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1 Important Information: This document is for information only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities mentioned herein are for illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in unit trusts are not deposits in, obligations of, or guaranteed or insured by Nikko Asset Management Asia Limited ( Nikko AM Asia ). Past performance or any prediction, projection or forecast is not indicative of future performance. The funds may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus and product highlights sheet obtainable from appointed distributors of Nikko AM Asia or our website ( before investing. The information contained herein may not be copied, reproduced or redistributed without the express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, Nikko AM Asia does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this document. Nikko Asset Management Asia Limited, Registration Number H ART BY LÉ GILL nikkoam.com.sg

2 Immediately after taking office in December 2012, Shinzo Abe, Prime Minister of Japan, unleashed one of the biggest economic maneuvers Japan has ever seen to lift the country out of its 15-year deflationary spiral. His three-arrow strategy, or Abenomics, is multifaceted: an expansionary fiscal policy based on increased spending on public infrastructure; a bold accommodative monetary policy that, among other things, aims to transform a deflationary economy and achieve a 2% inflation target; and structural reforms that include resolving long-standing barriers to efficiency and aim to spur private investment.

3 Our economy is showing signs of recovery, thanks to our three-arrow policy. We have a chance of escaping deflation after 15 years and we must not let it slip away. ABE proclaimed to his electorate that the objective of his cabinet strategy is to return the country to its position as a world power, framing his policies as a matter of national security. Through a combination of charisma, leadership, and boldness, Abe has galvanised the country and brought about a sanguine shift in the mindset of Japanese people. Prime Minister Shinzo Abe Our quantitative easing policy is exerting its extended effects. We are halfway on the road to the 2% target! (May 2014) HARUHIKO KURODA BANK OF JAPAN GOVERNOR 2014

4 JAPAN has the 3rd largest economy, 1 after the US and China. It also has Asia s biggest and the world s 3rd largest stock exchange 2 by aggregate market capitalisation of its listed companies. These rankings are commonly used barometers of economic depth and potential. 1 money.cnn.com/news/economy/world _economies_gdp/, accessed 12 December World Federation of Exchanges Monthly Report, November 2014 The World Economic Forum ranked Japan 9th out of 148 countries in its Global Competitiveness Index in In its analysis of Japan, it said that the country continues to enjoy a major competitive edge, ranking it 1st in business sophistication, 2nd in research-and-development spending, 4th in availability of talent, and 5th in innovation. 5 6

5 JAPAN is the world s 3rd largest automobile manufacturing country 3 and has one of the largest electronics goods industries. 4 It is also the world s 4th biggest exporter 5, behind China, US and Germany, but ahead of Korea (7th) and Australia (21st). Look around your household and chances are you would own at least two brands from the Land of the Rising Sun. Many are global brand leaders, growing their wealth worldwide. 3 accessed 30 December March still-genki, 16 September

6 IN 2011, Japan was hit by a whammy of earthquake, tsunami and nuclear fallout when its economy was already down on its knees. Yet within three years, the country was up and running. Not for the first time has Japan rebounded so quickly. Its post-world War II economic miracle and the Kobe quake reconstruction were perfect testimonies to its legendary resilience. There is little doubt Japan could rebuild its economy once again, a few impending obstacles en route notwithstanding. JAPAN S RESILIENCE

7 M T O N JA N E H S P FU ND AN For investors with medium to long-term investment time horizons, the Nikko AM Shenton Japan Fund is worth closer scrutiny. This Fund invests primarily in a diversified portfolio of equity investments listed in Japan, of which many are renowned corporations thriving in the global market. NIKKO A FORTUNE FAVOURS THE FARSIGHTED MARKET OUTLOOK Our outlook on the Japanese equity market over the next few years remains positive although Abenomics may not always be smooth sailing. The latest economic indicators suggest that Japan s recovery remains on track despite slowing growth momentum. argins profit mhigh, e t a r o p l Cor a historica been are at taxes have te corporaalready cut, omises with prore, of m said John Vail, Chief Global Strategist, Nikko AM, 15 December PORTFOLIO STRATEGY The long-term uptrend in the Japanese stock market remains intact, supported by government policies aimed at ending deflation, the weakening of the Japanese yen, and improvements to corporate earnings structures. These positive changes in economic fundamentals play into the fund's value approach and are a continued source of the fund's alpha. The companies listed here are in the top 10 holdings of the Fund as of 31 December This is for illustrative purposes only and does not constitute as an investment recommendation. TO BE CONTINUED...