<Current distribution channels>

   Specifically, the first method refers to an arrangement in which the sales agent underwrites the beneficial certificates for a pre-determined amount, establishes a trust by transferring to the trustee cash or securities equal to the underwritten amount from its proprietary assets, issues beneficial certificates that represent the trust assets, and sells units in the trust to investors. The advantage of such method is that the manager can quickly respond to the demands of investors by establishing an investment trust with little delay in consideration of the prevailing market conditions. Although the sales agent can avoid the burden of raising capital from investors prior to establishment of the fund, it is obliged to keep any unsold units arising from poor sales or cancellation of the remaining units, depending upon market conditions. In either case, the sales agent may face financial costs to meet the capital burden.

   The public offering method refers to an arrangement in which the sales agent first offers the beneficial certificates to investors and receives the subscription money from the investors. Then the subscription money is transferred to the trustee to establish the trust. The whole process usually takes two weeks to one month. This method is commonly used for closed-end type investment trusts and places no financial burden on the sales agent at the time of fund establishment; however, it lacks the flexibility to respond quickly to the needs of investors as market conditions change.

   The introduction of this system, which was widely welcomed by investors, has greatly contributed to the popularity of investment trusts by enabling the distributor to offer services comparable to those at banks while maintaining the distinctive qualities of investment trust products. As a result, the system has fuelled the universal acceptance of investment trust products, while contributing to the rapid advancement of the investment trust industry.

   There are three savings plans available using beneficial certificates - discretionary, deferment, and installment. The discretionary plan is an arrangement where an investor is free to purchase or redeem units at any time. Under a deferment plan, the investor is prohibited from purchase or redemption of units in a fund for a predetermined period after the initial purchase and any withdrawals are limited to the gains of the fund. With an installment plan, monthly or quarterly subscriptions for additional units may be made at the discretion of an investor in order to satisfy his or her long-term savings objectives. Recently discretionary installment plans with predetermined termination dates that give the investor full discretion over the installment amount and the investment period are becoming increasingly popular.

   At the time of the sale and purchase of the beneficial certificates, the distributor must distribute to investors a prospectus that contains information relating to the investment objectives, strategies, risks, and other basic characteristics of the investment trust such as the rights of unit-holders and management fees. In addition, after each accounting period, the distributor must distribute to the investors a portfolio management report outlining the portfolio management strategy, gains or losses in the investment portfolio, and other fundamental information relating to the investment trust.

   The distributor is obligated to redeem the beneficial certificates no later than 15 days from the date of a redemption request. However, in practice, the distributor settles the redemption request on the third business day from the request for bond investment trusts and hybrid investment trusts that do not invest their assets in stocks, while it settles the redemption request on the fourth business day for equity investment trusts and hybrid investment trusts that invest their assets in stocks. All redemptions are carried out using the net asset value (NAV) of the third business day from the redemption request. In line with prudent investment principles, the management company usually maintains a portion of trust assets as liquid assets to enable redemption requests to be satisfied without disposal of any securities in the portfolio.

   Investment trusts are classified as either open-end or closed-end, depending on whether redemption of units is permitted. The management company may choose the types of investment trusts it establishes, but most investment trusts are open-end trusts owing to limited market demand for closed-end types. Closed-end types, which prohibit redemption of units for a predetermined period, may be listed on the Korea Exchange in order to promote liquidity for trading of the units.

   The redemption amount is determined by multiplying the NAV per unit of the investment trust by the number of units to be redeemed minus the redemption fee and applicable tax amount. The applicable NAV for MMFs with mandatory settlement on the same day as the redemption request is the closing NAV per unit on the day prior to the redemption request date. For investment trusts that have a settlement date after the redemption request date, the applicable NAV is calculated using the closing prices of the Korea Exchange on the immediately previous day to the redemption payment date. The redemption fees are charged at the time of the payment of the redemption request by the distributor in accordance with the terms of the trust deed. The purpose of the redemption fee is to promote long-term investments by discouraging early withdrawals through a sliding fee schedule and stabilizing portfolio returns.

   Redemption fees became a major source of income for the distributor; however, since the introduction of a new regulation, the redemption fees generated from investment trusts that are set up according to the new regulation are required to be retained in the trust assets, except for certain trusts for foreign investors. For a holding period of less than 90-days for open-end and less than 180-days for closed-end investment trusts, a minimum of 70% of the capital gains has to be charged as a redemption fee. The management company has full discretion over the applicable fee charged for a holding period of over 90-days or 180-days respectively.

   A new supervisory regulation of the FSC, which is scheduled to come into effect from June 6, 2005, stipulates that a cut-off time shall be applied to all funds established under the Act ; however, in case of an automatic transfer account, a purchase or redemption request is deemed to have been made before the cutoff time on the request day. (Article 52-2, Paragraph 3 of Regulation on Supervision of the Act). The cut-off time depends on the fund type: cut-off time for equity funds that have more than 50% of equities is 15:00 while the cut-off time for other funds is 17:00 . The specific details are below:

(1) At the time of purchasing indirect investment securities

(2)At the time of redeeming indirect investment securities