Final Results

RNS Number : 9635V

Atlantis Japan Growth Fund Ld

20 July 2009

ATLANTIS JAPAN GROWTH FUND LIMITED

ANNUAL RESULTS FOR THE YEAR ENDED 30TH APRIL 2009

The Board of Directors of Atlantis Japan Growth Fund Limited are pleased to announce audited results for the year ended 30 April 2009. These are extracts taken from the audited accounts for the year ended 30th April 2009, approved by the Board of Directors on 17th July 2009.

Introduction

Investment Objective and Policies

The Company aims to achieve long term capital growth through investment wholly or mainly in listed Japanese equities.

The Investment Manager follows a stock-driven investment approach. The Company's portfolio is invested in companies quoted on the Tokyo Stock Exchange, the regional stock markets of Fukuoka, Nagoya, Osaka and Sapporo and the Japanese over-the-counter market.

The above includes the Ambitious Market (Sapporo), Mothers (Tokyo), Centrex (Nagoya), Hercules (Osaka) and Q Board (Fukuoka). Investment may also be made in companies listed elsewhere but controlled from Japan or with a material exposure to the Japanese economy.

The Company may also invest in securities which are neither listed nor traded on the Japanese over-the-counter market provided that immediately after any such investment is made the Company does not have more than 10 per cent of its Net Asset Value so invested. The Company may borrow money with a view to enhancing the capital returns. The Company may hedge its exposure to Japanese yen.

Investment Manager and Investment Adviser

Atlantis Fund Management (Guernsey) Limited has been appointed as Investment Manager of the Company.

Atlantis Investment Management Limited has been appointed by the Investment Manager as its Investment Adviser. Atlantis Investment Research Corporation, established in Tokyo, will, through Edwin Merner and his colleagues in that office, advise the Investment Adviser on the day-to-day conduct of the Company's investment business.

Chairman's Statement

For the year ended 30th April 2009

The year to 30th April 2009 was a difficult period for the Tokyo Market, for the Company and, indeed, for investors in general. The series of financial panics witnessed over the past year were essentially global in scope, leaving no major country unscathed and hitting not just share prices but real economic activity and corporate earnings. Japan was no exception, and at its nadir in March 2009 the Tokyo market touched its lowest point in the last 26 years.

Performance

The Company's net asset value per share declined 42.9% compared with a decline in the Topix Index of 34.6% and in the Tokyo Second Section of 30.3%. The Company's gearing, which started the period at 20.4% and stood at 16.5% at the end of the period contributed to this underperformance together with the style related bias explained in the Investment Manager's report.

Net Asset Value Total Return	1 Year %	3 Year %	5 Year %	10 Year %	Since Inception %
Atlantis Japan Growth Fund	-42.97%	-69.74%	-53.97%	-7.47%	-8.87%
Citywire Japanese Smaller Companies Investment Trust universe average	-38.40%	-66.86%	-53.18%	-26.88%	-
Share Price Total Return
Atlantis Japan Growth Fund	-43.01%	-75.02%	-57.64%	-1.27%	-25.12%
Citywire Japanese Smaller Companies Investment Trust universe average	-39.17%	-70.19%	-55.36%	-16.66%	-
Benchmark Return
Topix	-34.57%	-43.21%	-20.60%	-23.80%	-47.19%
TSE2	-30.27%	-55.60%	-32.14%	31.0%	-10.42%

Year to 30 April	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009
Total Net Assets (US$m)	337	221	197	173	401	429	610	467	324	185
NAV per Share (US$)	14.85	10.80	9.65	8.46	19.64	21.01	29.87	22.84	15.85	9.04

Source: Atlantis, Bloomberg and Citywire

Market background

Last year was a year when investor sentiment switched from optimism to pessimism. Investors turned decidedly cautious, avoiding risky stocks in favour of safe haven investments such as cash and gold, some even vowing never to buy equities again. Stock valuations were driven down to extremely low levels, trading volumes declined, and valuations contracted to the point where many stocks became outright bargains.

For investors such as those in your Company, with a long-term growth and value orientation, depressed market conditions such as we are now seeing represent a prime opportunity. When prices are low and the news is mostly negative undervalued stocks are at their most plentiful, making this a time not to sell but rather to consider buying or adding to holdings.

During the last six months of your Company's financial year the economy in Japan was hit by a perfect storm. Not only did exports fall sharply, but domestic private sector investment also fell as businesses became more reluctant to make capital commitments and household spending weakened in the face of rising unemployment. Real GDP contracted at a double-digit annualised rate in both calendar Q4 2008 and Q1 2009, putting Japan in its worst recession since the late 1940s.

There are however indications that the worst has now passed and that the Japanese economy is likely to improve going forward. Recent industrial production statistics suggest that overall production has already bottomed, and there are signs boding well on the export and consumer spending fronts as well. While year-on-year figures are likely to remain depressed until the autumn, your Manager expects positive growth on a month-on-month and quarter-on-quarter basis to lead to positive year-on-year growth from calendar Q1 2010. While real GDP growth is likely to finish down for the fiscal year to March 2010, we believe that the Japanese economy is positioned for positive growth during the fiscal year to March 2011 and corporate earnings will follow a similar path.

On top of these hopeful trends, I would remind investors that Japan is still the world's second largest economy and that Japanese companies continue to invest heavily in capital equipment and R&D relative to many of their overseas competitors, even though such investments may be down versus the previous year. Thus, we find Japanese companies still being granted large numbers of patents and featuring prominently among global leaders in many key products including carbon fibre, robots, titanium, carbon graphite, integrated circuit manufacturing equipment, autos, high-end consumer products, industrial machinery, cameras, endoscopes and other types of medical equipment, some types of dental equipment, nano-technology, game software, electronic parts, automobile parts, and office automation equipment, to name just a few. Importantly, many of these are industries that can be expected to continue growing for years to come.

Your Company's strategy

As for the Company, the investment portfolio is heavily weighted toward stocks that the Manager believes will benefit from the coming recovery, including not only medium-sized and smaller companies but also some well-known large companies such as Makita, Shin-Etsu Chemical, and Takeda Pharmaceutical. The Manager's approach is to give careful consideration to long-term earnings potential, valuations, balance sheet strength, and quality of management. There has been no change in the Company's long-term goal of positive long-term capital appreciation and the investment philosophy remains focused primarily on undervalued growth stocks but the trust also holds some cyclical growth stocks.

Gearing and Discount management

One of the benefits of closed end investment trusts is the ability to use borrowings which can enhance returns in a rising stock market. However, gearing exacerbates movements in the net asset value both positively and negatively and will exaggerate declines in net asset values when prices are falling. The table below illustrates the evolution of the Company's gearing over the year. As can be seen, by not renewing a Yen 1,500m facility that fell due last July and repaying early without penalty a further Yen 1,500m in October together with maintaining higher cash levels, the Company has kept its gearing in the region of 20% while the Company's net assets declined from $324m to $185m. From January to March 2009 gearing was brought down to around 10% but during April it was restored to 16.7%.

Yen 1,500,000,000 of the Company's borrowings is due to fall for renewal on 16th October 2009. At present ING Bank, who provide the facility have indicated that they may not be prepared to renew it on expiry. Your Board will use its best endeavours to identify an alternative lender if this occurs.

The table also illustrates the evolution of the discount to net asset values at which your Company's shares traded through the year. The discount started the year at 14.2% then narrowed to under 5% by the end of July 2008, only to widen as the Tokyo market tumbled ending March 2009 at 21.7%. However in April 2009 it narrowed again and ended the year at 14.5%.

Your Board has obtained from shareholders the power to buy shares back, both into Treasury and for cancellation. There is much debate in the investment trust industry about how this power should be used. Your Board's philosophy is that this power should be used relatively sparingly and only when your Company's discount is both sizeable and wider than its peer group and only to effect general market purchases not one off matched bargain trades. The objective is that it will only be used when the effect is to enhance net asset value per share and to support the share price. We do not think it is in shareholders interests for us to publish the precise criteria we have adopted and unnecessarily alert the market to our intended course of action. Over the last year we came close to buying in shares on a few occasions but because the share price remained outside our criteria did not do so. We have not ruled out re-selling any shares bought at a discount from Treasury provided the discount has reduced as this might enable us to enhance liquidity at the same time as enhancing net asset value. Shares held in Treasury will only be re-issued at a lower discount than the weighted average discount at which the shares held in Treasury were purchased. It is intended that shares not re-issued will be cancelled within two years from purchase. We know different shareholders hold differing views on this and welcome dialogue with those of you that have strong views over the coming months.

Board Composition

Last year was Tak Murakami's first full year as a Director. He joined our Board as a Director in November 2007. Tak lives in Tokyo and succeeded the previous Tokyo based Director. Until 2003, Tak had spent 17 years at Schroders Japan, and in 2004 he was Chairman of Instinet Japan. He brings a valuable understanding of Japanese finance to your Board. As regards your London based directors I (62) and Andrew Martin Smith (57) joined 6 years ago when Bill Brown your previous Chairman and Peter Pearson the Chairman of the Manager both retired. Eric Boyle (55) joined 8 ¾ years ago and Chris Jones (68) has been on the Board since inception of the Company (13 years). One of our institutional shareholders voted against Chris' re-election last year on grounds that he had been a Director for over 9 years. In the light of this, and the fact that we are proposing that this year Chris should again be re-elected I believe it is important to explain our rationale to shareholders. Your Board considers that knowledge of investments and investment trusts in particular are crucially important factors in enabling a Director to contribute effectively to an investment trust Board. Chris was, in his active career, a fund manager of a sizeable portfolio of investment trusts at Merchant Investors where he was head of investments. He is on the boards of seven other investment trusts. In short he is a real investment trust expert and his contribution is invaluable. Whether his independence is really compromised by serving for 9 years can be debated We as a Board are clear that it is not. In either event the Board remains compliant with the Combined Code as a majority of the Board (Andrew, Eric, Tak and I) are independent non executive directors with under 9 years of service. We do however intend to say farewell to Chris when he becomes 70 (next year).

Resolution to reduce meeting quorum in Articles

Your Company's Articles provide that the quorum for our Annual General Meeting is 5 % of your Company's shareholders. In recent years because of the way that many institutional shareholders hold their shares through nominees and then in turn through Euroclear's nominee has meant that securing a quorum has been time consuming and frustrating. Several of you have indicated that you intended to submit proxies to ensure we were quorate but that the process for instructing your custodians to instruct their nominee to instruct Euroclear has not worked smoothly. Moreover modern investment trust practice is to have a much lower quorum requirement. A survey of peer Japan investment trusts or closed end funds showed that a majority had a quorum requirement of two shareholders by proxy or in person with no minimum percentage of issue share capital required. We are therefore proposing to change your Company's Articles to reduce the quorum to two shareholders by proxy or in person. We hope you will support this pragmatic change.

Dividend

Although dividend income from securities held, has fallen slightly compared to the previous year the large percentage fall in the Company's net asset value during the year has resulted in a much lower investment management fee enabling us to pay a dividend for the first time in the Company's history. However, when the markets rise the investment management fee will increase again. In this event it is unlikely that a dividend will be paid in future years. Your Board has declared an interim dividend of 5.00 cents per share which will be paid on 4th September 2009 to shareholders on the register on 14th August 2009.

Prospects

As indicated above, the trends in the Japanese economy are improving and investor sentiment is recovering. Indeed since the year end we have seen a good rally in Japanese equity markets. I am very hopeful that when I write to you next year we will have a dramatically better account to give you. Indeed just as 2008/9 was a year when your Company's preferred type of investments were out of favour there are plausible grounds for supposing that the reverse could hold in 2009/10. I certainly hope so.

Timothy Guinness

Chairman

July 2009

Investment Manager's Report

For the year ended 30th April 2009

Performance

The last year was one of the most difficult periods the Fund has experienced since its inception in May 1996. Performance was hurt by a combination of negatives including high exposure to growth and value stocks that mostly underperformed the market throughout the year, low exposure to cyclical commodity stocks that performed well during the early part of the period, and low exposure to low-quality recovery stocks that performed well during the last part of the fiscal year.

Although the Fund cut back its borrowing, the Fund Manager's optimism during the early part of the fiscal year (before the world financial crisis hit last autumn) meant the Fund was still a large net borrower when the market was moving lower and this also had a negative impact on performance. Total borrowing has been reduced from a peak of Y7.5 billion to Y4.5 billion as of the end of April, which, together with current cash holdings of Y1.5 billion (around US$15 million) puts the Fund's net gearing at around 17%. The Company has no exposure to convertibles bonds, warrants, or other derivatives.

One positive contributor to performance was the Yen's appreciation to 98.150/US$ at fiscal year-end versus Y104.140 a year earlier, representing a gain of 5.8%. With all of the Company's assets in Yen and no foreign exchange hedges, the Fund was positioned to benefit fully from the Yen's appreciation.

For the year under review, the Fund's published net asset value fell 42.9% in US dollars terms leaving the published net asset value per share at US$9.04 at fiscal year-end (see Note 16). Over the same period the large cap-dominated Topix fell 34.6%, the Tokyo Second Market index fell 30.3% and the JASDAQ index fell 32.4% (all in US dollar terms).

Market Comment

At the beginning of the year under review, in May 2008, the outlook for the Japanese economy and market seemed relatively good. The economy was expanding and many corporations expected to report continued growth in sales and earnings. However, from September there was an abrupt change.

The world financial crisis hit virtually every stock market around the globe as many investors rushed to liquidate their holdings. This was also the case in Japan, where the outlook for the economy and corporate earnings deteriorated rapidly. Growth stocks were especially vulnerable, but almost all stocks were hit and many of Japan's leading companies saw their stocks slide to new lows. The sell-off culminated in early March 2009 with the Tokyo Market hitting a 26-year low, representing a decline of almost 82% from the market's all-time high in December 1989.

For the market to do well over the longer term, the economy must get firmly back on the expansion track, corporate earnings must recover, and investor sentiment must remain positive for an extended period of time. Because stock markets tend to be a good leading indicator of the direction of the economy and corporate earnings, we think there is a good chance that this recovery scenario will be realised.

The Company

Our basic market strategy remains unchanged. We will continue to focus on value and growth, seeking out undervalued companies that we think can grow earnings over at least the next several years. At this time we especially like 'fallen angels'; stocks of good companies that are cheap and have solid prospects for long-term earnings growth. While these stocks may not go up in the near term, they can provide rewarding investment returns over the longer term.

Similarly, we see the current market slump providing a rare opportunity to buy quality companies at bargain prices. Such opportunities come along perhaps only once every 10 to 20 years in our experience. Thus, rather than being depressed by the market weakness and negative comments in the media, we are instead stimulated by the fact that the stock prices of many companies we have long liked have fallen to low levels and now meet our strict valuation criteria. Examples include Makita, Shin-Etsu Chemical, Takeda Pharmaceuticals, Benesse, and Stanley Electric. We have added all of these names to the portfolio during the past year after finding them too expensive to warrant consideration many times in the past. Most of these have fallen out of favour due to temporary problems, but this has given us a chance to buy at bargain prices and be well positioned when good management and an improving operating environment ultimately bring about a turnaround.

Overall, we are still finding the best value in medium sized and smaller companies. Unlike in past years though, we are also finding some attractive stocks among the bigger companies (or what used to be large cap companies until they fell out of favour). In short, no company is too big or too small for us to consider.

As before, in constructing the portfolio we pay scant heed to sector weightings. Since we buy all kinds of stocks the portfolio does have exposure to a wide range of sectors including retail, services, electronics, chemicals, financials, trucking, healthcare and many more. However, there are some sectors where the portfolio has only limited exposure due to a lack of investment candidates that meet our criteria. This includes companies in heavy industry, utilities, shipping, airlines, fishing, mining, and also commodity-related companies.

While we are very much bottom-up investors, we do pay close attention to big picture trends since macro variables can and usually do impact sales growth and profit margins. When we buy a company we have no specific price target in mind for selling and, in fact, would hope to hold a stock for many years if things continue to go well.

This past year has been a terrible time in terms of market performance, the Company's performance, and the Japanese economy and corporate earnings. At times we have had to remind ourselves that economies and stock markets tend to be cyclical and are often unpredictable, but stocks bought at bargain prices tend to become rewarding investments over the longer term. For this reason, we plan to continue focusing on long-term capital appreciation going forward and will continue seeking out undervalued growth stocks.

Atlantis Fund Management (Guernsey) Limited

20th May 2009

Directors

TIMOTHY GUINNESS (Chairman, aged 62, appointed to the Board on 26th September 2002), British, graduated from Cambridge University with an MA in Engineering followed by an MBA from the Sloan School M.I.T. He began his investment banking career in Baring Brothers in 1970. He moved to Guinness Mahon in 1977, becoming Senior Investment Director in 1982. He was co-founder of Guinness Flight Global Asset Management in 1987. After its acquisition by Investec Asset Management in 1998, he served as Joint Chairman of Investec Asset Management until 31st March 2003.

He is the Chairman and Chief Investment officer of two investment management companies - Guinness Asset Management and Guinness Atkinson Asset Management since 2003. These companies specialize in investment in equities in three areas - energy; Asia ex Japan; and innovation. He also has a number of non-executive directorships. These include the chairmanship of Brompton Bicycle Company Ltd and directorships of Quayle Munro plc and S R Europe Trust plc.

CHRISTOPHER JONES (aged 68, appointed to the Board on 13th March 1996), British, began his career in 1971 as a fixed interest and money manager with Property Growth Assurance, now a wholly owned subsidiary of Royal & Sun Alliance Insurance Group plc. In 1985 he joined Merchant Investors Assurance Company Ltd, becoming head of Investments until retiring in 2003. He is a Director of Ecofin Water & Power Opportunities plc, Montanaro UK Smaller Companies Trust plc, Montanaro European Smaller Companies Ltd, Schroder UK Mid & Small Cap Fund plc, Jupiter Second Enhanced Income Trust plc, The Cayenne Trust plc and Japan Accelerated Performance Fund plc.

ERIC BOYLE FSI (aged 55, appointed to the Board on 17th October 2000), British, is a director of Smith & Williamson Investment Management. He has 30 years' experience in stockbroking and investment banking with NCL Investments - now part of Smith & Williamson. He became a member of the London Stock Exchange in 1982 and has specialised in Japan and emerging markets since 1989 in particular, by way of country and regional closed or open-ended funds. With the experience gained in studying a variety of companies in this capacity, he has held directorships in a number of companies and funds. During his career, he has raised new money for several groups launching new products investing in both emerging and developed markets.

ANDREW MARTIN SMITH (aged 57, appointed to the Board on 26th September 2002), British, graduated from Oxford University with an MA in Politics and Economics. He began his career with Allied Hambro Unit Trust Company and worked in the corporate finance and capital markets divisions of Hambros Bank Limited becoming a director in 1986. He was chief executive of Hambros' fund management activities from 1993 to 1997 prior to the merger with Guinness Flight. He has over 30 years experience in the financial services industry. He now works with Guinness Asset Management on private equity and consultancy matters. He is Chairman of Parmenion Capital Management LLP, and a Director of Berkshire Capital Securities, M & G High Income Investment Trust plc, TR European Growth Trust plc, Church House Trust plc and also Runciman Investments Limited.

TAKESHI MURAKAMI (aged 65, appointed to the Board on 29th November 2007), graduated from Doshisha University in Kyoto with BA in Economics. He has 38 years of experience in both stock broking and investment management. He started his career at Sanyo Securities, Osaka in 1966 where he was primarily engaged in international business promotion at its New York office for 7 years between 1972-1978 and at its London office for two years between 1982-1984. He then joined Schroder Securities in London in 1984, before moving to its Tokyo office in 1986. He served as Schroder's Tokyo Branch Manager for ten years until he moved to Schroder Investment Management Japan in 1996 as Director, where he promoted the Japanese pension fund management business. Having retired from Schroders at the age of 60 in 2003, Takeshi resumed his career at Instinet Japan as Chairman in 2004 for a year.

Directors' Report

The Directors are pleased to present their thirteenth Report and the Audited Financial Statements of the Company for the year ended 30th April 2009.

Directors' Responsibilities

The Directors are responsible for preparing Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable accounting standards have been followed subject to any material departures disclosed and explained
in the Financial Statements; and

- prepare the Financial Statements on a going concern basis unless it is inappropriate to presume that the Company will
continue in business.

We confirm, to the best of our knowledge, that:

- this Annual Report and Financial Statements, prepared in accordance with International Financial Reporting Standards, give
a true and fair view of the assets, liabilities, financial position and loss of the Company; and

- this Annual Report and Financial Statements includes information detailed in the Directors' Report, the Investment Manager's
Report and Notes to the Financial Statements, which provides a fair review of the information required by:

DTR 4.1.8 and 4.1.9 of the Disclosure and Transparency Rules ('DTR') being a fair review of the Company business and a description of the principal risks and uncertainties facing the Company; and
DTR 4.1.11 of the DTR being an indication of important events that have occurred since the beginning of the financial year and likely future development of the Company.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Financial Statements comply with The Companies (Guernsey) Law, 1994. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Directors' Report and other information included in the Annual Report is prepared in accordance with company law applicable in Guernsey. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Services Authority.

The Directors confirm that these Financial Statements comply with these requirements.

Tax Status

The Company is a Guernsey based closed-ended investment company, whose Ordinary Shares are listed on the London Stock Exchange. In the opinion of the Directors, the Company has conducted its affairs so as to be able to seek approved investment trust status from HM Revenue and Customs under section 842 Income and Corporation Taxes Act 1988 for the accounting year ended 30th April 2009.

Pursuant to arrangements between the Association of Investment Companies and HM Revenue and Customs, who have agreed that written approval of investment trust status can be granted within the Corporation Tax Self Assessment Regime, written approval for all accounting periods to 30th April 2008 has been received.

Dividend

The provisions of section 842 of the Income and Corporation Taxes Act 1988 ('s.842') include a retention test which states that the Company should not retain in respect of any accounting period an amount which is greater than 15% of the income it derives from shares and securities. In general, UK companies are excluded from this condition if they have a negative balance on their revenue reserve as the Companies Acts in the UK do not allow distributions in those circumstances. The relevant laws in Guernsey however, do not prevent such distributions and in order to meet the retention test, on 17th July 2009, the Board of Directors declared an interim dividend amounting to $0.05 per share. The dividend will be paid on the 4th September 2009 to all shareholders on register on the 14th August 2009.

Capital Values

At 30th April 2009 the value of net assets available to shareholders was $183,665,544 (2008 - $321,761,590) and the Net Asset Value per share was $8.99 (2008 - $15.75).

Preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with IFRS, which comprise standards and interpretations approved by the IASB, and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the IASC that remain in effect.

Directors

The Directors served throughout the year under review, there have been no changes to the directors during the year.

Certain Directors had a beneficial interest in the Company by way of their investment in the ordinary shares of the Company.

The details of these interests as at 30th April 2009 are as follows:

				Ordinary Shares
T. Guinness				10,000
A. Martin Smith				2,500
C. Jones				1,000

Directors' Interests:

There were no relevant contracts in force during or at the end of the year in which any Director had an interest. There are no service contracts in issue in respect of the Company's Directors.

No Directors had a non-beneficial interest in the Company during the year under review.

Significant Shareholdings

Shareholders of Guernsey companies are not legally required to disclose their shareholdings in the Company, however, the Board have been advised that the following companies that hold shares as nominees, constitute 3% or more of the issued share capital of the Company as at 30th April 2009.

Shareholder	%	Ordinary Shares
Mellon Nominees (UK) Limited	10.63	2,173,259
State Street Nominees Limited	5.75	1,175,652
HSBC Global Custody Nominee (UK) Limited	7.60	1,552,759

In addition the Company has been informed of the following notifiable interests in its voting rights:

Notifying Shareholder	Number of	% of	Date of
	voting rights	voting rights	Notification

Artic Trustee Limited	3,100,208	15.17	2 April 2009
	(indirect)

Japan Omnibus Ltd	2,029,917	9.93	28 July 2008
	(direct)

Newton Investment Management Limited	2,827,457	13.84	23 November 2007
	(indirect)

Investec Asset Management Limited	1,004,051	5.03	4 July 2007
	(indirect)

Secretary

The Secretary is Northern Trust International Fund Administration Services (Guernsey) Limited.

Auditors

Grant Thornton Limited have indicated their willingness to continue in office.

Resolutions re-appointing them and authorising the Directors to fix their remuneration will be proposed at the Annual General Meeting.

COMPANY'S OBJECTIVES, POLICIES AND STRATEGIES IN RESPECT OF FINANCIAL ASSETS

As an investment trust, the Company invests in securities for the long term. The financial investments held as assets by the Company comprise of equity shares. As such, the holding of securities, investing activities and financing associated with the implementation of the investment policy involves certain inherent risks. Events may occur that could result in either a reduction in the Company's net assets or a reduction of revenue profits available for distribution.

Set out below are the principal risks inherent in the Company's activities along with the actions taken to manage them. The Board reviews and agrees policies for managing these risks and these policies have remained substantially unchanged since 30th April 2006.

Market risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions in the face of price movements.

The market risk is monitored by the Board on a quarterly basis and on a daily basis by the Investment Manager.

Currency risk

The Company's results for the year and net assets could be significantly affected by currency movements as most of the Company's assets are denominated in Yen. In order to reduce this risk the Company may hedge its exposure to the Japanese currency. The Company did not have any hedging arrangements in place as at 30th April 2009 or 2008.

Borrowing and Interest rate risk

The Company finances its operations mainly through its share capital and retained profits, including realised and unrealised capital profits. Additional bank borrowings may be used with a view to enhancing capital returns. However, the Company's Articles of Association provide that borrowing levels should not exceed 20% of Net Asset Value at the time any borrowing is effected. The level of gross borrowing as at 30th April 2009 was 25.0%, while at 30th April 2008 it was 22.4%. The level of net borrowings as at 30th April 2009 was 16.7% while at 30th April 2008 it was 20.4%.

Liquidity risk and cashflow risk

The majority of the Company's assets comprise readily realisable securities, which can be sold to meet funding commitments as necessary.

Change to Guernsey Company Law

On 1st July 2008, The Companies (Guernsey) law, 1994 was superceded by The Companies (Guernsey) Law, 2008. Under the transitional provisions permitted by The Companies (Guernsey) Law, 2008 the Company has prepared these Financial Statements in accordance with The Companies (Guernsey) Law, 1994. All future Financial Statements will be prepared in accordance with the Companies (Guernsey) Law, 2008.

Annual General Meeting

The formal Notice of the Annual General Meeting (AGM) sets out the ordinary business and special business to be conducted at the meeting. An accompanying letter to shareholders set out the rationale for seeking to amend the quorum for general meetings to two persons present in person or by proxy.

In addition we are seeking shareholder approval to renew the Director's authority to buyback up to 14.99% of the Company's ordinary shares that was approved by shareholders at the AGM on 3rd October 2008. Accordingly a special resolution will be proposed at the AGM to authorise the Company to make market purchases of up to 14.99% of the ordinary shares in issue, equivalent to 3,063,300 ordinary shares as at the date of this report. Under the listing rules of the Financial Services authority, this is the maximum percentage of its equity share capital that a company may purchase through the market pursuant to such authority.

The authority of the Company to purchase its own ordinary shares will, by virtue of the Treasury Share Regulations and the Companies (Guernsey) Law, 2008, allow the Company to hold ordinary shares so purchased in treasury, as an alternative to immediate cancellation provided that the number of ordinary shares held in treasury is not more than 10% of the Company's issued share capital.

Recommendation

Your Board considers that all resolutions contained in the Notice of AGM are in the best interests of the Company and its members as a whole and are likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, your Board unanimously recommends that Shareholders should vote in favour of the resolutions as they intend to do in respect of their own beneficial shareholdings amounting to 13,500 ordinary shares.

Subsequent Events

There have been no events subsequent to the year ended 30th April 2009.

Andrew Martin Smith Christopher Jones

17th July 2009

Directors' Remuneration Report

The Board has prepared this report, in accordance with the rules covering good communication to Shareholders. An ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual General Meeting.

REMUNERATION COMMITTEE

The Board as a whole fulfils the function of a Remuneration Committee. The Company Secretary, Northern Trust International Fund Administration Services (Guernsey) Limited, will be asked to provide advice when the Directors consider the level of Directors' fees.

POLICY ON DIRECTORS' FEES

The Board's policy is that the remuneration of non-executive Directors should reflect the experience of the Board as a whole and be fair and comparable to that of other investment trusts that are similar in size, have a similar capital structure and have a similar investment objective.

The fees for the non-executive Directors are determined within the limits of £100,000 set out in the Company's Articles of Association. The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits.

DIRECTORS' SERVICE CONTRACTS

It is the Board's policy that none of the Directors have a service contract. The terms of their appointment provide that a Director shall retire and be subject to re-election at the first Annual General Meeting after his/her appointment, and at least every three years and will seek re-election if they have already served for more than nine years or are aged over 70. The terms also provide that a Director may be removed without notice and that compensation will not be due on leaving office.

YOUR COMPANY'S PERFORMANCE

For the purpose of this report the Board is required to select an index against which the Company's performance can be measured. Although performance is not measured against a single benchmark the Topix (US$) and the Tokyo Second Market (US$) have been selected for this purpose. The graphs below show the price total return over five years and from inception (assuming all dividends are reinvested) to Ordinary shareholders against the Topix (US$) and the Tokyo Second Market (US$) on a total return basis until 30th April 2009.

DIRECTORS' EMOLUMENTS FOR THE YEAR

The Directors who served in the year received the following emoluments in the form of fees:

	Year ended	Year ended
	30-Apr-09	30-Apr-08
	GBP	GBP
Timothy Guinness	20,000	20,000
Christopher Jones	15,000	15,000
Eric Boyle	15,000	15,000
Andrew Martin Smith	15,000	15,000
Takeshi Murakami (appointed 29/11/2007)	15,000	6,329
Yoshinobu Itai (retired 04/10/2007)	-	6,452
	80,000	77,781

APPROVAL

A resolution for the approval of the Directors' Remuneration Report for the year ended 30th April 2009 will be proposed at the Annual General Meeting.

By order of the Board

Andrew Martin Smith Christopher Jones

17th July 2009

Corporate Governance

INTRODUCTION

The Board has considered the principles and recommendations of the AIC Code of Corporate Governance ('AIC Code') by reference to the AIC Corporate Governance Guide for Investment Companies ('AIC Guide'). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the Combined Code), will provide better information to shareholders. The Company has complied with the recommendations of the AIC Code and the relevant provisions of Section 1 of the Combined Code, except in relation to the Combined Code provisions relating to:

the role of the chief executive
executive directors' remuneration
the need for an internal audit function

For the reasons set out in the AIC Guide, and in the preamble to the Combined Code, the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company. The Company has therefore not reported further in respect of these provisions.

THE BOARD

The Board is comprised of five independent non-executive directors including the Chairman, Timothy Guinness. The Board does not consider it necessary to appoint a senior independent director.

During the year the Audit Committee was chaired by Christopher Jones and comprises Timothy Guinness and Andrew Martin Smith. On 23rd June 2009, the Audit Committee approved the resignation of Christopher Jones as Chairman of the Audit Committee and agreed to recommend the appointment of Andrew Martin Smith as the new Chairman. Christopher Jones remains a member of the Audit Committee. During the year there were four Board Meetings and two Audit Committee Meetings. There will be at least two Audit Committee Meetings held each year. The role of the Audit Committee is reviewed in detail below. The Board has appointed a Nomination Committee, which comprises the Chairman and all other independent Directors. The Committee meets annually (or more often if necessary) and reviews the balance of skills, knowledge and experience of the Board. It is also responsible for considering and proposing suitable candidates for appointment to the Board where necessary and reviewing annual director performance evaluations.

The Board has not appointed a remuneration committee but being comprised of wholly independent directors, the whole Board considers these matters regularly. The Board considers Agenda Items formally laid out in the Notice and Agenda, which are formally circulated to the Board in advance of the Meeting as part of the Board Papers.

The primary focus at Board Meetings is a review of investment performance and associated matters such as gearing, asset allocation, marketing/investor relations, peer group information and industry issues. The Board has not appointed a Management and Engagement Committee but has chosen to assess and review the performance of the contractual arrangements with the manager and investment adviser at each July Board Meeting by the entire Board who are independent non-executive directors. The table below shows the number of Board Meetings attended by each director during the accounting year.

Director	Board Meetings Attended	Audit Committee Meetings Attended
Timothy Guinness	4	2
Christopher Jones	4	2
Eric Boyle	4	-
Andrew Martin Smith	4	2
Takeshi Murakami	4	-

Directors are appointed initially until the following Annual General Meeting when, under the Company's Articles of Association it is required that they be re-elected by shareholders. Thereafter two directors shall retire by rotation, or if only one director is subject to retire by rotation he shall retire. The retiring directors will then be eligible for reappointment having been considered for reappointment by the Chairman and other directors.

The Board evaluates its performance and considers the tenure of each director on an annual basis, and considers that the mix of skills, experience, ages and length of service to be appropriate to the requirements of the Company.

Having served on the Board for more than nine years Mr Jones is subject to annual re-election and offers himself for re-election. The Board considers that he continues to be independent of mind and that his length of service and breadth of experience enhance the effective management of the Company. In addition Mr Guinness and Mr Martin Smith retire by rotation and offers themselves for re-election. The Board confirms the performances of Mr Guinness and Mr Martin Smith have been subject to formal evaluation and that each continues to be effective in their roles. The Board firmly recommends to shareholders that Mr Guinness and Mr Martin Smith should be re-elected.

INTERNAL CONTROLS

The Board has delegated the responsibility for the management of the Company's investment portfolio, the provision of custody services and the administration, registrar and corporate secretarial functions including the independent calculation of the Company's Net Asset Value and the production of the Annual Report and Financial Statements which are independently audited. Whilst the Board delegates responsibility, it retains responsibility for the functions it delegates out and is responsible for the systems of internal control. Formal contractual agreements have been put in place between the Company and providers of these services.

The Board of Directors directly on an ongoing basis and via its Audit Committee has implemented a system to identify and manage the risks inherent in such contractual arrangements by assessing and evaluating the performance of the service providers including financial, operational and compliance controls and risk management systems. On an ongoing basis compliance reports are provided at each Board Meeting from the Custodian, Northern Trust (Guernsey) Limited and Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited and the Audit Committee reviews the SAS 70 reports on these service providers.

The extent and quality of the systems of internal control and compliance adopted by the Investment Manager and Investment Adviser, are also reviewed on a regular basis, and the primary focus at each Board Meeting is a review of investment performance and associated matters such as gearing, asset allocations, marketing/investment relations, peer group information and industry issues. The Board also closely monitors the level of discount and has the ability to buy back shares in the market should the discount be substantially greater than that of the Company's peer group.

The Board believes that it has implemented an effective system for the assessment of risk, but the Company has no staff, has no internal audit function and can only give reasonable but not absolute assurance that there has been no material financial misstatement or loss.

AUDIT COMMITTEE

An Audit Committee has been established which operates within defined terms of reference. The Audit Committee's responsibilities include:

- Review of draft Annual and Interim report and financial statements

- Review of independence and objectivity of the Auditors

- Review of audit fees

The Audit Committee was appointed by the Board on 10th June 2004 and comprises C. Jones as Chairman and A. Martin Smith and T. Guinness as Committee members. On 23rd June 2009 the Audit Committee approved the resignation of C. Jones as Chairman and agreed to recommend the appointment of A. Martin Smith as the Chairman.

The function of the Audit Committee is to ensure that the Company maintains the highest standards of integrity, financial reporting and internal control.

The Audit Committee will meet with the Company's external auditors normally twice a year to review the Annual and Semi-annual Accounts.

The Audit Committee may meet more frequently if the Audit Committee deems necessary or if required by the Company's Auditors.

The Company's Auditors shall be advised of the timing of the Audit Committee Meetings. The Audit Committee shall have access to the Compliance officers of the Investment Adviser, the Administrator, and the Custodian.

The Company Secretary shall be the Secretary of the Audit Committee and shall attend all Meetings of the Audit Committee.

The Audit Committee is satisfied that auditor objectivity and independence is not impaired by the performance of Grant Thornton Limited of non-audit tax services. The Audit Committee considers that the appointment of a third party unfamiliar with the Company to carry out non-audit services would not benefit shareholders since they would incur unnecessary additional expense. Grant Thornton UK LLP is UK-based and provides non-audit tax advice to the Company. The auditors are Grant Thornton Limited, based in Guernsey.

The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

SHAREHOLDER RELATIONS

The Board monitors the trading activity and shareholder profile on a regular basis and maintains contact with the Company's stock broker to ascertain the views of shareholders. Shareholder sentiment is also ascertained by the careful monitoring of the discount/premium that the shares are traded in the market against the NAV per share when compared to the discounts experienced by the Company's peer group. Shareholders where possible are contacted directly on a regular basis, and shareholders are invited to attend the Company's Annual General Meeting in person and ask questions of the Board of Directors and Investment Manager. Following the Annual General Meeting each year the Investment Manager gives a presentation to the shareholders.

The Company reports to Shareholders twice a year and a proxy voting card is sent to shareholders with the Annual Report and Financial Statements. The Registrar monitors the voting of the shareholders and proxy voting is taken into consideration when votes are cast at the Annual General Meeting. Shareholders may contact the Directors via the Company Secretary.

EVALUATION OF PERFORMANCE OF INVESTMENT MANAGER

The investment performance is reviewed at each regular Board meeting at which representatives of the Investment Manager are required to provide answers to any questions raised by the Board. The Board has instigated an annual formal review of the Investment Manager which includes consideration of:

performance compared with benchmark and peer group;
investment resources dedicated to the company;
investment management fee arrangements and notice period compared with peer group; and
marketing effort and resources provided to the Company.

In the opinion of the Directors the continuing appointment of the Manager on the terms agreed is in the interests of the Company's shareholders as a whole.

Investment Policy

The management and impact of the risk associated with this investment policy are described in detail in the notes to the Financial Statements (Note 15).

Details of Ten Largest Investments

Makita (401,200 shares, cost $11,899,550)

Makita manufactures and sells a wide range of power tools for professional and amateur users worldwide. The company also produces gardening and household products and provides parts, repairs and accessories. During the fiscal year ended March 2009, approximately 81% of Makita's sales were overseas. The company has over 100 service depots outside of Japan, with 28 located in the United States and 19 in China.

(Fair value of $9,156,271 representing 5.0% of the Net Asset Value (2008: 1.1%))

Toyota Tsusho (675,800 shares, cost $6,112,523)

Toyota Tsusho, 21.5% owned by Toyota Motors, is a medium/large scale trader involved in selling steel, autos and auto parts, and non-ferrous metals. Overseas sales account for a little more than 50% of total turnover.

(Fair value of $7,925,072 representing 4.3% of the Net Asset Value (2008: 0.4%))

Toyo Tanso (185,000 shares, cost $8,938,669)

Toyo Tanso manufactures, processes and sells specialist graphite products, carbon products, composite materials and similar items. The company's products are used in industrial machinery, electrical appliances, nuclear power equipment, and the aerospace, healthcare and energy sectors.

(Fair value of $6,823,230 representing 3.7% of the Net Asset Value (2008: 1.1%))

Shin-Etsu Chemical (125,000 shares, cost $6,028,768)

Shin-Etsu is the leading global supplier of wafers; thin slices of silicon used in semiconductor production. It also produces PVC which is used in housing construction, particularly in the United States. The company enjoys a strong cash position.

(Fair value of $6,049,414 representing 3.3% of the Net Asset Value (2008: Nil%))

Sakai Moving Service (271,700 shares, cost $5,639,605)

Sakai Moving Service is a specialist in household moving for individuals (46% of total sales), but is also strong in corporate moving for employees (42%). Sakai is also attracting new customers via the internet and has been steadily expanding its market share.

(Fair value of $5,550,265 representing 3.0% of the Net Asset Value (2008: 1.7%))

Hamakyorex (347,700 shares cost $7,467,480)

Hamakyorex is active in two business segments. Firstly, it provides third party logistics services as well as logistics-related consulting. Secondly, it has a large freight transportation trucking business.

(Fair value of $5,313,805 representing 2.9% of the Net Asset Value (2008: 1.3%))

Ajis (252,790 shares, cost $4,524,972)

Ajis provides inventory control services to supermarkets, bookstores, and other general shops. It also supplies peripheral distribution services, such as customer service checking and production capacity testing.

(Fair value of $5,022,318 representing 2.7% of the Net Asset Value (2008: 2.2%))

Seven Bank (2,000 shares, cost $3,899,802)

Seven Bank manages the largest ATM (Automated Teller Machine) network in Japan, with more than 13,000 machines based in Seven-Eleven convenience stores, other stores, train stations and airports. More than 95% of the company's overall revenue comes from ATM usage. Seven enjoys a very strong balance sheet and appears to take very few risks.

(Fair value of $4,727,458 representing 2.6% of the Net Asset Value (2008: 1.2%))

Nippon Electric Glass (505,000 shares, cost $4,234,381)

Nippon Electric Glass manufactures and sells flat panel and LCD displays for TVs. Over 78% of total sales for the year ended March 2009 were related to the display business and nearly 70% of overall sales originate from overseas.

(Fair value of $4,059,552 representing 2.2% of the Net Asset Value (2008: 0.1%))

Mitsubishi UFJ Lease & Finance (174,370 shares, cost $6,366,722)

Mitsubishi UFJ Lease & Finance is one of Japan's major leasing companies, primarily involved in leasing office equipment, information technology related equipment, and industrial machines. The company also supplies loans

for financing.

(Fair value of $4,023,923 representing 2.2% of the Net Asset Value (2008: 0.2%))

Schedule of Investments

		Fair	Percentage
	Number of	Value	of NAV
	Shares	$'000	%
Advertising
Tow	359,200	1,921	1.05

Aerospace/Defense
Jamco	338,000	1,415	0.77

Auto Parts&Equipment
F-Tech	110,000	616	0.34
H-One	52,500	167	0.09
Imasen Electric Industrial	129,800	886	0.48
Kanemitsu	45,200	122	0.07
Stanley Electric	235,100	3,330	1.81
Yachiyo Industry	77,300	510	0.28
		5,631	3.07

Banks
Biwako Bank	430,000	442	0.24
Seven Bank	2,000	4,727	2.58
Suruga Bank	406,000	3,458	1.88
		8,627	4.70

Building Materials
Comany	75,900	518	0.28

Chemicals
Adeka	50,000	318	0.17
Atect	192,200	578	0.31
Chugoku Marine Paints	500,000	2,858	1.56
Kanto Denka Kogyo	246,000	860	0.47
Marktec	35,000	300	0.16
Nitto Denko	35,000	815	0.44
Osaka Organic Chemical Industry	187,300	651	0.35
Sakai Chemical Industry	1,000,000	3,016	1.64
Seiko PMC	100,000	236	0.13
Shin-Etsu Chemical	125,000	6,049	3.30
Tri Chemical Laboratories	248,800	471	0.26
		16,152	8.79

Commercial Services
Ajis	252,790	5,022	2.73
Benesse	60,000	2,286	1.25
Mainichi Comnet	500,100	1,630	0.89
Nippon Kucho Service	210,000	1,515	0.82
Novarese	2,000	1,783	0.97
Paraca	426	166	0.09
Sunny Side Up	39,400	462	0.25
Toppan Forms	313,700	3,372	1.84
Yamada Servicer Synthetic Office	82,600	205	0.11
		16,441	8.95

Computers
Ferrotec	75,000	778	0.42
Nippon Information Development	46,500	431	0.23
Roland DG	131,900	1,779	0.97
		2,988	1.62

Cosmetics/Personal Care
Cota	109,500	788	0.43
Unicharm	40,000	2,788	1.52
		3,576	1.95

Distribution/Wholesale
Amsc	9,000	9	-
Echo Trading	58,200	438	0.24
Hoshi Iryo-Sanki	137,900	2,234	1.22
Innotech	592,800	1,510	0.82
Takachiho Electric	5,600	42	0.02
Takachiho Koheki	74,450	727	0.40
Toyota Tsusho	675,800	7,925	4.31
		12,885	7.01

Diversified Financial Services
JPN Holdings	67,800	249	0.14
Mitsubishi UFJ Lease & Finance	174,370	4,024	2.19
Osaka Securities Exchange	840	2,670	1.45
Osaka Securities Finance	800,500	1,452	0.79
Takagi Securities	200,000	251	0.14
UCS	213,800	686	0.37
		9,332	5.08

Electronics
Chiyoda Integre	100,000	982	0.53
Dai-ichi Seiko	196,800	3,168	1.72
Hamamatsu Photonics KK	45,000	905	0.49
Kokusai	70,300	224	0.12
Kyoritsu Electric	47,700	728	0.41
Micronics Japan	45,000	395	0.22
Nippon Electric Glass	505,000	4,060	2.21
River Eletec	145,100	244	0.13
Sumida	508,400	2,476	1.35
Sunx	881,900	2,417	1.32
Tokyo Electron Device	889	981	0.53
		16,580	9.03

Engineering&Construction
Yokogawa Bridge Holdings	75,000	648	0.35

Environmental Control
Airtech Japan	109,900	550	0.30

Food
Daikokutenbussan	43,400	651	0.35
Maxvalu Tokai	380,100	3,966	2.16
Universe	76,400	788	0.43
Warabeya Nichiyo	205,100	2,259	1.23
		7,664	4.17

Gas
Shizuoka Gas	144,000	813	0.44

Hand/Machine Tools
Ain Pharmaciez	204,100	3,080	1.68
Asahi Diamond Industrial	200,000	954	0.52
Central UNI	58,500	191	0.10
Daiken Medical	170,000	2,047	1.11
Makita	401,200	9,156	4.99
Mani	24,400	1,308	0.71
		16,736	9.11

Internet
Asahi Net	145,000	359	0.20
Cave	28	45	0.02
I-Freek	104	46	0.03
Kakaku	300	1,027	0.56
Matsui Securities	150,000	1,062	0.58
Monotaro	515	950	0.52
Morningstar Japan	1,275	361	0.20
		3,850	2.11

Leisure Time
Shimano	90,600	2,663	1.45

Machinery-Diversified
Giken Seisakusho	3,000	12	0.01

Media
Jupiter Telecommunications	1,358	959	0.52
Starcat Cable Network	1,133	629	0.34
		1,588	0.86

Miscellaneous Manufacturing
Kito Corp	500	400	0.22
Shoei/Taito-ku	102,000	950	0.52
Toyo Tanso	185,000	6,823	3.71
		8,173	4.45

Packaging&Containers
Fuji Seal International	214,700	2,909	1.58

Pharmaceuticals
Fuji Pharma	52,000	644	0.35
Medical Ikkou	319	816	0.44
Suzuken	66,600	1,645	0.90
Takeda Pharmaceutical	25,000	891	0.49
Tella	125,000	406	0.22
Toho Holdings	244,700	2,368	1.29
Towa Pharmaceutical	100,000	3,821	2.08
		10,591	5.77

Real Estate
Mitsui Fudosan	50,000	629	0.34

REITS
Fukuoka REIT	650	2,510	1.37
Japan Logistics Fund	300	1,791	0.98
MID Reit	400	783	0.43
Mori Trust Sogo Reit	275	1,908	1.04
Nippon Building Fund	200	1,624	0.88
Nippon Hotel Fund Investment	1,529	2,848	1.55
Nomura Real Estate Office Fund	150	770	0.42
		12,234	6.67

Retail
Allied Hearts Holdings	237,000	401	0.22
Amiyaki Tei	79	97	0.05
Blue Grass	154,500	787	0.43
Buffalo	100	46	0.03
Chimney	200,900	2,980	1.62
Creates SD Holdings	137,000	2,212	1.21
CVS Bay Area	200,000	255	0.14
Doutor Nichires Holdings	50,000	617	0.34
Gfoot	22,500	183	0.10
Growell Holdings	182,347	2,259	1.23
Handsman	306,300	1,233	0.67
Hiday Hidaka	316,700	3,272	1.78
Lic	254,600	537	0.29
Nihon Chouzai	180,000	2,346	1.28
Ryohin Keikaku	45,000	1,724	0.94
Sapporo Drug Store	196	155	0.08
Toell	140,000	357	0.19
Tokyo Derica	200,400	617	0.34
Village Vanguard	388	890	0.48
Watts Co Ltd	175	123	0.07
Yamato International	513,600	1,790	0.97
		22,881	12.46

Semiconductors
Mimasu Semiconductor Industry	85,000	973	0.53
Samco Inc	55,500	252	0.14
		1,225	0.67

Software
AQ Interactive	540	260	0.14
Hudson Soft	100,000	540	0.29
Jastec	135,200	623	0.34
Software Service	44,300	348	0.19
		1,771	0.96

Storage/Warehousing
Mitsui-Soko	248,000	867	0.47
Sugimura Warehouse	194,000	350	0.19
Yasuda Warehouse	300,400	2,139	1.16
		3,356	1.82

Transportation
AIT	55	48	0.03
Art	250,100	2,816	1.53
Hamakyorex	347,700	5,314	2.89
Higashi Twenty One	290,100	834	0.46
Kintetsu World Express	58,900	1,192	0.65
Sakai Moving Service	271,700	5,550	3.02
Trancom	200,000	2,011	1.09
		17,765	9.67

Total equities		212,124	115.49

Total Investments		212,124	115.49

Net Liabilities		(28,458)	(15.49)

Total Net Assets		183,666	100.00

Independent Auditors' Report to the Members of

Atlantis Japan Growth Fund Limited

For the year ended 30th April 2009

We have audited the financial statements of Atlantis Japan Growth Fund Limited for the year ended 30th April 2009 which comprise the income statement, statement of changes in equity, balance sheet, cash flow statement and notes 1 to 18. These financial statements have been prepared under accounting policies set out therein.

This report is made solely to the Company's members as a body, in accordance with Section 64 of The Companies (Guernsey) Law, 1994. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The Directors' responsibilities for preparing the Annual Report and the Financial Statements in accordance with applicable Guernsey Law and International Financial Reporting Standards ('IFRS') are set out in the Directors' Report under the heading of Directors' Responsibilities.

Our responsibility is to audit the Financial Statements in accordance with relevant, legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the Financial Statements give a true and fair view and have been properly prepared in accordance with The Companies (Guernsey) Law, 1994. We also report to you if, in our opinion, the Directors' Report is inconsistent with the Financial Statements, if the Company has not kept proper accounting records, or if we failed to obtain all access, information and explanations we require for our audit. The information given in the Directors' Report includes that specific information presented in the Investment Manager's Report that is cross referred from the Directors' Responsibilities section of the Directors' Report.

We read other information contained in the Annual Report and consider whether it is consistent with the audited Financial Statements. The other information comprises the Chairman's Statement, the Investment Manager's Report, the Directors' Report, Directors Remuneration Report, the Corporate Governance Statement, the details of the Ten Largest Investments and the Schedule of Investments. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Financial Statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Financial Statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Financial Statements, and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the Financial Statements.

Opinion

In our opinion:

the financial statements give a true and fair view, in accordance with IFRSs of the state of the company's affairs as at 30th April 2009 and of the Company's loss for the year then ended; and
the financial statements have been properly prepared in accordance with The Companies (Guernsey) Law 1994.

Grant Thornton Limited

Chartered Accountants

Guernsey, C.I.

17th July 2009

Income Statement

For the Year Ended 30th April 2009

		2009			2008

		Revenue	Capital	Total	Revenue	Capital	Total
Notes		$'000	$'000	$'000	$'000	$'000	$'000
	Income
3	Losses on investments held at fair value	-	(134,742)	(134,742)	-	(134,330)	(134,330)
	Exchange loss	-	(4,383)	(4,383)	(63)	(8,104)	(8,167)
	Dividend income	7,610	-	7,610	8,761	-	8,761

		7,610	(139,125)	(131,515)	8,698	(142,434)	(133,736)
	Expenses
4	Investment management fee	3,632	-	3,632	5,946	-	5,946
5	Custodian fees	287	-	287	191	-	191
6	Administration fees	231	-	231	242	-	242
6	Registrar and transfer agent fees	7	-	7	3	-	3
7	Directors' fees and expenses	143	-	143	233	-	233
	Transaction costs	-	537	537	-	915	915
	Insurance fees	21	-	21	96	-	96
	Audit fee	46	-	46	33	-	33
	Printing and advertising fees	42	-	42	42	-	42
	Legal and professional fees	75	-	75	46	-	46
	Listing fees	51	-	51	60	-	60
	Miscellaneous expenses	15	-	15	(10)	-	(10)

		4,550	537	5,087	6,882	915	7,797
	Finance cost
	Interest expense and bank charges	962	-	962	1,073	-	1,073

	Profit/(Loss) before tax	2,098	(139,662)	(137,564)	743	(143,349)	(142,606)

8	Taxation	(532)	-	(532)	(613)	-	(613)

	Profit/(Loss) for the year	1,566	(139,662)	(138,096)	130	(143,349)	(143,219)

9	Deficit per ordinary share			$(6.758)			$(7.008)

There are no recognised gains or losses arising in the year other than those dealt within the Income Statement. In arriving at the result for the year, all amounts above relate to continuing activities.

The total column in this statement represents the Company's Income Statement, prepared in accordance with IFRS. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

Statement of Changes in Equity

For the Year Ended 30th April 2009

				Capital	Capital	Capital Reserve/
	Ordinary Share	Share	Revenue	Reserve/	Reserve/	Exchange
	Capital	Premium	Reserve	Realised	Unrealised	Differences	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balances at 1st May 2008	204	192,650	(20,658)	305,885	(150,655)	(5,664)	321,762

Movements during the year
Realised loss on investments sold	-	-	103,730	(103,730)	-	-	-
Movement on unrealised loss on revaluation of investments	-	-	31,549	-	(31,549)	-	-
Loss on foreign exchange	-	-	4,383	-	-	(4,383)	-
Deficit on ordinary activities	-	-	(138,096)	-	-	-	(138,096)

Balances at 30th April 2009	204	192,650	(19,092)	202,155	(182,204)	(10,047)	183,666

				Capital	Capital	Capital Reserve/
	Ordinary Share	Share	Revenue	Reserve/	Reserve/	Exchange
	Capital	Premium	Reserve	Realised	Unrealised	Differences	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balances at 1st May 2007	204	192,650	(20,788)	328,877	(38,402)	2,440	464,981

Movements during the year
Realised gains on investments sold	-	-	22,992	(22,992)	-	-	-
Movement on unrealised loss on revaluation of investments	-	-	112,253	-	(112,253)	-	-
Loss on foreign exchange	-	-	8,104	-	-	(8,104)	-
Deficit on ordinary activities	-	-	(143,219)	-	-	-	(143,219)

Balances at 30th April 2008	204	192,650	(20,658)	305,885	(150,655)	(5,664)	321,762

Balance Sheet

As at 30th April 2009


		30-Apr-09	30-Apr-08
Notes		$'000	$'000
	Non Current Assets
2(f), 10	Financial assets at fair value
	through profit or loss	212,124	384,396


	Current Assets
	Due from brokers	4,289	3,808
2(d)	Dividends and other receivables	2,660	3,976
2(g)	Cash and cash equivalents	17,056	5,548

		24,005	13,332
	Current Liabilities
	Due to brokers	(6,106)	(3,213)
	Payables and accrued expenses	(509)	(735)
2(h), 11	Loans payable	(15,283)	(14,404)

		(21,898)	(18,352)
	Net Current Assets/(Liabilities)	2,107	(5,020)

	Non Current Liabilities
2(h), 11	Loans payable	(30,565)	(57,614)

14	Net Assets	183,666	321,762

13	Equity
	Ordinary share capital	204	204
	Share premium	192,650	192,650
	Revenue reserve	(19,092)	(20,658)
2(l)	Capital reserve	9,904	149,566

	Net Assets Attributable to Equity Shareholders	183,666	321,762

16	Net Asset Value per Ordinary Share*	$8.99	$15.75

*Based on the Net Asset Value at the year end divided by the number of shares in issue:

20,435,627 (30th April 2008 - 20,435,627)

Approved by the Board of Directors on 17th July 2009 and signed on its behalf by:

Andrew Martin Smith Christopher Jones

Cash Flow Statement

For the Year Ended 30th April 2009


	30-Apr-09	30-Apr-08
	$'000	$'000
Cash flows from operating activities	3,081	(417)

Investing Activities
Purchase of investments	(156,233)	(209,855)
Sale of investments	195,640	204,511
Net cash inflow/(outflow) from
investing activities	39,407	(5,344)

Net cash inflow/(outflow) before financing	42,488	(5,761)

Cash flows from financing activities
Interest paid	(1,084)	(996)
Net loans (repaid)/drawn-down	(26,170)	26,923


Net cash (outflow)/inflow from financing activities	(27,254)	25,927

Net increase in cash and cash equivalents	15,234	20,166

Exchange movements	(3,726)	(17,431)

Movement in cash and cash equivalents in the year	11,508	2,735

Cash and cash equivalents at beginning of year	5,548	2,813

Cash and cash equivalents at end of year	17,056	5,548


Reconciliation of loss for period to net cash outflow
from operating activities
Net loss before taxation	(137,564)	(142,606)
Loss on investments held at fair value	134,742	134,330
Exchange loss	4,383	8,167
Interest expense	962	1,073
Decrease/(increase) in debtors and accrued income	1,316	(607)
Decrease in creditors	(226)	(161)
Taxation	(532)	(613)

	3,081	(417)

Notes to the Financial Statements

For the year ended 30th April 2009

1. GENERAL

Atlantis Japan Growth Fund Limited (the 'Company') was incorporated in Guernsey on 13th March 1996. The Company commenced activities on 10th May 1996.

2. ACCOUNTING POLICIES

a) Statement of Compliance

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the IASB, and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the IASC that remain in effect.

At the date of authorisation of these financial statements, the following standards and interpretations, which may have an impact and have not been applied in these financial statements, were in issue but not yet effective:

- IFRS 3 - Business Combinations [Effective 1st January 2009]

- IFRS 8 - Operating Segments [Effective 1st January 2009]

- IAS 1 - Presentation of Financial Statements [Effective 1st January 2009]

- IAS 23 - Borrowing costs [Effective 1st January 2009]

- IAS 27 - Consolidated and Separate Financial Statements [Effective 1st January 2009]

- IAS 28 - Investments in Associates [Effective 1st January 2009]

- IAS 31 - Interests in Joint Ventures [Effective 1st January 2009]

- IAS 32 - Financial instruments presentation [Effective 1st January 2009]

- IAS 39 - (Amendment) Financial instruments, recognition and measurement [Effective 1st January 2009]

The Directors anticipate that these Standards and other standards and pronouncements which are in issue but not yet operative or adopted by the Company will have no material financial impact on the financial statements of the Company upon its adoption in future periods.

The Company has adopted for the first time IFRS 7 Financial Instruments: Disclosures and the complementary Amendment to IAS 1, Presentation of Financial Statements - Capital Disclosures.

b) Basis of Preparation

The financial statements have been prepared on a historical cost basis, except for the measurement at fair value of investments.

Where presentational recommendations set out in the Statement of Recommended Practice ('SORP') 'Financial Statements of Investment Companies', issued by the Association of Investment Companies in December 2005 do not conflict with the requirements of IFRS, the Directors have prepared the financial statements on a basis consistent with the recommendations in the SORP.

All financial assets and financial liabilities are recognised (or derecognised) on the date of the transaction by the use of 'trade date accounting'.

c) Presentation of Income Statement

In order to better reflect the activities of an investment trust company supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement.

d) Income Recognition

Dividends arising on the Company's investments are accounted for on an ex-dividend basis. Investment income is accounted for gross of withholding tax.

e) Expenses

All expenses are recognised on an accruals basis and have been charged against revenue, with the exception of transaction costs, which have been charged against capital.

f) Investments

The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors and other key management personnel.

Accordingly, upon initial recognition the investments are designated by the Company as 'at fair value through profit or loss'. They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Income Statement, and allocated to the capital column of the Income Statement at the time of acquisition). Subsequently, the investments listed overseas are valued at 'fair value', which is bid price (where a bid price is available) or otherwise at fair value based on published price quotations.

Gains and losses on non-current asset investments are included in the Income Statement as capital.

g) Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents, as defined above, net of outstanding bank overdrafts.

h) Loans Payable

All loans are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account discount or premium on settlement. Any costs of arranging any interest-bearing loans are capitalised and amortised over the life of the loan.

i) Foreign Currencies

The Company's investments are predominately denominated in Japanese yen. The Company's obligation to shareholders is denominated in US dollars and when appropriate, the Company may hedge the exchange rate risk from yen to US dollars. Therefore, the functional currency is US dollars, which is also the presentational currency of the Company. Transactions involving currencies other than US dollars, are recorded at the exchange rate ruling on the transaction date. At each balance sheet date, monetary items and non-monetary assets and liabilities that are fair valued, which are denominated in foreign currencies, are retranslated at the closing rates of exchange.

Exchange differences arising from retranslating at the balance sheet date:

- investments and other financial instruments measured at fair value through profit or loss; and

- other monetary items;

and arising on settlement of monetary items, are included in the Income Statement and allocated as capital if they are of a capital nature, or as revenue if they are of a revenue nature.

Foreign Currency Transactions

Foreign currency assets and liabilities, including investments at valuation, are translated into U.S. Dollars at the rate of exchange ruling at the balance sheet date. Investment transactions and income and expenditure items are translated at the rate of exchange ruling at the date of the transactions. Gains and losses on foreign exchange are included in the Income Statement.

j) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Income Statement is the 'marginal basis'. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Income Statement, then no tax relief is transferred to the capital return column.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. A deferred tax liability is recognised in full for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under section 842 of the Income and Corporation Taxes Act 1988 are not liable for taxation on capital gains.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

k) Financial Liabilities

Financial liabilities are recognised when the Company becomes a party to the contractual agreements of the instrument. Trade and other payables are initially recognised at their nominal value and subsequently measured at amortized cost less settlement payments. Financial liabilities are derecognised from the balance sheet only when the obligations are extinguished either through discharge, cancellation or expiration.

l) Capital and Reserves

The capital reserve distinguishes between gains/(losses) on sale or disposals and valuation gains/(losses) on investments. The capital reserve consists of realised gains/(losses) on investments, movement in valuation gains/(losses) on investments and gains/(losses) relating to foreign exchange.

3. LOSSES ON INVESTMENTS HELD AT FAIR VALUE

	2009	2008
	$'000	$'000

Proceeds from sales of investments	196,120	207,319
Original cost of investments sold	(299,850)	(229,396)

(Losses)/gains realised on investments sold during the period	(103,730)	(22,077)

Net unrealised depreciation for the period	(31,012)	(112,253)

	(134,742)	(134,330)

4. INVESTMENT MANAGEMENT FEE

The Company pays to the Investment Manager a fee accrued weekly and paid monthly in arrears at the annual rate of 1.5 per cent of the weekly Net Asset Value of the Company. For the year ended 30th April 2009, total investment management fees were $3,631,865 (2008 - $5,945,569) of which $202,725 (2008 - $389,430) is due and payable as at that date.

Under the terms of the Investment Management Agreement dated 18th March 1996, the Investment Manager, Atlantis Fund Managers (Guernsey) Limited, will continue in office until a resignation is tendered or the contract is terminated. In both circumstances, a resignation or termination must be given with a notice period which must not be less than twelve months, and be in accordance with the Investment Management Agreement. Fees payable to the Investment Adviser are met by the Investment Manager.

5. CUSTODIAN FEES

The Company pays to the Custodian a fee accrued weekly at a rate of 0.03 per cent of the total weekly Net Asset Value subject to an annual minimum of US$20,000 of the assets held by the Custodian or Sub-Custodian, together with transactions charges. For the year ended 30th April 2009, total custodian fees were $287,252 (2008 - $191,097) of which $35,042 (2008- $12,625) is due and payable as at that date.

6. ADMINISTRATION AND REGISTRAR FEES

The Company pays to the Administrator a fee accrued weekly and paid monthly in arrears at the annual rate of 0.18 per cent of the weekly Net Asset Value up to $50 million and 0.135 per cent between $50 million and $100 million, 0.0675 per cent between $100 million and $200 million and 0.02 per cent above $200 million, subject to an annual minimum of $100,000. In addition, an annual minimum retainer of $1,000 is payable in respect of maintaining the principal register of shareholders. For the year ended 30th April 2009, total administration and registrar fees were $238,133 (2008 - $244,855) which $83,116 (2008 - $108,703) is due and payable as at that date.

7. DIRECTORS' FEES AND EXPENSES

Each of the Directors is entitled to receive a fee from the Company, being £20,000 per annum for the Chairman and £15,000 per annum for each of the other Directors. In addition, the Company reimburses all reasonably incurred out-of-pocket expenses of the Directors. For the year ended 30th April 2009, total directors' fees and expenses were $143,353 (2008 - $233,565) of which $16,669 (2008 - $Nil) is due and payable as at that date.

8. TAXATION

	2009	2008
	$'000	$'000

Corporation tax at 28% (2008 - 29.83%)	-	-
Irrecoverable overseas tax	532	613
Tax charge in respect of the current year	532	613

Current Taxation

The current taxation charge for the year is different from the standard rate of corporation tax in the UK (28%). The differences are explained below.

	2009	2008
	$'000	$'000

Corporation tax at 28% (2008 - 29.83%)	-	-
Irrecoverable overseas tax	532	613
Tax charge in respect of the current year	532	613

The Company is an investment trust and therefore is not taxable on capital gains.

Factors that may affect future tax charges

The investment trust has excess management expenses of $23,693,442 (2008 - $25,258,742) that are available to offset future taxable revenue. A deferred tax asset has not been recognised in respect of these amounts as they will be recoverable only to the extent that there is sufficient future taxable revenue.

9. DEFICIT PER ORDINARY SHARE

The deficit per ordinary share figure is based on the net deficit for the year of $138,096,046 (2008 $143,219,000) and on 20,435,627 ordinary shares for each year, being the weighted average number of ordinary shares in issue during the year.

The deficit per ordinary share figure detailed above can be further analysed between revenue and capital, as below.

	2009	2008
	$'000	$'000

Net revenue profit	1,566	130
Net capital loss	(139,662)	(143,349)
Net total loss	(138,096)	(143,219)

Weighted average number of ordinary shares
in issue during the period	20,435,627	20,435,627

	$	$
Revenue profit per ordinary share	0.077	0.006
Capital deficit per ordinary share	(6.835)	(7.015)
Total deficit per ordinary share	(6.758)	(7.008)

10. INVESTMENTS

	2009	2008
	$'000	$'000

Cost of investments brought forward	425,025	443,777
Cost of purchase of investments	159,126	210,644
Proceeds on disposal of investments	(196,120)	(207,319)
Realised loss on disposal of investments	(103,730)	(22,077)
Cost of investments carried forward	284,301	425,025


Cost of investments	284,301	425,025
Unrealised depreciation	(72,177)	(40,629)
Fair value of investments at year end	212,124	384,396

11. LOANS PAYABLE

Loan Amount	Interest Rate	Maturity Date	2009 $’000	2008 $’000
Loans due for repayment within one year
3 year committed revolving credit facility
Y1,500,000,000	1.00%	29 July 2008	-	14,404

3 year committed fixed rate credit facility
Y1,500,000,000	1.71%	16 October 2009	15,283	-
			15,283	14,404
Loans due for repayment greater than one year
3 year committed fixed rate credit facility
Y1,500,000,000	1.90%	6 July 2009	-	14,404
Y1,500,000,000	1.71%	16 October 2009	-	14,404

5 year committed fixed rate credit facility
Y1,000,000,000	2.05%	31 July 2011	10,188	9,602
Y2,000,000,000	1.63%	13 October 2010	20,377	19,204
			30,565	57,614

			45,848	72,018

12. FORWARD CURRENCY CONTRACTS

At 30th April 2009 and 2008 the Company did not have any open forward currency contracts.

13. SHARE CAPITAL AND SHARE PREMIUM

a) Authorised

	2009	2008
	$’000	$’000
24,000,000 Ordinary Shares of US$0.01 eac	240	240

The rights which the ordinary shares convey upon the holders thereof are as follows:

Voting Rights

i) on a show of hands, every Member who is present shall have one vote; and ii) on a poll a Member present in person or by proxy shall be entitled to one vote per ordinary share held.

Entitlement to Dividends

The Company may declare dividends in respect of the ordinary shares.

Rights in a Winding-up

The holders of ordinary shares will be entitled to share in the Net Asset Value of the Company as determined by the Liquidator.


b) Issued
Ordinary Shares	Number of Shares	Share Capital	Share Premium
		$'000	$'000

In issue at 30th April 2009	20,435,627	204	192,650

14. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

Reconciliation of Movement in shareholders Funds
	2009	2008
	$'000	$'000
Deficit attributable to equity shareholders	(138,096)	(143,219)
Shareholders' funds at beginning of year	321,762	464,981
Shareholders' funds at end of year	183,666	321,762

15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

In accordance with its investment objectives and policies, the Company holds financial instruments which at any one time may comprise the following:

* securities held in accordance with the investment objectives and policies

* cash and short-term debtors and creditors arising directly from operations

* borrowing used to finance investment activity

* derivative transactions including investment in warrants and forward currency contracts

* options or futures for hedging purposes

The financial instruments held by the Company principally comprise equities listed on the stock market in Japan. The specific risks arising from the Company's exposure to these instruments, and the Manager/Investment Adviser's policies for managing these risks, which have been applied throughout the year, are summarised below.

Capital Management

The fair value of the Company's financial assets and liabilities approximate their carrying amounts at the balance sheet date.

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company may not borrow or otherwise use leverage exceeding 20% of its net assets for investment purposes, to meet redemption request or to settle facilities for specific investments such as bridge financing. In connection with the loan facility agreement with Bank N.V. (ING), the Company entered into a Guernsey law security interest agreement in favour of ING over its custody accounts held with Northern Trust (Guernsey) Limited.

The Company does not have any externally imposed capital requirements apart from the fact that it needs to distribute 85% of the income, in order to comply with UK Revenue distributor tax rules.

The Company may purchase a maximum of 3,063,300 Ordinary Shares, equivalent to 14.99% of the Issued share capital of the Company as at 30th April 2009 provided that;

* The minimum price to be paid (exclusive of expenses) be US$0.001; and

* If the shares are trading on the London Stock Exchange at a discount to the lower of the undiluted or diluted Net Asset Value;

Currently no shares have been bought back under this scheme and this would have to be approved at the Company's AGM. There had been no change in the capital structure of the Company during the year.

Market Price Risk

The Company's investment portfolio - particularly its equity investments - is exposed to market price fluctuations which are monitored by the Manager/Investment Adviser in pursuance of the investment objectives and policies. Adherence to investment guidelines and to investment and borrowing powers set out in the scheme particulars mitigates the risk of excessive exposure to any particular type of security or issuer.

At 30th April 2009, the Fund's market price risk is affected by three main components: changes in market prices, currency exchange rates and interest rate risk. Currency exchange rate movements and interest rate movements, which are dealt with under the relevant headings below, primarily affect the fair values of the Fund's exposures to equity securities, related derivatives and other instruments. Changes in market prices primarily affect the fair value of the Fund's exposures to equity securities, related derivatives and other instruments.

Exceptional risks associated with investment in Japanese smaller companies may include:

a) greater price volatility, substantially less liquidity and significantly smaller market capitalisation, and

b) more substantial government intervention in the economy, including restrictions on investing in companies or in industries deemed sensitive to relevant national interests.

Market price sensitivity analysis

If the price of each of the equity securities to which the Fund had exposure at 30th April 2009 had increased or decreased by 5% with all other variables held constant, this would have increased or decreased net assets attributable to holders of redeemable participating shares of the Fund by:

	2009	2008
	+/-	+/-
Net Asset Value	US$ 10,606,206	US$ 19,219,824
Net Asset Value per share	US$ 0.52	US$ 0.94

No benchmark is used in the calculation of the above information.

Foreign Currency Risk

The Company principally invests in securities denominated in currencies other than United States Dollar, the functional currency of the Company. Therefore, the balance sheet may be affected by movements in the exchange rates of such currencies against the US Dollar. The Manager/Investment Advisor has the power to manage exposure to currency movements by using forward currency contracts. No such instruments were held at the date of these Financial Statements.

It is not the present intention of the Directors to hedge the currency exposure of the Company, but the Directors reserve the right to do so in the future if they consider this to be desirable.

The treatment of currency transactions other than in US Dollars is set out in Note 2 to the Financial Statements under 'Foreign Currencies'.

The Company's net currency exposure is as follows:

	Sterling	Japanese Yen
As at 30th April 2009:	$'000	$'000

Assets
Cash and cash equivalents	-	17,015
Investments held at fair value	-	212,124
Other assets	-	6,869
Total assets	-	236,008

Liabilities
Loans payable	-	(45,848)
Other liabilities	-	(6,106)
Total liabilities	-	(51,954)

Total net assets	-	184,054

	Sterling	Japanese Yen
As at 30th April 2008:	$'000	$'000

Assets
Cash and cash equivalents	7	5,492
Investments held at fair value	-	384,396
Other assets	-	7,582
Total assets	7	397,470

Liabilities
Loans payable	-	(72,018)
Other liabilities	-	(3,213)
Total liabilities	-	(75,231)

Total net assets	7	322,239

Foreign Currency Sensitivity Analysis

If the exchange rate at 30th April, 2009 between the functional currency and all other currencies had increased or decreased by 5% (2008: 5%) this should be a reasonably possible change for a period of one year, or less if the next financial period will be less than one year with all other variables held constant, this would have increased or reduced net assets attributable to holders of ordinary shares of the Company by:

	2009	2008
	+/-	+/-
Net Asset Value	US$ 9,206,716	US$ 16,112,310
Net Asset Value per share	US$ 0.45	US$ 0.79

No benchmark is used in the calculation of the above information.

Interest Rate Risk

Substantially all the Company's financial assets and liabilities are non-interest bearing and any excess cash and cash equivalents are invested at short-term market interest rates. As a result, the Company is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

As at 30th April 2009, the Company only has significant exposure to interest rate risk regarding the loan facility and cash and cash equivalents.

Increases in interest rates may increase the costs of the Company's borrowings. The rate of interest on each ING drawdown loan for each interest period is the percentage rate per annum which is the aggregate of the applicable; (i) margin, (ii) LIBOR and (iii) mandatory cost. Interest on the loan is payable monthly in arrears. For the year ended 30th April 2009 the interest accrued on the loan was US$80,160 (30th April 2008: US$ 201,597)

Interest rate risk profile

The following financial assets and liabilities disclosures exclude prepayments and taxation debtors and creditors:

	Cash flow	Fair value
	interest	interest	Total
	rate risk	rate risk
As at 30th April 2009:	$'000	$'000	$'000

Financial assets
Cash and bank balances	17,056	-	17,056
Total financial assets	17,056	-	17,056

Financial liabilities
Loans payable	-	(45,848)	(45,848)
Total financial liabilities	-	(45,848)	(45,848)

Net financial assets/(liabilities)	17,056	(45,848)	(28,792)

	Cash flow	Fair value
	interest	interest	Total
	rate risk	rate risk
As at 30th April 2008:	$'000	$'000	$'000

Financial assets
Cash and bank balances	5,548	-	5,548
Total financial assets	5,548	-	5,548

Financial liabilities
Loans payable	-	(72,018)	(72,018)
Total financial liabilities	-	(72,018)	(72,018)

Net financial assets/(liabilities)	5,548	(72,018)	(66,470)

The cash flow interest rate risk comprises those financial assets and liabilities with a floating interest rate, for example cash deposits at local market rates. Cash and cash equivalents earn interest at the prevailing market interest rate. Although this portion of the Net Asset Value is not subject to fair value risk as a result of possible fluctuations in the prevailing market interest rates, the future cashflows of the Company could be adversely or positively impacted by decreases or increases in those prevailing market interest rates.

The fair value interest rate risk comprises those financial assets and liabilities with a fixed interest rate, for example loans payable and loan interest payable.

	Weighted average		Weighted average period for
	interest rate		which rate is fixed (years)
	2009	2008	2009	2008
Japanese Yen
Loans payable	1.75%	1.63%	0.89	1.33

Fair Value

All assets and liabilities are carried at fair value with the exception of short term borrowings which are carried at amortised cost using the effective interest rate method.

Short term Debtors and Creditors

Trade and other receivables do not carry interest and are short term in nature. They are stated at amortised cost as reduced by appropriate allowances for irrecoverable amounts in the case of receivables.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments.

As at 30th April 2009, the Company had drawn down a loan facility of JPY 4,500,000,000 ($ 45,848,192). In connection with the facility agreement, the Company entered into a Guernsey law security interest agreement in favour of ING over its custody accounts held with Northern Trust (Guernsey) Limited. The loan may only be applied for investment leverage purposes only and must be repaid on the latest of (i) the day falling 364 days from the date of the draw down of the loan, and (ii) any extension date agreed between the Company and ING.

The Company invests primarily in listed securities.

The maturity analysis of the Company's financial assets and liabilities (excluding prepayments and tax balances) at 30th April 2009 is as follows:

	Up to 1 year	1 to 5	Total
	or on demand	years
As at 30th April 2009:	$'000	$'000	$'000

Financial assets
Cash and bank balances	17,056	-	17,056
Investments held at fair value	212,124	-	212,124
Other financial assets	6,949	-	6,949
Total financial assets	236,129	-	236,129

Financial liabilities
Loans payable	(15,943)	(30,716)	(46,659)
Other financial liabilities	(6,615)	(261)	(6,876)
Total financial liabilities	(22,558)	(30,977)	(53,535)

Excess/(deficit) of financial assets over gross contractual liabilities	213,571	(30,977)	182,594

	Up to 1 year	1 to 5	Total
	or on demand	years
As at 30th April 2008:	$'000	$'000	$'000

Financial assets
Cash and bank balances	5,548	-	5,548
Investments held at fair value	384,396	-	384,396
Other financial assets	7,784	-	7,784
Total financial assets	397,728	-	397,728

Financial liabilities
Loans payable	(14,404)	(57,614)	(72,018)
Other financial liabilities	(3,948)	-	(3,948)
Total financial liabilities	(18,352)	(57,614)	(75,966)

Excess/(deficit) of financial assets over gross contractual liabilities	379,376	(57,614)	321,762

Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Company.

In accordance with the investment restrictions as described in its placing Memorandum, the Company may not invest more than 10% of the Company's gross assets in securities of any one company or issuer. However, this restriction shall not apply to securities issued or guaranteed by a government or government agency of the Japanese or US Governments. In adhering to these investment restrictions, the Company mitigates the risk of any significant concentration of credit risk arising on broker and dividend receivables.

As the Company invests primarily in publicly traded equity securities the Company is not exposed to credit risk from these positions. However, the Company will be exposed to a credit risk on parties with whom it trades and will bear the risk of settlement default. The Company minimises concentrations of credit risk by undertaking transactions with a large number of regulated counterparties on recognised and reputable exchanges. All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. The Company is exposed to credit risk on cash and investment balances held with the Custodian. The Investment Manager regularly reviews concentrations of credit risk.

The Custodian of the Fund, Northern Trust (Guernsey) Limited which is part of the Northern Trust Company has a rating of (AA-), which was rated by Standard & Poor`s. Northern Trust Company ('TNTCO') is also wholly owned by TNTC. TNTCO has a credit rating of AA from Standard & Poors (which was increased from AA- to AA in May 2008) and Aa3 from Moodys.

The securities held by the Company are legally held with the Custodian, which holds the securities in segregated accounts, and subject to any security given by the Company to secure its overdraft facilities, the Company's securities should be returned to the Company in the event of the insolvency of the Custodian or its appointed agents, although it may take time to the Company to prove its entitlement to the securities and for them to be released by the liquidator of the insolvent institution. The Company will however only rank as an unsecured creditor in relation to any cash deposited or derivative positions with the Custodian, their related companies and their appointed agents, and is therefore subject to the credit risk of the relevant institution in this respect.

The net assets exposed to credit risk at year end amounted to US$227,363,213 (2008 US$390,539,000).

16. RECONCILIATION OF NET ASSET VALUE TO PUBLISHED NET ASSET VALUE


	2009	Per Share
	$'000	$

Published Net Asset Value	184,722	9.04
Unrealised loss on revaluation of securities at bid prices	(1,056)	(0.05)
	183,666	8.99

	2008	Per Share
	$'000	$

Published Net Asset Value	323,824	15.85
Unrealised loss on revaluation of securities at bid prices	(2,062)	(0.10)
	321,762	15.75

In accordance with IFRS the Company's investments have been valued at bid price. However, in accordance with the Company's prospectus for the purposes of determining the daily net asset value per share the investments are valued at mid prices.

17. DIVIDEND

The following interim dividend was declared by the Board of Directors:-

Distribution	Date			Date	Amount
per unit	declared	Ex-date	Record Date	paid	US$	Relevant period

$0.05	17th July 2009	12th August 2009	14th August 2009	4th September 2009	1,021,781	1st May 2008 - 30th April 2009

18. SUBSEQUENT EVENTS

There have been no events subsequent to the year ended 30th April 2009.

Administration

Directors

Timothy Guinness (Chairman)

Christopher Jones

Eric Boyle

Andrew Martin Smith

Takeshi Murakami

Registered Office

Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL, Channel Islands

Investment Manager

Atlantis Fund Management (Guernsey) Limited

P.O. Box 255, Trafalgar Court, Les Banques, Guernsey, GY1 3QL, Channel Islands,

Global Custodian

Northern Trust (Guernsey) Limited

Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3DA, Channel Islands

Investment Adviser

Atlantis Investment Management Limited (regulated by FSA)

4th Floor, 30-34 Moorgate, London EC2R 6DN

(Telephone no. 020-7638-9192)

Administrator, Secretary and Principal Registrar

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL, Channel Islands

Jersey Registrar

Computershare Investor Services

P.O. Box 83, Ordnance House, 31 Pier Road, St. Helier, Jersey JE4 8PW,

Channel Islands

Stock Brokers

J.P. Morgan Cazenove Limited

20 Moorgate, London EC2R 6DA

Auditors

Grant Thornton Limited

P.O. Box 313, Island house, Grand Rue, St. Martin, Guernsey GY1 3TF

Legal Advisers

Ogier

Ogier House, St. Julian's Avenue, St Peter Port GY1 1WA

Annual General Meeting

(Company No. 30709)

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 2009 Annual General Meeting of the Company will be held at 20 Moorgate, London, EC2R 6DA on 2 October 2009 at 11.30am.

Resolution on Form of Proxy	Agenda
	1. To elect a Chairman of the Meeting.

Ordinary Resolution 1	2. To approve and adopt the Annual Report and Audited Financial Statements of the Company for the year ended 30 April 2009.

Ordinary Resolution 2	3. To re-appoint Grant Thornton Limited as Auditors to the Company until the conclusion of the next Annual General Meeting.

Ordinary Resolution 3	4. To authorise the Board of Directors to determine the remuneration of the Auditors.

Ordinary Resolution 4	5. To re-appoint Timothy Guinness following his retirement by rotation in accordance with Articles 83.1 and 83.2 of the Articles of Incorporation of the Company.

Ordinary Resolution 5	6. To re-appoint Andrew Martin Smith following his retirement by rotation in accordance with Articles 83.1 and 83.2 of the Articles of Incorporation of the Company.

Ordinary Resolution 6	7. To re-elect Christopher Jones as a Director of the Company in accordance with Section A7 of the New Combined Code.

Ordinary Resolution 7	8. To consider and approve the Directors' Remuneration Report as detailed in the Annual Report and Audited Financial Statements for the year ended 30 April 2009.

Special Resolution 1	9. To consider and approve that the Company be unconditionally and generally authorised in accordance with The Companies (Guernsey) Law, 2008, as amended, (the “Law”) to make market acquisitions of its Ordinary Shares of 1 cent each in its capital subject as follows:
	a) the maximum number of Ordinary Shares (“Shares”) hereby authorised to be acquired shall be 14.99% per cent. of the total number of Shares in issue; b) the maximum price which may be paid for any such Shares which the Company contracts to purchase on any day shall be a sum equivalent to 105% of the average of the middle market quotation for the Shares on the Daily Official List of the London Stock Exchange on the 5 business days immediately preceding that day;
	c) any purchase of Shares will be made in the market for cash at prices below the prevailing Net Asset Value per share;
	d) the minimum price which may be paid for such Shares is USD0.01; e) the authority conferred by this resolution shall expire at the conclusion of the next Annual General Meeting of the Company or, if earlier, on the expiry of eighteen months from the passing of this resolution, unless such authority is renewed, varied or revoked prior to such time.


Special Resolution 2	10. To consider and approve the alteration of the Articles of Incorporation of the Company by the deletion of the wording in Article 47 and replacing it with the following words: “No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business. For all purposes the quorum shall be not less than two Members present in person or by proxy. In circumstances where the Company only has one Member, one Member present in person or by proxy shall form a quorum.”
	11. Any other business.

By Order of the Board

For and on behalf of

Northern Trust International Fund Administration

Services (Guernsey) Limited

Secretary

7th August 2009

Notes

A member entitled to attend and vote at the meeting convened by the notice set out above is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not also be a member of the Company.

A Proxy Form is enclosed. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power or authority shall be deposited to Computershare Investor Services (Channel Islands) Limited, PO Box 83, Ordnance House, 31 Pier Road, St Helier, Jersey, JE4 8PW, Channel Islands not less than forty-eight hours before the time appointed for holding the meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR SEAFDSSUSEFW

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