Risk and Expenses regarding investment trust products

Investment trusts: risks

The price of investment trusts fluctuates, affected by price movements of securities incorporated in the investment trusts (in addition foreign currency denominated assets are subject to currency exchange rate fluctuations). Losses may occur when the price declines and this may result in a loss of principal.

Profits and losses generated by the fund as a result of investments are shared by all the beneficiaries. Unlike bank deposits, the principal of investment trusts is not guaranteed and a particular investment performance is not guaranteed.

Investment trusts: expenses

The following expenses are to be borne by the client.

Expenses to be borne directly:

  • Subscription fee: Maximum 3.85% (tax included)
  • Redemption (cancellation) fee: Maximum 1.10% (tax included)
  • Partial redemption charge: Maximum 0.60%

Expenses to be borne indirectly during the holding period

  • Management fees: Maximum 2.255% per annum (tax included)

Other expenses

The following fees and commissions are also charged from the trust assets: audit fees; brokerage commissions and other charges on traded securities, derivative transactions(including amounts for consumption and other taxes), etc; and charges, etc., for the custody, etc., of assets overseas. In addition, some investment trusts incur success fees and those success fees are paid out of the assets of the investment trust. When the fund invests into other funds, asset management fees and other expenses of those funds are charged indirectly.

As the amount of such charges depends on the details of particular transactions, etc., SMDAM cannot provide an upper limit or method of calculation for them.

* Further, as the total amount of fees, etc. borne by the customer, their calculation methods and maximum amounts differ according to the customer's holding period we are unable to provide more specific information.

The above risks and charges pertain to investment trusts in general. As regards the Subscription fee and other fees, the rates listed above are the highest applicable among all investment trusts managed by SMDAM Furthermore, as the risks and charges entailed by an investment trust vary from one trust to another, before making an investment the client is requested to read carefully all relevant items within the investment trust summary prospectus and the other documents provided prior to signing a contract.

Investment Trusts are unlike deposit/saving or insurance contract, not protected by Deposit Insurance/Saving Insurance/Policyholders Protection Corporation. Also, in case of purchase at Registered Financial Institutions, it will not be coverd by Investor Protection Fund.

Please note that no redemption/cancellation is accepted for investment trusts if it falls on the closed period of investment trusts or domestic and overseas public holidays.

〔As  of  July 31, 2021〕