Market risk – The net unit value of the Fund depends on the movement of market prices of the securities that form part of the Fund’s portfolio. A decline in securities prices may reduce the value of the Fund’s portfolio and its returns, and conversely an increase in securities prices may raise the value of the portfolio and its returns. To protect against market risk, the Company will seek to minimise it through portfolio diversification, in accordance with the principle of risk distribution.

Interest-rate risk – Changes in interest rates may have a positive or negative impact on the value of the Fund’s assets, particularly on the portion invested in deposits with authorised banks in the Republic of North Macedonia. To reduce this risk, the Company will place the fund’s assets in deposits with varying terms of up to a maximum of one year.

Credit risk – Credit risk is the probability that the issuer of a particular security will not be able, fully or partially, to settle its obligations at the time they fall due. Failure by issuers to meet their obligations would affect liquidity and reduce the value of the Fund. The Company will minimise this risk by ensuring the Fund does not invest in debt securities (bonds) in its portfolio.

Liquidity risk – Liquidity risk is the probability that, at any given moment, the Fund will have difficulty obtaining funds to settle obligations related to the redemption of units, as a result of being unable to quickly sell financial assets at a price approximately equal to their real value — primarily because of unfavourable current market demand. The Company will manage liquidity risk by investing in the most liquid securities available.

Currency risk – Currency risk is a form of risk that arises when the price of one currency changes relative to another. The Fund holds securities denominated in different currencies, and possible changes in those currencies relative to the domestic currency may lead to an increase or decrease in unit values. The Company will reduce this risk by diversifying the portfolio across different currencies.

Risk of change in tax regulations – The probability that the legislative authority, in the Republic of North Macedonia or abroad, will change tax regulations in a way that would negatively affect the Fund’s return. The risk of changes in tax regulations is entirely outside the Company’s sphere of influence.

Political risk – The possibility of political crises in the countries where the Fund has invested under this Prospectus may lead to a change in the Fund’s assets. To protect against this risk, the Company will invest the Fund’s assets in a way that minimises exposure to markets where political crises are expected to have a greater impact.

Operational risk – Risk of loss due to inadequate or weak internal processes, inadequate personnel, inadequate or weak systems, and external events. Operational risk also includes legal risk, the risk of money laundering and terrorism financing, and the risk of inadequate information systems supporting operations.