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Atlantis Japan Growth Fund LimitedAnnual Report and Financial Statementsfor the year ended 30th April 2008

PAGE

INTRODUCTION 2

CHAIRMAN’SSTATEMENT 3

INVESTMENTMANAGER’SREPORT 5

DIRECTORS 8

DIRECTORS’REPORT 9

CORPORATEGOVERNANCE 13

INVESTMENTPOLICY 16

DETAILSOFTENLARGESTINVESTMENTS 17

SCHEDULEOFINVESTMENTS 19

INDEPENDENTAUDITORS’REPORT 26

INCOMESTATEMENT 27

STATEMENTOFCHANGESINEQUITY 28

BALANCESHEET 29

CASHFLOWSTATEMENT 30

NOTESTOTHEFINANCIALSTATEMENTS 31

ADMINISTRATION 44

NOTICEOFANNUALGENERALMEETING 46

NOTE:Allreferencesto“dollars”or“$”throughoutthisreportaretotheUnitedStatescurrency

ATLANTIS JAPAN GROWTH FUND LIMITED

CONTENTS

1

INVESTMENT OBJECTIVE AND POLICIES

TheCompanyaimstoachievelongtermcapitalgrowththroughinvestmentwhollyormainlyinlistedJapaneseequities.

TheInvestmentManageradoptsastock-driveninvestmentapproach.TheCompany’sportfoliowillbeinvestedprincipallyincompaniesquotedontheTokyoStockExchange,theregionalstockmarketsofNagoya,Fukuoka,OsakaandSapporoandtheJapaneseover-the-countermarketsincludingJASDAQ,Mothers, Hercules, etc. Investment may also be made in companies listed elsewhere but controlledfromJapanorwithamaterialexposure to the Japaneseeconomy.TheCompanymayalso invest insecuritieswhichareneitherlistednotdealtinontheJapaneseover-the-countermarketprovidedthatimmediatelyafteranysuchinvestmentismadetheCompanydoesnothavemorethan10percent.ofitsNetAssetValuesoinvested.TheCompanymayborrowmoneywithaviewtoenhancingcapitalreturns. However, the Company’s Articles of Association provide that borrowing levels should notexceed20percent.ofNetAssetValueatthetimeanyborrowingiseffected.Derivativeinstruments,otherthanequitywarrantsandconvertiblebondswhichmaybeacquiredasinvestmentsintheirownright,willbeusedonlyforhedgingpurposes.TheCompanymayhedgeitsexposuretotheJapaneseYen, although the Investment Manager does not expect to hedge the Company’s exposure to theJapaneseyenunlessitsvaluerelativetotheUSdollardeclinessignificantly.

INVESTMENT MANAGER AND INVESTMENT ADVISER

Atlantis Fund Management (Guernsey) Limited has been appointed as Investment Manager oftheCompany.

Atlantis Investment Management Limited has been appointed by the Investment Manager as itsInvestmentAdviser.AtlantisInvestmentResearchCorporation,establishedinTokyo,will,throughEdwin Merner, advise the Investment Adviser on the day-to-day conduct of the Company’sinvestmentbusiness.


INTRODUCTION

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Theyearto30thApril2008wasadifficultperiodfortheTokyoMarketandtheCompany.Bothmovedloweroverthecourseoftheyearasthemarketrespondedtoasteadystreamofbadnewsfromoverseasand growing uncertainty on the domestic front. The negative sentiment kept stock prices underpressure,andevenpreviouslybullishoverseasinvestorsretreatedintonetselling.Thesellingpressurewasoftenfeltmostkeenlywhereliquidityhasbeentraditionallylow,thatis,inthemidandsmallercapsegmentofthemarket.ThiscompoundedtheperformancedifficultiesfortheCompany,whichhasinpastyearsmaintainedahighexposuretosmallandmedium-sizedstocks.

When the Company was established in 1996, the Investment Manager outlined their investmentprinciplesemphasisingvalueandlong-termearningsgrowth,andsetforththegoalofoutperformingthe market and delivering positive returns over the long term. The Company has stayed loyal totheseprinciplesthroughtheyearsinbothgoodandbadmarkets,recognisingthatthisapproachhasoftenmeantahightrackingerrorrelativetotheleadingmarketindices.InsomeyearstheCompanyhas outperformed the market and in others, including the year under review, the Company hasunderperformed the market. However, over the long term the Company has still outperformed themarketanddeliveredpositivereturns,inkeepingwithitsoriginalgoal.

Stockmarketsarecyclicalinnatureandnegativereturnscansometimespersistnotjustmonthsbutforyears.Forthisreason,eventhoughportfolioinvestmentsaremadeprimarilyonthebasisofindividualcompany fundamentals and valuations, consideration should be given to the various macro-levelfactorsthataffectthelong-termearningsoutlookandother“bigpicture”issues.

At theendofApril Japanese stocks lookedcheap, at leasthistorically.TheTokyoFirstMarketwastradingataround1.5xbookvalueandaround17xestimatedearningsforthefiscalyearjustendedandthedividendyieldofaround1.7%wasslightlyhigherthantheyieldonthebellwether10-yearJapanesegovernment bond. Valuations were even lower on the Tokyo Second Market. Of course, while lowvaluationsdonotmakeallstocksa“buy”anddonotsuggestthemarketwillreboundimmediately,theydoofferagoodreasontoholdJapaneseequities.Furthermoreitislikelythattheyenwillremainastrongcurrency,whileJapanmaintainlargetradeandcurrentaccountsurpluses,lowinflation,andanotherwisestableenvironment.

The Company ended the year under review at a 14.2% discount to Net Asset Value per share.We see this as a reflection of both the weak performance of the Tokyo Market and the generallynegative investor sentiment toward Japanese stocks and related closed-end investment trusts overthattime.Inthepast,whentheTokyoMarketwasstrongandinvestorswereconfident,theCompanyfrequentlytradedatapremiumtoNetAssetValue.Indeed,thiswasthecasejusttwoyearsago.Atthetimeofwritingthediscounthadfallentocirca5%andsentimenttowardstheJapanesemarketappearstobeimproving.

Whilstmarketconditionsweredifficultduringthepastyear,yourboardstillbelievesthatthestockmarket will in due course recover and that Japanese stocks will come back into favour. While it isimpossibletopredictthetiming,weremainconfidentthatyourCompanyremainswellpositionedtotakeadvantageoftherecoverywhenitcomes.

ATLANTIS JAPAN GROWTH FUND LIMITEDCHAIRMAN’SSTATEMENT

FORTHEYEARENDED30THAPRIL2008

Atlantis Japan Growth Fund Performance

Since Fund Inception Source: Atlantis

IamdelightedtoreportthatinNovember2007,TakeshiMurakamiacceptedaninvitationtojoinyourCompany’s Board. He brings with him 38 years of experience in the securities industries in Osaka,Tokyo,NewYorkandLondon.

TimothyGuinnessChairmanJuly2008


CHAIRMAN’SSTATEMENT(continued)

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Atlantis Japan Growth Fund NAV

Atlantis Japan Growth Fund Price

Topix (US$)

Tokyo Second Market (US$)

5

PERFORMANCEThe Company faced exceptionally difficult market conditions during the year to 30th April 2008.Indeed, theconfluenceofdifficultieswassuchthat itmightevenbedescribedas the“perfectstorm.”Inadditiontoadeclineintheoverallmarket,therewereaddedpressuresonthosesegmentsofthemarketthatyourInvestmentManagernormallyfavours,asbothgrowthandvaluestocksfelloutoffavourandsmallstocksunderperformedlargestocks.Atthesametime,thosesegmentsofthemarkettowhichtheportfoliohadlittleornoexposureoutperformedtheoverallmarketasinvestorsflockedtocommodity-related stocks and low-quality recovery situations, areas where the Investment Manager sees littleattractionbasedonlong-termfundamentals.AddingfurthertothedifficultieswastheFund’sleverage,whichhadanegativeimpactonperformanceasthevalueofequitiesintheportfoliodeclined.

Asaresult,theCompanyPublishedNetAssetValuefinishedtheyearto30thApril2008down30.8%.Thiscompareswithdeclinesof-8.30%fortheTopixand-18.4%fortheTokyoSecondMarketindex.Reflecting the greater pressure on small stocks and micro caps, where the Fund has considerableexposure,theMOTHERSindexfell24.1%andHERCULESindexfell24.0%overthesametimeframe.(Note:AllfiguresinUSdollarterms.)

Attheendoftheyearunderreview,theCompanyhadborrowingsofY7.5billion,(about$72million),representinganincreaseofY1billion($9.6million),andcashofY578million($5.5million).ThislefttheCompanyabout22.4%leveraged.Therearenoplanstoincreaseleverageatthistime.SincenearlyallCompanyassetsaredenominatedinYen,astrongYenhasapositiveimpactontheNAVinUSdollartermsandviceversa.Attheendoftheyearunderreview,theYenstoodat104.14/USdollarcomparedwithY119.575oneyearearlier,representingagainof14.8%.TheCompanyhasnoforeignexchangehedgesandnoneareplannedatthistime.

MARKET COMMENTOneyearago,mostinvestorsandeconomistssawagenerallysunnyoutlookfortheJapaneseeconomyandstockmarket.Stormcloudsmovedinunexpectedly,though,asamajorcreditcrunchhittheUS,impactingallmajorworldfinancialmarketsandslowingworldeconomicgrowthbutdoinglittle tostoptheriseinoilandcommodityprices.

WhiletemporarilydepressingtheTokyomarketandcloudingtheoutlookfortheJapaneseeconomy,thecurrentdifficultiesarenotatalllikethe1990s.Now,mostJapanesecompaniesareingoodshape–evenbanks.Profitmarginsarethehighestinmanyyears,balancesheetsarestrong,andoperationsarefocusedandlean.InthecaseofJapanesefinancialsectorcompanies,wewouldnotethatsubprimeloan-relatedlossesareactuallyverylimitedand,thus,willhavelittle-to-noimpactonleadingcompanies.

Thistimearound,theweaknessinJapanesestockscanbetracedlargelytoconcertedsellingbyoverseasinvestors, many of whom were looking to raise cash or move money into faster-moving emergingmarkets (which later fell). In contrast, we saw domestic investors stepping in as buyers in manymonths,accumulatingsharesparticularly inresponse tosevereweakness.As long-time investors inJapanwillrecognise,thisrepresentsanimportantshiftintheinvestmentpatternsofdomesticinvestors,who have for many years been net sellers rather than net buyers (with the main exception beingbusinesscorporations).

That said, worries about fundamentals were not totally absent or unjustified, as the ongoing rise incommoditypricescombinedwiththeappreciationoftheyendidindeedstarttopinchprofitmarginsastheyearworeon.Withitnaturallytakingtimeforcompaniestopassalonghighercostsand,insomecases,companiesconsciouslyrefrainingfrompassingthefullcostincreaseinhopesofremainingcompetitive,theimpactonmarginshasbecomeincreasinglyevidentsincetheJanuary-March2008quarter.

At the current juncture commodity prices remain elevated, and we believe many commodities aresignificantly overpriced, and that an unsustainable bubble has been created that is unrelated toend-userdemand.Thisdoesnotapplytoallcommodities,though,asweareseeingsomepressureonpricesinJapanthatarerelatedmoretosupplythandemand.Asaresult,wewouldexpectinterestratestoriseonlymodestlygoingforward,thuskeepinginterestratesrelativelylow.

ATLANTIS JAPAN GROWTH FUND LIMITEDINVESTMENTMANAGER’SREPORT


With the Japaneseeconomyclearlyslowing,we look for realGDPgrowth in thecurrent fiscalyear(toMarch2009)toeasetoaround+1%.Weexpecttheworstoftheslowdowntobeoverbylate2008orearly2009,allowingrealGDPgrowthtomovebacktowarditspotentialgrowthrateof+1.5-2.0%.Weanticipateasimilarpatternforoverallcorporateearnings,withearningsflattoslightlydownthisfiscalyearandimprovinggrowthnextfiscalyear.

WhileourmainscenarioseestheJapaneseeconomyandthestockmarketgettingbackontrack,thereareseveralrisksthatshouldbeidentified.Inparticular,weareconcernedaboutthepossibilityofcontinuedhighcommoditypricesandfurtherfinancialproblemsoverseas,eitherofwhichcouldworktoprolongtheslowdownintheworldeconomyanddelaytheeconomicandstockmarketrecoveryinJapan.

We are of the view that major stock markets tend to move in long cycles, with both up-cycles anddown-cyclesthatcanlastformanyyears.InthecaseoftheTokyomarket,wefoundstocksbottomingin1974-75beforemovingintoalong-termuptrendthatlastedthroughtheendof1989,withintermittentbouts of consolidation. This was followed by a long downtrend during the 1990s, which thoughinterruptedbyanumberofhopefulralliesdidnotultimatelyfindabottomuntilearly2003.

With the economy and the corporate sector having already cleared the main structural problemsthathinderedtherecoveryduringJapan’s“lostdecade,”webelievethecurrentconsolidationintheJapanese stock market is effectively laying the foundation for a sustained, long-term rally that willeventuallyprecipitaterenewedinterestinequitiesonthepartofdomesticinvestors.

We would expect valuations to be one of the main drivers of this shift into stocks by domesticinvestors, as Japanese stocks are now looking undervalued relative to most other domestic assetclasses (including bonds, real estate, and bank deposits) while the appeal of overseas investmentshasdimmedasaresultofforeignexchangerisk.Indeed,atthecurrentlevelweseeJapanesestockslookingreasonable-to-cheapbasedonanumberofmetrics,includingPER,bookvalue,cashflow,anddividendyield,withtheaveragedividendyieldforTokyoFirstMarketstockshigherthantheyieldonthebellwethergovernmentbondandpositiveafteradjustingforinflation.

THE COMPANYOur investment strategy remains unchanged. We remain focused on value and long-term earningsgrowth,justaswehavesincetheinceptionoftheCompanysometwelveyearsago.Thismeanswestillstressbottom-upstockpickingthatdependsprimarilyonindividualcompanyfundamentals,anddonotdeliberatelyseektotrackaparticularindexthroughatop-down,sectorallocationapproach.

Inconjunctionwith thisbottom-upapproach,wespendagreatdealof timeoncompanyvisitsandmeetingswithmanagement.Thistakesustoseecompaniesrangingfrombigtosmallandinallkindsof industries. Some are strictly domestic operators with businesses that are regional or national inscope,whileothersarealsoactiveinoverseasmarkets.Westronglyfavourcompaniesfromwhichwecanexpectgrowingsales, improvingprofitmargins,andpositivefreecashflow,andwherewealsofindmanagementthatcaresaboutreturnstoshareholdersandgoodcorporategovernance.

Wearelessconcernedabouttheindustryinwhichthecompanyoperates,exceptofcoursewhentheindustry dynamics are such that long-term earnings growth is unlikely or unpredictable, as is thecaseinmanymatureorcommodity-orientedindustries. Inpercentageterms,perhaps75-80%ofourdecisionisbasedonindividualcompanyfundamentals.Thoughourinvestmentdecisionsarenotmadetop-down,wedogiveconsiderableattentiontomacro-levelinformation.Thisincludesnotjusttrendsintheeconomy,commodityprices,andGovernmentpolicythatcanimpactthecompany’sbusiness,butalsothebalanceandfocusofstockmarketbuyingandsellingthatcanimpactthestockprice.

Becauseourmainfocusisonindividualbusiness,whenwechoosetoinvestwethinkofourselvesaspartownersofthebusiness.Wearenotshort-termtraders.Wedonothaveapre-settargetpriceatwhichweplantosellastock.Wedonotthinkintermsofdays,weeks,orevenmonths.Rather,wearelookingtoholdapositionforyearsontheconditionthattheoutlookfortheunderlyingbusinessremainsgoodandthestockhasnotbecomesoovervaluedthatthesharepricecannotbesustained.


INVESTMENTMANAGER’SREPORT(continued)

6


INVESTMENTMANAGER’SREPORT(continued)

7

As investors are well aware, timing the stock market is extremely difficult. In our experience, it israre forevenprofessionals tobuyat theverybottomorsellat thevery top.Wedonotclaimtobeexceptionalinthisregardand,thus,beforeopeningapositionwealwaysgivedueconsiderationtothepossibility that thestockmaydeclineafterour initialpurchase. Inpractice, thismeanswenormallylimitourinitialinvestmentwhenweareestablishinganewposition.Thisprovidesameasureofriskcontrolandgivesusroomtoaccumulatemoreshouldthestockshowfurtherweakness.

Inadditiontoourdisciplinedapproachtobuying,wealsomaintainstrictstandardsforsalesfromtheportfolio.Ourgeneralpolicyistosellexistingholdingswhenearningsarenotmeetingourexpectationsanddonotappearlikelytogetbackontrack,orwhenwehaveotherwiselostconfidenceinmanagementorthelong-termearningsoutlook.Thisnotonlykeepstheportfoliocomprisedofcompaniesthatwebelievehavesolidfundamentals,italsomakesroomforthenewinvestmentcandidatesthattheFundManageruncoversinthecourseofhisongoingcompanyvisitingandresearchprogram.

Gettingdowntomorespecifics,untilrecently,wehavebeenfindingmostofthebestvalueandgrowthamongmedium-sizedandsmallercompanies.Westillarefindingmanygoodcompaniesinthisareaof the market, but our visits to large companies have started to uncover more and more attractiveinvestment candidates. These are good companies for the long term, in our view, but have simplybeen oversold due to market disappointment with the near-term earnings outlook. Examples thathavealreadybeenadded to theportfolio includeMakita,AsahiGlass,Fanuc,Hoya.Thesewereallcompaniesthatwehadlikedandfollowedforsometime,buthadsimplyheldoffonpurchasesfortheportfoliobecausethevaluationshadnotbeensufficientlyattractiveuntiljustrecently.

We have also been adding to our position in Real Estate Investment Trusts (REITs), where we arefinding both high dividend yields and many companies selling at below real book value. We mustadmittopoortiminginthisregard,however,andacknowledgethatourhighexposuretoREITshasbeenoneofthefactorsbehindtheCompany’srecentunderperformance.WestillfeelmanyJapaneseREITshavegoodbusinessmodelsandattractivevaluations.ThebetterREITsarehavinglittletroubleinfindingfinancingonfavourabletermsandaregenerallyrunconservatively,withleveragelimitedtoaround50%.WeespeciallylikeREITsthatspecialiseinofficebuildingsintheTokyometropolitanarea,whereofficerentshavebeenslowlyrisingandvacancyratesforbuildingsinprimelocationsare2-3%orless.OurfavouriteshereincludeNomuraOffice,MoriTrust,andNipponCommercial.

At theendof theyearunderreview,theportfolioheldatotalof200stocks, including7REITs.TheCompanyhasnoexposuretowarrantsandnoconvertiblebonds, thoughtheabsenceofconvertiblebond holdings is more a reflection of a lack of investment opportunities than a lack of interest onour part. The largest holdings usually account for 2-3% of the portfolio each, as shown on pages17-18. The Schedule of Investments on pages 19 to 25 provides details listing of all holdings in theportfolio,brokendownbysector.Ascanbeseen,theportfoliohasrelativelyhighexposuretosomesectors and low exposure to other sectors. In particular, the portfolio is significantly overweightedin retail, services, electronics/technology, healthcare, machinery, real estate, financials, rubber, andland transportation, and underweighted in utilities, construction, fishing, textiles, and traditional“smoke-stack” industries.Becauseourfocus isonbottom-upstockpicking,asdiscussedabove,anyoverweightingorunderweightingofaparticularsectordoesnotreflectatop-downdecision.Rather,itissimplytheendproductofnumerousstockpicksbasedonindividualcompanyfundamentals.

The essence of our investment approach since the Company’s inception in 1996 has always beenindividual stock-picking focused on value and long-term earnings growth. Very often, this meansbuying stocks when they are not popular and thus likely to be undervalued or at least reasonablepriced.Whilethisapproachcanbeexpectedtooutperformoverthelongterm,attimesitcanresultin temporaryunderperformance suchaswehaveexperienced thispastyear.However, ifour stockselectionisright,webelievewecancontinuetooutperformoverthelongterm.

AtlantisFundManagement(Guernsey)Limited20thMay2008

8

TIMOTHY GUINNESS(Chairman,aged61,appointedtotheBoardon26thSeptember2002),British,graduated from Cambridge University with an MA in Engineering followed by an MBA from theSloanSchoolM.I.T.HebeganhisinvestmentbankingcareerinBaringBrothersin1970.HemovedtoGuinnessMahonin1977,becomingSeniorInvestmentDirectorin1982.Hewasco-founderofGuinnessFlightGlobalAssetManagementin1987.AfteritsacquisitionbyInvestecAssetManagementin1998,heservedasJointChairmanofInvestecAssetManagementuntil31stMarch2003.

HeistheChairmanandChiefInvestmentofficeroftwoinvestmentmanagementcompanies–GuinnessAssetManagementandGuinnessAtkinsonAssetManagementsince2003.Thesecompaniesspecializeininvestmentinequitiesinthreeareas–energy;AsiaexJapan;andinnovation.Healsohasanumberofnon-executivedirectorships.TheseincludethechairmanshipofBromptonBicycleCompanyLtdanddirectorshipsofQuayleMuunoplc;InvestecHighIncomeTrustLtdandSREuropeTrustLtd.

CHRISTOPHER JONES (aged 67, appointed to the Board on 13th March 1996), British, began hiscareerin1971asafixedinterestandmoneymanagerwithPropertyGrowthAssurance,nowawhollyownedsubsidiaryofRoyal&SunAllianceInsuranceGroupplc.In1985hejoinedMerchantInvestorsAssurance Company Ltd, becoming head of Investments until retiring in 2003. He is a Director ofEcofin Water & Power Opportunities plc, Montanaro UK Smaller Companies Trust plc, MontanaroEuropeanSmallerCompaniesLtd,SchroderUKMid&SmallCapFundplc,JupiterSecondEnhancedIncomeTrustplc,TheCayenneTrustplcandJapanAcceleratedPerformanceFundPLC.

ERIC BOYLEFSI(aged54,appointedtotheBoardon17thOctober2000),British,isadirectorofSmith&WilliamsonInvestmentManagement.Hehas30years’experienceinstockbrokingandinvestmentbankingwithNCLInvestments–nowpartofSmith&Williamson.HebecameamemberoftheLondonStockExchangein1982andhasspecialisedinJapanandemergingmarketssince1989inparticular,bywayofcountryandregionalclosedoropen-endedfunds.Withtheexperiencegainedinstudyingavarietyofcompaniesinthiscapacity,hehashelddirectorshipsinanumberofcompaniesandfunds.Duringhiscareer,hehasraisednewmoneyforseveralgroupslaunchingnewproductsinvestinginbothemerginganddevelopedmarkets.

ANDREW MARTIN SMITH (aged 56, appointed to the Board on 26th September 2002), British,graduatedfromOxfordUniversitywithanMAinPoliticsandEconomics.HebeganhiscareerwithAlliedHambroUnitTrustCompanyandworkedinthecorporatefinanceandcapitalmarketsdivisionsof Hambros Bank Limited becoming a director in 1986. He was chief executive of Hambros’ fundmanagement activities from 1993 to 1997 prior to the merger with Guinness Flight. He has over 30yearsexperienceinthefinancialservicesindustry.HenowworkswithGuinnessAssetManagementonprivateequityandconsultancymatters.HeisChairmanofParmenionCapitalManagement,LLP,andaDirectorofBerkshireCapitalSecurities,EvolutionSecuritiesUS,M&GHighIncomeInvestmentTrustPLC,TREuropeanTrustPLC,ChurchHouseTrustPLCandalsoRuncimanInvestmentsLimited.

TAKESHI MURAKAMI(aged65,appointedtotheBoardon29thNovember2007),graduatedfromDoshisha University in Kyoto with BA in Economics. He has 38 years of experience in both stockbrokingandinvestmentmanagement.HestartedhiscareeratSanyoSecurities,Osakain1966wherehewasprimarilyengagedininternationalbusinesspromotionatitsNewYorkofficefor7yearsbetween1972-1978andatitsLondonofficefortwoyearsbetween1982-1984.HethenjoinedSchroderSecuritiesinLondonin1984,beforemovingtoitsTokyoofficein1986.HeservedasSchroder’sTokyoBranchManagerfortenyearsuntilhemovedtoSchroderInvestmentManagementJapanin1996asDirector,wherehepromotedtheJapanesepensionfundmanagementbusiness.HavingretiredfromSchrodersattheageof60in2003,TakeshiresumedhiscareeratInstinetJapanasChairmanin2004forayear.


DIRECTORS

TheDirectorsarepleasedtopresenttheirtwelfthReportandtheAuditedFinancialStatementsoftheCompanyfortheyearended30thApril2008.

DIRECTORS’ RESPONSIBILITIESTheDirectorsareresponsibleforpreparingFinancialStatementsforeachfinancialyearwhichgiveatrueandfairviewofthestateofaffairsoftheCompanyandoftheprofitorlossoftheCompanyforthatyear.InpreparingtheseFinancialStatements,theDirectorsarerequiredto:

– selectsuitableaccountingpoliciesandthenapplythemconsistently;

– makejudgementsandestimatesthatarereasonableandprudent;

– statewhetherapplicableaccountingstandardshavebeenfollowedsubjecttoanymaterialdeparturesdisclosedandexplainedintheFinancialStatements;and

– preparetheFinancialStatementsonagoingconcernbasisunlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness.

Weconfirm,tothebestofourknowledge,that:

– thisAnnualReportandFinancialStatements,preparedinaccordancewithInternationalFinancialreportingStandards,giveatrueandfairviewoftheassets,liabilities,financialpositionandlossoftheCompany;and

– thisAnnualReportandFinancialStatementsincludesinformationdetailedintheDirectors’Report,the Investment Manager’s Report and Notes to the Financial Statements, which provides a fairreviewoftheinformationrequiredby:

a) DTR 4.1.8 and 4.1.9 of the Disclosures and Transparency Rules (“DTR”) being a fair reviewof theCompanybusinessandadescriptionof theprincipal risksanduncertainties facing theCompany;and

b) DTR 4.1.11 of the DTR being an indication of important events that have occurred since thebeginningofthefinancialyearandlikelyfuturedevelopmentoftheCompany.

TheDirectorsareresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonableaccuracy at any time the financial position of the Company and to enable them to ensure that theFinancialStatementscomplywithTheCompanies(Guernsey)Law,1994.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

TheDirectorsareresponsibleforensuringthattheDirectors’ReportandotherinformationincludedintheAnnualReportispreparedinaccordancewithcompanylawapplicableinGuernsey.TheyarealsoresponsibleforensuringthattheAnnualReportincludesinformationrequiredbytheListingRulesoftheFinancialServicesAuthority.

TheDirectorsconfirmthattheseFinancialStatementscomplywiththeserequirements.

TAX STATUSThe Company is a Guernsey based closed-ended investment company, whose Ordinary Shares arelistedontheLondonStockExchange.IntheopinionoftheDirectors,theCompanyhasconducteditsaffairssoastobeabletoseekapprovedinvestmenttruststatusfromHMRevenueandCustomsundersection842IncomeandCorporationTaxesAct1988fortheaccountingyearended30thApril2008.

PursuanttoarrangementsbetweentheAssociationofInvestmentCompaniesandHMRevenueandCustoms,whohaveagreedthatwrittenapprovalofinvestmenttruststatuscanbegrantedwithintheCorporation Tax Self Assessment Regime, written approval for all accounting periods to 30th April2007hasbeenreceived.


DIRECTORS’REPORT

9

RESULTSTheresultsfortheyeararedetailedonpage27.TheDirectorsdonotrecommendthepaymentofadividend.

CAPITAL VALUESAt30thApril2008thevalueofnetassetsavailabletoshareholderswas$321,761,590(2007-$464,980,738)andtheNetAssetValuepersharewas$15.75(2007-$22.75).

PREPARATION OF FINANCIAL STATEMENTSThefinancialstatementsoftheCompanyhavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(“IFRS”),whichcomprisestandardsandinterpretationsapprovedbytheIASB,and International Accounting Standards, and Standing Interpretations Committee interpretationsapprovedbytheIASCthatremainineffect.

DIRECTORSTheDirectorslistedonpage8servedthroughouttheyearunderreview,exceptforTakeshiMurakamiwho was appointed to the board on 29th November 2007 and Yoshinobu Itai who retired on4thOctober2007fromtheboard.

CertainDirectorshadabeneficialinterestintheCompanybywayoftheirinvestmentintheordinarysharesoftheCompany.

Thedetailsoftheseinterestsasat30thApril2008areasfollows:

Ordinary Shares

T.Guinness 10,000A.MartinSmith 2,500C.Jones 1,000

Directors’ Interests:TherewerenorelevantcontractsinforceduringorattheendoftheyearinwhichanyDirectorhadaninterest.TherearenoservicecontractsinissueinrespectoftheCompany’sDirectors.

NoDirectorshadanon-beneficialinterestintheCompanyduringtheyearunderreview.

SIGNIFICANT SHAREHOLDINGSShareholders of Guernsey companies are not legally required to disclose their shareholdings in theCompany,however, theBoardhavebeenadvised that the followingcompanies thathold sharesasnominees,constitute3%ormoreoftheissuedsharecapitaloftheCompanyasat31stMay2008.

Shareholder % Ordinary Shares

CitivicNomineesLimited 40.80 8,337,066MellonNominees(UK)Limited 6.47 1,321,858EuroclearNomineesLimited 4.90 1,000,440StateStreetNomineesLimited 5.30 1,083,202HSBCGlobalCustodyNominee(UK)Limited 8.65 1,766,926


DIRECTORS’REPORT(continued)

10

SECRETARYFor the period 1st May 2007 to 31st October 2007 the Secretary was, HSBC Securities Services(Guernsey)Limited,effective1stNovember2007theSecretaryisNorthernTrustInternationalFundAdministrationServices(Guernsey)Limited.

AUDITORSFollowingthetransferoftheirbusinesstoGrantThorntonLimitedwitheffectfrom1stNovember2007,RSM Robson Rhodes (Guernsey) Limited resigned as auditors on 31st October 2007. The Directorsappointedtheirsuccessor,GrantThorntonLimited,asauditors.Thisappointmentwillberatifiedatthenextannualgeneralmeeting,atwhichtimearesolutiontoreappointGrantThorntonLimitedasauditorswillbeproposed.GrantThorntonLimitedhaveindicatedtheirwillingnesstocontinueinoffice.

Resolutions re-appointing them and authorising the Directors to fix their remuneration will beproposedattheAnnualGeneralMeeting.

INVESTMENT MANAGERIn the opinion of the Directors, in order to achieve the investment objectives and policies of theCompany, and having taken into consideration the performance of the Company, the continuingappointmentoftheInvestmentManagerisintheinterestsoftheshareholdersasawhole.

CHANGE OF CUSTODIAN, ADMINISTRATOR, SECRETARY AND PRINCIPAL REGISTRARHSBCSecuritiesServices(Guernsey)Limitedceasedassecretary,administratorandprincipalregistrarandHSBCCustodyServices(Guernsey)LimitedceasedascustodianoftheCompanywitheffectfrom31stOctober2007.NorthernTrustInternationalFundAdministrationServices(Guernsey)Limitedhasbeen appointed as secretary, administrator and principal registrar, and Northern Trust (Guernsey)Limitedascustodianwitheffectfrom1stNovember2007.

COMPANY’S OBJECTIVES, POLICIES AND STRATEGIES IN RESPECT OF FINANCIAL ASSETSAsaninvestmenttrust,theCompanyinvestsinsecuritiesforthelongterm.ThefinancialinvestmentsheldasassetsbytheCompanycompriseofequityshares(seetheScheduleofInvestmentsonpages19to25forabreakdown).Assuch,theholdingofsecurities,investingactivitiesandfinancingassociatedwiththeimplementationoftheinvestmentpolicyinvolvescertaininherentrisks.EventsmayoccurthatcouldresultineitherareductionintheCompany’snetassetsorareductionofrevenueprofitsavailablefordistribution.

SetoutbelowaretheprincipalrisksinherentintheCompany’sactivitiesalongwiththeactionstakentomanagethem.TheBoardreviewsandagreespoliciesformanagingtheserisksandthesepolicieshaveremainedsubstantiallyunchangedsince30thApril2006.

Market riskMarket risk arises mainly from uncertainty about future prices of financial instruments used in theCompany’sbusiness.ItrepresentsthepotentiallosstheCompanymightsufferthroughholdingmarketpositionsinthefaceofpricemovements.

ThemarketriskismonitoredbytheBoardonaquarterlybasisandonadailybasisbytheInvestmentManager.



11



12

Currency riskTheCompany’sresultsfortheyearandnetassetscouldbesignificantlyaffectedbycurrencymovementsasmostoftheCompany’sassetsaredenominatedinyen.InordertoreducethisrisktheCompanymayhedgeitsexposuretotheJapanesecurrency.TheCompanydidnothaveanyhedgingarrangementsinplaceasat30thApril2008or2007.

Interest rate riskTheCompanyfinancesitsoperationsmainlythroughitssharecapitalandretainedprofits,includingrealised and unrealised capital profits. Additional bank borrowings may be used with a view toenhancing capital returns.However, theCompany’s Articlesof Associationprovide thatborrowinglevelsshouldnotexceed20%ofNetAssetValueat thetimeanyborrowingiseffected.Thelevelofborrowingasat30thApril2008was22.4%,whileat30thApril2007itwas11.7%.

Liquidity risk, and cashflow riskThemajorityoftheCompany’sassetscomprisereadilyrealisablesecurities,whichcanbesoldtomeetfundingcommitmentsasnecessary.

ChristopherJones TimGuinnessDirector Chairman

3rdJuly2008

INTRODUCTIONTheUKFinancialReportingCouncil issueda revisedCombinedCodeonCorporateGovernance inJune 2006. The AIC also published its Code of Corporate Governance and a Corporate GovernanceGuideforInvestmentCompaniesinMay2007.TheCompanyiscurrentlyamemberoftheAIC.BoardswhoreportagainsttheAICCodeandfollowtheAICGuidenolongerhavetoconsidertheCombinedCodeseparately.TheBoardofDirectorshaveprovidedastatementoftheCompany’scompliancewiththeAICcorporategovernanceprinciplesandhowtheseprincipleshavebeenapplied.

THE BOARDTheBoardiscomprisedoffiveindependentnon-executivedirectorsincludingtheChairman,TimothyGuinness.TheBoarddoesnotconsideritnecessarytoappointaseniorindependentdirector.

TheAuditCommitteeischairedbyChristopherJonesandcomprisesTimothyGuinnessandAndrewMartinSmith.DuringtheyeartherewerefourBoardMeetingsandtwoAuditCommitteeMeetings.TherewillbeatleasttwoAuditCommitteeMeetingsheldeachyear.TheroleoftheAuditCommitteeis reviewed in detail below. The Board has appointed a Nomination Committee, which comprisesthe Chairman and all other independent Directors. The Committee meets annually (or more oftenif necessary) and reviews the balance of skills, knowledge and experience of the Board. It is alsoresponsible for considering and proposing suitable candidates for appointment to the Board wherenecessaryandreviewingannualdirectorperformanceevaluations.

TheBoardhasnotappointedaremunerationcommitteebutbeingcomprisedofwhollyindependentdirectors, the whole Board considers these matters regularly. The Board considers Agenda ItemsformallylaidoutintheNoticeandAgenda,whichareformallycirculatedtotheBoardinadvanceoftheMeetingaspartoftheBoardPapers.

TheprimaryfocusatBoardMeetingsisareviewofinvestmentperformanceandassociatedmatterssuchasleveraging,assetallocation,marketing/investorrelations,peergroupinformationandindustryissues.TheBoardhasnotappointedaManagementandEngagementCommitteebuthaschosentoassessandreview theperformanceof thecontractualarrangementswith themanagerand investmentadviserateach JulyBoardMeetingby theentireBoardwhoare independentnon-executivedirectors.The tablebelowshowsthenumberofBoardMeetingsattendedbyeachdirectorduringtheaccountingyear.

Director Board Meetings Audit Committee Attended Meetings Attended

TimothyGuinness 4 2YoshinobuItai(retired4/10/2007) 3 –ChristopherJones 4 2EricBoyle 4 –AndrewMartinSmith 4 2TakeshiMurakami(appointed29/11/2007) 1 –

Directors are appointed initially until the following Annual General Meeting when, under theCompany’sArticlesofAssociationitisrequiredthattheybere-electedbyshareholders.Thereaftertwodirectorsshallretirebyrotation,orifonlyonedirectorissubjecttoretirebyrotationheshallretire.TheretiringdirectorswillthenbeeligibleforreappointmenthavingbeenconsideredforreappointmentbytheChairmanandotherdirectors.TheBoardevaluatesitsperformanceandconsidersthetenureofeachdirectoronanannualbasis,andconsidersthatthemixofskills,experience,agesandlengthofservicetobeappropriatetotherequirementsoftheCompany.

Having served over ten years on the Board, Mr Jones is subject to annual re-election. The BoardconsidersthathecontinuestobeindependentofmindandthathislengthofserviceandbreadthofexperienceenhancetheeffectivemanagementoftheCompany.


CORPORATEGOVERNANCE

13

INTERNAL CONTROLSTheBoardhasdelegatedtheresponsibilityforthemanagementoftheCompany’sinvestmentportfolio,theprovisionofcustodyservicesandtheadministration,registrarandcorporatesecretarialfunctionsincluding the independent calculation of the Company’s Net Asset Value and the production ofthe Annual Report and Financial Statements which are independently audited. Whilst the Boarddelegates responsibility, it retains responsibility for the functions itdelegatesoutand is responsibleforthesystemsofinternalcontrol.FormalcontractualagreementshavebeenputinplacebetweentheCompanyandprovidersoftheseservices.

TheBoardofDirectorsdirectlyonanongoingbasisandviaitsAuditCommitteehasimplementedasystemtoidentifyandmanagetherisksinherentinsuchcontractualarrangementsbyassessingandevaluatingtheperformanceof theserviceproviders includingfinancial,operationalandcompliancecontrolsandriskmanagementsystems.OnanongoingbasiscompliancereportsareprovidedateachBoardMeetingfromtheCustodian,NorthernTrust(Guernsey)*LimitedandAdministrator,NorthernTrust International Fund Administration Services (Guernsey)** Limited and the Audit CommitteereviewstheSAS70reportsontheseserviceproviders.

TheextentandqualityofthesystemsofinternalcontrolandcomplianceadoptedbytheInvestmentManagerandInvestmentAdviser,arealsoreviewedonaregularbasis,andtheprimaryfocusateachBoardMeeting isareviewof investmentperformanceandassociatedmatterssuchasgearing,assetallocations,marketing/investmentrelations,peergroupinformationandindustry issues.TheBoardalso closely monitors the level of discount and has the ability to enable the discount to be reducedby buying back shares in the Market should the discount be substantially greater than that of theCompany’speergroup.

The Board believes that it has implemented an effective system for the assessment of risk, but theCompanyhasnostaff,hasnointernalaudit functionandcanonlygivereasonablebutnotabsoluteassurancethattherehasbeennomaterialfinancialmisstatementorloss.

AUDIT COMMITTEEAnAuditCommitteehasbeenestablishedwhoseresponsibilitiesinclude:– ReviewofdraftAnnualandInterimreportandfinancialstatements– ReviewofindependenceandobjectivityoftheAuditors– Reviewofauditfees

The Audit Committee was appointed by the Board on 10th June 2004 and comprises C. Jones asChairmanandA.MartinSmithandT.GuinnessasCommitteemembers.

ThefunctionoftheAuditCommitteeistoensurethattheCompanymaintainsthehigheststandardsofintegrity,financialreportingandinternalcontrol.

TheAuditCommitteewillmeetwiththeCompany’sexternalauditorsnormallytwiceayeartoreviewtheAnnualandSemi-annualAccounts.

The Audit Committee may meet more frequently if the Audit Committee deems necessary or ifrequiredbytheCompany’sAuditors.

TheCompany’sAuditorsshallbeadvisedofthetimingoftheAuditCommitteeMeetings.TheAuditCommitteeshallhaveaccesstotheComplianceofficersoftheInvestmentAdviser,theAdministrator,andtheCustodian.

*HSBCCustodyServices(Guernsey)Limitedwascustodianupto31stOctober2007**HSBCSecuritiesServices(Guernsey)LimitedwasAdministratorupto31stOctober2007


CORPORATEGOVERNANCE(continued)

14

TheCompanySecretaryshallbetheSecretaryoftheAuditCommitteeandshallattendallMeetingsoftheAuditCommittee.ThedutiesandtermsofreferenceoftheCommitteeare:1) ToreviewandmakerecommendationsontheappointmentoftheCompany’sAuditors,thescope

oftheaudit,theauditfeeandanyquestionsofresignationordismissaloftheAuditors;2) TodiscusswiththeAuditorsthenatureandscopeoftheauditandtokeepunderreviewsuchscope

anditscost-effectiveness;3) ToreceiveandreviewaReportfromtheCompany’sAuditorsandtodiscussanymattersarising

fromtheauditandrecommendationsmadebythem;4) ToreviewtheCompany’sSemi-annualandAnnualAccountsandanyotherfinancialinformation

tobepublishedbytheCompany,ineachcasebeforeissueorpublicationpriortotheirsubmissiontotheBoardhavingparticularregardto:a) Whethertheaccountingpoliciescontinuetobeappropriatetothebusiness;b) anychangesinaccountingpoliciesorpracticeandwhethertheyareappropriatetothebusiness;c) anyimportantareaswherejudgementmustbeexercisede.g.valuationofunquotedinvestments;d) anysignificantadjustmentsarisingfromtheaudit;e) thegoingconcernassumption;andf) otherlegalorUKListingAuthorityrequirements.

5) Toreviewtheeffectivenessoftheinternalcontrolssystemsoftheserviceprovidersareadequate.To receive reports from the Company’s service providers covering internal control systems andproceduressupportedeitherbySAS70orAAF01/06Reports.Inlightoftheabove,toreviewtheCompany’sstatementoninternalcontrolspriortoendorsementbytheBoard;

6) To monitor the Company’s procedures for ensuring compliance with statutory, regulatory andother financial reporting requirements i.e. the Guernsey Financial Services Commission, theLondonStockExchangeandtheUKListingAuthority;

7) To review significant transactions outside the Company’s normal business (e.g. Company sharebuybacks);and

8) ToconsideranyothertopicsreferredtoitbytheBoard.

The Audit Committee is satisfied that auditor objectivity and independence is not impaired by theperformancebyGrantThorntonLimitedofnon-audittaxservices.TheAuditCommitteeconsidersthattheappointmentofathirdpartyunfamiliarwiththeCompanytocarryoutnon-auditserviceswouldnotbenefitshareholderssincetheywouldincurunnecessaryadditionalexpense.GrantThorntonUKLLPisUK-basedandprovidesnon-audittaxadvicetotheCompany.TheauditorsareGrantThorntonLimited,basedinGuernsey.

The Audit Committee is authorised by the Board to investigate any activity within its terms ofreference.Itisauthorisedtoobtainoutsidelegalorotherindependentprofessionaladviceandtosecuretheattendanceofoutsiderswithrelevantexperienceandexpertiseifitconsidersthisnecessary.

SHAREHOLDER RELATIONSThe Board monitors the trading activity and shareholder profile on a regular basis and maintainscontactwiththeCompany’sstockbrokertoascertaintheviewsofshareholders.Shareholdersentimentisalsoascertainedbythecarefulmonitoringofthediscount/premiumthatthesharesaretradedinthemarketagainst theNAVpersharewhencompared to thediscountsexperiencedby theCompany’speergroup.Shareholderswherepossiblearecontacteddirectlyonaregularbasis,andshareholdersareinvitedtoattendtheCompany’sAnnualGeneralMeetinginpersonandaskquestionsoftheBoardofDirectorsandInvestmentManager.FollowingtheAnnualGeneralMeetingeachyeartheInvestmentManagergivesapresentationtotheshareholders.

TheCompanyreportstoShareholderstwiceayearandaproxyvotingcardissenttoshareholderswiththeAnnualReport andFinancialStatements.TheRegistrarmonitors thevotingof the shareholdersand proxy voting is taken into consideration when votes are cast at the Annual General Meeting.ShareholdersmaycontacttheDirectorsviatheCompanySecretary.


CORPORATEGOVERNANCE(continued)

15

16

TheInvestmentManageradoptsastock-driveninvestmentapproach.TheCompany’sportfoliowillbeinvestedprincipallyincompaniesquotedontheTokyoStockExchange,theregionalstockmarketsofNagoya,Fukuoka,OsakaandSapporoandtheJapaneseover-the-countermarketsincludingJASDAQ,Mothers, Hercules, etc. Investment may also be made in companies listed elsewhere but controlledfromJapanorwithamaterialexposure to the Japaneseeconomy.TheCompanymayalso invest insecuritieswhichareneitherlistednotdealtinontheJapaneseover-the-countermarketprovidedthatimmediatelyafteranysuchinvestmentismadetheCompanydoesnothavemorethan10percent.ofitsNetAssetValuesoinvested.TheCompanymayborrowmoneywithaviewtoenhancingcapitalreturns. However, the Company’s Articles of Association provide that borrowing levels should notexceed20percent.ofNetAssetValueatthetimeanyborrowingiseffected.Derivativeinstruments,otherthanequitywarrantsandconvertiblebondswhichmaybeacquiredasinvestmentsintheirownright,willbeusedonlyforhedgingpurposes.TheCompanymayhedgeitsexposuretotheJapaneseYen, although the Investment Manager does not expect to hedge the Company’s exposure to theJapaneseyenunlessitsvaluerelativetotheUSdollardeclinessignificantly.

ThemanagementandimpactoftheriskassociatedwiththisinvestmentpolicyaredescribedindetailinthenotestotheFinancialStatements(Note15).


INVESTMENTPOLICY

Nissha Printing Co Ltd (323,100 shares, cost $9,381,927.95)Nissha Printing has two mainstay businesses accounting for 75% of total sales, (1) IMD (in-moulddecoration)whichisprimarilyappliedtomobilephonesbutnowmoreimportantlytonotebookPCs,and(2)electronics,notably“touchpanels”primarilyformobilephones.ItremainsastheNo.1globalplayerof“touchpanels”whichiscurrentlyinexpansionarystage,andisalsoexpectedtobenefitfromtheincreasingapplicationofIMDforlaptopPCsfromaround2009onwards.(Fairvalueof$13,310,000representing4.1%oftheNetAssetValue(2007:Nil%))

Stanley Electric (348,100 shares, cost $7,539,247.58)StanleyElectricisconventionallynotedforautomobilelightingproducts,primarilyHIDheadlampsas well as AFS lamps (69% of total sales), although more recently has gained its reputation in theelectronicsindustryasatopglobalplayerofCCFL(coldcathodefluorescentlighting)forLCDTVs,inadditiontoLEDpackagingcomponents.Atpresent,35%ofsalesisrelatedtotheHondaGroup.(Fairvalueof$8,774,000representing2.7%oftheNetAssetValue(2007:Nil%))

AJIS Co Ltd (252,790 shares, cost $4,524,972.29 / 2007: 206,890 shares, cost $3,231,836.10)AJIS Co is a commercial services company engaged in the provision of inventory services tosupermarkets,bookstores,andgeneralmerchandisestores,aswellasotherperipheralservicesrelatedtothedistributionbusiness.(Fairvalueof$7,088,000representing2.2%oftheNetAssetValue(2007:1.0%))

Maxvalu Tokai Co Ltd (476,000 shares, cost $8,668,239.12 / 2007: 476,000 shares, cost $8,668,239.12)Maxvaluisprincipallyengagedintheoperationofregionalsupermarketchains.TheCompanymainlyretailsfoodproducts,freshproduces,andhouseholdproductsintheareasofShizuoka.Thecompanyintendstoopenaround6storesayear,mainlylarge-scale‘Maxvalu’stores.(Fairvalueof$7,066,000representing2.2%oftheNetAssetValue(2007:1.8%))

Sumida Corp (483,400 shares, cost $7,270,167.69)SumidaCorporationmanufactures coilsandrelatedparts forelectronicequipment.TheCompany’sproductsareusedforaudio/video,officeautomation,dataprocessing,cellularphones,andautomobiles.SumidaCorporationhasitssubsidiariesinHongKong,Malaysia,Taiwan,theUS,andChina.(Fairvalueof$6,359,000representing2.0%oftheNetAssetValue(2007:Nil%))

Ulvac Inc (140,400 shares, cost $5,333,234.77 / 2007: 100,400 shares, cost $3,695,235.45)ULVAC, Inc. manufactures vacuum devices for industries such as semiconductor, electronics,chemical,pharmaceuticaland food.TheCompany’sproducts includepumps,valves,gasanalysers,leakdetectors,andsurfaceprofilemeasurement.(Fairvalueof$5,689,000representing1.8%oftheNetAssetValue(2007:0.7%))

Sakai Moving Service (257,000 shares, cost $5,367,403.84 / 2007: 183,200 shares, cost $3,575,900.68)SakaiMovingServiceisaspecialistinhouseholdmoving(46%oftotalsales),butalsohasitsstrengthincorporatemovingforemployees(41%),aswellasgainingbusinessthroughinternetactivities(13%)inrecentyears.Itanticipatesaconsistentincreaseinthedomesticmarketshareovertime(currently10%).(Fairvalueof$5,540,000representing1.7%oftheNetAssetValue(2007:1.2%))


DETAILSOFTENLARGESTINVESTMENTS

17

18


DETAILSOFTENLARGESTINVESTMENTS(continued)

Nippon Hotel Fund (1,529 shares, cost $6,444,302.64 / 2007: 1,300 shares, cost $5,417,324.35)Nippon Hotel Fund is a real estate investment trust (REIT) company which invests in securitisedreal estate products. The Company mainly invests in business hotels which are leased out on longtermcontracts.(Fairvalueof$5,520,000representing1.7%oftheNetAssetValue(2007:1.3%))

Fukuoka REIT Corp (852 shares, cost $6,472,805.66 / 2007: 852 shares, cost $6,472,805.66)FukuokaREITCorpisarealestateinvestmenttrustthatinvestsinrealestatesaroundtheKyushuarea.Thecompanyinvestsmostlyinofficeandcommercialbuildings.(Fairvalueof$5,048,000representing1.6%oftheNetAssetValue(2007:1.7%))

Asahi Glass Co. (425,000 shares, cost $4,897,595.28)Morethan50%ofsalesgeneratedfromAsahiGlassisrelatedtobuildingconstructionandautomotiveglass which while fairly commodity oriented businesses are never the less stable from a globalperspective.Themaincatchhoweveristheelectronics/displayuseglasssubstrates(28%oftotalsalesbutgeneratingmorethan20%inoperatingmarginaccountingformorethan50%ofcompany’sprofits)which are increasingly geared to TFT-LCD application (cannibalising CRT glass for TVs) where itcompetesgloballywithCorning.Ithopestonurturesolarcelluseglassasanothersalespillarfromtheyear2010onwards.(Fairvalueof$5,040,000representing1.6%oftheNetAssetValue(2007:Nil%))

19

Advertising ServicesTow 359,200 1,932 0.60TYOProductions 300,000 475 0.15

2,407 0.75

Aerospace/Defense-EquipJamco 350,000 2,537 0.79

Apparel ManufacturersTomiyaApparel 503,000 956 0.30

Applications SoftwareJastec 157,000 1,128 0.35NihonUnisys 204,800 2,789 0.87PCA 29,500 275 0.08

4,192 1.30

Audio/Video ProductsFosterElectric 100,000 1,920 0.60

Auto Trucks Parts & EquipmentF-Tech 110,000 1,643 0.51ImasenElectricIndustrial 129,800 1,790 0.56Kanemitsu 125,000 966 0.30MusashiSeimitsuIndustry 98,700 2,194 0.68Nichidai 440,400 1,679 0.52Takata 109,000 2,392 0.74

10,664 3.31

Building Products & ConstructionAsahiGlass 425,000 5,040 1.56Comany 102,200 1,043 0.32Eidai 243,000 537 0.17Hivic 249,000 378 0.12

6,998 2.17

ChemicalsADEKA 50,000 478 0.15Atect 192,200 1,172 0.36Marktec 35,000 471 0.14OsakaOrganicChemicalIndustry 221,100 1,214 0.38SakaiChemicalIndustry 829,000 3,144 0.98SeikoPMC 200,000 547 0.17TakagiSeiko 50,000 219 0.07TriChemicalLaboratories 208,300 1,800 0.56

9,045 2.81

Coatings/PaintChugokuMarinePaints 580,000 4,428 1.38KansaiPaint 500,000 3,414 1.06Natoco 50,000 416 0.13

8,258 2.57


SCHEDULEOFINVESTMENTS

Fair Percentage Number of Value of NAV Shares $’000 %

20

Commercial Banks Non-USBiwakoBank 545,000 942 0.29ChibaBank 113,000 889 0.28JurokuBank 354,000 2,067 0.64MieBank 319,000 1,623 0.50MizuhoFinancialGroup 175 907 0.28SevenBank 2,200 3,972 1.24YamanashiChuoBank 420,000 2,759 0.86

13,159 4.09

Commercial ServicesAjis 252,790 7,088 2.20KyodoPublicRelations 44,100 529 0.16NAC 80,600 608 0.19NipponKuchoService 258,400 1,923 0.60NOVARESE 2,109 1,665 0.52Paraca 2,015 1,293 0.40PrestigeInternational 400 507 0.16

13,613 4.23

ComputersNipponInformationDevelopment 60,000 894 0.28RolandDG 103,200 3,052 0.95

3,946 1.23

Consulting ServicesFunaiConsulting 346,500 1,930 0.60YamadaServicerSyntheticOffice 183,400 1,657 0.51

3,587 1.11

Cosmetics & ToiletriesCota 109,500 738 0.23

Dental Supplies & EquipmentNakanishi 28,400 2,855 0.89

Distribution/WholesaleAmsc 26,000 81 0.03HitachiHigh-Technologies 220,000 4,352 1.35Hoshiiryou-Sanki 162,600 2,295 0.71Innotech 564,400 3,474 1.08Parker 200,000 480 0.15Sugimoto 45,100 541 0.17TakachihoElectric 360,400 4,087 1.27

15,310 4.76

Diversified OperationsMainichiComnet 500,100 2,694 0.84

E-Commerce/ServicesBillingSystem 185 382 0.12SBIVeriTrans 620 246 0.08

628 0.20


SCHEDULEOFINVESTMENTS(continued)


Electric Products-MiscellaneousAsti 474,000 1,233 0.38StanleyElectric 348,100 8,774 2.73

10,007 3.11

ElectronicDai-ichiSeiko 227,000 3,272 1.02Daishinku 375,000 1,534 0.48Fanuc 15,000 1,574 0.49HOYA 50,000 1,383 0.43Innext 460 66 0.02IshiiHyoki 100,000 2,444 0.76KikusuiElectronics 100,000 399 0.12MicronicsJapan 90,000 3,241 1.01NihonDempaKogyo 105,600 3,093 0.96Nippo 293,700 1,811 0.56Optex 50,850 828 0.26RiverEletec 327,600 2,205 0.68Sumco 105,200 2,657 0.83Sunx 881,900 4,912 1.53TokyoElectronDevice 600 1,002 0.31

30,421 9.46

Entertainment SoftwareHudsonSoft 65,000 1,186 0.37

E-Services/ConsultingVinculumJapan 364 308 0.10

FinanceIwaiSecurities 305,600 3,445 1.07JapanSecuritiesFinance 590,000 4,895 1.52JPNCollectionService 545 1,021 0.32KyokutoSecurities 486,900 4,026 1.25MitsubishiUFJLease&Finance 10,000 488 0.15OsakaSecuritiesFinance 852,500 2,349 0.73TakagiSecurities 652,000 1,603 0.50UCS 174,200 728 0.23MatsuiSecurities 210,000 1,470 0.45

20,025 6.22

FoodHutechNorin 88,200 571 0.18IfujiSangyo 30,870 58 0.02MaxvaluTokai 476,000 7,066 2.20UnicharmPetcare 50,000 1,527 0.47WarabeyaNichiyo 58,000 772 0.24

9,994 3.11

Human ResourcesFujistaffHoldings 3,701 725 0.23PeopleStaff 1,749 1,881 0.58Quick 435,000 576 0.18

3,182 0.99



21


22

Import/ExportTakachihoKoheki 100,950 1,088 0.34ToyotaTsusho 65,500 1,396 0.43

2,484 0.77

IndustrialNittokuEngineering 75,000 465 0.14

Instruments-ScientificHamamatsuPhotonicsKK 70,000 2,131 0.66Ulvac 140,400 5,689 1.77

7,820 2.43

LeisureAccordiaGolf 1,150 1,182 0.37RoyalHotel 121,000 329 0.10

1,511 0.47

Lighting Products & SysNippoElectric 47,400 227 0.07

Machinery Tools & Related ProductsAnestIwata 100,000 401 0.13Disco 15,000 732 0.23HitachiZosenFukui 264,700 1,678 0.52KitagawaSeiki 161,500 786 0.24MiyanoMachinery 175,000 392 0.12TeikokuElectricManufacturing 100,200 1,751 0.54

5,740 1.78

MedicalAinPharmaciez 161,100 2,303 0.72CentralUNI 75,000 390 0.12CreateMedic 81,000 700 0.22FujiPharma 200,400 4,965 1.54MedicalIkkou 319 827 0.26SoftwareService 106,000 1,401 0.44Suzuken 16,600 626 0.19Sysmex 20,000 812 0.25TakedaPharmaceutical 40,000 2,109 0.66TohoPharmaceutical 159,700 3,297 1.02

17,430 5.42

MetalAhresty 25,000 364 0.11Alinco 300,000 1,028 0.32DaikiAluminiumIndustry 333,000 1,218 0.38Kyowakogyosyo 56,000 530 0.16OSAKATitaniumTechnologies 29,800 2,032 0.63SankoTechno 5,200 60 0.02

5,232 1.62






Miscellaneous ManufacturToyoTanso 42,600 3,408 1.06

Office Furnishings-OrigTakano 89,900 850 0.26

Pollution ControlAirtechJapan 109,900 649 0.20

Printing-CommercialNisshaPrinting 323,100 13,310 4.14KyoritsuPrinting 1,176,800 3,153 0.98

16,463 5.12

Real Estate/Real Estate Related/REITsAeonFantasy 213,944 2,868 0.89CreedOfficeInvestment 761 1,805 0.56Daikyo 750,000 1,692 0.53FukuokaREIT 852 5,048 1.57Industrial&InfrastructureFundInvestment 689 2,918 0.91JapanHotelandResort 875 2,907 0.90JapanLogisticsFund 50 335 0.10Kanamoto 78,000 474 0.15LaSalleJapanREIT 525 1,749 0.54MIDReit 876 3,180 0.99MoriTrustSogoReit 275 2,361 0.73NipponCommercialInvestment 951 3,771 1.17NipponHotelFundInvestment 1,529 5,520 1.72NisshinFudosan 150,700 881 0.27NomuraRealEstateOfficeFund 270 2,121 0.66ReloHoldings 100,000 1,117 0.35TokyuREIT 375 3,118 0.97TopREIT 50 187 0.06

42,052 13.07

RecyclingTakeei 68,800 2,656 0.83

RetailAlliedHeartsHoldings 223,000 428 0.13AmiyakiTei 203 388 0.12BICCAMERA 3,663 2,666 0.83BlueGrass 177,800 1,504 0.47BRONCOBILLY 35,000 515 0.16Buffalo 1,586 1,196 0.37Chimney 226,900 3,429 1.07CreateSD 162,000 3,555 1.10CVSBayArea 250,000 372 0.12Enoteca 269 630 0.20G-7Holdings 236,300 1,237 0.38Handsman 306,300 1,971 0.61HidayHidaka 256,500 2,029 0.63Jin 317,000 359 0.11

23


24

Retail (continued)Keiyo 100,000 545 0.17Kirindo 151,200 1,067 0.33K’sHoldings 205,000 4,262 1.32NiceClaup 239,200 804 0.25NihonChouzai 189,200 2,751 0.85Only 2,052 1,436 0.45Point 50,000 2,194 0.68PowerUp 202,100 747 0.23SapporoDrugStore 764 1,460 0.45StarbucksCoffeeJapan 1,200 584 0.18Terashima 28,900 208 0.07Toell 123,000 268 0.08TokyoDerica 352,500 1,374 0.43TsuruyaShoeStore 165,000 1,299 0.40UnitedArrows 105,300 760 0.24VillageVanguard 388 1,949 0.61WelciaKanto 182,347 4,859 1.51YamatoInternational 513,600 2,910 0.91

49,756 15.46

Rubber/Plastic ProductsBridgestone 190,000 3,455 1.07NishikawaRubber 175,000 1,622 0.50Nitta 45,000 743 0.23SumitomoRubberIndustries 550,000 4,811 1.50

10,631 3.30

Semiconductor EquipmentCanonMachinery 62,700 2,246 0.70

Soap & Cleaning PreparationNiitaka 22,000 151 0.05

Storage/WarehousingSugimuraWarehouse 194,000 508 0.16YasudaWarehouse 383,300 3,324 1.03

3,832 1.19

Textile-ProductsMitsubishiRayon 525,000 1,699 0.53TorayIndustries 185,000 1,151 0.36

2,850 0.89

Tools-Hand HeldFujiSeiko 58,000 190 0.06Makita 105,200 3,586 1.11

3,776 1.17




TransportArt 250,100 3,602 1.12Hamakyorex 209,100 4,256 1.32HigashiTwentyOne 290,100 908 0.28SakaiMovingService 257,000 5,540 1.72YusenAir&SeaService 300,000 4,609 1.43

18,915 5.87

Wire & Cable ProductsFCM 10,000 263 0.08Sumida 483,400 6,359 1.98

6,622 2.06

Total equities 384,396 119.47

Total Investments 384,396 119.47

Net Liabilities (62,634) (19.47)

Total Net Assets 321,762 100.00



25


26

WehaveauditedthefinancialstatementsofAtlantisJapanGrowthFundLimitedfortheyearended30thApril2008whichcomprisetheincomestatement,statementofchangesinequity,balancesheet,cashflowstatementandnotes1to16.Thesefinancialstatementshavebeenpreparedunderaccountingpoliciessetouttherein.

ThisreportismadesolelytotheCompany’smembersasabody,inaccordancewithSection64oftheCompanies(Guernsey)Law,1994.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.To the fullestextentpermittedby law,wedonotacceptorassumeresponsibility toanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective responsibilities of directors and auditorsThe Directors’ responsibilities for preparing the Annual Report and the Financial Statements inaccordancewithapplicableGuernseyLawandInternationalFinancialReportingStandards(“IFRS”)aresetoutintheDirectors’ReportundertheheadingofDirectors’Responsibilities.

OurresponsibilityistoaudittheFinancialStatementsinaccordancewithrelevant,legalandregulatoryrequirementsandInternationalStandardsonAuditing(UKandIreland).

Wereport toyououropinionas towhether theFinancialStatementsgivea trueand fairviewandhave been properly prepared in accordance with The Companies (Guernsey) Law, 1994. We alsoreporttoyouif,inouropinion,theDirectors’ReportisinconsistentwiththeFinancialStatements,iftheCompanyhasnotkeptproperaccountingrecords,orifwefailedtoobtainallaccess,informationand explanations we require for our audit. The information given in the Directors’ Report includesthatspecificinformationpresentedintheInvestmentsManager’sReportthatiscrossreferredfromtheDirectorsResponsibilitiessectionoftheDirectors’Report.

WereadotherinformationcontainedintheAnnualReportandconsiderwhetheritisconsistentwiththe audited Financial Statements. The other information comprises the Chairman’s Statement, theInvestmentManager’sReport,theDirectors’Report,theCorporateGovernanceStatement,thedetailsoftheTenLargestInvestmentsandtheScheduleofInvestments.WeconsidertheimplicationsforourreportifwebecomeawareofanyapparentmisstatementsormaterialinconsistencieswiththeFinancialStatements.Ourresponsibilitiesdonotextendtoanyotherinformation.

Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland)issuedby theAuditingPracticesBoard.Anaudit includesexamination,ona testbasis,of evidencerelevant to the amounts and disclosures in the Financial Statements. It also includes an assessmentofthesignificantestimatesandjudgementsmadebytheDirectorsinthepreparationoftheFinancialStatements,andofwhethertheaccountingpoliciesareappropriatetotheCompany’scircumstances,consistentlyappliedandadequatelydisclosed.

Weplannedandperformedourauditsoastoobtainalltheinformationandexplanationswhichweconsidered necessary in order to provide us with sufficient evidence to give reasonable assurancethattheFinancialStatementsarefreefrommaterialmisstatement,whethercausedbyfraudorotherirregularityorerror.Informingouropinion,wealsoevaluatedtheoveralladequacyofthepresentationofinformationintheFinancialStatements.

OpinionInouropinion:

the financial statements give a true and fair view, in accordance with IFRSs of the state of thecompany’saffairsasat30thApril2008andoftheCompany’slossfortheyearthenended;andthefinancialstatementshavebeenproperlypreparedinaccordancewiththeCompanies(Guernsey)Law1994.

GrantThorntonLimitedCharteredAccountantsGuernsey,C.I.4thJuly2008

•

•

INDEPENDENTAUDITORS’REPORTTOTHEMEMBERSOFATLANTIS JAPAN GROWTH FUND LIMITED


ATLANTIS JAPAN GROWTH FUND LIMITEDINCOMESTATEMENT


27

2008 2007

Revenue Capital Total Revenue Capital TotalNotes $’000 $’000 $’000 $’000 $’000 $’000 Income3 Lossesoninvestments heldatfairvalue – (134,330)(134,330) – (140,569)(140,569) Exchange(loss)/gain (63) (8,104) (8,167) (67) 2,440 2,373 Dividendincome 8,761 – 8,761 7,219 – 7,219

8,698 (142,434)(133,736) 7,152 (138,129)(130,977)

Expenses4 Investmentmanagementfee 5,946 – 5,946 7,467 – 7,4675 Custodianfees 191 – 191 256 – 2566 Administrationfees 242 – 242 274 – 2746 Registrarandtransferagentfees 3 – 3 27 – 277 Directors’feesandexpenses 233 – 233 197 – 197 Transactioncosts – 915 915 – 915 915 Insurancefees 96 – 96 49 – 49 Auditfee 33 – 33 27 – 27 Printingandadvertisingfees 42 – 42 37 – 37 Legalandprofessionalfees 46 – 46 43 – 43 Listingfees 60 – 60 29 – 29 Miscellaneousexpenses (10) – (10) 27 – 27

6,882 915 7,797 8,433 915 9,348

Finance cost Interestexpenseand bankcharges 1,073 – 1,073 824 – 824

GAIN/(LOSS) BEFORE TAX 743 (143,349)(142,606) (2,105) (139,044)(141,149)

8 Taxation (613) – (613) (505) – (505)

PROFIT/(LOSS) FOR THE YEAR 130 (143,349)(143,219) (2,610) (139,044)(141,654)

9 DEFICIT PER ORDINARY SHARE $(7.008) $(6.932)

TherearenorecognisedgainsorlossesarisingintheperiodotherthanthosedealtwithintheIncomeStatement.Inarrivingattheresultfortheyear,allamountsaboverelatetocontinuingactivities.

ThetotalcolumninthisstatementrepresentstheCompany’sIncomeStatement,preparedinaccordance with IFRS. The supplementary revenue and capital columns are both preparedunderguidancepublishedbytheAssociationofInvestmentCompanies.

Thenotesonpages31to43formpartofthesefinancialstatements

28

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30th April 2008 30th April 2007Notes $’000 $’000

NON CURRENT ASSETS2(f),10 Financialassetsatfairvaluethroughprofitorloss 384,396 515,814

CURRENT ASSETS Duefrombrokers 3,808 7982(d) Dividendsandinterestreceivable 3,976 3,340 Otherreceivables – 292(g) Cashandcashequivalents 5,548 2,813

13,332 6,980

CURRENT LIABILITIES Duetobrokers (3,213) (2,634) Payablesandaccruedexpenses (735) (820)2(h),11 Loanspayable (14,404) –

(18,352) (3,454)

NET CURRENT (LIABILITIES)/ASSETS (5,020) 3,526

NON CURRENT LIABILITIES2(h),11 Loanspayable (57,614) (54,359)

NET ASSETS 321,762 464,981

13 EqUITY Ordinarysharecapital 204 204 Sharepremium 192,650 192,650 Revenuereserve (20,658) (20,788)2(i) Capitalreserve 149,566 292,915

NET ASSETS ATTRIBUTABLE TO EqUITY SHAREHOLDERS 321,762 464,981

NET ASSET VALUE PER ORDINARY SHARE* $15.75 $22.75

*Based on the Net Asset Value at the year end divided by the number of shares in issue:20,435,627(30thApril2007-20,435,627)

ApprovedbytheBoardofDirectorson3rdJuly2008andsignedonitsbehalfby:

ChristopherJones TimGuinness Director Chairman


ATLANTIS JAPAN GROWTH FUND LIMITEDBALANCESHEETASAT30THAPRIL2008

29

30

2008 2007 $’000 $’000

CASH OUTFLOW FROM OPERATING ACTIVITIES (417) (3,007)

INVESTING ACTIVITIESPurchaseofinvestments (209,855) (201,319)Saleofinvestments 204,511 205,716

NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES (5,344) 4,397

NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (5,761) 1,390

CASH FLOWS FROM FINANCING ACTIVITIESInterestpaid (996) (789)Netloansdrawn-down 26,923 –

NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES 25,927 (789)

NET INCREASE IN CASH AND CASH EqUIVALENTS 20,166 601

Exchangemovements (17,431) (338)

Movementincashandcashequivalentsintheyear 2,735 263

Cashandcashequivalentsatbeginningofyear 2,813 2,550

Cashandcashequivalentsatendofyear 5,548 2,813

RECONCILIATION OF LOSS FOR PERIOD TO NET CASH OUTFLOW FROM OPERATING ACTIVITIESNetlossbeforetaxation (142,606) (141,149)Lossoninvestmentsheldatfairvalue 134,330 140,569Exchangeloss/(gain) 8,167 (2,373)Interestexpense 1,073 824Increaseindebtorsandaccruedincome (607) (217)Decreaseincreditors (161) (156)Taxation (613) (505)

(417) (3,007)


ATLANTIS JAPAN GROWTH FUND LIMITEDCASHFLOWSTATEMENT


1. GENERAL Atlantis Japan Growth Fund Limited (the “Company”) was incorporated in Guernsey on

13thMarch1996.TheCompanycommencedactivitieson10thMay1996.

2. ACCOUNTING POLICIES a) Statement of Compliance ThefinancialstatementsoftheCompanyhavebeenpreparedinaccordancewithInternational

FinancialReportingStandards(“IFRS”),whichcomprisestandardsandinterpretationsapprovedbytheIASB,andInternationalAccountingStandards,andStandingInterpretationsCommitteeinterpretationsapprovedbytheIASCthatremainineffect.

At the date of authorisation of these financial statements, the following standards andinterpretations,whichhavenotbeenappliedinthesefinancialstatements,wereinissuebutnotyeteffective:– (IFRS2-ShareBasedPayments–Amendmentrelatingtovestingconditionsandcancellations

(Effectivedate-1stJanuary2009)– IFRS 3 - Business Combinations – Comprehensive revision on applying the acquisition

method(Effectivedate-1stJanuary2009)– IAS1-PresentationofFinancialStatements–Comprehensiverevisionincludingrequiringa

statementofcomprehensiveincome(Effectivedate-1stJanuary2009)– IAS 23 (Revised) - Borrowing costs – Comprehensive revision to prohibit immediate

expensing(Effectivedate-1stJanuary2009)– IAS27-IAS28andIAS31–ConsequentialamendmentsarisingfromamendmentstoIFRS

3(Effectivedate-1stJanuary2009)– IAS32-Financialinstrumentspresentation–Amendmentsrelatingtoputtableinstruments

andobligationsarisingonliquidation(Effectivedate-1stJanuary2009)– IFRIC12-ServiceConcessionArrangements(Effectivedate-1stJanuary2008)– IFRIC13-CustomerLoyaltyProgrammes(Effectivedate-1stJuly2008)– IFRIC14-IAS19–TheLimitonaDefinedBenefitAsset,MinimumFundingRequirements

andtheirInteraction(Effectivedate-1stJanuary2008)

In November 2006, the IASB issued IFRS 8 “Opening Segments” which becomes effectivefor annual accounting periods beginning on or after 1st January 2009. This standard requiresdisclosuresonthefinancialperformanceoftheoperatingsegmentsoftheentity.

The Directors anticipate that the adoption of these Standards in future periods will have nomaterialfinancialimpactonthefinancialstatementsoftheCompany.

TheCompanyhasadopted for the first time IFRS7Financial Instruments:Disclosuresand thecomplementaryAmendmenttoIAS1,PresentationofFinancialStatements–CapitalDisclosures.

b) Basis of Preparation Thefinancialstatementshavebeenpreparedonahistoricalcostbasis,exceptforthemeasurement

atfairvalueofinvestments.

Where presentational recommendations set out in the Statement of Recommended Practice(“SORP”) “Financial Statements of Investment Companies”, issued by the Association ofInvestment Companies in December 2005 do not conflict with the requirements of IFRS, theDirectorshavepreparedthefinancialstatementsonabasisconsistentwiththerecommendationsintheSORP.

All financialassetsandfinancial liabilitiesarerecognised(orderecognised)onthedateof thetransactionbytheuseof‘tradedateaccounting’.

ATLANTIS JAPAN GROWTH FUND LIMITEDNOTESTOTHEFINANCIALSTATEMENTS


31

32

2. ACCOUNTING POLICIES(continued) c) Presentation of Income Statement Inordertobetterreflecttheactivitiesofaninvestmenttrustcompanysupplementaryinformation

whichanalysestheIncomeStatementbetweenitemsofarevenueandcapitalnaturehasbeenpresentedalongsidetheIncomeStatement.

d) Income Recognition Dividends arising on the Company’s investments are accounted for on an ex-dividend basis.

Investmentincomeisaccountedforgrossofwithholdingtax.

e) Expenses Allexpensesarerecognisedonanaccrualsbasisandhavebeenchargedagainstrevenue,with

theexceptionoftransactioncosts,whichhavebeenchargedagainstcapital.

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 ismanagedanditsperformanceevaluatedonafairvaluebasis,inaccordancewithadocumentedinvestmentstrategy,andinformationabouttheportfolioisprovidedinternallyonthatbasistotheCompany’sBoardofDirectorsandotherkeymanagementpersonnel.

Accordingly, upon initial recognition the investments are designated by the Company as ‘atfairvaluethroughprofitorloss’.Theyareincludedinitiallyatfairvalue,whichistakentobetheircost(excludingexpensesincidentaltotheacquisitionwhicharewrittenoffintheIncomeStatement,andallocatedtothecapitalcolumnoftheIncomeStatementatthetimeofacquisition).Subsequently,theinvestmentslistedoverseasarevaluedat‘fairvalue’,whichisbidprice(whereabidpriceisavailable)orotherwiseatfairvaluebasedonpublishedpricequotations.

Gains and losses on non-current asset investments are included in the Income Statementascapital.

g) Cash and Cash Equivalents Cashandcashequivalentscomprisecashatbankandinhandandshort-termdepositswithan

originalmaturityofthreemonthsorless.

ForthepurposesoftheCashFlowStatement,cashandcashequivalentsconsistofcashandcashequivalents,asdefinedabove,netofoutstandingbankoverdrafts.

h) Loans Payable Allloansareinitiallyrecognisedatcost,beingthefairvalueoftheconsiderationreceived,less

issuecostswhereapplicable.Afterinitialrecognition,allinterestbearingloansandborrowingsaresubsequentlymeasuredatamortisedcost.Amortisedcostiscalculatedbytakingintoaccountdiscount or premium on settlement. Any costs of arranging any interest-bearing loans arecapitalisedandamortisedoverthelifeoftheloan.

i) Foreign Currencies The Company’s investments are predominately denominated in Japanese yen. The Company’s

obligationtoshareholdersisdenominatedinUSdollarsandwhenappropriate,theCompanymayhedgetheexchangerateriskfromyentoUSdollars.Therefore,thefunctionalcurrencyisUSdollars,whichisalsothepresentationalcurrencyoftheCompany.TransactionsinvolvingcurrenciesotherthanUSdollars,arerecordedattheexchangeraterulingonthetransactiondate.Ateachbalancesheetdate,monetaryitemsandnon-monetaryassetsandliabilitiesthatarefairvalued,whicharedenominatedinforeigncurrencies,areretranslatedattheclosingratesofexchange.



2. ACCOUNTING POLICIES(continued) i) Foreign Currencies(continued) Exchangedifferencesarisingfromretranslatingatthebalancesheetdate:

– investmentsandotherfinancial instrumentsmeasuredat fairvaluethroughprofitor loss;and

– othermonetaryitems; andarisingonsettlementofmonetaryitems,areincludedintheIncomeStatementandallocated

ascapitaliftheyareofacapitalnature,orasrevenueiftheyareofarevenuenature.

ForeignCurrencyTransactions Foreign currency assets and liabilities, including investments at valuation, are translated into

U.S.Dollarsattherateofexchangerulingatthebalancesheetdate.Investmenttransactionsandincomeandexpenditure itemsare translatedat the rateof exchange rulingat thedateof thetransactions.GainsandlossesonforeignexchangeareincludedintheIncomeStatement.

j) Taxation Thetaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.

Thetaxcurrentlypayableisbasedonthetaxableprofitfortheperiod.TaxableprofitdiffersfromnetprofitasreportedintheIncomeStatementbecauseitexcludesitemsofincomeorexpensethataretaxableordeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableor deductible. The Company’s liability for current tax is calculated using tax rates that wereapplicableatthebalancesheetdate.

InlinewiththerecommendationsoftheSORP,theallocationmethodusedtocalculatetaxreliefonexpensespresentedagainstcapitalreturnsinthesupplementaryinformationintheIncomeStatementisthe“marginalbasis”.Underthisbasis,iftaxableincomeiscapableofbeingoffsetentirelybyexpensespresentedintherevenuereturncolumnoftheIncomeStatement,thennotaxreliefistransferredtothecapitalreturncolumn.

Deferredtaxisthetaxexpectedtobepayableorrecoverableondifferencesbetweenthecarryingamounts of assets and liabilities in the financial statements and the corresponding tax basesusedinthecomputationoftaxableprofit,andisaccountedforusingthebalancesheetliabilitymethod.Adeferredtax liability isrecognisedinfull forall taxabletemporarydifferencesanddeferred tax assets are recognised to the extent that it is probable that taxable profits will beavailable against which deductible temporary differences can be utilised. Investment trustswhichhaveapprovalassuchundersection842oftheIncomeandCorporationTaxesAct1988arenotliablefortaxationoncapitalgains.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when theliability is settled or the asset is realised. Deferred tax is charged or credited in the IncomeStatement,exceptwhenitrelatestoitemschargedorcrediteddirectlytoequity,inwhichcasethedeferredtaxisalsodealtwithinequity.

k) Financial Liabilities Financial liabilities are recognised when the Company becomes a party to the contractual

agreementsoftheinstrument.Tradeandotherpayablesareinitiallyrecognisedattheirnominalvalue and subsequently measured at amortized cost less settlement payments. Financialliabilitiesarederecognisedfromthebalancesheetonlywhentheobligationsareextinguishedeitherthroughdischarge,cancellationorexpiration.



33

34

2. ACCOUNTING POLICIES(continued) 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) oninvestments,movementinvaluationgains/(losses)oninvestmentsandgains/(losses)relatingtoforeignexchange.

3. (LOSSES)/GAINS ON INVESTMENTS HELD AT FAIR VALUE 2008 2007 $’000 $’000Proceedsfromsalesofinvestments 207,319 204,766Originalcostofinvestmentssold (229,396) (179,451)

(Losses)/gainsrealisedoninvestmentssoldduringtheyear (22,077) 25,315

Netunrealiseddepreciationfortheyear (112,253) (165,884)

(134,330) (140,569)

4. INVESTMENT MANAGEMENT FEE TheCompanypaystotheInvestmentManagerafeeaccruedweeklyandpaidmonthlyinarrears

attheannualrateof1.5percentoftheweeklyNetAssetValueoftheCompany.Fortheyearended30thApril2008,totalinvestmentmanagementfeeswere$5,945,569(2007-$7,467,360)ofwhich$389,430(2006-$543,879)isdueandpayableasatthatdate.

Under the terms of the Investment Management Agreement dated 18th March 1996, theInvestmentManager,AtlantisFundManagers(Guernsey)Limited,willcontinueinofficeuntilaresignationistenderedorthecontract isterminated.Inbothcircumstances,aresignationorterminationmustbegivenwithanoticeperiodwhichmustnotbelessthantwelvemonths,andbeinaccordancewiththeInvestmentManagementAgreement.FeespayabletotheInvestmentAdviseraremetbytheInvestmentManager.

5. CUSTODIAN FEES The Company pays to the Custodian a fee accrued weekly at a rate from 1st May 2007 to

31st October 2007 0.05 per cent of the total weekly Net Asset Value and from 1st November2007to30thApril20080.03percentofthetotalweeklyNetAssetValuesubjecttoanannualminimum of US$20,000 of the assets held by the Custodian or Sub-Custodian, together withtransactionscharges.Fortheyearended30thApril2008,totalcustodianfeeswere$191,097(2007-$256,186)ofwhich$12,625(2007-$18,129)isdueandpayableasatthatdate.

6. ADMINISTRATION AND REGISTRAR FEES TheCompanypaystotheAdministratorafeeaccruedweeklyandpaidmonthlyinarrearsat

theannualrateof0.20percentoftheweeklyNetAssetValueupto$50millionfrom1stMay2007to31stOctober2007and0.25percentoftheweeklyNetAssetValueupto$50millionfrom1stNovember2007to30thApril2008and0.10percentbetween$50millionand$100million,0.05 per cent between $100 million and $200 million and 0.025 per cent above $200 million,subjecttoanannualminimumof$125,000.Inaddition,anannualminimumretainerof$1,000ispayable inrespectofmaintainingtheprincipalregisterofshareholders.Fortheyearended30thApril2008,totaladministrationandregistrarfeeswere$244,855(2007-$301,308)ofwhich$108,703(2007-$30,183)isdueandpayableasatthatdate.

7. DIRECTORS’ FEES AND EXPENSES EachoftheDirectorsisentitledtoreceiveafeefromtheCompany,being£20,000perannumfor

theChairmanand£15,000perannumforeachoftheotherDirectors.Inaddition,theCompanyreimbursesallreasonablyincurredout-of-pocketexpensesoftheDirectors.Fortheyearended30thApril2008,totaldirectors’feesandexpenseswere$233,565(2007-$197,211)ofwhich$Nil(2007-$63,794)isdueandpayableasatthatdate.



8. TAXATION 2008 2007 $’000 $’000Corporationtaxat30%(2006-30%) – –Irrecoverableoverseastax 613 505

Taxchargeinrespectofthecurrentyear 613 505

Current Taxation Thecurrenttaxationchargefortheyearisdifferentfromthestandardrateofcorporationtaxin

theUK(30%).Thedifferencesareexplainedbelow. 2008 2007 $’000 $’000Deficitonordinaryactivitiesbeforetaxation 743 (2,105)

TheoreticaltaxatUKcorporationtaxrateof30%(2007-30%) 223 (632)

Effectsof:Expensesinexcessoftaxableincome (39) 784Reliefforoverseastaxsuffered (184) (152)Overseastaxwrittenoff 613 505

Actualcurrenttaxcharge 613 505

TheCompanyisaninvestmenttrustandthereforeisnottaxableoncapitalgains.

Factors that may affect future tax charges Theinvestmenttrusthasexcessmanagementexpensesof$24,111,403(2007-$24,240,403) that

areavailable tooffset future taxablerevenue.Adeferredtaxassethasnotbeenrecognised inrespectof theseamountsas theywillbe recoverableonly to theextent that there is sufficientfuturetaxablerevenue.

9. (DEFICIT)/EARNINGS PER ORDINARY SHARE The deficit per ordinary share figure is based on the net deficit for the year of $143,219,000

(2007$141,654,000)andon20,435,627ordinarysharesforeachyear,beingtheweightedaveragenumberofordinarysharesinissueduringtheyear.

The(deficit)/earningsperordinarysharefiguredetailedabovecanbefurtheranalysedbetweenrevenueandcapital,asbelow. 2008 2007 $’000 $’000

Netrevenueprofit/(loss) 130 (2,610)Netcapitalloss (143,349) (139,044)

Nettotalloss (143,219) (141,654)

Weightedaveragenumberofordinarysharesinissueduringtheyear 20,435,627 20,435,627

$ $Revenueearning/(deficit)perordinaryshare 0.006 (0.128)Capitaldeficitperordinaryshare (7.014) (6.804)

Totaldeficitperordinaryshare (7.008) (6.932)



35

36

10. INVESTMENTS 2008 2007 $’000 $’000Costofinvestmentsbroughtforward 443,777 421,103Costofpurchaseofinvestments 210,644 202,125Proceedsondisposalofinvestments (207,319) (204,766)Realised(loss)/profitondisposalofinvestments (22,077) 25,315

Costofinvestmentscarriedforward 425,025 443,777

Costofinvestments 425,025 443,777Unrealised(depreciation)/appreciation (40,629) 72,037

Fairvalueofinvestmentsatyearend 384,396 515,814

11. LOANS PAYABLE Loan Interest Maturity 2008 2007 Amount Rate Date $’000 $’000

3 year committed revolving credit facility Y1,500,000,000 1.00% 29thJuly2008 14,404 –

Loandueforrepaymentwithinoneyear 14,404

3 year committed revolving credit facility Y1,500,000,000 1.00% 29thJuly2008 – 12,545

3 year committed fixed rate credit facility Y1,500,000,000 1.90% 6thJuly2009 14,404 12,544 Y1,500,000,000 1.71% 16thOctober2009 14,404 12,544

5 year committed fixed rate credit facility Y1,000,000,000 2.05% 31stJuly2011 9,602 – Y2,000,000,000 1.63% 13thOctober2010 19,204 16,726

Loandueforrepaymentgreaterthanoneyear 57,614 54,359

72,018 54,359

12. FORWARD CURRENCY CONTRACTS At30thApril2008and2007theCompanydidnothaveanyopenforwardcurrencycontracts.



13. SHARE CAPITAL AND SHARE PREMIUM a) Authorised 2008 2007 $’000 $’000

24,000,000OrdinarySharesofUS$0.01each 240 240

Therightswhichtheordinarysharesconveyupontheholdersthereofareasfollows:

Voting Rights i)ona showofhands, everyMemberwho ispresent shallhaveonevote; and ii)onapoll a

Memberpresentinpersonorbyproxyshallbeentitledtoonevoteperordinaryshareheld.

Entitlement to Dividends TheCompanymaydeclaredividendsinrespectoftheordinaryshares.

Rights in a Winding-up TheholdersofordinaryshareswillbeentitledtoshareintheNetAssetValueoftheCompany

asdeterminedbytheLiquidator.

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

Inissueat30thApril2008and2007 20,435,627 204 192,650

14. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS 2008 2007 $’000 $’000Deficitattributabletoequityshareholders (143,219) (141,654)Shareholders’fundsatbeginningofyear 464,981 606,635

Shareholders’fundsatendofyear 321,762 464,981

15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES In accordance with its investment objectives and policies, the Company holds financial

instrumentswhichatanyonetimemaycomprisethefollowing:

* securitiesheldinaccordancewiththeinvestmentobjectivesandpolicies* cashandshort-termdebtorsandcreditorsarisingdirectlyfromoperations* borrowingusedtofinanceinvestmentactivity* derivativetransactionsincludinginvestmentinwarrantsandforwardcurrencycontracts* optionsorfuturesforhedgingpurposes

ThefinancialinstrumentsheldbytheCompanyprincipallycompriseequitieslistedonthestockmarketinJapan.ThespecificrisksarisingfromtheCompany’sexposuretotheseinstruments,and the Manager/Investment Adviser’s policies for managing these risks, which have beenappliedthroughouttheyear,aresummarisedbelow.



37

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15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(continued) Capital Management The fair value of the Company’s financial assets and liabilities approximate their carrying

amountsatthebalancesheetdate.

The Company’s objectives when managing capital are to safeguard the Company’s ability tocontinueasagoingconcerninordertoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.

The Company may not borrow or otherwise use leverage exceeding 25% of its net assets forinvestmentpurposes,tomeetredemptionrequestortosettlefacilitiesforspecificinvestmentssuchasbridgefinancing.InconnectionwiththeloanfacilityagreementwithBankN.V.(ING),theCompanyenteredintoaGuernseylawsecurityinterestagreementinfavourofINGoveritscustodyaccountsheldwithNorthernTrust(Guernsey)Limited.

TheCompanymaypurchaseamaximumof3,063,300OrdinaryShares,equivalentto14.99%oftheIssuedsharecapitaloftheCompanyasat30thApril2008providedthat;

* Theminimumpricetobepaid(exclusiveofexpenses)beUS$0.001;and* If the shares are trading on the London Stock Exchange at a discount to the lower of the

undilutedordilutedNetAssetValue;

Currently no shares have been bought back under this scheme and this would have to beapproved at the Company’s AGM. There had been no change in the capital structure of theCompanyduringtheyear.

Market Price Risk TheCompany’sinvestmentportfolio-particularlyitsequityinvestments-isexposedtomarket

pricefluctuationswhicharemonitoredbytheManager/InvestmentAdviserinpursuanceoftheinvestmentobjectivesandpolicies.Adherencetoinvestmentguidelinesandtoinvestmentandborrowingpowerssetoutintheschemeparticularsmitigatestheriskofexcessiveexposuretoanyparticulartypeofsecurityorissuer.

At30thApril2008,theFund’smarketpriceriskisaffectedbythreemaincomponents:changesinmarketprices,currencyexchangeratesandinterestraterisk.Currencyexchangeratemovementsandinterestratemovements,whicharedealtwithundertherelevantheadingsbelow,primarilyaffectthefairvaluesoftheFund’sexposurestoequitysecurities,relatedderivativesandotherinstruments.ChangesinmarketpricesprimarilyaffectthefairvalueoftheFund’sexposurestoequitysecurities,relatedderivativesandotherinstruments.

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

capitalisation,andb) moresubstantialgovernmentinterventionintheeconomy,includingrestrictionsoninvesting

incompaniesorinindustriesdeemedsensitivetorelevantnationalinterests.

Market price sensitivity analysis IfthepriceofeachoftheequitysecuritiestowhichtheFundhadexposureat30thApril2008had

increasedordecreasedby5%withallothervariablesheldconstant,thiswouldhaveincreasedordecreasednetassetsattributabletoholdersofredeemableparticipatingsharesoftheFundby:

2008 2007 +/– +/–NetAssetValue US$19,219,824 US$25,790,700NetAssetValuepershare US$0.94 US$1.26

Nobenchmarkisusedinthecalculationoftheaboveinformation.



15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(continued) Foreign Currency Risk TheCompanyprincipallyinvestsinsecuritiesdenominatedincurrenciesotherthanUnitedStates

Dollar, the functional currency of the Company. Therefore, the balance sheet may be affectedby movements in the exchange rates of such currencies against the US Dollar. The Manager/InvestmentAdvisorhasthepowertomanageexposuretocurrencymovementsbyusingforwardcurrencycontracts.NosuchinstrumentswereheldatthedateoftheseFinancialStatements.

ItisnotthepresentintentionoftheDirectorstohedgethecurrencyexposureoftheCompany,buttheDirectorsreservetherighttodosointhefutureiftheyconsiderthistobedesirable.

The treatment of currency transactions other than in US Dollars is set out in Note 2 to theFinancialStatementsunder“ForeignCurrencies”.

TheCompany’snetcurrencyexposureisasfollows: Sterling Japanese yen Asat30thApril2008: $’000 $’000 Assets Cashandcashequivalents 7 5,492 Investmentsheldatfairvalue – 384,396 Otherassets – 7,582

Total assets 7 397,470

Liabilities Loanspayable – (72,018) Otherliabilities – (3,213)

Total liabilities – (75,231) Total net assets 7 322,239

Sterling Japanese yen Asat30thApril2007: $’000 $’000 Assets Cashandcashequivalents – 2,813 Investmentsheldatfairvalue – 515,814 Otherassets 29 4,138

Total assets 29 522,765 Liabilities Loanspayable – (54,359) Otherliabilities (106) (2,759)

Total liabilities (106) (57,118) Total net (liabilities)/assets (77) 465,647

DuetotheimmaterialityofthemonetaryexposureoftheSterlingandJapaneseyenatyearendwehavenotpreparedasensitivityanalysis.



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40

15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(continued) Interest Rate Risk SubstantiallyalltheCompany’sfinancialassetsandliabilitiesarenon-interestbearingandany

excesscashandcashequivalentsareinvestedatshort-termmarketinterestrates.Asaresult,theCompanyisnotsubjecttosignificantamountsofriskduetofluctuationsintheprevailinglevelsofmarketinterestrates.

Asat30thApril2008,theCompanyonlyhassignificantexposuretointerestrateriskregardingtheloanfacilityandcashandcashequivalents.

Increases in interest rates may increase the costs of the Company’s borrowings. The rate ofinterestoneachINGdrawdownloanforeachinterestperiodisthepercentagerateperannumwhichistheaggregateoftheapplicable;(i)margin,(ii)LIBORand(iii)mandatorycost.Interestontheloanispayablemonthlyinarrears.Fortheyearended30thApril2008theinterestaccruedontheloanwasUS$201,597.

Interest rate risk profile The following financial assets and liabilities disclosures exclude prepayments and taxation

debtorsandcreditors: Cash flow Fair value interest interest Total rate risk rate risk Asat30thApril2008: $’000 $’000 $’000

Financial assets Cashandbankbalances 5,548 – 5,548

Totalfinancialassets 5,548 – 5,548

Financial liabilities Loanspayable – (72,018) (72,018)

Totalfinancialliabilities – (72,018) (72,018)

Netfinancialassets/(liabilities) 5,548 (72,018) (66,470)

Cash flow Fair value interest interest Total rate risk rate risk Asat30thApril2007: $’000 $’000 $’000

Financial assets Cashandbankbalances 2,813 – 2,813

Totalfinancialassets 2,813 – 2,813

Financial liabilities Loanspayable – (54,359) (54,359) Otherfinancialliabilities – (125) (125)

Totalfinancialliabilities – (54,484) (54,484) Netfinancialassets/(liabilities) 2,813 (54,484) (51,671)



15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(continued) Interest rate risk profile(continued) 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 earninterestattheprevailingmarketinterestrate.AlthoughthisportionoftheNetAssetValueisnotsubjecttofairvalueriskasaresultofpossiblefluctuationsintheprevailingmarketinterestrates,thefuturecashflowsoftheCompanycouldbeadverselyorpositivelyimpactedbydecreasesorincreasesinthoseprevailingmarketinterestrates.

Thefairvalueinterestrateriskcomprisesthosefinancialassetsandliabilitieswithafixedinterestrate,forexampleloanspayableandloaninterestpayable.

Weighted average Weighted average period for interest rate which rate is fixed (years) 2008 2007 2008 2007Japanese yenLoanspayable 1.63% 1.57% 1.33 2.43

Fair Value All assetsand liabilitiesare carriedat fairvaluewith theexceptionof short termborrowings

whicharecarriedatamortisedcostusingtheeffectiveinterestratemethod.

Short term Debtors and Creditors Tradeandotherreceivablesdonotcarryinterestandareshortterminnature.Theyarestated

atnominalvalueasreducedbyappropriateallowancesforirrecoverableamountsinthecaseofreceivables.

Liquidity Risk LiquidityriskistheriskthattheCompanywillencounterinrealisingassetsorotherwiseraising

fundstomeetfinancialcommitments.

As at 30th April 2008, the Company had drawn down a loan facility of JPY 7,500,000,000($72,018,435).Inconnectionwiththefacilityagreement,theCompanyenteredintoaGuernseylawsecurityinterestagreementinfavourofINGoveritscustodyaccountsheldwithNorthernTrust(Guernsey)Limited.Theloanmayonlybeappliedforinvestmentleveragepurposesonlyandmustberepaidonthelatestof(i)thedayfalling364daysfromthedateofthedrawdownoftheloan,and(ii)anyextensiondateagreedbetweentheCompanyandING.

TheCompanyinvestsprimarilyinlistedsecurities.

ThematurityanalysisoftheCompany’sfinancialassetsandliabilities(excludingprepaymentsandtaxbalances)at30thApril2008isasfollows:



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42



15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(continued) Liquidity Risk(continued)

Up to 1 year 1 to 5 Total or on demand years Asat30thApril2008: $’000 $’000 $’000

Financial assets Cashandbankbalances 5,548 – 5,548 Investmentsheldatfairvalue 384,396 – 384,396 Otherfinancialassets 7,784 – 7,784

Total financial assets 397,728 – 397,728

Financial liabilities Loanspayable (14,404) (57,614) (72,018) Otherfinancialliabilities (3,948) – (3,948)

Total financial liabilities (18,352) (57,614) (75,966)

Total interest sensitivity gap 379,376 (57,614) 321,762

Up to 1 year 1 to 5 Total or on demand years Asat30thApril2007: $’000 $’000 $’000

Financial assets Cashandbankbalances 2,813 – 2,813 Investmentsheldatfairvalue 515,814 – 515,814 Otherfinancialassets 4,138 – 4,138

Total financial assets 522,765 – 522,765

Financial liabilities Loanspayable – (54,359) (54,359) Otherfinancialliabilities (3,454) – (3,454)

Total financial liabilities (3,454) (54,359) (57,813)

Total interest sensitivity gap 519,311 (54,359) 464,952



43

15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES(continued) Credit risk Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a

commitmentthatithasenteredintowiththeCompany.

In accordance with the investment restrictions as described in its placing Memorandum, theCompanymaynotinvestmorethan10%oftheCompany’sgrossassetsinsecuritiesofanyonecompanyorissuer.However,thisrestrictionshallnotapplytosecuritiesissuedorguaranteedbyagovernmentorgovernmentagencyoftheJapaneseorUSGovernments.Inadheringtotheseinvestmentrestrictions,theCompanymitigatestheriskofanysignificantconcentrationofcreditriskarisingonbrokeranddividendreceivables.

As the Company invests primarily in publicly traded equity securities the Company is notexposedtocreditriskfromthesepositions.However,theCompanywillbeexposedtoacreditriskonpartieswithwhomittradesandwillbeartheriskofsettlementdefault.TheCompanyminimises concentrations of credit risk by undertaking transactions with a large number ofregulated counterparties on recognised and reputable exchanges. All transactions in listedsecurities are settled/paid for upon delivery using approved brokers. The risk of default isconsidered minimal, as delivery of securities sold is only made once the broker has receivedpayment.Paymentismadeonapurchaseoncethesecuritieshavebeenreceivedbythebroker.Thetradewillfailifeitherpartyfailstomeetitsobligation.TheCompanyisexposedtocreditriskoncashandinvestmentbalancesheldwiththeCustodian.TheInvestmentManagerregularlyreviewsconcentrationsofcreditrisk.

TheCustodianoftheFund,NorthernTrust(Guernsey)LimitedwhichispartoftheNorthernTrust Company has a rating of (AA-), which was rated by Standard & Poor’s. The net assetsexposedtocreditriskatyearendamountedtoUS$390,539,000(2007:US$516,791,000).

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

2008 Per Share $’000 $

PublishedNetAssetValue 323,824 15.85Unrealisedlossonrevaluationofsecuritiesatbidprices (2,062) (0.10)

321,762 15.75

2007 Per Share $’000 $

PublishedNetAssetValue 466,835 22.84Unrealisedlossonrevaluationofsecuritiesatbidprices (1,854) (0.09)

464,981 22.75

InaccordancewithIFRStheCompany’sinvestmentshavebeenvaluedatbidprice.However,inaccordancewiththeCompany’sprospectusforthepurposesofdeterminingthedailynetassetvaluepersharetheinvestmentsarevaluedatmidprices.

44

DIRECTORSTimothyGuinness(Chairman)

YoshinobuItai(retired4thOctober2007)ChristopherJones

EricBoyleAndrewMartinSmith

TakeshiMurakami(appointed29thNovember2007)

REGISTERED OFFICETrafalgarCourt,LesBanques,StPeterPort,Guernsey,GY13QL,ChannelIslands

INVESTMENT MANAGERAtlantisFundManagement(Guernsey)Limited

P.O.Box255,TrafalgarCourt,LesBanques,Guernsey,GY13QL,ChannelIslands,

GLOBAL CUSTODIANup to 31st October 2007

HSBCCustodyServices(Guernsey)LimitedP.O.Box208,ArnoldHouse,St.Julian’sAvenue,St.PeterPort,GuernseyGY13NF,ChannelIslands

from 1st November 2007NorthernTrust(Guernsey)Limited

TrafalgarCourt,LesBanques,StPeterPort,Guernsey,GY13DA,ChannelIslands

INVESTMENT ADVISERAtlantisInvestmentManagementLimited(regulatedbyFSA)

4thFloor,30-34Moorgate,LondonEC2R6DN(Telephoneno.020-7638-9192)

ADMINISTRATOR, SECRETARY AND PRINCIPAL REGISTRARup to 31st October 2007

HSBCSecuritiesServices(Guernsey)LimitedP.O.Box208,ArnoldHouse,St.Julian’sAvenue,St.PeterPort,GuernseyGY13NF,ChannelIslands

from 1st November 2007NorthernTrustInternationalFundAdministrationServices(Guernsey)Limited

TrafalgarCourt,LesBanques,StPeterPort,Guernsey,GY13QL,ChannelIslands

JERSEY REGISTRARComputershareInvestorServices

P.O.Box83,OrdnanceHouse,31PierRoad,St.Helier,JerseyJE48PW,ChannelIslands

CORPORATE ADVISERSINGBankN.V.

60LondonWall,LondonEC2M5TQ


ADMINISTRATION

45


ADMINISTRATION(continued)

STOCK BROKERSJ.P.MorganSecuritiesLimited

10Aldermanbury,LondonEC2V7RF

AUDITORSGrantThorntonLimited

P.O.Box313,AnsonCourt,LaRoutedesCamps,St.Martin,GuernseyGY13TF

LEGAL ADVISERSOgier

OgierHouse,St.Julian’sAvenue,StPeterPortGY11WA

46

ATLANTIS JAPAN GROWTH FUND LIMITED(CompanyNo.30709)

NOTICEOFANNUALGENERALMEETING

Notice isherebygiventhat theAnnualGeneralMeetingof theCompanywillbeheldat60LondonWall,LondonEC2M5TQon3rdOctober2008at11.30amforthefollowingpurposes:

Resolution on AgendaForm of Proxy 1. ToelectaChairmanoftheMeeting.

OrdinaryResolution1 2. ToapproveandadopttheAnnualReportandFinancialStatementsoftheCompanyfortheyearended30thApril2008.

OrdinaryResolution2 3. Tore-electGrantThorntonLimitedasAuditorsoftheCompanyuntiltheconclusionofthenextAnnualGeneralMeeting.

OrdinaryResolution3 4. ToauthorisetheBoardofDirectorstodeterminetheremunerationoftheAuditors.

OrdinaryResolution4 5. Tore-electTakeshiMurakamiasaDirectoroftheCompanyfollowinghisappointmenttotheBoardofDirectorson29thNovember2007.

OrdinaryResolution5 6. Tore-electandre-appointChristopherJonesasaDirectoroftheCompanyinaccordancewithSectionA7oftheNewCombinedCodeandfollowinghisretirementbyrotationinaccordancewithArticles83.1and83.2oftheArticlesofAssociationoftheCompany.

OrdinaryResolution6 7. To re-appoint Eric Boyle following his retirement by rotation inaccordancewithArticles83.1and83.2oftheArticlesofAssociationoftheCompany.

SpecialResolution1 8. To consider and approve that the Company be unconditionally and

generally authorised to make market purchases (as defined by TheCompanies (Guernsey) Law, 2008 as amended) of Ordinary Shares of1centeachinitscapitalsubjectasfollows:

a) the maximum number of Ordinary Shares (“Shares”) herebyauthorised to be purchased shall be 14.99% per cent. of the totalnumberofSharesinissue;

b) themaximumpricewhichmaybepaidforanysuchShareswhichtheCompanycontractstopurchaseonanydayshallbeasumequivalentto105%oftheaverageofthemiddlemarketquotationfortheShareson the Daily Official List of the London Stock Exchange on the 5businessdaysimmediatelyprecedingthatday;

c) anypurchaseofShareswillbemadeinthemarketforcashatpricesbelowtheprevailingNetAssetValuepershare;

d) theminimumpricewhichmaybepaidforsuchSharesisUSD0.01;

e) theauthorityconferredbythisresolutionshallexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompanyor,ifearlier,onthe expiry of eighteen months from the passing of this resolution,unless such authority is renewed, varied or revoked prior to suchtime.

47


NOTICEOFANNUALGENERALMEETING(continued)

SpecialResolution2 9. To insert intoArticle1of theCompany’sArticlesofAssociationat theendofthedefinitionof“theLaw”thefollowingwords:

“(including without limitation any ordinance, regulation, statutoryinstrumentorothersecondarylegislationmadethereunder).

SpecialResolution3 10. Todelete fromArticle19of theCompany’sArticlesofAssociation, thewords“bySpecialResolution”andtoinsertintoArticle19immediatelyafterthewords“reduceitssharecapital”,thefollowingwords:

“anycapitalreservefundoranysharepremiumaccount”.

SpecialResolution4 11. To insert after Article 19 of the Company’s Articles of Association, thefollowingasArticle19A:

“19A. Power to purchase shares”

SubjecttotheprovisionsoftheLawandtheseArticles: (i) theCompanymayfromtimetotimepurchase,oragreetopurchase

inthefuture,itsownshares(includinganyOrdinaryShares)inanymannerauthorisedbytheLawandmaymakepaymentsinrespectofanysuchpurchase;

(ii) theCompanyandanyofitssubsidiarycompaniesmaygivefinancialassistance within the meaning of the Companies (Guernsey) Law,2008 as amended, extended or replaced, directly or indirectly forthepurposeoforinconnectionwiththeacquisitionofsharesintheCompanyorinanycompanyofwhichtheCompanyisasubsidiaryorinconnectionwithreducingordischarginganyliabilityincurredinconnectionwiththepurchaseofsharesintheCompanyorinanycompanyofwhichtheCompanyisasubsidiary;and

(iii) theCompanyfromtimetotimemayholditsownsharesastreasuryshares.”

SpecialResolution5 12. To insert into Article 59.1 of the Company’s Articles of Association,immediatelyaftertheword“present”thefollowingwords:

“inpersonorbyproxy”.

SpecialResolution6 13. To insert into Article 112 of the Company’s Articles of Association,immediatelyafterthewords“byOrdinaryResolution”thefollowingwords:

“(ortheDirectorsmay)authoriseand”.

SpecialResolution7 14. TodeletefromArticle113oftheCompany’sArticlesofAssociationthewords“IfandinsofarasintheopinionoftheDirectorstheprofitsoftheCompanyjustifysuchpayments,”.

SpecialResolution8 15. TodeletefromArticle115oftheCompany’sArticlesofAssociationthewords “out of profits lawfully available for distribution” and replacethemwiththefollowingwords:

“inaccordancewiththeLaw”.

48


NOTICEOFANNUALGENERALMEETING(continued)

SpecialResolution9 16. TodeletefromArticle124.1oftheCompany’sArticlesofAssociationthewords“,withthesanctionofanOrdinaryResolutionoftheCompany,”.

SpecialResolution10 17. TodeletefromArticle125.1oftheCompany’sArticlesofAssociationthewords“shall”andreplaceeachofthemwiththeword“may”.

SpecialResolution11 18. Todelete fromArticle125.2.1of theCompany’sArticlesofAssociationthewords“,withthesanctionofanOrdinaryResolution,”.

19. Anyotherbusiness.

ByOrderoftheBoard

Forandonbehalfof Northern Trust International Fund Administration Services (Guernsey) Limited Secretary

8thAugust2008

NOTES:

1. Amemberentitledtoattendandvoteatthemeetingconvenedbythenoticesetoutaboveisentitledtoappointoneormoreproxiestoattendandvoteinsteadofhim.AproxyneednotalsobeamemberoftheCompany.

2. AProxyFormisenclosed.Theinstrumentappointingaproxyandthepowerofattorneyorotherauthority(ifany)underwhichitissignedoranotariallycertifiedcopyofsuchpowerorauthorityshallbedepositedattheregisteredofficeoftheCompanynotlessthanforty-eighthoursbeforethetimeappointedforholdingthemeetingatwhichthepersonnamedintheinstrumentproposestovoteandindefaulttheinstrumentofproxyshallnotbetreatedasvalid.

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