THE PROSPECT JAPAN FUND LIMITED

INTERIM RESULTS ANNOUNCEMENT

The financial information set out in this announcement does not
constitute the Company's statutory financial statements for the period ended
30 June 2014. All figures are based on the 30 June 2014 unaudited condensed
financial statements, approved by the Board of Directors on27 August 2014.

The Company's statutory financial statements will shortly be
available for inspection at the UK Listing Authority's Document Viewing
Facility, which is located at:

Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

CHAIRMAN'SREPORT

for the period from 1 January, 2014 to 30 June, 2014

The fund performed relatively strongly in the six months to the 30
June 2014 and rose 7.8% compared to MSCI

Japan Small Cap Index which rose 6.3%.

Prime Minister Abe's economic reform policy (the "three arrows" of
Abenomics) is well under way. The Bank of Japan remains committed to attaining
the target of 2% annual inflationat the earliest possible time. The CPI has
picked up, and stripping out the impact of the consumption tax increase, is
now above 1% per annum, although this has been helped by the weakness of the
yen. Fiscal policy was stimulated, in part to rebuild post the Tohoku
earthquake. The consumption tax was raised from 5% to 8% on 1 April 2014.
There was significant spending ahead of the rise, but an inevitable fall back
in the second quarter.

There has been much slower progress on the third arrow of "growth
strategies". Negotiations are continuing on the Trans Pacific Partnership
("TPP"). Corporation tax was reduced and cuts to below 30% are being
positively reviewed. The reopening of nuclear power stations has yet to occur
and as a result Japan is running a trade deficit.

Domestic investors are being encouraged to invest in equities. For
individuals Nippon Individual Savings Accounts ("NISA"s) were introduced on 1
January. These provided tax incentives for individuals investing up to ¥1m
annually into equities and investment trusts. The Government Pension
Investment Fund, the largest pension fund in the world, and similar funds,
recommended a higher weighting in domestic equities and a much reduced
position in bonds, in anticipation of inflation reaching 2%. It is worth
remembering that Japanese individuals, companies and pension funds remain
significantly underweight their own equity market.

The corporate sector remains buoyant as evident by earnings per
share for the fiscal year just ended reaching a record. Nomura are forecasting
a further 10% growth for the fiscal year ended March 2014. With this increased
confidence dividends are rising and there has been a pick up in share
buybacks. The property market continues its recovery with price rises
occurring in the major cities which will help asset values.

Risks and uncertainties remain. In particular it is too early to
judge whether Abenomics will succeed and relations with China have at times
been strained.

In accordance with the Company's Articles of Incorporation a
Special Resolution to wind up the Company is required to be put to the
Shareholders at the end of the first 12 years of the Company's life and every
3 years thereafter. The last such vote was at the AGM on 27 August of this
year when the resolution was not passed. Due to this and the Company's ability
to meet its obligations as they fall due over the next year the Board has
decided that it remains appropriate for these unaudited condensed financial
statements to be prepared on a going concern basis.

The Directors have reviewed the prospects for your Company with the
Investment Advisorand believe that the outlook for Japan will continue to
offer an encouraging environment for shareholders.

Christopher Sherwellretires as a Director on 27 August. The Board
and I would like to take this opportunity to thank him for his substantial
contribution over ten years since his appointment in 2004.

John Hawkins

Chairman

27 August, 2014

INVESTMENT ADVISOR'S REPORT

for the period from 1 January, 2014 to 30 June, 2014

Market Performance (%), US$ NAV

                               YTD 01.01.14
                                to 30.06.14 1 Year 3 Year 5 Year

THE PROSPECT JAPAN FUND LIMITED         7.8   19.0   50.0   97.1

MSCI Japan Small Cap Index              6.3   18.5   33.5   59.7

The Prospect Japan Fund Limited inception date is 20 December 1994. Above
performance of the Fund is net of fees and expenses and includes reinvestment
of dividends and capital gains.(Source: Prospect Asset Management, Inc.)
Although the Company is not managed to a benchmark, it measures its
performance against the MSCI Japan Small Cap Index (Total Return) for
comparison purposes only. The MSCI Developed Markets Small Cap Indices offer
an exhaustive representation of this size segment by targeting companies that
are in the Investable Market Index but not in the Standard Index in a
particular developed market. The indices include Value and Growth style
indices and industry indices based on the Global Industry Classification
Standard (GICS®). (Source: Bloomberg)

The Fund performed strongly during H1 2014, gaining 7.8% during the
period ending 30 June 2014 vs the MSCI Japan Small Cap Index's 6.3% total
return. The broader Japan market performed poorly during most of the half,
leading major world market declines as the impact of domestic issues such as a
higher import bill, disappointing export numbers and an impending consumption
tax hike, were compounded by external shocks from emerging market volatility
and the Russian incursion into Crimea. The market rebounded in May and June,
as the market reaction to April's consumption tax increase has been muted, and
corporate profits were strong. News was positive for corporate profits for
fiscal year 2014, with Japanese companies boosting dividends by an aggregate
20% to an all-time high, following 56% year-on-year rise in average net
profits.

The Abe administration committed to corporate tax reform during the
half, calling for a reduction in rates to the 20% to 29% range, with
incremental cuts starting as soon as Fiscal Year 2016. The fall in tax rates
would be compensated for by widening the tax base.

Thus far into 2014, the Bank of Japan has refrained from adding to
the easing that revitalized the market last year, and the question of Bank of
Japan's expansion timing has come out of focus given signs of market
resilience following the April consumption tax increase. The bank has left
inflation forecasts unchanged, suggesting the likelihood of changes to its
stimulus package is unlikely in the near term.

The expected Government Pension Investment Fund's ("GPIF")
rebalancing of its investments remains a potential positive catalyst, with
expectations being for a shift out of JGBs (currently 60% of assets) and into
riskier assets, including foreign bonds, will spark a weakening of the Yen and
added stimulus for Japanese corporates. Median estimates are for the Yen to
depreciate to ¥107 to the dollar by year's end.

The GPIF's move into equities, in combination with other pension
fund reallocation, Bank of Japan's Exchange Traded Fund ("ETF") purchases, and
tax-free Nippon Individual Savings Accounts' ("NISA") buying, could add as
much as ¥16 trillion in domestic demandfor equities.

Fund holdings, weighted towards Retail (13.5%) and Real Estate
(12.4%), are direct beneficiaries of the continued support for fiscal and
monetary stimulus by the Abe administration and Bank of Japan. Support for
domestic consumption can be seen through additional central government
spending and promotion of wage growth. Real Estate prices are supported by
expectation of stable near- to mid-term low government bond yields via Bankof
Japan purchases.

Holdings providing outsized contribution to positive performance
during the period included Shaklee Global Group (8205), a seller of nutrition
and personal care products and Katakura Industries (3001), a shopping mall
operator engaged in the manufacture and sale of textiles, pharmaceuticals and
auto parts. Shaklee Global Group shares rallied after reporting triple-digit
full year profit growth, beating upwardly revised forecastsand adding 4.97
percentage points to Fund performance. Katakura Industries outperformed
following its full year results announcement. The company reported that the
redevelopment of a large commercial facility near Tokyo proceeds on schedule,
with the unrealized gains on the company's rental assets rising 12.1%
year-on-year to ¥87.1 billionlowering the company's adjusted price to book
ratio to 0.32x vs a stated 0.82x. Katakura contributed 1.29 percentage points
of Fund performance.

Weakness came from Akatsuki Financial Group (8737), a commodity
futures trader, and Tomoe Corp (1921), a steel frame construction company.
Akatsuki Financial Group declined from six-year highs at the end of 2013,
along with the broader securities and commodities traders market(-0.76
percentage points Fund contribution). Tomoe Corp, fell in line with the real
estate index, following strong outperformance during 2013(-0.49 percentage
points Fund contribution).

J-REITs gained 11.4% in USD during the first half of 2014, strongly
outperforming the Nikkei 225's 2.6% decline, on attractive dividend yields,
lower debt financing rates, and recovering office occupancy and rents.

The Bank of Japan purchased a total of ¥10.2 billion in J-REIT
units during the half, 34% of the ¥30 billion target for direct purchases in
2014. The total amount of units purchased to date now stands at ¥151.2
billion.

To date, 2014 has seen three J-REIT Initial Public Offering ("IPO")
announcements, along with 15 public issuances of new investment units, raising
over ¥412 billion. J-REITs have announced over ¥827 billion in property
acquisitions to date during the year, along with ¥40 billion in sales.
Post-period, Fund holding Kenedix Residential REIT (3278) issued new units
valued at ¥8.6 billion. The proceeds were used to acquire ¥14 billion in new
property, resulting in a forecast 4.7% period-on-period increase in dividend
yield.

The cost of debt continues to fall for J-REITs, supporting dividend
growth. J-REITs have issued ¥80 billion in new bonds during the half, with an
average maturity of 7.5 years at 0.774% interest rate.

Principal Risks and Uncertainties

Japan remains vulnerable to slowdown in the global economy and
geopolitical turmoil, particularly in major trading partners.

While the Bank of Japan remains poised to provide additional
stimulus as needed, with inflation having taken firm root, the Abe
administration's successful rollout of regulatory and tax reform remains a
necessary catalyst for long-term economic growth. Fundamentals on the
corporate level remain strong, and domestic demand is poised to support the
market in 2H 2014.

The Prospect Japan Fund Limited

Top 10 Holdings

30 June, 2014

Symbol Security % of total assets

8205     SHAKLEE GLOBAL GROUP INC           13.2
2178     TRI-STAGE INC                        8.8
3001     KATAKURA INDUSTRIES CO LTD           8.3
1921     TOMOE CORP                           7.2
7404     SHOWA AIRCRAFT INDUSTRY CO LTD       5.8
8737     AKATSUKI FINANCIAL GROUP INC         5.2
gktaihei GODO KAISHA TAIHEIYO JISHO #1 BOND   5.0
8563     DAITO BANK LTD/THE                   4.8
9324     YASUDA LOGISTICS CORPORATION         4.6
9308     INUI WAREHOUSE CO LTD                2.3
The Prospect Japan Fund Limited

Sector Weighting

30 June, 2014

Security % of total assets

Retail                               13.5
Real Estate                          12.4
Diversified Financial Services       11.5
Advertising                           8.8
Storage/Warehousing                   8.5
Engineering & Construction            7.2
Machinery-Diversified                 6.2
Banks                                 4.8
Transportation                        2.7
Building Materials                    1.4
Distribution/Wholesale                0.8

Percentage weightings are Prospect Asset Management, Inc.'s
internal calculations and have not been reconciled by the administrator.
Results of calculations as presented may not be exact due to rounding and
precision of stored values.

Prospect Asset Management, Inc.

27 August, 2014

The Prospect Japan Fund Limited is a closed-end investment company
incorporated in Guernsey, and listed on the London Stock Exchange. The
Company's investment objective is to achieve long-term capital growth from a
portfolio of securities primarily of smaller Japanese companies Listed or
traded on Japanese Stock Markets. Past performance is no indication of future
results.

PORTFOLIO OF INVESTMENTS

as at 30 June, 2014

  Number of                                        Fair Value   Percentage of
 Securities Investments                       in U.S. Dollars Net Asset Value
            Listed investments
            Advertising
    933,400 Tri-stage Inc                          11,296,363            8.78

                                                   11,296,363            8.78

            Banks
  5,114,000 The Daito Bank                          6,204,291            4.82

                                                    6,204,291            4.82

            Building Materials
    116,400 Endo Lighting Corp                      1,750,851            1.36

                                                    1,750,851            1.36

            Distribution/Wholesale
    130,500 Kamei Corp                                998,846            0.78

                                                      998,846            0.78

            Diversified Financial Services
  1,168,260 Akatsuki Financial Group                6,671,821            5.19
    519,000 Yutaka Shoji Co Ltd                     1,571,564            1.22

                                                    8,243,385            6.41

            Engineering and Construction
  2,201,300 Tomoe Corp                              9,314,570            7.25
                                                                            .

                                                    9,314,570            7.25

            Machinery
     55,000 Nikki Co Ltd                              171,968            0.13
    676,600 Showa Aircraft Industry Co Ltd          7,407,664            5.76
    495,000 Tokyo Kikai Seisakusho Ltd                415,002            0.33

                                                    7,994,634            6.22

            Real Estate
  5,395,142 Gro-Bels Co Ltd +                       2,926,793            2.28
    829,700 Katakura Industries Co Ltd             10,663,304            8.29
    428,100 Keihanshin Building Co Ltd              2,313,940            1.80

                                                   15,904,037           12.37

            Retail
     72,000 Sekichu Co Ltd                            344,430            0.27
    348,000 Shaklee Global Group Inc               17,025,005           13.24

                                                   17,369,435           13.51

            Storage/warehousing
    315,500 Inui Warehouse Co Ltd                   2,962,529            2.30
    726,000 Maruhachi Warehouse Co Ltd              2,055,156            1.60
    559,395 Yasuda Logistics                        5,881,689            4.56

                                                   10,899,374            8.46

            Transportation
    744,000 Daiwa Motor Transportation Co Ltd       2,707,855            2.10
     20,000 Hokkaido Chuo Bus Co Ltd                   61,153            0.05
    218,800 Inui Steamship Co Ltd                     718,652            0.56

                                                    3,487,660            2.71

            Total listed investments               93,463,444
                                                                        72.68

            Unlisted investments
            Corporate bond
  5,150,000 Godo Kaisha Taiheiyo Jisho              6,414,115            4.98
315,700,000 Takefuji Corp                             151,481            0.12

                                                    6,565,596            5.10

            Total unlisted investments              6,565,596            5.10

            Total investments                     100,029,040           77.77

            Net current assets                     28,585,126           22.23

            NET ASSETS                                                 100.00
                                                  128,614,166

+ Mr. Curtis Freeze, Director of Prospect Asset Management (Channel
Islands) Limited ("PAM(CI)"), the Manager of The Prospect Japan Fund Limited,
is President of Gro-Bels Co Ltd ("Gro-Bels").Gro-Bels owns the entire share
capital ofPAM(CI) and Prospect Asset ManagementInc ("PAMI"), the Investment
Advisor of The Prospect Japan Fund Limited.

RESPONSIBILITY STATEMENT

for the period from 1 January, 2014 to 30 June, 2014

We confirm that to the best of our knowledge:

(a) the InterimUnaudited Condensed Financial Statements have been
prepared in accordance with IAS 34 - Interim Financial Reporting as adopted in
the European Union;

(b) the Chairman's Report, Investment Advisor's Report and Notes to
the Unaudited CondensedFinancial Statements include:

- a fair review of the information required by DTR 4.2.7R
(indication of important events during the first six months and description of
principal risks and uncertainties for the remaining six months of the year);
and

- a fair review of the information required by DTR 4.2.8R
(disclosure of related parties' transactions and changes therein).

By order of the Board,

Director Director

27 August, 2014

INDEPENDENT INTERIM REVIEW REPORT TO THE PROSPECT JAPAN FUND LIMITED

Introduction

We have been engaged by the Company to review the
UnauditedCondensed Financial Statements in the half-yearly Financial Report
for the six months ended 30 June, 2014 which comprise the Unaudited
CondensedStatement of Comprehensive Income, the Unaudited CondensedStatement
of Financial Position, the Unaudited Condensed Statement of Changes in Equity,
the Unaudited CondensedStatement of Cash Flows and the related notes 1 to 15.
We have read the other information contained in the half-yearly Financial
Report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the Unaudited Condensed
Financial Statements.

This report is made solely to the Company in accordance with
guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our
work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly Financial Report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for preparing
the half-yearly Financial Report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the Annual Financial Statements of the
Company are prepared in accordance with International Financial Reporting
Standards as adopted by the European Union. TheUnauditedCondensed Financial
Statements included in this half-yearly Financial Report have been prepared in
accordance with International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the
UnauditedCondensed Financial Statements in the half-yearly Financial Report
based on our review.

Scope of Review

We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board for use in the United Kingdom. A review of Interim
Financial Information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes
us to believe that the UnauditedCondensed Financial Statements in the
half-yearly Financial Report for the six months ended 30 June, 2014 are not
prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

27 August, 2014

The Financial Statements are published on websites maintained by the
Investment Advisor.

The maintenance and integrity of these websites are the
responsibility of the Investment Advisor; the work carried out by the Auditors
does not involve consideration of these matters and, accordingly, the Auditors
accept no responsibility for any changes that may have occurred to the
Financial Statements since they were initially presented on the website.

Legislation in Guernsey governing the preparation and dissemination of
Financial Statements may differ from legislation in other jurisdictions.

UNAUDITED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

for the period from 1 January, 2014 to 30 June, 2014

                                         Revenue       Capital         Total       Revenue       Capital         Total
                                   01.01.2014 to 01.01.2014 to 01.01.2014 to 01.01.2013 to 01.01.2013 to 01.01.2013 to
                                      30.06.2014    30.06.2014    30.06.2014    30.06.2013    30.06.2013    30.06.2013
                                         In U.S.       In U.S.       In U.S.       In U.S.       In U.S.       In U.S.
Notes                                    Dollars       Dollars       Dollars       Dollars       Dollars       Dollars

    Investment income                    788,822             -       788,822       811,857             -       811,857
    Interest income                            -             -             -       202,563             -       202,563
    Foreign exchange
    movements                          1,779,240     (721,417)     1,057,823       488,409   (3,116,826)   (2,628,417)
    Gain on financial assets
    at fair value through profit
    or loss                                    -     8,604,693     8,604,693             -    17,755,376    17,755,376
    Total income                       2,568,062     7,883,276    10,451,338     1,502,829    14,638,550    16,141,379

 4  Management fee                     (952,064)             -     (952,064)     (794,383)             -     (794,383)
 5  Other expenses                     (524,933)             -     (524,933)     (351,027)             -     (351,027)
    Transaction costs                          -     (286,989)     (286,989)             -     (719,620)     (719,620)

    Total expenses                   (1,476,997)     (286,989)   (1,763,986)   (1,145,410)     (719,620)   (1,865,030)

    Gain for the period before tax     1,091,065     7,596,287     8,687,352       357,419    13,918,930    14,276,349

 3  Withholding tax                    (179,336)             -     (179,336)      (75,030)             -      (75,030)

    Gain for the period after tax        911,729     7,596,287     8,508,016       282,389    13,918,930    14,201,319

    Total comprehensive
    income for the period                911,729     7,596,287     8,508,016       282,389    13,918,930    14,201,319

 2  Gain per Ordinary Share -
    Basic & Diluted                        0.010         0.081         0.090         0.003         0.146         0.149

The `Total' column of this statement represents the Company's
Unaudited Condensed Statement of Comprehensive Income, prepared in accordance
with IFRS. The supplementary `Revenue' and `Capital' columns are both prepared
under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations.

UNAUDITED CONDENSED STATEMENT OF FINANCIAL POSITION

as at 30 June, 2014

                                                  30.06.2014      31.12.2013      30.06.2013
Notes                                        In U.S. Dollars In U.S. Dollars In U.S. Dollars
                                                 (Unaudited)       (Audited)     (Unaudited)
      Non-current assets
      Financial assets at fair value through
  6   profit or loss                             100,029,040      99,187,758     106,078,142

      Current assets
  8   Receivables                                    435,054       3,162,181         232,186
      Cash and cash equivalents                   34,507,330      21,309,724       9,147,417

      Total current assets                        34,942,384      24,471,905       9,379,603
      Current liabilities
  9   Payables                                     6,357,258       2,047,594       5,696,537

      Net current assets                          28,585,126      22,424,311       3,683,066

      Net assets                                 128,614,166     121,612,069     109,761,208

      Equity
 10   Share capital account                           93,483          94,878          95,023
 10   Redemption reserve                          86,691,284      88,197,203      88,341,819
 10   Capital redemption reserve                     322,026         320,631         320,486
      Other reserves                              41,507,373      32,999,357      21,003,880

      Total equity                               128,614,166     121,612,069     109,761,208

      Ordinary Shares in issue                    93,483,602      94,878,602      95,023,602

  2   Net Asset Value per Ordinary Share                1.38            1.28            1.16

The Unaudited Condensed Financial Statements were approved by the
Board of Directors on 27 August, 2014 and signed on its behalf by:

Director Director

UNAUDITED CONDENSED STATEMENT OF CHANGES IN EQUITY

for the period from 1 January, 2014 to 30 June, 2014

                                                                                             Capital
                                 Capital                             Capital     Capital    Reserve/
                        Share
                      Capital Redemption  Redemption      Revenue   Reserve/    Reserve/    Exchange
                      Account    Reserve     Reserve      Reserve   Realised  Unrealised Differences       Total
                      In U.S.    In U.S.     In U.S.      In U.S.    In U.S.     In U.S.     In U.S.     In U.S.
                      Dollars    Dollars     Dollars      Dollars    Dollars     Dollars     Dollars     Dollars
Balances at 1
January, 2014          94,878    320,631  88,197,203 (14,106,096) 49,738,831 (2,389,140)   (244,238) 121,612,069

Total comprehensive
income/(expense)
for the period
Gain/(loss) for the
period after tax            -          -           -      911,729  6,341,679   1,976,025   (721,417)   8,508,016
Capital activities
Repurchase of
shares                (1,395)      1,395 (1,505,919)            -          -           -           - (1,505,919)

Balances at 30
June, 2014             93,483    322,026  86,691,284 (13,194,367) 56,080,510   (413,115)   (965,655) 128,614,166
for the period from 1 January, 2013 to 30 June, 2013

                                                                                             Capital
                                 Capital                            Capital      Capital    Reserve/
                        Share
                      Capital Redemption Redemption      Revenue   Reserve/     Reserve/    Exchange
                      Account    Reserve    Reserve      Reserve   Realised   Unrealised Differences       Total
                      In U.S.    In U.S.    In U.S.      In U.S.    In U.S.      In U.S.     In U.S.     In U.S.
                      Dollars    Dollars    Dollars      Dollars    Dollars      Dollars     Dollars     Dollars
Balances at 1
January, 2013          95,278    320,231 88,581,476 (12,292,130) 26,903,132 (11,862,827)   4,054,386  95,799,546

Total comprehensive
income/(expense)
for the period
Gain/(loss) for the
period after tax            -          -          -      282,389  7,276,651    9,759,105 (3,116,826)  14,201,319
Capital
activities
Repurchase of
shares                  (255)        255  (239,657)            -          -            -           -   (239,657)

Balances at 30
June, 2013             95,023    320,486 88,341,819 (12,009,741) 34,179,783  (2,103,722)     937,560 109,761,208

UNAUDITED CONDENSED STATEMENT OFCASH FLOWS

for the period from 1 January, 2014 to 30 June, 2014

                                                              01.01.2014 to   01.01.2013 to
                                                                 30.06.2014      30.06.2013
Notes                                                       In U.S. Dollars In U.S. Dollars

      Cash flows from operating activities
 11   Net cash inflow/(outflow) from operating activities         1,527,763     (2,934,778)

      Cash flows from investing activities
      Purchase of investments                                  (52,746,406)   (158,676,772)

      Sale of investments                                        64,104,483     153,359,433

      Net cash inflow/(outflow) from investing activities        11,358,077     (5,317,339)

      Net cash inflow/(outflow) before financing activities      12,885,840     (8,252,117)

      Cash flows from financing activities

      Repurchase of shares                                      (1,505,919)       (239,657)

      Net cash outflow from financing activities                (1,505,919)       (239,657)

      Increase/(decrease) in cash and cash equivalents           11,379,921     (8,491,774)

      Reconciliation of net cash flow to
      movement in net funds

      Net cash inflow/(outflow)                                  11,379,921     (8,491,774)

      Effects of foreign exchange rate changes                    1,817,685         693,706

      Cash and cash equivalents at beginning of the period       21,309,724      16,945,485

      Cash and cash equivalents at end of the period             34,507,330       9,147,417
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 Principal Accounting Policies

The Unaudited Condensed Interim Financial Statements for the six
months ended 30 June, 2014 have been prepared in accordance with IAS 34
"Interim Financial Reporting" as adopted by the European Union, the Listing
Rules of the London Stock Exchange ("LSE") and applicable legal and regulatory
requirements of the Companies (Guernsey) Law, 2008.

The UnauditedCondensed InterimFinancial Statements do not include
all the information and disclosures required in the Annual Financial
Statements and should be read in conjunction with the Company's Annual Report
and Audited Financial Statements for the year ended 31 December, 2013.

The accounting policies and methods of computation followed in this
Interim Unaudited Condensed set of Financial Statements are consistent with
those of the latest Annual Audited Financial Statements for the year ended 31
December, 2013 which were prepared in accordance with International Financial
Reporting Standards as adopted by the European Union, except for the adoption
of the new standards and interpretations effective as of 1 January, 2014 as
listed below, which had no impact on the financial position or performance of
the Company.

IAS 32 - Financial Instruments: Presentation - (effective 1
January, 2014)

IFRS 10 - Consolidated Financial Statements - (effective 1 January,
2014)

IFRS 12 - Disclosure of Interests in Other Entities - (effective 1
January, 2014)

IAS 27 - Separate Financial Statements - (effective 1 January,
2014)

IAS 36 - Impairment of Assets- (effective 1 January, 2014)

IAS 39 - Financial Instruments: Recognition and Measurement-
(effective 1 January, 2014)

The preparation of the InterimUnauditedCondensedFinancial
Statements requires management to make estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities at the date
of the Interim UnauditedCondensed Financial Statements. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from those estimates.

IFRS 10 (Amendments) includes an exception from consolidation for
entities which meet the definition of aninvestment entity, and requires such
entities to recognise all investments at fair value through profit or loss.The
Company meets the definition of an investment entity but does not control any
entities as defined underIFRS 10.

Presentation of information

The InterimUnauditedCondensed Financial Statements have been
prepared on a going concern basis under the historical cost convention
adjusted to take account of the revaluation of the Company's investments at
fair value.

In order to better reflect the activities of an investment Company
and in accordance with the guidance issued by the Association of Investment
Companies, supplementary information which analyses the Statement of
Comprehensive Income between items of a capital and revenue nature has been
presentedwithin the Statement of Comprehensive Income.

Going Concern

 The Directors believe that it is appropriate to continue to adopt
the going concern basis in preparing the FinancialStatements because the
assets of the Company consist mainly of securities that are readily realisable
and, whilstthe liquidity of these needs to be managed, the Company has
adequate financial resources to meet its liabilitiesas they fall due.

 In accordance with the Company's Articles, the Board is required
every three years to include in the businessto be considered by shareholders
at the Annual General Meeting a Special Resolution that the Company shouldbe
wound up. This resolution requires 75% of votes in favour for it to be passed.
The last such resolution was at the Annual General Meeting held on 27 August
of this year when the resolution was not passed. The next such resolution will
be tabled at the Annual General Meeting to be held in 2017.

Note 2 Gain/(loss) per Ordinary Share - Basic & Diluted and Net
Asset Value per Ordinary Share - Basic & Diluted

The gain per Ordinary Share - Basic and Diluted has been calculated
based on the weighted average number of Ordinary Shares of 94,284,810and a net
gain of US$8,508,016(31 December, 2013: 95,073,601 Ordinary Shares and a net
gain of US$26,196,796; 30 June, 2013:95,226,926 Ordinary Shares and a net gain
of US$14,201,319).

 There were no dilutive elements to shares issued or repurchased
during the period.

The Net Asset Value per Ordinary Share - Basic and Diluted has been
calculated based on the number of shares in existence at the period end date
of93,483,602(31 December, 2013:94,878,602; 30 June, 2013: 95,023,602) and
shareholders' funds attributable to equity interests of US$128,614,166(31
December, 2013: US$121,612,069; 30 June, 2013: US$109,761,208).

The Company announces its Net Asset Value per Share to the London
Stock Exchange ("LSE") at each weekly and month end valuation point.

Below is the Net Asset Value per Ordinary Share announced to the
LSE and as presented in these Interim Condensed Financial Statements.

                                                30.06.2014      31.12.2013      30.06.2013
                                           In U.S. Dollars In U.S. Dollars In U.S. Dollars

Net Asset Value per Ordinary Share - Basic
and Diluted                                           1.38            1.28            1.16

Note 3 Taxation

The Company has been granted Exempt Status under the terms of The
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 to income tax in
Guernsey. Its liability is an annual fee of £600.

The amount disclosed as withholding tax in the Statement of
Comprehensive Income relates solely to withholding tax suffered at source, on
income in the investing country, Japan.

Note 4 Management Fees

The management fee is payable to the Manager, PAM(CI) , monthly in
arrears at a rate of 1.5% per annum of the Net Asset Value, which is
calculated as of the last business day of each month.Total management fees for
the period amounted to US$952,064(30 June, 2013: US$794,383) of which
US$165,307 (30 June, 2013: US$125,374) is due and payable at the period end.
The Management Agreement dated 1 December, 1994remains in force until
determined by the Company or by the Manager giving the other party not less
than three months' notice in writing, subject to additional provisions
included in the agreement regarding a breach by either party.

Note 5 Other Expenses

                                           01.01.2014 to   01.01.2013 to
                                              30.06.2014      30.06.2013
                                         In U.S. Dollars In U.S. Dollars
Administration and secretarial fees*             158,677         132,397
Custodian's fees and charges**                    64,992          65,096
General expenses                                 188,043          60,717
Directors' remuneration                           77,183          65,120
Auditors' fees                                    17,720          17,863
Non-audit fees                                    18,318           9,834

                                                 524,933         351,027

*The administration and secretarial fees are payable to Northern
Trust International Fund Administration Services (Guernsey) Limited monthly in
arrears ata rateof 0.25% of the Net Asset Value of the Company as at the last
business day of the month. Total administration and secretarial fees for the
year amounted to US$158,667(30 June, 2013: US$132,397) of which US$27,551(30
June, 2013: US$20,896) is due and payable at the period end.

**The custodian's fees and charges are payable to Northern Trust
(Guernsey) Limited monthly in arrears ata rate of 0.08% of the value of
theportfolio of the Company as at the last business day of the month. Total
custodian's fees and charges for the year amounted to US$64,992 (30 June,
2013: US$65,096) of which US$6,700(30 June, 2013: US$5,814) is due and payable
at the period end.

Note 6 Financial Assets at Fair Value through Profit orLoss

                                    01.01.2014 to   01.01.2013 to   01.01.2013 to
                                       30.06.2014      31.12.2013      30.06.2013
                                  In U.S. Dollars In U.S. Dollars In U.S. Dollars

Opening book cost                     101,576,898      89,404,049      89,404,049
Purchases at cost                      56,929,895     241,863,287     163,591,704
Proceeds on sale                     (64,693,306)   (253,604,885)   (152,810,159)
Realised gain on sale                   6,628,668      23,914,447       7,996,270

Closing book cost                     100,442,155     101,576,898     108,181,864

Unrealised loss                         (413,115)     (2,389,140)     (2,103,722)

Fair value                            100,029,040      99,187,758     106,078,142

Note 7 Fair Value Hierarchy

Financial assets at fair value through profit or loss are carried at fair
value. The valuation techniques for valuingunlisted corporate bonds are
described below. Other assets and liabilities are carried at amortised cost
whichapproximate fair value.

IFRS 13 requires the Company to classify fair value measurements
using a fair value hierarchy that reflects thesignificance of the inputs used
in making the measurements.

Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderlytransaction between market
participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the
liability takes place either:

(i) In the principal market for the asset or liability, or

 (ii) In the absence of a principal market, in the most
advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by
the Company.

The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best
interest.

The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure fair
value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.

All financial instruments for which fair value is recognised or
disclosed are categorised within the fair value hierarchy, described as
follows, based on the lowest level input that is significant to the fair value
measurementas a whole:

Level 1 -- Quoted market prices (unadjusted) in an active market
for identical assets or liabilities

Level 2 -- Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or indirectly
observable

Level 3 -- Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable

For financial instruments that are recognised at fair value on a
recurring basis, the Company determines whether transfers have occurred
between Levels in the hierarchy by re-assessing categorisation, based on the
lowest level input that is significant to the fair value measurement as a
whole, at the end of each reporting period.

The following table analyses within the fair value hierarchy the
Company's financial assets and liabilities (by class) measured at fair value
for the period ended 30 June 2014.

                                        Quoted
                                        prices Significant  Significant
                                     in active  observable unobservable
                                       markets      inputs       inputs

                                       Level 1     Level 2      Level 3       Total
                                         In US       In US        In US       In US
                                       Dollars     Dollars      Dollars     Dollars

Financial assets at fair value
through profit or loss:
-Equity Securities                  93,463,444           -            -  93,463,444
-Debt Securities
Corporate bonds                              -           -    6,565,596   6,565,596

Total as at 30 June, 2014           93,463,444           -    6,565,596 100,029,040

The following table analyses within the fair value hierarchy the
Company's financial assets and liabilities (by class) measured at fair value
for the period ended 30 June 2013.

                                  Level 1     Level 2     Level 3       Total
                                    In US       In US       In US       In US
                                  Dollars     Dollars     Dollars     Dollars

Financial assets at fair value
through profit and loss:
-Equity Securities             84,074,716           -           -  84,074,716
-Debt Securities
Corporate bonds                         -           -  15,113,042  15,113,042

Total as at 31 December,
2013
          84,074,716        -  15,113,042  99,187,758

The following table presents the movement in level 3 instruments
for the period ended 30June,2014 by class of financial instrument.

                                                                                 Debt
                                                                           Securities         Total
                                                                        In US Dollars In US Dollars
Opening balance                                                            15,113,042    15,113,042
Sales                                                                     (2,925,117)   (2,925,117)
Conversion of unlisted bond to listed security during the period          (6,241,755)             -
Realised losses during the period                                           (494,679)     (494,679)
Unrealised gains during the period                                          1,114,105     1,114,105

Closing balance                                                             6,565,596    12,807,351
Net unrealised gain for the period included in the Statement of
Comprehensive Income for level 3 Investments held at 30
June, 2014                                                                  1,114,105     1,114,105

During the period, the holding in Gro-Bels Co Ltd was converted
from an unlisted bond into listed shares.

The following table presents the movement in level 3 instruments
for the period ended 31 December, 2013 by class of financial instrument.

                                                                       Debt
                                                                 Securities        Total
                                                                                   In US
                                                              In US Dollars      Dollars
Opening balance                                                   7,067,416    7,067,416
Purchases                                                        20,324,858   20,324,858
Sales                                                          (11,245,782) (11,245,782)
Realised losses during the year                                 (1,297,697)  (1,297,697)
Unrealised gains during the year                                    264,247      264,247

Closing balance                                                  15,113,042   15,113,042
Net unrealised gain for the year included in the
Statement of
Comprehensive Income for level 3 Investments held at 31
December, 2013                                                      624,230      624,230

Valuation techniques

Listed investments

Securities valued based on quoted market prices, in an active
market for identical assets without any adjustments, are included within Level
1 of the hierarchy and are valued at bid price.

Unlisted Investments

The Company invests in debt securities which are not quoted in an
active market. Transactions in such investments do not occur on a regular
basis. These positions are valued at the Directors estimate of their fair
value in accordance with IFRS 13.

Level 3 valuations are monitored closely by the Investment Advisor
who reports to the Board of Directors on a quarterly basis. Valuations are
based on the most appropriate method for each level 3 investment as described
below.

The Company holds a bond in TaiheyoJisho (GK) a Japanese
partnership set up to invest in real estate ventures at a fixed interest rate
of 10%. TaiheyoJisho currently invests in SCD ML II, LLC, which is developing
a project on the island of Hawaii. The assessed value of the land was over $7
million at the time of the bond issuance, there is also a title insurance
policy issued for $5 million. Projections show that equity in the project,
after liabilities and interest payments which include the bond, to be almost
$12 million which is in line with expectations. Projections are carried out
based on weekly performance reports of the construction project and regular
review of the financial statements. The bond was issued to fund the
development project which is developing as expected. The Company bought the
entire issuance of the bond which it still holds and there have been no
further issues, therefore a secondary market does not exist. The issuer does
not have a credit rating to monitor and the credit rating of the insurer
remains unchanged.

Based on the above and the means by which management monitors the
valuation of the investments, there is little likelihood of a change in the
fair value of the bonds.

Note 8 Receivables

                                 30.06.2014      31.12.2013
                            In U.S. Dollars In U.S. Dollars
Amounts due from brokers            435,054               -
Dividends receivable                      -         319,454
Other receivables*                        -       2,842,727

                                    435,054       3,162,181

*Other receivableswere amounts due from the custodian caused by duplicate
trades.

Note 9 Payables

                                        30.06.2014      31.12.2013
                                   In U.S. Dollars In U.S. Dollars
Amounts due to brokers                   6,065,168       1,748,459
Other creditors                            292,090         299,135

                                         6,357,258       2,047,594

Note 10 Share Capital, Redemption Reserve & Capital Redemption Reserve

Authorised Share Capital                                             30.06.2014      31.12.2013
           Number of shares                                     In U.S. Dollars In U.S. Dollars

                150,000,000 Ordinary Shares of US$0.001 each            150,000         150,000

                 60,000,000 "C" Ordinary Shares of US$0.01 each         600,000         600,000

As approved at the AGM on 21 June, 2013, the Company may purchase a
maximum of 14,275,516 Ordinary Shares, equivalent to 14.99% of the Issued
share capital of the Company as at the date of the AGM.

During the period, shares were purchased and cancelled as follows:-

                                                                                                    Capital
                                                                                 Redemption      Redemption
 Ordinary Shares                                              Share Capital         Reserve         Reserve
Number of shares                                            In U.S. Dollars In U.S. Dollars In U.S. Dollars
      94,878,602 Balance at 1 January, 2014                          94,878      88,197,203         320,631
                 Shares repurchased and
     (1,395,000) cancelled during the period                        (1,395)     (1,505,919)           1,395

      93,483,602 Balance at 30 June, 2014                            93,483      86,691,284         322,026

For purchases following the year end, details are provided in note 15 of the
Financial Statements.

                                                                                                         Capital
                                                                                      Redemption      Redemption
 Ordinary Shares                                                   Share Capital         Reserve         Reserve
Number of shares                                                 In U.S. Dollars In U.S. Dollars In U.S. Dollars
      95,278,602 Balance at 1 January, 2013                               95,278      88,581,476         320,231
                 Shares repurchased and
       (400,000) cancelled during the year                                 (400)       (384,273)             400

      94,878,602 Balance at 31 December, 2013                             94,878       8,197,203         320,631

The Redemption Reserve account is a distributable reserve account
which can be used for among other things, the payment of dividends, if any.The
Directors do not recommend the payment of a dividend for the period.

The Capital Redemption Reserve is used to cancel the shares of the
Company when they are redeemed or there is a share buy back.

Ordinary Shares carry the right to vote at general meetings of the
Company and to receive dividends and, in a winding-up will participate in any
surplus assets remaining after settlement of any outstanding liabilities of
the Company.

"C" Ordinary Shares do not carry the right to attend or to vote at
general meetings of the Company or to receive dividends and, in a winding up
will participate in any "C" Ordinary Share surplus assets remaining after the
settlement of any outstanding liabilities of the Company.

Note 11 Reconciliation of Return/(Deficit) on Ordinary Activities
to Net Cash Inflow/(Outflow) from Operating Activities

                                                                   30.06.2014      30.06.2013
                                                              In U.S. Dollars In U.S. Dollars
Return on ordinary activities for the period                          911,729         282,389
Decrease in dividends receivable and other receivables              3,162,181         620,832
Decrease in other creditors                                           (7,045)        (27,467)
Foreign exchange loss                                             (2,539,102)     (3,810,532)
Net cash inflow/(outflow) from operating activities                 1,527,763     (2,934,778)

Note 12 Related Party Transactions

Parties are considered to be related if one party has the ability
to control the other party or exercise significant influence over the other
party in making financial or operational decisions.

The Directors are responsible for the determination of the
investment policy of the Company and have overall responsibility for the
Company's activities. The Company's investment portfolio is managed
byPAM(CI)whose parent company is Prospect Co., Ltd (Kabushiki Kaisha Prospect
("KKP"), a Japanese Company) and the ultimate parent is Gro-Bels Co Ltd.
("Gro-Bels").

Mr Rupert Evans is a Director of the Manager.

Directors' fees are disclosed in Note 5. The basic fee payable to
Directors in 2014 is £20,000, the Chairman of the Audit Committee £22,500 and
the Chairman of the Board £25,000 per annum.

At 30 June, 2014 ChristopherSherwell held beneficial interests of
9,940 (2013: 9,940) Ordinary Shares in the Company. No other Directors holding
office at 30 June 2014, or their associates, had any beneficial interest in
the Company's shares. There have been no changes in these interests between
the end of the period and up to the date of this report.

Mr. Curtis Freezeis a Director of PAM(CI), the Manager of The
Prospect Japan Fund Limited, and is the President of Gro-Bels.Gro-Bels owns
the entire issued share capital of KKP, the owner of PAMI, the Investment
Advisor to The Prospect Japan Fund Limited and PAM(CI), the Manager of The
Prospect Japan Fund Limited.

Note 13 Segmental Reporting

 The Board is responsible for reviewing the Company's entire
portfolio and considers the business to have a single operatingsegment. The
Board's asset allocation decisions are based on a single, integrated
investment strategy, and the Company's performance is evaluated on an overall
basis.

 The Company invests in a diversified portfolio of Japanese
investments. The total fair value of the financial instruments held by the
Company and the equivalent percentages of the total value of the Company, are
reported in the Portfolio Statement.

 Revenue earned is reported separately on the face of the Statement
of Comprehensive Income as investment income being dividend income received
from equities, and interest income being interest earned from convertible and
corporate bonds.

Note 14 Contingent asset

 The Company declined to tender its shares for Toho Real Estate, as
the Company believed the true value to be considerably higher, and entered
into an arbitration process. The results of arbitration are uncertain and
placing a value of future receipts was challenging however the
Boardestimatedthat the true value of Toho Real Estate to be 10 per cent.in
excess of the tender offer price. As the tender offer price has now been
received, this results in a contingent asset of $933,023 (31 December, 2013:
$898,120), 10 per cent of the tender offer price of Toho Real Estate. The
appreciation in value of thecontingent asset at the period end is due to
movements in foreign exchange.The Board has taken into account the risks and
uncertainties of the arbitration process, applied discounts for the fact that
the holding was delisted and therefore no longer tradableand the time value of
money in reaching the estimated uplift.

Note 15 Subsequent Events

These Unaudited Condensed Financial Statements were approved for
issuance by the Board on 27 August 2014. Subsequent events have been evaluated
until this date.

From inception the Directors have believed that Shareholders should
be able to review the progress of the Company so that a decision can be taken
as to whether Shareholders should have an opportunity of realising the
Company's underlying investments. At the Annual General Meeting of the Company
held on 27 August 2014, the Board included in the business to be considered by
Shareholders a Special Resolution that the Company should be wound up. This
resolution was not passed.

On 27 August, 2014, Christopher Sherwellretired as a Director. A
new Director will be appointed in due course.

GENERAL INFORMATION

General

The Company is a closed-ended investment company incorporated in
Guernsey in November 1994 and was launched in December 1994 with an initial
asset value of US$70 million. There are 93,483,602Ordinary Shares in issue as
at 30 June, 2014. The Company's Ordinary Shares are listed on the London Stock
Exchange.

The Ordinary Shares of the Company have not been registered under
the United States Securities Act of 1933 or the United States Investment
Companies Act of 1940. Accordingly, none of the Ordinary Shares may be offered
or sold directly or indirectly in the United States or to any United States
persons (as defined in Regulation `S' under the 1933 Act) other than in
accordance with certain exemptions. Investment in the Company is suitable only
for sophisticated investors and should be regarded as long-term. Past
performance is no indication of future results.

Investment Objective

The following investment objective was approved on the 5 March,
2014:

The Company's investment objective is to achieve long-term capital
growth from a portfolio of securities primarily of smaller Japanese companies
listed or traded on Japanese Stock Markets. The aim will be to achieve a
long-term capital return on the Company's portfolio and dividend income will
be a secondary consideration in making investment decisions. Although the
Company is not managed to a benchmark, it measures its performance against the
MSCI Japan Small Cap Index (Total Return) for comparison purposes only.

Investment Restrictions

The following investment restrictions were approved on the 5March,
2014 and adopted by the Company:

(i) the Company may not invest in securities carrying unlimited
liability; or

(ii) the Company may not deal short in securities; or

(iii) the Company may not take legal or management control in
investments in its portfolio; or

(iv) the Company may not invest in any commodities, land or
interests in land; or

(v) the Company may not invest or lend more than 25 per cent of its
assets at the time the investment is made in securities of any one company or
single issuer (other than obligations of the Japanese Government or its
agencies or of the US Government or its agencies); or

(vi) invest more than 10 per cent of its assets at the time the
investment is made in closed-end investment funds which are listed on the
Official List maintained by the Financial Conduct Authority (except to the
extent that those investment funds have state investment policies to invest no
more than 15 per cent of their total assets in other investment funds which
are listed on the Official List) and the Company will not invest more than 15
per cent of its assets at the time the investment is made in such funds; or

(vii) the Company may not invest more than 5% of its assets at the
time the investment is made in unit trusts, shares or other forms of
participation in managed open-ended investment vehicles; or

(viii) the Company may not commit its assets in the purchase of
foreign exchange contracts, financial futures contracts, put or call options
or in the purchase of securities on margin other than in connection with or
for the purpose of hedging transactions effected on behalf of the Company; or

(ix) enter into borrowings in excess of 20 per cent. of net assets
at the time the borrowings are drawn down.

Investment Objective

Prior to 5 March, 2014, the Company's Investment Objective was as
follows:

The Company was established to invest substantially all of its
assets in securities issued by smaller Japanese companies. The objective of
the Company is to achieve long-term capital growth from an actively managed
portfolio of securities primarily of smaller Japanese companies listed or
traded on Japanese Stock Markets.

Investment Restrictions

The following investment restrictions were adopted by the Company
prior to the 5March, 2014:

(i) the Company may not invest in securities carrying unlimited
liability; or

(ii) the Company may not deal short in securities; or

(iii) the Company may not take legal or management control in
investments in its portfolio; or

(iv) the Company may not invest in any commodities, land or
interests in land; or

(v) the Company may not invest or lend more than 10% of its assets
in securities of any one company or single issuer (other than obligations of
the Japanese Government or its agencies or of the US Government or its
agencies); or

(vi) the Company may not invest more than 10% of its assets in
non-corporate investments or securities not listed or quoted on any recognised
stock exchange, for which purpose securities quoted on any of the Japanese
Stock Markets will be treated as securities quoted on a recognised stock
exchange; or

(vii) the Company may not invest more than 5% of its assets in unit
trusts, shares or other forms of participation in managed open-ended
investment vehicles; or

(viii) the Company may not commit its assets in the purchase of
foreign exchange contracts, financial futures contracts, put or call options
or in the purchase of securities on margin other than in connection with or
for the purpose of hedging transactions effected on behalf of the Company.

NAV and Information

The prices of Ordinary Shares and the latest NAV are published
daily in the Financial Times. Prices (in Sterling terms) of the Ordinary
Shares appear within the section of the London Share Service entitled
"Investment Companies".

Life of the Company

From inception the Directors have believed that Shareholders should
be able to review the progress of the Company so that a decision can be taken
as to whether Shareholders should have an opportunity of realising the
Company's underlying investments. Accordingly, at the Annual General Meeting
of the Company held on 27 August 2014, the Board included in the business to
be considered by Shareholders a Special Resolution that the Company should be
wound up which was not passed. The boardwill include a similar resolution in
the business to be considered at every third Annual General Meeting held. The
next such resolution will be tabled at the Annual General Meeting to be held
in 2017.

Directors

Brief biographical details of the Directors are as follows:

Rupert Evans, age 76, is a Guernsey advocate and former partner in
the firm of the Guernsey legal advisors, MourantOzannes. He is now a
consultant to MourantOzannes. He is a non-executive director of the Manager
and of a number of investment companies. Mr Evans is resident in Guernsey. Mr
Evans was appointed to the Board on 18 November, 1994.

John Hawkins, age 71, is a Fellow of the Institute of Chartered
Accountants in England and Wales. He was formerly Executive Vice President and
a member of the Corporate Office of The Bank of Bermuda Limited, with whom he
spent many years in Asia. He retired from the Bank of Bermuda in 2001 after 25
years with the Group. He is a director of a range of funds which include hedge
funds and equity funds investing in Japan and Asia.Mr Hawkins was appointed to
the Board on 4 April, 2004.

Christopher Sherwell, age 66,was Managing Director of Schroders
(C.I.) Limited from 2000 to 2003, and was Investment Director with Schroders
(C.I.) Limited from 1993 to 2000. Prior to joining Schroders (C.I.) Limited,
Mr Sherwell was Far East Regional Strategist with Smith New Court Securities,
and from 1977 to 1990 worked as a journalist on the Financial Times, including
seven years as a foreign correspondent in the Far East and Australia from 1983
to 1990.Mr Sherwell was appointed to the Board on 27 September, 2004and
retiredon 27 August, 2014.

Richard Battey, age62, is a qualified chartered accountant. He is a
non-executive director of a number of investment companies and funds. Mr
Battey joined the Schroder Group in December 1977 and was a director of
Schroders (C.I.) Limited from April 1994 to December 2004, where he served as
Finance Director and Chief Operating Officer, and was a director of Schroder
Group Guernsey companies before retiring from his last Schroder directorship
in December 2008.Mr Battey was appointed to the Board on 10 February, 2010.

Taxation Status

The Company has obtained exemption from Guernsey Income Tax under
The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. There is no capital
gains tax in Guernsey.

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