Risk disclosures of HSBC investment products

RMB CDs

If you are purchasing RMB denominated CDs, please take note of the following risk factors:

• RMB product will be subject to the risk of exchange rate fluctuation and you may suffer loss in principal.
• The available choice of RMB denominated underlying investments outside PRC is hence limited. These may adversely affect the product return and performance.
• For RMB denominated debt instruments with non-RMB denominated underlying investment, they are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.

• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.

General reminder

• The investment decision is yours but you should not invest in this product unless you are sure that HSBC staff has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
• HSBC has not provided any advice on the source of funds for the investment, including (i) new fund (ii) switching out / redemption of existing product(s), if applicable, this is solely based on your decision. (added on 8 Nov 2020)
  
• Our assessment on product suitability is based on information provided by you and you are responsible for ensuring such information is complete, accurate, up-to-date and not misleading so our assessment is not adversely affected. HSBC will not assume any responsibility for information provided by you. 
  (added on 8 Nov 2020)
• The product is not regulated by the Securities and Futures Commission (the 'SFC'). The offering documents have not been reviewed by the SFC or any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. (added on 12 Aug 2019)
• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.

RISK DISCLOSURE FOR RMB DPS

• RMB investment (whether RMB as Deposit Currency or Linked Currency) will be subject to the risk of exchange rate fluctuation and you may suffer loss in principal.
  
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• This product will be denominated (if Deposit Currency being RMB) and settled (when receive at maturity) in RMB deliverable in Hong Kong, which is different from that of RMB deliverable in Mainland China. CNY or CNH mentioned in the linked currency pair and exchange rate denotes the deliverable CNY in offshore market.

General reminder

• The investment decision is yours but you should not invest in this product unless you are sure that HSBC staff has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
• HSBC has not provided any advice on the source of funds for the investment, including (i) new fund (ii) switching out / redemption of existing product(s), if applicable, this is solely based on your decision. (added on 8 Nov 2020)
  
• Our assessment on product suitability is based on information provided by you and you are responsible for ensuring such information is complete, accurate, up-to-date and not misleading so our assessment is not adversely affected. HSBC will not assume any responsibility for information provided by you. (added on 8 Nov 2020)
• The product is not regulated by the Securities and Futures Commission (the 'SFC'). The offering documents have not been reviewed by the SFC or any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. (added on 12 Aug 2019)
• The offering documents are not intended to provide tax, legal, or other advice. If you are in any doubt, you should obtain independent professional advice.
• The tranche will be launched if accumulated orders reach the launch requirement and pricing of the deposit will be fixed upon the tranche launch date.

RISK DISCLOSURE FOR RMB CPI 3

• RMB investment will be subject to the risk of exchange rate fluctuation and you may suffer loss in principal.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties.
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• The product may suffer significant losses in liquidating the underlying investments, especially if the underlying investments do not have an active secondary market.
• This product (if denominated in RMB) will be denominated and settled in RMB deliverable in Hong Kong, which is different from that of RMB deliverable in Mainland China. CNY or CNH mentioned in the linked currency pair and exchange rate denotes the deliverable CNY in offshore market.

General reminder

• Early sell back prior to maturity is accepted every other Tuesday, or if such day is not a HK business day, the next following day that is a HK business day. Please contact us if you wish to early sell-back.
• If the investment period of your product subscribed is more than 1 year, you have a right to sell back the product to the bank within the post-sales cooling off period (i.e. within 5 business days from and including the order subscription date). You will be able to get back the principal minus any negative market value adjustments and the handling charge (if applicable).
• Secondly, the investment decision is yours but you should not invest in this product unless HSBC staff has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
• HSBC has not provided any advice on the source of funds for the investment, including (i) new fund (ii) switching out / redemption of existing product(s), if applicable, this is solely based on your decision. (added on 8 Nov 2020)
  
• Our assessment on product suitability is based on information provided by you and you are responsible for ensuring such information is complete, accurate, up-to-date and not misleading so our assessment is not adversely affected. HSBC will not assume any responsibility for information provided by you. (added on 8 Nov 2020)
• The Securities and Futures Commission (the 'SFC') has authorized the Equity Linked Investments and offering documents of Equity Linked Investments. The SFC’s authorization does not imply official recommendation or endorsement of Equity Linked Investments, nor does it guarantee the commercial merits of Equity Linked Investments or its performance. (added on 6 Apr 2019)
• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.

Risk disclosure for RMB DCDC ELI

If you are purchasing RMB denominated products, please take note of the following risk factors:

• The product will be denominated and settled in RMB outside PRC. Its exchange rate and interest rate may be different from RMB in PRC.
• The risk of RMB exchange rate fluctuation and the limited availability of RMB outside PRC may adversely affect the market value of the product (including any buy-back price during cooling off period or the bank's bid price for market making arrangements), and you may suffer loss in principal.
• For products which are denominated in a settlement currency other than RMB and linked to reference asset denominated in RMB, if the reference asset is deliverable to investor upon expiry, its value will be subject to the exchange rate fluctuation between the settlement currency and RMB.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• Interest rates for RMB is government controlled. Change in interest rate for RMB in PRC may or may not influence the interest rate for RMB outside PRC. Any interest rate fluctuation for RMB outside PRC may affect the market value of the product.
• If RMB payment obligation could not be satisfied as a result of a CNY disruption event, such payment maybe settled in HKD as soon as practicable without any interest payable for any delay. Such payment will be a complete discharge of our obligations under the product.

Risk disclosure For DCDC ELI Linked To ETF

If you are purchasing products linked to ETF, please take note of the following risk factors:
If the product is linked to or invests in synthetic ETFs, and is associated with the following risks:

• The political, economic, currency and other risks related to the underlying index.
• Synthetic ETF invests in derivatives and customers are exposed to the risks relating to the index, the credit risk and potential contagion of the derivative issuers.
• The market value of the collateral might fall substantially when the issuer seeks to realise the collateral.
• Higher liquidity risk and wider bid-offer spreads are involved if the synthetic ETF involves derivatives which do not have an active secondary market. This may result in losses.
• Failure of the tracking strategy, currency differences, fees and expenses etc may result in the disparity between the performance of the synthetic ETF and the performance of the underlying index.
• Where the index/market that the synthetic ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the synthetic ETF to trade at a higher premium or discount to its net asset value. If the ETF terminates, investors may not be able to recover the premium.

If the product is linked to/invests in ETF, and is associated with the following risks:

• Political, economic, currency and other risks related to the underlying equity(ies), assets or index.
• There may be disparity between the performance of the ETF and the performance of the underlying equity(ies), assets or index.
• Where the index or equity(ies) or assets that the ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the ETF to trade at a premium or discount to its net asset value.

If the product is linked to/invests in REIT, and is associated with the following risks:

• The REIT is exposed to the risks relating to investment in real estate
• There may be disparity between the market price of the units of a REIT and the net asset value per unit.

• This product is linked to units of a China ETF issued and traded outside the PRC which invests directly in A-shares through the RQFII regime and/or the “China Connect”. Investing in this product linked to a China ETF may be riskier than investing in product linked to traditional ETFs.
• The China ETF invests primarily in the PRC markets which involve concentration risk and other risks and special considerations not typically associated with investment in more developed economies or markets, such as greater risks related to political, tax, economic foreign exchange, liquidity, and regulatory.
• The RQFII and China Connect prescribed by the PRC government policy and rules are new and subject to change. The uncertainty and any potential change of the laws and regulations in the PRC may adversely and retrospectively impact the China ETF as well as the product.
• Trading of securities invested by the China ETF under China Connect will subject to a daily quota which does not belong to such China ETF and is utlized on a "first-come-first serve" basis. If the quota is reached, the manager may suspend creation of any China ETF unit. The liquidity of such China ETF may be affected and the China ETF may be trading in premium therefore and render the price of the Product more volatile. (added on 8 Nov 2020)
  
• There are risks and uncertainties associated with the current Chinese tax laws applicable to investment made by China ETF.
• The tax laws, rules, regulations and practice in PRC may subject to change and such change(s) may have retrospective effect. The units of such China ETF could become subject to additional taxation that is not anticipated at the trade date of the product.
• Although the China ETF may have made tax provisions in respect of potential tax liability that may arise from their investments, the provisions may not be sufficient or may even be excessive.
• Any shortfall between the provisions and the actual tax liabilities may have to be covered by the China ETF’s assets and may adversely affect the China ETF’s value.
• In addition, any changes in tax policies of the PRC government may reduce the after-tax profits of the companies in PRC which the China ETF invests in and may adversely affect the net asset value of such China ETF which in turn may adversely affect the market value and/or any potential gain or loss of the product.
• Although the units of the China ETF are listed on the Hong Kong Stock Exchange, there is no guarantee that an active trading market or liquidity of that market can be sustained. Also, the price and trading volume of the units of the China ETF may be highly volatile subject to the market sentiment, and may be more volatile than ETFs with a longer trading history. The risks may have a significant adverse impact on the performance of the units of a China ETF and the value of the product.
• The ETF units are traded in both RMB and HKD under the Exchange’s dual counter model and may involve additional risks. If the product is linked to the HKD traded units, any movement in the trading prices of the RMB traded units should not directly affect the price of the product, and vice versa. The market price on the Hong Kong Stock Exchange of HKD traded units and RMB traded units may deviate significantly due to a number of factors, including market liquidity, RMB conversion risk, currency risk and the demand and supply of each counter.
• Suspension of the inter-counter transfer of units between the HKD counter and the RMB counter for any reason may affect adversely to the price for the product.

General reminder

• Early sell back prior to maturity is accepted every other Tuesday, or if such day is not a HK business day, the next following day that is a HK business day. Please contact us if you wish to early sell-back.
• The investment decision is yours but you should not invest in this product unless HSBC staff has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
• HSBC has not provided any advice on the source of funds for the investment, including (i) new fund (ii) switching out / redemption of existing product(s), if applicable, this is solely based on your decision. (added on 8 Nov 2020)
  
• Our assessment on product suitability is based on information provided by you and you are responsible for ensuring such information is complete, accurate, up-to-date and not misleading so our assessment is not adversely affected. HSBC will not assume any responsibility for information provided by you. (added on 8 Nov 2020)
• The offering documents of the private placement notes provided by the issuer have not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong, and you are advised to exercise caution in relation to the offer. (added on 6 Apr 2019)
  
• The private placement notes is available to Professional Investors only. (added on 6 Apr 2019)
• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.

Risk disclosure for RMB PPN

If you are purchasing RMB denominated products, please take note of the following risk factors:

• The product will be denominated and settled in RMB outside PRC. Its exchange rate and interest rate may be different from RMB in PRC.
• The risk of RMB exchange rate fluctuation and the limited availability of RMB outside PRC may adversely affect the market value of the product (including any buy-back price during cooling off period or the bank's bid price for market making arrangements), and you may suffer loss in principal.
• For products which are denominated in a settlement currency other than RMB and linked to reference asset denominated in RMB, if the reference asset is deliverable to investor upon expiry, its value will be subject to the exchange rate fluctuation between the settlement currency and RMB.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• Interest rates for RMB is government controlled. Change in interest rate for RMB in PRC may or may not influence the interest rate for RMB outside PRC. Any interest rate fluctuation for RMB outside PRC may affect the market value of the product.
• If RMB payment obligation could not be satisfied as a result of a CNY disruption event, such payment maybe settled in HKD as soon as practicable without any interest payable for any delay. Such payment will be a complete discharge of our obligations under the product.

Risk disclosure for PPN linked to ETF

If you are purchasing products linked to ETF, please take note of the following risk factors:
If the product is linked to or invests in synthetic ETFs, and is associated with the following risks:

• The political, economic, currency and other risks related to the underlying index.
• Synthetic ETF invests in derivatives and customers are exposed to the risks relating to the index, the credit risk and potential contagion of the derivative issuers.
• The market value of the collateral might fall substantially when the issuer seeks to realise the collateral.
• Higher liquidity risk and wider bid-offer spreads are involved if the synthetic ETF involves derivatives which do not have an active secondary market. This may result in losses.
• Failure of the tracking strategy, currency differences, fees and expenses etc may result in the disparity between the performance of the synthetic ETF and the performance of the underlying index.
• Where the index/market that the synthetic ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the synthetic ETF to trade at a higher premium or discount to its net asset value. If the ETF terminates, investors may not be able to recover the premium.

• Political, economic, currency and other risks related to the underlying equity(ies), assets or index.
• There may be disparity between the performance of the ETF and the performance of the underlying equity(ies), assets or index.
• Where the index or equity(ies) or assets that the ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the ETF to trade at a premium or discount to its net asset value.
  

• The REIT is exposed to the risks relating to investment in real estate.
• There may be disparity between the market price of the units of a REIT and the net asset value per unit.

• This product is linked to units of a China ETF issued and traded outside the PRC which invests directly in A-shares through the RQFII regime and/or the “China Connect”. Investing in this product linked to a China ETF may be riskier than investing in product linked to traditional ETFs.
• The China ETF invests primarily in the PRC markets which involve concentration risk and other risks and special considerations not typically associated with investment in more developed economies or markets, such as greater risks related to political, tax, economic foreign exchange, liquidity, and regulatory.
• The RQFII and China Connect prescribed by the PRC government policy and rules are new and subject to change. The uncertainty and any potential change of the laws and regulations in the PRC may adversely and retrospectively impact the China ETF as well as the product.
• Trading of securities invested by the China ETF under China Connect will subject to a daily quota which does not belong to such China ETF and is utlized on a "first-come-first serve" basis. If the quota is reached, the manager may suspend creation of any China ETF unit. The liquidity of such China ETF may be affected and the China ETF may be trading in premium therefore and render the price of the Product more volatile. (added on 8 Nov 2020)
  
• There are risks and uncertainties associated with the current Chinese tax laws applicable to investment made by China ETF.
• The tax laws, rules, regulations and practice in PRC may subject to change and such change(s) may have retrospective effect. The units of such China ETF could become subject to additional taxation that is not anticipated at the trade date of the product.
• Although the China ETF may have made tax provisions in respect of potential tax liability that may arise from their investments, the provisions may not be sufficient or may even be excessive.
• Any shortfall between the provisions and the actual tax liabilities may have to be covered by the China ETF’s assets and may adversely affect the China ETF’s value.
• In addition, any changes in tax policies of the PRC government may reduce the after-tax profits of the companies in PRC which the China ETF invests in and may adversely affect the net asset value of such China ETF which in turn may adversely affect the market value and/or any potential gain or loss of the product.
• Although the units of the China ETF are listed on the Hong Kong Stock Exchange, there is no guarantee that an active trading market or liquidity of that market can be sustained. Also, the price and trading volume of the units of the China ETF maybe highly volatile subject to the market sentiment, and may be more volatile than ETFs with a longer trading history. The risks may have a significant adverse impact on the performance of the units of a China ETF and the value of the product.
• The ETF units are traded in both RMB and HKD under the Exchange’s dual counter model and may involve additional risks. If the product is linked to the HKD traded units, any movement in the trading prices of the RMB traded units should not directly affect the price of the product, and vice versa. The market price on the Hong Kong Stock Exchange of HKD traded units and RMB traded units may deviate significantly due to a number of factors, including market liquidity, RMB conversion risk, currency risk and the demand and supply of each counter.
• Suspension of the inter-counter transfer of units between the HKD counter and the RMB counter for any reason may affect adversely to the price for the product.

General reminder

• Early sell back prior to maturity is accepted every other Tuesday, or if such day is not a HK business day, the next following day that is a HK business day. Please contact us if you wish to early sell-back.
• The investment decision is yours but you should not invest in this product unless HSBC staff has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
• HSBC has not provided any advice on the source of funds for the investment, including (i) new fund (ii) switching out / redemption of existing product(s), if applicable, this is solely based on your decision. (added on 8 Nov 2020)
  
• Our assessment on product suitability is based on information provided by you and you are responsible for ensuring such information is complete, accurate, up-to-date and not misleading so our assessment is not adversely affected. HSBC will not assume any responsibility for information provided by you. (added on 8 Nov 2020)
• The offering documents of the private placement notes provided by the issuer have not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong, and you are advised to exercise caution in relation to the offer.
• The private placement notes is available to Professional Investors only.
• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.

Risk disclosure for RMB PPN

If you are purchasing RMB denominated products, please take note of the following risk factors:

• The product will be denominated and settled in RMB outside PRC. Its exchange rate and interest rate may be different from RMB in PRC.
• The risk of RMB exchange rate fluctuation and the limited availability of RMB outside PRC may adversely affect the market value of the product (including any buy-back price during cooling off period or the bank's bid price for market making arrangements), and you may suffer loss in principal.
• For products which are denominated in a settlement currency other than RMB and linked to reference asset denominated in RMB, if the reference asset is deliverable to investor upon expiry, its value will be subject to the exchange rate fluctuation between the settlement currency and RMB.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
  
• Interest rates for RMB is government controlled. Change in interest rate for RMB in PRC may or may not influence the interest rate for RMB outside PRC. Any interest rate fluctuation for RMB outside PRC may affect the market value of the product.
• If RMB payment obligation could not be satisfied as a result of a CNY disruption event, such payment maybe settled in HKD as soon as practicable without any interest payable for any delay. Such payment will be a complete discharge of our obligations under the product.
  

Risk disclosure for PPN linked to ETF

If you are purchasing products linked to ETF, please take note of the following risk factors:
If the product is linked to or invests in synthetic ETFs, and is associated with the following risks:

• The political, economic, currency and other risks related to the underlying index.
• Synthetic ETF invests in derivatives and customers are exposed to the risks relating to the index, the credit risk and potential contagion of the derivative issuers.
• The market value of the collateral might fall substantially when the issuer seeks to realise the collateral.
• Higher liquidity risk and wider bid-offer spreads are involved if the synthetic ETF involves derivatives which do not have an active secondary market. This may result in losses.
• Failure of the tracking strategy, currency differences, fees and expenses etc may result in the disparity between the performance of the synthetic ETF and the performance of the underlying index.
• Where the index/market that the synthetic ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the synthetic ETF to trade at a higher premium or discount to its net asset value. If the ETF terminates, investors may not be able to recover the premium.

• Political, economic, currency and other risks related to the underlying equity(ies), assets or index.
• There may be disparity between the performance of the ETF and the performance of the underlying equity(ies), assets or index.
• Where the index or equity(ies) or assets that the ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the ETF to trade at a premium or discount to its net asset value.

• The REIT is exposed to the risks relating to investment in real estate
• There may be disparity between the market price of the units of a REIT and the net asset value per unit.

• This product is linked to units of a China ETF issued and traded outside the PRC which invests directly in A-shares through the RQFII regime and/or the "China Connect". Investing in this product linked to a China ETF may be riskier than investing in product linked to traditional ETFs.
• The China ETF invests primarily in the PRC markets which involve concentration risk and other risks and special considerations not typically associated with investment in more developed economies or markets, such as greater risks related to political, tax, economic foreign exchange, liquidity, and regulatory.
• The RQFII and China Connect prescribed by the PRC government policy and rules are new and subject to change. The uncertainty and any potential change of the laws and regulations in the PRC may adversely and retrospectively impact the China ETF as well as the product.
• Trading of securities invested by the China ETF under China Connect will subject to a daily quota which does not belong to such China ETF and is utlized on a "first-come-first serve" basis. If the quota is reached, the manager may suspend creation of any China ETF unit. The liquidity of such China ETF may be affected and the China ETF may be trading in premium therefore and render the price of the Product more volatile. (added on 8 Nov 2020)
  
• There are risks and uncertainties associated with the current Chinese tax laws applicable to investment made by China ETF.
• The tax laws, rules, regulations and practice in PRC may subject to change and such change(s) may have retrospective effect. The units of such China ETF could become subject to additional taxation that is not anticipated at the trade date of the product.
• Although the China ETF may have made tax provisions in respect of potential tax liability that may arise from their investments, the provisions may not be sufficient or may even be excessive.
• Any shortfall between the provisions and the actual tax liabilities may have to be covered by the China ETF's assets and may adversely affect the China ETF’s value.
• In addition, any changes in tax policies of the PRC government may reduce the after-tax profits of the companies in PRC which the China ETF invests in and may adversely affect the net asset value of such China ETF which in turn may adversely affect the market value and/or any potential gain or loss of the product.
• Although the units of the China ETF are listed on the Hong Kong Stock Exchange, there is no guarantee that an active trading market or liquidity of that market can be sustained. Also, the price and trading volume of the units of the China ETF may be highly volatile subject to the market sentiment, and may be more volatile than ETFs with a longer trading history. The risks may have a significant adverse impact on the performance of the units of a China ETF and the value of the product.
• The ETF units are traded in both RMB and HKD under the Exchange’s dual counter model and may involve additional risks. If the product is linked to the HKD traded units, any movement in the trading prices of the RMB traded units should not directly affect the price of the product, and vice versa. The market price on the Hong Kong Stock Exchange of HKD traded units and RMB traded units may deviate significantly due to a number of factors, including market liquidity, RMB conversion risk, currency risk and the demand and supply of each counter.
• Suspension of the inter-counter transfer of units between the HKD counter and the RMB counter for any reason may affect adversely to the price for the product.

General reminder

• Early sell back prior to maturity is accepted every other Tuesday, or if such day is not a HK business day, the next following day that is a HK business day. Please contact us if you wish to early sell-back.
• The investment decision is yours but you should not invest in this product unless HSBC staff has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
• HSBC has not provided any advice on the source of funds for the investment, including (i) new fund (ii) switching out / redemption of existing product(s), if applicable, this is solely based on your decision. (added on 8 Nov 2020)
  
• Our assessment on product suitability is based on information provided by you and you are responsible for ensuring such information is complete, accurate, up-to-date and not misleading so our assessment is not adversely affected. HSBC will not assume any responsibility for information provided by you. (added on 8 Nov 2020)
• The offering documents of the private placement notes provided by the issuer have not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong, and you are advised to exercise caution in relation to the offer.
• The private placement notes is available to Professional Investors only.
• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.

Risk disclosure for RMB PPN
If you are purchasing RMB denominated products, please take note of the following risk factors:

• The product will be denominated and settled in RMB outside PRC. Its exchange rate and interest rate may be different from RMB in PRC.
• The risk of RMB exchange rate fluctuation and the limited availability of RMB outside PRC may adversely affect the market value of the product (including any buy-back price during cooling off period or the bank's bid price for market making arrangements), and you may suffer loss in principal.
• For products which are denominated in a settlement currency other than RMB and linked to reference asset denominated in RMB, if the reference asset is deliverable to investor upon expiry, its value will be subject to the exchange rate fluctuation between the settlement currency and RMB.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• Interest rates for RMB is government controlled. Change in interest rate for RMB in PRC may or may not influence the interest rate for RMB outside PRC. Any interest rate fluctuation for RMB outside PRC may affect the market value of the product.
• If RMB payment obligation could not be satisfied as a result of a CNY disruption event, such payment maybe settled in HKD as soon as practicable without any interest payable for any delay. Such payment will be a complete discharge of our obligations under the product.
  

Risk disclosure for PPN linked to ETF
If you are purchasing products linked to ETF, please take note of the following risk factors:
If the product is linked to or invests in synthetic ETFs, and is associated with the following risks:

• The political, economic, currency and other risks related to the underlying index.
• Synthetic ETF invests in derivatives and customers are exposed to the risks relating to the index, the credit risk and potential contagion of the derivative issuers.
• The market value of the collateral might fall substantially when the issuer seeks to realise the collateral.
• Higher liquidity risk and wider bid-offer spreads are involved if the synthetic ETF involves derivatives which do not have an active secondary market. This may result in losses.
• Failure of the tracking strategy, currency differences, fees and expenses etc may result in the disparity between the performance of the synthetic ETF and the performance of the underlying index.
• Where the index/market that the synthetic ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the synthetic ETF to trade at a higher premium or discount to its net asset value. If the ETF terminates, investors may not be able to recover the premium.

• Political, economic, currency and other risks related to the underlying equity(ies), assets or index.
• There may be disparity between the performance of the ETF and the performance of the underlying equity(ies), assets or index.
• Where the index or equity(ies) or assets that the ETF tracks is subject to restricted access, the efficiency in unit creation or redemption may be disrupted, causing the ETF to trade at a premium or discount to its net asset value.

• The REIT is exposed to the risks relating to investment in real estate
• There may be disparity between the market price of the units of a REIT and the net asset value per unit.

• This product is linked to units of a China ETF issued and traded outside the PRC which invests directly in A-shares through the RQFII regime and/or the "China Connect". Investing in this product linked to a China ETF may be riskier than investing in product linked to traditional ETFs.
• The China ETF invests primarily in the PRC markets which involve concentration risk and other risks and special considerations not typically associated with investment in more developed economies or markets, such as greater risks related to political, tax, economic foreign exchange, liquidity, and regulatory.
• The RQFII and China Connect prescribed by the PRC government policy and rules are new and subject to change. The uncertainty and any potential change of the laws and regulations in the PRC may adversely and retrospectively impact the China ETF as well as the product.
• Trading of securities invested by the China ETF under China Connect will subject to a daily quota which does not belong to such China ETF and is utlized on a "first-come-first serve" basis. If the quota is reached, the manager may suspend creation of any China ETF unit. The liquidity of such China ETF may be affected and the China ETF may be trading in premium therefore and render the price of the Product more volatile. (added on 8 Nov 2020)
  
• There are risks and uncertainties associated with the current Chinese tax laws applicable to investment made by China ETF.
• The tax laws, rules, regulations and practice in PRC may subject to change and such change(s) may have retrospective effect. The units of such China ETF could become subject to additional taxation that is not anticipated at the trade date of the product.
• Although the China ETF may have made tax provisions in respect of potential tax liability that may arise from their investments, the provisions may not be sufficient or may even be excessive.
• Any shortfall between the provisions and the actual tax liabilities may have to be covered by the China ETF’s assets and may adversely affect the China ETF’s value.
• In addition, any changes in tax policies of the PRC government may reduce the after-tax profits of the companies in PRC which the China ETF invests in and may adversely affect the net asset value of such China ETF which in turn may adversely affect the market value and/or any potential gain or loss of the product.
• Although the units of the China ETF are listed on the Hong Kong Stock Exchange, there is no guarantee that an active trading market or liquidity of that market can be sustained. Also, the price and trading volume of the units of the China ETF may be highly volatile subject to the market sentiment, and may be more volatile than ETFs with a longer trading history. The risks may have a significant adverse impact on the performance of the units of a China ETF and the value of the product.
• The ETF units are traded in both RMB and HKD under the Exchange’s dual counter model and may involve additional risks. If the product is linked to the HKD traded units, any movement in the trading prices of the RMB traded units should not directly affect the price of the product, and vice versa. The market price on the Hong Kong Stock Exchange of HKD traded units and RMB traded units may deviate significantly due to a number of factors, including market liquidity, RMB conversion risk, currency risk and the demand and supply of each counter.
• Suspension of the inter-counter transfer of units between the HKD counter and the RMB counter for any reason may affect adversely to the price for the product.

RMB Bonds
If you are purchasing RMB denominated bonds, please take note of the following risk factors:

• RMB investment will be subject to the risk of exchange rate fluctuation and you may suffer loss in principal.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
  

High Yield Bonds
If you are subscribing High Yield Bonds. Please take note of the following additional risk disclosure

• High yield bonds are typically rated below investment grade by a credit rating agency, or unrated. Whilst high yield bonds bear a higher yield opportunity than investment grade bonds, they present greater risks of issuer default, liquidity, volatility and non-payment of principal and interest.
• The risk of default on principal and / or interest, is greater for high yield bonds due to higher credit risk of the issuer and lower priority of claim by the bond holders in case of issuer default.
• High yield bonds can sometimes be less liquid than investment-grade bonds, depending on the issuer and the market conditions at any given time. Investors may be difficult to sell the high yield bond before maturity or at prices in line with their expectation compare to listed bond.
• High yield bonds tend to be more vulnerable to economic cycles and changes in the issuer’s financial conditions or business developments. In particular, during economic downturn, such bonds typically fall more in value than investment-grade bonds as the issuer default risk rises and investors become more risk adverse.
• Please be aware the concentration risk of investing in bonds issued by the same issuer or companies by the same group. A degrading of any of the group company's credit rating may expose the whole group to contagion risk. Please be also aware the risk of over concentrating investment in the high risk investment products.
  

General reminder

• Past performance, if any, of the Notes are not indicative of future performance. The Notes are not authorized by the Securities and Futures Commission ("SFC") and the relevant offering documentation provided by the issuer have not been reviewed by the SFC. You are advised to exercise caution in relation to the offer. (Added on 24 Jun 2019)
• The offering documents are not intended to provide tax, legal or other advice. If you are in any doubt, you should obtain independent professional advice.
• Listing of the Notes is not to be taken as an indication of the merits of the Issuer, the Group or the Notes. In making an investment decision, investors must rely on their own examination of the Issuer, the Group and the terms of the offering, including the merits and risks involved. (Added on 9 April 2018)
  

UT – Bond Fund
 

If the fund is a fixed income or bond fund, it will be subject to risks associated with investing in bonds, including:

Credit risk

• Bonds are subject to the risk of the issuer defaulting on its obligations. It should also be noted that credit ratings assigned by credit rating agencies do not guarantee the creditworthiness of the issuer;

Liquidity risk

• Some bonds may not have active secondary markets and it would be difficult or impossible for investors to sell the bond before its maturity; and

Interest rate risk

• Bonds are more susceptible to fluctuations in interest rates and generally prices of bonds will fall when interest rates rise.
• It will be subject to a higher degree of risks if it invests in non-investment grade debt securities, distressed debt securities, defaulted debt securities, emerging market debt securities, mortgage and asset-backed securities, debt securities in a limited number of geographical markets or sectors, contingent convertible securities.

Risk of debt securities issued by Special Purpose Vehicle ("SPVs")

• Investments in debt securities issued by SPVs may expose the Fund to additional risks such as the credit/default risk of both the SPV and its parent company or associated company.
• Investments in debt securities of a subordinated nature issued by SPVs will have a lower priority of claim in the event of the relevant issuer’s liquidation or bankruptcy as they rank behind holders of unsubordinated debt securities but before holders of equity securities and is therefore exposed to higher credit / insolvency risk of its counterparties.

Limited time horizon risk and reinvestment risk

(Added on 24 Jun 2019)

• neither the income nor the capital is guaranteed for investors to invest in the fund with limited time horizon (i.e. up to the Term Date). The fund’s investments may mature prior to the Term Date. The closer the fund is to the Term Date then the greater the investment in replacement shorter-dated securities (with progressively shorter maturities) and cash. Shorter-dated securities or cash may not offer as high a return as the securities they replace. Investors should have regard to the fixed time horizon of the fund in deciding whether investment in the fund is suitable for them.

UT – High Yield Bond Fund
 

Funds that primarily invest in high yield bonds are associated with the following risks:  

Risks associated with investment in high yield bonds, such as 

Higher credit risk 

• since they are typically rated below investment grade or are unrated and as such are often subject to a higher risk of issuer default; 
• Vulnerability to economic cycles 

During economic downturns such bonds typically fall more in value than investment grade bonds as 

(i) investors become more risk averse and (ii) default risk rises.  

• The net asset value of a fund that invests in high-yield bonds may decline or be negatively affected if there is a default of any of the high yield bonds that it invests in or if interest rates change.
• Some high-yield bond funds may have fees and/or dividends paid out of capital.  As a result, the capital that the fund has available for investment in the future and capital growth may be reduced.
• Some high-yield bond funds may not distribute dividends, but instead reinvest the dividends into the fund or alternatively, the investment manager may have discretion on whether or not to make any distribution out of income and/or capital of the fund.  Also, a high distribution yield does not imply a positive or high return on the total investment.
• Other key risks that may relate to the relevant fund including concentration of investments in particular types of specialized debt or a specific geographical region or sovereign securities.

UT – Equity / Balanced Fund

• If the fund is an equity fund and it invests in emerging markets, a single market or a limited number of geographical markets, sectors or smaller cap companies, the fund will be subject to higher degree of risk.
• Balanced fund invests in both fixed income products and equities, will be exposed to risks of both fixed income fund and equity fund as described above.
• If the fund invests in derivatives, it may be subject to higher volatility; counterparty risk and other additional risks may be involved.
• If the fund’s investments are concentrated in Greater China, it involves greater risk of loss than investing in more developed markets due to, among other factors, greater concentration, political, tax, economic, foreign exchange, liquidity, market volatility (such as interest rate and price volatility), legal and regulatory risks.
• If the fund invests in China A-shares and B-shares and make the relevant investment through Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and China A-shares Access Products may involve additional risks.

UT – Hedged Share Class

• Investment in Hedged Classes which do not hedge underlying portfolio currency exposures back to the investor’s own currency may result in the investor taking speculative currency positions which may be volatile and may have a material impact on Unitholders’ returns.
• A Hedged Class aims to manage the currency risk between the base currency and the customer's chosen Class Currency. Investment in Hedged Classes may protect unitholders against a decrease in the value of the base currency relative to the Class Currency, but it may also preclude unitholders from benefiting from an increase in the value of the base currency relative to the Class Currency. 
• There is no guarantee that (a) any hedging objective will be achieved, or (b) any hedging strategy will fully and effectively eliminate the effects of exchange rate fluctuations.
• The Fund’s underlying assets may not be hedged either to the base currency of the Fund or to the Class Currency.   Investors will still be subject to currency risks of any underlying investments in the Fund’s portfolio. Investors should note that the implementation of currency hedging strategies (if the customer has chosen a different Class Currency to the base currency) is distinct from the various currency hedging strategies that the Manager may implement at an overall fund portfolio level to manage risks.

UT – RMB Currency Risk

• RMB investment will be subject to the risk of exchange rate fluctuation and you may suffer loss in principal.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties. 
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• The product may suffer significant losses in liquidating the underlying investments, especially if the underlying investments do not have an active secondary market.
• The Fund offers RMB denominated units of investments. Subscriptions and redemptions for the Fund may involve conversion of currency at the applicable exchange rates. 
• The value of investment is subject to the exchange rate movements between RMB relative to the base currency of the Fund and/or other currency(ies) of the non-RMB-denominated underlying investments.  An investor, may still suffer losses even if there are gains or no losses in the value of the non-RMB-denominated underlying investments and may subject to further losses if the non-RMB-denominated underlying investments falls in value. 
• RMB is not freely convertible and currency conversions are subject to:
  
  a) the funds ability to convert into RMB and its availability of sufficient RMB at time of redemption
  b) possible delays in payment of redemption proceeds or dividends & in case of sizable redemptions the manager has the absolute discretion to delay any payment in respect of redemption of the RMB Classes (up to a maximum of one calendar month from receipt of a properly documented redemption request).
   
  When calculating the net asset value of Units of a RMB denominated Class, the exchange rate for offshore RMB market in Hong Kong, i.e. the CNH exchange rate will be applied, which may be at a premium or discount to the exchange rate for onshore RMB market in the PRC, i.e. the CNY exchange rate, leading to a possible trading costs incurred and investors may suffer losses.
  
  For hedged class denominated in RMB, there is no guarantee that currency hedging between RMB and the base currency will be effective.

UT – Risks associated with Financial Derivative Instruments

(added on 22 Mar 2021)

• Risks associated with financial derivative instruments include counterparty/credit risk, greater liquidity risk, valuation risk and volatility risk.
• The use of derivatives for investment purposes may involve leverage. Leverage can result in a loss significantly greater than the amount invested in derivatives by the Fund leading to a higher risk of significant loss by the Fund.
• Certain derivatives such as derivatives on currencies may be uncorrelated with the underlying securities held by the Fund. In this regard the Fund may suffer significant losses notwithstanding that there may be no loss in respect of the underlying securities positions (predominantly fixed income securities) held by the Fund Concentration risk / Mainland China market risk
• If the fund invests in alternative asset classes including hedge fund strategies, private equity or real estate sectors, the fund will involve higher volatility and liquidity risks.

UT – Bond Fund
 

If the fund is a fixed income or bond fund, it will be subject to risks associated with investing in bonds, including:

Credit risk

• Bonds are subject to the risk of the issuer defaulting on its obligations. It should also be noted that credit ratings assigned by credit rating agencies do not guarantee the creditworthiness of the issuer;

Liquidity risk

• Some bonds may not have active secondary markets and it would be difficult or impossible for investors to sell the bond before its maturity; and

Interest rate risk

• Bonds are more susceptible to fluctuations in interest rates and generally prices of bonds will fall when interest rates rise.
• It will be subject to a higher degree of risks if it invests in non-investment grade debt securities, distressed debt securities, defaulted debt securities, emerging market debt securities, mortgage and asset-backed securities, debt securities in a limited number of geographical markets or sectors, contingent convertible securities.

Risk of debt securities issued by Special Purpose Vehicle ("SPVs")

• Investments in debt securities issued by SPVs may expose the Fund to additional risks such as the credit/default risk of both the SPV and its parent company or associated company.
• Investments in debt securities of a subordinated nature issued by SPVs will have a lower priority of claim in the event of the relevant issuer’s liquidation or bankruptcy as they rank behind holders of unsubordinated debt securities but before holders of equity securities and is therefore exposed to higher credit / insolvency risk of its counterparties.

Limited time horizon risk and reinvestment risk

• neither the income nor the capital is guaranteed for investors to invest in the fund with limited time horizon (i.e. up to the Term Date). The fund’s investments may mature prior to the Term Date. The closer the fund is to the Term Date then the greater the investment in replacement shorter-dated securities (with progressively shorter maturities) and cash. Shorter-dated securities or cash may not offer as high a return as the securities they replace. Investors should have regard to the fixed time horizon of the fund in deciding whether investment in the fund is suitable for them.

UT – High Yield Bond Fund
 

Funds that primarily invest in high yield bonds are associated with the following risks:  

Risks associated with investment in high yield bonds, such as 

Higher credit risk 

• since they are typically rated below investment grade or are unrated and as such are often subject to a higher risk of issuer default; 
• Vulnerability to economic cycles 

During economic downturns such bonds typically fall more in value than investment grade bonds as 

(i) investors become more risk averse and (ii) default risk rises.  

• The net asset value of a fund that invests in high-yield bonds may decline or be negatively affected if there is a default of any of the high yield bonds that it invests in or if interest rates change.
• Some high-yield bond funds may have fees and/or dividends paid out of capital.  As a result, the capital that the fund has available for investment in the future and capital growth may be reduced.
• Some high-yield bond funds may not distribute dividends, but instead reinvest the dividends into the fund or alternatively, the investment manager may have discretion on whether or not to make any distribution out of income and/or capital of the fund.  Also, a high distribution yield does not imply a positive or high return on the total investment.
• Other key risks that may relate to the relevant fund including concentration of investments in particular types of specialized debt or a specific geographical region or sovereign securities.

UT – Equity / Balanced Fund

• If the fund is an equity fund and it invests in emerging markets, a single market or a limited number of geographical markets, sectors or smaller cap companies, the fund will be subject to higher degree of risk.
• Balanced fund invests in both fixed income products and equities, will be exposed to risks of both fixed income fund and equity fund as described above.
• If the fund invests in derivatives, it may be subject to higher volatility; counterparty risk and other additional risks may be involved.
• If the fund’s investments are concentrated in Greater China, it involves greater risk of loss than investing in more developed markets due to, among other factors, greater concentration, political, tax, economic, foreign exchange, liquidity, market volatility (such as interest rate and price volatility), legal and regulatory risks.
• If the fund invests in China A-shares and B-shares and make the relevant investment through Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and China A-shares Access Products may involve additional risks.

UT – ESG Fund

 (Added on 29 Nov 2021)

• There is no guarantee that an investment approach which considers environmental, social and governance (ESG) factors will produce returns similar to those which don't consider these factors. Investments which consider ESG factors may diverge from traditional market benchmarks.
• In addition, there is no standard definition of, or measurement criteria for environmental, social and governance impact ("SG Impact"). ESG Impact measurement criteria is (a) highly subjective and (b) may vary significantly across and within sectors. 
• HSBC undertakes due diligence when selecting third party fund managers. However, HSBC relies on the ESG Impact measurement criteria reported by third party fund managers and does not conduct its own specific due diligence in relation to ESG Impact measurement criteria. 
• There is no guarantee that: (a) the nature of the ESG Impact of an investment will be aligned with any particular investor's ESG Impact goals; and (b) the stated level or target level of ESG Impact will be achieved.

UT – Risks associated with the SME Board, ChiNext Board and/or STAR Board

(Added on 23 Nov 2020)

• Investments in the SME Board, ChiNext Board and/or STAR Board are subject to the following risks and may result in significant losses for the fund. 
• Higher fluctuation on stock prices and over-valuation risk: Listed companies on the SME Board, ChiNext Board and/or STAR Board are usually of emerging nature with smaller operating scale which are subject to higher fluctuation in stock prices and liquidity and have higher risks and turnover ratios than companies listed on the main board. The listed stocks may be overvalued and such exceptionally high valuation may not be sustainable.
• Differences in regulation applicable to ChiNext Board and STAR Board: The rules and regulations regarding companies listed on ChiNext Board and STAR Board are less stringent in terms of profitability and share capital than those in the main board and SME Board.
• Delisting risk: It may be more common and faster for companies listed on the SME Board, ChiNext Board and/or STAR Board to delist. 
• Concentration risk applicable to STAR Board: STAR Board is a newly established board and may have a limited number of listed companies during the initial stage. Investments in STAR Board may be concentrated in a small number of stocks and subject the fund to higher concentration risk. 

UT – Risks in connection with the investment strategy

(Added on 23 Nov 2020)

• Investments in specific themes may not achieve the desired results under all circumstances and market conditions. The investments of the fund may be adjusted among different themes from time to time depending on the market conditions of the respective themes and therefore the fund may incur greater transaction costs than a fund with static allocation strategy. The fund may focus its investments in specific themes, which may increase the concentration risk and may be more volatile than that of a fund having a more diverse portfolio of investments.

UT – Hedged Share Class

• Investment in Hedged Classes which do not hedge underlying portfolio currency exposures back to the investor’s own currency may result in the investor taking speculative currency positions which may be volatile and may have a material impact on Unitholders’ returns.
• A Hedged Class aims to manage the currency risk between the base currency and the customer's chosen Class Currency. Investment in Hedged Classes may protect unitholders against a decrease in the value of the base currency relative to the Class Currency, but it may also preclude unitholders from benefiting from an increase in the value of the base currency relative to the Class Currency. 
• There is no guarantee that (a) any hedging objective will be achieved, or (b) any hedging strategy will fully and effectively eliminate the effects of exchange rate fluctuations.
• The Fund’s underlying assets may not be hedged either to the base currency of the Fund or to the Class Currency.   Investors will still be subject to currency risks of any underlying investments in the Fund’s portfolio. Investors should note that the implementation of currency hedging strategies (if the customer has chosen a different Class Currency to the base currency) is distinct from the various currency hedging strategies that the Manager may implement at an overall fund portfolio level to manage risks.

UT – RMB Currency Risk

• RMB investment will be subject to the risk of exchange rate fluctuation and you may suffer loss in principal.
• Products or underlying investments which are not denominated in RMB are subject to multiple currency conversion costs in making investments and liquidating investments as well as RMB exchange rate fluctuations and bid/offer spreads when assets are sold to meet redemption requests and other capital requirements.
• The available choice of underlying investments denominated in RMB outside Mainland China is limited. This may adversely affect the return and performance of the product.
• Products which invest in debt instruments not supported by any collateral are exposed to credit risk of the counterparties. 
• Products which invest in derivative instruments are subject to counterparty risk as the default by derivative issuers, may adversely affect the performance of the product and result in substantial loss.
• Products which may invest in RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.
• The product may suffer significant losses in liquidating the underlying investments, especially if the underlying investments do not have an active secondary market.
• The Fund offers RMB denominated units of investments. Subscriptions and redemptions for the Fund may involve conversion of currency at the applicable exchange rates. 
• The value of investment is subject to the exchange rate movements between RMB relative to the base currency of the Fund and/or other currency(ies) of the non-RMB-denominated underlying investments.  An investor, may still suffer losses even if there are gains or no losses in the value of the non-RMB-denominated underlying investments and may subject to further losses if the non-RMB-denominated underlying investments falls in value. 
• RMB is not freely convertible and currency conversions are subject to:
  
  a) the funds ability to convert into RMB and its availability of sufficient RMB at time of redemption
  b) possible delays in payment of redemption proceeds or dividends & in case of sizable redemptions the manager has the absolute discretion to delay any payment in respect of redemption of the RMB Classes (up to a maximum of one calendar month from receipt of a properly documented redemption request).
   
  When calculating the net asset value of Units of a RMB denominated Class, the exchange rate for offshore RMB market in Hong Kong, i.e. the CNH exchange rate will be applied, which may be at a premium or discount to the exchange rate for onshore RMB market in the PRC, i.e. the CNY exchange rate, leading to a possible trading costs incurred and investors may suffer losses.
  
  For hedged class denominated in RMB, there is no guarantee that currency hedging between RMB and the base currency will be effective.

UT – Risks associated with the MRF arrangement

• Quota restrictions: The Mainland-Hong Kong Mutual Recognition of Funds (MRF) scheme is subject to an overall quota restriction. Subscription of units in the Fund may be suspended at any time if such quota is used up.
• Failure to meet eligibility requirements: If the Fund ceases to meet any of the eligibility requirements under the MRF, it may not be allowed to accept new subscriptions. In the worst scenario, the SFC may even withdraw its authorisation for the Fund to be publicly offered in Hong Kong for breach of eligibility requirements. There is no assurance that the Fund can satisfy these requirements on a continuous basis.
• Mainland China tax risk: Currently, certain tax concessions and exemptions are available to the Fund and/or its investors under the MRF regime. There is no assurance that such concessions and exemptions or Mainland tax laws and regulations will not change. Any change to the existing concessions and exemptions as well as the relevant laws and regulations may adversely affect the Fund and/or its investors and they may suffer substantial losses as a result. 
• Different market practices: Market practices in the Mainland China and Hong Kong may be different. In addition, operational arrangements of the Fund and other public funds offered in Hong Kong may be different in certain ways. For example, subscriptions or redemptions of units may only be processed on a day when both Mainland and Hong Kong markets are open, or it may have different cut-off times or dealing day arrangements versus other SFC-authorised funds. Investors should understand these differences and their implications.

Concentration risk / Mainland China market risk

• The Fund invests primarily in securities related to the Mainland China market and may be subject to additional concentration risk. Investing in the Mainland China market may give rise to different risks including political, policy, tax, economic, foreign exchange, legal, regulatory and liquidity risks.

RMB currency and conversion risks 

• RMB is currently not freely convertible and is subject to exchange controls and restrictions.
• Non-RMB based investors are exposed to foreign exchange risk and there is no guarantee that the value of RMB against the investors’ base currencies (for example HKD) will not depreciate. Any depreciation of RMB could adversely affect the value of investor’s investment in the Fund.
• Investors may not receive RMB upon redemption of investments and/or dividend payment or such payment may be delayed due to the exchange controls and restrictions applicable to RMB.

Mainland China Equity risk 

• Market risk: The 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.
• Volatility risk: High market volatility and potential settlement difficulties in the Mainland China equity markets may also result in significant fluctuations in the prices of the securities traded on such markets and thereby may adversely affect the value of the Fund.
• Policy risk: Securities exchanges in Mainland China typically have the right to suspend or limit trading in any security traded on the relevant exchange. The government or the regulators may also implement policies that may affect the financial markets. All these may have a negative impact on the Fund.
• High stock valuation risk: The stocks listed on the Mainland China stock exchanges may have a higher price-earnings ratio; and such high valuation may not be sustainable and stock prices may fall drastically.
• Liquidity risk: Securities markets in Mainland China may be less liquid than other developed markets. The Fund may suffer substantial losses if it is not able to dispose of investments at a time it desires.
• Risk associated with small-capitalisation/mid-capitalisation companies: The stock of small-capitalisaction/mid-capitalisation companies may have lower liquidity and their prices are more volatile to adverse economic developments than those of larger capitalisation companies in general.
• Risk associated with ChiNext market: 
  
  Differences in regulations: The rules and regulations regarding securities in the ChiNext market are less stringent in terms of profitability and share capital than those in the main board market.
  
  Emerging nature of ChiNext companies: Given the emerging nature of companies listed on the ChiNext market, there is a risk that the securities traded on ChiNext market may be susceptible to higher market volatility compared to securities traded on the main board market.
  
  Higher fluctuation on stock prices: Listed companies in the ChiNext market are usually in their preliminary stage of development having a smaller scale and shorter operating history and their stability and resistance to market risks may be lower. Hence, they are subject to higher fluctuation in stock prices as the performance of these companies changes. They are subject to higher risks and higher turnover ratios than companies listed on the main board.
• Delisting risk: The companies listed on the ChiNext market are generally less resistant to market risks and may experience more fluctuations in their performance. It may be more common and faster for listed companies in the ChiNext market than companies listed on main board and SME board to delist. This may have an adverse impact on the Fund if the companies that it invests in are delisted.
• Valuation risk: Conventional valuation methods may not be entirely applicable to companies listed in the ChiNext market. There are fewer circulating shares in the ChiNext market as such stock prices may be more susceptible to manipulation and may experience higher fluctuation upon market speculation. Stocks traded on the ChiNext market may be overvalued and such high valuation may not be sustainable.

Mainland debt securities risks

• Volatility and liquidity risks: The Mainland debt securities markets 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.
• Counterparty risk: The Fund is exposed to the credit/default risk of issuers of the debt securities that the Fund may invest in.
• Interest rate risk: Investment in the Fund is subject to interest rate risk. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise. The Fund is exposed to additional policy risk of potential adjustment by the government to the interbank deposit rate.
• Downgrading risk: The credit rating of a debt instrument or its issuer may be downgraded subsequent to investment by the Fund. In the event of such downgrading, the value of the Fund may be adversely affected. The Manager may or may not be able to dispose of the debt instruments that are being downgraded.
• Credit rating agency risk: The credit appraisal system in the Mainland and the rating methodologies employed in the Mainland may be different from those employed in other markets. Credit ratings given by Mainland rating agencies may therefore not be directly comparable with those given by other international rating agencies.
• Risk associated with urban investment bonds: The Fund may invest in urban investment bonds. Urban investment bonds are issued by local government financing vehicles ("LGFVs"), such bonds are typically not guaranteed by local governments or the central government of the Mainland. In the even that the LGFVs default on payment of principal or interest of the urban investment bonds, the Fund could suffer substantial loss and the net asset value of the Fund could be adversely affected.
• Risk associated with asset-backed securities: The Fund may invest in asset-backed securities (including asset-backed commercial papers). Asset-backed securities may be highly illiquid and prone to substantial price volatility. These instruments may be subject to greater credit, liquidity and interest rate risk compared to other debt securities. They are often exposed to extension and prepayment risks and risks that the payment obligations relating to the underlying assets are not met, which may adversely impact the returns of the securities.
• Risk associated with debt securities which are rated BB+ or below by a Mainland credit rating agency or unrated: The Fund may invest in debt securities rated BB+ or below by a Mainland credit rating agency or unrated. Such securities are generally subject to lower liquidity, higher volatility and greater risk of loss of principal and interest than high-rated debt securities.

Risks associated with repurchase and reverse repurchase transactions: 

The Manager may enter into repurchase and reverse repurchase transactions for the account of the Fund on the Mainland stock exchanges or in the interbank market.

• The collateral pledged under the reverse repurchase transactions in the interbank market may not be marked-to-market. In addition, the Fund may suffer substantial loss when engaging in reverse repurchase transactions as there may be delay and difficulties in recovering cash placed out or realizing the collateral, or proceeds from the sale of the collateral may be less than the cash placed with the counterparty due to inadequate valuation of the collateral and market movements upon default of the counterparty.
• For repurchase transactions, the Fund may suffer substantial loss as there may be delay and difficulties in recovering collateral pledged with the counterparty or the cash originally received may be less than the collateral pledged due to inadequate valuation of the collateral and market movement upon default of the counterparty.