Hi Laura,

Here's a short explanation of the term. There are many such explanations on Google.

Measuring the Relationship Between Interest Rates and Bond Prices


Investors use duration to predict bond price changes. Duration is a measure of a bond's interest-rate risk. Duration calculates the weighted average of a bond's coupon rates, principal, and time until these rates are paid. Duration is expressed as years from a bond's purchase date. As the value of a bond changes, so does its duration.

When interest rates change, the price of a bond will change by a corresponding amount related to its duration. For example, if a bond's duration is 5 years and interest rates fall 1%, you can expect the bond's prices to rise by approximately 5%. Therefore, if you expect interest rates to rise, you want to invest in bonds with lower durations. Low duration means less volatility or price risk.

In general, the shorter a bond's maturity, the less its duration. Bonds with higher yields also have lower durations.

By learning to watch interest rates carefully, you can have more success investing in bonds. Now let's summarize what we have learned.

la "duration" es la cantidad de años que se necesita para recuperar el valuor actual de un bono, incluyendo pagos de capital e intereses. (Puga-Oriolo)
Hope this helps
Clauldia

The term duration has a special meaning in the context of bonds. It is a measurement of how long, in years, it takes for the price of a bond to be repaid by its internal cash flows. It is an important measure for investors to consider, as bonds with higher durations carry more risk and have higher price volatility than bonds with lower durations.

http://www.investopedia.com/university/advancedbond/advanced...

When interest rates go up, bond prices go down. So the investment fund in question must have either sold the long-term Japanese Treasury bonds physically to profit from high prices (= caused by relatively low interest rates just about to rise - time to sell!) or even shorted the bonds (much less likely as involves greater risk).

You will be safe to understand that as "sold long-term bonds from our portfolio".

This does not say anything about changing duration profile of this fund's Japanese bond porfolio - there's no info to base opinions on, because they say they sold long-term bonds - but did they buy any short-term? Or not? In any case, the average duration of portfolio is likely to decrease - but again, no firm data in your quotation to support that.

Good luck - hope this helps.

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Note added at 3 hrs (2006-03-13 16:53:40 GMT)
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http://goldismoney.info/forums/archive/index.php/t-9304

At the same time but for different reasons pressure will be applied to the holders of mortgage-backed securities (MBS). When long rates fall, as they have been doing more-or-less continuously since early 2000, mortgage prepayments increase and the duration of MBS portfolios declines. To match assets and liabilities, MBS holders, such as pension funds and insurance companies, must buy duration (i.e., buy long Treasurys). This buying creates a cycle of rising bond prices, falling bond yields, falling duration, and more rising bond prices. As interest rates rise, however, prepayments fall and duration stabilizes. These same MBS holders must now sell duration (i.e., sell long Treasurys) to rebalance assets and liabilities, forcing rates up. This relationship has always been obscure, technically complex, and highly dynamic. What is new this time around is its size.