FSM Managed Portfolios Monthly Investment Outlook July 2016 1
Table of Contents Market Performance Review P.3 Portfolio s Performance Review P.4 Portfolio Holdings Performance P.6 Brexit Commentary P.10 Portfolio Changes and Strategies P.15 2
Global Major Stock and Bond Markets 1M & YTD Performance (as at 30 June 16) Major Stock Indices 1M YTD World MSCI AC World Index -0.81% -0.02% US S&P 500 Index 0.09% 2.69% Europe STOXX 600 Index -5.06% -9.82% Japan Nikkei 225 Index -9.63% -18.17% Asia ex-japan MSCI Asia ex Japan Index 1.89% 0.75% Emerging Markets MSCI Emerging Market Index 3.30% 5.03% EMEA MSCI Emerging Europe, Middle East & Africa 3.04% 9.75% Latin America MSCI Latin America 11.34% 24.02% China Hang Seng Mainland 100 Index 0.29% -6.35% China A CSI 300 Index -0.49% -15.47% Global Aggregate Bond Total Return Major Bond Categories 1M YTD JPM Global Aggregate Bond Index 2.84% 8.59% Asia Bonds CS Asian Bond Total Return Index 1.67% 6.27% EM Hard Currency JPM EMBI Total Return Index 3.73% 10.90% EM Local Currency JPM GBI-EM Global Core Index 5.74% 13.91% USD HY BoFA Merrill Lynch US HY Index 1.08% 9.32% Asia BB Credit Suisse Asia Bond Index Asia BB 1.39% 6.61% Source: Bloomberg and ifast Compilations Data as at 30 Jun 2016 Performance in index currency terms 3
Portfolio Performance Since Inception (as at End-Jun 16) Portfolio Portfolio Performance Index Performance Aggressive -1.2% 1.9% Moderately Aggressive 1.0% 3.3% Balanced 1.3% 4.7% Moderately Conservative 1.8% 6.1% Conservative 3.3% 7.5% See http://www.fundsupermart.com.hk/ for detailed fund allocation. Source: Bloomberg and ifast compilations; Managed Portfolios were launched on 31 August 2015 The portfolio's performance is calculated based on HKD 200,000 of investment,includes dividends and reflects sales charges. The performance figures are calculated based on the price of the funds as at its valuation date on an NAV-to-NAV basis and denominated in HKD with dividends reinvested on the dividend date. The latest available NAVs are carried forward if respective funds are on holiday. Performance figures less than one calendar year in the first year of its launch are calculated since launch until the end of the particular calendar year. Benchmark performance is calculated based on the price of the indices as at their respective valuation date in HKD terms. Past performance is not indicative of future return. The portfolio's performance is for illustrative purposes only and does not represent the actual or future performance of clients' portfolios. 4
Portfolio Performance in June Portfolio Portfolio Performance Index Performance Aggressive -0.7% 1.2% Moderately Aggressive -0.2% 1.6% Balanced 0.0% 1.9% Moderately Conservative 0.2% 2.3% Conservative 0.5% 2.7% See http://www.fundsupermart.com.hk/ for detailed fund allocation. Source: Bloomberg and ifast compilations; The portfolio's performance is calculated based on HKD 200,000 of investment,includes dividends and reflects sales charges. The performance figures are calculated based on the price of the funds as at its valuation date on an NAV-to-NAV basis and denominated in HKD with dividends reinvested on the dividend date. The latest available NAVs are carried forward if respective funds are on holiday. Performance figures less than one calendar year in the first year of its launch are calculated since launch until the end of the particular calendar year. Benchmark performance is calculated based on the price of the indices as at their respective valuation date in HKD terms. Past performance is not indicative of future return. The portfolio's performance is for illustrative purposes only and does not represent the actual or future performance of clients' portfolios. 5
RSP Portfolio Performance Since Inception (as at End-Jun 16) Portfolio RSP Portfolio Performance Growth 1.0% Balanced 1.8% Defensive 1.3% See http://www.fundsupermart.com.hk/ for detailed fund allocation. Source: Bloomberg and ifast compilations; RSP Managed Portfolios were launched on 15 March 2016 The portfolio's performance is calculated based on HKD 200,000 of investment,includes dividends and reflects sales charges. The performance figures are calculated based on the price of the funds as at its valuation date on an NAV-to-NAV basis and denominated in HKD with dividends reinvested on the dividend date. The latest available NAVs are carried forward if respective funds are on holiday. Performance figures less than one calendar year in the first year of its launch are calculated since launch until the end of the particular calendar year. Benchmark performance is calculated based on the price of the indices as at their respective valuation date in HKD terms. Past performance is not indicative of future return. The portfolio's performance is for illustrative purposes only and does not represent the actual or future performance of clients' portfolios. 6
Portfolio Holdings Performance Equity Funds Name ETF Returns Since Inception (%) Returns in June 16 (%) Vanguard S&P 500 Index ETF 5.3-1.3 Fund Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc Threadneedle IF ICVC European Select Fund (USD-Hedged) RNA Aberdeen Global Japanese Smaller Companies Fund (USD-Hedged) A2 Acc -6.4-2.2-1.0-3.3-14.5-9.5 First State Asian Equity Plus Fund (USD) I Dis 7.2 2.1 Mirae Asset Asia Great Consumer Equity Fund (USD) A -3.8-0.1 Fidelity Funds Emerging Europe, Middle East And Africa Fund A-Acc-USD -6.0-0.2 Fidelity Funds - Latin America Fund A-USD 5.5 9.3 First State China Growth Fund (USD) I -4.2 0.5 Neuberger Berman China Equity Fund (USD) A Acc 5.3 0.7 For past performance, see http://www.fundsupermart.com.hk. Source: Bloomberg and ifast compilations. Data as at 30 Jun 2016. *On 18 March, we switched out JPMorgan Latin America Equity A (Dist), and switched in Fidelity Funds - Latin America Fund. The performance figures are cumulative returns based on the prices of the underlying securities on a NAV-to-NAV basis with dividends reinvested. 7
Portfolio Holdings Performance Equity Funds Name 2015 2014 2013 2012 2011 Fund Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc Threadneedle IF ICVC European Select Fund (USD-Hedged) RNA Aberdeen Global Japanese Smaller Companies Fund (USD-Hedged) A2 Acc -5.29 13.66 37.56 18.39-2.78 4.07-2.32 24.80 26.71-4.93 8.26 25.62 17.32* - - First State Asian Equity Plus Fund (USD) I Dis -2.85 13.75 4.31 24.33-10.35 Mirae Asset Asia Great Consumer Equity Fund (USD) A -3.41 18.19 6.34 26.93-17.88* Fidelity Funds Emerging Europe, Middle East And Africa Fund A-Acc-USD -15.67-8.62 7.75 22.89-21.36 JPMorgan Latin America Equity A (Dist) USD -30.85-11.43-10.55 13.74-20.11 First State China Growth Fund (USD) I -4.08-2.76 21.48 18.96-14.84 Neuberger Berman China Equity Fund (USD) A Acc 0.65 21.60 4.44 22.23-14.19 For past performance, see http://www.fundsupermart.com.hk. Source: Bloomberg and ifast compilations, data as at 31 May 2016. For fund(s) with performance figure less than one calendar year in the first year of launch, the performance figure shown is calculated since launch until the end of the particular calendar year. The performance figures are cumulative returns based on the prices of the underlying securities on a NAV-to-NAV basis with dividends reinvested. 8
Portfolio Holdings Performance Fixed Income Funds Name Fund BlackRock Global Funds - US Dollar Short Duration Bond Fund (USD) A3 Mdis Returns Since Inception (%) Returns in June 16 (%) 1.0 0.3 PIMCO Global Bond (USD) E Acc 5.3 1.9 Templeton Global Total Return Fund (USD) A (Acc) -1.9-0.5 Invesco Emerging Markets Bond Fund (USD) A Dist 5.9-0.1 Threadneedle (Lux) US High Yield Bond (USD) AU 2.9* 0.2* First State Asian Quality Bond Fund (USD) I 6.6 1.5 BlackRock Global Funds - Asian Tiger Bond Fund (USD) A3 Mdis 7.2 1.9 BEA Union Investment Asian Bond And Currency Fund (USD) A Acc 12.5 1.6 Fidelity Funds - Asian High Yield Fund A-Acc-USD 9.1 1.4 BlackRock Global Funds - Global High Yield Bond Fund (USD) A2 0.0-0.3 Allianz US High Yield (USD) A MDis -2.0 0.4 For past performance, see http://www.fundsupermart.com.hk. Source: Bloomberg and ifast compilations; Data as at 30 Jun 2016. On 8 April, we switched out Neuberger Berman Emerging Market Debt - Local Currency Fund (USD) A Mdis and switched in Threadneedle (Lux) US High Yield Bond (USD) AU. The performance figures are cumulative returns based on the prices of the underlying securities on a NAV-to-NAV basis with dividends reinvested. 9
Portfolio Holdings Performance Fixed Income Funds Name 2015 2014 2013 2012 2011 BlackRock Global Funds - US Dollar Short Duration Bond Fund (USD) A3 Mdis Fund 0.32 1.03 0.92 4.02 1.82 PIMCO Global Bond (USD) E Acc -0.07 8.02-1.39 9.92 6.65 Templeton Global Total Return Fund (USD) A (Acc) Invesco Emerging Markets Bond Fund (USD) A Dist Neuberger Berman Emerging Market Debt - Local Currency Fund (USD) A Mdis -5.84-0.24 3.59 19.46-1.23 0.92 5.92-6.37 19.16 4.02-17.08-7.36* - - - First State Asian Quality Bond Fund (USD) I 0.86 6.86-2.93 8.83 2.40 BlackRock Global Funds - Asian Tiger Bond Fund (USD) A3 Mdis BEA Union Investment Asian Bond And Currency Fund (USD) A Acc Fidelity Funds - Asian High Yield Fund A-Acc- USD BlackRock Global Funds - Global High Yield Bond Fund (USD) A2 2.27 8.19-2.98 13.96 1.75 4.76 2.54 5.51 24.37-0.82 1.40 3.52 2.72 19.77-7.67-4.74 1.66 7.39 16.05 2.37 Allianz US High Yield (USD) A MDis -8.81-0.85 6.11 11.14 4.79 For past performance, see http://www.fundsupermart.com.hk. Source: Bloomberg and ifast compilations; data as at 31 May 2016. For fund(s) with performance figure less than one calendar year in the first year of its launch, the performance figure shown is calculated since launch until the end of the particular calendar year. The performance figures are cumulative returns based on the prices of the underlying securities on a NAV-to-NAV basis with dividends reinvested. 10
Brexit Commentary 11
-2.4% -2.5% -2.5% -3.1% -3.1% -3.5% -3.6% -6.8% -7.0% -7.2% -7.9% -8.0% -8.1% Major Assets Performance After Brexit 10% Performance on 24 th June 2016 5% 4.7% 4.0% 2.1% 1.7% 1.3% 0% -0.6% -1.3% -5% -4.9% -4.9% -10% -15% -12.4%-12.5% -13.4% -14.5% Source: Bloomberg and ifast Compilations Market performance in index currency on 24 th June 2016 12
UK Financial Stocks Suffered Largest Sell-off MSCI UK Index 4.0% 3.0% 2.0% 0.0% 1.0% 0.8% 0.1% -2.0% -4.0% -6.0% -1.7% -2.5% -3.6% -4.4% -8.0% -6.9% -10.0% -12.0% -10.7% Source: Bloomberg and ifast Compilations Market performance in index currency on 24 th June 2016 13
European Bank Stocks were the Worst Performer STOXX 600 Index 0.0% -2.0% -4.0% -6.0% -2.1% -2.8% -4.1% -5.0% -5.6% -6.1% -8.0% -6.5% -6.7% -6.8% -7.4% -7.8% -8.3% -8.5% -8.6% -8.7% -10.0% -9.6% -10.0% -12.0% -11.2% -14.0% -16.0% -14.5% Source: Bloomberg and ifast Compilations Market performance in index currency on 24 th June 2016 14
Brexit s impact on the European equity fund is minimized through our strategy This is a USD-hedged class, European (ex UK) equity fund As of May month-end, the Fund s largest sector underweight relative to the Benchmark was Financials (8.8% vs. 21.6%). The Fund s largest sector overweight relative to the Benchmark was Consumer Goods (32.4% vs. 19.6%). The Fund s top 10 positions comprised 44.9% of total assets at month-end. Source: Threadneedle investments and ifast Compilations Data as at end-may 2016 15
Portfolio Actions 16
Equity Strategy Equity View US Europe Japan Asia ex-japan EMEA LATAM China Neutral -> Underweight Neutral -> Underweight Overweight Overweight Underweight Neutral Overweight 17
Portfolio Action Summary 1. Switch from Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc to Fidelity Funds - America Fund A-Acc-USD. Apply to ALL portfolio. 2. Switch from Aberdeen Global - Japanese Smaller Companies Fund (USD-Hedged) A2 to Henderson Horizon Fund - Japanese Smaller Companies Fund (USD Hedged) A2. Apply to ALL portfolio. 3. Increase exposure in Neuberger Berman China Equity Fund (USD) A Acc in Aggressive and Moderately Aggressive. 4. Switch from Templeton Global Total Return Fund (USD) A (acc) to Invesco Emerging Markets Bond Fund (USD) A Dist in Balanced portfolio. 18
1. Fund Switching U.S Equity Funds Calendar Year Returns Fund Benchmark* Cumulative Returns Fund Benchmark* 2011-3.7% 1.5% YTD 1.9% 3.3% 2012 16.2% 15.2% 6-Month 1.0% 1.6% 2013 35.6% 31.5% 1-year -1.3% 1.0% 2014 17.3% 13.0% 3-Year 37.5% 34.4% 2015 0.7% 0.7% 5-Year 72.3% 68.1% Previously, we wanted to gain exposure on U.S growth stocks to form a hybrid investment approach on U.S equity part. The performance divergence among U.S growth-style equity funds is huge As we have downgraded U.S market s star rating again, it s good to position U.S equity part defensively Fidelity Funds - America Fund A-Acc-USD has been our fund pick in U.S equity category since 2013. It has outperformed the S&P 500 (Net Return) Index over the past 4 calendar years. As at end-april, this fund holds 54 stocks and its top 10 holdings account for 35.4% of the fund s assets. We propose to switch from Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc to Fidelity Funds - America Fund A-Acc-USD Source: FIL Investment Management and ifast Compilations Data as at end-may 2015 *Benchmark is S&P 500 (N) Index Performance is calculated in NAV to NAV, in US Dollar with dividends re-invested. 19
Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% 2. Fund Switching Japanese Equity Funds 190 170 150 130 110 90 70 50 2008 2009 2010 2011 2012 2013 2014 2015 Cumulative Returns (rebased to 100 as at April 2007) 193 162 Aberdeen Global - Japanese Smaller Companies Fund (JPY) A2 Henderson Horizon Fund - Japanese Smaller Companies Fund (USD) A2 Aberdeen Global - Japanese Smaller Companies Fund (JPY) A2 Henderson Horizon Fund - Japanese Smaller Companies Fund (USD) A2 Henderson Horizon Fund - Japanese Smaller Companies Fund (USD) A2 was our fund pick in 2013 and 2014. It has the strongest 1-year and 5-year cumulative returns. Its 5-year cumulative returns have far outperformed its benchmark (85.1% vs 52.4%; as at end April 2016) It has more consistent performance over the past five years Its resilience is one of the strongest among the Japanese equity funds on our platform We propose to switch from Aberdeen Global - Japanese Smaller Companies Fund (USD-Hedged) A2 to Henderson Horizon Fund - Japanese Smaller Companies Fund (USD Hedged) A2 Source: ifast Compilations Performance is calculated in NAV to NAV, in HK Dollar with dividends re-invested. 20
3. Increase exposure in Neuberger Berman China Equity Fund in A and MA Currently, we invest in FS China Growth for the Core s China equity portion and invest in NB China Equity fund for the Supplementary portfolio. The overall exposure in China equity fund in A and MA is 16.5% and 14.75% respectively. The diversification effect is not strong as we have higher exposure on Core s China equity fund (FS China Growth). We will include NB China Equity as part of Core s China portion and increase exposure in this fund in A and MA 21
4. Fund Switching EM Bond Fund in Balanced Portfolio Currently, in the balanced portfolio, Templeton Global Total Return Fund (USD) A (acc) is invested to represent Global/EM bond exposure. This fund s performance has been dragged by its currency positions. We understand that this fund has high exposure to high investment grade emerging market debt and currency and limited exposure to G7 sovereign debt. But we also find that this fund cannot represent EM bond exposure very well as it is too vulnerable to the currencies movement. Invesco Emerging Markets Bond Fund (USD) A Dist is our fund pick in the EM bond category and our choice in MC and C. It is a pure EM bond fund Therefore, for the balanced portfolio, we will switch out Templeton Global Total Return Fund (USD) A (acc) and switch in Invesco Emerging Markets Bond Fund (USD) A Dist. 22
Fixed Income Strategy Fixed Income Fund Portfolio Allocation Global bond/short-duration bond Underweight -> Neutral / Overweight Asian investment-grade bond Overweight -> Underweight Asian high-yield bond Overweight -> Neutral Emerging-market bond Neutral Global/US high-yield bond Overweight Source: ifast compilations. 23
Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Valuations look more expensive for most of the major FI segments other than US HY bonds (1) (bps) 25 US High Yield Spreads 20 15 10 5 0 BofA Merrill Lynch US High Yield Master II Option-Adjusted Spread BofA Merrill Lynch US High Yield BB Option-Adjusted Spread Source: Bloomberg, BofA Merrill Lynch and ifast Compilations 24
Nov-01 Mar-02 Jul-02 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Valuations look more expensive for most of the major FI segments other than US HY bonds (2) (bps) 1200 Asian Corporate Bonds (%) 16 1000 800 14 12 10 600 8 400 200 6 4 2 0 0 Asian Corporate Bonds (Spread bps, LHS) Asian Corporate Bonds (Yield %, RHS) Asian Corporate Bonds (Average Spread bps, LHS) Source: Bloomberg and ifast Compilations 25
May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Valuations look more expensive for most of the major FI segments other than US HY bonds (3) (bps) 1400 Asian High Yield Bonds (%) 16 1200 14 1000 800 600 400 12 10 8 200 6 0 4 Asian High Yield Bonds (Spread bps, LHS) Asian High Yield Bonds (Average Spread bps, LHS) Asian High Yield Bonds (Yield %, RHS) Source: Bloomberg and ifast Compilations 26
Dec-98 May-99 Oct-99 Mar-00 Aug-00 Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Valuations look more expensive for most of the major FI segments other than US HY bonds (4) (bps) 1600 1400 1200 1000 800 600 400 200 Emerging Market Corporate Bonds (%) 18 16 14 12 10 8 6 4 2 0 0 BofA Merrill Lynch Emerging Markets Corporate Plus Index Option-Adjusted Spread (LHS) BofA Merrill Lynch Emerging Markets Corporate Plus Index Effective Yield (RHS) Source: Bloomberg, BofA Merrill Lynch and ifast Compilations 27
Current Spreads 28
Portfolio Actions Fixed Income Category Neutral Allocation View Current Allocation Allocation After Adjustment Global Bonds/Short Duration Bonds 40% Neutral/OW 35% 45% Asian IG Bonds 20% Underweight 20% 15% Asian HY Bonds 15% Neutral 15% 10% Emerging Market Bonds 10% Neutral 10% 10% Global/US High Yield 15% Overweight 20% 20% The Asian HY allocation will be adjusted back to 10% Neutral, while the Asian IG allocation reduces to 15%, representing an UW (given the tight spreads). We will increase the Short Duration(SD)/Global bond exposure via an increase in the SD segment (total 45%). Apply to B, MC and C portfolio. The increased allocation to the Short Duration / Global bond category will be into the Short Duration category (Blackrock Global Funds - US Dollar Short Duration Bond Fund (USD) A3 Mdis). Apply to MC and C portfolio. The Asian HY allocation to be reduced proportionately for both funds (equal weights targeted). Apply to MC and C portfolio. Reduction in exposure in Asian IG bonds (First State Asian Quality Bond Fund (USD) I). Apply to MC and C portfolio. 29
Risk Disclosure Statement Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc RISK DISCLOSURE STATEMENTS INVESTMENT INVOLVES RISKS. The value of the Fund can be volatile and investors may not get back the amount originally invested. Past performance is not indicative of future results. Investors will be exposed to equity market, US markets, concentration, currency and debt securities risks. The Fund may use certain types of financial derivative instruments, which may involve a higher degree of risk including but not limited to counterparty, volatility, liquidity, leverage and valuation risks, and the Fund may suffer a substantial loss. Securities of smaller companies generally are less liquid and more volatile than those of larger companies; and smaller companies generally are more likely to be adversely affected by poor economic or market conditions. Investors should not invest based on this marketing material alone. Offering documents should be read for further details, including the risk factors. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Threadneedle IF ICVC - European Select Fund (USD-Hedged) RNA RISK DISCLOSURE STATEMENTS Threadneedle Investment Funds ICVC European Select (the Fund ) principally invests mainly in a relatively concentrated portfolio of equities of companies domiciled in Continental Europe or which have significant Continental European operations. The select investment approach means that the Authorised Company Director has the flexibility to take significant stock and sector positions which may lead to increased levels of volatility. The Fund may invest in one or a combination of the following instruments which may involve embedded leverage: fixed interest securities, other equities and money market securities. Investing in any one of the above instruments may involve substantial credit/counterparty, market, volatility and liquidity risk. If the issuers default or such instruments, or their underlying assets, cannot be realised or perform badly, investors entire investment may be lost. The Fund focuses on investing in a single geographical area is subject to higher risks of concentration than Funds following a more diversified policy. The Fund may have concentrated portfolios (holding a limited number of investments and/or large positions in a relatively small number of stocks). If one or more of those investments decline or are otherwise adversely affected, it may have a more pronounced effect on the Fund s value than if a larger number of investments were held or if the Fund had fewer large individual positions. Accordingly, the Fund may carry a higher degree of risk and NAV volatility than a fund which invests in a broad range of companies and or does not take large positions in a relatively small number of stocks. The investment decision is yours but you should not invest unless the intermediary which sells you the Fund has advised you that the Fund is suitable for you and has explained why, including how investment in the Fund will be consistent with your investment objectives. Investors should not base their investment decision on this document alone and must refer to the Prospectus of each Fund prior to investing. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 30
Risk Disclosure Statement Aberdeen Global - Japanese Smaller Companies Fund (USD-Hedged) A2 Acc RISK DISCLOSURE STATEMENTS The Fund invests in equities and equity-related securities of smaller companies in Japan. Smaller Companies are defined as companies with a market capitalisation of under Yen 250 billion at the date of initial investment and a maximum market capitalisation of Yen 500 billion at any time subsequent. The Fund s exposure to a single country market increases potential volatility. Investment in this fund may involve a high degree of risk and may not be suitable for all investors. It is possible that the entire value of the investment could be lost. Investors are responsible for their investment decisions and should ensure that the intermediary has advised on fund s suitability and consistency with their investment objective. If in doubt, please seek independent financial and professional advice. Investors should not invest in this Fund based solely on this document and should read the relevant offering documents (particularly the investment policies and risk factors) for more details before investing. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. First State Asian Equity Plus Fund (USD) I Dis RISK DISCLOSURE STATEMENTS Please refer to the Fund's offering document for the details of its ""Risk factors"", particularly the Emerging Markets Risks. The value of the Fund can be extremely volatile according to the change of market situation and could go down within a short period of time. It is possible that the entire value of your investment could be lost. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 31
Risk Disclosure Statement Mirae Asset Asia Great Consumer Equity Fund (USD) A RISK DISCLOSURE STATEMENTS The Sub-Fund invests in emerging markets that should be regarded as having higher political, regulatory, volatility, liquidity, economic and foreign currency risks than a fund which invests in developed markets. The Sub-Fund invests mainly in single geographical region (i.e. Asia ex Japan region) or specific sector should be regarded as having higher concentration risk and is more volatile than a fund following a more diversified policy. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Fidelity Funds - Emerging Europe, Middle East And Africa Fund A-Acc-USD RISK DISCLOSURE STATEMENTS The Fidelity Funds is an umbrella fund with sub-funds investing in equities, debt, money market securities and/or other instruments, including derivatives. These funds may be subject to the risks of investing in emerging markets which may be more volatile, and to concentration risks of investing in a single or in a limited number of market(s) or sector(s). These funds may invest in non-investment grade bonds which may be more volatile and subject to greater credit and liquidity risks. These funds may invest in derivative instruments and / or structured products which may involve additional risks. (For example, leverage may cause greater volatility.) Investors may suffer substantial loss of their investments in the funds. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 32
Risk Disclosure Statement JPMorgan Latin America Equity A (Dist) USD RISK DISCLOSURE STATEMENTS The Fund invests in emerging markets and thus has exposure to the relevant currency and settlement risk. The Fund s price movement may be subject to significant volatility and thus may go down or up sharply over a short time span. Investors may be subject to substantial losses. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. First State China Growth Fund (USD) I RISK DISCLOSURE STATEMENTS The Fund is a portfolio that invests in securities issued by companies with either assets in, or revenues derived from the People s Republic of China. Other than the Risk factors of the Fund s offering document - particularly the China Market Risk and Emerging Markets Risks, the Fund also involves Single Country Risk. The value of the Fund can be extremely volatile according to the change of market situation and could go down within a short period of time. It is possible that the entire value of your investment could be lost. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 33
Risk Disclosure Statement Neuberger Berman China Equity Fund (USD) A Acc RISK DISCLOSURE STATEMENTS The Fund will invest primarily in equity and equity-linked securities which are listed or traded on recognised markets and issued by companies that are incorporated or organized under the laws of, or that have a principal office in, the PRC, Hong Kong SAR, Macau SAR or Taiwan (the Greater China Region ), generally derive a majority of their total revenue or profits from (a) goods that are produced or sold, (b) investments made, or (c) services performed, in the Greater China Region, or generally hold a majority of their assets in the Greater China Region, (each a Greater China Company ). The Portfolio will invest primarily in mid and large capitalisation companies. The Fund is therefore exposed to investment, Equity Securities, Emerging Markets, Chinese Market, Lower Rated Securities, Currency and Currency Hedging Risk. The Fund may use financial derivative instruments (FDI) for efficient portfolio management and hedging purposes. FDIs, however, will not be extensively used for investment purposes (including efficient portfolio management) nor for hedging purposes. In respect of Distributing Shares, the Fund may at its discretion pay dividends out of the capital of the Fund. Dividends paid out of capital amount to a return or withdrawal of part of an investor s original investment or from any capital gains attributable to that original investment. Such dividends may result in an immediate decrease in the net asset value of the relevant shares. Investors may be subject to substantial losses. Investors should not solely rely on this document to make any investment decision. Please refer to the offering documents for details including the risk factors before making any investment decisions. Please seek independent financial and professional advice if necessary. Before you decide to invest, you should make sure the intermediary has explained to you that the fund is suitable for you. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 34
Risk Disclosure Statement BlackRock Global Funds - US Dollar Short Duration Bond Fund (USD) A3 Mdis RISK DISCLOSURE STATEMENTS The Fund invests in debt securities that are subject to both actual or perceived downgrading. The Fund may be affected by changes in prevailing interest rates and by credit quality considerations. The Fund's investments are concentrated in the US. This may result in greater volatility than more broad-based investments. The Fund may use derivatives to hedge market and currency risk and for efficient portfolio management. However, derivatives will not be extensively or primarily used for investment purposes. In an adverse situation, the Fund may suffer significant losses from their derivatives usage for hedging and efficient portfolio management. The value of a Fund can be volatile and could go down substantially within a short period of time. It is possible that the certain amount of your investment could be lost. Investors should not only base on this marketing material alone to make investment decision. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. PIMCO Global Bond (USD) E Acc RISK DISCLOSURE STATEMENTS The Fund may invest wholly through financial derivative instruments such as collateralised debt obligations, credit default swaps and asset-backed securities in order to meet its investment objective and such investment policies or portfolio management techniques may as a result lead to a higher volatility to the net asset value of the Fund. This investment may involve risks that could result in loss of part or entire amount of your investment. In making investment decisions, investors should not rely solely on this material. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 35
Risk Disclosure Statement Templeton Global Total Return Fund (USD) A (Acc) RISK DISCLOSURE STATEMENTS The Fund may invest in emerging market securities which are exposed to higher risk of economic, political and regulatory changes that may pose additional risk to the Fund. The Fund may invest up to 100% of their total net assets in structured products, mortgage- and asset-backed securities and derivatives (such as credit default swaps, forwards and options), and is subject to significant liquidity and counterparty default risks. The Fund may invest in defaulted debt securities on which the issuers are not currently making interest payment, and as a result may be subject to liquidity and counterparty default risks. The Fund may invest in non-investment grade debt securities, and as a result may be subject to liquidity and counterparty default risks. This investment involves risks which may result in loss of part or entire amount of your investment. The Fund s value may be affected by exchange control regulations and changes in exchange rates. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Invesco Emerging Markets Bond Fund (USD) A Dist RISK DISCLOSURE STATEMENTS The Fund is an investment fund investing in emerging markets bonds. Investors should note the interest rate risk, credit risk, counterparty risk and emerging markets associated with the investment. Financial derivatives instruments may be used for the purpose of meeting the investment objective of the fund; and such investment policies or portfolio management techniques may lead to a higher volatility to the net asset value of the fund and can involve additional risk, including but not limited to counterparty default risk or insolvency. The value of the product can be volatile and could go down substantially within a short period of time. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 36
Risk Disclosure Statement Neuberger Berman Emerging Market Debt - Local Currency Fund (USD) A Mdis RISK DISCLOSURE STATEMENTS The Fund invests primarily in debt securities and money market instruments which are issued by governments of, government agencies in or corporate issuers which have their head office or exercise an overriding part of their economic activity in Emerging Market Countries and which are denominated in or are exposed to the currencies of such Emerging Market Countries. The Fund is therefore exposed to investment, credit and sovereign debt, lower rated securities, emerging markets, concentration, currency, currency hedging, fixed income securities and downgrade risks, risk of investing in securities issued by or guaranteed by a single sovereign issuer with a credit rating below investment grade and risk of investing in asset-backed securities. The Fund may make use of financial derivative instruments (FDI) in its investment program. The Fund may use FDI extensively for investment purposes, including efficient portfolio management. The Fund may have a net leveraged exposure of over 100% of its net asset value as a result of its use of FDI, and may result in a significant or a total loss of the Fund. In respect of Distributing Shares, the Fund may at its discretion pay dividends out of the capital of the Fund. Dividends paid out of capital amount to a return or withdrawal of part of an investor s original investment or from any capital gains attributable to that original investment. Such dividends may result in an immediate decrease in the net asset value of the relevant shares. Investors should not solely rely on this document to make any investment decision. Please refer to the offering documents for details including the risk factors before making any investment decisions. Please seek independent financial and professional advice if necessary. Before you decide to invest, you should make sure the intermediary has explained to you that the fund is suitable for you. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. BlackRock Global Funds - Global High Yield Bond Fund (USD) A2 RISK DISCLOSURE STATEMENTS The Fund invests in debt securities that are subject to both actual or perceived downgrading. The Fund may be affected by changes in prevailing interest rates and by credit quality considerations. The Fund may be subject to a higher risk of default when it invests in distressed securities. Certain shares of the Fund pay dividends gross of expenses or from capital at the Directors discretion. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital. Dividends paid from capital may amount to a partial return of an investor s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date. The Fund may use derivatives to hedge market and currency risk and for efficient portfolio management. However, derivatives will not be extensively or primarily used for investment purposes. In an adverse situation, the Fund may suffer significant losses from their derivatives usage for hedging and efficient portfolio management. The value of a fund can be volatile and could go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost. Investors should not only base on this marketing material alone to make investment decision. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 37
Risk Disclosure Statement Allianz US High Yield (USD) A Mdis RISK DISCLOSURE STATEMENTS The Fund is therefore exposed to significant risks which include investment/general market, creditworthiness and interest rate changes risks. The Fund may invest in high-yield, non-investment grade investments and unrated securities which may subject to higher risks, such as credit, default, interest rate changes, general market and liquidity risks and therefore may increase the risk of loss of original investment. The Fund may invest in financial derivative instruments ("FDI") for efficient portfolio management (including for hedging) which may expose to higher counterparty, liquidity and market risks. The Fund will not invest extensively in FDI for investment purpose. Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Fund s income and/or capital which represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment. This may result in an immediate decrease of the NAV and the capital of the Fund available for investment in the future and capital growth may be reduced. This investment may involve risks that could result in loss of part or entire amount of your investment. In making investment decisions, investors should not rely solely on this material. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 38
Risk Disclosure Statement First State Asian Quality Bond Fund (USD) I RISK DISCLOSURE STATEMENTS The Fund invests in debt securities of issuers organised, headquartered or having their primary business operations in Asia. The Fund invests in emerging markets which may involve a greater risk than developed markets including sharp price movements, liquidity risk and currency risk. The Fund may invest in below investment grade and unrated debt securities. This exposes the Fund to greater liquidity risk, default risk and price changes due to change in the issuer's creditworthiness. The Fund invests in fixed income securities which may be impacted by movement in interest rates. It is possible that the entire value of your investment could be lost. For the monthly distributing Shares Class, any fees and expenses relating to this Share Class may be paid out of capital resulting in an increase in distributable income. At times the dividend may be paid out of capital. This amounts to a partial return of an investor's original investment, or from any capital gains attributable to that original investment, and may result in an immediate decrease of the Net Asset Value per share. You should not base your investment decision solely on this document. You should not invest unless the intermediary who sells it to you has advised you that the Fund is suitable for you and explained how it is consistent with your investment objectives. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. BlackRock Global Funds - Asian Tiger Bond Fund (USD) A3 Mdis RISK DISCLOSURE STATEMENTS The Fund invests in debt securities that are subject to risk of downgrading. The Fund is exposed to changes in prevailing interest rates and by credit quality considerations. The Fund may invest in higher yielding bonds which may have higher risk of loss. Investment in certain emerging markets may subject the Fund to additional risks arising from political, economic and market factors. The Fund also invests in bonds issued or guaranteed by governments or authorities which may involve political, economic, default, or other risks, and in turn have an adverse impact on the Fund. Certain shares of the Fund pay dividends gross of expenses or from capital at the Directors discretion. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital. Dividends paid from capital may amount to a partial return of an investor s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date. The Fund may use derivatives to hedge market and currency risk and for efficient portfolio management. However, derivatives will not be extensively or primarily used for investment purposes. In an adverse situation, the Fund may suffer significant losses from their derivatives usage for hedging and efficient portfolio management. The value of a fund can be volatile and could go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost. Investors should not base their investment decision on this marketing material alone. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 39
Risk Disclosure Statement BEA Union Investment Asian Bond And Currency Fund (USD) A Acc RISK DISCLOSURE STATEMENTS The Fund invests in emerging markets, which are subject to higher liquidity and volatility risks. The Fund may invest in lower-rated fixed income instruments, including below investment grade and non-rated debt securities, which are subject to greater credit and liquidity risks than higher-rated securities. The Fund may enter into futures contracts and currency forward contracts for hedging and investment purposes. For futures contracts and currency forward contracts entered into on an unhedged basis, the net total aggregate value of contract prices will not exceed 20% of the total net asset value of the Fund. Given the leverage effect embedded in futures and currency forward contracts, the Fund may be exposed to significant losses. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Fidelity Funds - Asian High Yield Fund A-Acc-USD RISK DISCLOSURE STATEMENTS The Fidelity Funds is an umbrella fund with sub-funds investing in equities, debt, money market securities and/or other instruments, including derivatives. These funds may be subject to the risks of investing in emerging markets which may be more volatile, and to concentration risks of investing in a single or in a limited number of market(s) or sector(s). These funds may invest in non-investment grade bonds which may be more volatile and subject to greater credit and liquidity risks. These funds may invest in derivative instruments and / or structured products which may involve additional risks. (For example, leverage may cause greater volatility.) Investors may suffer substantial loss of their investments in the funds. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 40