APPENDIX 6. NIKKO BNY Mellon Tri-Sector High Income Bond Fund Monthly Distribution Type (Yen Hedged Unit/Yen Non-Hedged Unit)

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1 APPENDIX 6 NIKKO BNY Mellon Tri-Sector High Income Bond Fund Monthly Distribution Type (Yen Hedged Unit/Yen Non-Hedged Unit) Directory Investment Manager BNY Mellon Asset Management Japan Limited Meiji Seimei Kan 6F Marunouchi Chiyoda-ku Tokyo Japan Administrator and Custodian Nikko Bank (Luxembourg) S.A. 9A, rue Robert Stümper L-2557 Luxembourg Grand Duchy of Luxembourg Sub-Investment Manager (SMAM) Standish Mellon Asset Management Company LLC One Boston Place, Suite 2900 Boston, MA United States of America Agent Company and Distributor Nikko Cordial Securities Inc. 3-1 Marunouchi 3-chome Chiyoda-ku Tokyo, Japan Sub-Investment Manager (MCM) Mellon Capital Management Corporation 50 Fremont Street, Suite 3900, San Francisco, California, United States of America Legal Adviser as to matters of Japanese law Mori Hamada & Matsumoto Marunouchi Park Building 2-6-1, Marunouchi Chiyoda-ku Tokyo Japan Definitions Except where the context otherwise requires, in this Appendix 6, the following expressions have the following meanings:- "Administration Agreement" means the administration agreement dated 30 March 2006 and made between the Trustee, the Manager and the Administrator and as amended and supplemented from time to time "Administrator" means Nikko Bank (Luxembourg) S.A. in its capacity as administrator of the Series Trust "Agent Company" means Nikko Cordial Securities Inc. in its capacity as agent company of the Series Trust TPH\603363\ v10 1

2 "Application Form" means the form of application for Units available from the Manager or the Administrator "Business Day" means a day (other than a Saturday or a Sunday) on which banks in all of Luxembourg, New York and Tokyo and financial instrument firms (kin-yu shohin torihiki gyosha) in Japan are open for business or such other day or days as the Manager may from time to time determine in respect of the Series Trust "Class A Units" means Yen Hedged Class A Units or Yen Non-Hedged Class A Units and, unless the context otherwise requires, includes all such classes of Unit "Class B Units" means Yen Hedged Class B Units or Yen Non-Hedged Class B Units and, unless the context otherwise requires, includes all such classes of Unit "Conversion Day" means each Business Day or such other day or days as the Manager may from time to time determine in respect of the Series Trust "Conversion Notice" means the form of conversion notice available from the Manager or the Administrator "Custodian" means Nikko Bank (Luxembourg) S.A. in its capacity as custodian of the Series Trust "Custodian Agreement" means the custodian agreement dated 30 March 2006 and made between the Trustee and the Custodian and as amended and supplemented from time to time "Dealing Day" means each Business Day or such other day or days as the Manager may from time to time determine in respect of the Series Trust "Distribution Date" means the fourth Business Day after each Distribution Record Date or such other date or dates in each year as the Manager may determine in respect of the Series Trust or in respect of any class or classes of Units TPH\603363\ v10 2

3 "Distribution Period" means a period ending on and including a Distribution Record Date and commencing, in the case of the first Distribution Period, from the beginning of the month following the month in which the last day of the relevant Initial Offer Period falls and thereafter from the calendar day next following the preceding Distribution Record Date "Distribution Record Date" means the last Business Day in each calendar month, commencing from the month following the month in which the last day of the relevant Initial Offer Period falls, or such other date or dates in each year as the Manager may from time to time determine in respect of the Series Trust or in respect of any class or classes of Units "Distributor" means Nikko Cordial Securities Inc. in its capacity as distributor of the Units "Eligible Investor" means any person, corporation or entity which is not (i) a citizen or resident of the US, a partnership organised or existing in the US, or any corporation, trust or other entity organised under the laws of or existing in the US; (ii) a person or entity resident or domiciled in the Cayman Islands (excluding any object of a charitable trust or power or an exempted or non-resident Cayman Islands company); (iii) unable to subscribe for or hold Units without violating applicable laws; and (iv) a custodian, nominee, or trustee for any person, corporation or entity described in (i) to (iii) above "Euro" and " " means the common currency of participating member states of the European Union that have adopted a single currency in accordance with the Treaty on European Union signed in Maastricht on 7 February 1992 "Initial Offer Period" has the meaning given to that expression in the section below headed "Subscription for Units - Initial Offer" "Investment Management Agreement" means the investment management agreement dated on or about 29 July 2009 between the Manager and the Investment Manager "Investment Manager" means BNY Mellon Asset Management Japan Limited TPH\603363\ v10 3

4 "Net Asset Value" means the Net Asset Value of the Series Trust calculated in accordance with the Master Trust Deed "Offering Memorandum" means the offering memorandum relating to the Trust dated June 2004, as amended or supplemented from time to time "Redemption Day" means each Business Day or such other day or days as the Manager may from time to time determine in respect of the Series Trust "Redemption Notice" means the form of redemption request available from the Manager or the Administrator "Series Trust" means NIKKO BNY Mellon Tri-Sector High Income Bond Fund Monthly Distribution Type (Yen Hedged Unit/Yen Non-Hedged Unit), a series trust of the Trust constituted pursuant to the Master Trust Deed and a supplemental trust deed dated 22 June 2009 between the Trustee and the Manager "Sub Investment Manager (MCM)" means Mellon Capital Management Corporation "Sub Investment Manager (SMAM)" means Standish Mellon Asset Management Company LLC "Unit" means a Unit of the Series Trust. Except where the context otherwise requires, the expression "Unit" includes all classes of Units "Unitholder" means the registered holder for the time being of a Unit including persons jointly so registered "US" means the United States of America, its territories and possessions TPH\603363\ v10 4

5 "Valuation Day" means each Business Day or such other day or days as the Manager may from time to time determine in respect of the Series Trust "Yen" and " " means the lawful currency of Japan "Yen Hedged Class A Unit" means a Unit denominated in Yen and designated as a Yen Hedged Class A Unit "Yen Hedged Class B Unit" means a Unit denominated in Yen and designated as a Yen Hedged Class B Unit "Yen Non-Hedged Class A Unit" means a Unit denominated in Yen and designated as a Yen Non-Hedged Class A Unit "Yen Non-Hedged Class B Unit" means a Unit denominated in Yen and designated as a Yen Non-Hedged Class B Unit "Yen Non-Hedged Units" means Yen Non-Hedged Class A Units or Yen Non-Hedged Class B Units and, unless the context otherwise requires, includes all such classes of Units "Yen Hedged Units" means Yen Hedged Class A Units or Yen Hedged Class B Units and, unless the context otherwise requires, includes all such classes of Unit Unless the context otherwise requires, other expressions used in this Appendix 6 shall have the same meaning as in the Offering Memorandum. Base Currency The Series Trust is denominated in Yen. Investment Objective and Policies The investment objective of the Series Trust is to pursue stable income and steady growth in capital by controlling risk through investment in three different asset classes: high yield bonds, emerging market debt and convertible bonds. The Investment Manager has appointed Nikko Global Wrap Ltd. ("NGW") to advise it on the allocation of the Series Trust's assets between the three different asset classes. The allocation will be determined by the Investment Manager after considering NGW's advice and may be TPH\603363\ v10 5

6 altered from time to time by the Investment Manager in accordance with changes in market conditions. The Investment Manager has delegated to the Sub-Investment Manager (SMAM) its responsibility for the management of the investment and re-investment of the Series Trust's investment portfolio in the asset classes of high yield bonds and emerging market debt. The Investment Manager has delegated to the Sub-Investment Manager (MCM) its responsibility for the management of the investment and re-investment of the Series Trust's investment portfolio in the asset class of convertible bonds. The Investment Manager may from time to time appoint other or additional investment advisers or investment managers in its discretion. High Yield Bonds Investments of the Series Trust in this asset class will primarily comprise high yield bonds denominated in US dollars which offer relatively attractive risk adjusted yields, and derivatives thereof. A limited allocation to investments in high yield bonds denominated in a currency other than US dollars may also be made. The reference index for investments of the Series Trust in this asset class will be the Merrill Lynch High Yield Master II Constrained Index (USD Base). The aim of investing in this asset class is to balance the objectives of providing sufficient income to support the stable payment of monthly distributions and of providing a long-term total return generally in line with that of the reference index (before fees and expenses). Emerging Market Debt Investments of the Series Trust in this asset class will primarily comprise emerging market bonds and other debt securities denominated in US dollars, and derivatives thereof. A limited allocation to investments in emerging market currency forwards and local-currency denominated bonds may also be made. The reference index for investments of the Series Trust in this asset class will be the JPMorgan EMBI Global Index (USD Base). The aim of investing in this asset class is to balance the objectives of providing sufficient income to support the stable payment of monthly distributions and of providing a long-term total return generally in line with that of the reference index (before fees and expenses). Convertible Bonds The primary objective of investing in this asset class is to maximise total return while providing income for the payment of monthly distributions. Investments of the Series Trust in this asset class will comprise mostly of a diversified portfolio of convertible securities and other debt instruments denominated in US dollars. A limited allocation to investments in convertible securities and other debt instruments denominated in a currency other than US dollars may also be made. The quantitative model that will be used aims to identify convertible bonds with yields reflecting a market misperception of credit quality and typically investments in this asset class will comprise higher-yielding bonds that are mispriced relative to their credit quality. The relationship between yield and credit quality will be continuously monitored and managed. The reference index for investments of the Series Trust in this asset class will be the Merrill Lynch All Convertibles Excluding Mandatory, All Quality Index (Ticker V0A0, USD Base). The Investment Manager, the Sub-Investment Manager (SMAM) and the Sub-Investment Manager (MCM) may invest all or part of the assets of the Series Trust in any of the aforesaid asset classes through other collective investment schemes, including collective investment schemes that are managed by affiliates of The Bank of New York Mellon Corporation. TPH\603363\ v10 6

7 Yen Hedged Units will be hedged to Yen in order to minimise the change in the value of that part of the Net Asst Value attributable to the relevant Yen Hedged Units as a result of the fluctuation between Yen and US dollars (in which the majority of the Investments of the Series Trust will be denominated), in which case any such hedging related costs will be allocated to the relevant class of Yen Hedged Units. While the Investment Manager will aim to hedge the currency exposure of Yen Hedged Units to fluctuations between Yen and US dollars fully, the exposure will not always be 100 percent hedged mainly because the future value of the Investments of the Series Trust will change. The currency exposure of Yen Non-Hedged Units will not be hedged. NO ASSURANCE CAN BE GIVEN THAT THE INVESTMENT OBJECTIVE OF THE SERIES TRUST WILL BE ACHIEVED. Investment Restrictions The investment restrictions applicable to the Series Trust are as follows: (a) (b) (c) (d) (e) (f) (g) (h) the Series Trust will not make short sales of physical securities if as a result the Series Trust would be required to deliver securities having a value exceeding 100 percent of the Net Asset Value or would be required to deliver securities issued by a single issuer having a value exceeding 10 percent of the Net Asset Value; the Series Trust will not acquire the shares of any one company, if is a result of such acquisition, (i) the total number of shares of such company held by all investment funds managed by the Manager would exceed 50 percent of the total number of all issued and outstanding shares of such company or (ii) the total number of voting rights of such company held by all investment funds managed by the Manager would exceed 50 percent of the total number of all voting rights of such company; the Series Trust will not acquire the shares of any one company if as a result of such acquisition, the total number of shares of such company held by the Series Trust would exceed 50 percent of the total number of issued and outstanding shares of such company; the Series Trust will not invest in any securities which have been privately placed, which are not listed on any stock exchange or which cannot be readily realised unless appropriate measures have been taken to secure price transparency as required by Article 21 (Standards for Selection for Foreign Investment Trust Securities) of the Rules Concerning Trading of Foreign Securities issued by the Japan Securities Dealers Association as the same may be amended or substituted from time to time; the Series Trust will not acquire any Investment which is not listed on an exchange or which is not readily realisable if, as a result thereof, the total value of all such Investments held by the Series Trust would immediately following such acquisition exceed 15 percent of the latest available Net Asset Value; will not invest in land or buildings (except shares in real estate companies or interests in real estate investment funds); the Series Trust will not make a loan except to the extent that the acquisition of an Investment or the making of a deposit might constitute a loan; the Series Trust will not assume, guarantee, endorse or otherwise become directly or contingently liable for or in connection with any obligation or indebtedness of any person in respect of borrowed money; TPH\603363\ v10 7

8 (i) no Investment will be purchased, made or added to if as a result thereof more than 50 percent of the value of the assets of the Series Trust would consist of assets which do not fall within the definition of "Securities" under Paragraph 1, Article 2 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended); (j) (k) the Series Trust will not invest in physical commodities, options on commodities or commodity based investments; and the Series Trust will not invest in any company for the purpose of exercising legal or management control thereof. The Investment Manager may, however, exercise on behalf of the Series Trust, any and all rights in respect of the securities acquired by the Series Trust. The Manager will not, on behalf of the Series Trust: (a) (b) enter into any transactions with itself or any of its directors as principal; and enter into any transactions which are intended to benefit the Manager or any party other than the Series Trust. In addition to the foregoing restrictions, the Investment Manager will not enter into any transactions for the account of the Series Trust that are contrary to the interests of Unitholders or are prejudicial to the proper management of the assets of the Series Trust. The Investment Manager is not required to sell Investments immediately if any of the restrictions applicable to the Series Trust are exceeded as a result of, inter alia, changes in the value of any of the Series Trust's Investments, reconstructions or amalgamations, payments out of the assets of the Series Trust, redemptions of Units or other reason outside the reasonable control of the Investment Manager. However, the Investment Manager will take such steps as are reasonably practicable having regard to the interests of Unitholders to comply with the restrictions applicable to the Series Trust within a reasonable period of time after a breach is identified. Borrowings Money may be borrowed for the account of the Series Trust where the Investment Manager deems this desirable to implement the Series Trust s investment objective and policies, to pay expenses or to fund the redemption of Units provided that the principal amount for the time being of all borrowings of the Series Trust will not exceed 10 percent of the Net Asset Value. The Investment Manager may charge or pledge all or any part of the assets of the Series Trust to secure any borrowing and the interest and expenses thereof. Distribution Policy The Trustee will, upon the direction of the Manager, make distributions in respect of each Distribution Period (the "Current Distribution Period") to each holder of Yen Hedged Class A Unit, Yen Non-Hedged Class A Unit, Yen Hedged Class B Unit and/or Yen Non-Hedged Class B Unit on the Distribution Date falling in the subsequent Distribution Period, of such amount as determined by the Manager, which will be paid out of the Series Trust's income, realised and unrealised capital gains and any distributable funds of the Series Trust as determined by the Manager and attributable to the relevant class of Units. Any distributions in respect of the Current Distribution Period will be made to the person in whose name Units of the relevant class of Units are registered in the Trust's register of unitholders on the Distribution Record Date on which the Current Distribution Period ends and all such distributions will be rounded down to the nearest Yen. For the avoidance of doubt, no distributions will be made before the Distribution Date relating to the month following the month in which the last day of the Initial Offer Period falls. TPH\603363\ v10 8

9 Risk Factors Investors should be aware that the value of Units may fall as well as rise. Investment in the Series Trust involves significant risks. Whilst it is the intention of the Investment Manager to implement strategies which are designed to minimise potential losses within the constraints of the Series Trust's investment objective and policies, there can be no assurance that these strategies will be implemented or, if implemented, will be successful. There is unlikely to be a secondary market in the Units and so Unitholders may only be able to dispose of their Units by means of redemption. It is possible that an investor may lose a substantial proportion or all of its investment in the Series Trust. As a result, each investor should carefully consider whether it can afford to bear the risks of investing in the Series Trust. The following discussion of risk factors does not purport to be a complete explanation of the risks involved in investing in the Series Trust. The risks of investing in the Series Trust, include: Political and/or Regulatory Risks The value of the Series Trust's assets may be affected by uncertainties such as international political developments, changes in government policies, changes in taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of countries in which investments may be made. Furthermore, the legal infrastructure and accounting, auditing and reporting standards in certain countries in which investment may be made may not provide the same degree of investor protection or information to investors as would generally apply in major securities markets. Portfolio Management Risk The Investment Manager and/or its delegates may engage in various portfolio strategies on behalf of the Series Trust through the use of derivatives for efficient portfolio management purposes. The Investment Manager may in its discretion take appropriate positions in a wide range of derivative instruments including, without limitation, futures, options and swaps for the application of the investment strategy of the Series Trust. Emerging Markets Risk The Series Trust may invest, directly or indirectly, in fixed income securities of companies in emerging markets. Such securities may involve a high degree of risk and should be considered speculative. Risks include (a) greater risk of expropriation, confiscatory taxation, nationalisation and social, political and economic stability; (b) the small current size of the markets for securities of emerging markets issuers and the currently low or non-existent volume of trading, resulting in lack of liquidity and in price volatility; (c) certain national policies which may restrict investment opportunities including restrictions on investing in issuers or industries deemed sensitive to relevant national interests; and (d) the absence of developed legal structures governing private or foreign investment and private property. Credit Risks Relating to Fixed Income Securities The Series Trust will invest in bonds and other fixed income securities and may invest, directly or indirectly, in lower-rated and/or non-rated fixed income securities. Lower-rated fixed income securities are securities rated below Baa by Moody's Investors Services, Inc., ("Moody's") or BBB by Standard & Poor's Rating Services ("S&P"). Non-rated fixed income securities are securities without ratings by Moody's or S&P. Lower-rated or non-rated fixed income securities may be below "investment grade" and face ongoing uncertainties and exposure to adverse business, financial or economic conditions that could lead to the issuer's inability to meet timely interest and principal payments. TPH\603363\ v10 9

10 The lower ratings of certain securities held by the Series Trust reflect a greater possibility that adverse changes in the financial condition of the issuer, or in general economic conditions, or both, or an unanticipated rise in interest rates, may impair the ability of the issuer to make payments of interest and principal. Such securities carry a higher degree of default risk which may affect the capital value of an Investment. The inability (or perceived inability) of issuers to make timely payments of interest and principal may make the values of securities approximate only to the values placed on such securities. In the absence of a liquid trading market for certain securities it may not be possible to establish the fair value of such securities. The rating assigned to a security by Moody's or S&P does not reflect an assessment of the volatility of the security's market value or the liquidity of an investment in the security. A security may not necessarily be realised when its rating is reduced below its rating at the time of purchase. Convertible Bonds The Investment Manager and/or its delegates may invest in convertible bonds for the account of the Series Trust. A convertible bond may be converted into or exchanged for a prescribed number of equity securities of the same or a different issuer within a particular period of time at a specified price or formula. Convertible bonds have varying conversion values. They have characteristics of both fixed income and equity investments. If a convertible bond invested for the account of the Series Trust is called for redemption, the Investment Manager and/or its delegates may be required to permit the issuer to redeem the instrument or convert it into equity securities. In such a case, the Investment Manager and/or its delegates may determine to hold the equity securities for the account of the Series Trust if, and to the extent that, that is consistent with the Series Trust's investment objective. The Investment Manager and/or its delegates may also invest in moving strike convertible bonds ( MSCBs ) for the account of the Series Trust. Unlike normal convertible bonds which have predetermined, fixed conversion ratios, MSCBs have a floating conversion ratio and on conversion holders of such convertible bonds receive equity securities at a discount on their market price. Investments in MSCBs or the relevant equity securities after conversion are high-risk as MSCBs are a type of financing commonly used by companies in difficult financial situation and the issue sometimes promotes short selling and large drops in the market price of the relevant equity securities. The risk associated with investments in convertible bonds includes, for example, fluctuations in market prices, fluctuations in interest rates, events adversely affecting the credit rating of the instrument, and events adversely affecting a specific issuer or the ability of an issuer to meet principal and interest payments. Sovereign Debt The Investment Manager and/or its delegates may, for the account of the Series Trust, invest in debt securities issued by governments and their agencies, including governments of emerging markets. Investing in instruments of government issuers in emerging markets may involve significant economic and political risks. Holders of certain emerging markets instruments may be requested to participate in the restructuring and rescheduling of these obligations and to extend further loans to their issuers. The interests of holders of emerging markets instruments could be adversely affected in the course of restructuring arrangements. The issuers of the sovereign debt securities in which the Investment Manager and/or its delegates may invest for the account of the Series Trust have in the past experienced serious difficulties in servicing their external debt obligations. These difficulties have, among other effects, forced such countries to reschedule interest and principal payments on obligations, and to restructure certain indebtedness. Rescheduling and restructuring arrangements have included reducing and rescheduling interest and principal payments by negotiating new or amended credit agreements, or converting outstanding principal and unpaid interest to "Brady Bonds" or similar instruments, and obtaining new credit to finance interest payments. Sovereign debt rated below investment grade by TPH\603363\ v10 10

11 Moody's and S&P is regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. Equity Securities The Series Trust may from time to time hold equity securities as a result of its holding in convertible bonds. The risk associated with investments in equity securities include fluctuations in market prices and events adversely affecting a specific issuer and the fact that equity interests are subordinate in the right of payment to other corporate securities, for example, debt securities. Collective Investment Schemes The Investment Manager and/or its delegates may, for the account of the Series Trust, invest in collective investment schemes. The strategy employed by the manager of a collective investment scheme or the characteristics of that collective investment scheme may change over time, which may adversely affect the return or the terms of investment of an investment in that collective investment scheme. There is a risk that the collective investment schemes in which the Investment Manager and/or its delegates invest for the account of the Series Trust may perform poorly or may not perform in accordance with the expectation of the Investment Manager and/or its delegates. Short Sales The Series Trust will engage in "short sale" transactions. A short sale involves the sale of a security that the Series Trust does not own in the hope of purchasing the same security (or a security exchangeable therefor) at a later date at a lower price. To make delivery to the buyer, the Investment Manager and/or its delegates must borrow the security for the account of the Series Trust and is obligated to return the security to the lender, which is accomplished by a later purchase of the security for the account of the Series Trust. Short selling can result in profits when the prices of the securities sold short decline. In a generally rising market, the Series Trust's short positions may be more likely to result in losses because the environment would be more conducive for the securities sold short to increase in value. A short sale involves the theoretically unlimited risk of an increase in the market price of the securities sold short. The Investment Manager and/or its delegates may engage in short-selling of futures contracts, over-the-counter foreign currency forward contracts and options for the account of the Series Trust. Such short-selling may expose the Series Trust to additional risk. Futures Futures prices can be volatile. Because of low margin deposits normally required in futures trading, an extremely high degree of leverage is used in a futures trading account. As a result, a small price movement in a futures contract may result in substantial losses to an investor. A futures transaction may result in losses in excess of the amount invested. Futures trading at times may be illiquid. Certain exchanges do not permit trading particular futures at prices that represent a fluctuation in price during a single day's trading beyond certain set limits which could prevent the Investment Manager and/or its delegates from promptly liquidating unfavourable positions, subjecting the Series Trust to substantial losses. Exchanges and regulatory authorities in some jurisdictions impose speculative position limits on the number of futures positions a person or group may hold or control in particular futures. For purposes of complying with speculative position limits, the Series Trust's outright futures positions may be required to be aggregated with any futures positions owned or controlled by the Investment Manager or any delegate of the Investment Manager or any principal of the Investment Manager or of any such delegate. As a result, the Investment Manager and/or any of its delegates may be TPH\603363\ v10 11

12 unable to take futures positions in particular futures or may be forced to liquidate positions in particular futures for the account of the Series Trust. Liquidity of Investment Portfolio Liquidity relates to the ability of the Investment Manager and/or its delegates to sell an Investment in a timely manner for the account of the Series Trust. The market for relatively illiquid securities tends to be more volatile than the market for more liquid securities. Investment of the Series Trust's assets in relatively illiquid securities may restrict the ability of the Investment Manager and/or its delegates to dispose of the Series Trust's Investments at a price and time that it wishes to do so. As mentioned above, futures positions may be illiquid because, for example, some exchanges limit fluctuations in certain futures contract prices during a single day by regulations referred to as "daily price fluctuations" or "daily limits". Once the price of a contract for a particular future has increased or decreased by an amount equal to the daily limit, positions in the future can neither be taken or liquidated unless traders are willing to effect trades at or within the limit. Similar occurrences could prohibit the Investment Manager and/or its delegates from promptly liquidating unfavourable positions and subject the Series Trust to losses. It is also possible that an exchange may suspend trading in a particular contract, order immediate liquidation and settlement of a particular contract or order that trading in a particular contract be conducted for liquidation only. The risk of illiquidity also arises in the case of overthe-counter transactions. There is no regulated market in such contracts, and the bid and offer prices will be established solely by dealers in these contracts. Investment in non-marketable securities carries liquidity risk. In addition, such securities are difficult to value and the issuers are not subject to the rules of a regulated market for the protection of investors. Foreign Currency Markets and Hedging The Series Trust will have exposure to fluctuations in currency exchange rates as the Series Trust invests in investments denominated in US dollars or currencies other than Yen. In respect of Yen Hedged Units, the Investment Manager will seek to offset the risks associated with currency exposure to fluctuations between Yen and US dollars through foreign exchange transactions. The markets in which foreign exchange transactions are effected are highly volatile, highly specialised and highly technical. Significant changes, including changes in liquidity and prices, can occur in such markets within very short periods of time, often within minutes. Foreign exchange trading risks include, but are not limited to, exchange rate risk, interest rate risk and potential interference by foreign governments through regulation of local exchange markets, foreign investment, or particular transactions in foreign currency. The Investment Manager may utilise financial instruments such as forward contracts, options, futures and swaps for hedging such currency exposure. Hedging against a decline in the value of a portfolio position does not eliminate fluctuations in the value of such position or prevent losses if the value of such position declines, but establishes another position designed to gain from those same developments, thus moderating the decline in the value of the portfolio position being hedged. Hedging transactions may also limit the opportunity for gain if the value of the portfolio positions should increase. The success of the Series Trust's hedging transactions is subject to movements in the direction of currencies and interest rates. The degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio position being hedged may vary. The Investment Manager may not be able to establish a perfect correlation between such hedging instruments and the US dollar denominated portfolio holdings being hedged. Such imperfect correlation may, in respect of Yen Hedged Units, prevent the Investment Manager from achieving the intended hedge or expose the Series Trust to risk of loss. TPH\603363\ v10 12

13 Derivatives Derivatives include instruments and contracts the value of which is linked to one or more underlying securities, financial benchmarks or indices. Derivatives allow an investor to hedge or speculate upon the price movements of a particular security, financial benchmark or index at a fraction of the cost of investing in the underlying asset. The value of a derivative depends largely upon price movements in the underlying asset. Therefore, many of the risks applicable to trading the underlying asset are also applicable to derivatives trading. However, there are a number of other risks associated with derivatives trading. For example, because many derivatives provide significantly more market exposure than the money paid or deposited when the transaction is entered into, a relatively small adverse market movement can result not only in the loss of the entire investment, but may also expose the Series Trust to the possibility of a loss exceeding the original amount invested. There can be no assurance that derivatives that the Investment Manager and/or any of its delegates wishes to acquire for the account of the Series Trust will be made available at any particular times on satisfactory terms or at all. Leverage, Interest Rates and Margin The Investment Manager and/or its delegates may, on behalf of the Series Trust, borrow funds from brokerage firms, banks and other financial institutions in order to increase the amount of capital available for investment. Consequently, the level of interest rates at which the Investment Manager and/or its delegates can borrow will affect the operating results of the Series Trust. In addition, the Investment Manager and/or its delegates may "leverage" the Series Trust s investment return with such instruments as futures, over-the-counter foreign currency forward contracts, options and other derivative contracts. The Investment Manager's use of borrowing for the account of the Series Trust will result in certain additional risks. For example, should the securities pledged to brokers to secure the Series Trust s margin accounts decline in value, the Series Trust could be subject to a "margin call" and need to deposit additional funds with the broker or suffer mandatory liquidation of the pledged securities to compensate for the decline in value. In the event of a sudden drop in the value of the Series Trust s assets, the Investment Manager and/or its delegates might not be able to liquidate assets quickly enough to pay off the Series Trust's margin debt. In addition, leverage can increase the loss to investors. In the futures markets, margin deposits are typically low. Low margin deposits mean that a relatively small price movement in a futures contract may result in immediate and substantial losses. For example, if at the time of purchase ten percent of the price of a futures contract is deposited as margin, a ten percent decrease in the price of the futures contract would, if the contract is then closed out, result in a total loss of the margin deposit before any deduction for the brokerage commission. Possible Effect of Redemptions Substantial redemptions of Units by Unitholders could require the Investment Manager and/or its delegates to liquidate Investments of the Series Trust more rapidly than otherwise desirable to raise the necessary cash to fund the redemptions. Counterparty Risk The Series Trust may be exposed to counterparties who will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (regardless of whether bona fide) or because of a credit or liquidity problem, thus causing the Series Trust to suffer a loss. Such "counterparty risk" is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where transactions have been entered into with a single or small group of counterparties. The Trustee, the Manager, the Investment Manager and/or its delegates, in respect of the Series Trust, are not restricted from dealing with any particular counterparty or from concentrating any or all of its transactions with one counterparty. Moreover, the Manager, the Investment Manager and/or its delegates have no internal credit function which evaluates the creditworthiness of its counterparties. The ability of TPH\603363\ v10 13

14 the Trustee, the Manager, the Investment Manager and/or its delegates to transact business with any one or number of counterparties and the lack of any meaningful and independent evaluation of such counterparties' financial capabilities, may increase the potential for losses to the Series Trust. The Series Trust may be exposed to the credit risk of the counterparties with which it trades in relation to non-exchange-traded derivative instruments, as these will not be afforded the same protections as may apply to participants trading such instruments on organised exchanges, such as the performance guarantee of an exchange clearing house. The counterparty in a nonexchange-traded derivative transaction will be the specific company or firm involved in the transaction rather than a recognised exchange, and accordingly the insolvency, bankruptcy or default of a counterparty with which the Trustee, the Manager, the Investment Manager and/or its delegates trade in respect of the Series Trust such instruments could result in substantial losses to the Series Trust. The Trustee, the Manager, the Investment Manager or its delegates, in respect of the Series Trust, may have contractual remedies upon any default pursuant to agreements relating to particular derivatives transactions. Such remedies could be inadequate, however, to the extent that the collateral or other assets available are insufficient. Recently, several prominent financial market participants (including counterparties to over-thecounter and inter-dealer transactions) have failed or nearly failed to perform their contractual obligations when due heightening the uncertainty observed in financial markets and leading to unprecedented government interventions, credit and liquidity contractions, early termination of transactions and financing arrangements, and suspended and failed payments and deliveries. Such turmoil has caused even solvent prime brokers and lenders to be unwilling or less willing to finance new investments or to offer financing on significantly less favorable terms than those that prevailed in the recent past. There can be no assurance that a counterparty will not default and that the Series Trust will not sustain a loss on a transaction as a result. Brokerage and Other Arrangements In selecting brokers or dealers to effect portfolio transactions, the Investment Manager and/or its delegates need not solicit competitive bids and has no obligation to seek the lowest available commission cost. The Investment Manager and/or its delegates may cause commissions to be paid to a broker or dealer that furnishes or pays for research or services at a higher price than that which might be charged by another broker or dealer for effecting the same transaction. Clearing Broker Insolvency Risk The Trustee, the Manager, the Investment Manager and/or its delegates, in respect of the Series Trust, may use the services of several brokers to clear and settle exchange traded futures and securities trades. While applicable rules and regulations may offer some protections of client assets, it is possible that, if one of the Series Trust s brokers becomes insolvent, the assets of the Series Trust held at such broker could be at risk. Custody Risks The Series Trust may invest, directly or indirectly, in markets where custodial and/or settlement systems are not fully developed. The assets of the Series Trust which are traded in such markets and which have been entrusted to sub-custodians, in circumstances where the use of such sub-custodians is necessary, may be exposed to certain risks. Such risks include, but are not limited to, a non-true delivery versus payment settlement, a physical market, and as a consequence the circulation of forged securities, poor information in regards to corporate actions, registration process that impacts the availability of the securities, lack of appropriate legal/fiscal infrastructure and lack of compensation/risk fund with a central depository. TPH\603363\ v10 14

15 Interest Rate Fluctuations Interest rate changes may affect the value of the Series Trust s investments in debt securities as they influence the fundamental outlook for the issuers of such securities and the decisions of other investors. Interest rate fluctuations may also affect the value and pricing of derivative instruments purchased or sold short by the Investment Manager and/or its delegates for the account of the Series Trust. Economic Conditions Changes in other economic conditions, including, for example, inflation rates, industry conditions, competition, technological developments, political and diplomatic events and trends, tax laws and innumerable other factors, can affect substantially and adversely the returns of the Series Trust. None of these conditions will be within the control of the Investment Manager. Unexpected volatility or liquidity in the markets in which the Series Trust directly or indirectly holds positions could impair the ability of the Investment Manager and/or its delegates to manage the investment and reinvestment of the Series Trust s assets and could expose the Series Trust to losses. Forward Contracts and Currency Transactions The Investment Manager and/or its delegates may deal in over-the-counter forward foreign exchange contracts between currencies of different countries and multi-national currency units and options on currencies and on currency futures contracts for hedging purposes. With respect to over-the-counter forward currency contracts, this is accomplished through contractual agreements generally to purchase or sell one specified currency for another currency at a specified future date and price determined at the inception of the contract. When the Investment Manager enters into an over-the-counter forward contract, it will rely on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. There is no limitation on the daily price moves of forward contracts or over-the-counter forward contracts, and a dealer is not required to continue to make markets in such contracts. There have been periods during which over-the-counter forward contract dealers have refused to quote prices for these contracts or have quoted prices with an unusually wide spread between the bid and asked prices. A counterparty may refuse to quote prices for these contracts at any time. The Investment Manager and/or its delegates, in trading over-the-counter forward contracts for the account of the Series Trust, will be subject to the risk of credit failure or the inability or refusal of a dealer to perform with respect to its contracts. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction. Repurchase Agreements The Investment Manager may enter into repurchase agreements for the account of the Series Trust with respect to securities issued by governments and institutions. Repurchase agreements involve credit risk to the extent that the Series Trust's counterparties may avoid such obligations in bankruptcy or insolvency proceedings, thereby exposing the Series Trust to unanticipated losses. The amount of credit risk incurred by the Series Trust with respect to a particular repurchase agreement will depend in part to the extend to which the Series Trust's counterparty is secured by sufficient collateral. Absence of Regulation and Counterparty Risk in over-the-counter Transactions The Investment Manager and/or its delegates will enter into over-the-counter transactions for the account of the Series Trust. In general, there is less governmental regulation and supervision in the over-the-counter markets than of transactions entered into on an organised exchange. In addition, many of the protections afforded to participants on some organised exchanges, such as the performance guarantee of an exchange clearing house, will not be available in connection with over-the-counter transactions. This will expose the Series Trust to the risks that a TPH\603363\ v10 15

16 counterparty will not settle a transaction because of a credit or liquidity problem or because of disputes over the terms of the contract. The Investment Manager is not restricted from concentrating transactions with one counterparty. The Series Trust, therefore, will be exposed to greater risk of loss through default than if the Investment Manager and/or its delegates confined the Series Trust s trading to regulated exchanges. The Series Trust will be subject to the risk of the inability of counterparties to perform with respect to transactions, whether due to insolvency, bankruptcy, governmental prohibition or other causes, which could subject the Series Trust to substantial losses. In an effort to mitigate such risks, the Investment Manager and/or its delegates will attempt to limit the Series Trust s transactions to counterparties that are believed to be creditworthy. Start-Up Periods The Series Trust may encounter start-up periods during which it will incur certain risks relating to the initial investment of newly contributed assets. Moreover, the start-up periods also represent a special risk in that the level of diversification of one or more of the Series Trust s portfolios may be lower than in a fully committed portfolio or group of portfolios. The Investment Manager may employ different procedures for moving to a fully-committed portfolio. These procedures will be based in part on market judgement. No assurance can be given that these procedures will be successful. Future Regulatory Change is Impossible to Predict The securities and derivatives markets are subject to comprehensive statutes, regulations and margin requirements. In addition, the US Securities and Exchange Commission and the exchanges are authorised to take extraordinary actions in the event of a market emergency, including, for example, the retroactive implementation of speculative position limits or higher margin requirements, the establishment of daily price limits and the suspension of trading. The regulation of securities and derivatives both inside and outside the US is a rapidly changing area of law and is subject to modification by government and judicial action. The effect of any future regulatory change on the Series Trust is impossible to predict, but could be substantial and adverse. Investment Manager The Manager has delegated its responsibility under the Master Trust Deed for the management of the investment and reinvestment of the assets of the Series Trust and to BNY Mellon Asset Management Japan Limited. The Investment Manager is a wholly-owned subsidiary of The Bank of New York Mellon Corporation. It is registered as an investment manager with the Financial Services Agency of Japan. Pursuant to the Investment Management Agreement, the Investment Manager will not be held liable for any actions, costs, charges, losses, damages or expenses arising as a result of the Investment Manager s activities in connection with the Investment Management Agreement unless the actions, costs, charges, losses, damages or expenses arise as a result of the Investment Manager s bad faith, gross negligence, wilful default, fraud, failure to materially comply with its obligations as set out in the Investment Management Agreement or breach of its representations or warranties thereunder. The Manager will indemnify the Investment Manager from and against all actions, costs, charges, losses, damages and expenses which the Investment Manager may incur or sustain (other than as a direct result of the Investment Manager s bad faith, gross negligence, wilful default, fraud, failure to materially comply with its obligations as set out in the Investment Management Agreement or breach of its representations or warranties thereunder) in the proper performance of its duties. The Investment Management Agreement may be terminated by the Manager by giving the Investment Manager no less than 30 days notice in writing, or by the Investment Manager by giving the Manager no less than 90 days notice in writing. It may also be terminated in certain circumstances set out therein. TPH\603363\ v10 16

17 Pursuant to the Investment Management Agreement, the Investment Manager may delegate responsibility for the management of the investment and re-investment of certain parts of the Series Trust's investment portfolio to other investment managers. Sub-Investment Manager (SMAM) The Investment Manager has delegated to Standish Mellon Asset Management Company LLC its responsibility for the management of the investment and re-investment of the Series Trust's investment portfolio in high yield bonds and emerging market debt. The Sub-Investment Manager (SMAM) is a wholly-owned subsidiary of The Bank of New York Mellon Corporation, a publicly owned and traded company. It is registered as an investment adviser with the United States Securities and Exchange Commission. The sub-investment management agreement entered into between the Investment Manager and the Sub-Investment Manager (SMAM) in respect of the Series Trust may be terminated by the Investment Manager by giving no less than 30 days notice in writing to the Sub-Investment Manager (SMAM), or by the Sub-Investment Manager (SMAM) by giving no less than 90 days notice in writing to the Investment Manager. The agreement may also be terminated in other circumstances set out therein. Sub-Investment Manager (MCM) The Investment Manager has delegated to Mellon Capital Management Corporation its responsibility for the management of the investment and re-investment of the Series Trust's investment portfolio in convertible bonds. The Sub-Investment Manager (MCM) is a wholly-owned subsidiary of The Bank of New York Mellon Corporation, a publicly owned and traded company. It is registered as an investment adviser with the United States Securities and Exchange Commission. The sub-investment management agreement entered into between the Investment Manager and the Sub-Investment Manager (MCM) in respect of the Series Trust may be terminated by the Investment Manager by giving no less than 30 days notice in writing to the Sub-Investment Manager (MCM), or by the Sub-Investment Manager (MCM) by giving no less than 90 days notice in writing to the Investment Manager. The agreement may also be terminated in other circumstances set out therein. Administrator Notwithstanding the provisions of the Offering Memorandum, the Trustee and the Manager have appointed Nikko Bank (Luxembourg) S.A. to act as the administrator and transfer agent of the Series Trust. Pursuant to the terms of the Administration Agreement, the Administrator will, inter alia, conduct all the day to day administration of the Series Trust, provide or procure the provision of the services of transfer agents to the Series Trust, determine the Net Asset Value and the purchase price and redemption price of Units and perform the duties of keeping the accounts of the Series Trust. Nikko Bank (Luxembourg) S.A. is a bank incorporated as a société anonyme under the laws of the Grand Duchy of Luxembourg and is a subsidiary of Nikko Cordial Securities Inc. As at the end of May 2009, Nikko Bank (Luxembourg) S.A. had a capital of million. The object of Nikko Bank (Luxembourg) S.A. is the undertaking for its own account, as well as for the account of third parties or on joint account with third parties, either within or outside the Grand Duchy of Luxembourg, of any banking or financial operations. TPH\603363\ v10 17

18 The Trustee and the Manager will indemnify the Administrator out of the assets of the Series Trust against all claims and demands (including costs and expenses arising therefrom or incidental thereto) which may be made against the Administrator in respect of any loss or damage sustained by any third party, otherwise than by reason of the wilful default, actual fraud or negligence of the Administrator or reckless disregard by it of its duties under the Administration Agreement. The Administration Agreement may be terminated by the Administrator giving to the Trustee and the Manager not less than 90 days' notice in writing and vice versa or in other circumstances as set out therein. Custodian The Trustee has appointed Nikko Bank (Luxembourg) S.A. to act as custodian of the assets of the Series Trust. The Trustee will indemnify the Custodian out of the assets of the Series Trust against all claims and demands (including costs and expenses arising therefrom or incidental thereto) which may be made against the Custodian in respect of any loss or damage sustained or suffered by any third party in relation to the Series Trust, otherwise than by reason of the wilful default, actual fraud or negligence of the Custodian or reckless disregard by it of its duties under the Custodian Agreement. The Custodian Agreement may be terminated by either the Trustee or the Custodian giving to the other not less than 90 days' notice in writing or in other circumstances as set out therein. Agent Company and Distributor The Manager has appointed Nikko Cordial Securities Inc. to act as agent company of the Series Trust and the distributor of Units in Japan. The Agent Company and the Distributor is a registered financial investments firm in Japan with a capital of 100 billion as of the end of May Valuations The Administrator will calculate the Net Asset Value on each Valuation Day in accordance with the Master Trust Deed. In that connection, the Valuation Point for the Series Trust will be 3:00 p.m. (Luxembourg time). The Net Asset Value in Yen will be calculated by ascertaining the value of the total assets of the Series Trust and deducting therefrom the total liabilities of the Series Trust. The Net Asset Value will be allocated between the different classes of Units based on a reasonable allocation method as determined by the Trustee and the Manager after making appropriate adjustments for any assets and liabilities attributable only to a particular class of Units. The Net Asset Value of a Unit of each class of Units will be calculated by dividing that part of the Net Asset Value attributable to such class of Units by the number of Units of such class in issue. Subscription for Units Classes of Units Yen Hedged Class A Units, Yen Non-Hedged Class A Units, Yen Hedged Class B Units and Yen Non-Hedged Class B Units are available for issue. Class A Units are subject to an initial charge of up to 3 percent (excluding applicable tax, if any) of the purchase price. Class B Units are subject to a contingent deferred sales charge instead of an initial charge. TPH\603363\ v10 18

19 Initial Offer Units may be subscribed for by Eligible Investors during the Initial Offer Period at the purchase price of 1 per Unit. The Initial Offer Period will commence on 13 July 2009 and will close on 29 July The Manager may extend or shorten the Initial Offer Period at its discretion. Units subscribed for during the Initial Offer Period will be issued on the first Business Day following the expiration of the Initial Offer Period. Subsequent Subscriptions Following the expiration of the Initial Offer Period Units will be available for subscription at the relevant purchase price on each Dealing Day except as described below. The purchase price per Unit will be calculated by dividing the Net Asset Value attributable to the class of Units concerned as at the Valuation Day falling on the relevant Dealing Day by the number of Units of such class in issue on such Valuation Day. Procedure During the Initial Offer Period, applicants for Units should send a completed Application Form (together with supporting documentation to verify the identity of the applicant as required) to the Distributor so as to be received by the Distributor by no later than 4:00 p.m. (Tokyo time) on the last Business Day in the Initial Offer Period. The Distributor will forward the completed applications to the Administrator within two hours of receipt. Cleared funds in respect of the subscription monies must be received for the account of the Series Trust on the Business Day immediately following the close of the Initial Offer Period. If the relevant Application Form and/or subscription monies is/are not received by the Administrator by the relevant time, the application will be held over until the first Dealing Day after the Application Form and subscription monies are received and Units will then be issued at the relevant purchase price on that Dealing Day. Following the expiration of the Initial Offer Period applicants for Units, and Unitholders wishing to apply for further Units, must send a completed Application Form (together with supporting documentation to verify the identity of the applicant as required) to the Distributor by no later than 4:00 p.m. (Tokyo time) on the relevant Dealing Day and cleared funds must be received for the account of the Series Trust within four Business Days after the relevant Dealing Day (i.e. T + 4). The Distributor will forward the completed applications to the Administrator within two hours of receipt, failing which the application will be held over to the first Dealing Day following receipt of the Application Form and subscription monies and Units will then be issued at the relevant purchase price on that Dealing Day. Unless an investor has made arrangements with the Administrator to make payment in some other currency, payment must be made in Yen. Payments in other freely convertible currencies will be converted into Yen and the proceeds of conversion (after deducting the costs of such conversion) will be applied towards payment of the application monies. Conversion of currencies may involve some delay and incur costs for the investor. Fractions of Units will not be issued. The Manager reserves the right to reject any application for Units in whole or part at its absolute discretion, in which event the amount paid on application or the balance thereof (as the case may be) will be returned as soon as practicable and at the risk and cost of the applicant. Once completed applications have been received by the Administrator, they are irrevocable. The Administrator will issue a written confirmation of ownership to successful applicants after receipt of the original completed Application Form and, if required, all documentation requested by the Administrator to verify the identity of the applicant. If the Administrator determines that it requires additional information from the applicant before a written confirmation can be issued, the Administrator will write to the applicant and request the information that is needed. TPH\603363\ v10 19

20 For the avoidance of doubt, at the discretion of the Administrator applications for Units may not be dealt with and Units may not be issued until receipt of notification that an applicant's funds have been cleared in the full amount of the subscription together with all information and documentation requested to verify the identity of the applicant. If the Administrator does not receive such information and documentation within one month of the expiration of the Initial Offer Period or the relevant Dealing Day, as the case may be, the Administrator will return the application to the applicant and all subscription monies paid by the applicant to the paying bank at the risk and cost of the applicant. Subject thereto, Units are deemed to be issued on the first Business Day following the expiration of the Initial Offer Period or on the relevant Dealing Day, as the case may be. Minimum Initial and Additional Subscriptions The minimum initial subscription per subscriber for Class A Units is 100,000,000 Class A Units of the relevant class and for Class B Units is 500,000 Class B Units of the relevant class. The minimum additional subscription for Units of the same class per Unitholder is 10,000 Units. Ineligible Applicants The Application Form requires each prospective applicant for Units to represent and warrant that, among other things, he is able to acquire and hold Units without violating applicable laws. Units may not be offered or issued to any person in circumstances which, in the opinion of the Manager, might result in the Series Trust incurring any liability to taxation or suffering any other pecuniary disadvantage which the Series Trust might not otherwise incur or suffer. Applicants for Units must represent and warrant on the Application Form that, inter alia, they have the knowledge, expertise and experience in financial matters to evaluate the risks of investing in the Series Trust, are aware of the risks inherent in investment in the assets in which the Series Trust will invest and the method by which those assets will be held and/or traded, and can bear the loss of their entire investment in the Series Trust. Form of Units All the Units are registered Units. Certificates for Units will not be issued unless requested by Unitholders and, if issued, will be issued at the cost and expense of the Unitholder requesting the same. A Unit may be registered in a single name or in up to four joint names. Where Units are registered in joint names, a joint holder will be required to authorise the Administrator to act upon the sole written instructions of any one of the joint holders in respect of the transfer or redemption of all or any of those Units. A copy of the Trust's register of unitholders will be available for inspection by Unitholders at the office of the Administrator during normal business hours. Suspension The Trustee, or the Administrator as its delegate, may declare a suspension of the issue of the Units in certain circumstances as described in the section of the Offering Memorandum headed "Suspension of Calculation of Net Asset Value". No Units will be issued during any such period of suspension. Redemptions of Units Units may be redeemed at the option of Unitholders on each Redemption Day. Unitholders should send a completed Redemption Notice to the Distributor so as to be received by the Distributor by no later than 4:00 p.m. (Tokyo time) on the relevant Redemption Day. The Distributor will forward the completed redemption notices to the Administrator within two hours of receipt or by such other time as the Administrator may in any particular case determine, failing TPH\603363\ v10 20

21 which the Redemption Notice will be held over until the next following Redemption Day and Units will be redeemed at the relevant redemption price applicable on that Redemption Day. A Redemption Notice, once given, is irrevocable. Redemption Price Subject as provided below in the section headed "Deferred Redemptions", the redemption price per Unit will be calculated by dividing the Net Asset Value attributable to the class of Units concerned as at the Valuation Day falling on the relevant Redemption Day by the number of Units of such class in issue on such Valuation Day. For the purposes of calculating the redemption price of a Unit, the Administrator may, after consultation with the Investment Manager, deduct from the Net Asset Value per Unit an amount which it considers to be an appropriate allowance to reflect fiscal and sale charges which would be incurred for the account of the Series Trust in realising assets or closing out positions to provide funds to meet Redemption Notices. Settlement Subject as provided in the Offering Memorandum, payment of redemption proceeds will be made, wherever possible, within four Business Days after the relevant Redemption Day (i.e. T + 4) or as soon as practicable thereafter. Payment will be made in Yen by direct transfer in accordance with instructions given by the redeeming Unitholder to the Administrator and at the Unitholder's risk and cost. Redemptions of Units may, at the discretion of the Manager (subject to the approval of the Unitholder requesting redemption of Units), be effected in specie by the appropriation of assets of the Series Trust of the relevant value in satisfaction of the redemption price. Any such appropriation will be effected in such manner as not to be materially prejudicial to the interests of the continuing Unitholders. Minimum Redemption The minimum number of Units that a Unitholder may redeem on any Redemption Day is one with amounts in excess thereof being in integral multiples of one Unit. Deferred Redemption If Redemption Notices representing more than 10 percent of the number of Units of all classes of Units are received in respect of any one Redemption Day, the Manager may delay the redemption of the relevant Units until sufficient Investments of the Series Trust have been realised in order to fund the relevant redemption whereupon such Units will be redeemed at a redemption price equal to the Net Asset Value attributable to the relevant class of Units immediately following the completion of such realisation divided by the number of Units of such class then in issue. Suspension The Trustee, or the Administrator as its delegate, may declare a suspension of the redemption of Units in certain circumstances as described in the section of the Offering Memorandum headed "Suspension of Calculation of Net Asset Value". No Units will be redeemed during any such period of suspension. Compulsory Redemption In the event that the Manager shall determine that any Units are being held by or for the benefit of a person who is not an Eligible Investor or that such holding would cause the Trust to be required to register, be subject to tax or violate the laws of any jurisdiction, or if the Trustee has reason to doubt the legitimacy of the source of moneys used to fund the subscription or purchase of such Units then TPH\603363\ v10 21

22 the Manager may direct the holder thereof to sell (subject to the provisions described below in the section headed "Transfer of Units") such Units within 10 days and provide to the Manager evidence of such sale, failing which the Manager may redeem such Units. The price payable in respect of any such compulsory redemption will be the price per Unit equal to the Net Asset Value per Unit of the relevant class of Units determined on the Valuation Day falling on or immediately preceding the date of such compulsory redemption plus or minus adjustments for differences between the announced value of those Investments of the Series Trust that are being realised to fund the relevant redemption and their subsequent realised value. Conversion of Units At the option of relevant Unitholders as at each Conversion Day, Class A Units of one class may be converted into Class A Units of another class and Class B Units of one class may be converted into Class B Units of another class. Unitholders should send a completed Conversion Notice to be received by the Distributor by no later than 4:00 p.m. (Tokyo time) on the relevant Conversion Day. The Distributor will forward the completed Conversion Notices to the Administrator within two hours of receipt or by such other time as the Administrator may, in any particular case determine, failing which the Conversion Notice will be held over until the next following Conversion Day and Units will be converted as at that Conversion Day. A Conversion Notice, once given, is irrevocable. All Yen Hedged Class B Units will be converted into Yen Hedged Class A Units and all Yen Non- Hedged Class B Units will be converted into Yen Non-Hedged Class A Units on the Conversion Day falling on or immediately after the seventh anniversary of the date on which they were purchased unless the holder thereof otherwise determines by written notice to the Administrator or, as the Administrator may determine, the Distributor, received by the Administrator or the Distributor, as the case may be, no later than the relevant Conversion Day. A conversion of Units of a class of Units (the "Existing Class") on any Conversion Day (the "relevant Conversion Day") into another class of Units (the "New Class") will be effected in accordance (or as nearly as may be in accordance) with the following formula: N = E x R S Where: N is the number of Units of the New Class to be issued, provided that amounts representing less than a whole Unit of the New Class will be rounded to the nearest whole Unit of the New Class (with 0.5 being rounded up). The benefit or burden of any such rounding will accrue to, or be borne by, the holders of Units of the New Class. E is the number of Units of the Existing Class to be converted. R is the redemption price per Unit of the Existing Class applicable on the relevant Conversion Day; and S is the purchase price per Unit of the New Class applicable on the Dealing Day falling on the relevant Conversion Day. No Class A Unit may be converted into a Class B Unit. Units will not be converted during any period when the determination of the Net Asset Value is suspended and when redemptions of Units of a particular class of Units are delayed as described in the section above headed "Redemptions of Units Deferred Redemption" conversions of Units of such class into Units of another Class of Units may be delayed accordingly. TPH\603363\ v10 22

23 Units may only be converted in integral multiples of one Unit. No conversion charge will be applied. Transfer of Units Every Unitholder may, subject to the prior written consent of the Trustee, after consultation with the Manager, transfer any Unit held by it by an instrument in writing in such form as the Trustee may from time to time approve, provided that the transferee shall first supply such information as may be required by the Trustee or its duly authorised agent in order to comply with any statutory provision or governmental or other requirement or regulation of any relevant or applicable jurisdiction or policy of the Trustee for the time being in force or otherwise as may be required by the Trustee. Further, the transferee will be required to represent to the Trustee in writing (a) that the transfer of Units is to an Eligible Investor, (b) that the transferee is acquiring the Units for its own account for investment purposes only and (c) as to such other matters as the Trustee may require in its discretion. Termination of the Series Trust Unless previously terminated, the Series Trust may terminate if required by applicable law or in the event that: (a) (b) the appointment of the Distributor as distributor of the Units is terminated; the appointment of the Agent Company as agent company of the Series Trust is terminated; or (c) the Net Asset Value is less than 1,000,000,000. Charges and Expenses Manager's Fees The Manager is entitled to receive out of the assets of the Series Trust a management fee of up to 0.87 percent per annum of the Net Asset Value accrued on and calculated as at each Valuation Day and payable monthly in arrears. The Manager is also entitled to receive out of the assets of the Series Trust a marketing fee at the rate of 0.64 percent per annum of the Net Asset Value attributable to the Class B Units accrued on and calculated as at each Valuation Day and payable monthly in arrears. In addition, the Manager is also entitled to be reimbursed out of the assets of the Series Trust for any expenses incurred by it in the proper performance of its powers and duties as permitted under the Master Trust Deed. The Manager will pay the fees of the Investment Manager out of its fees. The Investment Manager will be responsible for paying the fees of the Sub-Investment Manager (SMAM), the Sub-Investment Manager (MCM) and any of the Investment Manager's delegates or other parties appointed by the Investment Manager to perform its functions in respect of the Series Trust. Administrator's Fees The Administrator is entitled to receive out of the assets of the Series Trust a fee at the rate of 0.06 percent per annum of the Net Asset Value accrued on and calculated as at each Valuation Day and payable monthly in arrears. Custodian's Fees The Custodian is entitled to receive out of the assets of the Series Trust a fee at the rate of 0.04 percent per annum of the Net Asset Value accrued on and calculated as at each Valuation Day and payable monthly in arrears plus transaction fees and expenses. TPH\603363\ v10 23

24 Distributor's Fees The Distributor is entitled to receive out of the assets of the Series Trust a fee at the rate of: (a) (b) in respect of Class A Units, up to 0.70 percent per annum of that part of the Net Asset Value attributable to Class A Units; and in respect of Class B Units, up to 0.50 percent per annum of that part of the Net Asset Value attributable to Class B Units, accrued on and calculated as at each Valuation Day and payable monthly in arrears. Agent Company s Fees The Agent Company is entitled to receive out of the assets of the Series Trust a fee at the rate of 0.10 percent per annum of the Net Asset Value accrued on and calculated as at each Valuation Day and payable monthly in arrears. Other Fees and Expenses The costs and expenses in connection with the establishment of the Series Trust and the offering of the Units, including the costs and expenses of preparing and printing any prospectus or explanatory brochures required are estimated to amount to approximately US$190,000. Such costs and expenses will be amortised within the first five financial years of the Series Trust unless the Trustee decides that some other method shall be applied. Reporting The Series Trust's financial year ends on 31 January in each year. The first financial year of the Series Trust will be the period ending on 31 January Audited accounts will be prepared in accordance with Luxembourg generally accepted accounting principles and will generally be sent to Unitholders within 120 days of the end of each financial year. Unaudited semi-annual accounts will also be prepared and will generally be sent to Unitholders within 60 days of the end of the period to which they relate commencing with the period ending 31 July The latest available purchase and redemption prices of Units are available on request without charge at the office of the Administrator. July 2009 TPH\603363\ v10 24

25 Supplement to Appendix 6 Product Description Features of the Fund The fund seeks high income and mid to long term steady growth of asset by investing in 3 different asset classes of high yielding bonds. The asset allocation at the inception of the fund will be 60% of high yield bonds, 25% of emerging market debts and 15% of convertible bonds and seeks long-term stable income by diversification of asset. Note1:The Investment Manager determines the asset allocation taking the advice from Nikko Global Wrap into consideration. Note2:The asset allocation may be changed in the future. The fund aims monthly distribution payment. The record date will be the last business day in each calendar month. The fund seeks stable distribution payment principally out of the fund s income gain. The first distribution record date will be the last business day of August Note:Distribution may not be made depending on the fund s future performance and level of net asset value per unit. Yen Hedged Unit A/B and Yen Non-Hedged Unit A/B are available for your choice. Yen Hedged Unit A/B and Yen Non-Hedged Unit A/B are available for your choice to meet your investment needs. Conversion of Units is available between the same Class (Yen Non-Hedged Class A to Yen Hedged Class A and vice versa, and Yen Non-Hedged Class B to Yen Hedged Class B and vice versa.) without charge. 0 TPH\603363\ v10 25

26 Investing Asset Classes of NIKKO BNY Mellon Tri- Sector High Income Bond Fund Monthly Distribution Type (Yen Hedged Unit / Yen Non- Hedged Unit). The fund seeks to achieve higher yield and capital gain through balanced investments into 3 different asset classes of high yielding bonds. What is Yield CB? Corporate bonds having the right to convert into equity. We can expect price increase linked to equity price at equity market upturn (equity characteristic), while we can expect lower price resistance at the equity market downturn (bond characteristic). CB 15% Emerging market debts 25% High Yield Bonds 60% Aim of the Fund High level of yield Expected price appreciation Effect of diversification Yield CB are with which higher yield than ordinary CB. The figures in the chart above are as of May What is emerging market debt? Emerging market debts are bonds (such as government bond) issued and guaranteed by the governments of emerging countries. We can expect higher yield than sovereign bonds of developed countries, while having lower credit. What is high yield bond? Bonds with higher yield, which are generally rated lower than BBB. Yield of this product is high, but default risk is also higher. The risk of which coupon payment and capital repayment cannot be executed as set in the contract. 1 TPH\603363\ v10 26