The move by Japan's Ministry of Finance to weaken the Yen is positive for Japanese equities, according to Simon Somerville, manager of the £214m Jupiter Japan Income Fund.

Somerville, who has produced strong outperformance since launching the Jupiter Japan Income Fund five years ago, believes the government's action yesterday has essentially drawn a line in the sand at ¥83 per US dollar. He says: "I believe this is positive for the equity market and should mean global investors begin to re-evaluate how cheap Japanese equities are. However, for investors to turn really bullish we need to see action from the Bank of Japan (BoJ) too. The Ministry of Finance's move will have no impact on the BoJ's balance sheet and so will not add to liquidity. An un-sterilised intervention by the BoJ will expand its balance sheet, add to money supply and thus weaken the yen more effectively."

This week also saw Naoto Kan emerge victorious from a damaging leadership battle with disgraced former leader Inchiro Ozawa. Somerville says: "Since the Jupiter Japan Income Fund's launch in September 2005, there have been six different prime ministers. It is hard to believe that only a year ago, the Democratic Party of Japan (DPJ) had a land slide victory in the general election and appeared determined to stimulate growth and squeeze Japan's extensive bureaucracy. Since then, however, the DPJ has suffered a sharp fall in popularity due in part to PM Hatoyama's inability to deliver on his election promises. A change of prime minister to Kan followed in June but the defeat in the Upper House elections and the leadership battle mean that Kan still has much to do to unite his party.

"It is perhaps unsurprising that the poor political backdrop, combined with the strength of the Yen, has meant that Japanese equities have suffered from poor investor sentiment even though many companies are beating earnings forecasts. However, being negative on Japan is now a crowded trade. The short sale ratio is at a record 30% and the Merrill Lynch survey* of global fund managers shows institutional investors are at almost unprecedented levels of pessimism. Japanese equities are now trading at or close to record lows on most valuation measures.

Despite the challenges presented by such a backdrop the Jupiter Japan Income Fund has produced a gain of 17.0% over the past five years compared with -4.9% for the IMA sector average and 2.7% for the Topix Index, the Fund's benchmark. This places the Fund 4th out of 52 funds in the sector. During the past year, the Fund has returned 7.3% against 3.7% for the sector average and 3.7% for the Topix Index. This places the Fund 8th out of 65 funds in the sector.**

The Fund's strong outperformance during what has been a challenging investment climate is the result of Simon's focus on investing in companies with strong cashflow. Mid cap companies tied into the domestic economy such as Benesse, Yamatake and Air Water have been considerable contributors to performance, with well-positioned export and electronics names such as Nabtesco, Asahi Glass and Nissan Chemical also adding to returns.

Simon says that following its recent underperformance, the Japanese stock market appears to offer many stocks with solid earnings prospects and very low valuations. He says: "Nissan Chemical is an excellent example of an undervalued growth opportunity. The Company, which has been a long term hold in my portfolio, has been hit by concerns about weak demand for electronic materials. However, we believe these concerns have been overdone as Nissan Chemical has strong exposure to defensive pharmaceuticals and agrochemicals businesses which should not be affected by a slowdown in electronics demand. Even within its electronic materials business, Nissan Chemical supplies a technologically advanced alignment film for Apple's iPad. I believe this will underpin the company's sales growth in the next couple of years.

"Strong demand from China is also benefiting factory automation company Fanuc. Although Fanuc is vulnerable to a global slowdown and the yen's strength against the US dollar, nearly 50% of its sales are from China and other Asian countries. The company has a strong technological edge and should be able to compete effectively to benefit from growing factory upgrade demand in the region. China has recently stepped up its drive to demolish old, energy-guzzling factories and replace them with superior facilities in order to improve the country's overall energy efficiency. I expect Fanuc to continue to benefit from China's environmental drive in the long term."

- ENDS -

Notes to Editors

Year on Year % Growth ending 31.07.2010

JUPITER JAPAN INCOME FUND FACTS
Launch date: 15.9.2005
Manager: Simon Somerville (since launch)
Minimum investment: £500 lump sum or £50 a month regular savings
Charges: 5.25% initial charge and 1.5% annual management fee

Jupiter Unit Trust Managers Limited (JUTM) is authorised and regulated by the Financial Services Authority and the registered address is 1 Grosvenor Place London SW1X 7JJ. The group is collectively known as "Jupiter". The above commentary represents the views of the Fund Manager at the time of preparation and may be subject to change, and this is particularly likely during periods of rapidly changing market circumstances. They are not necessarily those of Jupiter and should not be interpreted as investment advice. The above commentary is based on Jupiter's understanding of current law and practice and could alter as a result of future legislation. If you are in any doubt regarding your tax position you should seek professional advise. Past Performance should not be seen as a guide to future returns, the value of an investment and the income from it can fall as well as rise and may be affected by exchange rate variations. You may get back less than you invested.  Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given.