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Investment opportunities in the New Japan
AXA Framlington Japan Smaller Companies Fund
Chisako Hardie
Fund Manager
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Positive outlook for Japan
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Japanese equities – a positive outlook
 Corporate behaviour
 Balance sheet reform
 M&A activity
 Improving shareholder returns
 Consumer confidence
 Labour market stabilisation
 Asset price recovery
 Death of deflation
 Capital expenditure
 Healthy cashflow
 High capacity utilisation
 Ageing capital stock

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Changing corporate behaviour
Trends in Japanese M&A: number and value of deals (US$bn)
0
50
100
150
200
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Value (LHS) Number of deals (RHS)
Source: SDC and Citigroup. Based on conclusion days for done deals.
(
$
b
n
)

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-4
-3
-2
-1
0
1
2
3
4
Jan-02 Dec-02 Nov-03 Oct-04 Sep-05 Aug-06
CPI Index (ex fresh food)
Domestic Corporate Goods
Improving consumer confidence
Jobs market Consumer prices (% y/y)
Sources: Ministry of Public Management, Home Affairs, Posts & Telecom; Bank of Japan
(all via Bloomberg), 31 January 02 to 30 November 2006 Source: Bloomberg as at 30 November 2006
3.5
4
4.5
5
5.5
6
Jan-02 Dec-02 Nov-03 Oct-04 Sep-05 Aug-06
0.4
0.7
1
1.3
Unemployment rate (LHS)
Job offers to applicants ratio (RHS)
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70
75
80
85
90
95
100
105
Jan-78 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06
Capital expenditure – upward pressure
Source: METI as at 30 November 2006
Production capacity (2000=100)
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51.3
26.6
10.7
4
2.8
4.6
13.3
31.4
30.8
14
7.1
3.4
0
10
20
30
40
50
60
Currency & deposits Insurance & pension
reserves
Shares & equities Investment trusts Bonds Other
Japan US
% Distribution Japan and US household financial assets
Will domestic investors buy equities?
Source: Bank of Japan as at 30 September 2006
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Japanese smaller companies
A most attractive asset class
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New business creation
Numerous new businesses are being created because of:
 Changes in large companies’ attitudes
 Changes in people’s sense of values
 Emergence of entrepreneurial sprit
 New technology
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Investment themes
 Recovery in capital expenditure
 Recovery in property prices
 Outsourcing
 Energy
 The retirement of baby-boomers
 Mobile internet
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Deane Donnigan
HEALTHCARE
10 years
Gareth Powell
BIOTECH
7 years
Matthew Lovatt
RISK MANAGER
19 years
SPECIALIST SUPPORT
Nick Evans
TECHNOLOGY
8 years
Richard Peirson
FINANCIALS
34 years
Investment team & experience
Amanda Prince
RISK MANAGER
16 years
Chisako Hardie
PRIMARY
15 years
Anja Balfour
SECONDARY
17 years
Ming Kemp
ASIA EX-JAPAN
11 years
PRIMARY & SECONDARY MANAGERS
GENERAL SUPPORT
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Investment process
 Bottom-up stock picking fund
 Main focus on growth but only when it’s undervalued
 Diversified portfolio
 Strong buy and sell disciplines
 Aware of the macro environment
 Direct company contact – ‘The Edinburgh Advantage’

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Stock selection process
The universe
3,000 listed companies
Screening
viability
profitability
Company meetings/site visits
Sell-side research
Independent research
Press
Trade publications
Macroeconomics
Themes
Global sectors
The monitor list
500 companies
Portfolio
70-85 stocks
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Portfolio construction
 Low style/sector risk
 Main risk is stock specific
 Only the best ideas
 Flexibility to switch from growth to value or vice-versa
 Aim to have no more than 2% in any individual stock (not a restriction though)
 Target prices set for stocks
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-60
-40
-20
0
20
40
60
80
100
120
140
Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05
%

g
r
o
w
t
h
SWIP Japanese Smaller Companies A Acc (MF)
MSCI Japan Small Cap TR (IN)
IMA Japanese Smaller Companies (IN)
Proven track record
Source: Lipper Hindsight © from 29 December 2000 to 31 December 2005, % Growth, Total Return, Bid to Bid, UK Tax Net
Percentage Growth Total Return, Tax UK Net, in GBP
129%
85%
71%
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AXA Framlington Japan Smaller
Companies Fund
 Investment Objective
 The objective of the Fund is to achieve long term capital growth.
 Investment Policy
 The Fund’s objective will be achieved through investment principally in small cap
companies having their head office or exercising part of their overriding economic
activity in any economic sector in Japan, having a market capitalisation of between
£1bn and £45m
 Benchmark
 IMA Japanese Smaller Companies Sector Average
 IMA Sector
 Japanese Smaller Companies
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AXA Framlington – corporate update
 AXA Framlington Group is owned 100% by AXA Investment Managers S.A.
 AXA Investment Managers took full ownership of Framlington Group on
1 November 2005
 Previously, Framlington Group was owned by HSBC Holdings (51%) and Comerica
Incorporated (49%)
 A formal condition of the sale agreement was that Framlington’s investment philosophy
and process would be protected, enabling managers to continue to manage money as
they always have
 AXA Framlington’s focus will therefore continue to be on delivering superior investment
returns for clients, through competitive products, backed up with excellent service

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Important information
This advertisement is for professional advisers only and must not be relied upon by private
investors. Circulation must be restricted accordingly.
Issued by AXA Framlington Unit Management Limited. AXA Framlington Unit Management Limited is
authorised and regulated by the Financial Services Authority. A Member of IMA.
The value of investments and the income from them can fluctuate and investors may not get back the
amount originally invested. Investments should be made for the long term, ie. at least five years. Past
performance is not a guide to future performance. Changes in exchange rates will affect the value of
investments made overseas. Investments in newer markets, smaller companies or single sectors offer the
possibility of higher returns but may also involve a higher degree of risk.
Information relating to investments is based on research and analysis undertaken or procured by AXA
Framlington Investment Management Limited for its own purposes and may have been made available to
other members of the AXA Framlington Group of Companies which, in turn, may have acted on it. Whilst
every care is taken over these comments, no responsibility is accepted for errors and omissions that may
be contained therein.
This document is not a prospectus and does not constitute an offer to sell or buy any units/shares in the
Fund. All applications for units are made strictly subject to the Prospectus. Copies of the latest Full
Prospectus, simplified Prospectus and Terms & Conditions are available directly from the Manager
upon request.