Disclosures

The Investment Risk Management Department, which is independent of the investment division and specializes in monitoring, was set up to appropriately manage risks by monitoring investment status of funds from diverse angles.

The Investment Risk Management Department has established a structure to ensure appropriate fund management by deploying human resources with knowledge of investment theories, related business laws and securities trading regulations, as well as IT skills to efficiently and effectively conduct monitoring operations.

The results of monitoring investment status of funds are periodically reported to the Investment and Risk Committee, which comprises the senior management of the investment division and risk management division, and improvement measures, etc. are deliberated and decided on an as-needed basis.

Furthermore, the status of deliberations at the Investment and Risk Committee meetings is regularly reported to the Executive Committee, which comprises the president and other top management team members, to establish a multi-faceted, multi-layered risk management structure on a company-wide level.

The main items to be monitored regarding the investment status of funds are as follows

Monitoring of risks associated with investment of funds

• Market Risk
• Credit Risk
• Liquidity risk
• Counterparty risk

Compliance monitoring associated with investment of funds

• Status of compliance with the investment guidelines
• Status of compliance with laws and regulations, etc.
• Management of transactions that may cause conflicts of interest

※ The names of the structure, committee, etc. described above may be changed going forward.

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:

1. Market Risk: The risk of price fluctuation investable assets, due directly to movements in financial instruments markets, such as stocks, interest rates, foreign exchange, and indexes.
2. Credit 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.
3. Liquidity 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.

Fees and Commissions

Expenses, incurred by clients are as follows.

Risk of Potential Loss

[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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PLAN (Plan)

The Investment and Risk Committee chaired by the executive officer in charge of the Business Planning Department determines investment strategies for funds and investment styles, and related issues. In accordance with the basic investment policy, etc. determined by the Investment and Risk Committee, the fund managers formulate policies on implementing investments as their investment plans at their respective investment departments, based on the investment specifications and guidelines.

DO (Implementation)

The fund managers of their respective investment departments implement investments in line with the investment plans and manage funds. The general managers of their respective investment departments check the status of investment implementations carried out by the fund managers thereof.

Execution of buy or sell orders is carried out by traders at the Trading Department which is independent of the respective investment departments, based on execution instructions for investments from the respective investment departments.

CHECK (Examination/Assessment)

The Business Planning Department reports the monitoring status of the investment performance at the Investment and Risk Committee meeting (chaired by the executive officer in charge of the Business Planning Department), held on a monthly basis, independently from the respective investment departments in the investment division.

As for the monitoring status and the details of deliberations, feedback is promptly provided to the fund managers by the general managers of their respective investment departments (members of the Committee) and is reflected in the investments of funds.

In addition, regarding risk management and monitoring status of compliance with laws and regulations, etc., in relation to investments, they are handled by the Investment Risk Management Department, which is independent of the investment division. The monitoring results are reported at the Investment and Risk Committee meeting and the Executive Committee meeting (chaired by the president), held every month.

Under these checks and balances, we are striving to maintain an appropriate investment structure through the consistent investment process of the PDC - PLAN-DO-CHECK - cycle.

※ The names of the structure, committee, etc. described above may be changed going forward.