SAMSUNG Bloomberg Global Semiconductor ETF

Samsung Bloomberg Global Semiconductor ETF (the “Sub-Fund”) is a sub-fund of Samsung ETFs Trust, an umbrella unit trust established under Hong Kong law. Units of the Sub-Fund (the “Units”) are listed on The Stock Exchange of Hong Kong Limited (the “SEHK”). These Units are traded on the SEHK like listed stocks. The Sub-Fund is a passively-managed index tracking exchange traded fund (“ETF”) falling under Chapter 8.6 of the Code on Unit Trusts and Mutual Funds issued by the SFC (the “Code”). The Sub-Fund is a physical ETF which invests directly in the constituent securities of the Index (as defined below).

• 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.

• New Index risk
  • The Index is new and has minimal operating history by which investors can evaluate its previous performance. There can be no assurance as to the performance of the Index. The Sub-Fund may be riskier than other exchange traded funds tracking more established indices with longer operating history.

• Equity market risk

• • The Sub-Fund’s investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors.
  • Some stock exchanges on which the equity securities of the Sub-Fund will invest may have the right to suspend or limit trading in any Security traded on the relevant exchange. The government or the regulators may also implement policies that may affect the financial markets.
  • Some countries in which the Sub-Fund will invest may restrict foreign investment or the repatriation of income, capital or the proceeds from sale of Securities, or may intervene with foreign exchange rates. The Sub-Fund may incur higher costs investing in these countries. These restrictions may limit the Sub-Fund’s ability to invest in these countries, delay the investment or repatriation of capital of the Sub-Fund and impact the Sub-Fund’s ability to track the performance of the Index.

• Concentration risk

• • The Sub-Fund’s investments are concentrated in the semiconductor sector. The value of the Sub-Fund may be more volatile than that of a fund having a more diverse portfolio of investments.

• Semiconductor sector risk

• • The Sub-Fund is subject to the risk that companies that are in the semiconductor industry may be particularly affected by certain factors. Such specific factors include, but are not limited to, domestic and international competition pressures, rapid obsolescence of products, the economic performance of the customers of semiconductor companies, capital equipment expenditures, significant spending on research and development, longer delivery time of products or even production stoppage.

• • Furthermore, as the semiconductor sector may be deemed sensitive to national interests, the sector may be subject to government intervention, sanctions and trade protectionism.  The success of companies in the semiconductor sector is typically dependent on the companies’ ability to maintain relationships with their technology partners. The semiconductors sector is also characterised by cyclical market patterns and periodic overcapacity. Any future downturn in the industry could harm the business and operating results of semiconductor companies.

• Emerging markets risk

• • The Sub-Fund invests in emerging markets which may involve increased risks and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks/control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk, currency devaluation, inflation and the likelihood of a high degree of volatility.
  • High market volatility and potential settlement difficulties in the markets may also result in significant fluctuations in the prices of the securities traded on such markets and thereby may adversely affect the value of the Sub-Fund.

• Risks associated with depositary receipts

• • Exposure to depositary receipts including ADRs and GDRs may generate additional risks compared to a direct exposure to the underlying stocks, including the risk of non-segregation of the underlying stocks from the depositary bank’s own assets and liquidity risks (as depositary receipts are often less liquid than the underlying stock). These may negatively affect the performance and/or liquidity of the Sub-Fund. Also, depositary receipts holders generally do not have the same right as the direct shareholders of the underlying stocks.  The performance of depositary receipts may also be impacted by the related fees.

• Currency risk

• • Underlying investments of the Sub-Fund may be denominated in currencies other than the base currency of the Sub-Fund.  In addition, the base currency of the Sub-Fund is USD but the trading currency of the Sub-Fund is in HKD. The net asset value of the Sub-Fund and its performance may be affected unfavourably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls.

• Securities lending transactions risk

• • Securities lending transactions may involve the risk that the borrower may fail to return the securities lent out in a timely manner and the value of the collateral may fall below the value of the securities lent out.

• Other currency distributions risk

• • Investors should note that all Units will receive distributions in the base currency (USD) only. In the event that the relevant Unitholder has no USD account, the Unitholder may have to bear the fees and charges associated with the conversion of such distribution from USD to HKD or any other currency.  The Unitholder may also have to bear bank or financial institution fees and charges associated with the handling of the distribution payment.  Unitholders are advised to check with their brokers regarding arrangements for distributions.

• Distributions out of or effectively out of capital risks

• • Payment of dividends out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment.  Any such distributions may result in an immediate reduction in the NAV per Unit of the Sub-Fund.

• Passive investments risk

• • The Sub-Fund is not “actively managed” under normal market conditions, and therefore the Manager will not adopt any temporary defensive position when the Index moves in an unfavourable direction. When there is a decline in the Index, the Sub-Fund will also decrease in value. Under exceptional market conditions and/or extreme circumstances, the Manager may adopt a temporary defensive position for protection of the Sub-Fund in the best interests of the Sub-Fund and the Unitholders.

• Trading risks

• • The trading price of the Units on the SEHK is driven by market factors such as the demand and supply of the Units. Therefore, the Units may trade at a substantial premium or discount to the NAV.
  • As investors will pay certain charges to buy or sell Units on the SEHK, investors may pay more or receive less than the NAV per Unit when buying or selling Units on the SEHK respectively.

• Trading differences risk

• • As the markets in which the Sub-Fund invests may be open when Units are not priced, the value of the securities in the Sub-Fund’s portfolio may change on days when investors will not be able to purchase or sell the Sub-Fund’s Units.
  • Differences in trading hours between the markets in which the Sub-Fund invests and the SEHK may also increase the level of premium or discount of the Unit price to Sub-Fund’s NAV.
  • Securities listed on certain stock exchanges are subject to trading bands which restrict increase and decrease in the trading price, while Units listed on the SEHK are not.  This difference may also increase the level of premium or discount of the Unit price to Sub-Fund’s NAV.

• Reliance on market maker risk

• • Although the Manager will use its best endeavours to put in place arrangements so that at least one market maker will maintain a market for the Units and that at least one market maker gives not less than 3 months’ notice prior to termination of the market making arrangement, liquidity in the market for the Units may be adversely affected if there is no or only one market maker for the Units. There is no guarantee that any market making activity will be effective.

• Tracking error risk

• • Due to the fees and expenses and investment strategy of the Sub-Fund, as well as market liquidity, the Sub-Fund’s return may deviate from that of the Index. There can be no assurance of exact or identical replication at any time of the performance of the Index.

• Termination risk

• • The Sub-Fund may be terminated early under certain circumstances, for example, where the size of the Sub-Fund falls below USD5 million. Any distribution received by a Unitholder on termination of the Sub-Fund may be less than the capital initially invested by the Unitholder and result in a loss.