In seeking to achieve the Sub-Fund’s investment objective, the Manager will primarily use a full replication strategy through investing in substantially all the Index securities constituting the Index (the “Index Securities”) in substantially the same weightings (i.e. proportions) as these Index securities have in the Index. Such Index Securities may include securities of non-financial companies (which may include listed depositary receipts such as American Depositary Receipts (“ADRs”) which are listed on the NASDAQ.

The Manager may however, in the exceptional circumstances (i.e. due to restrictions, suspensions of trading, limited availability of certain Index Securities, corporate events, or as the Manager believes there is significant market mispricing or foreseeable market turbulence) where it is not feasible or not in the best interest of investors to acquire certain securities which are constituents of the Index and/or it is not cost efficient, by reference to the Sub-Fund’s Net Asset Value, use a representative sampling strategy where the Manager believes will help the Sub-Fund achieve its investment objective.

In pursuing the representative sampling strategy, the Manager may:

1. invest in a representative sample whose performance is closely correlated with the Index, but whose constituents may or may not themselves be constituents of the Index;
2. invest in other collective investment schemes (“CIS”), each being either an exchange traded fund or an unlisted index tracking fund which tracks an index that has a high correlation with the Index. Such CIS may be authorised by the SFC, eligible schemes under Chapter 7.11A of the Code, or non-eligible schemes. The Sub-Fund’s aggregate investment in other CIS may be up to 10% of the Net Asset Value of the Sub-Fund; and

1. invest in financial derivative instruments (“FDIs”) which exhibit high correlation with the Index, including futures and swaps where the Manager believes such investments will help the Sub-Fund achieve its investment objective and are beneficial to the Sub-Fund. The futures which may be invested by the Sub-Fund will be index futures, such as the NASDAQ 100 E-mini futures. On the other hand, the swaps which may be invested by the Sub-Fund will be funded total return swap transaction(s) whereby the Sub-Fund will pass on the relevant portion of cash to the Swap Counterparty(ies) and in return the Swap Counterparty(ies) will provide the Sub-Fund with an exposure to the economic gain/loss in the performance of the relevant Securities (net of indirect costs). The expected proportion of the Sub-Fund’s Net Asset Value subject to investments in futures and swaps will not exceed 10% and 10% of its Net Asset Value, respectively. For the avoidance of doubt, the aggregate investment in futures and swaps will not exceed 10% of the Net Asset Value of the Sub-Fund.

In pursuing the representative sampling strategy, the Manager may cause the Sub-Fund to deviate from the index weighting on condition that the maximum deviation from the index weighting of any constituent will not exceed 3% or such other percentage as determined by the Manager after consultation with the SFC.

Investors should note that the Manager may switch between the full replication and representative sampling strategies without notice to investors and in its absolute discretion.

Securities lending transactions

The Manager may, on behalf of the Sub-Fund, enter into securities lending transactions , with the maximum level for up to 50% and expected level for approximately 20% of its Net Asset Value, and is able to recall the securities lent out at any time. All securities lending transactions will only be carried out in the best interest of the Sub-Fund and as set out in the relevant securities lending agreement. Such transactions may be terminated at any time by the Manager at its absolute discretion.

As part of the securities lending transactions, the Sub-Fund must receive cash and/or non-cash collateral of at least 100% of the value of the securities lent (interests, dividends and other eventual rights included). The collateral will be marked-to-market on a daily basis and be safekept by the Custodian. The valuation of the collateral generally takes place on trading day T. If the value of the collateral falls below 100% of the value of the securities lent on any trading day T, the Manager will call for additional collateral on trading day T, and the borrower will have to deliver additional collateral to make up for the difference in securities value, with settlement of such delivery expected to occur on or before trading day T+2. Non-cash collateral received may not be sold, re-invested or pledged. Please refer to “Collateral” under the section headed “Investment Objective, Strategy and Restrictions” in Part 1 of this Explanatory Memorandum for details of the requirements in relation to collateral received as part of the securities lending transactions.

In conducting securities lending transactions, the Manager will select independent counterparties approved by the Manager which (i) are incorporated in countries of high credit quality; (ii) have a minimum long-term credit rating of A2 or short-term credit rating of P2 by Moody’s or equivalent assigned by reputable credit rating agencies; or (iii) be a licensed corporation with the SFC or registered institution with the Hong Kong Monetary Authority. All the revenues arising from securities lending transactions, net of direct and indirect expenses as reasonable and normal compensation for the services rendered in the context of the securities financing transactions to the extent permitted by applicable legal and regulatory requirements, shall be returned to the Sub-Fund. Please refer to “Securities financing transactions” under the section headed “Investment Objective, Strategy and Restrictions” in Part 1 of this Explanatory Memorandum for details of the Manager’s policy in relation to securities lending transactions.

The Manager does not currently intend to enter into sale and repurchase transactions, reverse repurchase transactions and other similar over-the-counter transactions on behalf of the Sub-Fund. The Manager will seek prior approval of the SFC (to the extent required under applicable regulatory

requirements) and provide at least one month’s prior notice to Shareholders before the Manager engages in any such transactions.

Ancillary investments

Under exceptional circumstances (e.g. market crash or major crisis) or adverse market conditions, the Sub-Fund may be invested temporarily up to 100% of its Net Asset Value in liquid assets such as bank deposits, certificates of deposit, commercial paper and treasury bills for cash flow management.

The Sub-Fund may also utilise FDIs for hedging and investment purposes to the extent permitted by Chapter 7 of the UT Code. For the avoidance of doubt, the net derivative exposure of the Sub- Fund may be up to 50% of the Sub-Fund’s Net Asset Value.

Investment restrictions

No waivers from the investment restrictions set out in Part 1 of this Explanatory Memorandum have been sought or granted by the SFC.

The Index

This section is a brief overview of the Index. It contains a summary of the principal features of the Index and is not a complete description of the Index. As of the date of this Explanatory Memorandum, the summary of the Index in this section is accurate and consistent with the complete description of the Index. Complete information on the Index appears on the website identified below. Such information may change from time to time and details of the changes will appear on that website.

General Information on the Index

The Index is a modified market capitalisation weighted index, whereby the weights of Index Securities are based on their market capitalisations, but with certain rules capping the weights of the Index Securities as described further below in the section headed “Index Methodology”. It includes 100 of the largest US and international non-financial companies listed on the Nasdaq based on market capitalisation, and reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology, and does not contain securities of financial companies. The Index is calculated and disseminated in USD.

The Index is a net total return index, which means that it reflects the reinvestment of dividends or distributions, after deduction of any withholding tax.

The Index was launched on 31 January 1985 and had a base level of 125 on the same date. As at 14 March 2024, the Index had a net market capitalisation of USD 21.06 trillion and 101 constituents.

Index Provider

The Index is calculated and maintained by NASDAQ, Inc.. or its affiliates (the “Index Provider”). The Manager (and each of its Connected Persons) is independent of the Index Provider.

Index Methodology

To be eligible for initial inclusion in Index, a security must meet the following criteria:

• the issuer of the security’s primary US listing must be exclusively listed on the NASDAQ Global Select Market or the NASDAQ Global Market;

• the security must be issued by a non-financial company according to the Industry Classification Benchmark (ICB), a product of FTSE International Limited that is used under license;
• the security may not be issued by an issuer currently in bankruptcy proceedings;
• the security must have a minimum average daily trading volume of at least 200,000 shares in the preceding 3-month trading period;
• if the issuer of the security is organised under the laws of a jurisdiction outside the U.S., then such security must have listed options on a recognised options market in the U.S. or be eligible for listed-options trading on a recognised options market in the U.S.;
• the issuer of the security may not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being Index eligible; and
• the security must have been traded for at least full three months, not including the month of initial listing, on NASDAQ, New York Stock Exchange, or Chicago Board Options Exchange (A security that was added to the Index as the result of a spin-off event will be exempt from this requirement).

If an issuer has listed multiple security classes, all such security classes are eligible, subject to meeting all of the above eligibility criteria.

There is no market capitalisation or float eligibility criteria. Quarterly weight adjustment

On a quarterly basis in March, June, September and December, the weights of the securities in the Index will be reviewed according to issuer-level constraints, and the Index will be rebalanced if it is determined that:

• the weight of an issuer is greater than 24%; and/or
• the collective weight of issuers whose individual weights are each in excess of 4.5%, when added together, exceeds 48% of the Index.

During the rebalancing process, the weights of all securities with individual weights greater than 1% will be scaled down proportionately such that no issuer weight will exceed 20% and the collective weight of individual issuers exceeding 4.5% does not exceed 40%.

The above Index rebalancing changes become effective after the close of trading on the third Friday in March, June, September and December.

Annual weight adjustment

In addition to and after performing the above quarterly weight adjustment based on issuer-level constraints, on an annual basis in December, the weights of the securities in the Index will be reviewed according to security-level constraints, and the Index will be rebalanced if it is determined that:

• the weight of an Index Security is greater than 15%; and/or
• the collective weight of Index Securities with the five largest market capitalisations when added together, exceeds 40% of the Index.

During the rebalancing process, the weights of all securities with individual weights greater than 1% will be scaled down proportionately such that no Index Security weight will exceed 14%, and the collective weight of Index Securities with the five largest market capitalisations does not exceed