CMBI AI Equity Fund (the “Sub-Fund”) is a sub-fund of the CMBI Fund Series (the “Fund”), which is a Hong Kong domiciled umbrella structure unit trust. It is governed by the laws of Hong Kong.

Please note that the Sub-Fund does not have any guarantees. You may not get back the full amount of money you invest and the investments in Sub-fund may not be suitable for everyone. The investors should read the Explanatory Memorandum and Product Key Facts Statement carefully and pay attention to product features and risks to evaluate whether the product matches with investor’s own investment objective and risk appetite. Investors can obtain Explanatory Memorandum and Product Key Facts Statement of Sub-Fund from the office of CMB International Asset Management Limited, 39/F, Champion Tower, 3 Garden Road, Central, Hong Kong and can also download from website. Since the Sub-Fund is newly set up, there is insufficient data to provide a useful indication of past performance. And historical performance is not indicative of future results, neither does it constitute a representation or guarantee as to future results or performance.

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

1. Investment risk

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

2. Equity investment risk

• The Sub-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.

3. Sector concentration risk and risks associated with the AI Business

• Due to the concentration of the Sub-Fund’s investments in companies involved in the AI Business, the performance of the Sub-Fund may be more volatile than that of a fund having a more diverse portfolio of investments.
• The Sub-Fund invests primarily in the equity securities and equity-related securities of companies involved in the AI Business and, as such, is particularly sensitive to risks associated with those types of companies. These risks include, but are not limited to, small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation.
  • Stock prices of AI companies, especially companies which have a relatively small market capitalisation and limited operating history, tend to be more volatile than securities of companies that do not rely heavily on technology.
  • Rapid change to technologies that affect a company’s products could have a material adverse effect on such company’s operating results.
  • Companies involved in the AI Business may rely on a combination of patents, copyrights, trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies. There can be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior to such companies’ technology.
  • Increasing global regulatory scrutiny in relation to the collection, storage and usage of data may also impede the development of new AI products, hamper the commercial rollout of such products and affect the market demand.
• Companies in the AI sector also typically rely on heavy and significant spending on research and development, and there is no guarantee that the products produced by these companies will materialise into commercially successful products. Furthermore, as the AI sector may be deemed sensitive to national interests, the sector may be subject to government intervention, sanctions and trade protectionism. The success of companies in the AI sector is typically dependent on the companies’ ability to maintain relationships with their technology partners. If a company’s relationship with a technology partner were impaired or terminated, the company may not be able to enter into a new technology alliance on a timely basis or on commercially favourable terms, which could result in significant additional cost or disruptions to its businesses.

4. Concentration risk

The Sub-Fund’s investments are concentrated in Hong Kong and the United States. The value of the Sub-Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Hong Kong and United States market.

5. Risk associated with securities lending transactions

• The Sub-Fund may enter into securities lending transactions which may be subject to legal risk, operational risks, liquidity risks of the counterparty and custody risk of the collateral. In particular, 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.

6. Risks associated with ADRs and GDRs

• Exposure to ADRs and GDRs may generate additional risks compared to a direct exposure to the underlying securities, including the risk of non-segregation of the underlying stocks held by the depositary bank from the bank's own assets and liquidity risks (as ADRs and GDRs are often less liquid than the underlying stocks). Bankruptcy events in respect of the depositary banks may lead to trading suspension and thereafter a freeze of the price of ADRs or GDRs affected, which may negatively affect the performance and/or liquidity of the Sub-Fund.
• Holders of ADRs and GDRs generally do not have the same right as the direct shareholders of the underlying stocks. The performance of ADRs and GDRs may also be impacted by the related fees, for example fees charged by banks for the custody of underlying assets of depositary receipts.

7. Currency and foreign exchange risks

• Underlying investments of the Sub-Fund may be denominated in currencies other than its base currency. Also, a class of units may be designated in a currency other than the base currency of the Sub-Fund. The NAV of the Sub-Fund may be affected unfavourably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls.
• RMB is currently not freely convertible and is subject to exchange controls and restrictions which, under exceptional circumstances may cause a delay in payment of redemptions and/or dividend payments in RMB. Although offshore RMB (CNH) and onshore RMB (CNY) are the same currency, they trade at different rates. Any divergence between CNH and CNY may adversely impact investors.

8. Risks associated with distributions out of / effectively out of the Sub-Fund’s capital

• Payment of dividends out of capital and/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 of the NAV per unit.

9. Risks associated with investment in FDIs for investment, efficient portfolio management and hedging purposes

• The Sub-Fund may invest in FDIs for investment, efficient portfolio management and hedging purposes and in adverse situations its use of FDIs may become ineffective and/or cause the Sub-Fund to suffer significant loss. Risks associated with FDIs include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/component of an FDI can result in a loss significantly greater than the amount invested in the FDI by the Sub-Fund. Exposure to FDI may lead to a high risk of significant loss by the Sub-Fund.

The investment objective of the Sub-Fund is to provide capital growth by investing in companies which focus on developing, facilitating or utilising artificial intelligence solutions (the “AI Business”).

In seeking to achieve the Sub-Fund’s investment objective, the Manager will invest at least 70% of its NAV in equity securities and equity-related securities (such as common shares, preferred stock as well as American depositary receipts (“ADRs”), global depositary receipts (“GDRs”), participate in initial public offerings (“IPO”) and participation notes) of companies in the AI Business which are constituents of the Bloomberg Hong Kong & US AI Tech Price Return Index¹ (the “Index”). The Sub-Fund may invest less than 30% of its NAV in equity securities and equity-related securities of companies related to the AI Business which are not constituents of the Index.