Listed Index Fund Nikkei Semiconductor Stock

Investment Risks

The major risks associated with investment in the Fund are outlined below. Investors should ensure they carefully examine and understand fully these risks before deciding to subscribe to units of the Fund.

Factors that contribute to the NAV volatility

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 the market price or NAV. All profits and losses arising from investments in the Fund belong to the investors (beneficiaries). The 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:

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 or liquidity.
• Small and mid-cap stocks tend to have greater price volatility than the overall stock market average, which may also have a significant impact on the NAV.

Liquidity Risk

• The Fund may incur unexpected losses when the size of the market or trading volumes is small. The purchase and sale prices of securities are influenced by trading volume, resulting in the risks 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.
• In general, small and mid-cap stocks are considered to have higher liquidity risk due to their smaller market size and trading volume compared to the average of the overall stock market.

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.

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.

＜Major factors for discrepancy between the Nikkei Semiconductor Stock Index and the NAV＞

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

• The potential investment in selected issues other than the Nikkei Semiconductor Stock Index, the potential market impact from the trading, etc., of individual issues when portfolio adjustments are made due to changes in selected issues on the Nikkei Semiconductor Stock Index or capital transfers, or costs borne by the Fund such as trust fees, brokerage commission, and audit costs, etc.
• The timing and amount of payment for the distribution of the Fund will not be completely the same as the distribution from the underlying stocks.
• When derivative transactions such as futures are made, there may be disparity between the price movements of all or some of such transactions and that of the Nikkei Semiconductor Stock Index.
• Dividends may be paid by stocks in the portfolio and fees may be earned for securities lent.

＜Discrepancy between the market prices at which stocks are traded on exchanges and the NAV＞

The Fund is listed on 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.

Additional Considerations

• This document is meant as promotional material whose purpose is for Amova Asset Management to provide information about its ''Listed Index Fund Nikkei Semiconductor Stock'' and for investors to gain further understanding about the fund.
• The provisions stipulated in Article 37-6 of the Financial Instruments and Exchange Act (the “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. Nor are investment trusts protected by investor protection funds when purchased at banks or other registered financial institutions.
• 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 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.