Investors are not guaranteed the investment principal that they commit. Investors may incur a loss and the value of their investmentprincipal 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 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.

The principal risks of this Fund 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.
• In general, bonds of emerging countries tend to exhibit higher price volatility compared with those of developed countries. This can also have a significant impact on the Fund's NAV.

2. Liquidity Risk

• In a situation where the market size or trading volume is small, the price at which a security can be purchased or sold can be greatly influenced by the size of the transaction, giving rise to the risk that a transaction cannot be completed at the price expected due to market conditions, that a security cannot be sold as appraised, or that the transaction volume is limited regardless of the price level. This could lead to unexpected losses.
• In general, the liquidity risk of bonds of emerging countries may be higher compared with those of developed countries due to market size and smaller trading volume.

3. Credit Risk

• In general, in cases of default by issuers of public and corporate bonds or short-term financial assets or when default is expected to occur, the prices of such corporate bonds or short-term financial assets will decrease (possibly to zero), which can contribute to a decline in the Fund's NAV. If default actually occurs, there is a strong possibility that the investment principal cannot be recovered.
• In general, emerging country bonds have higher yields than those of developed countries, but at the same time, their price movements are more significant and therefore may have a higher risk of defaulting.
• There is a risk that the price of rated bonds will fall when ratings are revised.
• The Fund's capital may be managed with short-term financial assets such as call loans or transferable certificates of deposit, however, losses may be incurred as a result of default by purchasing counterparties. This can also contribute to a decline in the Fund's NAV.

4. Risk of Exchange Fluctuations

• In the case of foreign currency-denominated assets, generally if the foreign exchange market moves so that the yen appreciates against the currency in which the concerned assets are held, the fund’s NAV may depreciate as a result.
• In general, currencies of emerging countries may exhibit higher volatility than those of developed countries.

5. Country Risk

• There is the risk of significant losses in the Fund 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, coups or major political developments, or war). In such cases, the fund may not be managed in accordance with the investment policy.
• In general, the disclosure of information from emerging countries may not be as abundant as developed countries and accurate information may not be readily obtainable.
• The taxation systems of countries of the listed or traded assets this Fund targets for investment will vary depending on the country. In addition, those systems may be unilaterally changed or new systems introduced. Such factors may have an impact on the value of the Fund's trust assets.

6. Securities Lending Risk

• Lending of securities is accompanied by counterparty risks (default or cancellation of lending agreements as a result of bankruptcy) and as a result, there is a risk that the Fund will incur unexpected losses. Following a default or cancellation of a lending agreement, when liquidation procedures are implemented using the collateral set aside in the lending agreement, the procurement cost of buying back the securities may exceed the amount of collateral due to market price fluctuations. In such cases, the Fund is required to pay the difference, which may cause the Fund to incur losses.

< Price Discrepancies Between Barclays Capital EM Local Currency Government - 10% Country Capped Index and NAV >

Whereas the Fund seeks to match the movement in the NAV with that of Barclays Capital EM Local Currency Government - 10% Country Capped Index, it does not guarantee movements that are identical to those of the index for the following reasons.

• The gap between the timing of funds inflow and the actual purchase of investment trust securities.
• Investment in issues other than those that comprise the Barclays Capital EM Local Currency Government - 10% Country Capped Index, the potential market impact from the trading of individual issues when portfolio adjustments are made due to changes in or capital transfers of the issues that comprise the Barclays Capital EM Local Currency Government - 10% Country Capped Index, or expenses from trust fees, brokerage commission, audit costs, etc.
• The management fee from lending securities or dividends of incorporated issues.
• The disparity between price movements of derivative transactions, such as futures trading, and that of some or all of the issues that comprise the Barclays Capital EM Local Currency Government - 10% Country Capped Index.

◇Price Discrepancies Between NAV and Market Price Traded on Financial Instruments Exchanges

This Fund is listed on the Tokyo Stock Exchange and traded publicly, however, its market price will depend mainly on demand for the Fund, its investment performance, and how attractive it is to investors in comparison with alternative investments. Accordingly, it is not possible to predict whether the Fund's market price will trade above or below the NAV.

* The prices of the investment trust securities in which the Fund invests fluctuates in reaction to the impact of these risks. Accordingly, the Fund is also subject to these risks.
* The factors that contribute to fluctuations in the NAV are not limited to those listed above.

Other matters to consider

• These distribution materials were prepared for the purpose of providing information on the Listed Index Fund Emerging Bond (Barclays Local EM) offered by Nikko Asset Management and increasing investors’ understanding of this Fund.
• Unlike bank deposits or insurance policies, this Fund is not protected by the Deposit Insurance Corporation of Japan or the Life Insurance Policyholders Protection Corporation of Japan. Nor is this Fund 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. You should fully recognize the investment purposes and risk factors involved in this Fund before applying for it.
• When applying for the purchase of this fund, please read carefully the documents that are provided to you before concluding the contract.
• Pursuant to the provisions of the Financial Instruments and Exchange Act (Law No. 25 of 1948), a securities registration statement has been submitted to the Director General of the Kanto Local Finance Bureau for this Fund as of 11 January 2012, and shall come into effect from 27 January 2012. Details are subject to change before the securities registration statement comes into effect.