CSOP ETF SERIES (An umbrella unit trust established in Hong Kong) CSOP MSCI CHINA A INTERNATIONAL ETF (A sub-fund of CSOP ETF Series) Semi-Annual Report FOR THE PERIOD FROM 23 NOVEMBER 2015 (DATE OF INCEPTION) TO 30 JUNE 2016 RESTRICTED CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) CONTENTS Page Report of the Manager to the Unitholders 1 Condensed Statement of Financial Position 2 Condensed Statement of Comprehensive Income 3 Condensed Statement of Changes in Net Assets Attributable to Unitholders 4 Condensed Statement of Cash Flows 5 Notes to the Unaudited Condensed Financial Statements 6 - 17 Investment Portfolio (Unaudited) 18 - 30 Statement of Movements in Investment Portfolio (Unaudited) 31 - 58 Performance Record (Unaudited) 59 Management and Administration 60 RESTRICTED CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) REPORT OF THE MANAGER TO THE UNITHOLDERS Introduction The CSOP MSCI CHINA A INTERNATIONAL ETF (the “CSOP MSCI China A ETF”), a sub-fund of the CSOP ETF Series, is a unit trust authorised under Section 104 of the Securities and Futures Ordinance (Cap. 571) of Hong Kong. It was launched on 23 November 2015 and commenced trading in RMB under the stock code 83149 on The Stock Exchange of Hong Kong Limited (the “SEHK”) on 26 November 2015; following the SEHK’s dual counter model, the CSOP MSCI China A ETF started trading in HKD under the stock code 03149 on the SEHK on 26 November 2015 too. The CSOP MSCI China A ETF is benchmarked against the MSCI China A International Index and adopts the representative sampling indexing strategy. The Manager and RQFII Holder of the CSOP MSCI China A ETF is CSOP Asset Management Limited (the “Manager”). The trustee is HSBC Institutional Trust Services (Asia) Limited (the “Trustee”). The CSOP MSCI China A ETF is a physical ETF which invests directly in the MSCI China A International Index securities through the RQFII quotas of the Manager. Under current regulations in the PRC, foreign investors can invest in the domestic securities market through certain qualified foreign institutional investors that have obtained status as a QFII or a RQFII from the CSRC and have been granted quota(s) by SAFE to remit foreign freely convertible currencies (in the case of a QFII) and RMB (in the case of a RQFII) into the PRC for the purpose of investing in the PRC’s domestic securities markets. Meanwhile, from November 17, 2014, foreign investors can trade eligible stocks listed in Shanghai Stock Exchange through Shanghai-Hong Kong Stock Connect. The MSCI China A International Index (the “Index”) is compiled and published by MSCI Inc. The MSCI China A International Index captures the large and mid-cap representation and includes A-Shares constituents of the MSCI China All Shares Index. All of the constituents of the Underlying Index are listed on the SSE and the SZSE. The MSCI China All Shares Index is constructed by applying the MSCI Global Investable Market Indexes (GIMI) Methodology on the integrated MSCI China equity universe comprising A-Shares, B-Shares, H-Shares, Red-Chips and P-Chips. The Index operates under clearly defined rules published by the index provider and is a tradable index. Fund Performance The CSOP MSCI China A ETF seeks to provide investment results, before fees and expenses, which closely correspond to the performance of the Index. As of 30 June 2016, the dealing Net Asset Value (“NAV”) per unit of the CSOP MSCI China A ETF was RMB9.7906 and there were 6,200,000 units outstanding. The total asset under management was approximately RMB60.70 million. For the period from inception to 30 June 2016, the dealing NAV of CSOP MSCI China A ETF RMB counter (stock code 83149) performed -18.41% while the index performed -18.68%. The difference in performance between the NAV of the CSOP MSCI China A ETF and the Index is mainly attributed to fees and expenses. Exchange Liquidity Since inception, the CSOP MSCI China A ETF has attracted great investor attention from investors across the globe. The trading value of the RMB counter (stock code: 83149) remained steadily at an average daily turnover of RMB15,408 in June 2016. The trading value of the HKD counter (stock code: 03149) remained steadily at an average daily turnover of HKD73,673 in June 2016. The trading volume for the CSOP MSCI China A ETF reflected strong interest in the CSOP MSCI China A ETF. Portfolio Rebalance The CSOP MSCI China A ETF adopts representative sampling indexing strategy to track the Index. Since inception, the Sub-Fund has experienced three quarterly index rebalances. RESTRICTED 1 CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) CONDENSED STATEMENT OF FINANCIAL POSITION As at 30 June 2016 30 June 2016 (Unaudited) Notes RMB ASSETS NON-CURRENT ASSETS Deposit reserve 28,000 ----------------------- CURRENT ASSETS Investments 6(c),7(a) 59,818,420 Interest receivable 57 Bank balances 6(c) 674,625 ───────────── 60,493,102 ----------------------- Total assets 60,521,102 ----------------------- LIABILITIES CURRENT LIABILITIES Management fee payable 6(a) 36,801 Other accounts payable 69,608 ----------------------- Total liabilities 106,409 ----------------------- EQUITY Net assets attributable to unitholders 3 60,414,693 ═════════════ The notes on pages 6 to 17 form part of these unaudited condensed financial statements. RESTRICTED 2 CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) CONDENSED STATEMENT OF COMPREHENSIVE INCOME For the period from 23 November 2015 (date of inception) to 30 June 2016 Period from 23 November 2015 (date of inception) to 30 June 2016 (Unaudited) Notes RMB INCOME Dividend income 548,504 Interest income 4,819 Net loss on investments 4 (16,571,858) Other income 133,594 ────────────── Total net loss (15,884,941) ------------------------- EXPENSES Management fee 6(a),(b) (307,671) Trustee fee 6(b) (16,441) Transaction costs on investments (119,456) Audit fee (65,425) Safe custody and bank charges (92,530) Establishment costs (351,758) Other operating expenses (280,161) ────────────── Total operating expenses (1,233,442) ------------------------- Operating loss (17,118,383) ------------------------- Taxation 5 (58,024) ------------------------- Total comprehensive loss (17,176,407) ══════════════ The notes on pages 6 to 17 form part of these unaudited condensed financial statements. RESTRICTED 3 CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) CONDENSED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS For the period from 23 November 2015 (date of inception) to 30 June 2016 Period from 23 November 2015 (date of inception) to 30 June 2016 (Unaudited) RMB Net assets attributable to unitholders at the beginning of the period - ------------------------- Proceeds on issue of units 91,892,850 Payments on redemption of units (14,301,750) ────────────── Net increase from unit transactions 77,591,100 ------------------------- Total comprehensive loss for the period (17,176,407) ------------------------ Net assets attributable to unitholders at the end of the period 60,414,693 ══════════════ The notes on pages 6 to 17 form part of these unaudited condensed financial statements. RESTRICTED 4 CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) CONDENSED STATEMENT OF CASH FLOWS For the period from 23 November 2015 (date of inception) to 30 June 2016 Period from 23 November 2015 (date of inception) to 30 June 2016 (Unaudited) RMB OPERATING ACTIVITIES Payments for purchase of investments (99,180,213) Proceeds from sale of investments 22,789,935 Dividend received 548,504 Interest received 4,762 Other income received 133,594 Management fee paid (270,870) Transaction costs paid (119,456) Taxation paid (58,024) Other operating expenses paid (736,707) Deposit reserve paid (28,000) ─────────────── Net cash used in operating activities (76,916,475) --------------------------- FINANCING ACTIVITIES Proceeds on issue of units 91,892,850 Payments on redemption of units (14,301,750) ─────────────── Net cash generated from financing activities 77,591,100 --------------------------- Net increase in cash and cash equivalents 674,625 Cash and cash equivalents at the beginning of the period - ─────────────── Cash and cash equivalents at the end of the period 674,625 ═══════════════ Analysis of balances of cash and cash equivalents Bank balances 674,625 ═══════════════ The notes on pages 6 to 17 form part of these unaudited condensed financial statements RESTRICTED 5 CSOP MSCI CHINA A INTERNATIONAL ETF (A SUB-FUND OF CSOP ETF SERIES) NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS 1. GENERAL INFORMATION CSOP ETF Series (the “Trust”) is an umbrella unit trust governed by its a trust deed dated 25 July 2012, as amended, (the “Trust Deed”) and authorised by the Securities and Futures Commission of Hong Kong (the “SFC”) pursuant to Section 104(1) of the Securities and Futures Ordinance. The terms of the Trust Deed are governed by the laws of Hong Kong. As at 30 June 2016, the Trust has six sub-funds which are CSOP MSCI China A International ETF (the “Sub-Fund”), CSOP FTSE China A50 ETF, CSOP CES China A80 ETF, CSOP MSCI T50 ETF, CSOP SZSE ChiNext ETF and CSOP China CSI 300 Smart ETF. The date of inception of the Sub-Fund was 23 November 2015. The Sub-Fund is listed on The Stock Exchange of Hong Kong Limited. The manager and the trustee of the Sub-Fund are CSOP Asset Management Limited (the “Manager”) and HSBC Institutional Trust Services (Asia) Limited (the “Trustee”) respectively. The investment objective of the Sub-Fund is to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the underlying index, namely, the MSCI China A International Index. In seeking to achieve the investment objective of the Sub-Fund, the Manager will primarily use representative sampling indexing strategy by investing in a representative portfolio of securities that collectively has a high correlation with the underlying index.