Guidelines on Accountability of Investment Trust Management Company whenSoliciting for Switchover of Beneficiary Certificates, etc.
Established on January 25, 2002
Revised on September 21, 2007
Revised on February 17, 2011
Revised on January 13, 2022

1. Purpose of the Guidelines
The obligation to explain concerned with switchover solicitation of beneficiary certificates, etc. prescribed inArticle 123, Paragraph 1, Item 9 of the Cabinet Office Ordinance on Financial Instruments Business, etc.
(Cabinet Office Ordinance No. 52 of 2007; hereinafter referred to as the "Cabinet Office Ordinance") andArticle 5, Item 13 of the Regulations for Direct Offering, etc. of Beneficiary Certificates, etc. is one of therequirements for soliciting a switchover of beneficiary certificates, etc. which often have long-term
investment horizon and a variety of product attributes, in order to prevent such a switchover from being
conducted without sufficient explanation, and to explain Significant Matters for determining whether suchswitchover would meet customer's needs or benefit customer's interests.
The purpose of the Guidelines is to facilitate the compliance of the Regulations by presenting the contentsof the explanation concerning the accountability required for the act of soliciting a switchover of beneficiary
certificates, etc. as well as giving guidance for the establishment of an internal control environment in orderto perform such accountability.

2. Solicitations, etc. for Switchover subject to the Regulations(1) Solicitation activity for switchover subject to the Regulations
The act of soliciting for a switchover prescribed in the Regulations means an act of soliciting a customer tocancel a contract of the beneficiary certificates currently held by such customer, or redeem or sell such
beneficiary certificates (hereinafter simply referred to as “cancellation”) and to participate in an offeringof other beneficiary certificates at the same time. Therefore, the Regulations are applicable to the act ofsoliciting for “cancellation” and “offering” as a set (switchover).
The relevant act shall not be determined based on whether or not the actual cancellation and conclusionof another contact as to the relevant offering have been made at the same time.
(Note) The following cases are considered to be switchover solicitation.
(i) Instance where while encouraging a customer to invest fresh funds in beneficiary certificates, etc. atfirst, the sales representative eventually recommends such customer to purchase the such beneficiary
certificates, etc. using the funds obtained from selling other beneficiary certificates, etc. currently
held by such customer;(ii) Instance where a sales representative solicits a customer for sale of an investment product andpurchase of another investment product as a package through telephone calls, visits, etc., and actual
purchase and sale are conducted via the Internet;－1－(iii) instance where a sales representative solicits a customer for sale and purchase of investment
products as a package and funds for the purchase of the relevant beneficiary certificates, etc. aretransferred from an investment trust such as MRF or MMF, which are not subject to the Regulations;(iv) instance where a sales representative solicits a customer for sale and purchase of beneficiary
certificates, etc. as a package during the consultation that such customer has asked for on his/her asset
management; and(v) instance where a sales representative solicits a customer for sale and purchase of investment
products as a package and funds for the purchase of the relevant beneficiary certificates, etc. areappropriated by the sale of other product(s) (or by a separate fund) (or instance where the saleproceeds are once returned to the customer before being deposited again as the purchase payment).
The following examples are not considered to fall under the category of switchover solicitation. However,it should be noted that the following examples could also be regarded as switchover solicitation dependingon the actual circumstances of solicitation to a customer.
(i) Instance where a customer has invested a fresh fund in beneficiary certificates, etc. recommended bya sales representative, and after the conclusion of such transaction, the sales representative
recommends a sale of other beneficiary certificates, etc. when consulted by the customer about
his/her needs for new funds;(ii) instance where a sales representative recommends to a customer to invest fresh funds in beneficiary
certificates, etc., and such customer concludes the purchase contract thereof and sells anotherinvestment trust to fund the purchase of such investment recommended at the customer’s own
discretion (without any solicitation for sale from the sales representative) prior to the delivery date(payment date); and(iii) Instance where it is evident that there is no solicitation from a sales representative and a customer
gives instruction to sell the designated investment trust and purchase another trust.
(2) Beneficiary certificates, etc. subject to Regulations
Beneficiary certificates, etc. subject to the Regulations are other than those set forth in Article 65, items(ii) (a) through (c) of the Cabinet Office Ordinance (e.g., MMF, MRF).

3. Contents, etc. of Explanation
In soliciting switchover, it is necessary to explain Significant Matters which may affect customers'
investment decisions, with the following considerations in mind:- In case of soliciting switchover, considering in advance the respective product attributes of thebeneficiary certificates, etc. to be sold and the beneficiary certificates, etc. to be acquired, the customer'sneeds, benefits to be gained and other factors in connection with such switchover, comprehensively
examine whether such switchover will be suitable for the customer's investment policy, what kind ofrisk and expenses will be incurred to the customer, and whether the customer can correctly understandthe purpose of such switchover among other matters.
- When, as a result of the examination described above, it is judged that it is reasonable to make switchover－2－solicitation to the customer, in addition to the explanation in the prospectus of the beneficiary
certificates, etc. to be acquired, explanation shall also be given on matters necessary for the customer todetermine whether such switchover is reasonable in light of his/her own investment policy.
- The content of explanation as well as the materials and time required for such explanation at the time ofsoliciting switchover vary depending on the attributes and investment experience of the customer inaddition to the nature of the beneficiary certificates, etc. concerned. Therefore, such explanation shallbe made in a manner deemed appropriate in accordance with the degree of understanding of thecustomer to be solicited.

4. Establishment of Internal Control System
Acquisition and redemption of beneficiary certificates, etc. by customers are conducted on a daily basis, and
it is assumed that each company is conducting necessary monitoring. Monitoring shall be conducted inparticular with regard to solicitation for switchover in order to assure that explanation to customers is being
appropriately performed according to the purport of laws and regulations, Comprehensive Guidelines forSupervision and the voluntary regulations of the Association.
Each member company shall properly perform its obligation of explanation in light of its business
operations and solicitation methods (branch counter, customer visit, telephone, etc.), and shall establish asystem to check whether such solicitation meets customer's needs and whether such solicitation forswitchover is conducted for customer's benefit not only by paying attention to individual solicitation
activities and transactions but also by performing broader examination of such solicitations and transactions.

5. Others(1) Development of overall internal control system in relation to beneficiary certificates, etc.
In view of the fact that there are a large number of beneficiary certificates, etc. designed on long-termownership and in order to ensure thoroughly customer-oriented marketing practices, it is desirable todevelop an overall internal control system as regards to any offering of beneficiary certificates, etc. inaddition to such internal control system concerned with accountability according to the Guidelines. As
specific examples, the following can be considered.
(i) Establishment of internal rules, etc.
[Content] Regarding switchover between beneficiary certificates where their basic investment policy andinvestment assets are similar or any repeated switchovers within a short period of time regardlessof their respective assets to be invested, internal rules and other relevant matters shall beestablished to ensure thoroughly customer-oriented marketing practices, taking into fullconsideration economic rationality concerning such switchover as well as customers’ needs andinterests.
(ii) Implementation of monitoring[Content] In order to ensure thoroughly customer-oriented marketing practices based on their needs andinterests as well as economic rationality and suitability to the customer concerning suchswitchover, the member company shall conduct monitoring especially for switchovers between the－3－

funds of similar characteristics or repeated switchovers in a short period of time.

(2) Relationship with other Laws, Regulations, etc.
(i) Explanation using prospectus
In general, when soliciting customers to subscribe for beneficiary certificates, etc., it is necessary toexplain matters according to the contents of prospectus other than the “Significant Matters” as regards
to switchover solicitation.
(ii) Relationship to principle of suitability
From the viewpoint that the explanation of “Significant Matters” as regards to switchover solicitation
shall be made in consideration of the principle of suitability for investment, it is necessary to
sufficiently understand investment experience, investment purpose, financial resources, etc.
concerned with the relevant customer and to conduct solicitation for investments suited to suchcustomer’s intention and actual circumstances.
In addition, when the Transaction Commencement Criteria is established, it is necessary to confirm
that such Criteria is met before conducting any solicitation activities.
End.

Supplementary ProvisionThis amendment will come into effect on September 30, 2007.

Supplementary ProvisionThis amendment shall come into effect on April 1, 2011.

Supplementary ProvisionThis amendment shall come into effect on January 13, 2022.
* The amended provisions are as follows:
Revisions to Article 1.
Deletion of Article 2.
Addition of (Note) to Article 2 (Formerly Article 3).
Revisions to Articles 3, 4 and 5 (Formerly Articles 4, 5 and 6)
Deletion of "Attachment" and "Reference".

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