Introducing the New JPX-Nikkei Index 400

 
November 7, 2013

Japan: Portfolio Strategy

Introducing the New
JPX-Nikkei Index 400
                                                                                         Portfolio Strategy Research

Focus on ROE, governance, size and liquidity

New ROE-focused index to be launched                                            Kathy Matsui
                                                                                +81(3)6437-9950 kathy.matsui@gs.com
In an effort to promote the appeal of quality Japanese companies as well        Goldman Sachs Japan Co., Ltd.
as encourage the improvement of corporate value and a greater emphasis
on capital efficiency, the Japan Exchange Group and Nikkei Inc. have just       Hiromi Suzuki
                                                                                +81(3)6437-9955 hiromi.suzuki@gs.com
announced their new jointly-developed stock index, the “JPX-Nikkei Index        Goldman Sachs Japan Co., Ltd.
400”, which will be launched Jan. 6, 2014. The constituents have been
selected on the basis of ROE, governance, size and liquidity criteria.          Kazunori Tatebe
                                                                                +81(3)6437-9898 kazunori.tatebe@gs.com
                                                                                Goldman Sachs Japan Co., Ltd.
Comparison vs. TOPIX: Makes Japan appear more attractive
                                                                                Tsumugi Akiba
The new index would exhibit a higher ROE, lower P/E ratio, and a higher         +81(3)6437-9966 tsumugi.akiba@gs.com
dividend yield. In other words, it will make the Japanese market appear         Goldman Sachs Japan Co., Ltd.
more attractive overall. Using current stock prices, our comparison of
sector weightings vs. TOPIX shows potentially higher weightings for
electrical appliances, raw materials, machinery, transportation,
pharmaceuticals, wholesale trade, retail, real estate and food. We believe
sectors with lower weightings would include autos, banks, nonbank
financials, construction, and electric power & gas.

A deliberate focus on ROE; key will be how much traction
This new ROE-focused index is clearly unique, and seems to be a
deliberate effort to encourage companies and investors to focus more on
profitability and capital efficiency. It waits to be seen how much traction
the new index will have, but since the Nikkei has reported that the
Government Pension Investment Fund (GPIF) may consider shifting the
current benchmark for its domestic equity investments from TOPIX to the
new JPX-Nikkei 400 index, this could prompt other institutions to follow.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors
should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors
should consider this report as only a single factor in making their investment decision. For Reg AC certification and other
important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by
non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

The Goldman Sachs Group, Inc.                                                                          Global Investment Research
November 7, 2013                                                                                                                                Japan

JPX-Nikkei Index 400: Constituent criteria
                                 As mentioned in our Oct. 11 report, 4Q Focus: Earnings, Policy, and Growth
                                 Outperformance, the Japan Exchange Group (JPX) and Nikkei Inc. have announced the
                                 details of their new stock index called “JPX-Nikkei Index 400.”1

                                 The new index constituents have been released and the index will start to be calculated
                                 from the beginning of 2014. The key selection criteria of the index constituents include:

                                 Selection criteria for constituents
                                      •    Eligible stock universe: TSE-listed stocks (1st Section, 2nd Section, Mothers,
                                           JASDAQ)

                                           (1) Screening

                                           •     Screening by eligibility criteria: Stocks are excluded if they fall under any of
                                                 the following criteria: listed for fewer than 3 years, liabilities in excess of
                                                 assets during any of the past 3 fiscal years, operating deficit in all of the past 3
                                                 fiscal years, overall deficit in all of the past 3 fiscal years, designated as
                                                 “Security to be delisted.”

                                           •     Screening by market liquidity: The top 1,000 issues will be selected from those
                                                 eligible stocks in consideration of (a) trading value during the most recent 3
                                                 years and (b) market cap on the base date for selection.

                                           (2) Scoring based on Quantitative Indicators: The 1,000 issues selected in (1) will
                                               be scored according to the ranking of the following 3 items. (1st: 1000 points.
                                               1000th: 1 point.) Then, overall score is determined by aggregating those
                                               ranking scores with the following weights: (a) 3-year average ROE: 40%; (b) 3-
                                               year cumulative operating profit: 40%; (c) market capitalization on the base
                                               date for selection: 20%.

                                           (3) Scoring based on Qualitative factors: Following the quantitative scoring in (2),
                                               issues will be further scored based on the following 3 items. This score is
                                               complementarily added to the quantitative scores explained above in (2)*. (a)
                                               appointment of at least 2 independent outside directors; (b) adoption or
                                               scheduled adoption of IFRS; (c) disclosure of English earnings information via
                                               TDnet system (English company announcement distribution service).

                                            * The score is determined so that at most around 10 constituents are different
                                           from those chosen with only quantitative score above in (2).

                                           (4) Determination of constituents and review: Following scoring in (3), 400 stocks
                                               will be selected in descending order of high scores as constituents.

                                           Constituent review: A constituent review will be conducted on the last business
                                           day of August each year with the last business day of June as the base date for
                                           selection.

                                           (5) Calculation method: Free-float adjusted market capitalization-weighted (with
                                               1.5% cap).

                                 1
                                  For details, see official JPX/Nikkei joint press release: http://www.tse.or.jp/english/news/17/b7gje6000001nr5o-
                                 att/b7gje6000001nr8v.pdf

Goldman Sachs Global Investment Research                                                                                                             2
November 7, 2013                                                                                                           Japan

                                            (6) Start date of calculation: January 6, 2014 (Mon). Real-time dissemination (per
                                                1 second) of the index via Tokyo Stock Exchange’s Market Information System.

                                            (7) Base date/value for index calculation: August 30, 2013 / 10,000 points

                                 The list of 400 index constituents can be found in the Appendix.

Comparison vs. TOPIX/Nikkei 225
                                 While the new index will not be launched until January 6, 2014, we examined the
                                 differences between the new index and TOPIX/Nikkei 225.

                                      1.    Profitability and valuations: Using stock prices as of Nov. 5, we compared the
                                            combined ROE and valuation metrics of the new JPX-Nikkei 400 index with those
                                            of TOPIX (see Exhibit 1). As expected, the new index would exhibit a higher ROE,
                                            lower P/E ratio, and a higher dividend yield. In other words, the new index would
                                            make the Japanese market appear more attractive overall.

                                      2.    Sector weightings: Using stock prices as of Nov. 5, we estimated the sector
                                            weightings of the new JPX-Nikkei 400 index vs. TOPIX (see Exhibit 2). Sectors that
                                            will likely see increased weightings compared to TOPIX include: electrical
                                            appliances, IT services, raw materials, machinery, transportation, pharmaceuticals,
                                            wholesale trade, retail, real estate, food, steel & nonferrous metals, and energy.
                                            Meanwhile sectors that we expect will see decreased weightings include: autos,
                                            banks, nonbank financials, construction, and electric power & gas.

                                      3.    Compared to the existing Nikkei 225 index (price-weighted index), there are 59
                                            Nikkei 225 constituents that will be excluded from the JPX-Nikkei 400 index,
                                            including large-caps such as Panasonic, MS&AD Insurance, Daiwa Securities and
                                            Mazda Motor (see Exhibit 3).

                                      4.    Since there is a limit of 1.5% per constituent stock within the new index, Exhibit 4
                                            contains a list of stocks whose free-float adjusted market cap weightings within the
                                            new index may exceed 1.5% (based on our calculations using Nov. 5 prices) such
                                            as Toyota Motor and Softbank.

                                 Exhibit 1: JPX-Nikkei 400 index vs. TOPIX—New index would make Japanese equities
                                 appear more attractive

                                                                                          Div Yld       ROE        ROE
                                                   PE FY1       PE FY2         PB
                                                                                           FY1          FY1        FY2

                                    New Index        14.7         13.7         1.4          2.0          9.5       10.2

                                      Topix          15.1         13.9         1.3          1.9          8.8       9.6

                                 Source: I/B/E/S, Toyo Keizai, Factset, Goldman Sachs Global Investment Research

Goldman Sachs Global Investment Research                                                                                        3
November 7, 2013                                                                                                         Japan

                                 Exhibit 2: Sector weight comparison
                                 %

                                     14
                                                                                                 New Index*
                                     12
                                                                                                 TOPIX
                                     10

                                       8

                                       6

                                       4

                                       2

                                       0

                                                                                    New Index*   TOPIX        Diff.
                                                             Pharmaceutical                5.4       4.4           1.0
                                                             Machinery                     6.1       5.2           0.9
                                                             Retail                        5.1       4.2           0.9
                                                             Electric Appl.               13.5      12.7           0.8
                                                             Real Estate                   4.5       3.7           0.7
                                                             Wholesale Trade               5.3       4.6           0.7
                                                             IT & Services Others         11.2      10.7           0.5
                                                             Transportation                5.6       5.1           0.5
                                                             Raw Materials                 6.6       6.3           0.3
                                                             Energy Res.                   1.3       1.1           0.3
                                                             Foods                         4.3       4.1           0.2
                                                             Steel & Nonferrous            3.0       2.8           0.2
                                                             Financials Ex Bk              5.1       5.4          -0.4
                                                             Const. & Materials            3.9       4.4          -0.5
                                                             Electric Pwr & Gas            1.0       2.4          -1.3
                                                             Banks                         8.2       9.9          -1.6
                                                             Autos                         9.9      13.1          -3.2
                                 Note: GS assumed, as of Nov. 5.

                                 Source: TSE, Goldman Sachs Global Investment Research.

Goldman Sachs Global Investment Research                                                                                    4
November 7, 2013                                                                                                                                                Japan

Exhibit 3: Nikkei 225 constituents which will be excluded from the JPX-Nikkei Index 400

                                                                           MCap                                                                              MCap
 Ticker Name                                 Sector                                   Ticker Name                                Sector
                                                                           JPYbn                                                                             JPYbn
  6857   Advantest Corp.                     Electric Appliances              223     7912   Dai Nippon Printing Co., Ltd.       Other Products                 732
  6113   Amada Co., Ltd.                     Machinery                        338     1802   Obayashi Corporation                Construction                   446
  6770   Alps Electric Co., Ltd.             Electric Appliances              165     6976   Taiyo Yuden Co., Ltd.               Electric Appliances            148
  7733   Olympus Corp.                       Precision Instruments          1,074     2531   Takara Holdings Inc.                Foods                          206
  6103   Okuma Corp.                         Machinery                        146     9107   Kawasaki Kisen Kaisha, Ltd.         Marine Transportation          210
  6952   Casio Computer Co., Ltd.            Electric Appliances              266     3401   Teijin Limited                      Textiles & Apparels            214
  2501   Sapporo Holdings Limited            Foods                            173     5413   Nisshin Steel Holdings Co., Ltd.    Iron & Steel                   145
  7762   Citizen Holdings Co, Ltd.           Precision Instruments            230     5202   Nippon Sheet Glass Company          Glass & Ceramics Products      113
  6753   Sharp Corp.                         Electric Appliances              478     5333   NGK Insulators, Ltd.                Glass & Ceramics Products      546
  9412   SKY Perfect JSAT Holdings Inc.      Information & Communication      191     3863   Nippon Paper Industries Co., Ltd.   Pulp & Paper                   185
  4043   Tokuyama Corporation                Chemicals                        138     9101   Nippon Yusen Kabushiki Kaisha       Marine Transportation          512
  6752   Panasonic Corporation               Electric Appliances            2,534     6701   NEC Corp.                           Electric Appliances            565
  5803   Fujikura Ltd                        Nonferrous Metals                160     3110   Nitto Boseki Co., Ltd.              Glass & Ceramics Products      116
  7261   Mazda Motor Corp.                   Transportation Equipment       1,302     3105   Nisshinbo Holdings Inc.             Textiles & Apparels            152
  6479   Minebea Co., Ltd.                   Electric Appliances              253     9681   Tokyo Dome Corporation              Services                       130
  7951   Yamaha Corporation                  Other Products                   287     8804   Tokyo Tatemono Co., Ltd.            Real Estate                    396
  7752   Ricoh Company, Ltd.                 Electric Appliances              749     9501   Tokyo Electric Power Company        Electric Power & Gas           857
  4183   Mitsui Chemicals, Inc.              Chemicals                        234     3101   Toyobo Co., Ltd.                    Textiles & Apparels            169
  7003   Mitsui Engineering & Shipbuilding   Transportation Equipment         155     5901   Toyo Seikan Group Holdings Ltd.     Metal Products                 433
  9301   Mitsubishi Logistics Corporation    Warehousing                      230     8628   Matsui Securities Co., Ltd.         Securities                     282
  9502   Chubu Electric Power Company        Electric Power & Gas           1,076     6841   Yokogawa Electric Corp.             Electric Appliances            347
  8252   Marui Group Co., Ltd.               Retail Trade                     294     6703   OKI Electric Industry Company       Electric Appliances            165
  4005   Sumitomo Chemical Co., Ltd.         Chemicals                        604     1803   Shimizu Corporation                 Construction                   392
  5232   Sumitomo Osaka Cement Co., Ltd.     Glass & Ceramics Products        169     5406   Kobe Steel, Ltd.                    Iron & Steel                   536
  7911   Toppan Printing Co., Ltd.           Other Products                   546     9503   The Kansai Electric Power Company   Electric Power & Gas         1,124
  5801   Furukawa Electric Co., Ltd.         Nonferrous Metals                169     8725   MS&AD Insurance Group Holdings      Insurance                    1,610
  9104   Mitsui O.S.K.Lines,Ltd.             Marine Transportation            501     8630   NKSJ Holdings, Inc.                 Insurance                    1,052
  8601   Daiwa Securities Group Inc.         Securities                     1,604     6472   NTN Corporation                     Machinery                      224
  7735   Dainippon Screen Mfg. Co., Ltd      Electric Appliances              129     3436   Sumco Corporation                   Metal Products                 221
  4506   Dainippon Sumitomo Pharma           Pharmaceutical                   539

Source: Japan Exchange Group, TSE, Nikkei, Goldman Sachs Global Investment Research

                                        Exhibit 4: Stocks within the JPX-Nikkei 400 index whose free-float adjusted market cap
                                        weights may exceed the 1.5% limit

                                             Ticker                                 Name
                                             7203        Toyota Motor Corp.
                                             9984        SoftBank Corp.
                                             8306        Mitsubishi UFJ Financial Group, Inc.
                                             7267        Honda Motor Co., Ltd.
                                             2914        Japan Tobacco Inc.
                                             8316        Sumitomo Mitsui Financial Group, Inc.
                                             8411        Mizuho Financial Group, Inc.
                                        Note: GS assumed, as of Nov. 5.

                                        Source: TSE, Goldman Sachs Global Investment Research

Goldman Sachs Global Investment Research                                                                                                                              5
November 7, 2013                                                                                                          Japan

Implications: Greater focus on ROE
                                 While this is not the first time that a new stock index has been launched, we believe this
                                 one will be important to watch. As we have previously noted, the Nikkei newspaper
                                 reported on October 5 that the GPIF, the world’s largest pension fund with over $1.2 tn in
                                 assets, may consider shifting its current benchmark for its domestic equity investments
                                 from TOPIX to the new JPX-Nikkei index.

                                 Furthermore, proxy voting and research firm Institutional Shareholder Services (ISS) is
                                 considering incorporating ROE as a factor in its Japan voting guidelines for nominations of
                                 executives of Japanese firms from 2014.

                                 Compared to popular benchmark indices in the rest of the world, this new index is unique
                                 in that it is focused on factors such as ROE and governance in addition to size and liquidity
                                 considerations. It waits to be seen how much traction this new index will have, but if
                                 bellwether institutions such as the GPIF ultimately adopt it, we believe there is a good
                                 chance that other institutions will follow.

Goldman Sachs Global Investment Research                                                                                      6
November 7, 2013                                                                                                                                       Japan

Appendix: JPX-Nikkei Index 400 constituents
                                        The constituents of the new JPX-Nikkei 400 index are contained in Exhibits 5-7.

Exhibit 5: JPX-Nikkei 400 index constituents

                                                                     MCap                                                                            MCap
 Ticker Name                                 Sector                           Ticker Name                               Sector
                                                                     JPYbn                                                                           JPYbn
  1417   Mirait Holdings Corporation         Construction                75   3099   Isetan Mitsukoshi Holdings Ltd.     Retail Trade                   586
  1605   Inpex Corporation                   Mining                   1,654   3116   Toyota Boshoku Corp.                Transportation Equipment       231
  1721   Comsys Holdings Corporation         Construction               200   3141   Welcia Holdings Co., Ltd.           Retail Trade                   113
  1722   Misawa Homes Co., Ltd.              Construction                67   3167   Tokai Holdings Corporation          Wholesale Trade                 52
  1801   Taisei Corporation                  Construction               569   3231   Nomura Real Estate Holdings, Inc.   Real Estate                    466
  1808   Haseko Corporation                  Construction               219   3289   Tokyu Fudosan Holdings Corp.        Real Estate                    609
  1812   Kajima Corporation                  Construction               442   3291   Iida Group Holdings Co., Ltd.       Real Estate                    615
  1878   Daito Trust Construction Co., Ltd.  Construction               793   3315   Nippon Coke & Engineering Company Oil & Coal Products               36
  1911   Sumitomo Forestry Co., Ltd.         Construction               205   3349   Cosmos Pharmaceutical Corporation Retail Trade                     236
  1925   Daiwa House Industry Co., Ltd.      Construction             1,264   3360   Ship Healthcare Holdings, Inc.      Wholesale Trade                163
  1928   Sekisui House, Ltd.                 Construction               928   3382   Seven & I Holdings Co., Ltd.        Retail Trade                 3,182
  1951   Kyowa Exeo Corporation              Construction               137   3391   Tsuruha Holdings Inc.               Retail Trade                   211
  1963   JGC Corp.                           Construction               970   3402   Toray Industries, Inc.              Textiles & Apparels            989
  1983   Toshiba Plant Systems & Services Co Construction               164   3405   Kuraray Co., Ltd.                   Chemicals                      430
  2002   Nisshin Seifun Group Inc.           Foods                      285   3407   Asahi Kasei Corporation             Chemicals                    1,059
  2131   Accordia Golf Co., Ltd.             Services                   120   3632   Gree, Inc.                          Information & Communication    189
  2212   Yamazaki Baking Co., Ltd.           Foods                      220   3738   T-Gaia Corporation                  Information & Communication     79
  2267   Yakult Honsha Co., Ltd.             Foods                      862   3765   Gungho Online Entertainment, Inc.   Information & Communication    674
  2269   Meiji Holdings Co., Ltd.            Foods                      411   3774   Internet Initiative Japan Inc.      Information & Communication    129
  2270   Megmilk Snow Brand Co., Ltd.        Foods                       95   3861   Oji Holdings Corp.                  Pulp & Paper                   470
  2282   Nippon Meat Packers, Inc.           Foods                      343   3941   Rengo Co., Ltd.                     Pulp & Paper                   137
  2371   Kakaku.Com, Inc.                    Services                   438   4004   Showa Denko K.K.                    Chemicals                      205
  2413   M3, Inc.                            Services                   407   4021   Nissan Chemical Industries, Ltd.    Chemicals                      251
  2432   Dena Co., Ltd.                      Services                   328   4042   Tosoh Corporation                   Chemicals                      239
  2502   Asahi Group Holdings,Ltd.           Foods                    1,319   4045   Toagosei Co., Ltd.                  Chemicals                      114
  2503   Kirin Holdings Company, Limited     Foods                    1,391   4061   Denki Kagaku Kogyo Kabushiki Kaish Chemicals                       194
  2593   ITO EN,Ltd.                         Foods                      196   4063   Shin-Etsu Chemical Co., Ltd.        Chemicals                    2,433
  2607   Fuji Oil Co., Ltd.                  Foods                      151   4088   Air Water Inc.                      Chemicals                      271
  2651   Lawson, Inc.                        Retail Trade               776   4091   Taiyo Nippon Sanso Corporation      Chemicals                      282
  2670   ABC-MART, INC.                      Retail Trade               371   4095   Nihon Parkerizing Co., Ltd.         Chemicals                      124
  2681   GEO Holdings Corporation            Retail Trade                50   4114   Nippon Shokubai Co., Ltd.           Chemicals                      241
  2685   Adastria Holdings Co., Ltd.         Retail Trade               108   4151   Kyowa Hakko Kirin Co., Ltd.         Pharmaceutical                 604
  2702   Mcdonalds Holdings Company Japan, Retail Trade                 360   4185   JSR Corp.                           Chemicals                      428
  2726   Pal Co., Ltd.                       Retail Trade                62   4188   Mitsubishi Chemical Holdings CorporaChemicals                      654
  2767   Fields Corporation                  Wholesale Trade             62   4201   The Nippon Synthetic Chemical IndustChemicals                       91
  2768   Sojitz Corp.                        Wholesale Trade            233   4202   Daicel Corporation                  Chemicals                      288
  2782   Seria Co., Ltd.                     Retail Trade               134   4204   Sekisui Chemical Co., Ltd.          Chemicals                      597
  2801   Kikkoman Corporation                Foods                      379   4205   Zeon Corporation                    Chemicals                      273
  2802   Ajinomoto Co., Inc.                 Foods                      817   4206   Aica Kogyo Company, Limited         Chemicals                      135
  2809   Kewpie Corporation                  Foods                      223   4208   UBE Industries, Ltd.                Chemicals                      208
  2871   Nichirei Corporation                Foods                      146   4217   Hitachi Chemical Company, Ltd.      Chemicals                      306
  2875   Toyo Suisan Kaisha, Ltd.            Foods                      328   4272   Nippon Kayaku Co., Ltd.             Chemicals                      244
  2897   Nissin Foods Holdings Co., Ltd.     Foods                      480   4307   Nomura Research Institute,Ltd.      Information & Communication    721
  2914   Japan Tobacco Inc.                  Foods                    7,060   4324   Dentsu Inc.                         Services                     1,061
  3048   BIC Camera Inc.                     Retail Trade                85   4452   Kao Corp.                           Chemicals                    1,656
  3064   Monotaro Co., Ltd.                  Retail Trade               142   4502   Takeda Pharmaceutical Co. Ltd.      Pharmaceutical               3,708
  3086   J.Front Retailing Co., Ltd.         Retail Trade               398   4503   Astellas Pharma Inc.                Pharmaceutical               2,536
  3088   Matsumotokiyoshi Holdings Co., Ltd. Retail Trade               178   4507   Shionogi & Co., Ltd.                Pharmaceutical                 760
  3092   Start Today Co., Ltd.               Retail Trade               326   4508   Mitsubishi Tanabe Pharma Corporatio Pharmaceutical                 762
  3098   Cocokara Fine Inc.                  Retail Trade                67   4519   Chugai Pharmaceutical Co., Ltd.     Pharmaceutical               1,257
  4521   Kaken Pharmaceutical Co., Ltd.      Pharmaceutical             155   5214   Nippon Electric Glass Co., Ltd.     Glass & Ceramics Products      251
  4523   Eisai Co., Ltd.                     Pharmaceutical           1,158   5233   Taiheiyo Cement Corporation         Glass & Ceramics Products      520
  4527   Rohto Pharmaceutical Co., Ltd.      Pharmaceutical             165   5332   Toto Ltd.                           Glass & Ceramics Products      513
  4528   ONO Pharmaceutical Co., Ltd.        Pharmaceutical             845   5334   NGK Spark Plug Co., Ltd.            Glass & Ceramics Products      503
  4530   Hisamitsu Pharmaceutical Co., Inc. Pharmaceutical              493   5393   Nichias Corporation                 Glass & Ceramics Products       83
  4534   Mochida Pharmaceutical Co., Ltd.    Pharmaceutical             139   5401   Nippon Steel & Sumitomo Metal Corp. Iron & Steel                 2,984
  4536   Santen Pharmaceutical Co., Ltd.     Pharmaceutical             403   5411   JFE Holdings, Inc.                  Iron & Steel                 1,347
  4540   Tsumura & Co.                       Pharmaceutical             214   5471   Daido Steel Co., Ltd.               Iron & Steel                   227
  4541   Nichi-Iko Pharmaceutical Co., Ltd.  Pharmaceutical              99   5486   Hitachi Metals, Ltd.                Iron & Steel                   552
  4543   Terumo Corporation                  Precision Instruments      881   5631   The Japan Steel Works, Ltd.         Machinery                      200

Source: Japan Exchange Group, TSE, Nikkei

Goldman Sachs Global Investment Research                                                                                                                      7
November 7, 2013                                                                                                                                              Japan

Exhibit 6: JPX-Nikkei 400 index constituents cont’d

                                                                          MCap                                                                              MCap
 Ticker Name                                Sector                                 Ticker Name                                Sector
                                                                          JPYbn                                                                             JPYbn
  4544   Miraca Holdings Inc.                 Services                       257   5706   Mitsui Mining and Smelting Company, Nonferrous Metals                142
  4553   Towa Pharmaceutical Co., Ltd.        Pharmaceutical                  81   5711   Mitsubishi Materials Corp.            Nonferrous Metals              497
  4555   Sawai Pharmaceutical Co., Ltd.       Pharmaceutical                 226   5713   Sumitomo Metal Mining Co., Ltd.       Nonferrous Metals              769
  4568   Daiichi Sankyo Company, Limited      Pharmaceutical               1,300   5714   Dowa Holdings Co., Ltd.               Nonferrous Metals              278
  4569   Kyorin Holdings, Inc.                Pharmaceutical                 154   5802   Sumitomo Electric Industries, Ltd.    Nonferrous Metals            1,151
  4581   Taisho Pharmaceutical Holdings Co., Pharmaceutical                  622   5857   Asahi Holdings, Inc.                  Nonferrous Metals               59
  4612   Nippon Paint Co., Ltd.               Chemicals                      435   5938   LIXIL Group Corp.                     Metal Products                 709
  4613   Kansai Paint Co., Ltd.               Chemicals                      351   5947   Rinnai Corporation                    Metal Products                 398
  4631   DIC Corporation                      Chemicals                      255   5949   Unipres Corporation                   Transportation Equipment        87
  4634   Toyo Ink SC Holdings Co., Ltd.       Chemicals                      147   5970   G-Tekt Corporation                    Metal Products                  64
  4661   Oriental Land Co., Ltd.              Services                     1,399   5991   NHK Spring Co., Ltd.                  Metal Products                 244
  4666   Park24 Co., Ltd.                     Real Estate                    287   6136   OSG Corporation                       Machinery                      157
  4676   Fuji Media Holdings, Inc.            Information & Communication    475   6146   Disco Corporation                     Machinery                      203
  4681   Resorttrust, Inc.                    Services                       188   6201   Toyota Industries Corp.               Transportation Equipment     1,396
  4684   OBIC Co., Ltd.                       Information & Communication    301   6256   Nuflare Technology, Inc.              Machinery                      173
  4689   Yahoo Japan Corporation              Information & Communication 2,721    6268   Nabtesco Corporation                  Machinery                      287
  4704   Trend Micro Incorporated             Information & Communication    503   6273   SMC Corporation                       Machinery                    1,558
  4708   Moshi Moshi Hotline, Inc.            Services                        81   6301   Komatsu Ltd.                          Machinery                    2,041
  4716   Oracle Corporation Japan             Information & Communication    491   6302   Sumitomo Heavy Industries, Ltd.       Machinery                      284
  4732   USS Co., Ltd.                        Services                       451   6305   Hitachi Construction Machinery Co., L Machinery                      432
  4739   Itochu Techno-Solutions Corporation Information & Communication     232   6326   Kubota Corporation                    Machinery                    1,947
  4751   Cyberagent, Inc.                     Services                       218   6361   Ebara Corporation                     Machinery                      241
  4755   Rakuten, Inc.                        Services                     1,753   6366   Chiyoda Corp.                         Construction                   321
  4768   Otsuka Corporation                   Information & Communication    395   6367   Daikin Industries, Ltd.               Machinery                    1,647
  4842   Usen Corporation                     Information & Communication     53   6370   Kurita Water Industries Ltd.          Machinery                      251
  4901   Fujifilm Holdings Corporation        Chemicals                    1,250   6371   Tsubakimoto Chain Co.                 Machinery                      125
  4902   Konica Minolta, Inc.                 Electric Appliances            449   6412   Heiwa Corporation                     Machinery                      160
  4911   Shiseido Company,Limited             Chemicals                      673   6417   Sankyo Co., Ltd.                      Machinery                      446
  4924   Dr.Ci:Labo Co., Ltd.                 Chemicals                       83   6425   Universal Entertainment Corporation Machinery                        160
  4967   Kobayashi Pharmaceutical Co., Ltd. Chemicals                        230   6448   Brother Industries, Ltd.              Electric Appliances            310
  5002   Showa Shell Sekiyu K.K.              Oil & Coal Products            403   6460   Sega Sammy Holdings Inc.              Machinery                      695
  5012   Tonengeneral Sekiyu K.K.             Oil & Coal Products            518   6463   TPR Co., Ltd.                         Machinery                       62
  5019   Idemitsu Kosan Co., Ltd.             Oil & Coal Products            329   6465   Hoshizaki Electric Co., Ltd.          Machinery                      254
  5020   JX Holdings, Inc.                    Oil & Coal Products          1,268   6471   NSK Ltd.                              Machinery                      560
  5101   Yokohama Rubber Co. Ltd.             Rubber Products                320   6473   Jtekt Corp.                           Machinery                      414
  5105   Toyo Tire & Rubber Co., Ltd.         Rubber Products                139   6474   Nachi-Fujikoshi Corp.                 Machinery                      118
  5108   Bridgestone Corporation              Rubber Products              2,626   6481   THK Co., Ltd.                         Machinery                      280
  5110   Sumitomo Rubber Industries, Ltd.     Rubber Products                345   6501   Hitachi,Ltd.                          Electric Appliances          3,287
  5196   Kinugawa Rubber Industrial Co., Ltd. Transportation Equipment        34   6502   Toshiba Corp.                         Electric Appliances          1,729
  5201   Asahi Glass Co., Ltd.                Glass & Ceramics Products      710   6503   Mitsubishi Electric Corp.             Electric Appliances          2,304
  6504   Fuji Electric Co., Ltd.              Electric Appliances            332   7309   Shimano Inc.                          Transportation Equipment       770
  6506   Yaskawa Electric Corporation         Electric Appliances            310   7313   TS Tech Co., Ltd.                     Transportation Equipment       228
  6586   Makita Corporation                   Machinery                      672   7451   Mitsubishi Shokuhin Co., Ltd.         Wholesale Trade                155
  6594   Nidec Corporation                    Electric Appliances          1,340   7453   Ryohin Keikaku Co., Ltd.              Retail Trade                   275
  6645   Omron Corp.                          Electric Appliances            862   7458   Daiichikosho Co., Ltd.                Wholesale Trade                167
  6674   GS Yuasa Corporation                 Electric Appliances            231   7516   Kohnan Shoji Co., Ltd.                Retail Trade                    35
  6702   Fujitsu Limited                      Electric Appliances            876   7522   Watami Co., Ltd.                      Retail Trade                    62
  6727   Wacom Co., Ltd.                      Electric Appliances            124   7532   Don Quijote Co., Ltd.                 Retail Trade                   481
  6754   Anritsu Corporation                  Electric Appliances            182   7550   Zensho Holdings Co., Ltd.             Retail Trade                   128
  6755   Fujitsu General Limited              Electric Appliances            132   7581   Saizeriya Co., Ltd.                   Retail Trade                    62
  6758   Sony Corporation                     Electric Appliances          1,733   7593   VT Holdings Co., Ltd.                 Retail Trade                    48
  6762   TDK Corporation                      Electric Appliances            533   7599   Gulliver International Co., Ltd.      Wholesale Trade                 62
  6806   Hirose Electric Co., Ltd.            Electric Appliances            591   7606   United Arrows Ltd.                    Retail Trade                   157
  6845   Azbil Corporation                    Electric Appliances            172   7649   Sugi Holdings Co., Ltd.               Retail Trade                   260
  6849   Nihon Kohden Corporation             Electric Appliances            185   7729   Tokyo Seimitsu Co., Ltd               Precision Instruments           75
  6856   Horiba , Ltd.                        Electric Appliances            147   7731   Nikon Corp.                           Precision Instruments          695
  6861   Keyence Corporation                  Electric Appliances          2,429   7739   Canon Electronics Inc.                Electric Appliances             76
  6869   Sysmex Corporation                   Electric Appliances            645   7741   Hoya Corp.                            Precision Instruments        1,094
  6902   Denso Corp.                          Transportation Equipment     4,168   7751   Canon Inc.                            Electric Appliances          4,088
  6923   Stanley Electric Co., Ltd.           Electric Appliances            405   7832   Namco Bandai Holdings Inc.            Other Products                 408
  6954   Fanuc Corporation                    Electric Appliances          3,624   7860   Avex Group Holdings Inc.              Information & Communication    110
  6965   Hamamatsu Photonics K.K.             Electric Appliances            311   7936   Asics Corporation                     Other Products                 337
  6971   Kyocera Corporation                  Electric Appliances          1,863   7947   FP Corporation                        Chemicals                      163
  6981   Murata Manufacturing Co., Ltd.       Electric Appliances          1,777   7956   Pigeon Corporation                    Other Products                 203
  6988   Nitto Denko Corp.                    Chemicals                      874   7966   Lintec Corporation                    Other Products                 153
  7004   Hitachi Zosen Corporation            Machinery                      121   7988   Nifco Inc.                            Chemicals                      138
  7011   Mitsubishi Heavy Industries, Ltd.    Machinery                    2,122   8001   Itochu Corporation                    Wholesale Trade              1,894
  7012   Kawasaki Heavy Industries Ltd.       Transportation Equipment       654   8002   Marubeni Corporation                  Wholesale Trade              1,317
  7013   IHI Corporation                      Machinery                      596   8012   Nagase & Co., Ltd.                    Wholesale Trade                167
  7201   Nissan Motor Co., Ltd.               Transportation Equipment     3,892   8015   Toyota Tsusho Corp.                   Wholesale Trade                872

Source: Japan Exchange Group, TSE, Nikkei

Goldman Sachs Global Investment Research                                                                                                                             8
November 7, 2013                                                                                                                                             Japan

Exhibit 7: JPX-Nikkei 400 index constituents cont’d

                                                                          MCap                                                                             MCap
 Ticker Name                                 Sector                                Ticker Name                                Sector
                                                                         JPYbn                                                                             JPYbn
  7202   Isuzu Motors Limited                 Transportation Equipment     1,008   8020   Kanematsu Corporation                Wholesale Trade                 56
  7203   Toyota Motor Corp.                   Transportation Equipment   21,791    8028   Familymart Co., Ltd.                 Retail Trade                   424
  7205   Hino Motors,Ltd.                     Transportation Equipment       772   8031   Mitsui & Co.,Ltd                     Wholesale Trade              2,484
  7211   Mitsubishi Motors Corporation        Transportation Equipment       690   8035   Tokyo Electron Ltd.                  Electric Appliances            961
  7240   NOK Corporation                      Transportation Equipment       260   8036   Hitachi High-Technologies Corp.      Wholesale Trade                299
  7242   Kayaba Industry Co., Ltd.            Transportation Equipment       117   8051   Yamazen Corporation                  Wholesale Trade                 57
  7245   Daido Metal Co., Ltd.                Transportation Equipment        42   8053   Sumitomo Corporation                 Wholesale Trade              1,556
  7246   Press Kogyo Co., Ltd.                Transportation Equipment        46   8058   Mitsubishi Corporation               Wholesale Trade              3,267
  7248   Calsonic Kansei Corporation          Transportation Equipment       122   8088   Iwatani Corporation                  Wholesale Trade                112
  7259   Aisin Seiki Co., Ltd.                Transportation Equipment     1,139   8113   Unicharm Corporation                 Chemicals                    1,225
  7262   Daihatsu Motor Co., Ltd.             Transportation Equipment       787   8129   Toho Holdings Co., Ltd.              Wholesale Trade                145
  7267   Honda Motor Co., Ltd.                Transportation Equipment     7,119   8136   Sanrio Company, Ltd.                 Wholesale Trade                443
  7269   Suzuki Motor Corp.                   Transportation Equipment     1,380   8214   Aoki Holdings Inc.                   Retail Trade                   153
  7270   Fuji Heavy Industries Ltd.           Transportation Equipment     2,100   8218   Komeri Co., Ltd.                     Retail Trade                   130
  7272   Yamaha Motor Co., Ltd.               Transportation Equipment       501   8227   Shimamura Co., Ltd.                  Retail Trade                   399
  7276   Koito Manufacturing Co., Ltd.        Electric Appliances            288   8233   Takashimaya Company, Limited         Retail Trade                   303
  7278   Exedy Corporation                    Transportation Equipment       140   8253   Credit Saison Co., Ltd.              Other Financing Business       478
  7280   Mitsuba Corporation                  Electric Appliances             62   8267   AEON Co., Ltd.                       Retail Trade                 1,106
  7282   Toyoda Gosei Co., Ltd.               Transportation Equipment       306   8270   UNY Group Holdings Co., Ltd.         Retail Trade                   143
  7296   F.C.C.Co., Ltd.                      Transportation Equipment       115   8273   Izumi Co., Ltd.                      Retail Trade                   251
  8282   K'S Holdings Corporation             Retail Trade                   176   9001   Tobu Railway Co., Ltd.               Land Transportation            532
  8303   Shinsei Bank, Limited                Banks                          602   9003   Sotetsu Holdings, Inc.               Land Transportation            178
  8304   Aozora Bank,Ltd.                     Banks                          462   9005   Tokyu Corporation                    Land Transportation            833
  8306   Mitsubishi UFJ Financial Group, Inc. Banks                        8,711   9007   Odakyu Electric Railway Co., Ltd.    Land Transportation            678
  8308   Resona Holdings, Inc.                Banks                        1,174   9008   Keio Corporation                     Land Transportation            427
  8309   Sumitomo Mitsui Trust Holdings, Inc. Banks                        1,827   9009   Keisei Electric Railway Co., Ltd.    Land Transportation            348
  8316   Sumitomo Mitsui Financial Group, Inc.Banks                        6,632   9020   East Japan Railway Company           Land Transportation          3,286
  8327   The Nishi-Nippon City Bank, Ltd.     Banks                          208   9021   West Japan Railway Company           Land Transportation            863
  8331   The Chiba Bank, Ltd.                 Banks                          604   9022   Central Japan Railway Company        Land Transportation          2,573
  8332   The Bank Of Yokohama, Ltd.           Banks                          704   9031   Nishi-Nippon Railroad Co., Ltd.      Land Transportation            149
  8333   The Joyo Bank, Ltd.                  Banks                          387   9041   Kintetsu Corporation                 Land Transportation            671
  8334   Gunma Bank, Ltd.                     Banks                          264   9042   Hankyu Hanshin Holdings, Inc.        Land Transportation            687
  8354   Fukuoka Financial Group, Inc.        Banks                          376   9045   Keihan Electric Railway Co., Ltd.    Land Transportation            224
  8355   The Shizuoka Bank, Ltd.              Banks                          719   9048   Nagoya Railroad Co., Ltd.            Land Transportation            252
  8356   The Juroku Bank, Ltd.                Banks                          145   9062   Nippon Express Co., Ltd.             Land Transportation            517
  8358   Suruga Bank Ltd.                     Banks                          395   9064   Yamato Holdings Co., Ltd.            Land Transportation            959
  8359   The Hachijuni Bank, Ltd.             Banks                          312   9065   Sankyu Inc.                          Land Transportation            113
  8369   The Bank Of Kyoto, Ltd.              Banks                          316   9086   Hitachi Transport System,Ltd.        Land Transportation            167
  8377   Hokuhoku Financial Group, Inc.       Banks                          268   9202   ANA Holdings Inc.                    Air Transportation             721
  8379   Hiroshima Bank, Ltd.                 Banks                          252   9204   Skymark Airlines Inc.                Air Transportation              30
  8385   The Iyo Bank, Ltd.                   Banks                          323   9364   Kamigumi Co., Ltd.                   Warehousing & Harbor Trans     234
  8410   Seven Bank, Ltd.                     Banks                          416   9375   Kintetsu World Express, Inc.         Warehousing & Harbor Trans     133
  8411   Mizuho Financial Group, Inc.         Banks                        4,961   9404   Nippon Television Holdings, Inc.     Information & Communication    479
  8418   Yamaguchi Financial Group, Inc.      Banks                          241   9432   Nippon Telegraph and Telephone Cor Information & Communication 6,629
  8424   Fuyo General Lease Co., Ltd.         Other Financing Business       123   9433   KDDI Corporation                     Information & Communication 4,772
  8425   IBJ Leasing Company, Limited         Other Financing Business       115   9435   Hikari Tsushin, Inc.                 Information & Communication    362
  8439   Century Tokyo Leasing Corporation Other Financing Business          334   9437   NTT DoCoMo, Inc.                     Information & Communication 6,757
  8508   J Trust Co., Ltd.                    Other Financing Business       186   9449   GMO Internet Inc.                    Information & Communication    137
  8524   North Pacific Bank, Ltd.             Banks                          165   9513   Electric Power Development Co., Ltd. Electric Power & Gas           493
  8544   The Keiyo Bank, Ltd.                 Banks                          143   9531   Tokyo Gas Co., Ltd.                  Electric Power & Gas         1,289
  8566   Ricoh Leasing Company,Ltd.           Other Financing Business        87   9532   Osaka Gas Co., Ltd.                  Electric Power & Gas           835
  8570   AEON Financial Service Co., Ltd.     Other Financing Business       588   9602   Toho Co. Ltd.                        Information & Communication    393
  8591   Orix Corporation                     Other Financing Business     2,173   9603   H.I.S.Co., Ltd.                      Services                       179
  8593   Mitsubishi UFJ Lease & Finance Co. LOther Financing Business        493   9613   NTT Data Corp.                       Information & Communication    896
  8600   Tomony Holdings, Inc.                Banks                           55   9627   Ain Pharmaciez Inc.                  Retail Trade                    68
  8604   Nomura Holdings, Inc.                Securities & Commodity Futu 2,760    9697   Capcom Co., Ltd.                     Information & Communication    123
  8697   Japan Exchange Group, Inc.           Other Financing Business       614   9719   SCSK Corporation                     Information & Communication    255
  8729   Sony Financial Holdings Inc.         Insurance                      777   9735   Secom Co., Ltd.                      Services                     1,381
  8750   The Dai-Ichi Life Insurance Company, Insurance                    1,364   9766   Konami Corporation                   Information & Communication    345
  8766   Tokio Marine Holdings, Inc.          Insurance                    2,420   9783   Benesse Holdings, Inc.               Services                       379
  8795   T&D Holdings, Inc.                   Insurance                      784   9787   AEON Delight Co., Ltd.               Services                       105
  8801   Mitsui Fudosan Co., Ltd.             Real Estate                  2,829   9831   Yamada Denki Co., Ltd.               Retail Trade                   266
  8802   Mitsubishi Estate Company, Limited Real Estate                    3,849   9843   Nitori Holdings Co., Ltd.            Retail Trade                   508
  8830   Sumitomo Realty & Development Co., Real Estate                    2,216   9936   Ohsho Food Service Corp.             Retail Trade                    76
  8840   Daikyo Incorporated                  Real Estate                    124   9948   Arcs Company, Limited                Retail Trade                   101
  8870   Sumitomo Real Estate Sales Co., Ltd. Real Estate                    176   9956   Valor Co., Ltd.                      Retail Trade                    70
  8876   Relo Holdings, Inc.                  Services                        70   9962   Misumi Group Inc.                    Wholesale Trade                255
  8897   Takara Leben Co., Ltd.               Real Estate                     52   9983   Fast Retailing Co., Ltd.             Retail Trade                 3,447
  8905   AEON Mall Co., Ltd.                  Real Estate                    651   9984   SoftBank Corp.                       Information & Communication 9,257
  8933   Ntt Urban Development Corporation Real Estate                       404   9989   Sundrug Co., Ltd.                    Retail Trade                   320

Source: Japan Exchange Group, TSE, Nikkei

Goldman Sachs Global Investment Research                                                                                                                            9
November 7, 2013                                                                                                                                    Japan

Disclosure Appendix
Reg AC
We, Kathy Matsui, Hiromi Suzuki, Kazunori Tatebe and Tsumugi Akiba, hereby certify that all of the views expressed in this report accurately reflect
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Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global coverage universe

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Goldman Sachs Global Investment Research                                                                                                               10
November 7, 2013                                                                                                                                       Japan

global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular coverage
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Goldman Sachs Global Investment Research                                                                                                                  11
November 7, 2013                                                                                                                                  Japan

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Goldman Sachs Global Investment Research                                                                                                            12
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