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

1.    Risks associated with tokenised class of shares

       Blockchain technology risk

　　 • The blockchain technology is relatively new and is subject to various threats or risks that can adversely impact the Sub-Fund. Notwithstanding the fact that blockchains are secured by means of cryptography, there is a possibility that such security measures can be compromised (for example, blockchain systems can be susceptible to generic network attacks and phishing attacks) and thereby resulting in the unauthorized alteration of the blockchain or the Tokens that may disrupt the operation of the Sub-Fund.

　　 • Furthermore, a blockchain network may experience a “fork” (i.e., “split”) of the network, which would result in the existence of two or more versions of the blockchain network running in parallel with duplication of the same Token, but with each version’s native asset lacking interchangeability, potentially competing with each other for users and other participants. Where a fork occurs in one of the blockchain networks used by the Sub-Fund, the Manager, in consultation with the Custodian and the Tokenisation Provider, will act in the best interest of investors and have the sole discretion to determine which of the resulting blockchain networks will continue to be used in respect of the Sub-Fund’s tokenised shares and which will be discontinued.

　　 • There is also a risk of undiscovered technical flaws associated with systems utilizing blockchain technology. In addition, there is a possibility that new technologies or services that inhibit access to, or utility of, a blockchain may emerge. Blockchain technology may also never be implemented to a scale that provides identifiable  economic benefit.

       Token security risk

　　 • The loss or theft of the private key of an eligible distributor will compromise its digital wallet and expose its corresponding investor(s) to risk of misappropriation of Tokens or inability to access Tokens associated with the wallet. In the event of loss or theft of Tokens, the investors can be fully recovered with the lost or stolen Tokens as the Manager has control over the smart contract and may compel the transfer of the lost or stolen Tokens to a secure address.

       Cybersecurity risk

　　 • The Digital Platform contains the complete transaction history of the tokenised shares and certain data on the blockchain utilised is available to the public. As a result, certain information other than personal identifying information may be publicly accessible by way of tools that are capable of displaying activity on the blockchain. Personal identifying information is maintained separately by the eligible distributors and is not available to the public.

　　 • While each of the Manager and the Tokenisation Provider has put in place adequate policies and measures to counter cybersecurity risks, such policies and measures cannot provide absolute security. The techniques used

to obtain unauthorised access to data and information change frequently and may be difficult to detect for long periods of time. Hardware or software acquired from third parties may also contain defects in design or manufacture or other problems that can unexpectedly compromise information security. In the case of data security breaches where such personal identifying information is exposed to the public, such information can be used to determine a Shareholder’s identity and investing history in the Sub-Fund.

       Delay risk

　　 • Delays in transaction processing can occur on the blockchain utilised for the tokenised shares. For example,

delays can occur when computers on the network are unable to reach a consensus on transactions on the blockchain. During a delay, it will not be possible to record transactions in the shares on the blockchain which may create discrepancies between on-chain and off-chain records, thereby impacting investors’ ability to subscribe or redeem the tokenised shares. Delay risk may have adverse impact on both subscription and redemption processes of the tokenised shares and investors’ receipt of tokenised shares or redemption  proceeds may be delayed.

       Dependence on service providers

　　 • The Manager and the Sub-Fund rely on various parties (including eligible distributors) to facilitate the administration and offering of the tokenised shares through the use of blockchain and blockchain-related

technology and maintain the relevant operating infrastructure (e.g. software, systems and smart contract technology). Such operations may be adversely impacted if any such party ceases to provide the relevant services.

       Regulatory risk

　　 • As the use of blockchain technology is relatively new, Hong Kong regulations regarding blockchain are evolving and subject to development that may negatively impact the operation of the Sub-Fund in relation to the  administration and offering of the tokenised shares.

       Potential challenges in application of existing laws

　　 • There are differences in the way tokenised shares are dealt with and recorded, compared to traditional funds and their means of distribution. This can make the resolution of issues concerning tokenised shares more complex and difficult under existing laws.

       Operational and technical risk

　　 • Smart contracts used for tokenisation may contain coding errors, bugs, or vulnerabilities that could result in loss of Tokens, unauthorised operations, or system failures and may introduce additional security risks.

Integration between traditional fund administration systems and blockchain infrastructure may face operational disruptions. Business continuity plans may prove inadequate in blockchain-specific scenarios.

       Risk associated with virtual asset trading platforms (as distributors)

　　 • The virtual asset trading platforms on which tokenised shares in the Sub-Fund may be offered are relatively newly established. The use of virtual asset trading platforms may expose investors to, amongst other things, counterparty risks of the platform operators and liquidity risks whereby demand of the tokenised shares of the Sub-Fund may be limited and such platforms may impose limits or restrictions on which moneys deposited in

such platforms can be withdrawn (such as minimum withdrawal amount, and daily withdrawal limit).Furthermore, virtual asset trading platforms are also common targets of cybercriminals.

2.    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 the repayment of principal.

3.    Risks associated with fixed income securities (including money market instruments)

        Short-term fixed income securities risk

　　 • The Sub-Fund invests primarily in fixed income securities with short maturities. This means the turnover rates of the Sub-Fund’s investments may be relatively high and the transaction costs incurred as a result of the purchase or sale of such securities may increase which in turn may have a negative impact on the NAV of the Sub-Fund.

        Credit risk

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

       Interest rate risk

　　 • Investment in the Sub-Fund 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.

       Volatility and liquidity risk

　　 • The fixed income securities in some of the markets in which the Sub-Fund invests may be subject to higher volatility and lower liquidity compared to more developed markets. The prices of securities traded in such markets may be subject to fluctuations. The bid and spreads of the price of such securities may be large and the Sub-Fund may incur significant trading costs.

       Credit rating and downgrading risk

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

　　 • The credit rating of a fixed income security 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 agency risk

　　 • The credit appraisal system in the Mainland China and the rating methodologies employed in the Mainland China may be different from those employed in other markets. Credit ratings given by the Mainland China rating agencies may therefore not be directly comparable with those given by other international rating agencies.

       Sovereign debt risk

　　 • The Sub-Fund’s investment in securities issued or guaranteed by governments 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 request the Sub-Fund to participate in restructuring 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 NAV calculation of the Sub-Fund.

4.    Risks associated with bank deposits

Bank deposits are subject to the credit risks of the relevant financial institutions. The Sub-Fund’s deposit may not be protected by any deposit protection schemes, or the value of the protection under the deposit protection schemes may not cover the full amount deposited by the Sub-Fund. Therefore, if the relevant financial institution defaults, the Sub-Fund may suffer losses as a result.

5.    Concentration risk

    The Sub-Fund will invest primarily in USD-denominated and settled instruments. The Sub-Fund is therefore likely to be more volatile than a broad-based fund that adopts a more diversified strategy.

6.    Emerging markets risks

    The Sub-Fund may invest in emerging markets which may involve increased risks and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks/control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility.

7.    Risk associated with urban investment bonds

Urban investment bonds are issued by LGFVs, such bonds are typically not guaranteed by local governments or the central government in Mainland China. In the event that the LGFVs default on payment of principal or interest of the urban investment bonds, the Sub-Fund could suffer substantial loss and the NAV of the Sub-Fund could be adversely affected.

8.    Currency and foreign exchange risk

    Underlying investments of the Sub-Fund may be denominated in currencies other than the base currency of the Sub-Fund. Also, a class of shares may be designated in a currency other than the base currency of the Sub-Fund or the currency of its underlying investment. The NAV of the Sub-Fund may be affected unfavorably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls.

9.    Risk associated with instruments with loss-absorption features

　　 • Fixed income instruments with loss-absorption features are subject to greater risks when compared to traditional debt instruments as such instruments are typically subject to the risk of being written down or  converted to ordinary shares upon the occurrence of a pre-defined trigger event (e.g. when the issuer is near or at the point of non-viability or when the issuer’s capital ratio falls to a specified level), which are likely to be outside of the issuer’s control. Such trigger events are complex and difficult to predict and may result in a significant or total reduction in the value of such instruments.

　　 • In the event of the activation of a trigger, there may be potential price contagion and volatility to the entire asset class. Debt instruments with loss-absorption features may also be exposed to liquidity, valuation and sector concentration risk.

　　 • The Sub-Fund may invest in contingent convertible debt securities, commonly known as CoCos, which are highly complex and are of high risk. Upon the occurrence of the trigger event, CoCos may be converted into shares of the issuer (potentially at a discounted price), or may be subject to the permanent write-down to zero. Coupon payments on CoCos are discretionary and may be cancelled by the issuer at any point, for any reason, and for any length of time.

　　 • The Sub-Fund may invest in senior non-preferred debts. While these instruments are generally senior to subordinated debts, they may be subject to write-down upon the occurrence of a trigger event and will no longer fall under the creditor ranking hierarchy of the issuer. This may result in total loss of principal invested.

10.  Risk associated with differences in dealing and fee arrangements between tokenised class of shares and non-tokenised class(es) of shares

　　 • Dealing arrangements in respect of tokenised class of shares and non-tokenised class(es) of shares are different, the applicable dealing procedures with the eligible distributor (in the case of tokenised class of shares) and the distributor (if applicable, in the case of non-tokenised classes of shares) may be different. Investors should check with the eligible distributor or distributor for the applicable dealing procedures and timing. The NAV per share of each of the tokenised class of shares and non-tokenised class(es) of shares may also be different due to the different fees (such as the management fee and tokenisation fee) applicable to each such class of shares. Any or all of these factors may lead to a difference in the NAV of the tokenised class of shares and non-tokenised class(es) of shares.