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SuMi TRUST
CORPORATE BROCHURE

IMPORTANT NOTES ON
INVESTMENTS

Investment Advisory Agreement and Discretionary Investment Management Agreement

[Risk]

Risk of Potential Loss

Investments under discretionary investment agreements or advice under investment advisory agreements are applied to securities, including domestic and foreign equities and bonds, beneficiary certificates of investment trusts, trust beneficiary rights and interests in collective investment schemes, and financial instruments including loans, real estate, futures, options, swaps and foreign exchange instruments, which are associated with price volatility. Thus a loss of principal may occur due to, among other factors, fluctuations in prices in relation to those asset classes.

Price Fluctuations

Major risks of investing in these asset classes are as follows:

  • 1Market Risk: The risk of price fluctuation investable assets, due directly to movements in financial instruments markets, such as stocks, interestrates, foreign exchange, and indexes.
  • 2Credit Risk: The risk of price fluctuation of asset classes due directly to, among other things, changes in businesses or asset conditions of issuers, managers, intermediaries, etc., and their transaction counterparties.
  • 3Liquidity risk: The risk of price fluctuation in prices of asset classes, etc. caused directly by, among other factors, the inability or difficulty to execute transactions due to market movements or low trading volume with regard to financial instruments, or forced transactions through excessively unfair below above market pricing.

In addition to the above, hedge funds and securitized products, may entail various risks arising from investment methods and schemes.

[Expenses]

Expenses, incurred by clients are as follows.

Fees and Commissions

(Fees on Investment Advisory Services and Discretionary Investment Management Services)
In principle, fees are to be paid based on a calculation method, where the amount of assets is multiplied by a fee rate. Individual calculation methods cannot be provided in advance because they are determined according to the asset class, the investment management guidelines, and details of investment consultations with clients. Before signing an agreement, please make sure that you confirm the calculation methods for the fees on relevant investment services.
(Trading Costs)
Under discretionary investment management agreements, trading commissions for invested assets, miscellaneous expenses for trust administration, and fees paid to overseas custodians who hold such assets, are deducted from the assets under management, according to the asset classes (in the case of investment in beneficiary certificates of investment trusts, trust fees, partial redemption charges, and other expenses related to such funds may be incurred) The specific amounts, ceilings, and calculation methods vary depending on the types and volume of assets to be actually invested in and managed, and therefore cannot be provided in advance.
(Early Termination Fee)
When terminating an agreement, an early termination fee may apply in accordance with the provisions of the agreement.

Taxes, Public Dues and Administrative Expenses

In addition to the above, under discretionary investment management agreements, various expenses, taxes and other public charges, and expenses necessary for handling taxes, other public charges, and administrative affairs related to invested asset classes are deducted from the assets under management or incurred by the clients. Under investment advisory agreements, when a client buys or sells securities. the tax systems related to securities purchased or sold apply. For example, a client is subject to taxes on profits from stock trading, dividends from securities and taxes on interest.

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