Risk Factors

The following list of risk factors is provided as an indication of the variety of risks which exist with investment in Aberdeen funds detailed on this Aberdeen Private Wealth web site. The material on this site is directed only at persons in the Channel Islands. It is not an offer or invitation to buy or sell the funds to persons in any other jurisdiction other than the Channel Islands. These risks are not extensive and not all risks will apply to each investment. Investors attention is, however, drawn to these risks as investment in Aberdeen's range of products may not be suitable for all investors. In order to assist investors risks have been grouped in different categories.

If investors are in any doubt of the suitability of an investment given their individual circumstances, they are recommended to contact an independent financial adviser who will be able to provide tailored advice. Aberdeen Asset Management is not authorised and consequently unable to provide investment advice to individual customers. The information contained on this web site is made available for information only. Opinions expressed whether in general or both on the performance of individual funds and in a wider economic context represent the views of the contributor at the time of preparation. They are subject to change and should not be interpreted as investment advice.

All Funds:

• The value of units or shares and the income from them can go down as well as up. You may not get back the amount invested.
• Past performance is not a guide to the future.
• Derivatives may be used to hedge against various risks for the purposes of Efficient Portfolio Management as permitted by relevant statutory regulations (which may vary between different fund groups in different jurisdictions). The use of derivatives for hedging in a rising market may restrict potential gains.
• When cancellation rights are applicable and you exercise them, you may not get back the full amount you invested if the unit or share price falls between the initial investment and when we receive written confirmation that you wish to cancel the contract.

Charges:

• Where the Manager's periodic charge is to be taken from the income generated by the fund and there is insufficient income within the fund to meet that charge, the balance will be deducted from the fund's capital and to that extent this will constrain capital growth.
• Where the Manager's periodic charge is wholly taken out of the fund's capital, distributable income will be increased at the expense of capital, and to that extent, capital will be eroded or future growth constrained.

Foreign Exchange:

Changes in exchange rates could affect the value of your investments. Movements in foreign exchange rates can impact both on the level of income received and the capital value of the investment. For example, if Sterling strengthens against the currency in which the underlying investments of the fund are made, the value of your holding will reduce and vice versa.

Bond and fixed interest funds:

• Unlike income from a single bond, the level of income from a unit trust or OEIC is not fixed and may fluctuate. Yields are estimated figures and may fluctuate.
• Interest rate fluctuations affect the capital value of investments. Where long term interest rates rise the capital value of units or shares is likely to fall, and vice versa.
• The value of a bond will fall in the event of the default or reduced credit rating of the issuer (or if credit spreads widen, relative to gilts), similarly an increase in credit rating (or narrowing of credit spreads) can lead to capital appreciation. Generally the higher the rate of interest on any bond, the higher the perceived credit risk of the issuer. The yield (and hence market price) at any given time will depend on the market environment. However, the impact of any default is reduced by diversifying the portfolio across a wide spread of issuers and sectors.
• In risk terms, corporate bond funds are often considered to be a "half way house" between equity funds and building society accounts. However, unlike a bank or building society account where your capital is secure, corporate bond funds are not risk free. In view of the special risks associated with investment in funds containing investments which are below investment grade, such funds should be considered a greater risk than investment in equity funds and it is recommended that investment in such funds should not constitute the sole or principal component of any investors portfolio. Investments in such funds may not be appropriate for all investors.
• Bond yields (and as a consequence bond prices) are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the government's fiscal position, short-term interest rates and international market comparisons. Returns from bonds are fixed - as at the time of purchase, the fixed coupon payments are known, as is the final redemption proceeds. This means that if a bond is held until its redemption date, the total return achieved is unaltered from its purchase date. However, over the life of a bond, the yield (and hence market price) at any given time will depend on the market environment at that time. Therefore, a bond sold before its redemption date is likely to have a different price to its purchase level and a profit or loss may be incurred.
• The underlying investments of high yield bond funds are exposed to credit risk which reflects the ability of the borrower (i.e. bond issuer) to meet its obligations (i.e. pay the interest on a bond and return the capital on the redemption date). Generally the higher the quality of issuer, the lower the interest rate at which they can borrow money. Issuers of a lower quality will tend to have to pay more to borrow money to compensate the lender (the purchaser of a bond) for the extra risk taken.

Emerging markets:

Investment in emerging markets tends to be more volatile than more mature markets and the value of your investments could in some circumstances move sharply either up or down. In some circumstances the underlying investments may become illiquid which may constrain the investment managers ability to realise some or all of the portfolio. The registration and settlement arrangements in emerging markets may be less developed than in more mature markets so the operational risks of investing are higher. Political risks and adverse economic circumstances are more likely to arise putting the value of your investment at risk. The fund may also invest indirectly in emerging markets via ADRs or GDRs. Though operational risks here are significantly reduced, the value of these securities will also be impacted by political and economic developments in the underlying markets.

Specialist sectors/small markets:

• Funds which invest in a small market sector, are likely to be more volatile than a more diversified fund.
• Funds which invest in a specialist market sector, may at times, experience difficulties in realising some of the underlying holdings due to the specialist nature of those investments.
• Funds which include collective investment schemes investing in specialist market sectors within the portfolio, are likely to be more volatile than a more diversified portfolio.
• Funds which are specialist country specific funds, carry a greater risk due to their concentration than a fund diversified across more countries of investment, in return for higher potential rewards.
• Funds which invest in a specialised geographical region, carry a greater risk due to their concentration than a fund diversified across more regions, in return for higher potential rewards.
• Funds which invest in smaller and/or medium sized companies are specialist funds and as such are likely to carry higher risks than a more widely invested fund.

Technology:

Investment in technology related stocks can be more volatile than investments in more traditional or longer established companies. Above average price movements can be expected.