NEXT FUNDS Nikkei 225 High Dividend Stock 50 Index-linked Exchange Traded Fund is a very popular financial instrument for beginner investors. The index is a collection of stocks of companies that pay high dividends in the Japanese stock market, making it an attractive option for investors seeking stable income. This paper summarizes the features of this ETF.
Fund type：Additional Investment Trust/Japan Equity/ETF/Index Type
Index to be linked: Nikkei Stock Average High Dividend 50 Index
Fund Objective and Features
Objective: The Fund aims to achieve investment results that are linked to the Nikkei Stock Average High Dividend 50 Index. Specifically, the Fund aims to have its NAV fluctuate in line with the fluctuation rate of the underlying index.
Characteristics:
Main investment targets: Stocks listed on stock exchanges in Japan that are included in the Nikkei Stock Average High Dividend Stock 50 Index or stocks that have been decided to be included in the index.
Investment Policy:
The Fund will invest only in stocks that are included in the Nikkei Stock Average High Dividend Stock 50 Index and stocks that have been decided to be included in the index.
When the index changes or the stocks change, the composition of the trust assets will be adjusted to maintain the index linkage.
May use complementary futures contracts, thereby enhancing the linkage of investment results.
Investment Restrictions:
There are no restrictions on the percentage of investments in equities.
Investment in foreign currency denominated assets shall not exceed 20% of the total net assets of the trust.
Use of derivatives is limited in accordance with the investment policy.
Fund Performance
Base value (as of November 1, 2024): 2,221 yen per unit
Total net assets (as of November 1, 2024): 284.2 billion yen
Major investment issues (Top 10) (as of April 30, 2024):
Kawasaki Kisen Kaisha (Shipping industry) – 5.0
Mitsui O.S.K. Lines (Shipping industry) – 3.7
Mitsubishi UFJ Financial Group (Banking) – 3.5
Japan Tobacco Inc.
INPEX (Mining) – 3.3
Mitsubishi Corporation (Wholesale) – 3.3
Sumitomo Mitsui Financial Group (Banking) – 3.3
Mizuho Financial Group (Banking) – 3.2
SOMPO Holdings (Insurance) – 3.1
Nippon Steel Corporation (Steel) – 3.1
Investment performance:
Distribution: 38 yen/unit for distribution in October 2024.
Risks and Management Structure
Main Risks:
Stock Price Fluctuation Risk: NAV may rise or fall due to stock market fluctuations.
Liquidity Risk: Risk that assets may become illiquid and difficult to redeem in the event of large volume cancellations.
Credit Risk: Risk of loss due to deterioration in the financial condition of the investee company.
Derivative Risk: Risk of fluctuation in profit/loss due to price changes in futures transactions.
Risk Management System:
Performance Review: Periodic analysis and evaluation.
Management of investment risk: A risk management committee is established to constantly monitor asset allocation, credit risk, and liquidity risk.
Procedures and Fees (as of April 30, 2024)
Commission at the time of acquisition: Amount determined by the distributor in its sole discretion.
Commission at the time of exchange: amount determined by the distributor in its sole discretion
Trust fee: 0.30% per annum (0.28% per annum excluding tax)
Other expenses:
Trademark fee: 0.055% per year (0.05% per year excluding tax)
Listing fees: 0.00825% (0.0075% excluding tax) at the time of additional listing and as an annual listing fee, respectively
Taxes:
Distribution: 20.315% of total income tax and inhabitant tax (taxed as dividend income)
Gain on sale: 20.315% of total income tax and inhabitant tax (taxed as transfer income)
Use of NISA: By using the tax-exempt “NISA” system, dividend income and transfer income up to a certain amount are exempt from taxation.
Additional Information
Trust period: Indefinite
Early redemption: Redemption occurs when the number of beneficial interest units falls below 600,000 units for 20 consecutive business days, or when delisting or the subject index is abolished.
Re-split of beneficial interests: On January 19, 2024, beneficial interests are re-split at a ratio of 1 to 30. As a result, the number of beneficial interest units will increase significantly.
NEXT FUNDS Nikkei Stock Average High Dividend 50 Index-linked Exchange Traded Fund is an ETF that focuses on high dividend stocks in Japan and appears to be an option for investors seeking stable dividend income. It aims to track the Nikkei Stock Average High Dividend 50 Index and manages risk along with it. However, since there are market risks such as stock price fluctuation risk and liquidity risk, investors need to do their own research, fully understand, and make careful decisions when investing.
