quarter 4 2006 for professional investors only asset manager quarterly report schroder international selection fund isf us smaller companies overview the continued to perform well in outpacing returns of sector average and russell 2000 index within our choice stocks materials & processing consumer discretionary auto transportation healthcare sectors added significant value underweight exposure financial services also helped relative while weaker performance from some technology producer durables detracted small cap outperformed larger reversing trend previous two quarters over thirds posted gains although best performers tended be at very end size scale we expect economic growth remain a sub rate next year reflecting rise household savings moderation retail sales this slowdown should limit inflation risk same time business investment spending exports healthy anticipate soft landing economy which positive
