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CSOP Hang Seng TECH Daily (2X) Leveraged Product Summary

Introduction

• Name: CSOP Hang Seng TECH Index Daily (2x) Leveraged Product, Sub-fund of CSOP Leveraged and Inverse Series.
• Structure: Umbrella Unit Trust established in Hong Kong, managed by CSOP Asset Management Limited, with custody by HSBC Institutional Trust Services (Asia) Limited.
• Launch: 9 December 2020, trading commenced on 10 December 2020 with stock code 7226.
• Strategy: Swap-based synthetic replication tracking the Hang Seng TECH Index, aiming for 2x daily performance.
• Index: Comprises 30 largest HK-listed technology companies with high tech exposure.

Fund Performance

• Dealing NAV: As of 30 June 2021, HKD 7.1249 per unit.
• Assets Under Management: Approximately HKD 1.5 billion.
• NAV Performance: Up to 30 June 2021: -8.03% vs. Index +0.66%. Year-to-date price return of stock (7226): -5.40%.
• Liquidity: High trading activity; June 2021 average daily turnover HKD 71.1M.

Financial Position

• Total Assets: HKD 1,517,569,285.
• Total Liabilities: HKD 91,739,460.
• Net Assets: HKD 1,425,829,825 (200,200,000 units at HKD 7.1249 per unit).

Cash Flow

• Operating Activities: Net cash used HKD 948 million.
• Financing Activities: Net cash generated HKD 1,684 million.
• Cash & Cash Equivalents: HKD 735 million at period end.

Investment Portfolio (Unaudited)

• Key Holdings:
  • Listed ETFs (e.g., HKD Money Market ETF, USD ETF).
  • Quoted debt securities (Hong Kong Treasury Bills).
  • Unlisted Index Swaps (HSTECH SWAP with counterparties like CICC, Societe Generale).
• Derivatives: Unlisted Index Swaps: HKD 4,392,050 (0.31% of net assets).

Risks and Compliance

• Performance Discrepancy: Product aims for daily 2x index performance; long-term divergence is high due to compounding leverage.
• Counterparty Risk: Portfolio involves swaps with major financial institutions; disclosed counterparties include CICC and Societe Generale.
• Regulatory: Subject to HK law, managed by professionals, auditors, and legal counsel.

Governance

• Manager: CSOP Asset Management Limited.
• Trustee: HSBC Institutional Trust Services (Asia) Limited.
• Supervisory: Clifford Chance acting as legal counsel.

Notes

• NAV Fluctuations: Significant fluctuations (e.g., ranges from HKD 6.188 to 13.521 over inception to June 2021).
• Risk Factors: High leverage, aim for short-term gains; risky for investors not hedged against index movement.