For the quarter ended April 30, 2009, the Fund earned net investment income of approximately U.S. $438,000 (equivalent to income of U.S. $0.03 per share) resulting in net investment income for the six-month period of approximately U.S. $298,000 (equivalent to income of U.S. $0.02 per share). In addition, net realized and unrealized losses from investment activities and foreign currency transactions during that same three-month period was approximately U.S. $3,288,000 (equivalent to a loss of U.S. $0.22 per share). As a result, the net realized and unrealized loss increased to approximately U.S. $3,537,000 (equivalent to a loss of U.S. $0.24 per share) for the six months ended April 30, 2009.

In comparison, during the quarter ended April 30, 2008, the Fund earned net investment income of approximately U.S. $545,000 (equivalent to income of U.S. $0.04 per share) resulting in net investment income for the six-month period of approximately U.S. $435,000 (equivalent to income of U.S. $0.03 per share). In addition, net realized and unrealized gains from investment activities and foreign currency transactions during that same three-month period was approximately U.S. $3,694,000 (equivalent to a gain of U.S. $0.26 per share). As a result, the net realized and unrealized loss decreased to approximately U.S. $10,059,000 (equivalent to a loss of U.S. $0.69 per share) for the six months ended April 30, 2008.

On April 30, 2009, the total net assets of the Fund were approximately U.S. $74.3 million. The net asset value ("NAV") per share on that date was U.S. $5.15, based on 14,441,200 shares outstanding. In comparison, total net assets on April 30, 2008 were approximately U.S. $114.7 million, equivalent to a NAV of U.S. $7.95 per share, based on 14,431,605 shares outstanding. Assuming the reinvestment of the U.S. $0.042 per share dividend paid on December 30, 2008, the Fund generated a negative investment return of 3.99% for the six months ended April 30, 2009, when measured against the NAV per share of U.S. $5.41 on October 31, 2008, based on 14,431,605 shares outstanding at that time. During the same period, the Fund's benchmark, the Tokyo Stock Price Index (the "TOPIX Index"), decreased by 4.07% in U.S. dollar ("USD") terms.

As of April 30, 2009, the Fund had 97.71% of its net assets invested in Japanese common stocks. The remaining net assets were represented by a short-term USD-denominated time deposit (0.01%) and other assets less liabilities (2.28%).

As of June 10, 2009, the Fund's net asset value per share was U.S. $5.81, based on net assets of U.S. $83.9 million. At the same date, the market price of the Fund's shares on the New York Stock Exchange closed at U.S. $4.85, representing a trading discount to net asset value per share of 16.52%.

Market Review and Outlook

During the six-month period from November 2008 through April 2009, the return of the TOPIX Index was -3.38% in JPY terms. The Tokyo market experienced declines between November and mid-March, amid concerns over the global recession, the yen's appreciation, uncertainty in the global financial markets and worsening profit outlooks. The TOPIX Index reached its lowest level in a quarter of a century, and fell below the 700 level on March 12, 2009. However, the Tokyo market rebounded strongly in the middle of March, and its upward momentum accelerated in April.