Press Release December 3, 2010 Back-to-Basics Stock Investment Focusing on Japanese Equity Investment and Dividends Back-to-Basics Japanese Equity Fund Applications Accepted from December 6 Nikko Asset Management (Nikko AM) (Timothy F. McCarthy, Chairman and CEO) announced today that it will launch a new open-end investment trust, the Back-to-Basics Japanese Equity Fund (nick name: Yen Utilization), and will begin management on December 29. Cosmo Securities Co., Ltd. will accept applications for the fund from December 6. The Japanese economy continues to mature. Affected by a slowing growth rate, there is an increased sense that foreign and domestic investors alike have given up on the Japanese equity market. Nevertheless, Nikko AM views the current Japanese equity market to be full of many overlooked profit opportunities. There is currently a growing number of so-called "efficient" Japanese firms engaged in the streamlining of business management by pulling out of unprofitable business operations and cutting back on fixed costs. These efficient companies differ from those that prioritize additional growth and instead tend to have more cash reserves because they place more emphasis on business efficiency, such as by restricting their investments, even though they still maintain a constant rate of company growth. The growth in surplus funds is enhancing the attractiveness of investment in the many efficient companies that are conscious of giving back to their shareholders. High level and stable dividends are also expected to be sought from these firms. The Back-to-Basics Japanese Equity Fund (nick name: Yen Utilization) invests primarily in issues with estimated dividend yields that are above market average. In addition to dividend yield levels, the fund also focuses on underlying cash flow and seeks high level and stable dividend profits by carefully identifying companies that are steadily generating dividend resources (firms with low risk of dividend cuts). The fund also aims to provide dividend payments at the time of each settlement (10th day of January, April, July and October, or the following day if the 10th is a holiday) based on dividend revenue and transaction gains from the issues the fund invests in. As an example, a person engaged in agriculture would be concerned every day about the size of the annual harvest their field will produce. At the same time, they would not be so worried on a daily basis about how much their field is worth. The act of investing in and owning stocks is a financial contribution to a company, therefore, in return for this contribution, one can first expect to receive profits that the company generates each term in the form of dividends. Nikko AM considers this to be the basics of stock investment. Being concerned in the short-term about corporate value is the same as worrying about the price of one's field and is not necessarily the true nature of stock investment. As such, Nikko AM is pleased to offer its Back-to-Basics Japanese Equity Fund (nick name: Yen Utilization) so that investors can realize truly essential or agricultural-like stock investment. Registration Number: Director of the Kanto Local Financial Bureau (Financial instruments firms) No. 368 Member Associations: The Investment Trusts Association, Japan/Japan Securities Investment Advisers Association
This fund has been nick named the Yen Utilization fund based on the concept of focusing on company capital and its effective use, as well as the benefits it can provide to asset utilization for the fund's investors. Back-to-basics stock investment and to an age of Yen utilization for investors and companies Basics of stock investment Investment Company Profit generation Instead of stock price movements, focus is on how much you can earn from the company you invest in Investor Yen Utilization for investor Dividends Used for shareholder returns Profit Cash flow Used for further growth Yen Utilization for company Capital investment Business activities The above diagram is a representation only and may differ from reality. Nikko AM is committed to the continuous development of products that will contribute to investors wealth creation. Note: This material is an English translation of a Japanese announcement made on December 3, 2010. Although Nikko AM intended to faithfully translate the Japanese document into English, the accuracy and correctness of this translation are not guaranteed and thus you are encouraged to refer to the original Japanese document. Please note that you cannot purchase any products mentioned in this press release if you are not a Japanese resident or if you hold nationality of a country where there are legal restrictions on their ownership. The information referred to in this press release is for Japanese residents only. The information provided is designed for use by Japanese residents only and should not be relied on by residents of any other jurisdiction.
Purchase Memo Product Type Open-end investment trust / Domestic / Equity Purchase Unit Please contact the distributor or management company for information on purchase units. Initial application period: 1 yen per unit Purchase Price Subsequent purchase period: NAV as of the application date Application Application for initial purchase: From December 6 to 28, 2010 Period Applications will be accepted after the initial application period as well. Trust Period Until October 13, 2020 (Launch date: December 29, 2010) Fourth annually; i.e. the 10th day of January, April, July, and October of each year (or the Closing Date next business day if the 10th is a holiday) Starting in April 2011, at every settlement period the amount of dividend will be decided by the management company based on factors including the NAV and market movements. Dividends There may be circumstances in which a dividend will not be paid if the amount that would be paid is small. Redemption NAV as of the redemption application date. Price Payment of In principle, payment after 5 business days following the day of receiving the application for Redemption redemption. Proceeds In principle, the amount of normal dividends received as well as the marginal profit made at the time of redemption or maturity shall be taxable. Tax Implications * The fund will be treated as an equity investment trust for tax purposes. * For more details, please refer to the investment trust explanatory document (prospectus distributed in advance of purchase). Outline of Fees, etc. Investors must bear the following expenses: <Fee charged directly at the time of purchase and redemption> Purchase Application Fees: An application fee of no higher than 3.15% (3.0% before tax) shall be set by the distributor and charged at the time of application. * For investors who choose the dividend reinvestment course, no purchase application fee will apply to units purchased through reinvestment of investment gains. Redemption Fees: Not applicable Amount Retained in Trust Assets:Not applicable <Fees and expenses charged indirectly through the trust assets (i.e. paid from the Fund)> Trust Fees: The trust fee is calculated by multiplying the total net asset value by 1.218% per annum (1.16% before tax) Other Expenses: Brokerage commissions with respect to securities held in the portfolio, expenses for creating and delivering prospectuses, accounting fees (including outsourcing fees), audit fees, interest on borrowing and advances, fees related to securities lending, etc. * The rate or maximum amounts applicable to other fees and expenses cannot be disclosed in advance because the actual amount will vary depending on the state of the assets managed. * The total amount of fees charged to the Fund will vary depending on the length of investment period and other factors. Therefore, we cannot give a specific total. * For more detail, please refer to the investment trust explanatory document (prospectus distributed in advance of purchase).
Management Company and Other Related Companies Management Company: Trustee: The Sumitomo Trust and Banking Co., Ltd. (Sub-Trustee: Japan Trustee Services Bank, Ltd.) Distributor: Use the contact information below if you have an inquiry about distributors. Website: http:/// Call Center: 0120-25-1404 (9 a.m. - 5 p.m. Closed Saturdays, Sundays, and holidays) Risk Information This Fund will invest mainly in equities. As a result, its NAV may drop due to falls in the prices of equities or deterioration in the financial conditions and performance of the organizations that issue equities, thereby causing losses to investors. Accordingly, the investment principal is not guaranteed and may incur losses and fall below the initial amount due to a fall in the NAV. Any profit or loss derived from management of investment trusts belongs to all the beneficiaries. The principal risks are as follows: [Price Fluctuation Risk] [Liquidity Risk] [Credit Risk] [Foreign Currency Risk] [Risk Involved in Securities Lending, Etc. ] Other Matters to Consider These materials were prepared as a supplement to the prospectus (distributed in advance of purchase) for the Back-to-Basics Japanese Equity Fund offered by Nikko AM and to promote investors understanding of this Fund. Unlike bank deposits or insurance policies, investment trusts are not protected by the Deposit Insurance Corporation or the Insurance Policyholders Protection Corporations. Nor are investment trusts protected by Investor Protection Funds when purchased at banks or other registered financial institutions. In accordance with the provisions of Article 5 of the Financial Instruments and Exchange Law (Act No. 25 of 1948), Nikko AM filed a security registration statement with the Head of the Kanto Local Finance Bureau on November 19, 2010 and it will become effective as of December 5, 2010. The content of the statement may be subject to change before becoming effective. Any profit or loss derived from the management of investment trusts belongs to all the beneficiaries. When subscribing to these funds, distributor will provide you with an investment trust explanatory document (or prospectus distributed in advance of application) beforehand, so please be sure to verify the details and make your own decision whether or not to invest.
About Nikko Asset Management Registration Number: Director of the Kanto Local Finance Bureau (Financial instruments firms) No. 368 Member Associations: The Investment Trusts Association Japan Securities Investment Advisers Association Nikko Asset Management (Nikko AM) is a leading Japan-based asset management group. Since its establishment 50 years ago, Nikko AM has been offering a full lineup of retail funds to individual investors and high value-added advisory services to institutional investors. Its products are distributed through a network of around 200 distributor institutions including banks, securities companies, and Japan Post Bank. The firm offers investors access to both Nikko AM funds that invest mainly in Japanese equities, fixed income, and REITs and, through its independently developed World Series Fund Platform, opportunities to strategically utilize a global range of top-performing, independent asset managers over a diverse range of asset classes. In 1999, Nikko AM became the first Japanese firm to establish a Socially Responsible Investment (SRI) fund, and in 2001 broke new ground for a Japanese asset management firm by acquiring ISO 14001 certification (world-class environmental management standard). In these and other ways, Nikko AM actively involves itself in socially responsible activities. Furthermore, since autumn 2010, Nikko AM has positioned itself as a Fund Manufacturer and is currently engaged in activities to inform its customers in an easy-to-understand way about the roles of asset management companies and how retail funds can be utilized. Nikko AM has moved to enhance its expertise in the asset management business by clarifying the responsibilities of fund managers, reinforcing collaboration between research and management sections, and refining risk management capability. In recognition of these accomplishments, Nikko AM has been awarded several prestigious fund awards, such as the Lipper Japan Award, Asian Investor s Award, and R&I Fund Award. The Nikko AM Group1 has assets totaling 9.8 trillion yen under management as of September 30, 2010 2, and has overseas offices in London, New York, and Singapore. Note 1: Nikko AM Group stands for and its group companies. Note 2: Consolidated assets (including advised assets) of and its overseas subsidiaries.