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asset allocation of the Fund may change regularly or from time to time in response to the following changes in the stock market or the environment relating to the invested stocks, ¾ if stocks comprising the benchmark index are replaced regularly or from time

to time; ¾ if the market capitalization based weighting changes due to paid-in capital

increase or conversion of CBs to shares; ¾ if the issuers of the underlying stocks become bankrupt; or ¾ if the issuers of the underlying stocks undergo mergers, split-offs, etc.

  • The asset manager will continually adjust the portfolio to replicate the rate of

return of the benchmark index.

Causes of Tracking Errors

The performance of the Fund may differ from that of the benchmark index.

The

asset

manager

will

implement

measures

to

minimize

the

tracking

error,

such

as

minimizing

costs,

reflecting

the

tracking

error

in

composing

the

Portfolio

Deposit

file, but please be advised that nonetheless, tracking errors can occur: ¾ The Fund will refer to KOSPI 200 as benchmarks rather than copying

the

composition thereof as it is, considering the likelihood of bankruptcy of the issuers of the stocks held thereof and the liquidity of such stocks. This may cause Tracing Error to occur. ¾ Various fees or costs and expenses relating to the Fund (sales commission,

index usage fees, etc.) affect the net asset value of the Fund. ¾ Cash dividends from the shares held as Fund assets add to the net asset

value of the Fund. ¾ Replacement of, or changes in the composition of, the portfolio due to causes

necessitating portfolio adjustment. ¾ Despite due diligence by the asset manager, the bankruptcy of an issuer of

stocks held as Fund assets.

2. Investment Risks

Risks

Description

Risk of loss of This Fund is a performance-based investment product, where the principal is not

principal

guaranteed nor protected. There is a which will be borne by the investor.

risk of loss of all or part of the principal, The asset manager or the Authorized

Participant or any related person takes no responsibility for investment losses.

Market risks and By investing in stocks, this Fund is exposed to risks of price fluctuation, interest

individual risks

rate fluctuation and other changes in macroeconomic indicators. The value of the Fund assets may drastically change depending on the business, financial and credit conditions of the issuers of the underlying stocks.

Investment risk

s Because of the leveraging effect, derivatives (futures) are exposed to higher risks

of derivatives

than direct investment in underlying assets.

Risks of Tracking This Fund aims to replicate the benchmark index, but this may not be achieved

Error

due to realistic restrictions, such as fees, sales commissions and other costs and expenses. If you invest based on the assumption that the rate of return for this Fund will be the same as for the benchmark index, you may suffer unexpected losses due to the tracking error.

Risks

of If tracking error exceeding the rate prescribed in relevant rules occur and subsists

25

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