Investment Advisory Service

Our investment advisory service features quantitative advice envisioning tailored advice to customer's needs.
In terms of asset types, our service includes asset allocation such as "currency overlay management", "downside risk management" and "GTAA management". It also covers both equity investment, such as "enhanced index management", "market-neutral management" and "130⁄30 management" and bond investment such as yield curve analysis and floating rate government bond analysis (for details, see the section "Development of Investment Management").
Our investment advisory service is tailored to a wide range of institutional investors, including asset management companies, financial institutions, pension funds, foundations, public entities, and manufacturing companies. In addition to providing advisory service for specific asset classes, we also provide investment advisory service for the entire investment portfolio of institutional investors using advanced quantitative strategies, taking into consideration of downside risk management, realized gains/losses, multi-period optimization, and management of risks associated with structured bonds. (see the section "Valuation of Structured Fixed Income Portfolios")

• *We are a registered provider of investment management advisory service. (No. 1081 (FP) registered by the director of the Kanto Local Financial Bureau)
• *Kindly be advised that the above information relating to investment advice is effective as of January 31, 2008 and is subject to change or deletion without notice.

• We usually charge a predetermined fee (usually not exceeding 3.15% of the net asset value under advisory service, inclusive of tax*) for investment advisory services.
• The formula to calculate the investment advisory fee shall vary depending on an individual contract. Generally, the fee is determined by the following formula: average balance of (net) asset value under advisory service × rate specified in the contract × term of contract.
• For contracts performance fee inclusive, the investment advisory fee is generally determined by the following formula: average balance of (net) asset value under advisory service × (base fee rate specified in a contract (usually not exceeding 3.15%) × term of contract + performance fee rate (usually not exceeding 20%) × return above hurdle rate (i.e. return for the term of the contract in excess of predetermined hurdle rate)). Fees on contracts based on investment performance may result in higher fee than 3.15% of the assets for which the advisory service was rendered.

• *The above are maximum figures applicable to our current investment advisory service. Actual fee schedule vary depending on the contract and balance of assets. Advisory contracts based on investment performance may result in higher fee than 3.15% of the assets under advisory service. Please read the pre-agreement disclosures or individual contract before subscribing to our investment advisory service.

Risks associated with security investment, for which advice is given under the investment advisory contract are as follows.

The amount invested may not be recovered in full due to price fluctuation of stocks. The amount invested may not be recovered in full or may be completely lost due to changes in the management and⁄or financial status of issuers or changes in third-party evaluation of issuer's status.

There is a risk that the stock will not be able to be cashed if trading is disturbed due to changes in market condition, changes in the management and⁄or financial status of issuers, or changes in third-party evaluation of issuer's status (i.e. liquidity risk). As a result, the amount invested may not be recovered in full.

The amount invested may not be recovered in full due to price fluctuation of bonds caused by interest rate changes. The amount invested may not be recovered in full or may be completely lost due to changes in the management and⁄or financial status of issuers or changes in third-party evaluation of issuer's status. Meanwhile, if some types of bond may be redeemed before the maturity, it may make it impossible for the investors to recover the invested amount in full.

There is a risk that the bonds may not be able to be cashed if trading is disturbed due to changes in market condition, changes in the management and⁄or financial status of issuers, or changes in third-party evaluation of issuer's status (i.e. liquidity risk). As a result, the amount invested may not be recovered in full.

In a margin transaction or a derivative transaction, size of a transaction may exceed the amount of margin deposited. Accordingly, the amount of loss related to the transaction may exceed the amount of margin. The amount of margin may be short due to the fluctuation of stock prices related to the margin transaction or due to losses because of changes in the management and⁄or financial status of issuers of stocks related to the margin transaction or the guarantor, or changes in third-party valuation of issuer's status.