Strategy
In seeking to achieve the Sub-Fund’s investment objective, the Manager will primarily use a combination of full replication strategy and representative sampling strategy.
In pursuing the full replication strategy, the Manager may invest in substantially all the Index securities constituting the Index (“Index Securities”) in substantially the same weightings (i.e. proportions) as these Index Securities have in the Index.
In pursuing the representative sampling strategy, the Manager may 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. In addition, the Manager may:
(i) 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;
(ii) 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 30% of the NAV of the Sub-Fund provided that the Sub-Fund’s investment in CIS which are non-eligible schemes and not authorised by the SFC may not in aggregate exceed 10% of the NAV of the Sub-Fund; and
(iii) 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. For the avoidance of doubt, the aggregate investment in futures and swaps will not exceed 30% of the Sub-Fund’s NAV.
In pursuing the representative sampling strategy, the Manager may cause the Sub-Fund to deviate from the index weighting on condition that any excess weighting of a constituent held by the Sub-Fund over its relevant weighting in the Index will be subject to a maximum of 3% or such other percentage as determined by the Manager after consultation with the SFC.
The Sub-Fund may switch between the full replication strategy and the representative sampling strategy without prior notice to investors, in its absolute discretion, and as often as it believes is appropriate in order to achieve the investment objective of the Sub-Fund by tracking the Index as closely as possible to the benefit of investors.
The Sub-Fund may also utilise FDIs for hedging purposes to the extent permitted by Chapter 7 of the Code.
Securities Lending
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 NAV, and is able to recall the securities lent out at any time. 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. 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 .
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.
Index
The Index is a float-adjusted market capitalisation weighted index. It measures the performance of 500 large-cap companies which are common equities primarily listed on the US public traded stock market, and covers approximately 80% of available US market capitalisation. To be included, companies must have an unadjusted market cap of USD18 billion or greater, and must have a float-adjusted market cap that is at least 50% of the unadjusted minimum market cap threshold. All eligible US common equities listed on eligible US exchanges can be included. REITs are also eligible for inclusion but close-ended funds, exchange-traded funds, American depositary receipts, and certain other types of securities are ineligible for inclusion.
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. On a quarterly basis, the Index will be rebalanced in March, June, September and December.
The Index was launched on 4 March 1957 and with the first value date of 3 January 1928. As at 30 June 2025, the Index had a total market capitalisation of USD55,038,037.38 million and 504 constituents.
The Index is calculated and maintained by S&P Dow Jones Indices LLC (the “Index Provider”). The Manager (and each of its Connected Persons) is independent of the Index Provider.
Further details of the above Index rebalancing and reconstitution processes are set out in the Appendix of the Sub-Fund in Part 2 of the Prospectus.
The list of the constituents of the Index, their respective weightings, additional information and other important news of the Index can be obtained from the website of the Index Provider at https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview (the contents of this website have not been reviewed by the SFC).
Reuters: .SPXNTR
Bloomberg: SPTR500N
