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 invests mainly in the equities, rights for stock price index futures trading and short-term bonds. As such, it is possible that the NAV will fall and the Fund may incur losses due to a decline in the prices of rights for stock price index futures trading and short-term bonds or worsening financial standing or business results of the organizations that issue short-term bonds.
Losses may also be incurred due to exchange rate fluctuation when investing in assets denominated in foreign currencies.

Major risks for the target investment trust securities are as follows:

1.Price Fluctuation Risk

• Stock prices fluctuate due to the changes in the information of the company’s growth and profitability, and any 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 this Fund may incur material losses if unexpected changes occur in stock price movements or liquidity.
• The prices of rights relating to stock index futures will change due to fluctuations in the stock prices of companies used to calculate the stock price index, and in the constituent stock markets of the stock price index. In addition, the prices of rights relating to stock index futures trading can change due to the fluctuations in other domestic and overseas stock price indexes. There is a risk that the Fund will suffer material losses owing to an unexpected change in the prices of rights relating to stock index futures trading in the fund or to an unexpected fluctuation in the prices of stocks related to the stock price index and the constituent stock markets of the stock price index.
• Stocks and rights related to stock index futures trading in emerging countries tend to show high price volatility compared to those in developed countries. This can also have a large impact on the Fund's NAV.
• Public and corporate bonds contain a risk of price fluctuation due to interest rate fluctuation. In general, when interest rates rise, bond prices decline, resulting in a decline in the fund's NAV. However, price fluctuation is different for each bond depending on the maturity, coupon rate and other issuance conditions.

2.Liquidity Risk

• There is a risk that the Fund will incur unexpected losses when the market size or trading volume is small. The purchase and sale prices of securities are influenced by the trading volume, resulting in the inability of the Fund to sell certain stocks in its portfolio at prices that are expected to be realized in light of the prevailing market trend, that a security can sold as appraised, or that the transaction volume is limited regardless of the price levels.
• The liquidity risk of stocks and rights relating to stock index futures trading in emerging countries can be higher than those in developed countries, due to the small market size or trading volume.

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 decline (possibly to zero) due to fears of default or corporate bankruptcy, which can contribute to decline in the Fund's NAV.
• In cases where default has occurred or is expected to occur, for issuers of public and corporate bonds or money market instruments, the prices of such corporate bonds or money market instruments decline (the value could even fall to zero). This results in a decline in the Fund's NAV. Also, 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.
• Generally speaking, emerging countries' currencies show 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 state of 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 significant political changes, or war). In such cases, the fund cannot be managed in accordance with the investment policy.
• Generally speaking, 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 a result of bankruptcy, etc., of the counterparties. 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.

＜Risks of Disparity between the yen-converted Hang Seng China-Affiliated Corporations Index and NAV＞

Whereas the Fund seeks to match the NAV volatility with that of the yen-converted Hang Seng China-Affiliated Corporations Index, it does not guarantee the movements will be consistent to those of the Index for the following reasons:

• The lag in timing from fund inflow to the purchase of investment trust certificates
• The potential investment in selected issues other than Hang Seng China-Affiliated Corporations Index, potential market impact from the trading, etc., of individual issues or expenses from trust fees when portfolio adjustments are made due to changes in selected issues on the S&P 500 Index or capital transfers, costs borne by the Fund such as brokerage commission, audit costs, etc. The management fee from securities or dividends loan of incorporated issues
• When derivative transactions such as futures are made, there may be disparity between the price movements of all or some of such and that of the Hang Seng China-Affiliated Corporations Index.

◇ Discrepancy between the market prices at which stocks are traded on financial instruments 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 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.

* Since the prices of the investment trust securities targeted by the Fund fluctuate due to the impact of these factors, the Fund itself is subject to the same risks
* The 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 China H-share (Hang Seng China Enterprises)” 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 such as 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.