Investment involves risks. The Sub-Fund is a passive exchange traded fund (“ETF”) which invests directly in solana. The risks of investing in the Sub-Fund are therefore greater than those of investing in other conventional ETFs. Solana is relatively new investment with limited history. They are subject to unique and substantial risks, and historically, have been subject to significant price volatility. The value of an investment in the Sub-Fund could decline significantly in a short period of time and without warning, including to zero. You may lose the full value of your investment within a single day.

If you are not prepared to accept significant and unexpected changes in the value of the Sub-Fund and the possibility that you could lose your entire investment in the Sub-Fund you should not invest in the Sub-Fund. Your investment in the Sub-Fund should only be ancillary in your portfolio. Please refer to the Prospectus for details including as to the risk factors.

 

1. General 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. There is also no assurance that the investment objective of the Sub-Fund will be achieved.

 

2. Solana risks

The Sub-Fund is directly exposed to the risks of solana through investment in solana, and the following risks which adversely affect the price of solana may also affect the value of the Sub-Fund.

• New innovation risk: Solana is a relatively new innovation and the market for solana is subject to rapid price swings, changes and uncertainty. It is not backed by any authorities, government or corporations. Continued and further development of the Solana Network and the acceptance and use of solana are subject to a variety of factors that are difficult to predict or evaluate. Any cessation or reversal of such development of the Solana Network or the acceptance of solana may adversely affect the price of solana and thus the Sub-Fund’s investment.

• Unforeseeable risks: Given the rapidly evolving nature of solana, including advancements in the underlying technology, market disruptions and resulting governmental interventions that are unforeseeable, an investor may be exposed to additional risks which cannot currently be predicted.

• Speculative risk: Solana is highly speculative as it has limited track record and lack of intrinsic value. Its value is primarily driven by supply and demand dynamics within the solana market and does not generate cash flows.

• Extreme price volatility risk: Investing in solana and related products can be highly volatile compared to investments in traditional securities, and their price movements are difficult to predict. The prices of solana have historically been extremely volatile. For example, the price of solana dropped 82% during the period from 7 November 2021 to 1 January 2023. For example, in 2022, the biggest single-day drop of the price of solana was 42.3% *. The value of the Sub-Fund’s investments in solana could decline significantly and without warning, including to zero. Factors that contribute to the volatility of solana prices include:

• global demand and supply of solana;
• maintenance and development of the open-source software protocol of the Solana Network;
• competition from other digital assets;
• investor sentiments on the value or utility of solana;
• investors’ confidence regarding the security and long-term stability of a digital asset’s network and its blockchain; and
• contagious effect on the price of solana from incidents on digital assets and trading platforms, for example, the price of solana dropped significantly following the collapse of FTX, one of the largest digital assets exchanges, in November 2022.

     * This is based on daily prices of solana against USD at GMT 00:00.

• Risk relating to the limited history of solana: Solana Network was launched in March 2020. Solana and the Solana Network have a limited history, therefore, it is unclear how all elements of solana will unfold over time, specifically with regard to governance between validators, developers and users, as well as the long-term security model as the validator reward of solana decreases over time. Insufficient software development or any other unforeseen challenges that the solana community is not able to resolve could have an adverse impact on solana price and thus the Sub-Fund’s investment.

 

• Hybrid Proof-of-History (“PoH”) and Proof-of-Stake (“PoS”) mechanism risk: Solana employs a hybrid consensus model combining PoH with PoS. This unique model may lead to risks such as operational risk. In particular, PoH is a new blockchain technology that is not widely used, and may not function as intended. For example, it may require more specialised equipment to participate in the network and fail to attract a significant number of users. In addition, there may be flaws in the cryptography underlying PoH, which may affect functionality of the Solana Network or make the network vulnerable to attack.

 

• Inflationary risk: Solana adopts a flexible inflation model. Its initial annual inflation rate was 8% in 2020, with an inflation rate decreasing in a rate of 15% year-over-year, until it stabilises at a fixed rate of 1.5% annually. A net issuance of new tokens can dilute the value of solana holdings. To counteract inflation, there is a mechanism where 50% of transaction fee is burned (permanently removed from circulation, thereby reducing the total supply) and the other 50% goes to the validator that processed the transaction. During high network demand, high transaction volume from users and applications increases the burn rate, reducing net inflation. During low network demand and as activity on Solana Network declines, the burn mechanism becomes less effective, and net inflation remains positive. The potential for low network adoption and usage would cause the baseline inflation continuing to dilute solana value. As a result, the Sub-Fund’s value will be adversely impacted.

 

• Cybersecurity, fraud, market manipulation and security failure risk: Solana may be subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact solana trading venues. In particular, the Solana Network and entities that hold solana in custody or facilitate the transfers or trading of solana are vulnerable to various cyber attacks. Malicious actors may also exploit flaws in the code or structure in the Solana Network that will allow them to, among other things, steal solana held by others, control the blockchain, steal personally identifying information, or issue significant amounts of solana in contravention of the protocols. The occurrence of any of the above may have negative impact on the price of solana and thus the Sub-Fund’s investment. Over the past several years, a number of major players such as less regulated virtual assets trading venues have experienced, or may in the future, collapse, stop operating or temporarily or permanently shut down due to issues such as fraud, failure, security breaches, cybersecurity issues or manipulation. This may adversely affect the value of solana and thus the value of the Sub-Fund.

• Concentration of ownership risk: A significant portion of solana is held by a small number of holders who may have the ability to manipulate the price of solana. As a result, large sales by such holders could have an adverse effect of the market price of solana.

 

• Network outage: The Solana Network has experienced network outages. On 14 September 2021, the Solana Network experienced a significant disruption and was offline for 17 hours. In this instance, validators were unable to reach a consensus as to which recent blocks were valid and which were invalid, and therefore could not determine the correct blockchain. This led to a slowdown of the Solana Network, with new transactions taking longer to validate, thereby creating congestion. This represents vulnerabilities to operational failures, targeted attacks, or collusion. Any future network instability or similar outages may adversely affect the price of solana and consequently the value of the Sub-Fund’s investment. The negative sentiment arising from a network outage, particularly a prolonged outage, could also exacerbate the decline in the price of solana.

 

• Changes in acceptance of solana: The value of solana is subject to risks related to its usage and there is no assurance that solana usage will continue to grow over the long-term to support its value. Reduction or slowdown in the acceptance and/or prevalence of solana may result in lack of liquidity, increased volatility or a significant reduction in the price of solana and thus the Sub-Fund’s investment.

• Regulatory risk: The regulation on solana, digital assets and related products and services continues to evolve and increase. To the extent that future regulatory actions or policies limit or restrict solana usage, solana trading or the ability to convert solana to fiat currencies, the demand for and value of solana may be reduced significantly. Changes to existing regulation (e.g., regarding dealing in virtual asset-related products) may also impact the ability of the Sub-Fund to achieve its investment objective or operate as planned.

• Fork risk: As the Solana Network is an open-source project, the developers may suggest changes to the solana software from time to time. If the updated solana software is not compatible with the original solana software and a sufficient number (but not necessarily a majority) of users and validators elect not to migrate to the updated solana software, this would result in a “hard fork” of the Solana Network, with one prong running the earlier version of the solana software and the other running the updated solana software, resulting in the existence of two versions of the Solana Network running in parallel and a split of the blockchain underlying the Solana Network. The occurrence of such “fork” or similar events may result in an adverse impact on the price and liquidity of solana and thus the Sub-Fund’s investment. In case of a “hard fork”, the Manager will, acting in the best interest of investors, use its sole discretion to determine which network should be considered the appropriate network for the Sub-Fund and keep investors informed. There is no guarantee that the Manager will choose the digital asset that is ultimately the most valuable fork, and their decision may adversely affect the value of the Sub-Fund as a result.

• Contagion risk: The collapse of any major players in the crypto ecosystem (for example, wallets and trading platforms) may have contagious adverse effects on the values of virtual assets including solana and the value of the Sub-Fund’s investments.

• Control and potential manipulation of Solana Network risk: Solana Network is vulnerable to malicious attack and malicious actor would be able to gain full control of the network and the ability to manipulate the blockchain.

• Illicit use of ether: Solana can be used to purchase illegal goods, fund illicit activities or launder money. Negative developments of solana may affect the general outlook on the industry as a whole, trigger governmental intervention/restrictions/regulations, and may have adverse effect on the Sub-Fund’s investments.

 

3. Index risk

• The Index is a new index which was launched on 14 April 2025 and has limited operating history. The Sub-Fund may be riskier than other exchange traded funds tracking more established indices with longer operating history. The Index has similar index methodology as CME CF Solana-Dollar Reference Rate which was launched on 25 April 2022, except for the index calculation time.

• The price of solana has historically been volatile and subject to influence by many factors including operational interruptions. The Index price and the price of solana generally remain subject to the volatility experienced by the Constituent Exchanges.

• The Sub-Fund is also subject to the risk of system failures or errors of the Index Provider. If the computers or other facilities of the Index Provider, data providers and/or relevant Constituent Exchanges malfunction for any reason, calculation and dissemination of the Index may be delayed. Errors in the Index data, the Index computations and/or construction may occur from time to time and may not be identified and/or corrected for a period of time or at all, which may have an adverse impact on the Sub-Fund and its investors. Any of the foregoing may lead to the errors in the Index, which may lead to a different investment outcome for the Sub-Fund and its investors than would have been the case had such events not occurred.

• If the Index is discontinued, the Manager will seek the SFC’s prior approval to replace the Index with another index that has a similar objective to the Index (as applicable). If the Manager cannot agree within a reasonable period on a suitable replacement index acceptable to the SFC, the Manager may, in its discretion, terminate the Sub-Fund. Upon the Sub-Fund being terminated, the amount distributed may be less the amount of capital invested by the investors and the investors may suffer losses.

 

4. Risks associated with virtual asset trading platforms

• The virtual asset trading platforms that the Sub-Fund may acquire and dispose of solana are still developing. The solana traded on these virtual asset trading platforms may be subject to lower liquidity compared to other spot solana trading venue. As such, there may be a delay in the Sub-Fund's ability to acquire or dispose of its investments from these virtual asset trading platforms. The bid and offer spreads of the price of solana on these virtual asset trading platforms may be large and the Sub-Fund may incur significant trading costs.

• In the event that the virtual asset trading platform’s licence from the SFC is being revoked/terminated or otherwise invalidated, the Sub-Fund may be prohibited from conducting transactions and acquisitions of solana.

• The virtual asset trading platform may be subject to trading limits in buying and selling underlying solana in respect of subscriptions and redemptions for Shares in cash to comply with relevant capital requirements. If such trading limits are exceeded on any dealing day, the ability of the Sub-Fund to buy or sell solana on the relevant virtual asset trading platform may be affected and creation or redemption applications in cash may be postponed to be processed on the next dealing day. This may affect the tracking performance of the Sub-Fund and affect the price of the Shares.

• In addition, not all virtual asset trading platforms are licensed by the SFC (including the Constituent Exchanges). For those that are not licensed by the SFC, they are largely unregulated in other jurisdictions and therefore prone to fraud and market manipulation. Over the past several years, a number of virtual asset trading platforms have collapsed, ceased operations or shut down temporarily or permanently due to issues such as fraud, failure, security breaches, cybersecurity issues and market manipulation, and other virtual asset trading platforms may in the future experience similar failures. The potential consequences of the failure of a virtual asset trading platform could adversely affect the value of solana and in turn the value of the Shares.

 

5. Difference between executable price of solana on virtual asset trading platforms and valuation price for subscription and redemption

• The executable price of solana on the virtual asset trading platforms used by the Sub-Fund may not be the same as the traded prices of solana on the Constituent Exchanges used by the Index for valuation of the Sub-Fund. As such, depending on the circumstances, this may impact participating dealers and market makers’ ability to conduct effective arbitrage and provide liquidity for the Sub-Fund, which may lead to higher premium or discount to Net Asset Value and/or higher bid-ask spread of the Sub-Fund in secondary market. This may also result in higher tracking difference.

 

6. Custody risk

• Ownership and rights to solana depend on securely storing and knowing the private key. If the private key is lost without a backup, access to the corresponding solana address is lost as well, with no possibility of restoration by the Solana

• While the Manager has conducted due diligence on the Sub-Custodian and believes that there are security procedures in place for the Sub-Fund by the Sub-Custodian, the Manager does not control the Sub-Custodian’s or the virtual asset trading platforms’ operations or their implementation of such security procedures and there can be no assurance that such security procedures will actually work as designed or prove to be successful in safeguarding the Sub-Fund’s assets against all possible sources of theft, loss or damage.

• While the Sub-Custodian will store most of the Sub-Fund’s solana holdings in the cold wallet (i.e. where the private keys to solana are kept in an offline environment), the Sub-Fund’s solana may be temporarily held online in the hot wallet (i.e. where the private keys to solana are kept in an online environment) for meeting the needs of subscriptions and redemptions, which is more susceptible to cyber-attacks.

• The Sub-Fund itself does not insure its holdings in solana. While the Sub-Custodian is required by the applicable laws and regulations to have in place a compensation arrangement to cover potential loss of client virtual assets through third-party insurance or other permitted means, such compensation arrangement is shared among all clients of the Sub-Custodian and is not specific to the Sub-Fund. The Sub-Custodian’s insurance coverage excludes, among other things, loss from any trading and loss from network failure of a cryptocurrency’s cryptographic protocol (i.e. a protocol which governs secure communication and exchange of information over a network using cryptographic methods). There is no assurance that such compensation arrangement is adequate to protect the virtual assets of the Sub-Fund from all possible losses. Where the compensation arrangement of the Sub-Custodian is not sufficient to cover the loss of virtual assets of the Sub-Fund, neither the Manager nor the Sub-Fund will be responsible for the shortfall.

• The Sub-Custodian is responsible for the custody of solana held by the Sub-Fund. If the Sub-Custodian fails to perform the custodial functions for the Sub-Fund or its licence from the SFC is being revoked or terminated or otherwise invalidated, the Sub-Fund may be unable to operate or effect creations and redemptions. In such cases, or where the Custodian decides to replace the Sub-Custodian, the Custodian may not be able to engage a substitute sub-custodian within the termination notice period.

 

7. New product risk

• The Sub-Fund is a passive ETF investing directly in solana. The novelty of such an ETF and the fact that the Sub-Fund is one of the first few spot virtual asset ETFs in Hong Kong makes the Sub-Fund potentially riskier than traditional ETFs investing in equity or debt Given the novelty of the underlying assets of the Sub-Fund, there is no guarantee that the service providers (such as participating dealers and market makers) can perform their duties effectively.

 

8. Concentration risk

• The exposure of the Sub-Fund is concentrated in solana via direct investment in solana. This may result in higher concentration risk and the Sub-Fund’s value may be more volatile than that of a fund having a more diverse portfolio of investments. The value of the Sub-Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting solana.

 

9. Passive investment risk

• The Sub-Fund is passively managed and, in general, the Manager will not have the discretion (except for exceptional circumstances such as a “hard fork” event) to adapt to market changes due to the inherent investment nature of the Sub-Fund. Falls in the Index are expected to result in corresponding falls in the value of the Sub-Fund.

• The Sub-Fund invests in solana regardless of its investment merit and the Manager does not attempt to select other securities or virtual assets or to take defensive positions in declining markets.

 

10. Tracking error risk

• The Sub-Fund may be subject to tracking error risk, which is the risk that it may not provide investment results that closely correspond to the performance of the price of solana as reflected by the Index. This tracking error may result from factors such as fees and expenses. The Manager will monitor and seek to manage such risk and minimise tracking error. There can be no assurance of exact or identical replication at any time of the performance of the Index.

 

11. Currency risk

• Shares of the Sub-Fund are traded in the secondary market in HKD. Secondary market investors may be subject to additional costs or losses associated with fluctuations in the exchange rates between the Trading Currency (i.e. HKD) and the Base Currency (i.e. USD) when trading the Shares in the secondary market.

 

12. Trading risks

• Generally, retail investors can only buy or sell Shares on the SEHK. The trading price of the Shares on the SEHK is driven by market factors such as the demand and supply of the Shares. Therefore, the Shares may trade at a substantial premium or discount to the Net Asset Value of the Sub-Fund.

• Trading volume and liquidity of solana on the Constituent Exchanges is not consistent throughout the day and the Constituent Exchanges may be shut down temporarily or permanently due to security concerns, directed denial-of-service attacks and distributed denial-of-service attacks and other reasons. As a result, during periods when the SEHK is open but the Constituent Exchanges are either lightly traded or closed, trading spreads and the resulting premium or discount on the Shares may widen and, therefore, increase the difference between the price of the Shares and the Sub-Fund’s solana holdings per Share.

 

• As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Shares on the SEHK, investors may pay more than the Net Asset Value per Share when buying Shares on the SEHK, and may receive less than the Net Asset Value per Share when selling Shares on the SEHK.

• Under extreme market conditions, the trading price of the Shares may fall to a very low nominal level. The bid-ask spreads of the Shares may widen significantly, trading liquidity may deteriorate, and market makers may face practical difficulties or be unable to fulfil their market making obligations. The trading price of the Shares may reach the price floor of 0.01 (of any available trading currency). When this occurs, the trading price of the Shares on the SEHK may not be able to fully reflect movements in the Net Asset Value or indicative Net Asset Value of the Shares, and the Shares may trade at prices that deviate materially from their respective Net Asset Value.

 

13. Trading hours differences risks

• As solana is trading 24 hours but the Shares are not, the value of solana in the Sub-Fund’s portfolio may change on days or at times when investors will not be able to purchase or sell the Sub-Fund’s Shares on the SEHK. To the extent that the price of solana on the Constituent Exchanges drops significantly during hours when the SEHK is closed, investors may not be able to mitigate losses in a rapidly negative market.

 

14. Early termination risk

• The Sub-Fund may be terminated early under certain circumstances, for example, where the Index is no longer available for benchmarking, or where there is no market maker, or if the size of the Sub-Fund falls below USD5 million. Any amount recovered by a shareholder on termination of the Sub-Fund may be less than the capital initially invested by the shareholder, resulting in a loss to the shareholder.

 

15. Reliance on market maker risks

• Liquidity in the market for the Shares may be adversely affected if there is no or only one market maker for the Shares. The Manager will seek to mitigate this risk by ensuring that at least one market maker gives not less than 3 months’ notice prior to terminating market making arrangement under the relevant market maker agreement. It is possible that there is only one SEHK market maker for the Sub-Fund, or the Manager may not be able to engage a substitute market maker within the termination notice period of a market maker. There is no guarantee that any market making activity will be effective.

Objective

The investment objective of the Sub-Fund is to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the price of solana as reflected by the CME CF Solana-Dollar Reference Rate - Asia Pacific Variant (the “Index”) so as to provide exposure to the value of solana.

 

Strategy

Solana is a virtual asset launched in March 2020. Solana serves as the unit of account on an open-source, decentralised, peer-to-peer computer network (“Solana Network”). No single entity owns or operates the Solana Network. Solana is not a legal tender and is not backed by any authorities, government or corporations. The value of solana is determined, in part, by the supply of, and demand for, solana in the global markets for trading solana, market expectations for the adoption of solana as a decentralised store of value and medium of exchange, the number of merchants and/or institutions that accept solana as a form of payment and the volume of private end-user-to-end-user transactions. Please refer to the Prospectus for further details.

In seeking to achieve its investment objective, the Sub-Fund is passively managed by directly investing up to 100% of its Net Asset Value in solana through SFC-licensed virtual asset trading platform(s). Transaction and acquisition of solana by the Sub-Fund will be conducted through SFC-licensed virtual asset trading platform(s). The Sub-Fund will not stake any of its solana holdings. The Sub-Fund will not acquire other types of investments except that the Sub-Fund may retain a small amount of cash (up to a maximum of 3% of its Net Asset Value) to pay ongoing fees and expenses and meet redemption requests. All of the Sub-Fund’s solana will be held by the Sub-Custodian.

The Sub-Fund will not invest in any financial derivative instruments. Currently, the Manager will not enter into borrowing, sale and repurchase transactions, reverse repurchase transactions, securities lending transactions or other similar over-the-counter transactions. The Manager will seek the prior approval of the SFC (if required), and provide at least one month’s prior notice to shareholders (if required) before the Manager engages in any such investments or transactions. There is no leverage exposure to solana at the Sub-Fund level.

 

Index

The Index is a benchmark index price for solana that aggregates the trade flow of solana trading activity across major spot solana trading venues approved by the CME CF Cryptocurrency Pricing Products Oversight Committee of the Index Provider (as defined below) (“Constituent Exchanges”). The Index is designed based on the IOSCO Principles for Financial Benchmarks and is a Registered Benchmark under the UK Benchmark Regulations (“BMR”) of the U.K. Financial Conduct Authority (“FCA”). The Net Asset Value of the Sub-Fund will be valued by reference to the Index.

To be eligible as a Constituent Exchange, a spot solana trading venue is required to meet certain eligibility criteria imposed by the Index Provider (as defined below) (e.g. minimum trading volume, compliance with applicable law and regulations, etc.) and make trade data and order data available through an automatic programming interface with sufficient reliability, detail and timeliness. The Constituent Exchanges of the Index may change from time to time. As of 7 September 2026, the Constituent Exchanges include Bitstamp, Coinbase, Kraken, Gemini, LMAX Digital and Crypto.com.

The administrator of the Index is CF Benchmarks Ltd. (the “Index Provider”) a UK incorporated company, authorised and regulated by the FCA as a Benchmark Administrator, under BMR. The Manager and its connected persons are independent of the Index Provider.

The Index serves as a once-a-day benchmark rate of the U.S. dollar price of solana (USD/SOL), calculated as of 4:00 p.m. (Hong Kong time). The Index aggregates the trade flow of all Constituent Exchanges, during an observation window between 3:00 p.m. and 4:00 p.m. (Hong Kong time) into the U.S. dollar price of one solana at 4:00 p.m. (Hong Kong time). Specifically, the Index is calculated based on the “Relevant Transactions” which is any solana versus USD spot trade that occurs during the observation window between 3:00 p.m. and 4:00 p.m. (Hong Kong time) on a Constituent Exchange.

The Index was launched on 14 April 2025.

You can obtain the most updated list of Constituent Exchanges, the last closing index level and additional information of the Index including important news from the website of the Index Provider and index methodology at https://www.cfbenchmarks.com/data/indices/SOLUSD_AP (this website has not been reviewed by the SFC).