Our mission is to offer global investment opportunities to Japan, as well as provide the world with a wealth of investment opportunities sprouting out of the Asia-Pacific region. We are fully committed to and engaged in fulfilling the fiduciary duties and other responsibilities entrusted to us by both Japanese and global investors. Nikko AM Group companies and related parties provide a variety of services, and so the interests of our customers do not succumb to undue harm, we conform to the laws listed below and publicly disclose a summary of our Conflict of Interest Control Policy, and shall properly manage transactions with possible conflicts of interests by following the Policy.

1. Transactions and Other Such Conduct with Possible Conflicts of Interest

Among transactions and other such conduct engaged in by Nikko AM, transactions and conduct with possible conflicts of interest are actions in which undue harm may be caused to the interests of customers of a financial instruments business, such as transactions and conduct involving business contracts between Nikko AM and companies in its group (hereinafter “group companies”) or securities issued by group companies, as listed below*.

  • When a conflict of interest occurs between a customer and group companies or other customers
  • When there is competition between a customer and group companies or other customers
  • When group companies use information obtained from a customer, benefitting group companies or other customers

* Group companies are listed separately.

2. Types of Transactions and Other Such Conduct with Possible Conflicts of Interest

Transactions and other such conduct with possible conflicts of interests are classified as controlled transactions based on the below in internal regulations, and are managed as not to cause undue harm to the interests of customers:

  1. Typical conflicts of interests
    Transactions or conduct with possible conflicts of interests deemed by law as applicable to separate rules of conduct, restricted activities, and measures to prevent harmful effects
    Main transaction forms:
    • Inclusion of securities (equities, bonds, fund securities) or short-term financial products (CDs, CP) issued or launched by group companies among assets in funds, discretionary investment agreements or investment advisory agreements
    • Transactions involving call loans, deposits or borrowing in which group companies are counterparties regarding assets in funds or discretionary investment agreements
    • Transactions between managed assets whose transaction terms risk harming the interests of beneficiaries
    • Block ordering or distribution of IPO results between assets in multiple funds or investment advisory agreements
    • Management of equities, bonds or foreign exchange brokered by group companies in assets in funds or investment advisory agreements
    • Management of equities, bonds or foreign exchange brokered by distributors in funds
    • Transactions that are not based on best practice in assets in funds or investment advisory agreements
    • Launches of funds that do not constitute reasonable compensation frameworks
    • Early trading of own assets using information on trading of assets under management in order to further own interests
    • Excess provision or receipt of gift or entertainment to extent likely to create conflicts of interest
  2. Offering of products created within group
    Sale or recommendation by group companies of products or services provided by other group companies or products or services developed using assets of other group companies
    Main transaction forms:
    • Involvement of group company as related party for fund (as trustee, custody bank, investment advisor or distributor)
  3. Exercising of influence
    Investment management, engagement or exercising of voting rights by investment management departments in group companies that handle the assets of customers in regard to the stocks of companies that have business relationships with the institutional sales departments of said group companies or other group companies.
    Main transaction forms:
    • Engagement and exercising of voting rights in response to requests from group companies or companies with which have business relationship in order to further interests of said companies in funds or investment advisory agreements
  4. Transactions or conduct other than those listed above in which undue harm may come to the interests of customers

3. Controlling Conflicts of Interest

Transactions and other such conduct with possible conflicts of interests, in principle, are controlled with the following methods in suitable combination with others. However, group companies that must protect the confidentiality of parties related to transactions and other such conduct with possible conflicts of interests will control any issues without disclosing details on said transactions and other such conduct with possible conflicts of interests. In addition, if there are logical reasons for doing so upon consideration of the degree of the conflict of interest and other circumstances, degrees of control may be established:

  1. Isolate information managed by the departments that handle transactions and other such conduct with possible conflicts of interests and the departments that handle customers
  2. Change the conditions for and/or methods for handling transactions and other such conduct with possible conflicts of interests and/or customers
  3. Stop the handling of transactions and other such conduct with possible conflicts of interests and/or customers
  4. Appropriately disclose information to concerned customers and, if necessary, receive consent from them, regarding the fact that the interests of customers may succumb to undue harm due to transactions and other such conduct with possible conflicts of interest.
  5. Ensure that transactions and other such conduct with possible conflicts of interests are conducted with fair transaction terms
  6. Monitor parties that share certain information related to transactions and other such conduct with possible conflicts of interest

In principle, control methods applicable to classification types A through D listed above are:

  1. Typical conflicts of interests
    In accordance with the intentions of the regulations, comply with the laws so that undue harm is not incurred on the interests of customers. Also, prevent the inappropriate use of customer information through information blocking practices.
  2. Offering of products created within group
    When customer interests are at risk of being harmed unduly because group companies are involved from multiple positions, take measures such as verifying whether the transaction conditions are impartial.
  3. Exercising of influence
    In order to prevent group companies and other such entities from exercising influence on investment management decisions by such means as exercising voting rights on equities held among assets in trust and ensure such operations are performed appropriately, stipulate reasonable decision standards, and perform the operations under the supervision of the Stewardship and Proxy Voting Committee. In addition, perform under the monitoring and oversight of the Stewardship and Voting Rights Policy Oversight Committee, the majority of whose members are from outside Nikko AM (including the Chair).

4. Conflict of Interest Control Framework

In order to properly manage transactions and other such conduct with possible conflicts of interests, Nikko AM has appointed the Business & Regulatory Compliance Department as the department responsible for conflict of interest control and the head of the Business & Regulatory Compliance Department as the manager responsible for overseeing conflict of interest control. They are charged with maintaining the conflict of interest control framework and periodically verifying its effectiveness, as well continuously striving to improve it; and also communicating all aspects of conflict of interest control to officers and employees through education and training practices.

Appendix: Related Group Companies

• Sumitomo Mitsui Trust Holdings, Inc.
• Sumitomo Mitsui Trust Bank, Limited.
• Sumitomo Mitsui Trust Research Institute Co., Ltd.
• Sumitomo Mitsui Trust Asset Management Co., Ltd.
• Japan Trustee Services Bank, Ltd.
• SBI Sumishin Net Bank, Ltd.
• Sumitomo Mitsui Trust Card Co., Ltd.
• Sumitomo Mitsui Trust Loan & Finance Co., Ltd.
• Sumitomo Mitsui Trust Panasonic Finance Co., Ltd.
• Sumitomo Mitsui Trust Leasing (SINGAPORE) Pte, Ltd.
• Sumitomo Mitsui Trust Investment Co., Ltd.
• Sumitomo Mitsui Trust (Hong Kong) Limited
• Tokyo Securities Transfer Agent Co., Ltd.
• Japan Securities Agents, Ltd.
• Sumitomo Mitsui Trust Realty Co., Ltd.
• Sumitomo Mitsui Trust Real Estate Investment Management Co., Ltd.
• Mitsui & Co., Logistics Partners Ltd.
• Nikko Asset Management Co., Ltd.
• Nikko Asset Management Americas, Inc.
• Nikko Asset Management Asia Limited
• Nikko Asset Management Australia Limited
• Nikko Asset Management Europe Ltd.
• Nikko AM Limited
• Nikko Asset Management International Limited
• Asian Islamic Investment Management Sdn. Bhd.
• Nikko Asset Management New Zealand Limited
• Nikko Asset Management Hong Kong Limited
• Nikko AM Equities Australia Pty Limited
• Affin Hwang Asset Management Berhad
• Sumitomo Mitsui Trust International Limited
• Sumitomo Mitsui Trust Bank (Luxembourg) S.A.
• Sumitomo Mitsui Trust Bank (U.S.A) Limited
• Sumitomo Mitsui Trust (UK) Limited
• OIF (PANAMA) S.A.
• STB Finance Cayman Ltd.
• STB Preferred Capital 3 (Cayman) Ltd.
• STB Preferred Capital 4 (Cayman) Ltd.
• Fresco Asset Funding Corporation
• Crecer Asset Funding Corporation
• Vector Asset Funding Corporation
• Nexus Asset Funding Corporation
• Affin Capital Services Berhad
• Nikko AM Japan Property Fund I Pte. Ltd.
• Sky Ocean Asset Management Co., Ltd.
• Sea Bridge Finance Limited
• Trust Capital Mezzanine 2015 Investment Partnership
• Trust Capital Mezzanine 2016 Investment Partnership
• Trust Capital Private Equity Partners Investment Partnership VIII
• Sumitomo Mitsui Trust Bank (Thai) Public Company Limited
• SBI Card Co., Ltd.
• JP Asset Management Co., Ltd.
• FA Leasing Co., Ltd.
• Sumitomo Mitsui Trust Club Co., Ltd
• Enex Asset Management Co., Ltd.

(As of February 1, 2018)