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 market price or 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 bonds. The NAV of the Fund may fall and you may suffer a loss for reasons such as a drop in the price of bonds or deterioration in the financial conditions and business performance of an issuer of stocks.
Major risks are as follows:
1. Price Fluctuation Risk 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 and the terms of issue in question.
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.
3. Credit Risk 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.
5. 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 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.
Risk of Discrepancies in FTSE Nonyen World Government Bond Index (ex-Japan, no hedge, yen based) and NAV
This Fund seeks to ensure that its NAV has the same volatility as FTSE Nonyen World Government Bond Index (ex-Japan, no hedge, yen based); 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;
- Where the portfolio is adjusted through investment in issues other than the constituent issues of FTSE Nonyen World Government Bond Index (ex-Japan, no hedge, yen based) or through changes in the constituent issues or weighting of FTSE Nonyen World Government Bond Index (ex-Japan, no hedge, yen based), the trading of individual issues may be affected by market impact or the Fund may bear costs such as management fees, brokerage fees and auditing fees.
- Securities lending fees from lending securities; and
- When derivative transactions such as futures are conducted, discrepancies in price movements between such transactions and part or all of the constituent issues of FTSE Nonyen World Government Bond Index (ex-Japan, no hedge, yen based).
Discrepancies between the market prices at which bonds 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 effects of 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.
Additional Considerations
- These distribution materials were prepared for the purpose of providing information on the Listed Index Fund International Bond (FTSE WGBI) (Monthly Dividend Payment Type) offered by Amova Asset Management and increasing investors' understanding of this Fund.
- The provisions stipulated in Article 37-6 of the Financial Instruments and Exchange Act (''cooling-off period'') are not applicable to Fund transactions.
- This Fund differs from deposits or insurance policies in that it is not protected by the Deposit Insurance Corporation of Japan or the Policyholders Protection Corporation of Japan. Furthermore, units purchased from registered financial institutions, such as banks, are exempted from compensation by the Japan Investor Protection Fund.
- When the Fund faces big redemption causing short term cash requirement or sudden change in the main trading market condition, there can be temporal decline in the liquidity of holding assets, resulting in the risks that Fund unable to trade securities at the expected market prices or appraised prices, or encounters limitation in trading volume. This may result in the negative influence on NAV, suspension of redemption applications, or delay in making payment of redemption.
- When applying for the purchase of this fund, please read carefully the documents that are provided to you before concluding the contract.
