Matters to Consider - Listed Index Fund World Equity (MSCI ACWI) ex Japan Print

Listed Index Fund Listed Index Fund World Equity (MSCI ACWI) ex Japan Code:****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.

This Fund will invest mainly in rights for stock price index futures trading and short-term bonds, therefore, the NAV may fall and the Fund may incur losses due to falls in the prices of rights for stock price index futures trading and short-term bonds, or worsening financial standing or business results of short-term bonds issuers. Losses may also be incurred due to exchange rate fluctuation when investing in assets denominated in foreign currencies.

Major risks are as follows:

1.Price Fluctuation Risk

  • Stock prices fluctuate as they are affected by information on the company's growth rate and profitability as well as 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 will suffer material losses if unexpected changes occur in stock price movements or liquidity.
  • In general, the prices of rights relating to stock index futures will fluctuate due to fluctuations in the stock prices of companies used to calculate the stock price index, and the constituent stock markets of the stock price index. In addition, the prices of rights relating to stock index trading can fluctuate due to fluctuations in other domestic and overseas stock price indices. There is a risk that the Fund will suffer material losses if prices of rights relating to stock index futures trading in the fund changes unexpectedly and results in an unanticipated fluctuation in the prices of stocks related to the stock price index and the constituent stock markets of the stock price index.
  • In general, stocks of emerging countries and rights related to stock index futures trading tend to exhibit higher price volatility compared with those of developed countries and rights related to stock index futures trading. This can also have a significant impact on the Fund's NAV.
  • Corporate and government bonds generally have a price fluctuation risk arising from changes in interest rates. Generally, their prices go down when interest rates rise, causing the NAV of the funds to fall. The degree of price fluctuation varies depending on the remaining time to maturity, coupon rate and other issuance conditions.

2.Liquidity Risk

  • Where the market size or trading volume is small, buying and selling prices for securities may be largely affected. This results in the risk that securities cannot be traded at the expected prices, sold at the appraised prices, or that trading volume is limited regardless of prices. This creates the risk of unexpected losses.
  • In general, stocks of emerging countries and rights related to stock index futures trading may exhibit higher liquidity risk compared with those of developed countries and rights related to stock index futures trading due to smaller market scale and trading amount.

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 decrease (possibly to zero) due to fears of default or corporate bankruptcy, which can contribute to a decline in the Fund's NAV.
  • If a default has occurred or is expected to occur, for issuers of public and corporate bonds or short-term financial assets, the prices of such public and corporate bonds or short-term financial assets decline (the value could even fall to zero). This results in a decline of the Fund's NAV. In addition, if default in fact occurs, there is a high possibility of being unable to collect investment funds.

4.Currency Fluctuation Risk

  • For foreign-currency-denominated assets, in general, if the yen is stronger than the currencies of such assets, the Fund's NAV will decline.
  • In general, emerging countries' currencies show higher volatility than those of developed countries.

5.Country Risk

  • There is a risk that the Fund may incur material losses due to market trends or the flow of funds, including emergencies in invested countries (such as financial crises, government default due to financial reasons, significant policy changes or introductions of new regulations including asset freezes, natural disasters, coup d’état or significant political changes, or war). In such cases, the fund cannot be managed in accordance with the investment policy.
  • In general, emerging countries do not disclose enough information, or accurate information cannot be obtained in a timely manner.

6.Security-lending Risk

  • Lending of securities is accompanied by counterparty risks, which are the risks of default or cancellation of lending agreements as result of bankruptcy, etc., by the counterparties. As a result, there is a risk that the Fund will suffer unanticipated 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.

Factors Contributing to the discrepancies between yen-converted MSCI ACWI ex Japan Index and NAV

This Fund seeks to ensure that its NAV has the same volatility as the yen-converted MSCI ACWI ex Japan Index, however, we cannot always guarantee that the Fund will have the same volatility as the Index due to the following factors attributable to this Fund and to the investment trust securities invested in by this Fund:
  • Lag in the timing of fund inflows and to the purchase of investment trust securities.
  • The potential market impact from the trading, etc., of individual issues when portfolio adjustments are made due to changes in selected issues on MSCI ACWI ex Japan Index or capital transfers, or costs borne by the Fund such as trust fees, brokerage commission, and audit costs, etc.
  • The share-lending fee from securities or dividends of incorporated issues.
  • When derivative transactions such as futures are conducted, discrepancies in price movements between such transactions and part or all of the constituent issues of the MSCI ACWI ex Japan Index.

◇ Discrepancies between the market prices at which stocks are traded on the exchange and the NAV

This Fund is listed on and will be publicly traded on the Tokyo Stock Exchange; however, the market price of the units will depend mainly on the demand for the Fund, its investment performance, and how attractive it is to investors in comparison to alternative investments, etc. We cannot predict whether this fund will be traded at a market value below or above its NAV.

* The prices of securities targeted for investment of this Fund will fluctuate due to the aforementioned risks. Therefore, please note that this Fund itself has these risks as well.
* The factors that contribute to fluctuations in the NAV are not limited to those listed above。

Other Items to Consider

  • These distribution materials have been created by Nikko Asset Management with the intention of communicating information on "Listed Index Fund World Equity (MSCI ACWI) ex Japan" in order to increase investors' understanding of this Fund.
  • Unlike bank deposits or insurance policies, this Fund is not protected by the Deposit Insurance Corporation or the insurance policy holders protection corporations. Nor are investment trusts protected by investor protection funds when purchased at banks or other registered financial institutions.
  • When applying for the purchase of this fund, please read carefully the documents that are provided to you before concluding the contract.