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 and listed REITs. The NAV of the Fund may fall and you may suffer a loss for reasons such as a drop in the price of stocks or REITs or deterioration in the financial conditions and business performance of an issuer of stocks or REITs

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.
• Fluctuations in the value of REITs are caused by a variety of factors, including the circumstances surrounding real estate, real estate market conditions and movement in long- and short-term interest rates, and macroeconomic changes. When the financial conditions, performance or market conditions of REITs deteriorate, there is a risk that the Fund will suffer losses due to a decline in the prices of, or distributions from, the REITs.

2. Liquidity Risk

• There is a risk that the Fund will incur unexpected losses when the sizes of the market or trading volumes are small. The purchase and sale prices of securities are influenced by trading volume, resulting in the risk that they cannot be traded at prices expected to be realized in light of the prevailing market trend, sold at the estimated prices, or that the trading volume is limited regardless of the level of prices.

3. Credit Risk

• There is a risk that the Fund will incur material losses in the event of a material 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.
• When REITs fall into, or are expected to fall into, a state of insolvency or liabilities in excess of assets, there is a risk that the Fund will suffer losses.

4. Security-lending Risk

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

＜Risk of Discrepancy between the MSCI Japan Index and NAV＞

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

• The 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 the MSCI Japan Index and capital changes among corporations. In addition, the Fund incurs 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 MSCI Japan Index.

◇Discrepancy between the market prices at which stocks are traded on 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 fluctuations in the NAV are not limited to those listed above.

＜Other items to consider＞

• This document is meant as promotional material whose purpose is for Nikko Asset Management to provide information about its “Listed Index Fund Japan Equity (MSCI Japan)” and for investors to gain further understanding about the fund.
• Unlike a bank deposit or an insurance policy, this fund is not covered by the Deposit Insurance Corporation of Japan or the Policyholders’ Protection Corporation. Also, if the investor purchases the fund at a registered financial institution like a bank, it is not subject to payment from the Investor Protection Fund.
• Prior to purchasing the fund, please carefully read the pre-contract documents and other material.