Shin Nippon - A history of the Trust

Baillie Gifford Shin Nippon PLC was launched in July 1985, in order to capitalise on the investment opportunity available among companies too small and illiquid for Baillie Gifford Japan Trust PLC, which had been launched successfully four years before. In 1994 the Company held a 'C' share issue in order to improve liquidity.

Shin Nippon, which means New Japan, has as its objective the pursuit of long term capital growth principally through investment in small Japanese companies which are believed to have above average prospects for capital growth.

There are several reasons why we believe the Japanese small capitalisation universe can be considered a particularly attractive asset class. First, many of the most interesting emerging service sectors in Japan, which are growing fast owing to corporate outsourcing and government deregulation, such as temporary labour provision and nursing care, consist entirely of small companies. Second, in certain sectors such as retail and finance the companies with the best niche positions, growth prospects and management teams tend to be small. Third, broker coverage of these stocks can be fairly minimal, giving our large Japanese team substantial potential to add value against the market through in-house research.

Shin Nippon enjoyed tremendous investment returns in 1999 as Japanese small cap valuations were propelled to stratospheric levels in the internet bubble. The net asset value reached a historic high of 308p per share in November 1999, up by 451% from its October 1998 low, but then suffered from a severe market correction during the following three years.

Please bear in mind that past performance is not a guide to future performance.

The value of your investment can go down as well as up and you may not get back the amount invested.

As the Trust invests in overseas securities changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.

Investment in smaller companies is generally considered higher risk as their shares are usually more volatile and less liquid than those of larger companies; as a result, share price fluctuations may be greater than those of larger companies. Smaller companies may do less well in periods of adverse economic conditions.