| Investment risk: The Fund is an investment fund and is not in the nature of a bank deposit. Investment in the Fund is subject to fluctuations in value and the Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Fund may suffer losses. There is no guarantee of repayment of principal. Concentration risk: Due to the concentration of the investment portfolio of the Fund (through its investment in the Trust) in Korean companies, events that have an effect on this region will have a greater effect on the Fund than in the case of a less concentrated investment. The value of the Fund may be more volatile than that of a fund having a more diverse portfolio of investments. The value of the Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory events affecting the Korean market. Risk of investment in Korea: The Trust will invest substantially in Korea. The risks inherent in Korean securities are of a nature and degree not typically encountered in investment in securities of listed companies on other major securities markets. Due to the outbreak of natural calamities, wars, conflict of arms or grave and sudden changes in domestic or foreign economic circumstances or other equivalent situations, the Ministry of Finance and Economy (MOFE) may temporarily suspend payment, receipt of transactions to which the relevant Foreign Exchange Transactions laws and regulations apply, or impose an obligation to safekeep, deposit or sell means of payment in or to certain Korean governmental agencies or financial institutions. The Trust’s investments are concentrated in Korean markets which may be subject to 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 and the likelihood of a high degree of volatility. If the international balance of payments and international finance are likely to be confronted with serious difficulty or the movement of capital between Korea and abroad is likely to bring about serious obstacles in carrying out Korean government’s currency policies, exchange rate policies and other macroeconomic policies, the MOFE may require any person who intends to perform capital transactions to obtain permission or to deposit part of the payments received in such transactions at certain Korean governmental agencies or financial institutions, subject to certain limitations. Risk relating to master/feeder fund structure: The Fund’s performance may not be equal to the performance of the Trust due to the master/feeder fund structure and additional costs that may have been incurred at feeder fund level. The Fund will be subject to the risks associated with the Trust. The Fund does not have control of the investments of the Trust and there is no assurance that the investment objective and strategy of the Trust will be successfully achieved which may have a negative impact to the net asset value of the Fund. The Fund may be adversely affected by the suspension of dealing of the master fund, the Trust. Dealing of the Fund may be suspended and the payment of redemption proceeds may be delayed during the period when dealing of the Trust is suspended. There is also no guarantee that the Trust will have sufficient liquidity to meet the Fund’s redemption requests as and when made. Risks of investment in equities and equity-related securities: The Trust’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. When the equity markets are extremely volatile the Trust’s net asset value may fluctuate substantially. The Trust may invest in equity-related securities. These are usually issued by a broker, an investment bank or a company and are therefore subject to the risk of insolvency or default of the issuer. If there is no active market in these instruments, this may lead to liquidity risk. Further, investment in equity-linked securities may lead to dilution of performance of the Trust when compared to the other funds which invest directly in similar underlying assets due to fees embedded in the notes. The aforesaid circumstances may adversely affect the net asset value per unit of the Trust. Securities exchanges typically have the right to suspend or limit trading in any instrument traded on that exchange. The governments or the regulators may also implement policies that may affect the financial markets. A suspension could render it impossible for the underlying fund manager to liquidate positions and thereby expose the Trust to losses and may have a negative impact on the Trust. High market volatility and potential settlement difficulties in the Korean 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 Trust. Risks of investment in small-capitalisation/mid-capitalisation companies: The stock of small-capitalisation and mid-capitalisation companies may have lower liquidity and their prices are more volatile to adverse economic developments than those of larger capitalisation companies in general. Risks include economic risks, such as lack of product depth, limited geographical diversification, increased sensitivity to the business cycle and organisational risk, such as concentration of management and shareholders and key-person dependence. Shares in smaller companies can be more difficult to buy and sell, resulting in less flexibility, and sometimes higher costs, in implementing investment decisions. Risks of investing in convertible bonds: Convertible bonds are a hybrid between debt and equity, permitting holders to convert into shares in the company issuing the bond at a specified future date. As such, convertibles will be exposed to equity movement and greater volatility than straight bond investments. Investments in convertible bonds are subject to the same interest rate risk, credit risk, liquidity risk and prepayment risk associated with comparable straight bond investments. Currency risk: The underlying investments of the Trust may be denominated in currencies other than the base currency of the Trust. Also, a class of units of the Trust may be designated in a currency other than the base currency of the Trust. The net asset value of the Trust may be affected unfavourably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls. Risks associated with derivatives: In adverse situations, the Trust’s use of derivatives for hedging and/or efficient portfolio management may become unsuccessful and the Trust may suffer significant losses. Risks associated with financial derivative instruments include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/ component of a financial derivative instrument can result in a loss significantly greater than the amount invested in the financial derivative instrument by the Trust. Exposure to financial derivative instruments may lead to a high risk of significant loss by the Trust. |