_BOCI ETF_AR2015_Cover_v3C

Transcription

1 Annual Report As of 31 December 2015 ETFs World Index Shares ETFs Fund Manager and Report Issuer BOCI-Prudential Asset Management

2 W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF), W.I.S.E.-CSI HK 100 TRACKER TM, W.I.S.E.-SSE 50 CHINA TRACKER, W.I.S.E.-CSI HK LISTED MAINLAND CONSUMPTION TRACKER AND W.I.S.E.-CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUNDS OF WORLD INDEX SHARES ETFs) 300 * * 100 TM 50 ETFs CONTENTS PAGE(S) MANAGEMENT AND ADMINISTRATION 1 REPORT OF THE MANAGER TO THE UNITHOLDERS 2 REPORT OF THE TRUSTEE TO THE UNITHOLDERS 24 INDEPENDENT AUDITORS REPORT 25 AUDITED FINANCIAL STATEMENTS STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 28 STATEMENTS OF FINANCIAL POSITION 33 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 38 STATEMENTS OF CASH FLOWS 43 NOTES TO THE FINANCIAL STATEMENTS 48 W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) 300 * * INVESTMENT PORTFOLIO 97 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS 125 HOLDINGS OF COLLATERAL 172 PERFORMANCE TABLE 173 W.I.S.E.-CSI HK 100 TRACKER TM 100 TM INVESTMENT PORTFOLIO 174 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS 178 PERFORMANCE TABLE 184 W.I.S.E.-SSE 50 CHINA TRACKER 50 INVESTMENT PORTFOLIO 185 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS 188 PERFORMANCE TABLE 194 W.I.S.E.-CSI HK LISTED MAINLAND CONSUMPTION TRACKER INVESTMENT PORTFOLIO 195 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS 197 PERFORMANCE TABLE 200 W.I.S.E.-CSI HK LISTED MAINLAND REAL ESTATE TRACKER INVESTMENT PORTFOLIO 201 STATEMENT OF MOVEMENTS IN PORTFOLIO HOLDINGS 202 PERFORMANCE TABLE 204

3 W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF), W.I.S.E.-CSI HK 100 TRACKER TM, W.I.S.E.-SSE 50 CHINA TRACKER, W.I.S.E.-CSI HK LISTED MAINLAND CONSUMPTION TRACKER AND W.I.S.E.-CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUNDS OF WORLD INDEX SHARES ETFs) 300 * * 100 TM 50 ETFs MANAGEMENT AND ADMINISTRATION MANAGER AND LISTING AGENT BOCI-Prudential Asset Management Limited 27/F, Bank of China Tower 1 Garden Road Central Hong Kong DIRECTORS OF THE MANAGER AND LISTING AGENT Wang Zhongze Mak Tat Cheung Tse Yung Hoi Guy Robert Strapp Julian Christopher Vivian Pull TRUSTEE AND CUSTODIAN BOCI-Prudential Trustee Limited 12/F & 25/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong Standard Chartered Bank (China) Limited 28/F, Standard Chartered Tower 201 Century Avenue Pudong Shanghai China AUDITORS Ernst & Young 22/F, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong REGISTRAR Computershare Hong Kong Investor Services Limited 46/F, Hopewell Centre 183 Queen s Road East Wanchai Hong Kong CONVERSION AND SERVICE AGENT HK Conversion Agency Services Limited 1/F One & Two Exchange Square 8 Connaught Place Central Hong Kong LEGAL ADVISER TO THE MANAGER Baker & McKenzie 23/F, One Pacific Place 88 Queensway Hong Kong 1 27 Guy Robert Strapp Julian Christopher Vivian Pull

4 REPORT OF THE MANAGER TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) 300 * * ETFs Fund Performance The W.I.S.E.- CSI 300 China Tracker * ( * This is a synthetic ETF) ( WISE-CSI300 or the Sub-Fund ) is an indextracking exchange traded fund which seeks to track the performance of the CSI 300 Index (the Underlying Index or CSI300 ). As of 31 December 2015, the net asset value ( NAV ) per unit of the Sub-Fund was HKD with a total of 123,200,000 units outstanding and total assets under management ( AUM ) of HKD 4,446,516, * * ,200,000 AUM 4,446,516,734 The WISE-CSI300 adopts a representative sampling strategy. A summary of the performance of the WISE- CSI300 is shown below Total Return (a) Since Inception (Annualized) (f) (a) (f) CSI 300 (RMB) (b) 7.04% 55.61% -5.33% 9.80% % 1.25% 300 (b) CSI 300 (HKD) (c) 2.13% 51.95% -2.55% 10.78% % 2.99% 300 (c) WISE-CSI300 NAV-to-NAV (d) 2.13% 40.27% -8.24% 7.28% % -0.67% 300 (d) WISE-CSI300 Market-to-Market (e) 2.80% 28.29% % 5.97% % -1.68% 300 (e) as of 31 December 2015 (last dealing date of December, 2015) Past performance figures shown are not indicative of the future performance of the sub-fund. Starting from 1 July 2014, CSI 300 Total Return Index is replaced with CSI 300 Net Total Return Index for index performance calculation. CSI 300 Net Total Return Index is denominated in RMB. For the purpose of performance comparison, index performance is presented in HKD and calculated by referring to the foreign exchange rates for RMB / HKD quoted by Bloomberg Bloomberg RMB (CNY) rate (Tokyo Composite) at 4:00 p.m. Hong Kong time on the corresponding dealing dates (CNY) 2

5 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 300 * * ETFs Fund Performance (continued) (a) Total returns represent the rate that an investor would have earned (or lost) on an investment, assuming reinvestment of all dividends and distributions. (a) (b) The index performance in RMB calculated on a total return basis reflects returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction costs or other expenses, which would reduce performance returns (b) of the sub-fund. (c) The index performance in HKD calculated on a total return basis reflects returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction costs or other expenses, which would reduce performance returns (c) of the sub-fund. (d) (e) The sub-fund performance is calculated in HKD on NAV-to-NAV basis with gross distribution reinvested. Units in the sub-fund are issued and redeemed at NAV. Market returns are calculated in HKD using historical market closing prices, and do not represent the returns you would receive if you traded units at other times. (d) (e) (f) This is the annualized return since the sub-fund inception. The sub-fund inception date is 13 July (f) Source: BOCI-Prudential Asset Management Ltd., China Securities Index Co., Ltd., Bloomberg Fund Activities As of 31 December 2015, there were 123,200,000 units outstanding in the Sub-Fund and the Sub-Fund had exposure to 302 stocks. 123,200, On 20 May 2015, the Manager announced that Fitch Ratings Ltd ( Fitch ) had downgraded Deutsche Bank AG s Longterm Issuer Default Rating ( IDR ) and senior unsecured debt ratings to A from A+ and its Short-term IDR and debt ratings to F1 from F1+. As at the date of that Announcement, the credit ratings of Deutsche Bank AG remained above the minimum credit rating requirement as disclosed in the Prospectus. On 10 June 2015, the Manager further announced that Standard & Poor s Ratings Services ( S&P ) had downgraded the Deutsche Bank AG London s Long-term Issuer Credit Rating to BBB+ from A. As at the date of that Announcement, the credit ratings of Deutsche Bank AG London remained above the minimum credit rating requirement as disclosed in the Prospectus. AG IDR A+A F1+F1 AG AG A BBB+AG With effect from 30 June 2015, the auditors of the Sub-Fund were changed to Ernst & Young. As a result, the information of the Auditors under the section headed PARTIES in the Prospectus of the Sub-Fund was amended. 3

6 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 300 * * ETFs Fund Activities (continued) With effect from 12 August 2015, in addition to investing in A Shares indirectly through AXPs and investing directly in A Shares by the Manager as a QFII on behalf of the Sub- Fund (to the extent of such portion of the Manager s QFII investment quota as the Manager may allocate to the Sub- Fund from time to time), the Sub-Fund may, via the Shanghai-Hong Kong Stock Connect, invest directly in certain eligible A Shares of PRC companies listed on the Shanghai Stock Exchange. Currently, the target aggregate exposure to A Shares through direct investment will not exceed 30% of the Sub-Fund s Net Asset Value. AXP A QFII A QFII A A 30% The Manager revised the Offering Document of the Sub- Fund as follows: (i) amending the section headed Investment Objectives and Policies of the Sub-Fund so as to reflect the Sub- Fund s direct investment in A Shares via the Shanghai- (i) A Hong Kong Stock Connect; (ii) updating the section on Risk Factors and Risk Management Policies to include the additional risk disclosure in relation to direct investment in A Shares via the Shanghai-Hong Kong Stock Connect, e.g. quota limitation, suspension risk, differences in trading day, operational risk, restrictions on selling imposed by front-end monitoring, recalling of eligible stocks, clearing and settlement risk, counterparty risk relating to brokers and regulatory risk etc; (ii) A (iii) updating Appendix I A Share Market in the PRC to include a brief description of the Shanghai-Hong Kong Stock Connect; and (iii) A (iv) updating the relevant disclosure relating to PRC Capital Gain Tax so as to reflect the Sub-Fund s direct investment in A Shares via the Shanghai-Hong Kong Stock Connect. (iv) A On 12 August 2015, the Manager announced that the Manager s initial QFII investment quota of US$90 million allocated to the Sub-Fund has been reduced to US$70.2 million approximately as a result of the Manager s recent repatriation of capital in the approximate sum of US$19.8 million as approved by the State Administration of Foreign Exchange ( SAFE ). 1,980 9,000 QFII 7,020 4

7 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 300 * * ETFs Fund Activities (continued) On 4 November 2015, the Manager further announced that in relation to the Sub-Fund s direct investment in the A Shares through the Manager s QFII investment quota, the Manager s QFII investment quota allocated to the Sub-Fund has been reduced to approximately US$51 million as a result of the Manager s further repatriation of capital in the total sum of approximately US$19.2 million as approved by SAFE. Therefore the Manager may invest up to the approximate sum of US$51 million in acquiring A Shares for the account of the Sub-Fund by using its QFII investment quota. QFIIA 1,920 QFII5,100 QFII 5,100 A In relation to the provision of 10% which has been set aside by the Sub-Fund to meet the potential capital gains tax ( CGT ) liability in respect of the Sub-Fund on capital gains derived from dealings in A Shares acquired by the Manager up to and including 14 November 2014 on behalf of the Sub-Fund through the Manager s QFII investment quota, the Manager has made its tax filings to the PRC tax authorities and has received treaty relief approval in respect of the Sub-Fund. As a result, the Manager has made a positive adjustment of % to the NAV of the Sub- Fund as of 11 November QFII A 10% % Upon finalisation of the CGT liabilities with the PRC tax authority, AXP issuers have determined and agreed with the Sub-Fund the amounts that are required to discharge the Sub-Fund s CGT liabilities on capital gains derived from dealings in A Shares in relation to which the AXPs issued by the AXP issuers were linked (up to and including 14 November 2014) (the Payable Amounts ). The Payable Amounts are less than the CGT provision made. As a result, the Manager has made a positive adjustment of % to the NAV of the Sub-Fund as of 20 November 2015, and a positive adjustment of % to the NAV of the Sub- Fund as of 8 December AXP AXPAXP A % % On 9 December 2015, the Manager announced that Fitch Ratings Ltd ( Fitch ) has downgraded Deutsche Bank AG s Long-term Issuer Default Rating and long-term senior debt ratings to A- from A. As at the date of that Announcement, the credit ratings of Deutsche Bank AG remain above the minimum credit rating requirement as disclosed in the Prospectus. AG AA- AG Please refer to the corresponding public announcements on our company web-site ( for details. ( 5

8 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 300 * * ETFs Index Activities The CSI 300 Index underwent three ongoing event related changes and two regular semi-annual reviews in The details of the index changes are summarized in Figure Shanghai Stock Exchange and China Securities Index Co., Ltd. (CSI) decided to change the new free float methodology with effect from 11 March The new free float rules are listed as follows: (CSI) The previous 10% threshold was increased to 15%, and if the Negotiable Market Cap Ratio was between 0% and 15%, the inclusion factor would be rounded up to the nearest percentage point. The rest of the free float methodology remained unchanged. 10% 15% 0 15% Category-Weighted Chart after Adjustment Negotiable Market Cap Ratio (%) (%) Inclusion Factor (%) (%) 15 (15, 20] (20, 30] (30, 40] (40, 50] (50, 60] (60, 70] (70, 80] >80 nearest higher percentage point Please refer to the corresponding announcements on the CSI web-site ( for details. ( Figure 1 Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 26-Jan May May Jun Jun Jun Hong Yuan Securities Co., Ltd China CNR Corporation Limited Shanghai Oriental Pearl (Group) Co., Ltd Tangshan Jidong Cement Company Limited CPT Technology (Group) Co., Ltd Yantai Chang Yu Pioneer Wine Company Limited Shenwan Hongyuan Group Co., Ltd Lepu Medical Technology (Beijing) Co., Ltd AVIC Aero-engine Controls Co., Limited Oceanwide Co., Ltd Guangdong Electric Power Development Co., Ltd Guangdong Golden Dragon Development Inc. 6

9 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 300 * * ETFs Index Activities (continued) Figure 1 (continued) Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 15-Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Dec Dec Dec Dec Guangdong Advertising Group Co., Ltd Shenzhen Aisidi Co., Ltd Shenzhen MTC Co., Ltd Shijiazhuang Yiling Pharmaceutical Co., Ltd Minmetals Development Co., Ltd Humanwell Healthcare (Group) Co., Ltd Kingfa Sci. and Tech. Co., Ltd Zhejiang Hisun Pharmaceutical Co., Ltd Guizhou Panjiang Refined Coal Co., Ltd Zhangzhou Pientzehuang Pharmaceutical Co., Ltd Fiberhome Telecommunication Technologies Co., Ltd Shanghai Yuyuan Tourist Mart Co., Ltd Harbin Pharmaceutical Group Co., Ltd Chengdu B-ray Media Co., Ltd Neway Valve (Suzhou) Co., Ltd CITIC Guoan Information Industry Co., Ltd Yunnan Copper Co., Ltd Yunnan Tin Co., Ltd Beijing Zhong Ke San Huan High-tech Co., Ltd Guosen Securities Co., Ltd Beijing Ultrapower Software Co., Ltd East Money Information Co., Ltd Leshi Internet Information and Technology Corp., Beijing Wuhan Iron and Steel Company Limited Yingkou Port Liability Co., Ltd Tianjin Port Co., Ltd Orient Securities Company Limited Spring Airlines Co., Ltd The Pacific Securities Co., Ltd China First Heavy Industries Everbright Securities Company Limited China COSCO Company Limited Hainan Mining Co., Ltd Datang International Power Generation Co., Ltd Bohai Leasing Co Ltd Zhongtian Urban Development Group Co Ltd Shanghai 2345 Network Holding Group Co., Ltd Wanda Cinema Line Co., Ltd. 7

10 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF) (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 300 * * ETFs Index Activities (continued) Figure 1 (continued) Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 14-Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Zhejiang NHU Co., Ltd China CAMC Engineering Co., Ltd Beijing Orient Landscape and Ecology Co., Ltd Haining China Leather Market Co., Ltd Beingmate Baby and Child Food Co., Ltd Haisco Pharmaceutical Group Co., Ltd Gansu Yasheng Industrial (Group) Co., Ltd Inner Mongolia Yili Energy Company Limited Jiangxi Hongdu Aviation Industry Co., Ltd Yang Quan Coal Industry (Group) Co., Ltd Yunnan Chihong Zinc and Germanium Co., Ltd Fangda Carbon New Material Co., Ltd Bright Dairy and Food Co., Ltd Shanxi Xinghuacun Fen Wine Factory Co., Ltd Western Mining Co., Ltd Jishi Media Co., Ltd Songcheng Performance Development Co., Ltd Ourpalm Co., Ltd Shanghai Electric Power Co Limited Shandong Hi-speed Company Limited Shanghai Tunnel Engineering Co., Ltd Shanghai Zhangjiang Hi-tech Park Development Co., Ltd Jiangsu Broadcasting Cable Information Network Corporation Limited CECEP Wind-Power Corporation Dongxing Securities Co., Ltd Guotai Junan Securities Co Ltd Guangzhou Automobile Group Co., Ltd CITIC Heavy Industries Co., Ltd Jihua Group Co., Ltd China Merchants Energy Shipping Co., Ltd China National Nuclear Power Co., Ltd Juneyao Airlines Co., Ltd Source: China Securities Index Co., Ltd., Shanghai Stock Exchange, Shenzhen Stock Exchange 8

11 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI HK 100 TRACKER TM (SUB-FUND OF WORLD INDEX SHARES ETFs) 100 TM ETFs Fund Performance The W.I.S.E. CSI HK 100 Tracker TM ( WISE-CSIHK100 or the Sub-Fund ) is an index-tracking exchange traded fund which seeks to track the performance of the CSI Hong Kong 100 Index (the Underlying Index or CSIHK100 ). As of 31 December 2015, the net asset value ( NAV ) per unit of the Sub-Fund was HKD with a total of 24,500,000 units outstanding and total assets under management ( AUM ) of HKD 465,720, TM ,500,000 AUM465,720,726 The WISE-CSIHK100 adopts a representative sampling strategy, and invests in a representative sample of the index securities of the Underlying Index. A summary of the performance of the WISE-CSIHK100 is shown below Total Return (a) in HKD Since Inception (Annualized) (e) (a) (e) CSIHK100 (b) -5.78% 5.31% 6.61% 26.23% % 1.27% 100 (b) WISE-CSIHK100 NAV-to-NAV (c) -6.38% 4.44% 4.55% 25.97% % 0.24% 100 (c) WISE-CSIHK100 Market-to-Market (d) -7.42% 5.03% 3.31% 27.17% % 0.18% 100 (d) as of 31 December 2015 (last dealing date of December, 2015) Past performance figures shown are not indicative of the future performance of the sub-fund. (a) Total returns represent the rate that an investor would have (a) earned (or lost) on an investment, assuming reinvestment of all dividends and distributions. (b) The index performance calculated on a total return basis reflects (b) returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction costs or other expenses, which would reduce performance returns of the sub-fund. (c) Units in the sub-fund are issued and redeemed at NAV. The sub- (c) fund performance is calculated on NAV-to-NAV basis with gross distribution reinvested. (d) Market returns are calculated using historical market closing prices, and do not represent the returns you would receive if you (d) traded units at other times. (e) This is the annualized return since the sub-fund inception. The (e) sub-fund inception date is 13 May Source: BOCI-Prudential Asset Management Ltd., China Securities Index Co., Ltd., Bloomberg 9

12 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI HK 100 TRACKER TM (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 100 TM ETFs Fund Activities As of 31 December 2015, there were 24,500,000 units outstanding in the Sub-Fund and the Sub-Fund had exposure to 101 stocks. 24,500, Pursuant to the Stamp Duty (Amendment) Ordinance 2015, stamp duty for any sale or purchase of ETF units and for any transfer of ETF units traded on the Stock Exchange of Hong Kong Limited was waived with effect from 13 February ETF ETF With effect from 30 June 2015, the auditors of the Sub-Fund were changed to Ernst & Young. As a result, the information of the Auditors under the section headed PARTIES in the Prospectus of the Sub-Fund was amended. A final distribution for the financial year ended 31 December 2015 of HK$0.40 per unit was paid on 26 January The Ex. Distribution Date was 29 December Please refer to the corresponding public announcements on our company web-site ( for details. ( Index Activities The CSI HK 100 Index underwent an ongoing event related change and two regular semi-annual reviews in The details of the index changes are summarized in Figure Shanghai Stock Exchange and China Securities Index Co., Ltd. (CSI) decided to change the new free float methodology with effect from 11 March The new free float rules are listed as follows: (CSI) The previous 10% threshold was increased to 15%, and if the Negotiable Market Cap Ratio was between 0% and 15%, the inclusion factor would be rounded up to the nearest percentage point. The rest of the free float methodology remained unchanged. 10% 15% 0 15% Category-Weighted Chart after Adjustment Negotiable Market Cap Ratio (%) (%) Inclusion Factor (%) (%) 15 (15, 20] (20, 30] (30, 40] (40, 50] (50, 60] (60, 70] (70, 80] >80 nearest higher percentage point

13 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI HK 100 TRACKER TM (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 100 TM ETFs Index Activities (continued) Please refer to the corresponding announcements on the CSI web-site ( for details. ( Figure 1 Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 27-May Jun HK Hutchison Whampoa Limited 1113.HK Cheung Kong Property Limited 0069.HK Shangri-La Asia Limited 0010.HK Hang Lung Group Limited 15-Jun HK The People s Insurance Company (Group) of China Limited 0241.HK Alibaba Health Information Technology Limited 15-Jun HK Tianhe Chemicals Group Limited 0288.HK WH Group Limited 15-Jun HK PRADA S.p.A HK Beijing Enterprises Water Group Limited 15-Jun HK Chow Tai Fook Jewellery Group Limited 0966.HK China Taiping Insurance Company Limited 15-Jun HK Nine Dragons Paper () Limited 1038.HK Cheung Kong Infrastructure Limited 15-Jun HK China Huishan Dairy Company Limited 6808.HK Sun Art Retail Group Limited 14-Dec HK First Pacific Company Limited 0066.HK MTR Corporation Limited 14-Dec HK Tsingtao Brewery Company Limited 1060.HK Alibaba Pictures Group Limited 14-Dec HK SOHO China Limited SOHO 1093.HK CSPC Pharmaceutical Group Limited 14-Dec HK Sihuan Pharmaceutical Group Ltd HK Sino Biopharmaceutical Limited 14-Dec HK ASM Pacific Technology Limited 1336.HK New China Life Insurance Company Ltd. 14-Dec HK China Resources Cement Limited 1800.HK China Communications Construction Company Limited 14-Dec HK FIH Mobile Limited 2020.HK ANTA Sports Products Limited 14-Dec HK GCL-Poly Energy Limited 2313.HK Shenzhou International Group Limited Source: China Securities Index Co., Ltd., HKEx 11

14 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. SSE 50 CHINA TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) 50 ETFs Fund Performance The W.I.S.E.- SSE 50 China Tracker ( WISE-SSE50 or the Sub-Fund ) is an index-tracking exchange traded fund which seeks to provide investment performance (before taxes) that tracks the performance of the SSE 50 Index (the Underlying Index or SSE50 ). As of 31 December 2015, the net asset value ( NAV ) per unit of the Sub-Fund was HKD with a total of 5,600,000 units outstanding and total assets under management ( AUM ) of HKD 118,289, ,600,000 AUM118,289,161 The WISE-SSE50 adopts a representative sampling strategy. The Sub-Fund, at present, invests directly in A Shares via the Shanghai-Hong Kong Stock Connect. A summary of the performance of the WISE-SSE50 is shown below. 50 A 50 Total Return (a) Since Inception (Annualized) (f) (a) (f) SSE50 (RMB) (b) -4.42% 69.34% % 18.10% % 6.53% 50 (b) SSE50 (HKD) (c) -8.73% 65.23% -9.75% 19.19% % 7.35% 50 (c) WISE-SSE50 NAV-to-NAV (d) % 57.60% % 14.33% % 2.01% 50 (d) WISE-SSE50 Market-to-Market (e) -7.34% 52.10% % 11.05% % 2.25% 50 (e) as of 31 December 2015 (last dealing date of December, 2015) It was a synthetic ETF during 15 April 2009 to 11 May Please note that the investment strategy of the Sub-Fund has changed from synthetic replication to physical replication with effect from 12 May Past performance figures shown are not indicative of the future performance of the sub-fund. Starting from 1 July 2014, SSE 50 Total Return Index is replaced with SSE 50 Net Total Return Index for index performance calculation. SSE 50 Net Total Return Index is denominated in RMB. For the purpose of performance comparison, index performance is presented in HKD and calculated by referring to the foreign exchange rates for RMB / HKD quoted by Bloomberg Bloomberg RMB (CNY) rate (Tokyo Composite) at 3:00 p.m. Hong Kong time on the corresponding dealing dates (CNY) 12

15 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. SSE 50 CHINA TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 50 ETFs Fund Performance (continued) (a) Total returns represent the rate that an investor would have (a) earned (or lost) on an investment, assuming reinvestment of all dividends and distributions. (b) The index performance in RMB calculated on a total return basis (b) reflects returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction costs or other expenses, which would reduce performance returns of the sub-fund. (c) The index performance in HKD calculated on a total return basis (c) reflects returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction costs or other expenses, which would reduce performance returns of the sub-fund. (d) The sub-fund performance is calculated in HKD on NAV-to-NAV (d) basis with gross distribution reinvested. Units in the sub-fund are issued and redeemed at NAV. (e) Market returns are calculated in HKD using historical market (e) closing prices, and do not represent the returns you would receive if you traded units at other times. (f) This is the annualized return since the sub-fund inception. The (f) sub-fund inception date is 9 April Source: BOCI-Prudential Asset Management Ltd., China Securities Index Co., Ltd., Bloomberg Fund Activities As of 31 December 2015, there were 5,600,000 units outstanding in the Sub-Fund and the Sub-Fund had exposure to 51 stocks. 5,600,00051 The Sub-Fund changed its investment strategy from synthetic replication (i.e. investing through both the AXP Route and the Direct Investment Route) to physical replication (i.e. investing through Direct Investment Route) (the Change ) in order to achieve its investment objective. The conversion of remaining AXPs to direct purchase of A Shares via Shanghai-Hong Kong Stock Connect was fully completed (i.e. the relevant trades for the Change have fully executed) on 11 May 2015 and the Sub-Fund wholly invests directly in A Shares via the Shanghai-Hong Kong Stock Connect with effect from 12 May 2015 (i.e. the Effective Date). AXP AXP A A With effect from the Effective Date, the name of the Sub- Fund was changed from W.I.S.E. SSE 50 China Tracker * (*This is a synthetic ETF) to W.I.S.E. SSE 50 China Tracker. The stock short name of the Sub-Fund changed from X WISE SSE50ETF to WISE SSE50ETF with effect from the next Hong Kong trading day following the Effective Date. 50 * 50 X

16 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. SSE 50 CHINA TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 50 ETFs Fund Activities (continued) Further information regarding the Sub-Fund s direct investment was reflected in the latest Prospectus and Product Key Facts Statement of the Sub-Fund, which incorporated other updates and amendments, including: 1. amendment relating to Dealing Deadline for creation and redemption of Units; enhancement of risk disclosure relating to investment via the Shanghai-Hong Kong Stock Connect and addition of disclosure relating to trading quotas under the Shanghai-Hong Kong Stock Connect; and update of the number of constituents listed on Shanghai Stock Exchange and the total market capitalization and the percentage of the total market capitalization of the Shanghai Stock Exchange that the 50 constituent stocks of the SSE 50 Index represent and the top ten holdings of the SSE 50 Index With effect from 30 June 2015, the auditors of the Sub-Fund were changed to Ernst & Young. As a result, the information of the Auditors under the section headed PARTIES in the Prospectus of the Sub-Fund was amended. With effect from 21 August 2015, KGI Securities (Hong Kong) Limited was appointed as a Participating Dealer of the Fund. Upon finalisation of the capital gains tax ( CGT ) liabilities with the PRC tax authority, two AXP issuers have determined and agreed with the Sub-Fund the amounts that are required to discharge the Sub-Fund s CGT liabilities on capital gains (derived from dealings in A Shares in relation to which the AXPs (previously acquired by the Sub-Fund when it was a synthetic ETF) were linked, up to and including 14 November 2014) (the Payable Amounts ). The Payable Amounts are less than the CGT provision made. As a result, the Manager has made a positive adjustment of % to the NAV of the Sub-Fund as of 20 November 2015, and a positive adjustment of % to the NAV of the Sub- Fund as of 8 December AXP AXP A % % Please refer to the corresponding public announcements on our company web-site ( for details. ( 14

17 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. SSE 50 CHINA TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 50 ETFs Index Activities The SSE 50 Index underwent two ongoing event related changes and two regular semi-annual reviews in The details of the index changes are summarized in Figure Shanghai Stock Exchange and China Securities Index Co., Ltd. (CSI) decided to change the new free float methodology with effect from 11 March The new free float rules are listed as follows: (CSI) The previous 10% threshold was increased to 15%, and if the Negotiable Market Cap Ratio was between 0% and 15%, the inclusion factor would be rounded up to the nearest percentage point. The rest of the free float methodology remained unchanged. 10% 15% 0 15% Category-Weighted Chart after Adjustment Negotiable Market Cap Ratio (%) (%) Inclusion Factor (%) (%) 15 (15, 20] (20, 30] (30, 40] (40, 50] (50, 60] (60, 70] (70, 80] >80 nearest higher percentage point Please refer to the corresponding announcements on the CSI web-site ( for details. ( 15

18 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. SSE 50 CHINA TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) 50 ETFs Index Activities (continued) Figure 1 Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 21-May May Jun Jun Jun Jun Jun Dec Dec Dec Dec Dec China CNR Corporation Limited Shanghai Oriental Pearl (Group) Co., Ltd Shanghai Fosun Pharmaceutical (Group) Co., Ltd Guangzhou Baiyunshan Pharmaceutical Company Limited China Avionics Systems Co., Ltd Sanan Optoelectronics Co., Ltd China Hainan Rubber Industry Group Co., Ltd TBEA Co Ltd Guanghui Energy Co., Ltd NARI Technology Co., Ltd Offshore Oil Engineering Co., Ltd Qingdao Haier Co., Ltd AVIC Aviation Engine Corporation PLC Offshore Oil Engineering Co., Ltd Orient Securities Company Limited China Railway Construction Corporation Limited China Railway Group Limited China Communications Construction Company Limited Bank of China Limited GD Power Development Co., Ltd Guotai Junan Securities Co Ltd New China Life Insurance Company Ltd Power Construction Corporation of China, Ltd China National Nuclear Power Co., Ltd. Source: China Securities Index Co., Ltd., Shanghai Stock Exchange 16

19 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND CONSUMPTION TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) ETFs Fund Performance The W.I.S.E. CSI HK Listed Mainland Consumption Tracker ( WISE-CSIMLCT or the Sub-Fund ) is an index-tracking exchange traded fund which seeks to provide investment returns, before fees and expenses, that closely correspond to the performance of the CSI Hong Kong Listed Tradable Mainland Consumption Index (the Underlying Index or CSI HKT Mainland Consumption ). As of 31 December 2015, the net asset value ( NAV ) per unit of the Sub-Fund was HKD with a total of 1,500,000 units outstanding and total assets under management ( AUM ) of HKD 10,143, ,500,000 AUM10,143,093 The WISE-CSIMLCT adopts a representative sampling strategy. A summary of the performance of the WISE- CSIMLCT is shown below. Total Return (a) in HKD (f) (Annualized) (e) Since Inception (a) (f) (e) CSI HKT Mainland Consumption (b) -3.67% % 8.48% 10.42% % -4.56% (b) WISE-CSIMLCT NAV-to-NAV (c) -5.41% % 7.48% 3.24% % -6.59% (c) WISE-CSIMLCT Market-to-Market (d) % % 8.65% 2.05% % -7.59% (d) as of 31 December 2015 (last dealing date of December, 2015) Past performance figures shown are not indicative of the future performance of the sub-fund. (a) Total returns represent the rate that an investor would have earned (or lost) on an investment, assuming reinvestment of all (a) dividends and distributions. (b) The index performance calculated on a total return basis reflects returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction (b) costs or other expenses, which would reduce performance returns of the sub-fund. (c) Units in the sub-fund are issued and redeemed at NAV. The subfund performance is calculated on NAV-to-NAV basis with gross (c) distribution reinvested. (d) Market returns are calculated using historical market closing prices, and do not represent the returns you would receive if you (d) traded units at other times. (e) (f) This is the annualized return since the sub-fund inception. The sub-fund inception date is 7 January The performance shown for 2011 covers the period from the sub-fund inception date to the end of (e) (f) 17

20 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND CONSUMPTION TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) ETFs Fund Performance (continued) Source: BOCI-Prudential Asset Management Ltd., China Securities Index Co., Ltd., Bloomberg Fund Activities As of 31 December 2015, there were 1,500,000 units outstanding in the Sub-Fund and the Sub-Fund had exposure to 47 stocks. 1,500,00047 Pursuant to the Stamp Duty (Amendment) Ordinance 2015, stamp duty for any sale or purchase of ETF units and for any transfer of ETF units traded on the Stock Exchange of Hong Kong Limited was waived with effect from 13 February ETFETF With effect from 30 June 2015, the auditors of the Sub-Fund were changed to Ernst & Young. As a result, the information of the Auditors under the section headed PARTIES in the Prospectus of the Sub-Fund was amended. A final distribution for the financial year ended 31 December 2015 of HK$0.14 per unit was paid on 26 January The Ex. Distribution Date was 29 December Please refer to the corresponding public announcements on our company web-site ( for details. ( Index Activities The CSI Hong Kong Listed Tradable Mainland Consumption Index underwent two regular semi-annual reviews in In particular, the details of the index review are summarized in Figure 1. 1 Shanghai Stock Exchange and China Securities Index Co., Ltd. (CSI) decided to change the new free float methodology with effect from 11 March The new free float rules are listed as follows: (CSI) The previous 10% threshold was increased to 15%, and if the Negotiable Market Cap Ratio was between 0% and 15%, the inclusion factor would be rounded up to the nearest percentage point. The rest of the free float methodology remained unchanged. 10% 15% 0 15% 18

21 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND CONSUMPTION TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) ETFs Index Activities (continued) Category-Weighted Chart after Adjustment Negotiable Market Cap Ratio (%) (%) Inclusion Factor (%) (%) 15 (15, 20] (20, 30] (30, 40] (40, 50] (50, 60] (60, 70] (70, 80] >80 nearest higher percentage point Please refer to the corresponding announcements on the CSI web-site ( for details. ( Figure 1 Deletion Addition Effective Date Stock Code Stock Name Stock Code Stock Name 15-Jun HK V1 Group Limited 0288.HK WH Group Limited 15-Jun HK Shenguan (Group) Limited 0308.HK China Travel International Investment Hong Kong Limited 15-Jun HK Trinity Limited 1999.HK Man Wah Limited 15-Jun HK China Child Care Corporation Limited 6808.HK Sun Art Retail Group Limited 15-Jun HK Labixiaoxin Snacks Group Limited 15-Jun HK Texhong Textile Group Limited 15-Jun HK Hengdeli Limited 15-Jun HK Bosideng International Limited 14-Dec HK Ajisen (China) Limited 1448.HK Fu Shou Yuan International Group Limited 14-Dec HK SinoMedia Holding Limited 2006.HK Shanghai Jin Jiang International Hotels (Group) Company Limited 14-Dec HK Wumart Stores, Inc HK Cosmo Lady (China) Company Limited 14-Dec HK China Yurun Food Group Limited 3836.HK China Harmony New Energy Auto Holding Limited 19

22 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND CONSUMPTION TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) ETFs Index Activities (continued) Figure 1 (continued) Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 14-Dec HK Goodbaby International Limited 14-Dec HK Yashili International Ltd 14-Dec HK Parkson Retail Group Limited Source: China Securities Index Co., Ltd., HKEx 20

23 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) Fund Performance The W.I.S.E. CSI HK Listed Mainland Real Estate Tracker ( WISE-CSIMLRET or the Sub-Fund ) is an index-tracking exchange traded fund which seeks to provide investment returns, before fees and expenses, that closely correspond to the performance of the CSI Hong Kong Listed Tradable Mainland Real Estate Index (the Underlying Index or CSI HKT Mainland Real Estate ). As of 31 December 2015, the net asset value ( NAV ) per unit of the Sub-Fund was HKD with a total of 2,500,000 units outstanding and total assets under management ( AUM ) of HKD 15,688,270. ETFs ,500,000 AUM15,688,270 The WISE-CSIMLRET adopts a representative sampling strategy. A summary of the performance of the WISE- CSIMLRET is shown below. Total Return (a) in HKD (f) (Annualized) (e) Since Inception (a) (f) (e) CSI HKT Mainland Real Estate (b) 14.29% -3.15% -7.69% 73.89% % 3.36% (b) WISE-CSIMLRET NAV-to-NAV (c) 13.71% -4.15% % 68.88% % 1.08% (c) WISE-CSIMLRET Market-to-Market (d) 4.66% -4.00% -8.50% 49.57% % -0.66% (d) as of 31 December 2015 (last dealing date of December, 2015) Past performance figures shown are not indicative of the future performance of the sub-fund. (a) (b) (c) (d) (e) (f) Total returns represent the rate that an investor would have earned (or lost) on an investment, assuming reinvestment of all dividends and distributions. The index performance calculated on a total return basis reflects returns due to both price changes and dividend income. An investor cannot invest directly in an index and the index performance returns do not reflect management fees, transaction costs or other expenses, which would reduce performance returns of the sub-fund. Units in the sub-fund are issued and redeemed at NAV. The subfund performance is calculated on NAV-to-NAV basis with gross distribution reinvested. Market returns are calculated using historical market closing prices, and do not represent the returns you would receive if you traded units at other times. This is the annualized return since the sub-fund inception. The sub-fund inception date is 7 January The performance shown for 2011 covers the period from the sub-fund inception date to the end of (a) (b) (c) (d) (e) (f) Source: BOCI-Prudential Asset Management Ltd., China Securities Index Co., Ltd., Bloomberg 21

24 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) ETFs Fund Activities As of 31 December 2015, there were 2,500,000 units outstanding in the Sub-Fund and the Sub-Fund had exposure to 25 stocks. 2,500,00025 Pursuant to the Stamp Duty (Amendment) Ordinance 2015, stamp duty for any sale or purchase of ETF units and for any transfer of ETF units traded on the Stock Exchange of Hong Kong Limited was waived with effect from 13 February ETFETF With effect from 30 June 2015, the auditors of the Sub-Fund were changed to Ernst & Young. As a result, the information of the Auditors under the section headed PARTIES in the Prospectus of the Sub-Fund was amended. A final distribution for the financial year ended 31 December 2015 of HK$0.12 per unit was paid on 26 January The Ex. Distribution Date was 29 December Please refer to the corresponding public announcements on our company web-site ( for details. ( Index Activities The CSI Hong Kong Listed Tradable Mainland Real Estate Index underwent two regular semi-annual reviews in The details of the index review are summarized in Figure 1. 1 Shanghai Stock Exchange and China Securities Index Co., Ltd. (CSI) decided to change the new free float methodology with effect from 11 March The new free float rules are listed as follows: (CSI) The previous 10% threshold was increased to 15%, and if the Negotiable Market Cap Ratio was between 0% and 15%, the inclusion factor would be rounded up to the nearest percentage point. The rest of the free float methodology remained unchanged. 10% 15% 0 15% 22

25 REPORT OF THE MANAGER (continued) TO THE UNITHOLDERS OF W.I.S.E. CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUND OF WORLD INDEX SHARES ETFs) (continued) ETFs Index Activities (continued) Category-Weighted Chart after Adjustment Negotiable Market Cap Ratio (%) (%) 15 (15, 20] (20, 30] (30, 40] (40, 50] (50, 60] (60, 70] (70, 80] >80 Inclusion Factor (%) (%) nearest higher percentage point Please refer to the corresponding announcements on the CSI web-site ( for details. ( Figure 1 Deletion 1 Addition Effective Date Stock Code Stock Name Stock Code Stock Name 15-Jun HK New World China Land Limited 0754.HK Hopson Development Limited 15-Jun HK Yuzhou Properties Company Limited 14-Dec HK Hopson Development Limited 2868.HK Beijing Capital Land Limited 14-Dec HK Kaisa Group Ltd HK Sino-Ocean Land Limited 14-Dec HK Dalian Wanda Commercial Properties Co., Ltd. Source: China Securities Index Co., Ltd., HKEx 23

26 REPORT OF THE TRUSTEE TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * This is a synthetic ETF), W.I.S.E.-CSI HK 100 TRACKER TM, W.I.S.E.-SSE 50 CHINA TRACKER, W.I.S.E.-CSI HK LISTED MAINLAND CONSUMPTION TRACKER AND W.I.S.E.-CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUNDS OF WORLD INDEX SHARES ETFs) 300 * * 100 TM 50 ETFs We hereby confirm that, in our opinion, the Manager of W.I.S.E.-CSI 300 China Tracker * ( * This is a synthetic ETF), W.I.S.E.-CSI HK 100 Tracker TM, W.I.S.E.-SSE 50 China Tracker, W.I.S.E.-CSI HK Listed Mainland Consumption Tracker and W.I.S.E.-CSI HK Listed Mainland Real Estate Tracker (the Sub-Funds of World Index Shares ETFs, the Sub-Funds ) has, in all material respects, managed the Sub-Funds in accordance with the provisions of the Trust Deed dated 11 July 2007, as amended, for the year ended 31 December * * 100 TM 50 ETFs For and on behalf of BOCI-Prudential Trustee Limited 18 March

27 INDEPENDENT AUDITORS REPORT TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * THIS IS A SYNTHETIC ETF), W.I.S.E.-CSI HK 100 TRACKER TM, W.I.S.E.-SSE 50 CHINA TRACKER, W.I.S.E.-CSI HK LISTED MAINLAND CONSUMPTION TRACKER AND W.I.S.E.-CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUNDS OF WORLD INDEX SHARES ETFs) 300 * * 100 TM 50 ETFs We have audited the financial statements of W.I.S.E.-CSI 300 China Tracker * ( * This is a synthetic ETF), W.I.S.E.-CSI HK 100 Tracker TM, W.I.S.E.-SSE 50 China Tracker, W.I.S.E.- CSI HK Listed Mainland Consumption Tracker and W.I.S.E.- CSI HK Listed Mainland Real Estate Tracker (collectively the Sub-Funds of World Index Shares ETFs or the Sub-Fund(s) ) set out on pages 28 to 96, which comprise the statements of financial position 31 December 2015, and the statements of profit or loss and other comprehensive income, the statements of changes in net assets attributable to unitholders and the statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. 300 * * 100 TM 50 ETFs Manager s and Trustee s Responsibilities for the Financial Statements The Manager and the Trustee of the Sub-Funds are responsible for the preparation of these financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and are responsible for ensuring that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the Sub-Funds Trust Deed dated 11 July 2007 (the Trust Deed ), as amended, and the relevant disclosure provisions specified in Appendix E of the Code on Unit Trusts and Mutual Funds of the Securities and Futures Commission of Hong Kong (the SFC Code ) and for such internal control as the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. E 25

28 INDEPENDENT AUDITOR S REPORT (continued) TO THE UNITHOLDERS OF W.I.S.E.-CSI 300 CHINA TRACKER * ( * THIS IS A SYNTHETIC ETF), W.I.S.E.-CSI HK 100 TRACKER TM, W.I.S.E.-SSE 50 CHINA TRACKER, W.I.S.E.-CSI HK LISTED MAINLAND CONSUMPTION TRACKER AND W.I.S.E.-CSI HK LISTED MAINLAND REAL ESTATE TRACKER (SUB-FUNDS OF WORLD INDEX SHARES ETFs) (continued) 300 * * 100 TM 50 ETFs Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. We are also required to assess whether the financial statements have been properly prepared, in all material respects, in accordance with the disclosure provisions of the Trust Deed, as amended, and the disclosure requirements specified in Appendix E of the SFC Code. E An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Sub-Funds preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Sub-Funds internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager and the Trustee, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 26