i) Basic Policy for Engagement

We consider that engagement with investee companies is an effective way to fulfill our stewardship responsibility, and we intend to do so proactively.
We believe that engagement should be held based on the deep understanding of investee companies and their business environment. In this way, we will strive to understand companies' specific circumstances. We then support companies in the management of business to help them enhance corporate value and achieve sustainable growth through engagement. At the same time, we do not believe that asking for improvements in companies with management issues is the only method of engagement. We believe it is also very important to reassure well-managed companies of our support as investors.
As our operation underlies medium-to-long term investment based on thorough fundamental research and analysis, we believe that medium-to-long term fundamentals are the key to engagement. However, we expect the contents of the dialogue with each investee company to vary depending on the business environment and each company's specific business circumstances.
Based on the principles stated above, we set forth our basic policy on corporate engagement as shown below, with the intention of fulfilling our stewardship responsibilities by deepening mutual understanding through our day-to-day dialogue with investee companies:

  1. (1)Maintain an amicable and constructive stance when communicating with investee companies.
  2. (2)Deepen understanding not only on financial information, but also on non-financial information of the investee companies, which includes ESG issues, the background to certain strategies and management philosophy.
  3. (3)Exchange ideas and opinions with investee companies regarding capital efficiency.
  4. (4)Exchange ideas and opinions regarding the cause and recurrence countermeasures in the event of incidents that breach accepted standards and promote effective corporate management.

We will continue to encourage investee companies to create value and achieve sustainable growth through such engagement activities.

There may be some cases where we receive material facts that have not been disclosed under the insider trading regulations, or information that carries some risk of being considered "insider information" in the course of performing such engagement activities. Such information must, if received, be treated properly in accordance with laws and regulations, and applicable industry and internal rules.

ii) Status of Engagement

Upon making an investment decision, we hold direct interviews with the investee companies. Through this long-established policy, we held direct contacts on around 5,300 occasions during fiscal year 2015 (Japanese companies, including company briefing sessions, but excluding telephone interviews).
We make contact with companies in several ways, such as company information sessions, Investor Relations (IR) interviews, conducting on-site visits, and direct high-level interviews with senior management. The total figure includes meetings held at our Tokyo headquarters office (around 2,000 in FY2015). These meetings provide opportunities to exchange frank opinions regarding details of corporate management and managerial issues. Around 40% of these meetings held in our headquarters office are attended by directors in charge of corporate management, with discussions covering a wide range of management issues.
As many aspects of the business environment of these companies are closely related and have a broad impact on issues such as business strategies, financial strategies, business results, and capital management (e.g. policies relating to shareholder value), we believe that corporate engagement should be incorporated into such regular dialogue.
We also strive to fulfill our responsibility as an institutional investor by discussing their adherence to ESG related issues, especially corporate governance.