Fund Objective

The investment objective of the Trust is to achieve capital growth.

View on Past Performance

This month the Trust returned -8.3%, while the Index returned -8.6%. The Japanese equity market declined in September. The sub-prime loan debacle continued to put substantial pressure on Western financial institutions, and the US government was forced to intervene with a rescue package to restore confidence in its financial system. However, the plan failed to improve sentiment already battered by a string of financial crises and failures.In this environment, the Japanese economy continued to lose steam, as seen in weaker capital spending and exports. Both sector selection and stock selection contributed positively to performance during the month. Sector allocation was positive due to the underweight to wholesale trade and the overweight to banks relative to the index. Stock selection was also positive due to the appreciation of general contractor Shimizu and Sumitomo Mitsui Financial Group.

Future Expectations

In terms of sectors, we increased exposure to chemicals and pharmaceutical, and reduced exposure to machinery and wholesale trade. The degree of underweight to electric power & gas and foods was reduced. One company we invested in was Kao, Japan's largest manufacturer of toiletries. We expect the company to benefit from lower oil and fat prices.Although Japan is currently staggering, along with the global economy, it has already solved its main economic problems, and has only limited exposure to sub-prime loans amongst the financial institutions. With less likelihood of a credit crunch in Japan, we expect economic slow-down in Japan to be less pronounced than in many other countries.

Fund Details