advice. This Addendum forms an integral part of and should be read in conjunction with the Prospectus of the Sub-Funds dated 30 May 2013, as amended by the addenda dated 29 January 2014, 5 May 2014 and 21 July 2014 (together, the Prospectus ). The Manager accepts full responsibility for the accuracy of the information contained in this Addendum as at the date of publication and confirm, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement misleading. Harvest MSCI China A Index ETF RMB Counter Stock Code: 83118 HKD Counter Stock Code: 03118 Harvest MSCI China A 50 Index ETF RMB Counter Stock Code: 83136 HKD Counter Stock Code: 03136 (Sub-funds of Harvest Funds (Hong Kong) ETF, a Hong Kong umbrella unit trust, authorised under Section 104 of the Securities and Futures Ordinance (Cap. 571) of Hong Kong) (collectively, the Sub-Funds ) Addendum to the Prospectus The following change to the Prospectus shall apply with effect from 30 October 2014. 1. The definition of Participation Agreement on page 7 is deleted in its entirety and replaced with the following: Participation Agreement means an agreement entered into between the Trustee, the Manager, a Participating Dealer and (where applicable) a PD Agent setting out, (amongst other things), the arrangements in respect of the issue of Units and the redemption and cancellation of Units. 2. A definition of PD Agent is added after the definition of Participation Agreement on page 7: PD Agent means a person who is admitted by HKSCC as either a Direct Clearing Participant or a General Clearing Participant (as defined in the General Rules of CCASS) in CCASS and who has been appointed by a Participating Dealer as its agent for the creation and redemption of Units. 3. The definition of Service Agent s Fee on page 8 is deleted in its entirety and replaced with the following: Service Agent s Fee means the fee which may be charged for the benefit of the Service Agent to each Participating Dealer or PD Agent (as the case may be) on each book-entry deposit or withdrawal transaction made by the relevant Participating Dealer or PD Agent (as the case may be), the maximum level of which shall be determined by the Service Agent and set out in this Prospectus. 1
4. The definition of Service Agreement on page 8 is deleted in its entirety and replaced with the following: Service Agreement means each agreement by which the Service Agent provides its services in respect of a Sub-Fund entered amongst the Trustee and Registrar, the Manager, the Participating Dealer, the PD Agent (where applicable), the Service Agent and the Hong Kong Securities Clearing Company Limited. 5. The last sentence in the last paragraph in the section The Offering Phases After Listing on page 13 is deleted in its entirety and replaced with the following: The beneficial interests in Units of any client of the Participating Dealers shall be established through such client s account with the relevant Participating Dealer or PD Agent (as the case may be) or with any other CCASS participants if the client is buying from the secondary market. 6. The last sentence under Evidence of Unitholding on page 36 is deleted in its entirety and replaced with the following: Investors owning Units in CCASS are beneficial owners as shown on the records of the participating brokers or the relevant Participating Dealer(s) or PD Agent(s) (as the case may be) who are participants of CCASS. 7. On page 54, the following is added before the last sentence in the risk factor Reliance on Participating Dealers Risk under the section Risk Factors : Where a Participating Dealer appoints a PD Agent to perform certain CCASS-related functions, if the appointment is terminated and the Participating Dealer fails to appoint an alternative PD Agent, or if the PD Agent ceases to be a CCASS participant, the creation or redemption of Units by such Participating Dealer may also be affected. 8. The first sentence under The Service Agent on page 64 is deleted in its entirety and replaced with the following: HK Conversion Agency Services Limited acts as Service Agent under the terms of the Service Agreement entered into among the Manager, the Trustee, the Registrar, the Participating Dealer, the PD Agent (where applicable), the Service Agent and HKSCC. 9. The second paragraph under the section entitled General in the Appendix 1: Harvest MSCI China A Index ETF on page 107 of the Prospectus is deleted in Its entirety and replaced with the following: The MSCI China A Index is constructed and maintained under the MSCI Global Investable Market Indices ( GIMI ) Methodology. The MSCI GIMI methodology is a completely rule-based methodology used for the construction of the MSCI Global Equity Index series. As of 30 September 2014, the Index had a free float adjusted market capitalisation of RMB5,687 billion and 444 constituents. 10. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 1: Harvest MSCI China A Index ETF on page 111 of the Prospectus are deleted in their entirety and replaced with the following: "As at 30 September 2014, the 10 largest constituents of the Index, represented approximately 17.41% of the market capitalisation of the Index based on total shares in issue, were as follows: 2
Rank Constituent Name Weighting (%) 1. Ping An Insurance 2.61% 2. China Merchants Bank 2.45% 3. China Minsheng Bank 2.23% 4. Shanghai Pudong Development Bank 1.76% 5. Citic Securities Co 1.73% 6. Industrial Bank 1.71% 7. Bank of Communications 1.33% 8. China Vanke Co 1.33% 9. Kweichow Moutai 1.14% 10. Inner Mongolia Yili 1.12% 11. The second paragraph under the section entitled General in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 148 of the Prospectus is deleted in deleted in Its entirety and replaced with the following: The Index was launched on 12 November 2012 and had a base level of 1,000 on 30 November 2004. As of 30 September 2014, the Index had a free float adjusted market capitalisation of RMB2,283 billion and 50 constituents. 12. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 150 of the Prospectus are deleted in their entirety and replaced with the following: As at 30 September 2014, the 10 largest constituents of the Index, represented approximately 46.11% of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. Ping An Insurance 6.50% 2. China Merchants Bank 6.10% 3. China Minsheng Bank 5.56% 4. Shanghai Pudong Development Bank 4.38% 5. Citic Securities Co 4.31% 6. Industrial Bank 4.26% 7. Bank of Communications 3.32% 8. China Vanke Co 3.32% 9. Kweichow Moutai 2.84% 10. Inner Mongolia Yili 2.78% The Prospectus may only be distributed if accompanied by this Addendum. Harvest Global Investments Limited as Manager of Harvest MSCI China A Index ETF and Harvest MSCI China A 50 Index ETF Date: 30 October 2014 3
Important: If you are in any doubt about the contents of this Addendum, you should consult your stockbroker, bank manager, solicitor, accountant and other financial adviser for independent financial advice. This Addendum forms an integral part of and should be read in conjunction with the Prospectus of the Sub-Funds dated 30 May 2013, as amended by the addenda dated 29 January 2014 and 5 May 2014 (together, the Prospectus ). The Manager accepts full responsibility for the accuracy of the information contained in this Addendum as at the date of publication and confirm, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement misleading. Harvest MSCI China A Index ETF RMB Counter Stock Code: 83118 HKD Counter Stock Code: 03118 Harvest MSCI China A 50 Index ETF RMB Counter Stock Code: 83136 HKD Counter Stock Code: 03136 (Sub-funds of Harvest Funds (Hong Kong) ETF, a Hong Kong umbrella unit trust, authorised under Section 104 of the Securities and Futures Ordinance (Cap. 571) of Hong Kong) (collectively, the Sub-Funds ) Addendum to the Prospectus The following change to the Prospectus shall apply with effect from 21 July 2014. 1. The following is added under the section Risk Factors on page 57 of the Prospectus as the last risk factor in this section: Risks relating to FATCA The US Foreign Account Tax Compliance Act ( FATCA ) imposes a 30% withholding tax on certain US source withholdable payments to foreign financial institutions ( FFIs ) (such as the Trust and each Sub-Fund) that are not FATCA compliant. The US Internal Revenue Service (the IRS ) has released regulations and other guidance that provide for the phased implementation of FATCA, whereby an FFI that is not otherwise exempt or treated as deemed-compliant should register with the IRS, perform due diligence, withholding and reporting obligations with respect to financial accounts maintained by the FFI. The United States Department of the Treasury and Hong Kong have, on 9 May 2014, in substance agreed to enter into an intergovernmental agreement based on the Model 2 format ( Model 2 IGA ). According to a previous announcement of the IRS, an agreement in substance is considered to be effective as long as the parties sign the agreement by 31 December 2014. In order to comply with FATCA and to avoid the above-mentioned withholding tax, the Manager has registered with the IRS as a sponsoring entity for funds under its management, and has agreed to perform, on behalf of the sponsored investment entities, all due diligence, reporting and other relevant FATCA requirements. The Manager has a Global Intermediary Identification Number of ILEIIQ.00000.SP.344. The Trust and the Sub-Funds are registered deemed compliant FFIs sponsored by the Manager. Under the Model 2 IGA, the Trust and the Sub-Funds will, with the consent from 1
the Unitholders, provide the IRS with information on the identity, account balance and the income received by Unitholders that are specified US persons (within the meaning of the Internal Revenue Code) ( Specified US Persons ) or, in case of a non-us entity that is classified as a passive non-financial foreign entity ("Passive NFFE"), on the information of any controlling persons that are Specified US Persons. Please note that Unitholders that are found reportable but do not provide consent to the Trust and the Sub-Funds would still be reported to the IRS under aggregate reporting. Although the Trust and the Sub-Funds will attempt to satisfy any obligations imposed on them to avoid the imposition of FATCA withholding tax, no assurance can be given that the Trust and the Sub-Funds will be able to fully satisfy these obligations. If the Trust or any Sub-Fund becomes subject to a withholding tax as a result of FATCA, the Net Asset Value of such Sub-Fund may be adversely affected and such Sub-Fund and its Unitholders may suffer material loss. The Trust and the Sub-Funds ability to comply with FATCA will depend on each Unitholder providing the Trust with information that the Trust requests concerning the Unitholder or its direct and indirect owners, if applicable. If a Unitholder fails to provide the Trust with any information the Trust requests, the Trust may exercise its right to compulsorily redeem such interest from the Unitholder. Any such compulsory redemption will be done in accordance with applicable laws and regulations, and the discretion to do so will be exercised by the Manager in consultation with the Trustee acting in good faith and on reasonable grounds. As at the date of this Prospectus, all Units in the Sub-Funds are registered in the name of HKSCC Nominees Limited. It is the Manager s understanding that HKSCC Nominees Limited is registered as a Reporting Model 2 FFI. Please also refer to the section FATCA and compliance with US withholding requirements in this Prospectus for further details on FATCA and related risks. All prospective investors and Unitholders should consult with their own legal or tax advisors regarding the potential implications of FATCA and the tax consequences on their investments in a Sub-Fund. Unitholders who hold their Units through intermediaries should also confirm the FATCA compliance status of those intermediaries. 2. A new section titled FATCA AND COMPLIANCE WITH US WITHHOLDINGS REQUIREMENTS is inserted on page 78 of the Prospectus as the last section of Part 1 of the Prospectus: FATCA AND COMPLIANCE WITH US WITHHOLDINGS REQUIREMENTS The US Hiring Incentives to Restore Employment Act (the HIRE Act ) was signed into US law in March 2010 and includes provisions commonly referred to as the Foreign Account Tax Compliance Act or FATCA. Broadly, the FATCA provisions are set out in sections 1471 to 1474 of the US Internal Revenue Code of 1986, as amended (the Revenue Code ), which impose a new reporting regime with respect to financial accounts held by Specified US Persons with FFIs, such as the Trust and each Sub-Fund. US source withholdable payments, including US source interest and dividends paid from securities of US issuers and gross proceeds from the sale of such securities made to a financial account may be subject to withholding at a rate of 30%, unless the account holders provide sufficient information to the financial institutions to enable the financial institutions to identify such account holder's FATCA classification. To avoid such withholding on payments received, FFIs (including banks, brokers, custodians and investment funds) such as the Trust and each Sub-Fund located in jurisdictions that have not signed intergovernmental agreements for implementation of FATCA (each an IGA ), will be required to register and enter into an agreement (an FFI Agreement ) with the IRS to be treated as a participating FFI (but see paragraph below regarding IGA status of Hong Kong). Participating FFIs are required to identify all investors that are Specified US Persons and report certain information concerning such Specified US Persons to the IRS. The FFI Agreement will also generally require that a participating FFI deduct and withhold 2
30% from US source withholdable payments made by the participating FFI to investors who fail to cooperate with certain information requests made by the participating FFI. Moreover, participating FFIs are required to deduct and withhold such US source withholdable payments made to investors that are themselves FFIs but that have not entered into an FFI Agreement with the IRS and that are not otherwise exempt or deemed as compliant with FATCA. FATCA withholding generally applies to (i) payments of US source income, including US source dividends and interest, made after 30 June 2014; and (ii) payments of gross proceeds of sale or other disposal of property that can produce US source income after 31 December 2016. The 30% withholding could also apply to payments otherwise attributable to US source income (also known as foreign passthru payments ) starting no earlier than 1 January 2017, though the US tax rules on foreign passthru payments are currently pending. Withholding agents (which includes participating FFIs) will generally be required to begin withholding on US source withholdable payments made after 30 June 2014. The first reporting deadline for information on relevant financial accounts (e.g. account held by Specified US Persons) for FFIs that have entered into the FFI Agreement will be 31 March 2015 with respect to information relating to the 2014 calendar year. The United States and a number of other jurisdictions have entered into IGAs. The United States Department of the Treasury and Hong Kong have on 9 May 2014 in substance agreed to enter into an intergovernmental agreement based on the Model 2 format ( Model 2 IGA ). According to a previous announcement of the IRS, an agreement in substance is considered to be effective as long as the parties sign the agreement by 31 December 2014. The Model 2 IGA modifies the foregoing requirements but generally requires similar procedures on identifying account holders FATCA classification, and disclosing information to the IRS. A Reporting Model 2 FFI complying with the terms of an FFI Agreement (i) will generally not be subject to the above described 30% withholding tax; and (ii) will generally not be required to withhold tax on payments made to investors who fail to provide certain requested information, but may be required to withhold tax on certain payments made to non-compliant FFIs. However, there can be no assurance that a Model 2 IGA or any IGA will be entered into between Hong Kong and the United States. As such, the effects which the FATCA provisions may have on the Trust and each Sub-Fund are still uncertain. Further, even if such an IGA is reached between Hong Kong and the United States, withholding may continue to apply to US source withholdable payments made to the Trust and the Sub-Funds if the Trust and each Sub-Fund cannot satisfy the applicable requirements and is determined to be non-fatca compliant. The Manager has registered with the IRS as a sponsoring entity for funds under its management, and has agreed to perform, on behalf of the sponsored investment entities, all due diligence, reporting and other relevant FATCA requirements. The Manager has a Global Intermediary Identification Number of ILEIIQ.00000.SP.344. The Trust and the Sub-Funds are registered deemed compliant FFIs sponsored by the Manager. In order to protect Unitholders and avoid being subject to withholding under FATCA, it is the Manager s and the Trustee s intention to endeavour to satisfy the requirements imposed under FATCA. Hence it is possible that this may require the Trust (through its agents or service providers) as far as legally permitted, to report information on the holdings or investment returns of any Unitholder to the IRS or the local authorities pursuant to the terms of an applicable IGA (as the case may be) and to require the compulsory redemption of Unitholders who fail to provide the information and documents required to identify their status, or who are non-fatca compliant financial institutions or who fall within other categories specified in the FATCA provisions and regulations. Any such compulsory redemption will be done in accordance with applicable laws and regulations, and the discretion to do so will be exercised by the Manager in consultation with the Trustee acting in good faith and on reasonable grounds. As at the date of this Prospectus, all Units in the Sub-Funds are registered in the name of HKSCC Nominees 3
Limited. It is the Manager s understanding that HKSCC Nominees Limited is registered as a reporting FFI under the Model 2 IGA. Although the Trust and the Sub-Funds will attempt to satisfy any obligations imposed on them to avoid the imposition of FATCA withholding tax, no assurance can be given that the Trust and the Sub-Funds will be able to fully satisfy these obligations. If any Sub-Fund becomes subject to a withholding tax as a result of FATCA, the Net Asset Value of such Sub-Fund may be adversely affected and such Sub-Fund and its Unitholders may suffer material loss. The FATCA provisions are complex and certain implications may be uncertain at this time. The above description is provided based in part on regulations, official guidance and model IGAs currently available, all of which are subject to change or may be implemented in a materially different form. Nothing in this section constitutes or purports to constitute tax advice and Unitholders should not rely on any information set out in this section for the purposes of making any investment decision, tax decision or otherwise. All Unitholders should therefore consult their own tax and professional advisors regarding the FATCA requirements, possible implications and related tax consequences with respect to their own situation. In particular, Unitholders who hold their Units through intermediaries should confirm the FATCA compliance status of those intermediaries to ensure that they do not suffer the above mentioned withholding tax on their investment returns. 3. The fourth paragraph under each section entitled What is the RQFII regime? on page 81 (in Appendix 1) and on page 120 (in Appendix 2) of the Prospectus is deleted in its entirety. 4. The paragraph under each sub-section of RQFII quota risk on page 86 (in Appendix 1) and page 125 (in Appendix 2) of the Prospectus is deleted in its entirety and replaced with the following: The Sub-Fund will utilise the Manager s RQFII quota granted under the RQFII Regulation. This RQFII quota is limited and may be reached. Furthermore, the Manager has the flexibility to allocate its RQFII quota granted by SAFE across different public open-ended fund products under its management from time to time, or, subject to SAFE s approval, to transfer its RQFII quota between public open-ended funds and other non-public products and/or accounts under its management from time to time. As such, the Sub-Fund will not have exclusive use of a specified amount of RQFII investment quota granted by SAFE to the Manager and will rely on the Manager s management and allocation of such quota between different products. There can be no assurance that the Manager can obtain or allocate sufficient RQFII quota to the Sub-Fund to meet all application for creations. In such event, it may be necessary for the Manager to suspend creations of Units. As a result, the trading price of a Unit on the SEHK may be at a significant premium to the Net Asset Value of each Unit (which may also increase tracking error of the Sub-Fund). 5. The second paragraph under the section entitled General in the Appendix 1: Harvest MSCI China A Index ETF on page 107 of the Prospectus is deleted in Its entirety and replaced with the following: The MSCI China A Index is constructed and maintained under the MSCI Global Investable Market Indices ( GIMI ) Methodology. The MSCI GIMI methodology is a completely rule-based methodology used for the construction of the MSCI Global Equity Index series. As of 30 June 2014, the Index had a free float adjusted market capitalisation of RMB4,927 billion and 441 constituents. 4
6. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 1: Harvest MSCI China A Index ETF on page 111 of the Prospectus are deleted in their entirety and replaced with the following: "As at 30 June 2014, the 10 largest constituents of the Index, represented approximately 19.08% of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. Ping An Insurance 2.87% 2. China Merchants Bank 2.79% 3. China Minsheng Bank 2.56% 4. Industrial Bank 1.94% 5. Shanghai Pudong Development Bank 1.88% 6. Citic Securities Co 1.72% 7. Bank of Communications 1.39% 8. China Vanke Co 1.38% 9. Gree Electric Appliances 1.35% 10. Agricultural Bank of China 1.20% 7. The second paragraph under the section entitled General in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 148 of the Prospectus is deleted in deleted in Its entirety and replaced with the following: The Index was launched on 12 November 2012 and had a base level of 1,000 on 30 November 2004. As of 30 June 2014, the Index had a free float adjusted market capitalisation of RMB2,122 billion and 50 constituents. 8. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 150 of the Prospectus are deleted in their entirety and replaced with the following: As at 30 June 2014, the 10 largest constituents of the Index, represented approximately 44.31% of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. Ping An Insurance 6.66% 2. China Merchants Bank 6.47% 3. China Minsheng Bank 5.95% 4. Industrial Bank 4.50% 5. Shanghai Pudong Development Bank 4.38% 6. Citic Securities Co 3.99% 7. Bank of Communications 3.23% 8. China Vanke Co 3.21% 9. Gree Electric Appliances 3.13% 10. Agricultural Bank of China 2.79% The Prospectus may only be distributed if accompanied by this Addendum. Harvest Global Investments Limited as Manager of Harvest MSCI China A Index ETF and Harvest MSCI China A 50 Index ETF Date: 21 July 2014 5
Important: If you are in any doubt about the contents of this Addendum, you should consult your stockbroker, bank manager, solicitor, accountant and other financial adviser for independent financial advice. This Addendum forms an integral part of and should be read in conjunction with the Prospectus of the Sub-Fund dated 30 May 2013 (the Prospectus ). The Manager accepts responsibility for the accuracy of the information contained in this Addendum as being accurate at the date hereof. Harvest MSCI China A Index ETF RMB Counter Stock Code: 83118 HKD Counter Stock Code: 03118 Harvest MSCI China A 50 Index ETF RMB Counter Stock Code: 83136 HKD Counter Stock Code: 03136 (Sub-funds of Harvest Funds (Hong Kong) ETF, a Hong Kong umbrella unit trust, authorised under Section 104 of the Securities and Futures Ordinance (Cap. 571) of Hong Kong SAR) Addendum to the Prospectus The following change to the Prospectus shall apply with effect from 201. 1. The fourth paragraph under the section entitled What is the RQFII regime? in the Appendix 1: Harvest MSCI China A Index ETF on page 81 of the Prospectus is deleted in their entirety and replaced with the following: The Manager has obtained RQFII status and has been granted, on behalf of the Sub-Fund, a RQFII quota of RMB billion. To the extent that the Manager has, on behalf of the Sub-Fund, utilised its entire RQFII quota, the Manager may, subject to any applicable regulations, apply for an increase of the RQFII quota and will make an announcement on its website of its application for additional quota and upon receiving additional quota. 2. The second paragraph under the section entitled General in the Appendix 1: Harvest MSCI China A Index ETF on page 107 of the Prospectus is deleted in deleted in Its entirety and replaced with the following: The MSCI China A Index is constructed and maintained under the MSCI Global Investable Market Indices ( GIMI ) Methodology. The MSCI GIMI methodology is a completely rule-based methodology used for the construction of the MSCI Global Equity Index series. As of ber 2013, the Index had a free float adjusted market capitalisation of RMB5, billion and 462 constituents. 3. The first paragraph and the table under the section entitled Top 10 constituents? in the Appendix 1: Harvest MSCI China A Index ETF on page 111 of the Prospectus are deleted in their entirety and replaced with the following: 1
"As at ber 2013, the 10 largest constituents of the Index, represented approximately 18. 2% of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. China Merchants Bank 2. % 2. China Minsheng Bank 2. % 3. Ping An Insurance 2. % 4. Shanghai Pudong Development Bank 1. % 5. Industrial Bank 1. % 6. CITIC Securities Co 1. % 7. 1. % 8. 1.3 % 9. 1.3 % 10. 1. % 4. The second paragraph under the section entitled General? in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 148 of the Prospectus is deleted in deleted in Its entirety and replaced with the following: The Index was launched on 12 November 2012 and had a base level of 1,000 on 30 November 2004. As of ber 2013, the Index had a free float adjusted market capitalisation of RMB2, billion and 50 constituents. 5. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 150 of the Prospectus are deleted in their entirety and replaced with the following: As at ber 2013, the 10 largest constituents of the Index, represented approximately 4. % of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. China Merchants Bank 6. % 2. China Minsheng Bank 3. Ping An Insurance 5. % 4. Shanghai Pudong Development Bank 4.4 % 5. Industrial Bank 4.4 6. CITIC Securities Co % 7. 3. % 8. 3.1 % 9. 3.0 % 10. 3.0 % The Prospectus may only be distributed if accompanied by this Addendum. Harvest Global Investments Limited as Manager of Harvest MSCI China A Index ETF and Harvest MSCI China A 50 Index ETF Date: 201 2
Important: If you are in any doubt about the contents of this Addendum, you should consult your stockbroker, bank manager, solicitor, accountant and other financial adviser for independent financial advice. This Addendum forms an integral part of and should be read in conjunction with the Prospectus of the Sub-Funds dated 30 May 2013, as amended by an addendum dated 29 January 2014 (together, the Prospectus ). The Manager accepts full responsibility for the accuracy of the information contained in this Addendum as at the date of publication and confirm, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which wold make any statement misleading. Harvest MSCI China A Index ETF RMB Counter Stock Code: 83118 HKD Counter Stock Code: 03118 Harvest MSCI China A 50 Index ETF RMB Counter Stock Code: 83136 HKD Counter Stock Code: 03136 (Sub-funds of Harvest Funds (Hong Kong) ETF, a Hong Kong umbrella unit trust, authorised under Section 104 of the Securities and Futures Ordinance (Cap. 571) of Hong Kong) (collectively, the Sub-Funds ) Addendum to the Prospectus The following change to the Prospectus shall apply with effect from 5 May 2014. 1. The risk factors PRC withholding taxation risk on page 87-88 (in Appendix 1) and page 127 (in Appendix 2) under the sections of Risks Factors Specific to the Sub-Fund in the respective Appendix are deleted in their entirety and each replaced with the following: In light of the uncertainty on the income tax treatment on capital gains and in order to meet this potential tax liability for capital gains, the Manager reserves the right to provide for withholding income tax ( WIT ) on such gains or income and withhold the tax for the account of the Sub-Fund. After careful consideration of the Manager s assessment and having taken and considered independent professional tax advice relating to the Sub- Fund s eligibility to benefit from 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 ), and in accordance with such advice, the Manager holds a view that the Sub-Fund should be regarded as a Hong Kong tax resident for the purpose of the China- HK Arrangement and should be able to enjoy the WIT exemption on capital gains derived from the alienation of the A-Shares of non-immovable properties-rich companies (as defined below) under the China-HK Arrangement. The aforesaid capital gains tax exemption will only apply if approval is obtained from the PRC tax authorities. Before a Hong Kong tax resident can enjoy the relief under the China-HK Arrangement, a Hong Kong Tax Resident Certificate ( HKTRC ) issued by the Inland Revenue Department (the IRD ) should be submitted to the relevant PRC tax authority for this purpose. As at the date of this Addendum, the Sub-Fund has not yet obtained the HKTRC from the IRD. If the PRC tax authorities enforce the collection of WIT on capital gains and require the Sub- 1
Fund to provide a HKTRC in order to obtain the WIT exemption, the Manager will apply for a HKTRC on behalf of the Sub-Fund. In this connection, the Manager, having taken and considered independent professional tax advice and in accordance with such advice, has determined that no WIT provision will be made on the gross realised and unrealised capital gains derived from trading of PRC Securities, except for those capital gains derived from trading of A-Shares issued by PRC tax resident companies which are immovable properties-rich companies (i.e. PRC companies in which 50% or more of their assets are comprised, directly or indirectly, of improvable property situated in the PRC). A 10% provision for WIT will continue to be provided for the gross realised and unrealised capital gains derived by the Sub-Fund from trading of A-Shares issued by PRC tax resident companies which are immovable properties-rich companies. The methodology adopted by the Manager in identifying whether or not PRC tax resident companies are immovable properties-rich companies has been agreed and accepted by the Manager s independent tax adviser. The amount of provision will be disclosed in the financial statements of the Sub-Fund. It should be noted that there are uncertainties in relation to the Manager s determination of WIT provision, including: The China-HK Arrangement may be changed in the future and the Sub-Fund may ultimately be required to pay WIT on capital gains. As at 5 May 2014, the Sub-Fund has not yet obtained the HKTRC from the IRD. If the PRC tax authorities enforce the collection of WIT on capital gains and require the Sub-Fund to provide a HKTRC, the Manager will apply for a HKTRC on behalf of the Sub-Fund. Whether the Manager is able to obtain a HKTRC on behalf of the Sub-Fund is subject to prevailing practice of Hong Kong and/or PRC tax authorities. The Manager may need to apply with the IRD for a HKTRC on behalf of the Sub- Fund on an annual basis, which is subject to the assessment of the IRD. There is a risk that the Manager will not be able to obtain a HKTRC on behalf of the Sub- Fund. To date, the PRC tax authorities have not sought to enforce WIT collection on capital gains derived by RQFIIs such as the Manager for the Sub-Fund. If the PRC tax authorities start to enforce WIT collection on capital gains, the relief under the China-HK Arrangement is still subject to the final approval of the PRC tax authorities and the Manager is not aware of any successful cases for tax treaty capital gain exemption approval for RQFIIs. Even if the Manager, in accordance with independent professional tax advice, believes that the Sub-Fund should be eligible for such relief, the PRC tax authorities may ultimately hold a different view. Due to the limitation to the availability of the public information in the PRC (e.g. in determining whether ownership of an associate company will constitute an immovable properties-rich investment), the information to be adopted by the PRC tax authorities in assessing immovable properties-rich companies may be different from the information used by the Manager in assessing immovable properties-rich companies which may result in different conclusion by the Manager for some A- Share companies to those of the PRC tax authorities. For the above reasons, any WIT provision on capital gains made by the Manager in respect of the Sub-Fund may be less than the Sub-Fund s actual tax liabilities. It should also be noted that there is a possibility of the PRC tax rules being changed and taxes being applied retrospectively. In view of the above uncertainties, investors should note that the level of provision may be inadequate to meet actual PRC tax liabilities on investments made by the Sub-Fund. Consequently, Unitholders may be disadvantaged depending upon the final tax liabilities, the level of provision and when they subscribed and/or redeemed their Units. If the actual tax levied by the State Administration of 2
Taxation is higher than that provided for by the Manager so that there is a shortfall in the tax provision amount, investors should note that the Net Asset Value of the Sub-Fund may be lowered, as the Sub-Fund will ultimately have to bear the full amount of tax liabilities. In this case, the additional tax liabilities will only impact Units in issue at the relevant time, and the then existing Unitholders and subsequent Unitholders will be disadvantaged as such Unitholders will bear, through the Sub-Fund, a disproportionately higher amount of tax liabilities as compared to that borne at the time of investment in the Sub-Fund. On the other hand, the actual tax liabilities may be lower than the tax provision made, in which case those persons who have already redeemed their Units before the actual tax liabilities are determined will not be entitled or have any right to claim any part of such overprovision. As a result, investors may be disadvantaged depending on the final rules of the relevant PRC tax authorities, the level of provision and when they subscribed and/or redeemed their Units. Upon any future resolution of the above-mentioned tax exemption or further changes to tax law or policies, the Manager, will as soon as practicable, make relevant adjustments to the amount of tax provision as it considers necessary. 2. The second to fourth paragraphs under each sub-section of Capital gains in the sections PRC Taxation on page 115 (in Appendix 1) and page 154 (in Appendix 2) are deleted in their entirety and each replaced with the following: Under the China-HK Arrangement, capital gains derived by Hong Kong tax residents from alienation of shares issued by PRC companies may be taxed in the PRC only if the recipient, at any time within 12 months preceding such alienation, had a participation of at least 25% of the capital in that PRC company or if the PRC company is an immovable property-rich company. The Sub-Fund will invest in A-Shares through the Manager s RQFII quota. Due to the Sub-Fund s investment restrictions, the Sub-Fund cannot hold more than 10% of any ordinary shares issued by any single issuer. In such a case, the capital gains derived from the alienation of the shares of non-immovable properties-rich A- Share companies may be exempted from WIT, subject to the approval of the PRC tax authorities. The aforesaid capital gains tax exemption will only apply if approval is obtained from the PRC tax authorities. Before a Hong Kong tax resident can enjoy relief under the China-HK Arrangement, a HKTRC issued by the IRD should be submitted to the relevant PRC tax authority for this purpose. As at 5 May 2014, the Sub-Fund has not yet obtained the HKTRC from the IRD. If the PRC tax authorities enforce the collection of WIT on capital gains and require the Sub-Fund to provide a HKTRC in order to obtain the WIT exemption, the Manager will apply for a HKTRC on behalf of the Sub-Fund. In light of the uncertainty on the income tax treatment on capital gains and in order to meet this potential tax liability for capital gains, the Manager reserves the right to provide for WIT on such gains or income and withhold the tax for the account of the Sub-Fund. The Manager, acting in the best interest of Unitholders, assesses the WIT provisioning approach on an on-going basis. Given the fast development of the RQFII regime together with the Manager s accumulated knowledge about WIT, the Manager reassesses the WIT provisioning approach. After careful consideration of the reassessment and having taken and considered independent professional tax advice relating to the Sub-Fund s eligibility to benefit from the China-HK Arrangement, and in accordance with such advice, the Manager holds a view that the Sub-Fund should be regarded as a Hong Kong tax resident for the purpose of the China-HK Arrangement and should be able to enjoy the WIT exemption on capital gains derived from the alienation of the A-Shares of non-immovable properties-rich companies under the China-HK Arrangement. As such, there is a change in tax provision with respect to the Sub-Fund effective from 5 May 2014 2014. In this connection, the Manager, having taken and considered independent professional tax advice and in accordance with such advice, has determined that no WIT provision will be made on the gross realised and unrealised capital gains derived from trading of PRC Securities, except for those capital gains derived from trading of A-Shares issued by PRC tax resident companies which are immovable properties-rich companies. A 10% provision for WIT will continue to be provided for the gross realised and unrealised capital gains 3
derived by the Sub-Fund from trading of A-Shares issued by PRC tax resident companies which are immovable properties-rich companies. The methodology adopted by the Manager in identifying whether or not PRC tax resident companies are immovable properties-rich companies has been agreed and accepted by the Manager s independent tax adviser. The Manager will continue to make a WIT provision of 10% for the account of the Sub-Fund on dividend and interest if the WIT is not withheld at source. The amount of provision will be disclosed in the financial statements of the Sub-Fund. It should be noted that there are certain uncertainties regarding the Manager s determination of the WIT provisioning approach, including: The China-HK Arrangement may be changed in the future and the Sub-Fund may ultimately be required to pay WIT on capital gains. As at 5 May 2014, the Sub-Fund has not yet obtained the HKTRC from the IRD. If the PRC tax authorities enforce the collection of WIT on capital gains and require the Sub-Fund to provide a HKTRC, the Manager will apply for a HKTRC on behalf of the Sub-Fund. Whether the Manager is able to obtain a HKTRC on behalf of the Sub-Fund is subject to prevailing practice of Hong Kong and/or PRC tax authorities. The Manager may need to apply with the IRD for a HKTRC on behalf of the Sub- Fund on an annual basis, which is subject to the assessment of the IRD. There is a risk that the Manager will not be able to obtain a HKTRC on behalf of the Sub- Fund. To date, the PRC tax authorities have not sought to enforce WIT collection on capital gains derived by RQFIIs such as the Manager for the Sub-Fund. If the PRC tax authorities start to enforce WIT collection on capital gains, the relief under the China-HK Arrangement is still subject to the final approval of the PRC tax authorities and the Manager is not aware of any successful cases for tax treaty capital gain exemption approval for RQFIIs. Even if the Manager, in accordance with independent professional tax advice, believes that the Sub-Fund should be eligible for such relief, the PRC tax authorities may ultimately hold a different view. Due to the limitation to the availability of the public information in the PRC (e.g. in determining whether ownership of an associate company will constitute an immovable properties-rich investment), the information to be adopted by the PRC tax authorities in assessing immovable properties-rich companies may be different from the information used by the Manager in assessing immovable properties-rich companies which may result in different conclusion by the Manager for some A- Share companies to those of the PRC tax authorities. Notwithstanding the above change in tax provisioning approach, persons who have already redeemed their Units in the Sub-Fund before the return of any overprovision to the account of the Sub-Fund will not be entitled or have any right to claim any part of such overprovision. The tax provision made for the account of the Sub-Fund may be excessive or inadequate to meet the actual PRC tax liabilities on investments made by the Sub-Fund. As a result, investors may be advantaged or disadvantaged depending on the final rules of the relevant PRC tax authorities. Upon the availability of a definitive tax assessment or the issue of announcements or regulations by the competent authorities promulgating definitive tax assessment rules, the Manager will, as soon as practicable, make relevant adjustments to the amount of tax provision as it considers necessary. Please refer to the risk factor headed PRC withholding taxation risk under the section Risks Factors Specific to the Sub-Fund in this Appendix for further information in this regard. 3. The second paragraph under the section entitled General in the Appendix 1: Harvest MSCI China A Index ETF on page 107 of the Prospectus is deleted in deleted in Its entirety and replaced with the following: 4
The MSCI China A Index is constructed and maintained under the MSCI Global Investable Market Indices ( GIMI ) Methodology. The MSCI GIMI methodology is a completely rule-based methodology used for the construction of the MSCI Global Equity Index series. As of 3 2014, the Index had a free float adjusted market capitalisation of RMB4,81 billion and 46 constituents. 4. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 1: Harvest MSCI China A Index ETF on page 111 of the Prospectus are deleted in their entirety and replaced with the following: "As at 3 2014, the 10 largest constituents of the Index, represented approximately 18. % of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. China Merchants Bank 2.7 % 2. China Minsheng Bank 2.7 % 3. Ping An Insurance 2. % 4. Shanghai Pudong Development Bank 2.0 % 5. Industrial Bank % 6. Citic Securities Co 1. % 7. Gree Electric Appliances 1. % 8. Bank of Communications 1.3 % 9. China Vanke Co 1.3 % 10. 1. % 5. The second paragraph under the section entitled General in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 148 of the Prospectus is deleted in deleted in Its entirety and replaced with the following: The Index was launched on 12 November 2012 and had a base level of 1,000 on 30 November 2004. As of 3 2014, the Index had a free float adjusted market capitalisation of RMB2,0 billion and 50 constituents. 6. The first paragraph and the table under the section entitled Top 10 constituents in the Appendix 2: Harvest MSCI China A 50 Index ETF on page 150 of the Prospectus are deleted in their entirety and replaced with the following: As at 3 2014, the 10 largest constituents of the Index, represented approximately 43. % of the market capitalisation of the Index based on total shares in issue, were as follows: Rank Constituent Name Weighting (%) 1. China Merchants Bank 6.4 % 2. China Minsheng Bank 6. % 3. Ping An Insurance 5. % 4. Shanghai Pudong Development Bank 4.8 % 5. Industrial Bank 4. % 6. Citic Securities Co 3. % 7. Gree Electric Appliances 3.2 % 8. Bank of Communications 3. % 9. China Vanke Co 3. % 10. 2. % 5
The Prospectus may only be distributed if accompanied by this Addendum. Harvest Global Investments Limited as Manager of Harvest MSCI China A Index ETF and Harvest MSCI China A 50 Index ETF Date: 5 May 2014 6
IMPORTANT INFORMATION This Prospectus relates to the offer in Hong Kong of units (the Units ) in the Harvest Funds (Hong Kong) ETF (the Trust ), an umbrella unit trust established under Hong Kong law by a trust deed dated 27 August 2012 as amended (the Trust Deed ) between Harvest Global Investments Limited (the Manager ) and HSBC Institutional Trust Services (Asia) Limited (the Trustee ). The Trust will have a number of sub-funds (the Sub-Funds or individually a Sub-Fund ). Harvest MSCI China A Index ETF and Harvest MSCI China A 50 Index ETF are the first and second Sub-Fund of the Trust respectively and each of them is an exchange traded fund. The information contained in this Prospectus has been prepared to assist potential investors in making an informed decision in relation to investing in the Sub-Funds. It contains important facts about the Sub-Funds whose Units are offered in accordance with this Prospectus. A product key facts statement which contains the key features and risks of each of the Sub-Funds is also issued by the Manager and such product key facts statement shall form part of this Prospectus, and shall be read, in conjunction with, this Prospectus. The Manager accepts full responsibility for the accuracy of the information contained in this Prospectus and confirms having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement misleading. The Manager also confirms that this Prospectus includes particulars given in compliance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Code on Unit Trusts and Mutual Funds (the Code ) and the Overarching Principles of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products for the purposes of giving information with regard to the Units of the Sub-Funds. Neither the Trustee nor the Listing Agent is responsible for the preparation of this Prospectus. The Trustee and the Listing Agent are not responsible for the contents and shall not be held liable to any person for any information disclosed in this Prospectus, except for the information regarding (as the case may be) the Trustee itself under the paragraph headed The Trustee and Registrar in the section on Management of the Trust and the Listing Agent on page iv and page 65. The Sub-Funds are funds falling within Chapter 8.6 and Appendix I of the Code. The Trust and each Sub-Fund is authorised by the SFC in Hong Kong under Section 104 of the Securities and Futures Ordinance. The SFC takes no responsibility for the financial soundness of the Trust, the Sub-Funds or for the correctness of any statements made or opinions expressed in this Prospectus. SFC authorisation is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. i