Important Risk Disclosure for PAIF
- ABF Pan Asia Bond Index Fund ("PAIF") is an exchange traded bond fund which seeks to provide investment returns that corresponds closely to the total return of the Markit iBoxx ABF Pan-Asia Index ("Index"), before fees and expenses, and its return may deviate from that of the Index.
- PAIF primarily invests in local currency government and quasi-government bonds in eight Asian markets, comprising of China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore and Thailand.
- Investment involves risks, including risks of exposure to bonds in both developed and emerging Asia markets. Investors may lose part or all of their investments.
- PAIF is not "actively managed" and will not try to "beat" the market it tracks.
- The Executives' Meeting of East Asia and Pacific Central Banks group (the "EMEAP") member central banks and monetary authorities are like any other investors in PAIF and each of them may dispose of their respective interest in the Units they hold. There are no guarantees that the EMEAP member central banks and monetary authorities will continue to be investors in PAIF.
- The trading price of PAIF may differ from the underlying net asset value per share.
- PAIF may not be suitable for all investors. Investors should not invest based on this marketing material only. Investors should read the PAIF's prospectus, including the risk factors, take into consideration of the product features, their own investment objectives, risk tolerance level etc and seek independent financial and professional advices as appropriate prior to making any investment.
Glossary
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Bond
An instrument of debt issued by a corporation or government to raise capital. Bonds are interest bearing and promise to pay the holder a specified sum of money at its maturity plus interest at given intervals.
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Bond Price
Expressed as a % of the par value of a bond.
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Call Provision
Call Provision allows the issuer to call back the bond prior to maturity.
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Certificate of Deposit (CD)
CD are interest-bearing certificates and generally issued by commercial banks.
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Commercial Paper
Commercial Papers are short-term credit instruments with a maturity of 30, 60 or 90 days. They are cash equivalents.
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Coupon Rate
Coupon rate is the interest rate on a bond, expressed as a percentage of par (or face value).
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Current Yield
Amount of coupon income received, expressed as a percentage of the current market value of the bond or portfolio.
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Eurodollar Bond
Bonds issued by US organizations and denominated in US Dollar but traded outside of the US (not only Eurozone).
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Floating-Rate Note (FRN)
Also known as Floater or Variable-Rate Note, FRN has variable coupon rates, periodically changed according to the rise and fall of a certain interest rate index or a specific fixed income security which is used as a benchmark. Also known as a "floater".
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Gilt Edge
Bonds that carry the smallest degree of investment risk are referred to as 'gilt edge'.
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Junk Bond
Junk Bond refers to lower quality bond and is also known as high yield bond, usually with a rating of BB or less. It is not considered to be of investment quality by Wall Street analysts.
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Maturity Date
The date on which final payment is due.
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Par Value
The value of a bond as expressed on its face value without consideration to any premium or discount. It also signifies the dollar value on which bond interest is figured. The principal amount at which the issuer contracts to redeem the bond at maturity.
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Perpetual Bond
Bonds that are never paid off and have no maturity dates.
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Put Provision
Put Provision enables investors to have an option to sell a bond back to the issuer at par value after a certain period prior to maturity.
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Serial Bond
An issue that is segmented into a series of maturities which matures in relatively small amounts at stated periodic intervals.
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Treasury Bill (T-bill)
T-Bill is non-interest bearing and fully guaranteed by the US Government. T-bill is sold on a discount basis so that the income is the difference between the purchase price and the face value.
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Treasury Bond
Treasury Bond is issued by the US Treasury and has a maturity of 10 to 30 years, considered to be a long term bond.
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Treasury Inflation Protection Securities (TIPS)
TIPS is issued by the US Treasury. It intends to protect investors against the effects of inflation by adjusting both the principal and coupon payments upward with any rise in inflation.
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Treasury Note
Treasury Note is issued by the US Treasury with a maturity of 1 to 10 years, considered to be an intermediate bond.
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Variable-Rate Note
Please refer to Floating Rate Note.
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Yankee Bonds
Bond issued by non-US entities but traded in the US and denominated in US Dollar.
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Yield
The rate of annual income return on an investment expressed as a percentage. Income yield is obtained by dividing the current dollar income by the current market price of the security.
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Yield Curve
The yield curve, a graph that depicts the relationship between bond yields and maturities, is an important tool in fixed-income investing. Investors use the yield curve as a reference point for forecasting interest rates, pricing bonds and creating strategies for boosting total returns.
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Yield to Call (YTC)
The yield of a bond that an investor holds until the call date, calculated based on the coupon rate, the length of time to the call date, and the market price.
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Zero-Coupon Bond
This kind of bond is sold at a discount from its value, which means investors receive return in the form of capital appreciation over the life of the bond rather than interest installments.
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Authorized Participant
An Authorized Participant refers to brokers or dealers who have entered into a Participation Agreement with the Receiving Agent, the Manager and the Trustee with respect to creations and redemptions.
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Creation Dealing Deadline
All orders to create units must be received by the Receiving Agent no later than 12 noon, Hong Kong time (Creation Dealing Deadline); otherwise, the orders will be deemed to be received next Dealing Day.
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Creation Unit
PAIF units can be subscribed and redeemed in multiples of Creation Unit, ie, blocks of 20,000 units, through Authorized Participants.
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Dealing Day
Any day on which commercial banks are open for business in Singapore and Hong Kong, the Stock Exchange of Hong Kong is open for normal trading, and the Markit iBoxx ABF Pan-Asia Index is compiled and published.
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EMEAP
EMEAP refers to The Executives' Meeting of East Asia and Pacific Central Banks, comprising the Central Banks and Monetary Authorities in the Asia-Pacific region: Reserve Bank of Australia, People's Bank of China, Monetary Authority of Hong Kong, Bank Indonesia, Bank of Japan, Bank of Korea, Bank Negara Malaysia, Reserve Bank of New Zealand, Bangko Sentral ng Pilipinas, Monetary Authority of Singapore and Bank of Thailand.
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Ex-Dividend Date
Dealing day falling immediately before the 15th day of December and June or such determined by the Manager with the approval of the Trustee.
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Index Constituent Economies
China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore and Thailand.
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Receiving Agent
The Receiving Agent, HSBC Institutional Trust Services (Asia) Limited, will perform certain services in connection with the creation and redemption of Units by Authorized Participants, including receiving creation and redemption orders from, and issuing settlement instructions to, Authorized Participants as well as facilitating the exchange of, cash and units on the transaction settlement day.
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Record Date
The 15th day of December and June or such other date as shall be determined by the Manager (with the prior approval of the Trustee) as the dates for the purpose of determining the unitholders of record entitled to receive any distributions of dividends.
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Redemption Dealing Deadline
All orders to redeem units must be received by the Receiving Agent no later than 12 noon, Hong Kong time (Redemption Dealing Deadline); otherwise, the orders will be deemed to be received next Dealing Day.
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The Manager
State Street Global Advisors Singapore Limited
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The Trustee
HSBC Institutional Trust Services (Singapore) Limited
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Transaction Date
The date on which an order to create/redeem units is received by the Receiving Agent.
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Valuation Point
PAIF's NAV (net asset value) will be calculated by the day end prices at the time when the valuation of the Underlying Index is completed on a Dealing Day.