Company Profile Mitsubishi UFJ Trust and Banking was established in 1927, and has been in business for
approximately 100 years. It was reorganized in October 2005 through the merger of Mitsubishi
Trust and Banking and UFJ Trust Bank in harmony with the merger of their parent companies.
Mitsubishi UFJ Trust and Banking is a wholly owned subsidiary of MUFG and a core MUFG
company. With total assets of 38.7 trillion yen as of September 30, 2018, it is one of Japan's
largest trust banks.
Besides operations in Japan, Mitsubishi UFJ Trust and Banking serves customers through a
global business consisting of a worldwide network of branches and subsidiaries in Asia, Europe
and the United States. As Japan's major trust bank, Mitsubishi UFJ Trust and Banking offers
high-quality and comprehensive financial services for customers, which include various
commercial banking services as well as asset management and administration, real estate, and
stock transfer agency services.
1927 Mitsubishi Trust and Banking established
1959 UFJ Trust Bank (formerly Toyo Trust and Banking) established
1962 Entered pension fund management business
2005 Mitsubishi Trust and Banking merged with UFJ Trust Bank to become “Mitsubishi UFJ
Trust and Banking”
Description of Advisory Services
We are one of Japan's leading asset managers. We first started managing corporate pension
fund assets in 1962. We now have around 250 investment professionals and approximately 396
billion US dollars (as of March2019) in assets under management, managing funds for corporate
pension funds, public pension funds, financial institutions and corporates. Our resources allow
us to offer a wide range of investment strategies across asset classes on both a pooled and
segregated basis, and provide the solution that best fits client requirements.
In the investment trust business, Mitsubishi UFJ Kokusai Asset Management Co., Ltd. meets a
wide range of client asset management needs through an extensive product portfolio and a
strong sales network that includes the MUFG group.
In the corporate pension field, we have a high degree of specialization and expertise developed
over many years. Based on these strengths, we offer comprehensive corporate pension services,
ranging from corporate pension design to asset management and administration. These services
are offered not only to our own customers, but also to customers of MUFG Bank (the Bank),
regional banks and other client institutions.
Availability of Customized Services to Individual Clients
In North America, Mitsubishi UFJ Trust and Banking provides discretionary investment advisory
service to a single U.S. registered investment advisor (RIA), mainly through separately managed
accounts to be set up by the RIA. The sole client may impose reasonable restrictions on
investing in certain securities or types of securities, depending on their investment objectives,
risk tolerance and other various suitability requirements. These restrictions must be in writing
and must accompany the Discretionary Investment Agreement.
Asset Under Management As of the end of March 2019, our assets under management are 396 billion US dollars.
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Investment management fee arrangements, which includes portfolio management, execution,
back office operations, performance analysis, reporting and client services, are generally based
on a percentage of the market value of assets under management although performance-based
fee, fixed-fee or other alternative fee structures may apply. The specific fee arrangements with
respect to any given account are negotiable on a client-by-client basis. When determining
appropriate fees, the firm may take into account, among other things, the account’s investment
strategy, and the level of servicing required by the account. The allocation of these expenses is
made in accordance with the agreement in place between Mitsubishi UFJ Trust and Banking and
the client.
Mitsubishi UFJ Trust and Banking does not select account custodians on behalf of separate
account clients. Client is responsible for selecting a custodian, charges imposed by custodians
such as custodial fees and out of pocket expense fees.
Depending on the actual content of discretionary investment contracts with investors, Mitsubishi
UFJ Trust and Banking may sometimes purchase investment trust products or conduct derivative
transactions based on discretionary investment considerations. In such cases, there may be
variable additional costs incurred, including investment trust management fees and derivative
transaction execution fees. In such cases, total investment management costs may also vary.
Other expenses such as brokerage fees, custodial fees for foreign currency denominated
securities and taxes may also be incurred to separate account clients. Amount of tax may
change depending on client type. Audit costs and trust-related expenses may also be incurred as
a result of investment trust purchases based on discretionary investment considerations.
Amounts may vary according to investment management status, and cannot be stated in
advance.
Investment management fees are charged to a single U.S. RIA in accordance with client
agreements.
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As mentioned in the Item 5, Mitsubishi UFJ Trust and Banking may apply upon negotiation
performance-based fees to clients based on agreements.
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In North America, Mitsubishi UFJ Trust and Banking provides discretionary investment advisory
service to sole U.S. registered investment advisor (RIA), mainly through separately managed
accounts to be set up by the RIA. Mitsubishi UFJ Trust and Banking has in general a minimum
initial amount for separately managed accounts of $50 million and we may waive conditions
subject to the situation. In Japan, our investment trust business offers a wide range of products
that enables us to meet the diversified needs of our customers through a broad array of
distribution channels.
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STRATEGIES Mitsubishi UFJ Trust and Banking offers one of the industry's most extensive product lineups,
firmly grounded in product development that leverages our unique competitive advantages. We
constantly strive to upgrade and maintain the quality of our product lineup to ensure that we
provide a portfolio that addresses the varied investment targets and objectives of each client, as
well as the changing investment environment.
With one of Japan's leading investment portfolios and an outstanding team of investment
professionals, we offer investment products across an expanded range of asset classes to meet
the diverse needs of our clientele. Furthermore, we provide optimal solutions tailored to the
diversifying investment priorities of our clients by taking full advantage of the breadth and depth
of our product portfolio as well as our extensive asset management expertise.
INVESTMENT PRINCIPLES (1) Client Investment Objective
We seek to be the client's strategic partner. Our investment objective is to achieve the best
risk-adjusted returns possible taking into consideration the nature of the client's funds.
(2) Research and Analysis
Inefficiencies exist in financial markets. In response, we aim to add value through both qualitative
and quantitative proprietary research and analysis.
(3) Investment Process
Our investment process is disciplined and structured to ensure consistency, with investment
teams following a "Plan-Do-Check-Act" cycle.
(4) Risk Management
We carry out rigorous risk management to ensure we take intended risk but avoid unintended
risk, and manage portfolios as efficiently as possible.
(5) Proper Disclosure of Information
Disclosure of information is absolutely crucial to maintaining client trust in the investment
process. We strive to increase our clients' understanding of our investment policies by reporting
on investment performance regularly and whenever necessary.
INVESTMENT TECHNOLOGY We constantly look to stay ahead of market developments and keep our investment strategies up
to date. Here we are supported by our subsidiary quantitative investment research institute,
Mitsubishi UFJ Trust Investment Technology Institute Co., Ltd. established in 1988.
Mitsubishi UFJ Trust Investment Technology Institute Co., Ltd. is Japan's first private-sector
investment-theory research institute specializing in financial engineering. The institute's basic
philosophy is to "harmonize and fuse theoretical and applied knowledge in financial engineering."
Guided by this philosophy, Mitsubishi UFJ Trust Investment Technology Institute Co., Ltd. applies
cutting-edge investment theory, mathematics, statistics, operations research, corporate finance
and other branches of knowledge to build the asset management, risk management and other
models used by the Trust Bank.
Mitsubishi UFJ Trust Investment Technology Institute Co., Ltd. constantly strives to conduct
leading-edge theoretical and model research and development. To this end, an outstanding
research environment has been developed, including a staff of numerous academic experts
invited as guest research advisors.
INVESTMENT PROFESSIONALS We have invested significant resources in our investment capabilities. Our position in the
industry attracts high caliber staff and we have around 250 investment professionals with an
average of over 10 years of investment experience.
At Mitsubishi UFJ Trust and Banking, we have divisions engaged in the development and
management of investment products and a division involved in the development and
management of tie-up products with third parties. Each of these divisions strives to upgrade and
expand the investment product lineup and enhance quality, by honing their specialized expertise.
We also have an excellent corporate research organization in the field of active investment
operations. We continue working to generate stable investment returns in excess of the cost of
capital.
As with any investment, there can never be any guarantee that the investment objectives
targeted for a given portfolio will be achieved. Clients should be aware of and prepared for the
possibility that, due to market movements and or other factors, their investment in securities may
expose them to the risk of losses. Mitsubishi UFJ Trust and Banking has put in place a
comprehensive risk management framework to help monitor, measure and respond to this risk,
specifically the exposure to (1) Market risk, (2) Credit risk (issuer), (3) Counterparty risk (and
Operational risk), (4) Liquidity risk, (5) External Manager risk and (6) Market Capitalization risk.
(1) Market risk: Market risks are designated by the investment strategies of the fund, or based
on client mandates and specific requests. Monitoring by the Trust Assets Risk Management
Division is made through quantitative criteria such as asset allocation, tracking error,
duration of securities, and other metrics as defined.
(2) Credit risk: Credit analysts in the Index Strategy Team monitor credit risk from a qualitative
view for all of the investment universe stocks in terms of solvency, financing, and/or
business environment, and sets out a list of stocks called “Default Risk Stocks” which are in
general not permitted to hold in our managed portfolios by internal rules. It may
exceptionally be held by specific reasons such as client guideline requirements, but it must
be preapproved by the General Manager of the corresponding investment team. This is
checked by the Trust Assets Risk Management Division.
(3) Counterparty / Operational risk: Counterparty risks are monitored from both quantitative and
qualitative approach. Mitsubishi UFJ Trust and Banking maintains internal rules and
procedures to select and monitor third party broker approval list with which Trust Assets
Management Business Unit is allowed to deal. Broker selection criteria includes quantitative
terms such as capital ratio, credit rating and regulatory history tests and quality terms such
as execution ability, level of research papers and operational stability. Broker evaluations
are carried out semi-annually, separately for passive and active strategies, and in case of
regulatory violations of brokers announced Legal & Compliance Division may ban the use of
such broker until further remedial measures are approved by the authorities. In case of
counterparty default or potential default, Mitsubishi UFJ Trust and Banking sets
organizational structure to check and monitor counterparty risks from all business units to
make timely actions to mitigate risks to client accounts. Regarding with an Operational
risks, we have an Operational Risk Management Policy for managing operational risk. The
policy sets forth the core principals regarding operational risk management, including the
risk of loss caused by either internal control issues such as misconduct, system failures or
external factors such as natural disasters and terrorist activity, and the risk monitoring
system and process. There are two divisions that are fully engaged in the process of
operational risk management; the Corporate Risk Management Division and the Internal
Audit Division. The Board of Directors receives regular reports on the status of our business
from an operational risk management perspective. In addition to the firm-wide operational
risk management policy above, the Detailed Rules for Business Operations defines specific
operations in asset management business, such as procedures related to subscription and
redemption, securities transaction. The Rule includes trade error policy and states that the
Trust Risk Management Division shall interact with the Corporate Risk Management
Division, which is primary responsible for operational risk, to handle the error and prevent
the occurrence of trade errors and other operational accidents. Risk assessment by internal
audit for a division or a specific business is made once a year and AT-C320 internal control
audits are carried out every year by Ernst & Young ShinNihon.
(4) Liquidity risk; Monitoring by the Trust Assets Risk Management Division is made through
qualitative criteria, especially preparing for the systematic malfunction of the trade platforms
and other specific cases where the fund may face difficulty to liquidate the position when
needed. Based on market liquidity monitoring and market impact, we basically refrain from
concentrated investments and investments into low liquidity names.
(5) External Manager risk: The Trust Assets Risk Management Division monitors and evaluates
the external fund based on our internal rule from both quantitative and qualitative
perspective and report when breaching the investment risk management items.
(6) Market Capitalization risk: Depending on the client account, a considerable component of
our strategy might center on investments in small– and micro-cap companies. The stocks of
small- and micro-cap companies may fluctuate more widely in price than the market as a
whole, may be difficult to sell when the economy is not robust or during market downturns,
and may be more affected than other types of stocks by the underperformance of a sector or
during market downturns. In addition, compared to larger companies, small- and micro-cap
companies may depend on a more limited management group, may have a shorter history
of operations, and may have limited product lines, markets or financial resources. There
may also be less trading in small- or micro-cap stocks, which means that buy and sell
transactions in those stocks could have a larger impact on a stock’s price than is the case
with the stocks of larger companies.
Clients should be aware that the above list is not intended to be an exhaustive inventory of all the
risks to which they may be exposed. It is not possible to identify all of the risks associated with
investing and the particular risks applicable to a client account will depend on the nature of the
account, its investment strategy or strategies and the types of securities held. Not all of the
risks listed above will pertain to every account as certain risks may only apply to certain
strategies.
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Mitsubishi UFJ Trust and Banking has not been involved in legal or disciplinary events that would
be material to a client’s or prospective client’s evaluation of Mitsubishi UFJ Trust and Banking’s
advisory business or the integrity of its management.
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As noted under item 12: "Brokerage Practices", Mitsubishi UFJ Trust and Banking may, with your
prior consent and in accordance with applicable law, execute client transactions through affiliated
brokers.
Depending on the type of security transacted, Mitsubishi UFJ Trust and Banking may specifically
use its affiliate Mitsubishi UFJ Securities Holdings which our parent MUFG has 100% ownership
stake.
Mitsubishi UFJ Trust and Banking has no existing arrangements with Mitsubishi UFJ Securities
Holdings to provide broker-dealer or advisory services to Mitsubishi UFJ Trust and Banking or
any of its clients.
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Personal Trading Mitsubishi UFJ Trust and Banking has established its Code of Ethics, as largely summarized
below, which reflects fiduciary obligations and requires compliance with regulations. It is our
policy to timely provide a copy of the code of ethics to all clients and prospective clients upon
request.
Anti-Fraud Provisions The anti-fraud provisions of the Investment Advisers Act of 1940 Advisers Act and federal and
state rules and regulations make it unlawful for an investment adviser to directly or indirectly
“employ any device, scheme or artifice to defraud a client or a prospective client” or to “engage in
any transaction, practice, or course of business which operates as a fraud or deceit upon any
client or prospective client.” Mitsubishi UFJ Trust and Banking conducts business with the
highest level of ethical standards and to comply with all applicable federal and state securities
laws at all times.
Mitsubishi UFJ Trust and Banking takes seriously its responsibility to comply with all applicable
federal and state securities laws. In furtherance of the principles cited in the Code, management
has established guidelines specifying that Supervised Persons are not permitted, in connection
with the purchase or sale, directly or indirectly, of a security held or to be acquired by a client:
(1) To defraud such client in any manner.
(2) To mislead such client, including by making a statement that omits material facts.
(3) To engage in any manipulative practice with respect to securities, including price
manipulation.
Conflict of interests Mitsubishi UFJ Trust and Banking conduct business in an honest, ethical, and fair manner. A
conflict of interest occurs when a Supervised Person’s private interest interferes with the
interests of or the service to Mitsubishi UFJ Trust and Banking or any of its clients. The Firm has
implemented policies and procedures to address potential and actual conflicts of interest.
Mitsubishi UFJ Trust and Banking do not engage in any conduct or act, directly, indirectly or
through any other person that would be unlawful to do under the provisions of any rules and
regulations.
Mitsubishi UFJ Trust and Banking do not engage principal trades with client accounts, unless
Mitsubishi UFJ Trust and Banking receives client consent prior to the completion (upon
settlement) of each principal transaction, in accordance with Section 206(3) of the Advisers Act.
Mitsubishi UFJ Trust and Banking offers comprehensive financial services for customers, which
include banking services as well as asset management. Mitsubishi UFJ Trust and Banking’s
Banking Division and Trust Division are strictly separated and appropriate wall in place between
the two businesses to avoid conflicts.
Mitsubishi UFJ Trust and Banking, with the exception of pilot funds, does not engage in
proprietary trading. Mitsubishi UFJ Trust and Banking take steps to ensure that if pilot fund
trades are aggregated with client orders, procedures are implemented to help make certain
ensure that subsequent trade allocations are equitable and in accordance with the relative
regulatory guidelines.
Mitsubishi UFJ Trust and Banking may engage in cross trades only when the closing price is
available. A cross trade is when a transaction occurs between two different clients, both of
which are managed by Mitsubishi UFJ Trust and Banking. In such case, the cross trade will
be at an independently determined market price, without incurring brokerage commissions.
Customary transfer fees may be incurred with respect to cross trades, but no such fees will
be paid to Mitsubishi UFJ Trust and Banking.
Mitsubishi UFJ Trust and Banking will not engage in agency cross transactions that involve a
broker/dealer and where Mitsubishi UFJ Trust and Banking has discretion over only one of
the client accounts involved in the transaction and it, or an affiliated broker/dealer, executes
the transaction for both sides in a brokerage capacity without obtaining a client’s consent
before each transaction, or the following conditions are met:
(1) The client has executed a written blanket consent after receiving full disclosure of the
conflicts involved, which must be renewed each year.
(2) Mitsubishi UFJ Trust and Banking provides a written confirmation to the client before the
completion of each transaction providing, among other things, the source and amount of
any remuneration it received.
(3) The disclosure and confirmation each clearly disclose that consent may be revoked at any
time.
Mitsubishi UFJ Trust and Banking seeks to allocate investment opportunities among eligible
clients promptly and on a fair and equitable basis. In some cases, an investment opportunity
may be limited and Mitsubishi UFJ Trust and Banking will allocate the trade result among its
eligible client accounts in accordance with its allocation policies and procedures, which seek to
make allocations in a timely, fair and equitable manner in accordance with regulation.
Unethical Conduct Any person engaging in an unethical business practice is subject to having his/her license
denied, suspended, or revoked and employment terminated. The following activities are
examples of unethical business practices:
(1) Forgery
(2) Embezzlement
(3) Theft
(4) Exploitation
(5) Non-disclosure
(6) Incomplete disclosure or misstatement of material facts
(7) Manipulative or deceptive practices
(8) Aiding or abetting any unethical practices
Mitsubishi UFJ Trust and Banking has established processes allowing it to monitor, discourage
and or prevent its Supervised Persons from engaging in any dishonest or unethical conduct
including, but not limited to:
(1) Engaging in any act, practice, or course of business that is fraudulent, deceptive, or
manipulative contrary to any rules or regulations established by all governing regulatory
bodies.
(2) Recommending to a client the purchase, sale, or exchange of any security without
reasonable grounds for believing that the recommendation is suitable for the client based on
the information furnished by the client after reasonable inquiry regarding the client’s age,
investment experience, time horizon, liquidity, risk tolerance, financial history, investment
objectives, financial situation and needs, and other information that is known by the
investment adviser.
(3) Recommending or implementing trades in a client’s account that are excessive in size or
frequency with respect to the client’s financial resources, investment objectives, and the
character of the account.
(4) Borrowing money or securities from or loaning money or securities to a client.
(5) Providing advice and guaranteeing the client that a gain or no loss will occur as a result of
the advice.
(6) Publishing, circulating, or distributing any advertisement that has not been approved and
that does not comply with the proper regulatory requirements.
(7) Disclosing any confidential information of any client, unless required by law to do so or
having received written authorization from the client to do so.
(8) Failing to provide the proper disclosure documents (Form ADV Part 2A, 2A Appendix 1 and
Part 2B) prior to or at the time of executing a client agreement for advisory services.
(9) Creating any condition, stipulation, or provision as part of any advisory client agreement that
limits or attempts to limit the liability of the Firm or any of its Supervised Persons for willful
misconduct or gross negligence.
Insider Trading Material non-public information (“MNPI”) is information which investors would consider important
in making a decision and which has not been effectively communicated to the market place.
Improper use of MNPI, including use of insider information, when conducting any securities
transaction is a serious violation of securities laws and will not be tolerated.
Any person having access to MNPI violate anti-fraud provisions of the federal securities laws by
effecting transactions or communicating such information for the purpose of effecting
transactions in such securities without public disclosure of the information. The Firm is aware
that employees may come into possession of MNPI from time to time. Although possession of
MNPI, in and of itself, is not a breach of any regulatory requirements, the Firm take seriously our
obligation to safeguard access to MNPI, identify instances when employees obtain MNPI and
prevent its unlawful use in the execution of trades.
Furthermore, the firm has implemented measures to assess the implications of an employee’s
receipt of MNPI, to include analysis of whether such information might necessitate prohibiting
any further trading in a related security even if the decision to trade in the security was reached
prior to receiving the MNPI or the MNPI would not have led to a decision to trade.
Supervised Persons may not purchase or sell a security, either personally or on behalf of others,
while in the possession of MNPI. Supervised Persons are also forbidden to communicate MNPI
to others in violation of the law.
Personal Securities Transactions Mitsubishi UFJ Trust and Banking prohibits personal trading by all personnel, in principle.
Individual exceptions require the approval of the respective division General Manager, who
ensures that any exceptions do not violate restrictions, guidelines, and prohibitions discussed in
this Code of Ethics and/or in firm policy. If an exception is granted, actual trading results are
reported to the division General Manager, and monitored by the Compliance and Legal Division
for compliance with internal policy.
Reporting Requirements Mitsubishi UFJ Trust and Banking requires all personal securities transactions and holdings
by Access Persons and their immediate families to be disclosed and reported. Access
persons must report trades implemented for a personal account, an account of any
household family member (immediate family members residing in the same household) or
any account for which the access person acts as a trustee. Personal securities transactions
that need to be reported include stocks, bonds, limited partnerships, options, and other
general securities.
Transactions involving any of the following do not need to be included on
the report:
(1) Open-end mutual fund (unless the adviser or a control affiliate acts as the investment
adviser or principal underwriter for the fund)
(2) Money market instruments
(3) Bankers’ acceptances
(4) Bank CDs
(5) Commercial paper and high quality short-term debt instruments
(6) Variable annuities funded by insurance company separate accounts organized as unit
investment trusts. Such separate accounts typically are divided into subaccounts,
each of which invests exclusively in shares of an underlying open-end fund.
(7) Government securities
(8) Unit Investment Trusts (UITs) (provided that the UIT is invested exclusively in
unaffiliated mutual funds)
Access persons must maintain as part of MUTB books and records their and other household
personal accounts trading in: stocks, bonds, limited partnerships, options, and other general
securities.
Access Persons will ensure that they submit to AMCCO copies of statements and
confirmations for all of individuals and related family members living with Access Persons.
Access Persons will make sure the Firm receives the statements no later than 30 days after
the end of the applicable calendar quarter. AMCCO monitors all statements and
confirmations received from access persons, and ensures that they are received in a timely
fashion, and do not reveal any improper trading activity. The firm requires attestation that
reported holdings/changes to holdings are also reflective of indirect holdings (i.e., accounts
held by Access Persons' spouses). Account statements serve as the annual holding report
required by the Code of Ethics rule under the US Advisers Act.
Gift and Entertainment Receiving or giving any gift of any amount from any person or entity that does business with or
on behalf of any client/investor is prohibited, except as otherwise permitted by Chief Compliance
Officer of this business.
For purposes of the following policies on receiving and sending gifts, a gift of nominal value is
defined as, any physical item, services, or event tickets. Any gifts given or received by
Mitsubishi UFJ Trust and Banking or any of its supervised persons are considered in aggregate
whether or not they were conferred by the same or different people at Mitsubishi UFJ Trust and
Banking or the other (recipient) firm or party.
For purposes of the Mitsubishi UFJ Trust and Banking’s policies regarding entertainment, an
entertainment event includes any conference, meal, or sponsored outing.
No Supervised Person or member of a Supervised Person’s immediate family may receive any
gift of any amount from any persons or entity including clients and their service providers,
vendors, and competitors.
No Supervised Person or member of a Supervised Person’s immediate family may send any gift
of any amount to any person or entity including clients and their service providers, vendors, and
competitors.
Supervised persons may invite clients to an event provided that the purpose of the meeting is to
discuss the Mitsubishi UFJ Trust and Banking’s business and the event has been approved by
Chief Compliance Officer of this business.
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In the ordinary course of business, Mitsubishi UFJ Trust and Banking receives proprietary
research services from its executing broker-dealers and considers the usefulness and amount of
the research as part of its broker-dealer semi-annual review process.
Such research services may include information on securities markets, the economic outlook,
pricing information and services, and other appropriate research products and services.
While our policy is to seek best execution, Mitsubishi UFJ Trust and Banking may occasionally
select a broker-dealer with relatively higher transaction costs than its competitors if Mitsubishi
UFJ Trust and Banking determine in good faith that the cost is reasonable when taking into
account evaluation factors in the Broker Selection Standard.
However, Mitsubishi UFJ Trust and Banking believes that we are able to negotiate costs on client
transactions that are competitive and consistent with our policy to seek best execution.
Mitsubishi UFJ Trust and Banking may execute transactions through affiliated broker-dealers to
the extent consistent with applicable law, the terms comprising client contracts, and its duty to
seek best execution. In all cases, Mitsubishi UFJ Trust and Banking may only place orders with
broker-dealers that are on the firm’s Approved Broker-Dealer List.
Research and Other Soft Dollar Benefits Mitsubishi UFJ Trust and Banking receives safe harbor soft-dollar services such as research and
administrative functions including portfolio pricing, account statement generation and fee
calculations, which are intended to support our firm in conducting business and in serving the
best interests of our clients. This is a conflict of interest because we may be incentivized to use
certain brokers in order to receive these safe harbor soft dollar services. In order to resolve this
conflict of interest, Mitsubishi UFJ Trust and Banking will fulfill its fiduciary duty by putting clients’
interests ahead of its own. Mitsubishi UFJ Trust and Banking’s selection of a particular broker in
supporting our clients’ trades is based on our clients’ interests in receiving best execution. Our
firm does not receive client brokerage commissions (or markups or markdowns) to obtain
research or other products or services. We do not receive soft dollars, products or services
acquired with client brokerage commissions.
Mitsubishi UFJ Trust and Banking considers the full range of services offered by the
broker/dealer, including quality of research information when making an initial selection of any
broker/dealer to execute client securities and periodically evaluates the brokers it uses, to
confirm that the services provided to Mitsubishi UFJ Trust and Banking sufficiently meet best
execution standards.
Brokerage for Client Referrals Mitsubishi UFJ Trust and Banking does not receive client referrals from broker-dealers for
brokerage services.
Directed Brokerage Mitsubishi UFJ Trust and Banking may accept instructions from clients with separately managed
accounts to execute transactions through specified broker-dealers in accordance with clients
request or the guidelines, provided that there shall be the approval by the director or executive
officer over such directed brokerage.
When so instructed, Mitsubishi UFJ Trust and Banking may have limited capability to negotiate
commissions, aggregate orders to receive volume discounts, select brokers to obtain best price
or best execution. In addition, Mitsubishi UFJ Trust and Banking may not be able to aggregate
orders for these transactions with orders for other client accounts.
As a general rule, we encourage each client to compare the possible costs or disadvantages of
directed brokerage against the value of the custodial or other services provided by the broker to
the client.
Trade Aggregation and Allocation When a trade is placed for more than one client account, Mitsubishi UFJ Trust and Banking can
aggregate orders to reduce transaction costs.
Each client account receives the same execution price when orders are aggregated.
When an aggregated order is partially filled, it is generally allocated among the client accounts
on a pro-rata basis in proportion to the intended pre-trade allocation.
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Account Review Process As mentioned in the Items 4 and 7, In North America, Mitsubishi UFJ Trust and Banking provide
discretionary investment advisory services to a single U.S. registered investment advisor (RIA),
mainly through Separately Managed Accounts to be set up by the RIA. Based on that,
investment strategies, risk characteristics and performance are set and reviewed regularly by
Mitsubishi UFJ Trust and Banking. Mitsubishi UFJ Trust and Banking’s portfolio managers then
review their SMAs on an ongoing basis to assess the appropriateness of client investments
relative to the investment strategy and in accordance with the client’s specific investment
objective, guidelines and restrictions for the account. The Master Trust Bank of Japan, Ltd.
routinely reviews account custodian reconciliations and Mitsubishi UFJ Trust and Banking
monitor and oversee The Master Trust Bank of Japan, Ltd.’s account review process based on
the agreement between Mitsubishi UFJ Trust and Banking and The Master Trust Bank of Japan,
Ltd..
Trade Errors It is Mitsubishi UFJ Trust and Banking’s policy to ensure trading errors are handled and corrected
in a timely manner in the best interests of the client affected by the error. All trade errors should
be corrected within a reasonable period of time following discovery of the error. Mitsubishi UFJ
Trust and Banking do not use commissions from client accounts to correct trade errors.
Reports to Clients Mitsubishi UFJ Trust and Banking issues periodic reports to its direct client, U.S. RIA, which
includes transaction summaries, portfolio valuation, and performance data. Frequency and time
horizon of submission is subject to a client agreement.
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Mitsubishi UFJ Trust and Banking usually receives investment discretion in a written
Discretionary Investment Agreement signed by the U.S. RIA and Mitsubishi UFJ Trust and
Banking as its subadvisor. Discretion is granted to select the issuers, amount and brokers
through which such transactions are executed. The investment management database also
contains each client's specific investment objectives, guidelines and restrictions.
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Proxy Voting Policies – Authority to Vote
Mitsubishi UFJ Trust and Banking has adopted and implemented written proxy voting policies
and procedures (the “Proxy Voting Guidelines”) reasonably designed to ensure that the
investment adviser votes client securities in the best interests of the clients and addressing how
conflicts of interest are handled;
To avoid conflicts, proxy voting decisions are the responsibility of the Proxy Voting Committee
and are made in accordance with the Proxy Voting Guidelines.
Mitsubishi UFJ Trust and Banking regularly reviews the voting policy at least on an annual basis.
Review of the voting policy and the proxy voting plans are discussed by the Proxy Voting
Committee, which is established within the asset management business unit. Final voting
decisions are signed off by the Managing Director of the unit.
In addition to the aggregate results, Mitsubishi UFJ Trust and Banking makes individual
disclosure of exercised voting rights (voting for or against each proposal and the reason) to show
that voting rights were appropriately exercised.
Proxy voting decisions generally depend on the extent to which each proposal contributes to
shareholder returns. However, Mitsubishi UFJ Trust and Banking generally votes against
proposals that could erode corporate value or that are problematic from the point of view of
corporate governance. Mitsubishi UFJ Trust and Banking sets out and disclose our proxy voting
policy on our website. The policy includes both quantitative and qualitative voting criteria to
enhance transparency of the proxy voting process.
The voting policy and the proxy voting plans are reviewed by the compliance divisions and the
Stewardship Committee chaired by an independent director who helps to oversee the process.
The Stewardship Committee comprises 3 members, including an external expert and Managing
Director of the Compliance division.
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Mitsubishi UFJ Trust and Banking is not aware of any financial condition that is reasonably likely
to impair its ability to meet contractual fiduciary commitments. Mitsubishi UFJ Trust and Banking
has not been the subject of a bankruptcy petition.
Item 19: Requirements for State-Registered Advisers Not Applicable
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Open Brochure from SEC website