Closure of L26 Alquity Africa Fund

To provide long term capital appreciation by investing mainly at least 70% of its net assets in equity securities listed on either (i) the regulated stock markets of African countries or (ii) the regulated stock markets outside the African continent provided that the relevant companies realized more than 50% of their revenue and/or profit in the African continent.

The underlying fund will mainly invest, directly or indirectly, in listed equities but will also consider bonds and convertible bonds. The underlying fund may also invest in assets such as money market instruments, time deposits.

The underlying fund may hold cash and cash equivalents temporarily, on an ancillary basis and, under exceptional circumstances (e.g. the global financial crisis of 2008 or Asian financial crisis of 1998), the underlying fund may also be invested up to 100% in cash and cash equivalents.

Within the limits set forth and as described under Appendix II. of the prospectus, the underlying fund may use financial techniques and instruments such as call and put options and financial futures for efficient portfolio management or to attempt to hedge or reduce the overall risk of its investments.

For so long as the underlying fund remains authorised for public offering in Hong Kong, the underlying fund will not use financial derivative instruments primarily or extensively for investment purposes without the prior approval of the SFC and at least one month’s prior notice to investors.

The underlying fund will not engage in securities lending or enter into repurchase agreements.

The underlying fund will not invest in debt securities issued and/or guaranteed by any single sovereign issuer (including its government, a public or local authority of that country) with a credit rating below investment grade, including unrated sovereign issuer.

The underlying fund will not invest in real-estate investment trusts, asset-backed securities or mortgage-backed securities.

The investment process of the underlying fund encompasses the consideration of environmental, social and governance (ESG) factors.

The underlying fund seeks to achieve a return in USD in line with prevailing money market rates whilst aiming to preserve capital consistent with such rates and to maintain a high degree of liquidity by investing in USD denominated short-term debt securities (i.e. money market instruments, eligible securitisations and asset-backed commercial paper) and deposits with credit institutions and reverse repurchase transactions.

All assets will be invested in USD denominated short-term debt securities (i.e. money market instruments, eligible securitisations and asset-backed commercial paper) and deposits with credit institutions and reverse repurchase transactions. These debt securities may be rated by an independent rating agency or unrated.

In addition to receiving a favourable credit quality assessment pursuant to the management company’s internal credit procedures, debt securities are rated at least A or A-1 by Standard & Poor’s (or equivalent ratings given by other independent rating agencies) for long-term and short-term ratings, respectively. Independent rating agencies include Standard & Poor’s, Moody’s and Fitch. The underlying fund may also invest in unrated debt securities of comparable credit quality to those specified above.

The investment manager assigns an internal credit rating to all debt securities, whether they are rated or unrated by an independent credit rating agency. Credit research of debt securities involves qualitative and quantitative analysis as well as peer group comparison.

Ongoing monitoring on debt securities is performed by the portfolio management team and a dedicated risk team. The weighted average maturity of the underlying fund’s portfolio will not exceed 60 days and the initial or remaining maturity of each money market instrument, eligible securitisation and asset-backed commercial paper will not exceed 397 days at the time of purchase.

The underlying fund may have exposure to investments in zero or negative yielding securities in adverse market conditions. In adverse market conditions, investments in short-term debt securities may generate a zero or negative yield. A short-term debt security may have a negative yield if, for example, the security has a zero coupon (i.e. it is a security that normally earns a positive yield by being purchased at a price below its final maturity value, such as a three month US treasury bill) and in adverse market conditions is available for purchase only at a price above its final maturity value.

The underlying fund may at any time enter into reverse repurchase transactions on over-the-counter markets. The expected proportion of the assets under management of the underlying fund that could be subject to reverse repurchase transactions fluctuates between 0% and 30%, subject to a maximum of 100%. All income generated from reverse repurchase transactions entered into by the underlying fund will accrue to the underlying fund. The underlying fund will only enter into transactions with counterparties which the management company believes to be creditworthy. Approved counterparties will typically have a credit rating of A- or above as rated by Standard & Poor’s or otherwise similarly rated by Moody’s and Fitch. Counterparties will comply with prudential rules considered by the Commission de Surveillance du Secteur Financier as equivalent to EU prudential rules. The collateral underlying the reverse repurchase transactions will only include USD denominated short-term debt securities valued greater than or equal to the value of the reverse repurchase transactions.

The underlying fund will not invest more than 10% of its net asset value in securities issued or guaranteed by any single country (including its government, a public or local authority of that country) with a credit rating below investment grade. The underlying fund does not intend to invest in financial derivative instruments for any purposes.