NIKKO AM GLOBAL UMBRELLA FUND Société d’investissement à ... Report December 2009.pdf · Mr....

NIKKO AM GLOBAL UMBRELLA FUNDSociété d’investissement à Capital Variable Luxembourg

R.C.S Luxembourg : B.53.436 Audited Annual Report

December 31, 2009

This report does not constitute an offer of shares. No subscription can be received on the basis of

financial reports. Subscriptions are only valid if made on the basis of the current prospectus, which must be accompanied by the latest available annual report of the Fund and the latest unaudited semi-

annual report if published after such annual report.

NIKKO AM GLOBAL UMBRELLA FUND Société d’investissement à capital variable Table of contents Nikko AM Global Umbrella Fund Page(s) Administration of the Fund 3 General information 5 Report of the Board of Directors 6 Independent Auditor’s Report 16 Statement of net assets Combined statement 18 Nikko AM Asia-Pacific Fund 19 Nikko AM Japan Value Fund 20 Nikko AM Japan Growth Fund 21 Statement of operations and changes in net assets Combined statement 22 Nikko AM Asia-Pacific Fund 23 Nikko AM Japan Value Fund 24 Nikko AM Japan Growth Fund 25 Statistical information 26 Notes to the financial statements 28 Nikko AM Global Umbrella Fund - Nikko AM Asia-Pacific Fund Statement of investments 32 Classification of investments by country and by economical sector 34 Nikko AM Global Umbrella Fund - Nikko AM Japan Value Fund Statement of investments 36 Classification of investments by country and by economical sector 39 Nikko AM Global Umbrella Fund - Nikko AM Japan Growth Fund Statement of investments 40 Classification of investments by country and by economical sector 43

NIKKO AM GLOBAL UMBRELLA FUND Société d’investissement à capital variable

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Administration of the Fund Registered Office 9A, rue Robert Stümper, L-2557 Luxembourg, RC Luxembourg B 53 436 Board of Directors Chairman : Mr. Stuart KINNERSLEY, Senior Managing Director and Chief Investment Officer Nikko Asset Management Europe Ltd., London Directors : Mr. William Jones, Managing Director ManagementPlus (Luxembourg) S.A. Mr. Jacques ELVINGER, Partner Elvinger, Hoss & Prussen, Luxembourg Management Company Nikko Asset Management Luxembourg S.A. 19, rue Bitbourg, L-1273, Luxembourg Custodian, domiciliary, administrative, registrar, transfer and corporate agent Nikko Bank (Luxembourg) S.A. 9A, rue Robert Stümper, L-2557 Luxembourg Independent Auditor of the Fund PricewaterhouseCoopers S.à r.l. Réviseur d’entreprises 400, route d’Esch, BP 1443, L-1014 Luxembourg Legal adviser In Luxembourg : Elvinger, Hoss & Prussen, 2, Place Winston Churchill, L-1340 Luxembourg


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Administration of the Fund (continued) Nikko AM Global Umbrella Fund - Nikko AM Asia-Pacific Fund Investment adviser Nikko Asset Management Europe Ltd. 1 London Wall, London EC2Y 5AD, United Kingdom Investment sub-adviser Nikko Asset Management Singapore Ltd. 77 Robinson Road # 06-03A, SIA Building, Singapore 068896 Nikko AM Global Umbrella Fund - Nikko AM Japan Value Fund Investment adviser Nikko Asset Management Europe Ltd. 1 London Wall, London EC2Y 5AD, United Kingdom Investment sub-adviser Nikko Asset Management Co., Ltd. Midtown Tower, 9-7-1 Akasaka, Minato-ku, Tokyo 107-6242, Japan Nikko AM Global Umbrella Fund - Nikko AM Japan Growth Fund Investment adviser Nikko Asset Management Europe Ltd. 1 London Wall, London EC2Y 5AD, United Kingdom Investment sub-adviser Nikko Asset Management Co., Ltd. Midtown Tower, 9-7-1 Akasaka, Minato-ku, Tokyo 107-6242, Japan


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General information Investment objectives

Nikko AM Asia-Pacific Fund pursue an investment strategy that blends bottom-up fundamental research and top down views within the context of a centralized decision-making approach. The portfolio is designed to add value by exploiting stock price volatility, divergence of company quality and circumstances across the region. This is captured in the strategy’s top-down approach and portfolio construction process. Nikko AM Japan Value Fund seeks a return which exceeds that of the 1st Section of the Tokyo Stock Exchange (TSE1) as measured by the Tokyo Stock Price Index (TOPIX). The Sub-Fund will use qualitative stock selection based upon fundamental research as well as quantitative screening methods developed by the Investment Sub-Adviser. Nikko AM Japan Growth Fund seeks to outperform Tokyo Stock Price Index (TOPIX) in the medium to long term by investing in equity/equity-related securities listed on Japanese stock markets, and recently-issued ones for which an application has been made for listing on any Japanese stock markets. Investing in recently-issued securities for which an application has been made for listing on any Japanese stock market, will be authorised provided that it is made in accordance with the investment restrictions as described under the heading "10. INVESTMENT RESTRICTIONS" in section "10) GENERAL INFORMATION" of the Prospectus. Other information The list of changes in each portfolio for the year-ended December 31, 2009 is available upon request at the registered office of the Fund. The prospectus, the articles of incorporation, the audited annual reports and unaudited semi-annual reports are made available to the shareholders free of charges at the registered office of the Fund. All notices to registered shareholders are sent to the address of shareholders register and, if required by Luxembourg Law, are published in the Mémorial.


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Report of the Board of Directors Nikko AM Asia-Pacific Fund Market Review 2009

Asia Pacific ex Japan markets started on a weak note in 2009 in the midst of the global financial crisis. Markets subsequently stabilized towards the end of 1Q09 as panic subsided on a heavy dose of economic stimulus measures across the world. Thereafter, investor confidence gradually returned, especially after re-assessing the damage to corporate health. In addition, governments’ efforts at pump-priming their economies and cost cutting measures by companies were seen to be effective in limiting further downside to the economy and corporate earnings. The Asia ex Japan banking sector was also intact and in a position to support an economic recovery. The rally continued until mid October when unexpected policy rate hikes in Australia and curbs in loan growth in China led stock markets to take a breather. Towards the end of 2009, stock markets rallied further as investors were convinced that policy risks would remained low for an ‘extended period’, as the unwinding of economic stimulus measures seemed confined to economies such as Australia and China that were delivering stronger economic growth. The prices of commodities recovered progressively over the year as the economic recovery gathers pace. In particular, China’s demand for base metals and coal was extremely strong, supported by infrastructure projects that were partially driven by aggressive fiscal spending. As a result, the natural resources sector performed well during the year, and most of the balance sheet issues were resolved through successful fund raising and strong operational cash generation. The consumer sector was in play as its longer term prospects were underpinned by rising disposable income and low levels of household leverage, particularly in China. The Chinese government also attempted to stimulate domestic consumer demand by offering subsidies to its rural population. The residential property market in key cities such as Hong Kong, Singapore, Shanghai and Beijing saw dramatic V-shaped recoveries in both pricing and transaction volumes. This was driven by pent-up demand from up-graders and first-time home buyers on the back of record low mortgage rates. Alternative energy plays, in the wind and solar space in particular, were in focus throughout much of 2H 2009, helped by the media coverage leading up to the Copenhagen Climate Change Conference. Investor interests extended into technology stocks which are linked to efficient energy usage, such as LED (light emitting diodes) and electric vehicle battery producers. During the year, diplomatic relations between China and Taiwan improved further. A Memorandum of Understanding allowing Taiwan financial institutions to conduct business in the Mainland was sealed. An Economic Cooperation Framework Agreement is also scheduled to be signed in early 2010. In Indonesia, President Yudhoyono won a five-year second term in office, and instated a number of reformist economic policy makers in the new Cabinet.


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Report of the Board of Directors (continued) Nikko AM Asia-Pacific Fund (continued) Fund Performance

The Fund appreciated 91.56% (Class A) against the 68.40% increased in the benchmark Index (MSCI AC Pacific ex Japan). In the midst of the financial crisis in 1Q09, the fund did well by focusing on well-capitalized companies which can generate stable cash flows and pay good dividend yields. These were mostly in the telecom and REIT sectors. When the crisis started to stabilize, we ploughed into stocks that would benefit from risk dissipation, especially in oversold big cap names in China, Hong Kong, Australia, and Singapore. We also invested sizeable positions in banks that have re-capitalized. In 4Q09, the Fund’s overweight in the resources sector, particularly in coal and platinum, contributed significantly to stronger performance against the benchmark. Outlook We expect returns in Asia Pacific ex Japan equities to be more muted in 2010 after the strong rebound in 2009. There could be pockets of volatility as the market grapple with post-crisis issues, namely banking sector reforms in the US and the exit from stimulus policies. Inflation could also become a concern should commodity prices climb further. Policy makers in some countries may also act to prevent asset price bubbles from developing, and we are already seeing China taking steps to cool its residential property market. Despite the anticipated volatility, equity markets should still be well-supported by the continuing economic recovery. Earnings should also recover on the back of a stronger economy and this would help to support market valuations. Liquidity flows should also be supportive of Asia Pacific ex Japan equities, helped by stronger growth and anticipated currency strength. We expect the medium term market uptrend to remain intact, especially once we get past ‘stimulus exit’ issues.


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Report of the Board of Directors (continued) Nikko AM Japan Value Fund Market Review for Year 2009

The Japanese stock market rose at the beginning of the year moving in particularly close correlation with export stocks, on the back of expectations of a large economic stimulus package in the US and the halt of yen appreciation. However, amidst worsening domestic recession after the middle of January 2009, the stock market continued to fall due to the significant downward revisions of earnings forecasts by major Japanese companies as well as political chaos, posting a record low in the beginning of March since the collapse of the bubble economy. Subsequently, the stock market rebounded with support from a rising US stock market as a result of diminishing financial instability, expectations of the Japanese government’s additional economic policy packages, as well as the weaker yen. After April, amidst increasing expectations of a bottoming out of the economy and corporate earnings in Japan and the US, the stock market rose further, specifically moving in tandem with cyclical stocks. From the middle of June to the beginning of July, the stock market fell back due to the uncertainty over the future of the global economy. However, the upturn in earnings of major companies and expectations of domestic and foreign economic recovery, pushed up the stock market, leading it to hit a ten-month high in the end of August. After the middle of September, however, the stock market weakened due to multiple negative factors such as expectations of capital increases by large financial institutions and slumping business of the largest Japanese airline. This was coupled with the strengthening of the yen against the US dollar. In November, a wave of announcements of capital increases by major companies caused concern of oversupply of stocks. In addition to this there was uncertainty about the direction of the new government’s policies and the yen’s appreciation accelerated. These negative factors pushed the stock market significantly lower. In December, although credit uneasiness in the Middle East and the euro zone slowed the market rally, the stock market firmed up supported by the abating yen appreciation and expectations of additional easing in monetary policy by the Bank of Japan. Also, overseas investors continued to buy Japanese equities in recognition of its lag behind other global equities. Towards the end of Q4 2009, more export stocks were purchased as a result of the weaker yen. This led to the stock market rising further and ending the quarter with a positive net quarter-on-quarter return. Major Japanese Equity Indices as at December 31, 2009

Period TOPIX TOPIX w/dividend

Nikkei 225 TSE2 JASDAQ

3-month -0.25% -0.27% 4.08% -7.21% -2.74%

6-month -2.38% -1.67% 5.90% -6.52% -0.37%

9-month 17.31% 18.07% 30.05% 13.36% 17.84%

1 year 5.63% 7.62% 19.04% 6.56% 0.33% Source: Bloomberg


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Report of the Board of Directors (continued) Nikko AM Japan Value Fund (continued) (continued) Performance Review for Year 2009

In the first half of 2009, stock prices declined as they were impacted by concerns in the financial market stemming from the sub-prime mortgage crisis and subsequent global recession. This hit a record low since the commencement of the crisis, at the beginning of March. From a three-to-five-year long-term view, we believe that we are now in a position where excess returns can be obtained most effectively through the re-evaluation of both individual stock valuations and cash flow. We therefore invested proactively. We regard this as a historic opportunity to invest for the longer term in stocks which are deeply undervalued relative to their asset value. In particular, we invested in stocks of companies that were undervalued relative to their asset value, with high technological and product development capabilities, strong brand awareness, high quality human resources, high levels of production and expertise, and a robust financial standing. We sought out stocks to include in the portfolio, paying attention to PBR levels in the first half of the year, and in the second half of the year those stocks with the likelihood of improvement in cash flow after the full year of 2010. Specifically, we invested in KDDI, SONY, and DOWA HOLDINGS. Meanwhile, we completely sold out of our positions in JFE Holdings, Keisei Electric Railway, and Kamigumi, as those companies became less undervalued and increasingly regarded as having less opportunity to improve revenues due to changes in their earnings and business environment. The fund outperformed the benchmark in 2009. From April to June, excess risk premium shrank in response to receding credit risk fears, and the market saw stock prices increase.. It was possible for the fund to obtain significantly greater returns through stock value revaluation. Overweighting Sumitomo Metal Mining and Sumitomo Electric Industries also positively impacted performance. Sumitomo Metal Mining benefited from stable copper prices, while Sumitomo Electric Industries performed well thanks to the expectation of improvements in earnings in the automobile parts business. Additionally, the absence of positions in Nintendo, Tokyo Electric Power, and NTT DoCoMo made a positive contribution to performance. Meanwhile, overweighting Mitsui Warehouse, Tokyo Gas, and Kyowa Exeo negatively impacted performance. Focusing on car manufacturers, the absence of Nissan Motor and underweighting Honda Motor was a negative contribution to performance. Concerning sector allocation, underweighting electric power and gas, information and communications, and banks, and overweight positions in glass and ceramics products and nonferrous metals made a positive contribution.


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Report of the Board of Directors (continued) Nikko AM Japan Value Fund (continued) GICS 10 sector allocation as of end-December 2009

GIGS Sector Managed % Benchmark % Relative Energy 2.35 1.11 1.24 Materials 18.33 8.68 9.65 Industrials 31.10 19.73 11.36 Consumer Discretionary 17.83 20.09 -2.26 Consumer Staples 0.85 6.23 -5.39 Health Care 4.06 5.61 -1.54 Financials 12.48 16.41 -3.93 Information Technology 6.72 13.40 -6.68 Telecommunication Services 2.51 3.67 -1.16 Utilities 3.77 5.06 -1.29

Source: Barra Market Outlook Currently, the risks of the credit crunch are gradually receding and the trend of the Japanese economy is one of recovery from the bottom of the economic cycle . We believe that the next phase will be to see the full effects of the investment strategy in undervalued stocks. On this basis, we will take a stronger stance on making proactive investment choices in undervalued stocks with a long-term view. From the perspective of a 3 to 5 years investment strategy, the current level of the Japanese stock market are extremely attractive. In addition to their deeply attractive stock value, companies are likely to become much more undervalued in terms of cash flow. We will identify and invest in undervalued stocks from the viewpoint of stock value in the first half of 2010, and cash flow reflecting earnings recovery in the second half of the year.


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Report of the Board of Directors (continued) Nikko AM Japan Value Fund (continued) Investment Policies

Within the overall economy there is a need to formulate measures regarding environmental and energy concerns and implement various environmental regulations, as a result of economic growth and these should provide improvements in the business environment of industrial electronics and machinery and those sectors holding technological advantages in the environmental and energy fields As individual consumption within China becomes more active once again, the transportation, warehouse, and some of the retailing sector show signs of an improvement in earnings.. Demand of agricultural machinery is growing sharply on the back of a rising global demand of foods and we will note this in our investment choices. In particular, we will identify and invest in undervalued companies with the following characteristics: 1) Those firms exhibiting current low profit levels and low price to book value ratios that

possess the potential for future cash flows 2) Those with sound balance sheets which are resilient to an economic downturn. 3) Companies with excess capacity to allow the provision of returns to shareholders such as

dividends based on stable cash flows 4) Those who apply a proactive approach in seeking to find solutions to structural problems

such as supply surplus. 5) Companies who have made preparation for future investment opportunities, research and development, and M&A activities in recognition that for them the current economic crisis is another investment opportunity.


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Report of the Board of Directors (continued) Nikko AM Japan Growth Fund Market Review for Year 2009

The Japanese stock market rose at the beginning of the year moving in particularly close correlation with export stocks, on the back of expectations of a large economic stimulus package in the US and the halt of yen appreciation. However, amidst worsening domestic recession after the middle of January 2009, the stock market continued to fall due to the significant downward revisions of earnings forecasts by major Japanese companies as well as political chaos, posting a record low in the beginning of March since the collapse of the bubble economy. Subsequently, the stock market rebounded with support from a rising US stock market as a result of diminishing financial instability, expectations of the Japanese government’s additional economic policy packages, as well as the weaker yen. After April, amidst increasing expectations of a bottoming out of the economy and corporate earnings in Japan and the US, the stock market rose further, specifically moving in tandem with cyclical stocks. From the middle of June to the beginning of July, the stock market fell back due to the uncertainty over the future of the global economy. However, the upturn in earnings of major companies and expectations of domestic and foreign economic recovery, pushed up the stock market, leading it to hit a ten-month high in the end of August. After the middle of September, however, the stock market weakened due to multiple negative factors such as expectations of capital increases by large financial institutions and slumping business of the largest Japanese airline. This was coupled with the strengthening of the yen against the US dollar. In November, a wave of announcements of capital increases by major companies caused concern of oversupply of stocks. In addition to this there was uncertainty about the direction of the new government’s policies and the yen’s appreciation accelerated. These negative factors pushed the stock market significantly lower. In December, although credit uneasiness in the Middle East and the euro zone slowed the market rally, the stock market firmed up supported by the abating yen appreciation and expectations of additional easing in monetary policy by the Bank of Japan. Also, overseas investors continued to buy Japanese equities in recognition of its lag behind other global equities. Towards the end of Q4 2009, more export stocks were purchased as a result of the weaker yen. This led to the stock market rising further and ending the quarter with a positive net quarter-on-quarter return. Major Japanese Equity Indices as at December 31, 2009

Period TOPIX TOPIX w/dividend

Nikkei 225 TSE2 JASDAQ

3-month -0.25% -0.27% 4.08% -7.21% -2.74%

6-month -2.38% -1.67% 5.90% -6.52% -0.37%

9-month 17.31% 18.07% 30.05% 13.36% 17.84%

1 year 5.63% 7.62% 19.04% 6.56% 0.33% Source: Bloomberg


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Report of the Board of Directors (continued) Nikko AM Japan Growth Fund (continued) Performance Review for Year 2009

In the first half of 2009 (from January to March), we reduced our holdings in defensive stocks and gradually increased our weighting in economic sensitive stocks with a robust financial standing based on the following criteria; i) expectations of a bottoming out of macroeconomic indicators, as evidenced by the projected upward turn of the production index from April, ii) signs of increases in production in major export companies after May, and iii) the high likelihood of implementation of further easing of monetary policy by the Bank of Japan and economic stimulus packages by the government. After March, we took profits in stocks that had risen significantly in anticipation of an improvement in earnings and had become a little overvalued, and also in financial stocks where there was a concern at the prospect of large capital increase due to tighter capital regulations. Meanwhile, we invested in stocks where the expectations for earnings recovery were not reflected in the current stock price. In particular, we invested in or increased our holdings in stocks in economically sensitive sectors such as electronic appliances, semiconductors, automobile parts, and trading companies, due to the improvements in the production index and in business sentiment. After September, the Japanese stock market declined significantly due to the appreciation of the yen and concerns of worsening supply and demand balance stemming from large capital increases. However, we still maintained our view that the trend of corporate earnings will continue to recover with support from the improvements in the diffusion index and the production index. With this in mind, we continued to purchase or increase our weightings in stocks in the economically sensitive sectors such as electronic appliances, semiconductors, automobile parts, and materials. Specifically, we added TDK, Kuraray, and Toshiba to the portfolio, based on our opinion that manufacturers will complete production adjustments before May and that production will begin to improve after that point. In addition, we increased our weightings in Mitsui & Co. and Sumitomo Corp. Meanwhile, we sold or minimised our positions in financial stocks where there was a concern that capital increases would be necessary due to tighter capital regulations, and also in defensive stocks such as Lawson and Ajinomoto. In 2009, the fund achieved outperformance over the benchmark. The top performers were cyclical stocks. In particular, overweighting electric appliances and automobile parts such as NIDEC, Sumitomo Electric Industry, and DISCO made a positive contribution to performance. Meanwhile, the bottom performers included consumption-related stocks such as Lawson and ABC Mart, and utilities stocks such as Tokyo Gas and NTT DoCoMo. In terms of sector allocation, we were overweight in chemicals, nonferrous metals, and electric appliances, and underweight in banks, electric power and gas, and land transport and resulted in a positive impact on performance.


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Report of the Board of Directors (continued) Nikko AM Japan Growth Fund (continued) Performance Review for Year 2009 (continued)

GICS 10 sector allocation as of end-December 2009 GIGS Sector Managed % Benchmark % Relative Energy 0.68 1.11 -0.43 Materials 17.86 8.68 9.18 Industrials 19.35 19.73 -0.39 Consumer Discretionary 25.48 20.09 5.38 Consumer Staples 2.91 6.23 -3.32 Health Care 6.87 5.61 1.27 Financials 9.88 16.41 -6.53 Information Technology 13.53 13.40 0.13 Telecommunication Services 3.44 3.67 -0.23 Utilities 0.00 5.06 -5.06

Source: Barra Market Outlook We forecast that the Japanese stock market will remain on a gradual upward trend. In particular, we project the TOPIX to range between 800 and 1000 points over the next six-months, and expect it to hit 850 points at the end of March 2010 and 900 points at the end of June 2010. Looking forward, the industrial production index and the global economy will sustain their momentum and corporate earnings are likely to recover better than is expected. On this basis, we expect the stock market will rise over the short term. However, due to the ongoing economic recovery, there is a possibility of changes to the financial and economic policies which have supported the stock market rally up until now, including ongoing global quantitative easing and low long –term interest rates. We envisage that earnings improvement will be factored into stock prices and subsequently the stock market will remain range-bound on wariness over a so-called “exit strategy” from these financial and economic measures.


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Report of the Board of Directors (continued) Nikko AM Japan Growth Fund (continued) Investment Policies

Looking forward, the Japanese stock market looks likely to be more sensitive, to the strength of the recovery in the economy and the trends of production and supply. However, we believe that the actual economy will continue to improve albeit at a moderate pace. In light of this , we will invest in stocks that are expected to show an improvement in earnings in response to the economic recovery, and will not invest in defensive stocks. However after December 2009, the stock market has been shifting from the trend of ‘buying on expectation’, to stock picking based on the ‘actual progress’ in profits and key fundamentals. Accordingly, we will identify and invest in companies that can outperform the market consensus by delivering superior earnings and business results after F/Y2010, with careful attention to corporate earnings trends and stock valuation.

Luxembourg, March 31, 2010 Note : The figures stated in this report are historical and not necessarily indicative of future performance.

Page 16 R.C.S. Luxembourg B 65 477 - TVA LU17564447

PricewaterhouseCoopers Société à responsabilité limitée Réviseur d'Entreprises 400, route d’Esch B.P. 1443 L-1014 Luxembourg Telephone +352 494848-1 Facsimile +352 494848-2900 www.pwc.com/lu [email protected]

Independent Auditor’s Report To the Shareholders of Nikko AM Global Umbrella Fund

We have audited the accompanying financial statements of Nikko AM Global Umbrella Fund (the “SICAV”) and of each of its sub-funds, which comprise the statement of net assets and the statement of investments as at December 31, 2009 and the statement of operations and changes in net assets for the year then ended, and a summary of significant accounting policies and other explanatory notes to the financial statements. Board of Directors of the SICAV’s responsibility for the financial statements The Board of Directors of the SICAV is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the “Institut des Réviseurs d’Entreprises”. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors of the SICAV, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion In our opinion, these financial statements give a true and fair view of the financial position of Nikko AM Global Umbrella Fund and of each of its sub-funds as of December 31, 2009, and of the results of their operations and changes in their net assets for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial statements. Other matters Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we express no opinion on such information. However, we have no observation to make concerning such information in the context of the financial statements taken as a whole. PricewaterhouseCoopers S.à r.l. Luxembourg, March 31, 2010 Réviseur d’entreprises Represented by Laurent Marx


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Combined statement of net assets at December 31, 2009 Combined statement (Expressed in US dollars) Notes Combined USD Assets Investments At cost 11,055,704.19 At market value 2.3 10,112,406.24 Cash at bank 215,075.73 Receivable for investments sold 12,176.26 Dividend receivable 3,016.77 Total assets 10,342,675.00 Liabilities Payable for investments purchased 4,696.93 Printing and publishing expenses payable 60,864.61 Professional fees payable 23,014.96 Management fees payable 3 21,539.87 Custodian and administration fees payable 4 3,920.63 “Taxe d’abonnement” payable 5 510.46 Total liabilities 114,547.46 Total Net Assets 10,228,127.54 The accompanying notes are an integral part of these financial statements.


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Statement of net assets at December 31, 2009 Nikko AM Asia-Pacific Fund (Expressed in US dollars) Notes Nikko AM Asia-Pacific Fund USD Assets Investments At cost 4,478,306.10 At market value 2.3 5,151,183.55 Cash at bank 110,751.18 Total assets 5,261,934.73 Liabilities Printing and publishing expenses payable 29,740.22 Professional fees payable 2,404.26 Management fees payable 3 10,262.34 Custodian and administration fees payable 4 1,893.49 “Taxe d’abonnement” payable 5 254.65 Total liabilities 44,554.96 Total Net Assets 5,217,379.77 Net assets Class A USD Shares USD 3,975,420.99 Class B USD Shares USD 1,241,958.78 Number of shares outstanding Class A USD Shares USD 115,302.57 Class B USD Shares USD 36,297.05 Net assets per share Class A USD Shares USD 34.48 Class B USD Shares USD 34.22 The accompanying notes are an integral part of these financial statements.


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Statement of net assets at December 31, 2009 Nikko AM Japan Value Fund (Expressed in Japanese yen) Notes Nikko AM Japan Value Fund JPY Assets Investments At cost 416,608,874 At market value 2.3 268,099,301 Cash at bank 7,698,690 Dividend receivable 212,784 Total assets 276,010,775 Liabilities Printing and publishing expenses payable 1,787,296 Professional fees payable 1,024,790 Management fees payable 3 626,278 Custodian and administration fees payable 4 117,676 “Taxe d’abonnement” payable 5 12,873 Total liabilities 3,568,913 Total Net Assets 272,441,862 Net assets Class A JPY Shares JPY 211,817,579 Class B JPY Shares JPY 60,624,283 Number of shares outstanding Class A JPY Shares JPY 388,264.48 Class B JPY Shares JPY 112,159.32 Net assets per share Class A JPY Shares JPY 546 Class B JPY Shares JPY 541 The accompanying notes are an integral part of these financial statements.


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Statement of net assets at December 31, 2009 Nikko AM Japan Growth Fund (Expressed in US dollars) Notes Nikko AM Japan Growth Fund USD Assets Investments At cost 2,062,291.62 At market value 2.3 2,055,627.14 Cash at bank 20,887.36 Receivable for investments sold 12,176.26 Dividend receivable 710.67 Total assets 2,089,401.43 Liabilities Payable for investments purchased 4,696.93 Printing and publishing expenses payable 11,754.11 Professional fees payable 9,504.27 Management fees payable 3 4,494.17 Custodian and administration fees payable 4 752.61 “Taxe d’abonnement” payable 5 116.35 Total liabilities 31,318.44 Total Net Assets 2,058,082.99 Net assets Class A JPY Shares JPY 129,814,845 Class B USD Shares USD 633,940.01 Class B JPY Shares JPY 1,384,264 Number of shares outstanding Class A JPY Shares JPY 262,704.03 Class B USD Shares USD 120,000.00 Class B JPY Shares JPY 3,000.00 Net assets per share Class A JPY Shares JPY 494 Class B USD Shares USD 5.28 Class B JPY Shares JPY 461 The accompanying notes are an integral part of these financial statements.


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Combined statement of operations and changes in net assets for the year ended December 31, 2009 Combined statement (Expressed in US dollars) Notes Combined USD (*) Income Dividend income (net) 2.6 219,380.17Total income 219,380.17 Expenses Publishing and printing expenses 86,922.96 Transaction, safekeeping fees 80,521.93 Management fees 3 77,946.24 Professional fees 66,606.85 Custodian and administration fees 4 14,095.44 Legal fees 12,776.48 Registration fees 9,702.12 "Taxe d'abonnement" 5 1,884.98 Other expenses 1,415.99Total expenses 351,872.99 Net investment loss (132,492.82) Net realised : Gain on investments 603,304.77 Loss on foreign exchange 2.4 (44,605.73)Net realised gain for the year 426,206.22 Net change in unrealised : Appreciation on investments 2,530,597.09Net increase in net assets as result of operations 2,956,803.31 Movement in capital Subscription of shares 71,513.80 Redemption of shares (1,246,371.81)Net movement in capital (1,174,858.01) Net assets at the beginning of the year 8,527,205.85 Exchange difference (81,023.61)Net assets at the end of the year 10,228,127.54 (*) Amounts in JPY are translated at the average exchange rate of 93.56 JPY/USD The accompanying notes are an integral part of these financial statements.


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Statement of operations and changes in net assets for the year ended December 31, 2009 Nikko AM Asia-Pacific Fund (Expressed in US dollars) Notes Nikko AM Asia-Pacific Fund USD Income Dividend income (net) 2.6 128,519.92Total income 128,519.92 Expenses Publishing and printing expenses 37,113.30 Transaction, safekeeping fees 49,009.33 Management fees 3 32,625.88 Professional fees 22,296.00 Custodian and administration fees 4 6,004.13 Legal fees 5,100.56 Registration fees 3,373.90 "Taxe d'abonnement" 5 845.74 Other expenses 967.82Total expenses 157,336.66 Net investment loss (28,816.74) Net realised : Gain on investments 1,721,580.29 Loss on foreign exchange 2.4 (50,558.76)Net realised gain for the year 1,642,204.79 Net change in unrealised : Appreciation on investments 921,832.49Net increase in net assets as result of operations 2,564,037.28 Movement in capital Subscription of shares 71,513.80 Redemption of shares (308,648.09)Net movement in capital (237,134.29) Net assets at the beginning of the year 2,890,476.78 Net assets at the end of the year 5,217,379.77 The accompanying notes are an integral part of these financial statements.


Page 24

Statement of operations and changes in net assets for the year ended December 31, 2009 Nikko AM Japan Value Fund (Expressed in Japanese yen) Notes Nikko AM Japan Value Fund JPY Income Dividend income (net) 2.6 5,444,790Total income 5,444,790 Expenses Publishing and printing expenses 2,266,014 Transaction, safekeeping fees 623,548 Management fees 3 2,530,815 Professional fees 2,265,936 Custodian and administration fees 4 475,124 Legal fees 453,831 Registration fees 340,785 "Taxe d'abonnement" 5 54,023 Other expenses 7,735Total expenses 9,017,811 Net investment loss (3,573,021) Net realised : Loss on investments (73,889,131) Gain on foreign exchange 2.4 7,501Net realised loss for the year (77,454,651) Net change in unrealised : Appreciation on investments 104,264,901Net increase in net assets as result of operations 26,810,250 Movement in capital Redemption of shares (62,028,320)Net movement in capital (62,028,320) Net assets at the beginning of the year 307,659,932 Net assets at the end of the year 272,441,862 The accompanying notes are an integral part of these financial statements.


Page 25

Statement of operations and changes in net assets for the year ended December 31, 2009 Nikko AM Japan Growth Fund (Expressed in US dollars) Notes Nikko AM Japan Growth Fund USD Income Dividend income (net) 2.6 32,665.06Total income 32,665.06 Expenses Publishing and printing expenses 25,589.97 Transaction, safekeeping fees 24,847.97 Management fees 3 18,270.42 Professional fees 20,092.00 Custodian and administration fees 4 3,013.07 Legal fees 2,825.27 Registration fees 2,685.83 "Taxe d'abonnement" 5 461.83 Other expenses 365.50Total expenses 98,151.86 Net investment loss (65,486.80) Net realised : Loss on investments (328,531.22) Gain on foreign exchange 2.4 5,873.08Net realised loss for the year (388,144.94) Net change in unrealised : Appreciation on investments 494,356.74Net increase in net assets as result of operations 106,211.80 Movement in capital Redemption of shares (274,750.53)Net movement in capital (274,750.53) Net assets at the beginning of the year 2,226,621.72 Net assets at the end of the year 2,058,082.99 The accompanying notes are an integral part of these financial statements.


Page 26

Statistical information Nikko AM Asia-Pacific Fund

Class A USDNikko AM Asia-Pacific Fund

Class B USDNikko AM Japan Value Fund

Class A JPYNikko AM Japan Value Fund

Class B JPY Number of shares outstanding at the end of the year :

December 31, 2007 115,302.57 55,368.05 388,264.48 123,490.06 December 31, 2008 115,302.57 45,462.05 492,850.48 123,490.06 Shares issued - 2,245 - - Shares redeemed - (11,410) (104,586) (11,330.74) December 31, 2009 115,302.57 36,297.05 388,264.48 112,159.32 Total net assets at the end of the year : USD USD JPY JPY December 31, 2007 3,651,501.75 1,750,055.99 351,067,543 111,272,566 December 31, 2008 2,076,004.50 814,472.28 246,338,857 61,321,075 December 31, 2009 3,975,420.99 1,241,958.78 211,817,579 60,624,283 Net asset value per share at the end of the year :

USD USD JPY JPY

December 31, 2007 31.67 31.61 904 901 December 31, 2008 18.00 17.92 500 497 December 31, 2009 34.48 34.22 546 541


Page 27

Statistical information (continued) Nikko AM Japan Growth

Fund Class A JPYNikko AM Japan Growth

Fund Class B USDNikko AM Japan Growth

Fund Class B JPY Number of shares outstanding at the end of the year: December 31, 2007 262,704.03 141,900.00 65,300.00 December 31, 2008 262,704.03 140,000.00 40,300.00 Shares issued - - - Shares redeemed - (20,000.00) (37,300.00) December 31, 2009 262,704.03 120,000.00 3,000.00 Total net assets at the end of the year: JPY USD JPY December 31, 2007 216,261,969 1,026,272.63 50,833,165 December 31, 2008 120,166,228 702,604.87 17,330,593 December 31, 2009 129,814,845 633,940.01 1,384,264 Net asset value per share at the end of the year: JPY USD JPY December 31, 2007 823 7.23 778 December 31, 2008 457 5.02 430 December 31, 2009 494 5.28 461


Page 28

Notes to the financial statements

(As of December 31, 2009) Note 1 - Activity NIKKO AM GLOBAL UMBRELLA FUND (hereinafter referred to as the "Fund") is an investment

company organised under Luxembourg law as a "Société d'Investissement à Capital Variable" (SICAV). The Fund is submitted to the Part I of the law of December 20, 2002 relating to Undertakings for collective investment. On October 1, 2009, an extraordinary general meeting of the shareholders of the Fund decided to modify art 1 of the article of incorporation in order to change the name from Nikko Global Umbrella Fund to Nikko AM Global Umbrella Fund. The Fund is organised as a SICAV with multiple sub-funds. At the date of this report, the following three sub-funds are in operation : * NIKKO AM GLOBAL UMBRELLA FUND – Nikko AM ASIA-PACIFIC FUND (hereinafter referred to as “Nikko AM Asia-Pacific Fund”) * NIKKO AM GLOBAL UMBRELLA FUND – Nikko AM JAPAN VALUE FUND (hereinafter referred to as “Nikko AM Japan Value Fund”) * NIKKO AM GLOBAL UMBRELLA FUND – Nikko AM JAPAN GROWTH FUND (hereinafter referred to as “Nikko AM Japan Growth Fund”) The following classes of shares are in operation: Nikko AM Asia-Pacific Fund Class A USD shares for institutional investors. Class B USD shares for all investors. Nikko AM Japan Value Fund Class A Yen shares for institutional investors. Class B Yen shares for all investors. Nikko AM Japan Growth Fund Class A Yen shares and class A USD shares for institutional investors. Class B Yen shares and class B USD shares for all investors. As at December 31, 2009, there is no share outstanding in class A USD.

Note 2 - Significant accounting policies 2.1 - Presentation of financial statements The financial statements are presented in accordance with Luxembourg regulations relating to

undertakings for collective investment. 2.2 - Combined statement of net assets The combined financial statements of the Fund are expressed in USD. The combined statement of

net assets is the sum of the sub-funds net assets converted in USD at exchange rates prevailing at year-end. The combined statement of operations and changes in net assets is converted in USD at the average exchange rates applicable for the year-ended December 31, 2009.


Page 29

Notes to the financial statements (continued)

(As of December 31, 2009) Note 2 - Significant accounting policies (continued) 2.3 - Valuation of investments in securities and derivatives • the value of securities and/or financial derivative instruments which are quoted or dealt in on

any stock exchange shall be based on the latest available closing price and each security traded on any other organised market shall be valued in a manner as similar as possible to that provided for quoted securities.

• for securities, for which trading on the relevant stock exchanges is thin and secondary market

trading is done between dealers who, as main market makers, offer prices in response to market conditions, the Company may decide to value such securities in line with the prices so established;

• for non-quoted securities or securities not traded or dealt in on any stock exchange or other

organised market, as well as quoted or non-quoted securities on such other market for which no valuation price is available, or securities for which the quoted prices are not representative of the fair market value, the value thereof shall be determined prudently and in good faith on the basis of foreseeable sales prices;

• liquid assets and Money Market Instruments may be valued at face value plus any accrued

interests;

• the financial derivative instruments which are not listed on any official stock exchange or traded on any other organised market will be valued in accordance with market practice;

• shares or units in underlying open-ended investment funds shall be valued at their last

available net asset value reduced by any applicable charges.


Page 30


(As of December 31, 2009) Note 2 - Significant accounting policies (continued) 2.4 - Foreign currency translation Assets and liabilities expressed in other currencies than the currency of the sub-fund are translated

at exchange rates ruling at the year-end. Transactions in foreign currencies are translated into the currency of the sub-fund at exchange rates ruling at the transaction dates. Gains and losses on foreign exchange are recognised in the statement of operations and changes in net assets of each sub-fund in determining the result for the year. The exchange rates used for the translation of assets and liabilities into USD as at December 31, 2009 were:

Currency Exchange rate Currency Exchange rate

JPY 92.27 TWD 31.99HKD 7.76 KRW 1,166.08AUD 1.11 MYR 3.43SGD 1.40 PHP 46.20

2.5 - Formation expenses Formation expenses have been fully amortised. 2.6 - Income Dividends are credited to income on the date upon which the relevant securities are first listed as

“ex-dividend”. Interest income is accrued on a daily basis.


Page 31


(As of December 31, 2009) Note 3 - Management fees The Management Company, Investment advisors, Investment sub-advisors and duly authorized

distributors or intermediaries are entitled to receive a management fees from the Fund for their management, advisory, or other services conducted for the Fund at the end of each quarter at an aggregate annual percentage rate of no greater than 2.50% of the average daily net assets of the relevant sub-fund during the quarter. The fee levels charged are respectively for Nikko AM Asia-Pacific Fund and Nikko AM Japan Value Fund 0.75% for class A and 1% for class B and for Nikko AM Japan Growth Fund 0.75% for class A and 1.20% for class B.

Note 4 - Custodian and administration fees The Fund pays fees in accordance with normal practice in Luxembourg, to the Custodian, Registrar

and Transfer, Corporate, Administrative and Domiciliary Agent. The fees are based on the net assets of the Fund. They are also determined partly on a transaction basis and partly as a fixed percentage of the total net assets, the total having been determined with reference to market rates prevailing in Luxembourg. The fixed percentage of net asset value charged during the year-ended December 31, 2009 are 0.15% for Nikko AM Asia-Pacific Fund, Nikko AM Japan Value Fund and Nikko AM Japan Growth Fund.

Note 5 - Taxation The Fund is subject to Luxembourg law with respect of its tax status. Under current legislation, the

Fund is not subject to any taxes on income or capital gains. However, the Fund is subject to the "taxe d'abonnement" at an annual rate of 0.05% based on the net assets of the Fund at the end of the calendar quarter, calculated and paid quarterly. The rate is reduced to 0.01% in respect of the share which comprises only Institutional Investors within the meaning of article 129 of the law of December 20, 2002. Interest and dividend income received by the Fund may be subject to non-recoverable withholding tax in the countries of origin.

Note 6 - Dividend distribution Annual dividends may be declared separately in respect of each class of each sub-fund by a

resolution of the Shareholders of the sub-fund concerned at the annual general meeting of Shareholders. No dividend distribution occurred in 2009.


Page 32

Statement of investments at December 31, 2009 Nikko AM Asia-Pacific Fund (Expressed in US dollars)

Quantity Description Currency Cost Market value Ratio* Transferable securities admitted to an official Stock Exchange or dealt in an another regulated market Shares USD USD %

85,000 ANTA SPORTS PRODUCTS LTD HKD 110,104.04 126,266.67 2.427,536 ANZ BANKING GROUP LTD AUD 151,431.71 155,138.27 2.97

34,352 AQUARIUS PLATINUM LIMITED AUD 168,752.99 227,175.45 4.36177,500 ASIA CEMENT CORP TWD 197,351.32 191,985.50 3.68

3,204 ASX LTD AUD 97,741.06 100,725.04 1.93146,000 BANK OF CHINA LTD -H- HKD 55,506.21 79,071.41 1.5277,000 BEIJING JINGKELONG CO LTD -H- HKD 21,934.71 62,751.65 1.207,869 BHP BILLITON LTD AUD 178,419.19 305,295.45 5.869,000 CHEUNG KONG HOLDINGS LTD HKD 99,016.39 116,402.08 2.23

50,000 CHINA AGRI-INDUSTRIES HLDGS LTD HKD 59,158.12 65,763.89 1.26136,000 CHINA COMMUNICATIONS SERVICES -H- HKD 80,067.19 66,991.48 1.28147,000 CHINA CONSTRUCTION BANK-H HKD 82,785.02 126,433.01 2.4276,000 CHINA HIGH SPEED TRANS EQPMT GP LTD HKD 160,084.90 185,810.07 3.5715,000 CHINA LIFE INSURANCE CO -H- HKD 52,810.78 74,177.80 1.4220,000 CHINA MOBILE (HK) LTD HKD 196,818.11 187,878.40 3.6067,000 CHINA MOLYBDENUM CO LTD -H- HKD 54,265.76 53,910.92 1.03

170,147 CHINATRUST FINANCIAL HOLDING TWD 98,474.32 106,111.18 2.033,203,500 CIPUTRA PROPERTY TBK PT IDR 96,169.69 83,709.93 1.60

96,000 CNOOC LTD HKD 119,405.02 151,024.84 2.8910,000 DBS GROUP HOLDINGS LTD SGD 91,444.44 109,898.06 2.1110,000 HENDERSON LAND DEVELOPMENT CO LTD HKD 64,715.03 75,306.10 1.4450,000 HO BEE INVESTMENT LTD SGD 49,086.33 61,728.45 1.1813,800 HON HAI PRECISION INDUSTRY CO LTD TWD 45,688.82 65,356.03 1.2568,000 HUNG POO REAL ESTATE DEVELOP TWD 103,335.19 109,261.21 2.09

380 HYUNDAI MOBIS KRW 50,606.86 55,725.13 1.07102,000 IND AND COMM BK OF CHINA -H- HKD 64,974.48 84,703.89 1.6222,500 INDO TAMBANGRAYA MEGAH PT IDR 48,826.81 76,312.52 1.469,000 KEPPEL CORP LTD SGD 44,292.98 52,858.11 1.01

275 LG CHEMICAL LTD KRW 50,073.08 53,887.78 1.031,355 LG ELECTRONICS INC KRW 129,850.28 141,184.49 2.72

994 LG INNOTEK CO LTD KRW 89,763.09 84,475.63 1.622,540,000 LIPPO KARAWACI TBK PT IDR 166,776.67 138,162.46 2.65

271,000 LIPPO-MAPLETREE INDONESIA RE SGD 92,422.77 97,662.98 1.876,500 MACARTHUR COAL LTD AUD 50,106.78 65,794.25 1.266,219 NATIONAL AUSTRALIA BANK LTD - NAB AUD 134,226.45 153,318.00 2.941,997 NEWCREST MINING LTD AUD 60,192.35 63,481.00 1.22

48,000 NOBLE GROUP LTD SGD 79,137.91 111,325.30 2.1312,000 PPB GROUP BERHAD MYR 51,348.73 55,893.79 1.0740,000 PRESIDENT CHAIN STORE CORP TWD 93,554.96 95,156.53 1.821,720 RIO TINTO LIMITED AUD 76,719.06 115,897.56 2.22

80 SAMSUNG ELECTRONICS KRW 50,396.50 54,816.10 1.05140,849 SHIN KONG FINANCIAL HOLDING TWD 54,586.94 58,559.77 1.12

(*) Weight of the Market value against the Total net assets expressed in %.


Page 33

Statement of investments at December 31, 2009 (continued) Nikko AM Asia-Pacific Fund (continued) (Expressed in US dollars)

Quantity Description Currency Cost Market value Ratio* Transferable securities admitted to an official Stock Exchange or dealt in on another regulated market (continued) Shares (continued) USD USD %

188 SHINSEGAE CO LTD KRW 88,937.96 86,577.20 1.667,000 SUN HUNG KAI PROPERTIES HKD 105,558.87 104,977.22 2.01

48,279 TAIWAN SEMICONDUCTOR MANUFACT COMP TWD 78,351.16 97,344.62 1.8714,271 UNITED GROUP LTD AUD 181,081.64 183,488.42 3.53

1,157,000 VISTA LAND AND LIFESCAPES INC PHP 48,637.81 47,082.31 0.903,089 WESTPAC BANKING CORP AUD 44,904.49 70,317.02 1.35

41,000 WING TAI HOLDINGS SGD 51,042.65 53,543.19 1.032,400 WOOLWORTHS LTD AUD 57,368.48 60,465.39 1.16

Total shares 4,478,306.10 5,151,183.55 98.73 Total transferable securities admitted to an official Stock Exchange or dealt in on another regulated market 4,478,306.10 5,151,183.55 98.73 Total investments 4,478,306.10 5,151,183.55 98.73 (*) Weight of the Market value against the Total net assets expressed in %. The accompanying notes are an integral part of these financial statements.


Page 34

Classification of investments Nikko AM Asia-Pacific Fund Classification of investments by country and by economical sector Country Economical sector Ratio (%) * Australia Banks & Other Credit Institutions 7.26 Coal Mining & Steel Industry 7.12 Building Materials & Trade 3.53 Non-Ferrous Metals 2.22 Holding & Finance Companies 1.93 Precious Metals And Stones 1.22 Retail Trade & Department Stores 1.16 24.44 China Banks & Other Credit Institutions 5.56 Machine & Apparatus Construction 3.57 Textiles & Garments 2.42 Insurance 1.42 Communications 1.28 Foodstuffs & Non-Alcoholic Drinks 1.20 Coal Mining & Steel Industry 1.03 16.48 Hong Kong Real Estate Companies 5.68 Communications 3.60 Petroleum 2.89 Miscellaneous Services 2.13 Agriculture & Fishery 1.26 15.56 Taiwan Building Materials & Trade 3.68 Holding & Finance Companies 3.15 Electrical Engineering & Electronic 3.12 9.95 (*) Weight of the Market value against the Total net assets expressed in %.


Page 35

Classification of investments (continued) Nikko AM Asia-Pacific Fund (continued) Classification of investments by country and by economical sector (continued) Country Economical sector Ratio (%) * Republic of Korea Electrical Engineering & Electronic 5.39 Retail Trade & Department Stores 1.66 Road Vehicles 1.07 Chemicals 1.03 9.15 Singapore Real Estate Companies 3.05 Banks & Other Credit Institutions 2.11 Holding & Finance Companies 1.03 Miscellaneous Services 1.01 7.20 Indonesia Real Estate Companies 4.25 Coal Mining & Steel Industry 1.46 5.71 Bermuda Precious Metals And Stones 4.36 4.36 Taiwan Real Estate Companies 2.09 Miscellaneous Services 1.82 3.91 Malaysa Agriculture & Fishery 1.07 1.07 Phillipines Real Estate Companies 0.90 0.90 Total investments 98.73 (*) Weight of the Market value against the Total net assets expressed in %.


Page 36

Statement of investments at December 31, 2009 Nikko AM Japan Value Fund (Expressed in Japanese yen)

Quantity Description Currency Cost Market value Ratio* Transferable securities admitted to an official Stock Exchange or dealt in on another regulated market Shares JPY JPY %

4,000 AMADA CO LTD JPY 4,484,716 2,324,000 0.853,000 ASAHI GLASS CO LTD JPY 4,426,938 2,634,000 0.971,300 BOOKOFF CORP JPY 1,558,438 1,313,000 0.481,000 CANON INC JPY 5,198,713 3,910,000 1.441,600 CHUBU ELECTRIC POWER CO INC JPY 3,456,331 3,552,000 1.30

40 COCOKARA FINE HOLDINGS INC JPY 94,730 67,600 0.021,500 DAIFUKU CO LTD JPY 2,331,800 886,500 0.332,800 DAIICHI SANKYO CO LTD JPY 8,304,909 5,457,200 2.00

500 DAIKIN INDUSTRIES LTD JPY 1,595,600 1,830,000 0.673,000 DAIWA HOUSE INDUSTRY CO LTD JPY 4,197,910 2,982,000 1.095,000 DAIWA SECURITIES GROUP INC JPY 5,204,245 2,325,000 0.855,000 DOWA HOLDINGS CO LTD JPY 1,850,170 2,570,000 0.94

800 ELECTRIC POWER DEVELOPMENT JPY 3,057,058 2,112,000 0.78300 FANUC LTD JPY 3,257,268 2,589,000 0.95

14,000 FUJI ELECTRIC HOLDINGS CO JPY 2,225,788 2,240,000 0.825,000 FUJITSU LTD JPY 4,402,150 2,980,000 1.096,000 FUKUOKA FINANCIAL GROUP INC JPY 2,625,103 1,932,000 0.714,000 GODO STEEL LTD JPY 726,356 800,000 0.294,000 H20 RETAILING CORP JPY 4,100,786 2,144,000 0.792,000 HISAKA WORKS LTD JPY 3,864,866 1,840,000 0.68

20,000 HITACHI ZOSEN CORP JPY 3,557,748 2,520,000 0.921,300 HONDA MOTOR CO JPY 4,476,401 4,043,000 1.48

300 IDEMITSU KOSAN CO LTD JPY 3,898,264 1,620,000 0.593 INPEX CORPORATION JPY 3,115,398 2,103,000 0.77

2,900 ISETAN MITSUKOSHI HOLDINGS JPY 2,580,348 2,427,301 0.8913,000 ISUZU MOTORS LTD JPY 6,580,098 2,249,000 0.83

900 JAFCO CO LTD JPY 5,054,774 2,007,000 0.74900 JAPAN AIRPORT TERMINAL CO JPY 984,508 1,132,200 0.42

7,000 JFE SHOJI HLDGS INC JPY 4,160,611 2,324,000 0.8514,000 KAWASAKI HEAVY INDS LTD JPY 5,643,474 3,276,000 1.20

7 KDDI CORP JPY 3,606,547 3,451,000 1.271,600 KINTETSU WORLD EXPRESS INC JPY 4,209,530 3,856,000 1.42

20,000 KOBE STEEL LTD JPY 5,940,310 3,360,000 1.234,000 KUBOTA CORP JPY 2,496,711 3,400,000 1.251,500 KURARAY CO LTD JPY 2,124,135 1,630,500 0.60

11,000 KUREHA CORPORATION JPY 5,872,221 5,038,000 1.853,900 KYOWA EXEO JPY 4,989,995 3,065,400 1.134,000 KYOWA HAKKO KIRIN CO LTD JPY 4,226,776 3,940,000 1.459,000 MARUBENI CORP JPY 5,185,177 4,599,000 1.695,200 MARUI GROUP CO LTD JPY 3,819,138 2,969,200 1.096,000 MEISEI INDUSTRIAL CO LTD JPY 3,142,076 1,194,000 0.443,500 MITSUBISHI CHEMICAL HOLDGS JPY 1,553,523 1,379,000 0.51



Page 37

Statement of investments at December 31, 2009 (continued) Nikko AM Japan Value Fund (continued) (Expressed in Japanese yen)

Quantity Description Currency Cost Market value Ratio* Transferable securities admitted to an official Stock Exchange or dealt in on another regulated market (continued) Shares (continued) JPY JPY %

2,000 MITSUBISHI CORP JPY 4,299,712 4,610,000 1.696,000 MITSUBISHI ELECTRIC CORP JPY 5,916,765 4,110,000 1.515,000 MITSUBISHI GAS CHEMICAL CO JPY 4,405,899 2,330,000 0.864,000 MITSUBISHI HEAVY INDUSTRIES JPY 1,496,402 1,304,000 0.489,600 MITSUBISHI UFJ FINANCIAL GP JPY 12,830,003 4,339,200 1.599,000 MITSUI-SOKO CO LTD JPY 6,590,435 3,024,000 1.11

17,100 MIZUHO FINANCIAL GROUP JPY 10,850,342 2,838,600 1.042,000 NABTESCO CORP JPY 1,264,324 2,116,000 0.786,000 NIPPON OIL CORP JPY 2,205,604 2,580,000 0.95

15,000 NIPPON STEEL CORP JPY 8,071,287 5,625,000 2.068,400 NIPPON SUISAN KAISHA LTD JPY 3,313,022 2,200,800 0.81

900 NIPPON TELEGRAPH AND TEL. JPY 5,450,364 3,285,000 1.215,500 NIPPON YAKIN KOGYO CO LTD JPY 3,359,618 1,958,000 0.727,100 NOMURA HOLDINGS INC JPY 13,009,096 4,835,100 1.771,100 NS SOLUTIONS CORP JPY 1,402,482 1,612,600 0.593,200 OSG CORP JPY 3,601,434 3,084,800 1.132,000 PANASONIC ELEC WORKS CO LTD JPY 2,686,000 2,244,000 0.826,900 PARCO CO LTD JPY 8,916,685 5,526,900 2.031,800 RESONA HOLDINGS INC JPY 2,855,953 1,688,400 0.62

900 RYOHIN KEIKAKU CO LTD JPY 4,668,513 3,042,000 1.126,000 SANKEN ELECTRIC CO LTD JPY 2,714,219 1,566,000 0.577,000 SANKYU INC JPY 2,070,347 3,332,000 1.22

500 SANTEN PHARMACEUTICAL CO JPY 1,533,718 1,490,000 0.551,800 SEIREN CO LTD JPY 1,523,735 1,157,400 0.423,000 SEKISUI CHEMICAL CO LTD JPY 1,989,715 1,728,000 0.63

600 SHIMA SEIKI MFG LTD JPY 1,823,625 1,012,800 0.374,000 SHIMADZU CORP JPY 3,898,507 2,464,000 0.90

600 SHIMANO INC JPY 2,437,395 2,232,000 0.828,000 SHIMIZU CORP JPY 3,586,536 2,664,000 0.981,600 SHOWA CORP JPY 1,398,151 894,400 0.33

16,000 SHOWA DENKO JPY 6,070,996 2,960,000 1.0935 SKY PERFECT JSAT HLDGS INC JPY 1,343,676 1,295,000 0.48

12,800 SOJITZ CORP JPY 4,720,258 2,240,000 0.825,000 SOMPO JAPAN INSURANCE INC JPY 4,781,295 2,965,000 1.09

900 SONY CORP JPY 2,249,797 2,403,000 0.884,000 SUMITOMO CORP JPY 6,065,169 3,772,000 1.383,700 SUMITOMO ELECTRIC INDS JPY 5,772,685 4,255,000 1.562,900 SUMITOMO FORESTRY CO LTD JPY 1,723,501 2,030,000 0.75

14,000 SUMITOMO METAL IND JPY 4,914,491 3,486,000 1.283,000 SUMITOMO METAL MINING CO JPY 5,228,010 4,137,000 1.521,400 SUMITOMO MITSUI FINANCIAL JPY 13,508,922 3,703,000 1.36



Page 38

Statement of investments at December 31, 2009 (continued) Nikko AM Japan Value Fund (continued) (Expressed in Japanese yen)

Quantity Description Currency Cost Market value Ratio* Transferable securities admitted to an official Stock Exchange or dealt in on another regulated market (continued) Shares (continued) JPY JPY %

19,000 TAIHEIYO CEMENT CORP JPY 4,343,450 2,014,000 0.7410,000 TAISEI CORP JPY 3,584,555 1,590,000 0.58

500 TDK CORP JPY 4,270,148 2,825,000 1.0412,000 TOKYO GAS CO LTD JPY 6,998,416 4,452,000 1.636,000 TOKYO TATEMONO CO LTD JPY 4,277,699 2,124,000 0.788,000 TOKYU CORP JPY 5,994,288 2,960,000 1.095,000 TOKYU LAND CORP JPY 3,651,710 1,710,000 0.63

16,000 TORAY INDUSTRIES INC JPY 13,624,722 8,048,000 2.954,000 TOSHIBA CORP JPY 3,205,297 2,044,000 0.75

300 TOYO TANSO CO LTD JPY 1,188,311 1,341,000 0.49600 TOYOTA INDUSTRIES CORP JPY 3,281,716 1,653,000 0.61

2,000 TOYOTA MOTOR CORP JPY 12,556,531 7,760,000 2.8515,000 UBE INDUSTRIES LTD JPY 5,601,638 3,810,000 1.403,800 UNITED ARROWS LTD JPY 2,699,368 2,937,400 1.08

300 YAMATAKE CORP JPY 600,699 618,000 0.23 Total shares 416,608,874 268,099,301 98.41 Total transferable securities admitted to an official Stock Exchange or dealt in on another regulated market 416,608,874 268,099,301 98.41

Total investments 416,608,874 268,099,301 98.41 (*) Weight of the Market value against the Total net assets expressed in %. The accompanying notes are an integral part of these financial statements.


Page 39

Classification of investments Nikko AM Japan Value Fund Classification of investments by country and by economical sector Country Economical sector Ratio (%) * Japan Machine & Apparatus Construction 9.76 Electrical Engineering & Electronic 7.43 Retail Trade & Department Stores 6.59 Miscellaneous Trading Companies 6.43 Building Materials & Trade 5.81 Coal Mining & Steel Industry 5.58 Road Vehicles 5.49 Holding & Finance Companies 5.29 Transportation 5.26 Chemicals 5.20 Banks & Other Credit Institutions 4.28 Pharmaceuticals & Cosmetics 4.02 Textiles & Garments 3.97 Energy & Public Utilities 3.71 Miscellaneous Services 2.64 Communications 2.48 Non-Ferrous Metals 2.46 Petroleum 2.31 Miscellaneous Consumer Goods 1.70 Photographic & Optics 1.44 Real Estate Companies 1.41 Insurance 1.09 Software Companies 1.09 Medical And Healthcare Services 0.90 Agriculture & Fishery 0.81 Paper & Forest Products 0.75 Chemicals Energy Related 0.51 98.41 Total investments 98.41 (*) Weight of the Market value against the Total net assets expressed in %.


Page 40

Statement of investments at December 31, 2009 Nikko AM Japan Growth Fund (Expressed in US dollars)

Quantity Description Currency Cost Market value Ratio* Transferable securities admitted to an official Stock Exchange or dealt in on another regulated market Shares USD USD %

500 ABC-MART INC JPY 11,960.42 14,084.13 0.683,000 AIR WATER INC JPY 27,405.43 35,625.53 1.732,000 AJINOMOTO CO INC JPY 17,722.05 18,995.94 0.92

800 ALOKA CO LTD JPY 6,738.84 5,679.24 0.28900 ASAHI INTECC CO LTD JPY 15,256.12 15,142.48 0.74200 BENESSE CORP JPY 8,295.32 8,445.05 0.41800 CANON INC JPY 34,449.19 33,953.88 1.65

3,000 DAICEL CHEMICAL INDUSTRIES JPY 17,811.06 17,715.07 0.864,000 DAIWA SECURITIES GROUP INC JPY 25,157.13 20,189.97 0.986,000 DENKI KAGAKU KOGYO KK JPY 22,890.68 27,028.51 1.31

300 DISCO CORP JPY 12,515.50 18,789.70 0.91500 DOSHISHA CO LTD JPY 10,960.74 11,261.88 0.55500 EAST JAPAN RAILWAY JPY 33,350.51 31,858.90 1.55400 EISAI CO LTD JPY 14,573.42 14,849.40 0.72600 ELPIDA MEMORY INC JPY 7,877.70 9,808.42 0.48200 FP CORP JPY 8,561.53 9,118.05 0.44500 FUJIFILM HOLDINGS CORP JPY 19,986.52 15,142.48 0.74500 FUYO GENERAL LEASE CO LTD JPY 11,841.31 10,599.73 0.51

5,000 HANWA CO LTD JPY 18,122.04 18,290.38 0.89700 HITACHI CHEMICAL CO LTD JPY 14,570.72 14,292.54 0.69

1,400 HONDA MOTOR CO JPY 44,649.19 47,261.90 2.30500 HOYA CORP JPY 9,933.86 13,351.43 0.65700 IBIDEN CO LTD JPY 25,730.95 25,074.64 1.22700 IT HOLDINGS CORP JPY 12,878.61 8,048.37 0.39

3,000 ITOCHU CORP JPY 20,846.59 22,208.97 1.086,000 JAPAN TRANSCITY CORP JPY 19,307.68 17,324.30 0.84

900 JFE HOLDINGS INC JPY 28,391.41 35,658.09 1.73300 JSR CORP JPY 5,935.66 6,122.12 0.30

2,000 KANEKA CORP JPY 13,455.38 12,830.40 0.622,000 KANSAI PAINT CO LTD JPY 17,106.48 16,868.39 0.82

6 KDDI CORP JPY 40,447.43 32,108.56 1.5610 KEYENCE CORP JPY 1,695.93 2,084.13 0.10

1,000 KINTETSU WORLD EXPRESS INC JPY 28,241.94 26,160.12 1.272,000 KOITO MFG CO LTD JPY 28,119.84 32,108.56 1.56

800 K'S HOLDINGS CORP JPY 21,569.34 24,227.96 1.182,000 KUBOTA CORP JPY 11,632.57 18,453.20 0.901,500 KURARAY CO LTD JPY 12,812.35 17,698.79 0.86

700 KURITA WATER INDUSTRIES LTD JPY 14,776.92 22,035.29 1.07200 KYOCERA CORP JPY 16,389.78 17,736.78 0.86700 LINTEC CORP JPY 10,945.63 14,208.96 0.69400 MARS ENGINEERING CORP JPY 11,915.70 9,747.63 0.47

2,500 MITSUBISHI CHEMICAL HOLDGS JPY 10,283.15 10,692.00 0.52 (*) Weight of the Market value against the Total net assets expressed in %.


Page 41

Statement of investments at December 31, 2009 (continued) Nikko AM Japan Growth Fund (continued) (Expressed in US dollars)


4,000 MITSUBISHI ELECTRIC CORP JPY 38,747.95 29,742.21 1.451,000 MITSUBISHI ESTATE CO LTD JPY 15,722.71 16,043.43 0.788,500 MITSUBISHI UFJ FINANCIAL GP JPY 74,856.65 41,704.23 2.032,900 MITSUI AND CO JPY 45,702.91 41,268.95 2.011,000 MITSUI FUDOSAN CO LTD JPY 16,419.10 16,911.81 0.82

800 NETUREN CO LTD JPY 5,361.48 5,114.79 0.251,000 NGK INSULATORS LTD JPY 22,993.46 21,926.74 1.073,000 NHK SPRING CO LTD JPY 21,805.93 28,038.01 1.36

400 NIDEC CORPORATION JPY 24,103.66 37,080.07 1.801,100 NIFCO INC JPY 20,637.48 22,029.86 1.073,000 NIPPON OIL CORP JPY 14,647.06 14,002.72 0.682,000 NIPPON SEIKI CO LTD JPY 34,296.40 23,033.93 1.125,000 NIPPON STEEL CORP JPY 19,471.69 20,352.79 0.991,900 NISSAN MOTOR CO LTD JPY 14,046.87 16,705.57 0.812,000 NISSHIN OILLIO GROUP JPY 10,721.90 10,160.11 0.49

900 NISSIN KOGYO CO LTD JPY 8,642.92 14,097.16 0.68200 NITORI CO LTD JPY 10,549.99 15,044.78 0.73

4,000 NITTETSU MINING CO LTD JPY 19,044.77 18,843.97 0.92500 NS SOLUTIONS CORP JPY 13,333.82 7,956.58 0.3919 NTT DOCOMO INC JPY 29,247.17 26,728.91 1.30

200 ORIX CORP JPY 8,703.49 13,611.95 0.662,300 PANASONIC CORP JPY 48,507.92 33,080.07 1.61

300 PIGEON CORP JPY 11,406.97 11,853.47 0.588 RAKUTEN INC JPY 5,745.47 6,139.49 0.30

6,000 RIKEN CORP JPY 21,628.04 19,603.81 0.95700 SANTEN PHARMACEUTICAL CO JPY 18,971.01 22,643.16 1.10200 SECOM CO LTD JPY 10,274.99 9,595.66 0.47

3,000 SEKISUI CHEMICAL CO LTD JPY 17,776.22 18,757.13 0.91100 SHIMAMURA CO LTD JPY 6,134.65 9,617.37 0.47300 SHIN ETSU CHEMICAL JPY 16,896.42 17,031.22 0.83

8,000 SHINAGAWA REFRACTORIES CO JPY 18,516.90 18,757.13 0.91500 SOFTBANK CORP JPY 11,843.49 11,777.48 0.57800 SONY CORP JPY 34,689.49 23,185.90 1.13

1,400 STANLEY ELECTRIC CO JPY 26,694.90 28,357.14 1.375,300 SUMITOMO CORP JPY 49,075.40 54,251.31 2.643,500 SUMITOMO ELECTRIC INDS JPY 42,131.02 43,690.66 2.124,000 SUMITOMO HEAVY INDS JPY 17,540.67 20,320.23 0.991,600 SUMITOMO MITSUI FINANCIAL JPY 82,313.76 45,937.61 2.221,000 SUMITOMO REALTY AND DEV. JPY 13,310.88 18,876.54 0.92

900 SUMITOMO RUBBER INDUSTRIES JPY 6,105.91 7,835.01 0.38300 TAKEDA PHARMACEUTICAL CO LTD JPY 15,703.84 12,472.19 0.60700 TDK CORP JPY 32,801.24 42,930.82 2.09

3,300 TEIKOKU PISTON RING JPY 13,518.40 12,895.53 0.63 (*) Weight of the Market value against the Total net assets expressed in %.


Page 42

Statement of investments at December 31, 2009 (continued) Nikko AM Japan Growth Fund (continued) (Expressed in US dollars)


300 TERUMO CORP JPY 9,956.40 18,236.10 0.896 T-GAIA CORP JPY 11,147.58 10,726.74 0.52

1,400 TOHO HOLDINGS CO LTD JPY 18,026.82 16,883.59 0.822,000 TOKAI CARBON CO JPY 12,988.02 9,986.44 0.491,500 TOKAI RIKA CO LTD JPY 19,646.51 33,948.46 1.65

700 TOKIO MARINE HOLDINGS INC JPY 25,497.88 19,223.89 0.932,000 TOKUYAMA CORP JPY 12,235.83 11,223.89 0.55

200 TOKYO ELECTRON LTD JPY 11,720.69 12,852.11 0.621,000 TOPPAN PRINTING CO LTD JPY 8,177.98 8,151.97 0.406,000 TOSHIBA CORP JPY 25,625.26 33,280.88 1.62

200 TOWA PHARMACEUTICAL CO LTD JPY 9,753.57 9,335.15 0.454,000 TOYO INK MFG CO LTD JPY 15,528.10 15,500.69 0.752,000 TOYO KOHAN CO LTD JPY 9,769.24 10,507.47 0.516,000 TOYO TIRE + RUBBER CO LTD JPY 10,997.49 11,202.18 0.541,300 TOYOTA MOTOR CORP JPY 61,167.95 54,751.72 2.66

800 TRANCOM CO LTD JPY 14,952.23 12,417.92 0.60800 TSUMURA AND CO JPY 22,482.25 26,051.57 1.27200 UNI-CHARM CORP JPY 15,424.64 18,909.10 0.92600 UNIPRES CORP JPY 9,435.56 9,547.90 0.46

Total shares 2,062,291.62 2,055,627.14 99.88 Total transferable securities admitted to an official Stock Exchange or dealt in on another regulated market 2,062,291.62 2,055,627.14 99.88

Total investments 2,062,291.62 2,055,627.14 99.88 (*) Weight of the Market value against the Total net assets expressed in %. The accompanying notes are an integral part of these financial statements.


Page 43

Classification of investments Nikko AM Japan Growth Fund Classification of investments by country and by economical sector Country Economical sector Ratio (%) * Japan Electrical Engineering & Electronic 15.34 Road Vehicles 12.31 Chemicals 8.65 Miscellaneous Trading Companies 7.30 Machine & Apparatus Construction 5.74 Pharmaceuticals & Cosmetics 5.64 Holding & Finance Companies 4.76 Coal Mining & Steel Industry 4.40 Communications 3.95 Transportation 3.42 Photographic & Optics 3.04 Miscellaneous Consumer Goods 2.84 Medical And Healthcare Services 2.73 Real Estate Companies 2.52 Miscellaneous Services 2.41 Retail Trade & Department Stores 1.91 Building Materials & Trade 1.82 Banks & Other Credit Institutions 1.64 Foodstuffs & Non-Alcoholic Drinks 1.41 Textiles & Garments 1.33 Rubber & Tires 1.22 Building Materials & Trade (Green) 1.07 Electrical Eng & Elect Energy 1.07 Insurance 0.93 Petroleum 0.68 Chemicals Energy Related 0.52 Packing Industry 0.44 Graphics & Publishing 0.40 Software Companies 0.39 99.88 Total investments 99.88 (*) Weight of the Market value against the Total net assets expressed in %.

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