Distribution History | SSIF DCE Iron Ore Futures Index ETF | Products | Shanxi Securities International Asset Management Limited

Important Information

The Sub-Fund is a futures based ETF. The risks of investing in the Sub-Fund are therefore greater than those of investing in other types of ETF. In particular investment in futures contracts involves specific risks such as high volatility, leverage, rollover and margin risks. Here are the risks which investors may face:
This is a complex product. Investors should exercise caution in relation to the product.
1. 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.
2. New product risk
The Sub-Fund is a futures-based ETF investing directly in DCE Iron Ore Futures Contracts. The novelty and untested nature of such an ETF and the fact that the Sub-Fund is one of the first few futures-based ETFs in Hong Kong makes the Sub-Fund potentially riskier than traditional ETFs investing in equity securities.
The Sub-Fund is the first exchange traded fund managed by the Manager. As such, the Manager will substantially make use of and rely upon the risk management tools to support the investments of the Sub-Fund. In the event of a breakdown or disruption in such tools, the operations of the Sub-Fund may be adversely affect.
3. Iron ore market risk
Concentration / single commodity risk: As the exposure of the Sub-Fund is concentrated in the iron ore market by investing in single DCE Iron Ore Futures Contract; generally, this may result in large concentration risk. The Sub-Fund is more susceptible to the effects of iron ore price volatility than more diversified funds and an ETF which holds futures contracts with different expiring months.
Iron ore commodity volatility risk: Iron ore prices are highly volatile and may fluctuate widely and may be affected by numerous events or factors such as production decisions by other iron ore producers, complex interaction of supply and demand of iron ore, economic conditions, speculator’s activities and financial market conditions.
4. Futures contracts risk
Contango risk: A “roll” occurs when a new main DCE Iron Ore Futures Contract is determined and is replaced in the Underlying Index with the next main DCE Iron Ore Futures Contract. Where the Underlying Index is calculated with reference to these DCE Iron Ore Futures Contracts, the value of the Underlying Index (and so the NAV per Unit) may be adversely affected by the cost of rolling positions forward (due to the increased price of the DCE Iron Ore Futures Contract, i.e. “contango”).
Volatility risk: The price of DCE Iron Ore Futures Contracts can be highly volatile and is influenced by, among other things, interest rates, changing market supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments.
Leverage risk: Because of the low margin deposits normally required in futures trading, an extremely high degree of leverage is typical of a futures trading account. As a result, a relatively small price movement in a DCE Iron Ore Futures Contract may result in a proportionally high impact and substantial losses to the Sub-Fund, having a material adverse effect on the NAV. Like other leveraged investments, a futures transaction may result in losses in excess of the amount invested.
Liquidity risk: The Underlying Index is calculated with reference to DCE Iron Ore Futures Contracts exposing the Sub-Fund and the investors to a liquidity risk linked to DCE Iron Ore Futures Contracts which may affect their value.
Margin risk: Generally, most leveraged transactions, such as DCE Iron Ore Futures Contracts, involve the posting of margin or collateral. Increases in the amount of margin or collateral or similar payments may result in the need for the Sub-Fund to liquidate its investments at unfavourable prices in order to meet margin or collateral calls. This may result in substantial losses to unitholders.
Risk relating to measures taken by relevant parties: Regarding the Sub-Fund’s futures positions, relevant parties (such as clearing brokers, execution brokers, participating dealers and stock exchanges) may impose certain mandatory measures for risk management purpose under extreme market circumstances. These measures may include limiting the size and number of the Sub-Fund’s futures positions and/or mandatory liquidation of part or all of the Sub-Fund’s futures positions without advance notice to the Manager. In response to such mandatory measures, the Manager may have to take corresponding actions in the best interest of the Sub-Fund’s unitholders and in accordance with the Sub-Fund’s constitutive documents, including suspension of creation of the Sub-Fund’s Units and/or secondary market trading, implementing alternative investment and/or hedging strategies and termination of the Sub-Fund. These corresponding actions may have an adverse impact on the operation, secondary market trading, index-tracking ability and the NAV of the Sub-Fund. While the Manager will endeavour to provide advance notice to investors regarding these actions to the extent possible, such advance notice may not be possible in some circumstances.
5. Risk of material non-correlation with spot/current market price of iron ore
As the Underlying Index is based upon DCE Iron Ore Futures Contracts but not on physical iron ore, the performance of the Underlying Index may substantially differ from the current market or spot price performance of the iron ore. Accordingly, the Sub-Fund may underperform a similar investment that is linked to the spot price of iron ore.
6. Position limits risk
The DCE has stipulated speculative position limits for DCE Iron Ore Futures Contracts. Based on the rollover schedule, these speculative position limits are not currently expected by the Manager to affect the Sub-Fund, although the Manager cannot guarantee that the circumstances (such as rolling schedule, DCE Iron Ore Futures Contracts’ expiry dates) will remain unchanged. If the Sub-Fund exceeds a speculative position limit, its ability to seek additional exposure by acquiring further DCE Iron Ore Futures Contracts as a result of new creations of Units could be impaired, the Sub-Fund’s ability to achieve its investment objective could be affected and, as a result, the Manager could be required to suspend new creations of Units. This may result in divergence between the trading price of the Unit and the NAV per Unit. The investment exposure would also deviate from the target exposure which adds tracking error to the Sub-Fund. The position limit may have adverse impact to the Sub-Fund and may cause substantial loss to the Sub-Fund.
7. Government intervention and restriction
There may be substantial government intervention in the economy, including restrictions on investment in companies or industries deemed sensitive to relevant national interests. Governments and regulators may also intervene in the financial markets, such as by the imposition of trading restrictions, a ban on “naked” short selling or the suspension of short selling for certain stocks. Such interventions may be unpredictable, affect the trading, operation and market making activities of the Sub-Fund and may also lead to an increased tracking error for the Sub-Fund. Furthermore, such market interventions may have a negative impact on the market sentiment which may in turn affect the performance of the Underlying Index and as a result the performance of the Sub-Fund. In worst case scenario, the investment objective of the Sub-Fund cannot be achieved.
8. Investment in other funds risk
The Sub-Fund may invest in money market funds. The Sub-Fund will be exposed to the risk of investing in another management company’s funds with all the related risks which attach to funds generally and bear the fees and expenses of the underlying funds. These charges will be in addition to the fees payable by the Sub-Fund.
9. Trading differences risk
As the DCE may be open when Units in the Sub-Fund are not priced, the value of any iron ore futures contracts in the Sub-Fund’s portfolio may change substantially when investors will not be able to purchase or sell the Sub-Fund’s Units. Further the price of DCE Iron Ore Futures Contracts listed on the DCE may not be available during part of or all of the SEHK trading sessions due to trading hour differences which may result in Units of the Sub-Fund being traded at a premium or discount of the Unit price to its NAV.
10. Other currency distribution risk
Investors should note that all Units will receive distribution in 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 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.
11. Emerging market risk
The Sub-Fund may invest in Mainland China. Investing in the Mainland China market is subject to the risks of investing in emerging markets which may involve increased risk 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 risk, settlement risk, custody risk and the likelihood of a high degree of volatility.
12. Currency exchange risk
Assets of the Sub-Fund, such as monies in the margin account and settlement account, may be denominated in currencies other than USD and the underlying DCE Iron Ore Futures Contracts are denominated in RMB, whilst the Sub-Fund is denominated in USD. The Sub-Fund is subject to transaction costs in the exchange of such other currencies to USD. The performance, tracking difference, tracking error and the NAV of the Sub-Fund may therefore be affected unfavourably by movements in the exchange rate between USD and such other currencies and changes in exchange rate control policies.
13. Dual counter trading risk
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 the relevant counter on the SEHK, which may inhibit or delay an investor dealing.
The market price on the SEHK of Units traded in USD and of units traded in HKD may deviate significantly. As such investors may pay more or receive less when buying or selling Units traded in USD on the SEHK than in respect of Units traded in HKD and vice versa.
14. Reliance on market makers risk
Although the Manager ensures that at least one market maker will maintain a market for the Units traded in each counter and that at least one market maker to each counter gives not less than 90 days prior written notice to terminating market making arrangement, under the relevant market maker agreement, liquidity in the market for the Units may be adversely affected if there is no or only one market maker for the USD or HKD traded Units. There is also no guarantee that any market making activity will be effective.
15. Tracking error risk
The Sub-Fund may be subject to tracking error risk, which is the risk that its performance may not track that of the Underlying Index exactly. Factors such as the fees and expenses of the Sub-Fund, inability to rebalance the Sub-Fund’s holdings of Futures Contracts to track the Underlying Index, rounding of the Futures Contracts’ prices, and changes to the regulatory policies may affect this tracking error. The Manager will monitor and seek to manage such risk minimising tracking error. There can be no assurance of exact or identical replication at any time of the performance of the Underlying Index.
16. 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 Sub-Fund’s NAV.
As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Units on the SEHK, investors may pay more than the NAV per Unit when buying Units on the SEHK, and may receive less than the NAV per Unit when selling Units on the SEHK.
17. Termination risks
The Sub-Fund may be terminated early under certain circumstances, for example, where the Underlying Index is no longer available for benchmarking or if the size of the Sub-Fund falls below USD 10 million. Investors may not be able to recover their investments and suffer a loss when the Sub-Fund is terminated.
18. Passive investment risk
The Sub-Fund is passively managed and under normal market circumstances, the Manager will not have the discretion to adapt to market changes due to the inherent investment nature of the Sub-Fund. Falls in the Underlying Index are expected to result in corresponding falls in the value of the Sub-Fund. Under extreme market circumstances, the Manager will adopt temporary defensive position for protection of the Sub-Fund.
19. PRC tax risk
There are risks and uncertainties associated with the current PRC tax laws, regulations and practice in respect of the trading of DCE Iron Ore Futures Contracts (which may have retrospective effect). Any increased tax liabilities on the Sub-Fund may adversely affect the Sub-Fund’s value.
Based on professional and independent tax advice, the Manager does not intend to make any PRC tax provision on the trading of DCE Iron Ore Futures Contracts.
20. Derivative instrument risk
Risks associated with FDI include counterparty / credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element / component of an FDI can result in a loss significantly greater than the amount invested in the FDI by the Sub-Fund. Exposure to FDI may lead to a high risk of significant loss by the Sub-Fund.
21. Hedging risk
The Manager is permitted, but not obliged, to use hedging techniques such as using futures, options and/or forward contracts to attempt to offset market and currency risks. There is no guarantee that hedging techniques will fully and effectively achieve their desired result and hedging may become inefficient or ineffective. This may have adverse impact on the Sub-Fund, including its NAV, tracking difference and tracking error, and its investors.
22. Risk relating to distributions paid out of capital
Payment of distributions out of or effectively out of capital represents a return or a withdrawal of part of the amount they originally invested or capital gain attributable to that amount. Any such distributions may result in an immediate reduction of the NAV per Unit of the Sub-Fund.

Overview Performance & Simulation Tracking Difference / Error Holdings Distribution History Literature & Announcement

Distribution History

For the Month of	Dividend Per Share	Dividend paid out of net distributable income* for the year	Dividend paid out of capital	Dividend yield	Ex-Date	Record Date	Payable Date

Data to be shown after the first dividend pay out is made.

*a) “Net Distribution Income” means (i) the net investment income (i.e. dividend income and interest income net of fees and expenses) attributable to the relevant unit class and may also include net realized gains (if any) based on unaudited management accounts. However, "net distributable income" cannot include net unrealized gains. (ii) which is not declared and paid as dividends in a period of a financial year can be carried forward as net distributable income for the next period(s) within the same financial year. "Net distributable income" that has been accrued as at the end of a financial year and is declared and paid as dividends at the next distribution date immediately after that financial year end could be treated as "net distributable income" in respect of that financial year. However, "net distributable income" which has been accrued as at the end of a financial year but is not declared and paid as dividends at the next distribution date immediately after that financial year end should be included as "capital" for the next financial year. (iii) where the fund may pay dividend out of gross income while charging / paying all or part of the fund's fees and expenses to / out of capital, the amount of fees and expenses that has been paid out of capital has to be deducted from the gross investment income in order to come up with the "net distributable income".

b) The composition of the latest dividends (i.e. relative amounts paid from (i) net distributable income and (ii) capital) for the last 12 months are available from the Manager on request and on http://am.ssif.com.hk. The Manager may amend the above dividend policy with respect to payment of fees and/or dividends out of capital subject to the Securities and Futures Commission’s prior approval and by giving not less than one month’s prior notice to investors.

Warning :
Please note that a positive distribution yield does not imply a positive return nor guarantee of distribution. Investors should not make any investment decision solely based on information contained in the table above. You should read the relevant offering document (including the key facts statement) of the fund for further details including the risk factors.

Important information about Dividend out of capital / effectively out of capital

The Manager may in its discretion make cash distributions to Unit holders out of capital or out of gross income (while charging/paying all or part of the Product’s fees and expenses to/out of the capital of the Product) resulting in an increase in distributable income for the payment of distributions which is in effect a payment of distributions out of capital.
Payment of distributions 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 distributions involving payment out of or effectively out of the Product’s capital may result in an immediate reduction of the Net Asset Value per Unit.

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Investment always involves risks. Shanxi Securities International Asset Management Limited (CE# BEN407) is licensed with the Securities and Futures Commission to carry on Type 4 (advising on securities), Type 5 (advising on futures contracts and Type 9 (asset management) regulated activities, as defined under the Securities and Futures Ordinance of Hong Kong (Cap. 571). This website provides general information about Shanxi Securities International Asset Management Limited, its business and its products. Shanxi Securities International Asset Management Limited reserves the right at any time to modify, update, edit or delete contents on this website without any earlier notice. Investors must not rely on the contents of this website when making any investment decisions. The Offering document should be read for further details including the risk factos. Past performance does not indicate or guarantee any future performance.

This website is prepared by Shanxi Securities International Asset Management Limited and have not been reviewed by the Securities and Futures Commission in Hong Kong.