development of sri in japan

Development of SRI in Japan

2009/5/27

Akitsugu Era

Nikko Asset Management Co., Ltd. Registration Number: Director of the Kanto Local Financial Bureau (Financial instruments firms) No. 368Member Associations: The Investment Trusts Association, Japan/Japan Securities Investment Advisers Association

This material has been prepared by Nikko AM solely for the purposes of a presentation at TBLI Conference 2009. It is not solicitation for a specific fund. Moreover, the information in this material will not effect Nikko AM's fund investment in any way. Investment trusts invest in assets that change their value (assets in foreign currency bears the foreign exchange rate risk); therefore, net asset values fluctuate. Accordingly, it is possible for the NAV to fall below the amount of invested principal. Fees may be charged when purchasing, holding, and cashing out investment trusts. For more detail, please refer to the investment trust explanatory document (prospectus distributed in advance of application).

Corporate Data (As of End March ,2009)

AUM: 　 8.8 trillion JPY

Corporate history: 　 50yrs

Business base: 2/3 retail 1/3 institutional

Signatory of UNEPFI, PRINote: Consolidated Nikko AM and its overseas subsidiaries' assets under management (including advised assets).Note2: Total is less than the sum of each component due to the adjustment to eliminate double counting of investment advisory assets and investment trusts assets/fund of funds.Note3: Data of this fiscal year is disclosed on quarterly basis.


Nikko Eco Fund

First Japanese Eco mutual fund launched in 1999

Source: As of May 2009, Nikko Asset Management, Bloomberg

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99 00 01 02 03 04 05 06 07 08 09

（billions JPY）

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AUM of Nikko ECO Fund Nikkei AVG

（ JPY)（ left axis) （ right axis)

The above graphs depict historical data and make no promise of future performance.


History of SRI in Japan (mutual funds)

Number of funds has shown steady growth AUM was growing rapidly until……

Source: As of May 2009, Nikko Asset Management, Bloomberg

0200400600800

100012001400160018002000

99 00 01 02 03 04 05 06 07 08 09

（billions JPY）

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70Number of SRI Funds in Japan Total AUM of JP SRI Funds（ right axis) （ left axis)

The above graphs depict historical data and make no promise of future performance.


Listed Index fund FTSE Japan Green Chip 35

First ECO ETF launched on 2009/4/28 Investment universe: Business opportunity in

ECO related area, Market cap 10billion JPY over

Source: As of April 2009, Nikko Asset Management

Top 10 invested company

3.62%Toshiba10

3.74%Mitsubishi Electric9

3.83%Hitachi 8

3.84%Sharp7

4.86%Mitsubishi Heavy Ind.

6

6.51%Kyocera5

10.41%Panasonic4

10.47%Honda3

10.54%Sony2

10.68%Toyota1

WeightCompany

Toshiba10

9

8

Sharp7

Mitsubishi Heavy Ind.

6

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3

2

1

WeightCompany

GHG reduction Next generation cars Railways Alternative energy LED

Water Waste management Recycle

Theme


Strategy 　（ Research)Integration of ESG factors

Economy Stimulus packages “Global Green New Deals” US: 150 billion USD JP: 15 trillion JPY ⇒ 　 1.8trillion JPY

Eco-car tax break: 370 billion JPY Eco points: 290 billion JPY * energy-efficient home electronics product purchase incentives

“E” within ESG is becoming mainstream as theme.


Strategy 　（ Engagement)

Representative of the Minority shareholder No. of invested Japanese companies: 　 1977

（ July, 2007 ～ June, 2008)

Voice > Exit Engagement (Voice)

Over 100 meetings per year Proxy voting

Election of directors Votes Against : 8.7 % Votes against total company agendas: 19.0%

　　　　　　　　　　　　　　　　　　　　　　（ July, 2007 ～ June, 2008)


Challenges

Concentration of AGM Approx 50% AGMs are held in June.

Assessments


■Comprehensive Risk Information on Mutual Funds○ Investment trusts invest in assets whose prices fluctuate (foreign currency-denominated assets contain exchange rate risk as well), so the

NAV will fluctuate accordingly. It is possible that the NAV will fall below your original investment. ○ Different investment trusts invest in different asset classes, markets, and countries, and are subject to different investment restrictions, so the

details of their risks differ accordingly.

Overview of fees and other costsCustomers will be responsible for the following costs:<Fees collected at subscription and redemption>　 Subscription fee 　　　　　 Maximum 3.675% (3.5% before tax)　 Redemption fee 　　　　　 Maximum 1.05% (1.0% before tax)　 Amount reserved for trust assets 　 Maximum 1.0%　 Switching fee 　　　　　 Maximum 0.21% (0.2% before tax)

<Costs paid indirectly by the customer for the trust assets (paid from the fund) >　 Trust Fees 　　　　　 Maximum 2.9975% (2.95% before tax)

　　　　　 Some funds charge a performance fee based on investment performance, etc.　 Other costs 　　　　　 Brokerage commission with respect to securities included in the portfolio, audit fees, interest on

borrowing　　　　　 and advances, 　 stock-loan related fees, etc.

　　　　　　　　　　　　＊ We cannot provide prior information on rates, maximum amounts, and other related information for other costs because they will vary depending on 　 investment performance.　　＊ The total amount of fees and other costs described above will vary depending on the length of investment period

　　　　　　　　　　　　　　　　　　　　　　　　　　　 and other factors. Therefore, we cannot give a specific total.　　＊ Please see the prospectus for details.

<Disclaimer>○ The figures listed above are the highest rates charged for fees and other costs as regards investment trusts managed by Nikko Asset

Management (as of the date of creation of this material).○ The risk information, fees and other information listed above assume investment trusts in general. Actual fees will vary for each specific

investment trust. For details, please refer to the investment trust prospectus.


Other matters to consider○ Unlike bank deposits or insurance policies, investment trusts are not protected by the Deposit Insurance Corporation or the Insurance

Policyholders Protection Corporation. Nor are investment trusts protected by investor protection funds when purchased at banks or other registered financial institutions.

○ Profits and losses made by the management of investment trusts all belong to the beneficiaries. The distributor will provide you with a prospectus either before or when you submit your application to this Fund, so please make an investment decision carefully after taking the time to read the contents in detail.

development of sri in japan

Economy & Finance