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Risk and Profit
Information
Primary risk of investment in “Unit Trusts”
- Market Risk
This is indeed the principal source of risk. If the market value of the investment objects of the fund is affected by political situation, economic environment, business conditions, occurrence of major events, and investor sentiment and confidence, the net value of the fund will be significantly affected. - Exchange Risk
Offshore funds are expressed in relevant foreign currencies. If the specific foreign currency revaluates against NTD, investors will enjoy exchange gains in the conversion. However, investors will suffer exchange loss if the specific foreign currency devaluates against the NTD. For example, if the exchange rate of the NTD to USD devaluates from NTD 30 to 1 USD to NTD 34 to 1 USD, investors will enjoy exchange gains, or vice versa. - Liquidity Risk
If investment and trading in the host country of investments are being restricted, to the extent that trading cannot be conveniently conducted, the liquidity of the objects of investments will become low. This represents liquidity risk.
Except the primary risk above, there may also have return risk, interest risk, political risk, credit risk, settlement risk and tax risk, etc. Before you make investment decisions, please refer to the Prospectus released by relevant fund companies.
Return on “Unit Trusts”
- Capital Gains
In investing in different financial instruments, Unit Trusts may earn a spread through buying low and selling high. This will be reflected in the daily net asset value of the fund. Indeed, this is the principal source of return on investment in funds. - Interest income
Interest or dividends will usually be paid out by money market funds, bonds funds and equity funds.
- Investment of accrued interest: the return on funds will be converted to additional units of investment and will be reflected in the net value.
- Cash dividend: Interest will be accrued on a daily basis and payable monthly. The interest accrued on the day will be reflected on the net value. There will be an ex-dividend day each month on which the fund will deduct the interest accrued in the month payable on that day from the net value of the fund. Further to the monthly payout of interest, there will be quarterly interest payment and annual interest payment.
*Refer to relevant fund prospectus - Exchange Gains
Redemption of offshore funds expressed in a specific currency may result in exchange gains in the conversion process if the NTD revaluates against such currency at the time of conversion. In effect, investors make profit from foreign exchange settlement.
Unit Trust Related Information
Disclaimers
- The investment amount in Offshore Bond through Non-Discretionary Trust account is for investment not deposit. Therefore, the investment amount is not inclusive of the extent of deposit insurance of Central Deposit Insurance Corporation (CDIC). The trustee banks disclaim responsibility on the management the performance of the trust account. Investors shall assume as their own responsibility any risks that may arise from investment and possible loss thereof.
- Bond price may and will fluctuate. The price of any type of bond may fall and may have no market value. Investors shall make judgment on participation in any of the investment cautiously with reference to their own capacity to assume risks, investment experience, investment objectives, financial positions and related conditions (effects on legal, taxation and accounting aspects).
