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Back-end Load Offshore Funds
Product Instruction
- Back-end Load Offshore Funds - refer to offshore funds with the load collection being deferred to the time of redemption, known as “Back-end Load Offshore Funds”. The concept was originated from the US, and it is to classify funds of different load collection model. For traditional funds, offshore funds with the load collected upon the subscription are known as the Front-end Load Funds (A Share Fund). The Back-end Load Overseas Mutual Funds are also classified into B Share, C Share, C2 Share, F Share, T Share, Y Share, and U Share funds. One same fund may be classified into front-end load and back-end load fund, and their investment subject matter, region and management team are completely the same. The greatest difference relies in the different “load structure”. For front-end load funds (A Share fund), the load for the subscription is collected upon the time when the investor makes the subscription of fund. For back-end load funds, the load is not collected during the subscription, but instead, the fund company collects the “contingent deferred sales charge” during the redemption according to the length of the fund holding period of the investor. If the holding period exceeds the agreed period, the investor is not required to pay the contingent deferred charge. It shall be noted that since the criteria including price etc. are different during the time of establishment and issuance, and for back-end load funds (such as B, C, C2, F, T, Y, U Shares), it is required to further pay the Distribution Fee. Such distribution fee is a fee specified in the prospectus, and it is deducted by the fund company from the daily net asset value of each fund. Consequently, the net value price, fund distribution yield presented by the back-end load and front-end load funds are also different. Investors making investments shall be aware that no conversion between a back-end load fund and a front-end load fund is permitted. In addition, if the fund company specifies further requirements for conversion, then such requirements shall be applied.
Product Characteristics
- Provide another choice of investment to investors
Different from front-end load funds (A Share fund) where investors are required to pay the subscription load upon the subscription of funds, for back-end load funds (such as B, C, C2, F, T, Y, U Shares), investors are not required to pay subscription load upon the subscription of funds, and contingent deferred sales charge is collected upon redemption according to the period of fund holding period, and a distribution fee is to be paid annually (details in the following). Such type of fee payment method provides another investment alternative to investors, and investors can choose either the front-end load or back-end load funds on their own discretion depending upon their investment plans. - The longer the period of investment, the cheaper the contingent deferred sales charge
During the redemption, the fund company collects the load in a deferred method according to the length of the fund holding period of the investor. Therefore, as the holding period is longer, the contingent deferred sales charge is lower. After the holding period exceeds a certain length of period, the contingent deferred sales charge is no longer collected. - ”Contingent deferred sales charge” of most of the funds are calculated according to either the fund cost or the market price at redemption, whichever is lower.
During the redemption of a “back-end load overseas mutual fund”, despite that contingent deferred sales charge may be paid, nonetheless, most of the fund companies allow investors to choose the most advantageous criteria for paying the contingent deferred sales charge. When the fund performance is great, the “original fund cost” is used to calculate the contingent deferred sales charge. If the fund net worth performance is poor, then the contingent deferred sales charge can be calculated according to the “market price at redemption”. However, where the prospectus specifies special requirements, such requirements shall be applied. - Rules for conversion fee of back-end load overseas mutual funds
During the conversion of the investment of back-end load series of funds, most of the fund companies do not further collect additional conversion fee but only require investors to pay a conversion fee ofNTD500元轉換手續費(such as B Share) for each transaction to our bank. However, during the conversion of investment in partial back-end load series of funds, in addition to the conversion fee of our bank, the fund company will further collect a conversion fee deducted from the account or additionally pay(such as C Share). Relevant requirements shall follow the content specified in the prospectus. - For back-end load offshore funds (such as: B, C, C2, F, T, Y, U Shares), after the settlor holds the fund for a certain period of time, it may be automatically converted into other type of funds (such as Franklin Templeton B/F Share series fund converted into A Share series of fund, AllianceBernstein B Share series fund converted into A Share series of fund, NN(L) (original ING) Y Share fund series of fund converted into X Share series of fund, Amundi T Share/U Share fund series of fund converted into A Share series of Fund, Merian C2 Share series of fund converted into A Share series of fund etc.). The settlor shall carefully read the prospectus of such fund and the investor brochure before the subscription.
Relevant Restrictions
- Investment method: Presently, single subscription is permitted only.
- Minimum investment amount for each subscription:
- Subscription for back-end load (B, C, T, Y, U Shares):
- For investments in NTD, the minimum amount for each subscription accepted by our bank is NTD 120 thousand , and it is accumulated based on the unit of NTD 10 thousand.
- For investments in foreign currencies, the minimum amount for each subscription accepted by our bank is USD/EUR/AUD 5 thousand , and it is accumulated based on the unit of USD/EUR/AUD 1 thousand. For investments in ZAR, the minimum accepted amount is ZAR 50 thousand, and it is accumulated based on the unit of ZAR 10 thousand.
- Subscription for back-end load (C2, F Shares):
- For investments in NTD, the minimum amount for each subscription accepted by our bank is NTD 30 thousand , and it is accumulated based on the unit of NTD 10 thousand.
- For investments in foreign currencies, the minimum amount for each subscription accepted by our bank is USD/EUR 1 thousand , and it is accumulated based on the unit of USD/EUR 1 hundred. For investments in AUD, the minimum accepted amount is AUD 2 thousand, and it is accumulated based on the unit of AUD 1 thousand. For investments in ZAR, the minimum accepted amount is ZAR 20 thousand, and it is accumulated based on the unit of ZAR 10 thousand.
- Limitation on conversion: Back-end load funds (such as B Share/C Share/C2 Share/F Share/T Share/Y Share/U Share funds) are limited to be converted into other back-end load funds of the same category under one identical fund company. During partial conversion, the transaction amount and the trust amount retained for each time of conversion shall follow the requirements for the minimum investment amount.
- Limitation on redemption: During partial redemption, the transaction amount and the trust amount retained for each time of conversion shall follow the requirements for the minimum investment amount specified for each contract.
- Requirements for short-term trading: If a settlor is subject to the requirements for short-term trading (specified by the fund company, typically referring to 3~6 months of short-term trading) frequently, then the trading counterparty (fund company) may restrict, refuse or cancel the settlor's right to subscription or conversion (including trading of subscription or conversion already accepted by the trustee institution). In addition, investor may be required to pay a certain ratio of buyback fee according to the requirements specified in the prospectus.
Possible fees required to be paid for “Back-end Load Overseas Mutual Funds” are disclosed in the following:
- 1. Contingent Deferred Sales Charge
- Franklin, Janus, Amundi, AllianceBernstein, NN(L) (original ING): The calculation of the charge is based on either the market price at redemption or trust principle, whichever is lower, followed by multiplying the value of the fund at the time of redemption with the rate indicated in the following table. The amount of such charge is deducted by the fund company from the redemption total amount during the redemption of the fund.
- Merian: The calculation method of the charge is to multiply the value of the trust principle by the rate indicated in the following table. The amount of such charge is deducted by the fund company from the redemption total amount during the redemption of the fund.
- Contingent Deferred Sales Charge of Fund Companies
※ The contingent deferred sales charge of each fund company is specified in their respective prospectus. The above uses the charges for the Franklin, Janus, AllianceBernstein, Amundi B Share series of funds, Franklin F Share, Amundi T Share/U Share, Merian C/C2 Share and NN(L) (original ING) Y Share series of funds as examples for illustration.Holding period at fund companyLess than 1 year1 year (inclusive)-2 years2 years (inclusive)-3 years3 years (inclusive)-4 yearsAbove 4 years (inclusive)Franklin/Janus/Amundi B Share seriesStock type4%3%2%1%0%Bond typeAllianceBernstein B Share seriesStock type4%3%2%1%0%Bond type3%2%1%0%0%Merian C Share seriesStock type1%0%0%0%0%Bond type1%0%0%0%0%Franklin F Share/ NN(L)(original ING) Y Share series/Amundi U Share seriesStock type3%2%1%0%0%Bond type3%2%1%0%0%Amundi T Share/Merian C2 Share seriesStock type2%1%0%0%0%Bond type2%1%0%0%0%※The above charge shall be handled according to the latest requirements specified by the fund companies.
- Distribution Fee
- For back-end load overseas mutual funds, it is necessary to pay Distribution Fee, and such distribution fee is a fee specified in the prospectus, which is not additionally collected by the trustee but is deducted by the fund company from the daily net asset value of each fund.
- Distribution Fee of Fund Companies
※The contingent deferred sales charge of each fund company is specified in their respective prospectus. The above uses the charges for the Franklin, Janus, AllianceBernstein, Amundi B Share series of funds, Franklin F Share, Amundi T Share/U Share, Merian C/C2 Share and NN(L) (original ING) Y Share series of funds as examples for illustration.Franklin B Share Fund Franklin F Share FundAmundi B Share/T Share FundAmundi U Share FundAllianceBernstein B Share FundNN (L) (original ING) Y Share FundJanus B Share FundMerian C Share FundMerian C2 Share FundDistribution Fee (annual rate)1.06％1.0％1.5％1.0％1.0％1.0％1.0％1.5％1.0％
- Channel service fee at subscription:
It is paid by the fund company to the trustee at the time of subscription, and the rate is 0%~5%. When such channel service fee is a fee specified in the prospectus of an offshore fund, then it is collected by the fund company by deducting the fee amount from the daily net asset value of each fund. - Channel service fee during holding period:
Such fee is calculated by multiplying the net asset value of the fund company with the rate, and the rate is 0%~1%. The fee is paid by the fund company to the trustee, and the payment method may be different for different fund companies, such that it may be paid in a monthly, quarterly, semi-annually or annually basis. When such channel service fee is a fee specified in the prospectus of a fund, then it is collected by the fund company by deducting the fee amount from the daily net asset value of each fund. - Conversion fee:
Trustee collects a fee of NTD 500 for each conversion, and additional conversion fee may be deducted from each fund or collected as further payment depending upon the requirements specified by each fund company. - Trust management fee:
It is calculated based on the latest net value obtainable by the trustee on the last business day of each month, and according to the number of beneficial units of the investment subject matter of the settlor, based on the annual rate of 0.2%, and it is recognized cumulatively.
- Shall you have any questions, please contact our Customer Service Center or operating counters at each branch or please contact Trust Division at (02)2536-2951, Ext. 2210~2219
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