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Structured Note

Product Instruction

  1. “Structured Note” is a product that combines bonds (fixed income type product) and options (derivatives). In other words, the partial principle is used to purchase products of fixed income, such as bonds, in order to achieve the goal of protecting a certain ratio of principle; furthermore, the remaining principle is used in the investment of derivate linked with interest rate, exchange rate, options or stock index etc., in light of achieving the characteristics of seeking great profit with small investment cost of derivatives, thereby allowing investors to gain additional income.

Common Types of Structured Note

  1. Subject matters linked with structured note are mostly targeted at stocks, interest rate, exchange rate, index and credit etc.
  1. Linked to single stock or a basket of stocks.
    Profit depends on the increase and decrease of the stock.
  2. “Interest rate” structured note
    Linked interest rate is used as the investment subject matter. Profit depends on the high and low of the interest rate or the interval predefined. If the interest rate falls within the predefined interval, then the investor can obtain the agreed interest distribution
  3. “Exchange rate” structured note
    Profit status is related to the increase and decrease of exchange rate.
  4. “Index” structured note
    Use “index” as the linked subject matter, and interest distribution is calculated based on the increase and decrease of index.
  5. “Credit” structured note
    Linked to the company credit, and during the investment period, fixed interest distribution is provided; however, it is required to bear the risk of credit default.  

Principle Guaranteed Rate

  1. Principal Guaranteed Rate refers to the rate of principle that an investor is guaranteed to obtained upon maturity. For example: When the principle guaranteed rate is 100%, it means that the investor can obtain at least 100% of the principle upon the maturity.

Participation Rate

  1. Participation Rate refers to the rate that an investor can actually gain from the increase level of the linked subject asset. For example: When the participation rate is 90%, and the subject asset increases 30%, then an investor can obtain 27% for the return (participation rate of 90% x increase level of 30%) 

Possible Risks

  1. Different risks may involve for different types of products, and the risks may include the risk of early redemption by settlor, interest rate risk, liquidity risk, credit risk, exchange risk, event risk, country risk, settlement risk, risk associated with impacts of linked subject matter, risk associated with increase and decrease of linked subject matter etc.
  2. When choosing a structured note, investor is advised to carefully review the product brochure and terms on the contract in order to ensure protection of one’s rights and interest. 
  3. If you have any questions, please contact our Customer Service Center at 0800-365-889 or operating counters at each branch or please contact Trust Division at (02)2536-2951, Ext. 2210~2216