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 your investment in the Sub-Fund may suffer losses. There is no guarantee of repayment of principal.

2. Risks associated with investment in Qualified Exchange Traded Funds

• Qualified Exchange Traded Funds invested by the Sub-Fund are not actively managed, therefore when there is a decline in the reference index, the Qualified Exchange Traded Funds also decrease in value without any temporary defensive position against market downturns. The Sub-Fund may then lose part or all of its investments in Qualified Exchange Traded Funds.

• The trading prices of units/shares in a Qualified Exchange Traded Fund may differ significantly from the net asset value of the units/shares of such Qualified Exchange Traded Fund due to factors such as fees and expenses, disruptions to creation and realisations of units/shares of the Qualified Exchange Traded Fund, imperfect correlation between the Qualified Exchange Traded Fund’s underlying assets and constituents of its reference index and adjustment to the reference index of the Qualified Exchange Traded Fund. There can be no assurance of an exact or identical replication of the reference index performance by the Qualified Exchange Traded Fund at any given time. A Qualified Exchange Traded Fund’s returns may therefore deviate from that of its reference index and may adversely affect the Sub-Fund’s ability to achieve its investment objective.

• There can be no assurance that an active trading market will exist or maintain for units/shares of a Qualified Exchange Traded Fund on any securities exchange. Qualified Exchange Traded Funds mainly rely on market maker(s) to maintain liquidity in the market for trading their units/shares. The market making activity of Qualified Exchange Traded Funds may not be effective at all times. Sometimes, the market making arrangement of Qualified Exchange Traded Funds may be terminated under the relevant market making agreement. In this case, the liquidity of the Qualified Exchange Traded Funds may be adversely affected and may in turn adversely affect the Sub-Fund’s ability to achieve its investment objective.

• Qualified Exchange Traded Funds may be terminated under certain circumstances in accordance with the provisions of the constitutive documents, for example, the reference index is no longer available for benchmarking or the fund size falls below a minimum threshold. Termination of Qualified Exchange Traded Funds invested by the Sub-fund may adversely affect the Sub-Fund’s ability to achieve its investment objective.

• Synthetic Qualified Exchange Traded Funds typically invest in derivatives to replicate the performance of a reference index. Derivative instruments invested by the synthetic Qualified Exchange Traded Funds may be susceptible to price fluctuations and higher volatility, which may result in large bid and offer spreads with no active secondary market. Also, synthetic Qualified Exchange Traded Funds are subject to the credit risk of the counterparties who issue the derivatives. If the derivative counterparties of a synthetic Qualified Exchange Traded Fund default, the Sub-Fund may suffer substantial losses, or even the full value of its investment in such synthetic Qualified Exchange Traded Fund.

3. Risks relating to investment in derivatives

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

• The Sub-Fund’s investment in futures involves specific risks such as high volatility, leverage and margin risks. In particular for commodities futures, there may be imperfect correlation between the value of the underlying assets and the futures contracts, which may prevent the Sub-Fund from achieving its investment objective. Further, the Sub-Fund may be adversely affected by the costs of rolling the futures position forward (i.e. replacing existing futures contracts that are about to expire with futures contracts that will expire at a later date) due to higher price of the futures price (which is affected by fundamental factors like storage, financing and insurance costs associated with the underlying asset of the commodities futures contracts) than the spot price of the underlying asset.

4. Risk relating to dynamic asset allocation strategy

• The dynamic asset allocation of the Sub-Fund may not achieve the desired results under all circumstances and market conditions.

• The investments of the Sub-Fund may be periodically rebalanced and therefore the Sub-Fund may incur greater transaction costs than a fund with static allocation strategy.

5. Managed volatility strategy risk

• Whilst the Manager will endeavour to manage the Sub-Fund such that the volatility may not exceed the target range, there is no guarantee that such target can be achieved under all market conditions. Investors should note that managing the volatility of the Sub-Fund within the target range does not necessarily mean the Sub-Fund will be subject to lower risk and may still suffer losses. Further, in managing the volatility of the Sub-Fund within the target range, the Sub-Fund may be precluded from fully capturing the upside in rising markets, and hence, underperform a fund not adopting such a strategy in this circumstance.

• Under volatile market conditions, in order to manage the volatility of the Sub-Fund within the target range, the Sub-Fund may need to adjust its portfolio’s asset allocation more frequently, and thus, the Sub-Fund may incur greater transaction costs than a fund not adopting such a strategy.

6. Risks of implementing active currency position

• The Sub-Fund may employ an active currency strategy, which involves taking deliberate positions in foreign currencies separate from the currency exposures of its underlying investments. This strategy is distinct from plain hedging and is intended to generate returns or enhance yield for the Sub-Fund. In implementing active currency positions, the Sub-Fund’s performance may be strongly influenced by movements in foreign exchange rates since the active foreign currencies positions implemented by the Sub-Fund may not be correlated with the other underlying investments held by the Sub-Fund. Thus, the Sub-Fund may suffer a significant or total loss even if there is no loss in the value of the other underlying investments (e.g. equities, fixed income securities, commodities, etc.) held by the Sub-Fund. There is no guarantee or assurance that such strategy/technique will be successful under all market conditions.

• Valuing currency positions involve inherent difficulties. The Manager’s ability to accurately value these positions may be adversely impacted during periods of market illiquidity, volatility, or disruption. If such valuation turns out to be incorrect, this may affect the net asset value calculation of the Sub-Fund.

7. Commodities related exposure risks

• The prices of precious metals including gold, silver and platinum may fluctuate substantially over short period of time, due to a variety of worldwide economic, financial, political factors and/or other factors (e.g. natural disasters, environmental risks and hazards and government control, etc.). Such fluctuations / volatility may adversely affect the Sub-Fund’s performance.

• Oil price is highly volatile and may fluctuate widely and may be affected by numerous events or factors such as oil production and sale, complex interaction of supply and demand of oil, weather, crude oil inventory level and other financial market factors. Under extreme circumstances, oil price may drop to zero or even negative value within a short period of time. The Sub-Fund may therefore suffer substantial loss as a result of its exposure to crude oil.

• The exposure to commodities may present additional risks to the Sub-Fund. There are numerous events and circumstances that can impact commodities markets, including but not limited to, general economic and political conditions; war, other armed conflicts, acts of terrorism and criminality; fire, flood and other natural disasters; actions by governmental authorities, such as increased regulation, enforcement or restraints on trade; actions by a major producer or producers, such as Organization of the Petroleum Exporting Countries; significant changes in supply and demand, which may be sudden and unforeseen; commodity speculation or other disruptive market effects; disruptions in the delivery of commodities and related raw materials; changes in laws affecting energy companies or other commodity-related businesses; and environmental laws and regulation.

8. Risks associated with fixed income securities

Interest rate risk

• The Sub-Fund’s exposure to fixed income securities is subject to interest rate risk. In general, the prices of fixed income securities rise when interest rates fall, whilst their prices fall when interest rates rise.

Credit / Counterparty risk

• The Sub-Fund is exposed to the credit/default risk of issuers of the fixed income securities that the Sub-Fund may invest in.

Downgrading risk

• The credit rating of a fixed income securities or its issuer may subsequently be downgraded. In the event of such downgrading, the value of the Sub-Fund may be adversely affected. The Manager may or may not be able to dispose of the fixed income securities that are being downgraded.

Credit rating risk

• Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuer at all times.

Sovereign debt risk

• The Sub-Fund’s exposure to securities issued or guaranteed by government may be exposed to political, social and economic risks. In adverse situations, the sovereign issuers may not be able or willing to repay the principal and/or interest when due or may restructure such debts. The Sub-Fund may suffer significant losses when there is a default of sovereign debt issuers.

Valuation risk

• Valuation of the Sub-Fund’s investments may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the net asset value calculation of the Sub-Fund.

9. Equity market risk

• The Sub-Fund’s exposure to 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.

10. Risk relating to small-capitalisation / mid-capitalisation companies

• The Sub-Fund may be exposed to securities of small-capitalisation / mid-capitalisation companies. Investing in these securities may expose the Sub-Fund to risks such as greater market price volatility, less publicly available information, lower liquidity and greater vulnerability to fluctuations in the economic cycle than those of larger capitalisation companies in general. Their prices are also more volatile to adverse economic developments than those of larger capitalisation companies in general.

11. Currency risk

• The underlying investments of the Sub-Fund may be denominated in currencies other than the base currency of the Sub-Fund. Also, a class of units of the Sub-Fund may be designated in a currency other than the base currency of the Sub-Fund. The net asset value of the Sub-Fund may be affected unfavourably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls.

12. RMB currency and conversion risk associated with RMB-denominated unit classes

• As regards RMB-denominated unit classes of the Sub-Fund, non-RMB based investors investing in such classes are exposed to foreign exchange risk and there is no guarantee that the value of RMB against the investors’ home currencies will not depreciate. Any depreciation of RMB could adversely affect the value of investor’s investment in the Sub-Fund.

• RMB is currently not freely convertible and is subject to exchange controls and restrictions. Under exceptional circumstances, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB.

• The unit classes denominated in RMB may be valued with reference to the offshore RMB (known as “CNH”) rather than onshore RMB (known as “CNY”). Although CNH and CNY are the same currency, they are traded in different and separate markets which operate independently. As such, CNH does not necessarily have the same exchange rate and may not move in the same direction as CNY. Any divergence between CNH and CNY may adversely impact investors.

13. Risks associated with distribution of dividends out of and/or effectively out of capital

• 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 that original investments. Any such distributions may result in an immediate reduction of the net asset value per unit.

• The distribution amount and net asset value of the currency hedged unit classes may be adversely affected by the differences in the interest rates of the reference currency of the currency hedged unit class and the Sub-Fund’s base currency, resulting in an increase in the amount of distribution that is paid out of capital and hence a greater erosion of capital than other non-currency hedged unit classes.