FundFund

Superfund Japan Outline

Superfund Japan Outline

The form of beneficiary certificate

The form

Open end foreign investment trust registered in Cayman Islands (denominated in JPY and USD) with no par beneficiary securities.

Sub fund Class Issue price
Green A Gold Yen class 1 share 100 yen
Green B Yen class
US dollar class
Gold Yen class
Gold US dollar class
1 share 100 yen
1 share 1 dollar
1 share 100 yen
1 share 1 dollar
Red Yen class
US dollar class
Gold Yen class
Gold US dollar class
Silver Yen class
Silver US dollar class
1 share 100 yen
1 share 1 dollar
1 share 100 yen
1 share 1 dollar
1 share 100 yen
1 share 1 dollar
Blue Yen hedge class
Gold Yen class
1 share 100 yen
1 share 100 yen
     Cautionary note
 

The new beneficiary securities of each class issued on the each issue date are integrated immediately with the existing beneficiary securities on the evaluation date of the each issue date.
The number of beneficiary securities for the new applicants are adjusted according to the net asset values of the corresponding asset class on the corresponding evaluation date.
Therefore the new beneficiary securities of each class are issued on the corresponding evaluation dates and the number of new beneficiary securities would depend on the net asset value per beneficiary security.

Application procedures

Application period From January 1 2018 to Jun 30 2018
Sub fund Class The minimum application unit
Green A Gold Yen class More or equal to 5000 shares, 100 shares per unit
Green B Yen class
US dollar class
Gold Yen class
Gold US dollar class
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
Red Yen class
US dollar class
Gold Yen class
Gold US dollar class
Silver Yen class
Silver US dollar class
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
Blue Yen hedge class
Gold Yen class
More or equal to 5000 shares, 100 shares per unit
More or equal to 5000 shares, 100 shares per unit
Caution 1

Distributor may change partially or all of the above application unit
through consultations with the administration company.

Caution 2

The minimum application amount for each class on the last fund business
day of the month is equal to or more than 1,000 units with minimum application unit of 100.

Caution 3

We intend to extend subscription period and continue offering beneficiary
certificates by submitting registration statement.

Application procedure

Applicants will sign “Agreement on Dealing Foreign Securities” with the sales companies (including agency companies). The sales companies will issue “Contract for Foreign Securities Transactions” to the applicants and the applicants will submit applications for account opening in accordance with “Contract for Foreign Securities Transactions”.
The applicants submit applications to the sales companies before the deadline date of one fund business day before the evaluation date.
Then the money (investment money and application fees) is paid to the sales companies before the domestic settlement date.
The issue and registration of the beneficiary securities become legally effective once the administrative company on behalf of the fund recognizes the money paid on the payment deadline date.

Refund procedures

Shareholders can apply for total redemption or partial redemption by notifying the
sales companies or the agency companies “one fund business day plus one Japanese business day” before the redemption date defined below.
Redemption will be made by subtracting redemption fees defined below from the net asset value per beneficiary security decided on the redemption date. Redemption date is the final evaluation date of each month or other dates designated by the management company.
Redemption proceeds will be remitted within two Japanese business days after the administrative company sends the transaction statement and redemption price to the sales companies.

Caution

The management company has the authority to limit the number of beneficiary securities to be redeemed on a particular redemption date to 20% of the total net asset value of the fund in order to protect the profits of the shareholders.

Subscription and redemption for this fund is not covered under the “Cooling off provision” of the Financial Instruments and Exchange Act article 37 number 6 (revocation of subscription or redemption after the deadline date cannot be accepted.).

Application Procedures and Transaction Fees etc.

Definition of the fund terminology

Fund business day

Banking business day in Tokyo, London, New York, Cayman other than Saturday and Sunday.

Japanese business day

Banking business days in Tokyo other than Saturday and Sunday.

Evaluation date

Fund business day before each Wednesday or the last fund business day for the last week of the month.

Master Fund business day

Banking business day in London, New York, Cayman other than Saturday and Sunday.

This fund is treated under the current Japanese tax system as the publicly offered foreign stock investment trust. The following chart is the withholding tax for the individual investors and may differ with other methods of taxation (it is different from below for corporates). And this fund is applicable for the Small Investment Tax Regime (nickname: NISA). As for treatment of NISA, please check with your distributor or the mediator.

Timing Item Tax
Time of conversion to cash  (buy back) Income tax and Local tax Taxed at 20.315% on capital
gains at the time of conversion
to cash.

Fund’ expenses and fees

Superfund Japan’s fees and compensations

Expenses paid directly by the investor
Purchase fee
(Subscription fee)
Maximum 5.4% (excludes 8% tax) multiplied by the purchase amount
as subscription fee
Compensations and expenses for the materials and explanations
provided to the investor at the
time of the purchase of the
financial instrument, operational costs related to receiving orders, operational costs related to trade executions and settlements.
Fees for conversion to cash (redemption) For the following cases, 2% redemption fee would be charged at the
discretion of the administration    company.
・Beneficiary certificate was redeemed within 12 months from the time of purchase.
・Compulsory redemption was ordered by the fund.
The cost incurred by the fund in the process of raising money for redemptions.
Expenses that the investor burdens indirectly for the trust asset.
Compensations for the administration company. 0.1% per annum of the net asset value of each sub-fund. Compensations for the operational exchanges with the trust company, the operational processing company, the custodian and other relevant entities as well as the management of the contracts related to the activities of this fund and the management of the investment activities including subscriptions and redemptions.
Compensations for the trust company. 8,500 US dollars annually per each
sub-fund.
Compensations for the fiduciary business performed according to the trust deed.
Compensations for administration Compensations for administration and transfer agent services for this fund. 6,000 US dollars annually per each  sub-fund. Compensations for calculation of net asset value as of each evaluation date, management of the beneficiary names list, accepting and processing the contracts related to subscriptions, electro-magnetic issuance and certification of beneficiary certificates and preparations and delivery of holdings  report.
Compensations for arranging annual report and audit 400 US dollars annually per each sub-fund. Compensations for creating and assisting creations of audited annual financial statements in accordance with related regulations.
Compensations for providing main offices 6,000 US dollars annually per each  sub-fund (to be paid to the related companies of the administrative company). Compensations for providing the main offices for this fund.
Compensation for the member of agency association. As for the sub-funds Green A and B, the fees are 0.5% per annum of the respective net asset values.
As for the sub-funds Red and Blue, the fees are 0.1% per annum of the respective net asset values.
Compensation for sending prospectus and financial statements to the beneficiaries and publications of net asset values in accordance with Japanese laws and regulations of the Japan Securities Dealers’ Association.
Other expenses ・Transaction fees and expenses for preparing prospectus and printing.
・Lawyer fees (Compensations for preparation of contract documentations related to the fund, duties related to publication of prospectus, preparations and reporting of materials submitted to the supervisory authorities and duties related to these duties).
・Taxes etc.
Other expenses described above will be paid indirectly from the fund as actual expenses.
Other expenses fluctuate depending on investment conditions etc. and
their rates and upper-limits and impossible to indicate beforehand.

Investment Report

The management company creates Investment Report (Total Version) and Issued Investment Report as of the end of the calculation period (December 31 of each year) based on the laws related to investment trust and investment corporations (1951 Resolution 198) and submits these reports to the Financial Service Agency through an agent in Japan.
Issued Investment Reports are delivered to the known beneficiaries.

Information regarding the management company etc.

Related companies

Management Company Superfund Japan Trading (Cayman) Limited is the management company.
It manages the fund and sends investment instructions.
The management company is an investment company set up on October 8 2004 based on the company law (includes revised laws) of Cayman Islands.
The total value of the shares held by the administrative company is JPY 50,000,000.
The management company also issues beneficiary securities.

Trust Company Harneys Trustee (Cayman) Limited serves as the trustee for the fund following the trust deed (conforming to Cayman Islands laws) between the management company and the trust company.
The trust company can outsource certain duties to the management company, the administrative company and the sales companies.

Administrative Company Apex Fund Services (Malta) Limited Luxembourg branch serves as the administrative company for the fund conforming to the administrative contract between the trust company.
It performs net asset value calculations, settlement operations, accounting and other financial duties as well as other duties required for the management of these funds.

Sales Company and Agency Association Member Superfund Japan Corporation is the sales company in charge of selling funds and responding to general inquiries.
The sales company can designate one or more sales agency companies to sell funds and respond to general inquiries.
The management company has designated Superfund Japan Corporation as the Agency Association Member for selling the beneficiary securities in Japan.

Investment Risk

These funds are financial products with price fluctuations.
Net asset value per unit of these funds may fall below investment principal or even lose all its value due to the price fluctuations of various markets such as the financial and commodity futures markets, gold spot and futures markets, interest rates and foreign exchange markets as well as the change in credit conditions of the counterparties.
All the profits and losses arising from the fund performance revert to investors (beneficiaries).
Investment trusts are not covered by the deposit insurance unlike the bank deposits.

To understand the details of the investment risks, please request for the prospectus and read it or look at the securities registration statement (Fund Code “G07555”) submitted on December 15 2017 on EDINET (disclosure page on the homepage of Financial Service Agency http://disclosure.edinet-fsa.go.jp/).

Risk Management

The fund managers of the management company and the Master Fund Investment Advisory Company will strictly abide by the above investment policies in managing the portfolios of these funds, master funds, and the underlying master funds.
And the compliance officer of the Master Fund Investment Advisory Company will monitor and confirm these investment policies are being abided by the master fund and the underlying master funds.
And the portfolio managers of the Master Fund Investment Advisory Company have internal guidelines to supplement the investment policies regarding specific investment strategies.
These internal guide lines demand dispersion of strategies and positions, restraint on volatility and adequate level of leverage.
Master Fund Investment Advisory Company uses automated trading systems for not just risk management but also for making investment decisions.
The automated trading systems make investments based on four basic policies described below.

Original Technical Analysis

The trading systems find price patterns (Trading Signals) with high profit opportunities based on the historical data of the futures markets and diversified original technical indices.
The trading systems decide buy and sell orders based on these trading signals automatically.

Managed Futures Strategy and Market Neutral Strategy

The trading systems currently adopt “Managed Futures Strategy” and “Market Neutral Strategy (dynamic hedge)”.
Each master fund and underlying master fund limit or balance the short term and medium term trading cycles and aim for profits in both rising and falling market patterns.

Strict Risk Management

The trading systems eliminate miscalculations caused by human emotions from the decision making process based on the strict transaction rules embedded in the system.
The trading systems limit the positions and cut losses early.
The trading systems preset upper risk limit to each transaction at a certain percentage of the segregated portfolio assets and monitor the risk quantity on continuous daily basis.

Diversified Investment

Managed futures strategy makes diversified investment using both buy and sell positions in the world financial futures and commodity futures markets with high liquidity.
Managed futures strategy aims to diversify the risk by making investments in many futures markets with low correlations.
And the market neutral strategy makes profits by investing in outperforming individual stocks selected from the stock markets world-wide while shorting the index that includes these outperforming stocks as a risk hedge operation.

Superfund Japan concept diagram

Above is only a concept diagram.
Actual diversification ratio is constantly adjusted to reflect market conditions and the strategies of the each master fund.
Portfolio managers of the Master Fund Investment Advisory Company have no discretions in the investment decisions and they are required to follow the demands of the trading systems accurately.
By using the trading systems, human emotions are almost eliminated from the regular investment decision making process.
The trading system is set up to maintain cash rather than maximizing profits.
In order to reduce the system risk, standard variables are diversified and the maximum unidentified risk based on the market correlations and volatilities is indicated before the positions are taken.
The positions are either stopped out or closed to adjust to the changes in market volatilities and correlations or realize profits. But the results are not guaranteed to be the same as the previous case.
And this system also reduces the risks associated with regional markets by trading in the world major markets.
Market efficiencies are regularly assessed and particular markets are added or removed from the market portfolio.
Spare trading systems are maintained in a different geographical location to the Master Fund Investment Advisory Company to reduce the regional disaster risk to minimum.
The employees of the management company and the Master Fund Investment Advisory Company are not allowed to use the information obtained from the transaction orders and the trading systems for other purposes.
Not limited to above, the employees of the management company and the Master Fund Investment Advisory Company must not trade for themselves or other third parties.The employees of the management company and the Master Fund Investment Advisory Company are under the obligations of non-disclosure agreement.
Master Fund Investment Advisory Company creates monthly investment reports for the master fund and weekly investment reports for the underlying master funds. These reports include net asset values, monthly or weekly net profits and the fiscal year profits of the master funds and underlying master funds.
The financial statements of the management company are audited annually by an independent accounting firm just like the financial statements for the master funds and the underlying master funds.
Board of directors of the management company sets policies for particular risk management issues and implements them.
These policies include but not limited to credit approval of the counterparties, credit limits for the counterparties and trading policies of the employees.

Main Risk Factors

The main risk factors for these funds are as follow.
These risk factors describe the fact that these funds will be invested in the master fund with the maximum ratio of 100%.
The master funds use special investment technologies in the futures markets and they are subject to particular risks associated with these special investment technologies.
Future delivery contracts, futures contracts, options, swaps and other financial derivatives markets can be very volatile and the risks of incurring losses associated with these markets are high.

Investments in commodities futures and optionsThe sub-funds of the master fund can invest in commodities futures markets or their options markets either directly or through the underlying master funds.
The commodities markets are very unstable.
Profitability of these investments rely on the accuracy of the market analysis by the investment advisory companies. And the market analysis is affected by the change in supply and demand, climate change, agricultural and commercial plans and policies by the governments, political and economic phenomena and changes interest rates of the world.
And the investments in commodity futures and options entail risks that are not limited to leverage.
CFTC and currency futures exchanges have established speculative position limits for net long and short positions.
The positions of the master fund and the sub-funds of the underlying master funds are aggregated for the limit checks.
In order to avoid the positions exceeding the limits, positions held by the sub-funds may need to be liquidated.
In such cases the profitability of the sub-funds could be affected.

Investments in gold, silver and other precious metals:The net asset values of the master fund and underlying sub-funds are affected by the spot prices of gold, silver and other precious metals as well as the levels of margins for the futures contracts.
There are cases where the master fund and the underlying master funds cannot take positions as planned because of the levels of margins.
Hedge positions in gold and silver may be taken when the portfolios of the master fund and the underlying master funds are not fully hedged.
Most important positions taken in the investment strategy will not be hindered in the trade process.
There is no guaranty that the master fund and the underlying master funds are fully hedged against the fluctuations in gold and silver prices.
Gold and silver prices are volatile and the net asset values of these funds may fluctuate more than other investment products.
Gold and silver prices can be affected by the reasons that are not limited to following uncontrollable reasons.

  • Unpredictable monetary policies, economic and political conditions of the world.
  • Forecasts of investors regarding inflation, stock markets, financial markets and real estate markets of the world.
  • World supply and demand of gold. The supply and demand of gold is affected by many factors such as production volumes, transactions by the central banks, demand for precious metals, supply of recycled precious metals, speculation and industrial supply and demand.
  • Interest rates and foreign exchange rates. Especially the strength and credibility of US dollar.
  • Actions of the speculative community such as hedge funds and commodities funds.

The share prices of the Gold Class and Silver Class receive the direct effect of the gold and silver prices denominated in US dollar.
This means 5% increase in gold and silver prices would translate into 5% increase in the net asset values of the other class shares and 5% decrease would translate 5% decrease in the net asset values of the other class shares when the gold and silver hedges are fully implemented.
There is no guaranty that assets of each class shares are fully hedged against the prices of gold and silver.

Foreign Exchange RiskSub-funds of this fund is denominated in JPY or USD. The assets of these sub-funds are invested in the master fund denominated in either JPY or USD. And the master fund invests a portion of these assets in the stocks held by the underlying master funds denominated in USD or EUR.
Therefore the master fund may incur foreign exchange losses due to the foreign exchange fluctuations of USD and JPY.
And the base currency of the underlying master funds are either USD or EUR. But they also invest in financial products denominated in currencies other than JPY or USD.
The prices of these products are determined by references to USD or currencies other than JPY.
The asset prices of the master fund and the underlying master funds are affected by the foreign exchange rates of USD, EUR and JPY as well as the prices of the investment products.
The fluctuations in the foreign exchange markets can greatly affect the performances of the master fund and the underlying master funds.
Appreciation of USD and EUR versus other currencies reduces the effects of rising prices of the investment products denominated in other currencies and increases the effects of falling prices of the investment products denominated in other currencies.
On the other hand, depreciation of USD and EUR decreases the effect of falling prices in the investment products denominated in other currencies and increases the effects of the rising prices of the investment products denominated in other currencies.
The underlying master funds can invest in derivative products to hedge the foreign exchange risks.
But there is no guaranty that the hedges will be effective.
There is the possibility of negative effect on the performance of the underlying master funds due to management of foreign exchange risk.
Same can be said for the beneficiary securities and stock classes that are denominated in currencies different from the base currencies of the sub-funds, sub-funds of the master fund and the underlying master funds.

Liquidity of the investmentsIn some markets daily price fluctuations are limited by restrictions such as “the daily price change restriction” and “the daily restrictions”.
Therefore trades at prices over these limits cannot be executed.
When this happens trades cannot be executed unless there is an agreement with brokers to execute trades at the prices within these limits.
There were cases in the past where no trades were executed for consecutive days due to over limit price movements.
Same conditions can prevent the underlying master funds and the master fund from closing the losing positions and causing large losses to the funds as the result.

Losses due to hedgesThe master fund and the underlying master funds can utilize financial products such as futures, options, interest rate swaps and cap and floors to hedge the portfolios from the movements in foreign exchange markets, stock markets and interest rate markets and others.
These hedges can stem the decrease in position values but cannot avoid the losses that have already occurred.
But these losses can be offset by other positions that are made to profit from the decrease in values of this particular position.
And these hedges limit the profits arising from the increase in portfolio position values.
And the master fund and the underlying master funds may not be able to make hedges that are at good enough prices to hedge the decreases in the portfolio positions.
In addition, the funds may not be able to hedge a particular risk at all.
Master Fund Investment Advisory Company has no obligations to make hedges to the portfolio positions and it can also refrain from making hedges.
The success of the hedge operations depends on the ability of Master Fund Investment Advisory Company to forecast the movements of foreign exchange, interest rates and stock markets accurately and to forecast the occurrences and timings of other influential events.
When Master Fund Investment Advisory makes inaccurate judgements, their negative effects on performances can be larger for the master fund and the underlying master funds.
Also the correlation between the portfolio position values and hedge products may vary.
In addition, Master Fund Investment Advisory Company may not want perfect correlation between the portfolio assets and hedge products for various reasons.
Imperfect correlation can impede profits from hedges or increase the risks to the master fund or the underlying master funds.
It requires skills within the master fund or the underlying master funds in selecting portfolios to make hedges and risk control trades successful.

LeverageInvestment activities of the underlying master funds include high leverage investments.
Leverages entail high risk but they provide opportunities for higher total returns.
The underlying master funds try to manage the leverage risks by reserving capital and diversification of investments.
The short term cash borrowings for margins by the underlying master funds contribute to higher risks for the master fund.
For example if the collateral securities offered to brokers lost their values or the brokers decided to raise the margin requirements, the underlying master fund may need to increase the cash collateral by selling some of its securities holdings.
If the downturn in asset prices was too fast and the liquidations of the securities holdings were too late, the positions could be liquidated causing considerable losses.

Counterparty RiskSome of the markets that the underlying master funds and the master fund trade in are OTC markets or the inter-dealers markets.
The participants of these markets are unlike the members of the exchange markets and are outside the supervisions of the regulators.
The underlying master funds and the master fund bear the risk of the trades not settling due to the counterparty credit problems or the market liquidity problems. As the result, the underlying master funds or the master fund may incur losses.
In addition, the underlying master funds and the master fund may face difficult market conditions caused by the trade defaults.
These counterparty risks may arise for various reasons over time but these risks increase by limiting the counterparty to a single broker or a small group of brokers.
But the underlying master funds and the master fund are not prohibited from dealing with particular brokers or concentrating the trades to a particular counterparty.
And the underlying master funds and the master fund do not have the function of assessing the credit conditions of the counterparties.
The losses incurred by the underlying master funds and the master fund may increase due to concentration of trades and the inability of the funds to assess the financial strength of the counterparties and lack of regulated markets to promote trade settlements.

※Important matters Past investment performance does not indicate or guaranty the investment performance of the future.
The fund invests in volatile futures and securities markets.
As for classes other than Yen Hedge Class, the NAV can fluctuate due to foreign exchange risks and price risks of gold and silver.
Therefore the preservation of the investment capital is not guaranteed.
All profit and loss from the fund investment attribute to the investor.
Please read prospectus carefully and judge for yourself when applying.

Type I and Type II Financial Instruments Business (Director-General of the Kanto Finance Bureau (FIEA) Article 236),Commodity Futures Trading Dealers (OTC commodity derivative trading)
Member Associations:Japan Securities Dealers Association,Financial Futures Association of the Japan,Type Ⅱ Financial Instruments Firms Association,Japan Commodity Futures Association,Japan Investor Protection Fund
Japan Cryptocurrency Business Association Associate member Membership number 2024

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