Fund Objective

The Fund aims to achieve capital growth.

View on Past Performance

Following several months of recovery, Japan's small-cap indices fell back once again in July.Japanese markets were affected by nervousness among investors around the world, stemming from the problems in the US sub-prime mortgage market. This prompted investors to reduce their exposure to areas of the market that they regard as being riskier than others and to reallocate their funds to more liquid asset classes.We have begun to invest in some internet-related companies, having not held them for a considerable time. Valuations in the sector are now more attractive, and we may continue to reduce our underweight. The fund remains most overweight in cyclical services and general industrials, reflecting our positive view of the economy.

Future Expectations

The wide-ranging and savage downturn that took place in 2006 could prove a long-term buying opportunity. Investors may now refocus their attention on the many smaller companies that are highly sensitive to the economic recovery, and which trade on extremely attractive valuations.

Fund Details