Risk Considerations

Risk factors you should consider before investing:

• This material is not intended to provide investment advice or be considered a personal recommendation.
• The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
• If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
  
• Some portfolios may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.
• There are additional Bond Connect, Bonds, China IBM, Counterparty, Derivative instruments, Emerging markets, Liquidity and Operational risks associated with this fund.

Fund risks

Bond Connect risk: Investments in Chinese onshore bonds traded on CIBM via Bond Connect are subject to various risks associated with clearing and settlement, as well as liquidity, regulatory and counterparty risks.

Bonds risk: The value of bonds can change as a result of interest rate changes – typically when interest rates rise, bond values fall. Funds investing in bonds are exposed to credit risk. A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless.

China IBM risk: The fund may invest on the China Interbank Bond Market. This market can be volatile and subject to liquidity constraints due to low trading volumes. As a result, the price of debt securities traded on this market can fluctuate significantly, spreads may be large, and realisation costs may be significant.

Counterparty risk: Other financial institutions provide services to the fund such as safekeeping of assets, or may serve as a counterparty to financial contracts such as derivatives. There is a risk the counterparty will not meet their obligations.

Derivative instruments risk: Derivatives are financial instruments deriving their value from an underlying asset and may be used to hedge existing exposures or to gain economic exposure. A derivative instrument may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.

Emerging markets risk: Investments in emerging markets are generally more sensitive to risk events such as changes in the economic, political, fiscal and legal environment.

Liquidity risk: In stressed market conditions, certain securities held by the fund may not be able to be sold at full value, or at all. This could cause the fund to defer or suspend redemptions of its shares, meaning investors may not have immediate access to their investment.

Operational risk: The risk of potential loss resulting from inadequate or failed internal processes, people and systems or from external events.