Investors are not guaranteed the investment principal that they commit. Investors may incur a loss and the value of their investment principal may fall below par as the result of a decline in NAV. All profits and losses arising from investments in the Fund belong to the investors (beneficiaries). This fund is different from saving deposit.
The Fund invests primarily in stocks. The NAV of the Fund may fall and investors may suffer a loss due to a decline in stock prices or deterioration in the financial conditions and business performance of an equity issuer.

Major risks are as follows:

1. Price Fluctuation Risk
Stock prices fluctuate due to the changes in the information of the company’s growth and profitability, and any changes in such information. They also fluctuate as they are affected by economic and political conditions in Japan and abroad. There is a risk that the Fund may incur material losses if unexpected changes occur in stock price movements or liquidity.

The prices of small- and mid-cap stocks and the stocks of emerging companies tend to fluctuate more than the average of the overall equity market, and may largely affect the Fund’s NAV.

2. Liquidity Risk
There is a risk that the Fund will incur unexpected losses when the market size or trading volumes are small. The purchase and sale prices of securities are influenced by the trading volume, resulting in the inability of the Fund to sell certain stocks in its portfolio at prices that are expected to be realized in light of the prevailing market trend, that a security can sold as appraised, or that the transaction volume is limited regardless of the price levels. As a result, the Fund may incur unexpected losses.

In general the market size and trading volumes for the small- and mid-cap stocks and the stocks of emerging companies tend to be smaller than the average of the overall equity market and are believed to have high liquidity risk.

3. Credit Risk
There is a risk that the Fund will incur material losses in the event of a serious crisis that directly or indirectly affects the business of a corporation in which the Fund invests. The prices of stocks of issuers may substantially decline (possibly to zero) due to fears of default or corporate bankruptcy, which can contribute to decline in the Fund NAV.

4. Security-lending Risk
Lending of securities involves counterparty risks, which are the risks of contractual default or cancellation following bankruptcy, etc., by the counterparty. As a result, the Fund may suffer unexpected losses. Following the default or cancellation of a lending agreement, when liquidation procedures are implemented by using the collateral that is set aside in the lending agreement, the procurement cost of buying back the securities can surpass the collateral value, due to price fluctuations in the market. In such cases, the Fund is required to pay the difference, which may cause the Fund to incur losses.

<Risks of Discrepancy between the TOPIX Mid400 and NAV>

The Fund seeks to match the NAV volatility with that of the TOPIX Mid400 Index, but it cannot guarantee that movements will be consistent with the Index for the following reasons:

• he Fund may be subjected to a market impact when buying or selling individual stocks as it adjusts its portfolio in response to changes in the stocks that comprise TOPIX Mid400 and capital changes among corporations. In addition, the Fund will incur various expenses, including trust fees, brokerage commissions, and audit fees.
• Dividends may be paid by stocks in the portfolio and fees may be earned for securities lent.
• When derivative transactions such as futures are made, there may be disparity between the price movements of such transactions and that of some or all of the constituents of the TOPIX Mid400.

Discrepancy between the market prices at which stocks are traded at exchanges and the NAV
The Fund is listed in the Tokyo Stock Exchange and the Units are traded on that exchange. The market price of the Units is affected primarily by the size of demand for the Fund, its performance, and how attractive it is to investors in comparison with their other investments. It is not possible to predict whether the Units will sell in the market above or below the NAV.

* Factors that contribute to NAV fluctuations are not limited to those listed above.

Other Items to Consider

• These materials are solicitation materials prepared by Nikko Asset Management in order to enhance investors' understanding of "Listed Index Fund TOPIX Mid400 Japan Mid Cap Equity".
• Unlike bank deposits or insurance policies, this Fund is not protected by the Deposit Insurance Corporation or the insurance policyholders protection corporations. Nor are investment trusts protected by investor protection funds when purchased at banks or other registered financial institutions.
• Any and all profits and losses arising from the trust assets belong to the beneficiaries. Applicants for subscription of this Fund are advised to fully acknowledge the investment objective of the Fund and associated risk factors.
• When applying to invest in the Fund, please make the decision to invest carefully after taking the time to read the delivered pre-agreement document and other relevant materials in detail.