Financial instruments and investment-related risks overview

Version 1.1, valid from 18 April 2023

Before starting to use our services and investing, please read this document and carefully assess your individual situation (in case you intend to use our services for your personal needs) or the situation of the company you represent (in case you act on behalf of a legal entity) in terms of financial status, investment goals, risk tolerance, etc. Please consider consulting a professional advisor if needed to better understand the risks related to investment.

All investment decisions you make regarding transactions in financial instruments while using our services are at your own discretion and risk. Fundvest does not make any investment recommendations nor provides any investment advice. All information that is available on our website, social media channels and app is for information purposes only and may not be considered as any advice or recommendation.

Fundvest does not provide tax, accounting, or legal advice to its clients, and all investors are advised to consult with professional advisors regarding any potential obligations.

This document was prepared by Fundvest UAB which is a company established in Lithuania and licensed as a financial brokerage firm by the Bank of Lithuania. It contains information about the nature and risk of financial instruments that you may invest in while using our services. It may not explain all the risks or how the specific risks may affect you personally or the company you represent. If you have any doubts if our services and the specific financial instruments are appropriate for you or the company you represent, please seek professional advice.

Investing is always related to risk which may result in financial losses. This may happen because the value of the financial instruments you purchase may drop and because of this the return may be negative, meaning that the transaction may be unprofitable or even become of no value at all. The risk of loss is different and depends on each specific financial instrument. We strongly encourage you to evaluate the characteristics of financial instruments and the related risks, taking into account at least the below-listed factors related to you personally or the company you represent:

• financial status,
• previous investment experience,
• investment goals,
• investment period.

You should also consider other important factors and not engage in investing unless you understand the nature of the particular financial instrument and the extent of your exposure to the risk of financial loss.

When using our services you may invest in the following financial instruments:

• Stocks (shares) which are units of ownership in companies. Shares that are traded in the stock exchanges (e.g. New York Stock Exchange) can be purchased when using our platform. If the company that issued the shares (issuer) earns profit, part of the profit can be distributed to the owners of the shares (shareholders) in the form of dividends.

• ETFs (exchange-traded funds) which are collective investment funds that are traded in the stock exchanges. They may consist of various asset classes, such as shares, bonds, etc., thus ensuring greater diversification and potentially lower investment risk. ETFs are managed by professional investment management companies.

By investing in any of the above you or the company you represent risk not getting back the same amount as you originally invested. Additionally, please take into account other risks that are listed below.

Counterparty credit risk –risk of incurring losses if a counterparty against whom the Client has a credit exposure, does not fulfil its financial obligations.

Country risk – risk of financial instrument value changing because of events or developments in a specific country or region.

Information risk – risk of the Client making a decision without having complete information about a specific financial instrument or this information not being available to the Client.

Interest rate risk –risk of market value of a financial instrument changing significantly because of changes in interest rates (especially applicable towards bonds (currently not available) and bond-based ETFs).

Legal risk – risk of financial instruments losing value or incurring additional expenses because of legal restrictions or duties as a result of changes including, but not limited to, legislation, mandatory changes by regulators or national competent authorities.

Liquidity risk – risk of financial instrument not being available for purchasing or selling without significant additional costs due to lack of liquidity in the market. One of the ways how liquidity risk can be measured (not applicable for all cases) is the difference between best bid and best ask price (in absolute terms or as percentage of the last traded price).

Market risk (or systematic risk) is a risk of prices changing because of overall performance of relevant financial markets.

Price risk – risk of relevant financial instrument price changing.

Stocks (shares) Stocks are open to all general risks mentioned above and some stock-specific risks such as:

Rating risk – risk of value of a listed company (therefore, a stock) changing because of changes in credit rating issued by one of the rating agencies.

Risk of (hostile) merger and acquisition – risk of a company (issuer) being acquired or merged leading to the fact that Client ownership in listed company will be bought following the announced terms and conditions.

ETFs are managed by asset management companies.

ETFs are open to general risks mentioned above and some specific risks such as:

Closure risk – risk of asset management company deciding to liquidate or merge an ETF with another listed or unlisted product.

Management fee risk – risk of asset management company changing the management fee that is taken while managing the fund.