Investment involves risks. Please refer to the Prospectus for details including the risk factors.

1   General investment risk

   The Sub-Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore, investors’ investments in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.

2   Equity market risk

   The Sub-Fund’s investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors.

3   Passive investment risk

   The Sub-Fund is passively managed and the manager will not have the discretion to adapt to market changes due to the inherent investment nature of the Sub-Fund. Declines in the index are expected to result in corresponding decreases in the Sub-Fund’s value.

4   Net dividend yield weight index risk

   The Index is a net dividend yield weighted index whereby the Index constituents are weighted in proportion to their net dividend yield on each review day (but not between each review day) regardless of their size or market capitalisation based on the methodology of the Index. The Sub-Fund by tracking the Index may have relatively large holdings in Index constituents with relatively small market capitalisation than it would have held if tracking a full market capitalisation weighted index, leading to higher risks and potential underperformance.

5   Concentration in high yield stocks and the associated risk

   The Sub-Fund focuses on high dividend stocks listed on the SEHK which subjects it to greater concentration risk. High dividend stocks often belong to specific sectors (including the financial, energy, property and construction sector), which may not be as diversified as the broader market potentially leading to greater exposure to sector-specific risks and market fluctuations. The Sub-Fund may focus its investments in other sectors from time to time. This concentration may lead to increased volatility and risk, particularly if these sectors experience downturns or regulatory changes. Additionally, companies that offer high dividends may, in challenging economic environments, might reduce or suspend dividend payments, in turn impacting the Sub-Fund's performance. There is no assurance that dividends will be declared and paid in respect of the securities comprising the Index, and dividend payment rates in respect of such securities will depend on the performance of the constituent securities of the Index as well as factors beyond the control of the Manager. Whether or not distributions will be made by the Sub-Fund is at the discretion of the Manager taking into account various factors and its own distribution policy. There can be no assurance that the distribution yield of the Sub-Fund is the same as that of the Index.

6   Risk associated with mid-capitalisation companies

   The Sub-Fund may make investments in mid-capitalisation companies. The stocks of such companies may have lower liquidity and their prices are more volatile and susceptible to adverse economic developments than those of larger capitalisation companies in general.

7   Tracking error risk

   The Sub-Fund may be subject to tracking error risk, which is the risk that its performance may not track that of the Index exactly. This tracking error may result from the investment strategy used, and fees and expenses. The Manager will monitor and seek to manage such risk in minimising tracking error. There can be no assurance of exact or identical replication at any time of the performance of the Index.

8   Concentration risk

   The Sub-Fund’s investments are concentrated in Hong Kong. The value of the Sub-Fund may be more volatile than that of a fund having a more diverse portfolio of investments and may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Hong Kong market.

9   Currency risk

   The Sub-Fund's base currency is in HKD but has Units traded in USD and RMB. Secondary market investors may be subject to additional costs or losses associated with fluctuations in the exchange rates between USD, RMB and the base currency and by changes in exchange rate controls when trading Units in the secondary market.

10   Trading risk

   The trading price of the Units on the SEHK is driven by market factors such as the demand and supply of the Units. Therefore, the Units may trade at a substantial premium or discount to the Sub-Fund’s NAV.

   As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Units on the SEHK, investors may pay more than the NAV per Unit when buying Units on the SEHK, and may receive less than the NAV per Unit when selling Units on the SEHK.

   The Units in the RMB counter are RMB denominated securities traded on the SEHK and settled in CCASS. Not all stockbrokers or custodians may be ready and able to carry out trading and settlement of the RMB traded Units. The limited availability of RMB outside the PRC may also affect the liquidity and trading price of the RMB traded Units.

11   Risks relating to securities lending transactions

   Securities lending transactions may involve the risk that the borrower may fail to return the securities lent out in a timely manner. The Sub-Fund may as a result suffer from a loss or delay when recovering the securities lent out. This may restrict the Sub-Fund’s ability in meeting delivery or payment obligations from redemption requests.

   As part of the securities lending transactions, the Sub-Fund must receive cash and/or non-cash collateral of at least 100% of the valuation of the securities lent valued on a daily basis. However, there is a risk of shortfall of collateral value due to inaccurate pricing of the securities lent or change of value of securities lent. This may cause significant losses to the Sub-Fund.  

12   Risks associated with investment in FDI

   Risks associated with FDI include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/component of an FDI can result in a loss significantly greater than the amount invested in the FDI by the Sub-Fund. Exposure to FDI may lead to a high risk of significant loss by the Sub-Fund.

   The Sub-Fund may use FDIs for hedging purposes, and in adverse situations, such hedging may become ineffective and the Sub-Fund may suffer significant loss.

   The Manager may adopt synthetic representative sampling strategy for the Sub-Fund, which may involve investing up to 50% of its NAV in funded total return swaps. In case of swaps, the Sub-Fund may suffer significant loss if a swap counterparty fails to perform its obligations, or in case of insolvency or default of the swap counterparty(ies).

13   Reliance on market maker risk

   Although the Manager will use its best endeavours to put in place arrangements so that at least one market maker will maintain a market for the Units traded in each counter and that at least one market maker to each counter gives not less than 3 months’ notice prior to terminating market making under the relevant market maker agreement, liquidity in the market for the Units may be adversely affected if there is no market maker for the USD, RMB or HKD traded Units. There is also no guarantee that any market making activity will be effective.

   There may be less interest by potential market makers making a market in Units denominated and traded in RMB. Any disruption to the availability of RMB may adversely affect the capability of market makers in providing liquidity for the Units.

14   Multi counter and foreign exchange risks

   If there is any limitation on the level of services by brokers and CCASS participants, unitholders will only be able to trade their Units in the relevant counter on the SEHK, which may inhibit or delay an investor dealing.

   The market price on the SEHK of Units traded in each counter may deviate significantly due to different factors, such as market liquidity, supply and demand in each counter and the exchange rate between HKD and USD or RMB (in both the onshore and the offshore markets). As such, investors may pay more or receive less when buying or selling Units traded in USD or RMB on the SEHK than in respect of Units traded in HKD and vice versa.

   Investors without HKD accounts may buy and sell Units in USD or RMB only. Such investors will not be able to buy or sell Units in HKD and should note that distributions are made in HKD only. As such, investors may suffer a foreign exchange loss and incur foreign exchange associated fees and charges to receive their dividend.

   Not all brokers and CCASS participants may be familiar with the single International Securities Identification Number approach for Multi-counter Eligible Securities adopted in June 2025 or may not be operationally ready, and as such may not be able to (i) buy Units in one counter and to sell Units in the other, or (ii) trade Units in different counters at the same time. This may result in potential settlement failure or delay.

15   Distributions out of/effectively out of capital risk

    Payment of dividends out of capital and/or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to such original investments. Any such distributions may result in an immediate reduction of the NAV per Unit of the Sub-Fund. This may also reduce the capital that the Sub-Fund has available for investment in future and may constrain capital growth.

16   Other currency distribution risk

   All Units will receive distributions in the base currency (HKD) only. In the event that the relevant unitholder has no HKD account, the unitholder may have to bear the fees and charges and/or suffer the foreign exchange losses associated with the conversion of such distribution from HKD to RMB or USD or any other currency. The unitholder may also have to bear bank or financial institution fees and charges associated with the handling of the distribution payment.

17   Differences in dealing arrangements between Listed and Unlisted Classes of Units risk

   Investors of Listed Class of Units and Unlisted Class of Units are subject to different pricing and dealing arrangements. The NAV per Unit of each of the Listed Class of Units and Unlisted Class of Units may be different due to different fees and cost applicable to each class. The trading hours of SEHK applicable to the Listed Class of Units in the secondary market and the dealing deadlines in respect of the Listed Class of Units (on the primary market) or the Unlisted Class of Units are also different.

   Listed Class of Units are traded on the stock exchange in the secondary market on an intraday basis at the prevailing market price (which may diverge from the corresponding NAV), while Unlisted Class of Units are sold through intermediaries based on the Dealing Day-end NAV and are dealt at a single valuation point with no access to intraday liquidity in an open market. Depending on market conditions, investors of the Listed Class of Units may be at an advantage or disadvantage compared to investors of the Unlisted Class of Units.

   In a stressed market scenario, investors of the Unlisted Class of Units could redeem their Units at NAV while investors of the Listed Class of Units in the secondary market could only sell at the prevailing market price (which may diverge from the corresponding NAV) and may have to exit the Sub-Fund at a significant discount. On the other hand, investors of the Listed Class of Units could sell their Units on the secondary market during the day thereby crystallising their positions while investors of the Unlisted Class of Units could not do so in a timely manner until the end of the day.

18   Differences in cost mechanisms between Listed Class of Units and Unlisted Classes of Units risk

   Investors should note that different cost mechanisms apply to Listed Class of Units and Unlisted Classes of Units. For Listed Class of Units, the transaction fee and the duties and charges in respect of creation and realisation applications are paid by the participating dealer applying for or realising such units and/or the Manager. Investors of Listed Class of Units in the secondary market will not bear such transaction fees and duties and charges (but for the avoidance of doubt, may bear other fees, such as SEHK trading fees).

   On the other hand, the subscription and realisaton of Unlisted Classes of Units may be subject to a subscription fee and realisation fee respectively, which will be payable to the Manager by the investor subscribing or realising. In addition, in determining the subscription price and realisation price, the Manager is entitled to add/deduct an amount which it considers represents an appropriate allowance for the fiscal and purchase/sale charges.

   Any or all of these factors may lead to a difference in the NAV of the Listed Class of Units and Unlisted Classes of Units.

19   Termination risk  

   The Sub-Fund may be terminated early under certain circumstances, for example, if the size of the Sub-Fund falls below HKD50,000,000 (or equivalent). Investors may not be able to recover their investments and suffer a loss when the Sub-Fund is terminated.