Premia BOCHK Saudi Arabia Government Sukuk ETF CIES Eligible ^#
(Listed Distribution Units Class)

IMPORTANT: Investment involves risk, including the loss of principal. Investors should refer to the Prospectus and Key Facts Statement of PREMIA BOCHK Saudi Arabia Government Sukuk ETF (the "ETF") for details, including the risk factors. Investors should not base investment decisions on this marketing material alone. Investors should note:

The ETF aims to provide investment results that, before fees and expenses, closely correspond to the performance of iBoxx Tadawul Government & Agencies Sukuk Index (SAR Unhedged) TRI (“Index”).

General investment risk
The ETF’s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the ETF may suffer losses. There is no guarantee of the repayment of principal.

Sukuk and fixed income instruments related risk
Sukuk certificates represent ownership interests in underlying Sukuk assets and pricing is therefore based on the value of those underlying assets and the income they generate. There are certain risks specific to Sukuk such as Shariah Compliance, where any non-compliance with Sharia principles can cause investors to suffer losses if a Sharia board revokes approval and Asset Related risks, which can lead to losses if an underlying asset loses value or is seized. Sukuk holders may not recover their principal unlike bondholders with contractual debt claims. At the same time, Sukuk are also subject to risks associated with typical fixed income instruments, including interest rate, credit rating, credit rating downgrades, liquidity, below investment grade, unrated and valuation risks.

• Interest rate risk is the risk that fixed income instruments will decline in value because of an increase in interest rates. Fixed income instruments with longer terms or residual time to maturity generally are subject to greater interest rate risk.
• Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the issuer at all times.
• The ETF may invest in securities which are below investment grade or which are unrated and be subject to lower liquidity, higher volatility and greater risk of loss of principal and profit/return than high-rated securities.
• Credit risk is inherent in the underlying assets of the Sukuk. Failure of payment from underlying assets will result in an inability to meet periodic payments and/or failure to repay capital of the Sukuk instruments, ultimately impacting the value of the Sukuk.
• Investment grade securities which the ETF may invest in may be subject to the risk of being downgraded. In the event of a downgrade in the credit ratings of a security or an issuer relating to a security, the ETF’s investment value in such security may be adversely affected.
• If the ETF invests in illiquid securities (including Sukuk which are close to maturity) or the current market becomes illiquid, the returns of the ETF may be reduced because the ETF cannot sell the illiquid securities at an advantageous time or price.
• Valuation of fixed income instruments may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the Net Asset Value of the ETF.

Sovereign and quasi-sovereign Sukuk risk
For sovereign Sukuk and quasi-sovereign Sukuk, the governmental entity (including the government or any public or local authority) that controls the payment or redemption of sovereign Sukuk and quasi-sovereign Sukuk may not be able or willing to pay the principal and/or profit/return when due in accordance with the terms of such debt or may request the ETF to participate in restructuring such debts. Sovereign Sukuk and quasi-sovereign Sukuk holders may also be affected by additional constraints relating to sovereign and quasi-sovereign issuers which may include: (i) the unilateral rescheduling of such debt by the issuer and (ii) the limited legal recourses available against the issuer (in case of failure of delay in repayment). The ETF may therefore suffer a significant or even total loss in the event of default of the sovereign and quasi-sovereign issuer.

Saudi Arabia concentration and emerging market risks
Saudi Arabia concentration risk - The ETF’s investments are concentrated in Saudi Arabia. The value of ETF may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event in Saudi Arabia, and may therefore be more volatile than that of a fund having a more diverse portfolio of investments.

Economic risk - The economy of Saudi Arabia is dominated by petroleum exports. Consequently, a sustained decrease in petroleum prices could have a negative impact on all aspects of the economy of Saudi Arabia. Any instability in the larger Middle East region could adversely impact the economy of Saudi Arabia.

Political risk - Saudi Arabia has historically experienced strained relations with economic partners worldwide, including other countries in the Middle East due to geopolitical events. The performance of the ETF may be affected by political developments in Saudi Arabia, changes in government policies and changes in regulatory requirements. Governmental actions in the future could have a significant effect on economic conditions in Saudi Arabia, which could affect the value of Securities in the ETF’s portfolio.

Legal and regulatory risks – The Saudi legal system is based on Shariah law. The outcome of previously determined cases would not be binding in nature, the interpretation and enforcement of applicable Saudi laws and regulations involves significant uncertainties. In addition, as the Saudi legal system develops, no assurance can be given that changes in such laws and regulations, their interpretation or their enforcement will not have a material adverse effect on the ETF’s operations or the ability of the ETF to acquire Saudi listed Sukuk.

Emerging market risk - Saudi Arabia is an emerging market and may involve increased risks and special considerations not typically associated with investment in other developed markets, such as liquidity risks, currency risks/control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility. Investments in Saudi Arabia may be less liquid and experience greater volatility than investments in other developed markets due to generally lower trading volumes, smaller market capitalisations of companies and potential settlement difficulties in Saudi Arabia, which may adversely affect the value of the ETF.

Risks relating to trading of Sukuk on Saudi Exchange
Potential market volatility risk - Market volatility may result in significant fluctuation in the prices of Securities traded on the Saudi Exchange, which would therefore impact upon the Net Asset Value of the ETF.

Electronic trading platform risk - Brokers submit trade orders through an electronic system which is linked and received by the Saudi Exchange’s system. The use of electronic systems by the broker or the Saudi Exchange is subject to software, hardware, or communication failure which may cause halts or delays in acquiring the intended securities for the ETF.

Settlement risk - Settlement procedures in Saudi Arabia may be different compared to those in other developed markets, with the clearing, settlement and registration systems potentially experiencing delays and other material difficulties in settling trades and registering the transfer of Securities, thereby affecting the Net Asset Value of the ETF. Any delay could result in substantial losses for the ETF if investment opportunities are missed or if the ETF is unable to acquire or dispose of the Securities as a result.

Broker risk and custody risk – The number of brokers who can provide services to the ETF may be limited, which may have an adverse impact on the prices, quantity or timing of the transactions for the ETF’s portfolio.

The Trustee has appointed the Custodian, who will act through its delegate, the Sub-Custodian, for the safe custody of the ETF’s assets. The ETF will be exposed to the credit risk of the Custodian and/or the Sub-Custodian to the extent that the cash and/or assets in the portfolio of the ETF are held by the Custodian and/or the Sub-Custodian. Since the custodial and/or settlement systems in Saudi Arabia may be different from those systems in other developed markets, the assets of the ETF may be exposed to custodial risk.

Trading band risk - Trading band limits are imposed by the Saudi Exchange, where trading in any Securities on the stock exchange may be suspended if the trading price of the security has increased or decreased to the extent beyond the trading band limit during the day. Any dealing suspension of that security will render it impossible for the ETF to acquire the relevant Index Security or liquidate positions to reflect creation/redemption of the Units. This may result in a higher tracking error and may expose the ETF to losses. Units of the ETF may also be traded at a significant premium or discount to its Net Asset Value.

Trading prohibition risk - If there is an unexecuted purchase or sell trade in respect of any Securities then an opposing trade via the same custodial account for the same Securities will be rejected in the market (the “Saudi Trading Prohibition”) – for example, if a purchase trade fails and there is another sell trade on the same custodial account for the same Securities, then the sell trade will also fail to settle. Therefore, any trading activity that triggers the Saudi Trading Prohibition may cause a delay in trading. This may impact the ETF’s ability to rebalance and cause an increase of its tracking error.

Saudia Arabia tax risk
There are risks and uncertainties associated with the Saudi tax laws, regulations and practice. Any increased tax liabilities on the ETF may adversely affect the ETF’s value.

Based on professional and independent tax advice, the ETF is eligible for exemption from KSA domestic tax on capital gains for trading of securities listed on the Saudi Exchange. For disposal of Securities not traded on a stock market inside the KSA, where the exemption would not be applicable, 20% Saudi capital gains tax should apply in respect of capital gains realised by the ETF. Please refer to the section headed “Saudi Arabia Taxation” in the Appendix 12 of the Prospectus for further details.

Differences in dealing arrangements between Listed Class of Units and Unlisted Class of Units risk
Investors of the Listed Class of Units and the Unlisted Class of Units are subject to different pricing and dealing arrangements. The Net Asset Value per Unit of each of the Listed Class of Units and Unlisted Class of Units may be different due to the different fees and cost applicable to each class.

The Listed Class of Units are traded on the stock exchange in the secondary market on an intraday basis at the prevailing market price (which may diverge from the corresponding Net Asset Value), while Unlisted Class of Units are sold through intermediaries based on the Dealing Day-end Net Asset Value and are dealt at a single valuation point with no access to intraday liquidity in an open market. Depending on market conditions, investors of the Listed Class of Units may be at an advantage or disadvantage compared to investors of the Unlisted Class of Units.

In a stressed market scenario, investors of the Unlisted Class of Units could redeem their Units at Net Asset Value while investors of the Listed Class of Units in the secondary market could only sell at the prevailing market price (which may diverge from the corresponding Net Asset Value) and may have to exit the ETF at a significant discount. On the other hand, investors of the Listed Class of Units could sell their Units on the secondary market during the day thereby crystallising their positions while investors of the Unlisted Class of Units could not do so in a timely manner until the end of the day.

Differences in fee and cost arrangements between Listed Class of Units and Unlisted Class of Units risk
The levels and types of fees and costs applicable to each of the Listed Class of Units and the Unlisted Class of Units may differ. As such, the Net Asset Value per Unit of each of the Listed Class of Units and Unlisted Class of Units may also be different.

For the Listed Class of Units, the Transaction Fee may be payable by the Participating Dealer in respect of creation and redemption applications. In relation to cash creation and redemption applications by Participating Dealers, the Manager reserves the right to require the relevant Participating Dealer to pay an additional sum on the creation amount or deduct from the redemption proceeds such sum representing the Duties and Charges for the purpose of compensating or reimbursing the relevant ETF. Investors in the secondary market will not be subject to the foregoing, but may incur SEHK-related fees such as brokerage fees, transaction levy, trading fee, and inter-counter transfer fee.

SAR, foreign exchange risk
The ETF's Base Currency is in SAR and the underlying investments are primarily denominated in SAR, and the Unlisted Class of Units may be designated in a currency other than SAR. The Net Asset Value of the ETF may be affected unfavourably by fluctuations in the exchange rates between the relevant currency and SAR and by changes in exchange rate controls.

Physical ETFs and Other Sukuk ETFs related risk
The ETF may invest in Other Physical ETFs and Other Sukuk ETFs. The fees and costs charged in respect of the Other Physical ETFs and Other Sukuk ETFs will be borne by the ETF. Although the Manager (and, where applicable, the Investment Adviser) will only invest in Other Physical ETFs or Other Sukuk ETFs if it considers that doing so is in the best interest of the ETF and its Unitholders, there is no guarantee that these Other Physical ETFs and Other Sukuk ETFs will achieve their respective investment objectives and any tracking error of these Other Physical ETFs or Other Sukuk ETFs will also contribute to the tracking error of the ETF.

Distributions out of or effectively out of capital risk
Payment of dividends out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any such distributions may result in an immediate reduction in the Net Asset Value per Unit of the Unlisted Distribution Units of the ETF.

Passive investments risk
The ETF is passively managed and the Manager (and, where applicable, the Investment Adviser) will not have the discretion to adapt to market changes due to the inherent investment nature of the ETF. Falls in the Index are expected to result in corresponding falls in the value of the ETF.

Tracking error risk
The ETF may be subject to tracking error risk, which is the risk that its performance may not track that of the Index exactly. This tracking error may result from the investment strategy used and/or fees and expenses. There can be no assurance of exact or identical replication at any time of the performance of the Index.

Securities Lending Transactions Risk
Securities lending transactions may involve the risk that the borrower may fail to return the securities lent out in a timely manner and the value of the collateral may fall below the value of the securities lent out.

New index risk
The Index is a new index. The ETF may be riskier than other exchange traded funds tracking more established indices with longer operating history.