SAMSUNG NYSE FANG+ ETF

Samsung NYSE FANG+ ETF (the “Sub-Fund”) is a sub-fund of Samsung ETFs Trust, which is an umbrella unit trust established under Hong Kong law. The units of the Sub-Fund (“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 under Chapter 8.6 of the Code on Unit Trusts and Mutual Funds (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.

• 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.

• United States market technology sector concentration risks

• • The Sub-Fund’s investments are concentrated in the companies with selected technology themes in a single country (the United States). The value of the Sub-Fund 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 the United States.

• Technology theme risks

• • Constituents of the Index have high exposure to companies in technology themes. Companies in the technology sector are characterised by relatively higher volatility in price performance when compared to other economic sectors. Companies in the technology sector also face intense competition and there may also be substantial government intervention, which may have an adverse effect on profit margins. The price volatility of constituents of the Index may be greater than the price volatility constituents of more broad-based indices. Rapid changes could render obsolete the products and services offered by these companies. These companies are also subject to the risks of loss or impairment of intellectual property rights or licences, cyber security risks resulting in undesirable legal, financial, operational and reputational consequences.

• • The Sub-Fund may be exposed to risks associated with different technology sectors and themes, including search, social networking, autonomous driving, electric vehicles, smartphones, mobile payments, e-commerce, online games, streaming media, online entertainment, cryptocurrencies and blockchain, big data, artificial intelligence, machine learning, digital advertising, cloud services and other innovative technologies. A downturn in the business for companies in these sectors or themes may have adverse effects on the Sub-Fund.

• Media and communications sector risk

• • Media companies are subject to risks including obsolescence of products, cyclicality of revenues and earnings, a decrease in the discretionary income of targeted individuals, changing consumer tastes and interests, fierce competition in the industry and the potential for increased government regulation.
  • Companies in the communications sector (including social media companies) are particularly vulnerable to the potential obsolescence of products and services due to technological advancement and the innovation of competitors. Additionally, fluctuating consumer demands, shifting demographics and often unpredictable changes in consumer tastes can drastically affect such a company’s profitability. These companies are exposed to operational risks including disruptions or delays in service caused by hardware or software failure and security breaches involving private, sensitive, proprietary or confidential information. Increasing concerns relating to privacy issues and the collection of data by social media companies and the evolving laws and regulations on the communications industry will also affect the businesses and operations of these companies.

• Consumer discretionary sector risks

• • The performance of companies in the consumer discretionary sector are correlated to the growth rate of the consumer market, individual income levels and their impact on levels of domestic consumer spending, which in turn depend on the worldwide economic conditions, which have seen significant deterioration in the past. Any future slowdowns or declines in the economy or consumer spending in the relevant market may materially and adversely affect the business of the companies in the consumer discretionary sector. This may adversely affect the value of investments of the Sub-Fund.

• Equal weighted index risks

• • The Index is an equal weighted index whereby the Index constituents will have the same weighting at each rebalancing (but not between each rebalancing) regardless of its size or market capitalisation, based on the methodology of the Index. The Sub-Fund by tracking the Index may have relatively large holdings in Index constituents with relatively smaller market capitalisation than it would have held if tracking a market capitalisation weighted index, leading to higher risks and potential underperformance.

• 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.

• Multi counter risks

• • If there is a suspension of the inter-counter transfer of Units between the counters and/or any limitation on the level of services by brokers and CCASS participants, Unitholders will only be able to trade their Units in one counter only, which may inhibit or delay an investor dealing. The market price of Units traded in each counter may deviate significantly.
  • As such, investors may pay more or receive less when buying or selling the Units traded in HKD on the SEHK than in respect of the Units traded in USD and vice versa.

• Currency risk

• • Units may be traded in a currency other than the base currency of the Sub-Fund (USD). The NAV may be affected unfavourably by fluctuations in the exchange rates between the class currency and the Sub-Fund’s base currency and by changes in exchange rate controls.

• 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 traded in each counter (which may be the same market maker) and that at least one market maker for each counter (which may be the same 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 traded in the HKD or USD counter. 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.