Fund Objective

To achieve maximum capital growth.

View on Past Performance

We added five new holdings to the portfolio; these were EPS, Kao, Komeri, Shizuoka Gas and Yamato Holdings. We sold three holdings: Kubota, Nippon Residential Reit and Nomura Holdings. In making the changes the bias was towards domestic companies whose input costs are declining. We also reduced portfolio exposure to the financial sector which has held up relatively well this year, but is likely to suffer from rising losses.The strength in the yen, to some extent, mitigated the market losses for foreign investors; however it was a bad month for all equity markets. The portfolio declined by less than the market, continuing the improvement in relative performance. Responsibility lies with the Fund's exposure to domestic and defensive names.

Future Expectations

Volatility in the market has been extreme. Since 1980 there have been only 14 days when the index has moved by more than 7%. Eight of these have occurred in the past month.The final few days of the month saw the market rebound from 25 year lows as the yen retreated from its highs and Bank of Japan cut interest rates on top of Prime Minister Taro Aso's announcement of a 29 trillion yen fiscal stimulus package.While foreigners and proprietary traders continue to sell Japanese equities, domestic pension funds and individuals are becoming more active on the buy side.

Fund Details