JPMorgan Japanese Regulatory News (JFJ)

 LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN JAPANESE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2023

Legal Entity Identifier: 549300JZW3TSSO464R15

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Investment Performance

Japanese equities market has had a good year with local currency returns for the year to 30 September up some 29.3%; the weakening Yen meant though that in sterling terms the market return was only 14.7%.

In the year to 30th September 2023, the Company's total return on net assets (in sterling terms), with debt calculated at fair value, was 8.0% in net asset value (NAV) terms, an underperformance of some 6.7% relative to the benchmark. The share price total return, with dividends reinvested, was 6.4%, because of a modest widening in the discount to NAV at which the Company's shares trade over the year. NAV and share price performance for the prior year and the 3, 5 and 10 year annualised performance is shown on page 6 of the Annual Report and Financial Statements.

After the earlier periods of underperformance, this year's numbers are indeed disappointing. As reported in the half year report, the Company's performance over the first six months of the 2023 financial year was in line with its benchmark, the Tokyo Stock Exchange (TOPIX) Index. However, relative performance over the full year has not been so positive; returns kept up with the market for most of the second half but we had a very challenging end to our financial year meaning we lagged the market in the second half of the year and so for the full year. By way of illustration, c 4.6% of the year's NAV underperformance of 6.7% came in September, the final month of our financial year.

The Portfolio Managers set out in more detail in their report on the following pages the main reason for the underperformance during the year, namely the market's rotation into low quality, value and cyclical stocks at the expense of the quality and growth stocks favoured by the Company's strategy. They also set out the investment rationale behind recent portfolio activity and the outlook in more detail.

There is, however, cause for optimism; the TOPIX increase of 14.7% in sterling terms was supported by several positive developments, including a surge in economic activity following the post-pandemic reopening of the Japanese economy, widespread wage increases and an acceleration in corporate governance reforms, which are lifting shareholder returns. And after decades of seemingly intractable deflation, unlike other central banks the Bank of Japan is likely to welcome the recent modest rise in inflation and therefore take a very cautious approach to monetary tightening. One other encouraging aspect of the rise in Japanese stock prices is that it has been fuelled in part by foreign buying.

Since the end of the financial year, the Company's net asset value has increased by 2.6% as at 1st December 2023, compared to a benchmark increase of 0.2%, while the share price increased by 3.4%.

Analyst Ratings

As I commented in the half year report, the Company's Morningstar Analyst rating has been maintained at the highest level, Gold, recognising the strength of the Company's Investment Manager and their investment process. The Company also continues to maintain the highest Morningstar sustainability rating of five globes.

Morningstar assesses and publishes data on some 900 Japanese equity funds and share classes under its 'Japan Large-Cap equity' classification. Your Manager is one of the only three active Japanese Equity Managers with a Gold Morningstar Analyst rating within this category. You can find further details of the Morningstar research and rating at www.morningstar.co.uk

Board Investment Review

The Board recognises the Company's underperformance vs its benchmark over the medium term which primarily results from poor performance at the end of 2021 and in the first quarter of 2022, as well as the poor numbers in September 2023 referred to above. The Board is also conscious of the very unusual investment environment our Manager has faced since the start of Covid in early 2020 and that your Company has performed reasonably vs growth indices and peers with a similar growth style of investing.

The Board has continued to spend a significant amount of time with the Company's Portfolio Managers and other members of the JPMorgan Asset Management (JPMAM) investment team to discuss and understand the factors behind the Company's performance. These conversations focused on the price at which the Portfolio Managers are willing to buy/sell the stocks they like, the valuation analysis described on page 20 of the Annual Report and Financial Statements, and the impact of the corporate governance changes (described in the Investment Manager's report) on the Company's portfolio vs the wider index. The Board supported the Portfolio Managers' plans to increase their focus on valuation (you can read about some of the resulting changes made to the Portfolio in the Investment Managers' report), and recognised that the corporate governance changes may well continue to represent a headwind for the Company's performance vs. the benchmark and those peers with a value style of investing.

Following these detailed discussions with JPMAM, the Board remains fully supportive of the strategy the Company offers UK investors, our Portfolio Managers and their investment process.

Gearing

The Board believes that gearing can benefit performance. The Board sets the overall strategic gearing policy and guidelines and reviews them at each Board meeting. The Portfolio Managers then manage the gearing within the agreed limits of 5% net cash to 20% geared in normal market conditions. As at 30th September 2023, gearing was equivalent to 13.7% (2022: 11.7%) of net assets.

The Scotiabank loan facility expired on 2nd December 2022. During the second half of the financial year, the Company took out a ¥10 billion revolving credit facility with Industrial and Commercial Bank of China Limited, London Branch, which is in addition to the existing ¥5 billion credit facility with Mizuho Bank Limited and the Company's long-term fixed rate debt. Further details on page 84 of the Annual Report and Financial Statements.

Revenues and Dividends

Income received during the year ended 30th September 2023 again rose year-on-year, with earnings per share for the full year of 7.46p (2022: 7.48p). This reflected a continued recovery in the level of dividends paid and the strong balance sheets of portfolio companies.

The Board's dividend policy is to pay out the majority of revenue available each year. The Board therefore proposes, subject to shareholders' approval at the Annual General Meeting to be held on 11th January 2024, to pay a final dividend of 6.5p per share (2022: 6.2p) on 5th February 2024 to shareholders on the register at the close of business on 22nd December 2023 (ex-dividend date 21st December 2023).  This increase represents an increase of 4.8% in the dividend (2022: 17%).

We hope to be able to continue to increase the dividend in future years.

Discount Management and Share repurchases

The Board monitors the discount to NAV at which the Company's shares trade. It believes that for the Company's shares to trade close to NAV over the long term, the focus must remain on consistent, strong investment performance over the key one, three, five and ten-year timeframes, combined with effective marketing and promotion of the Company.

The Board recognises that a widening of, and volatility in, the Company's discount is seen by some investors as a disadvantage of investments trusts. The Board has restated its commitment to seek a stable discount or premium over the long run, commensurate with investors' appetite for Japanese equities and the Company's various attractions, not least the quality of the investment team, the investment process and the resultant strong long-term performance. To this end, during the past financial year, a total of 3,870,000 shares (2.40% of shares in issue) were repurchased (2022: 2,278,345 shares).

As at 30th September 2023, the discount was 8.8%, compared to the level of 7.3% where it closed the previous year. Over the past financial year, the discount ranged from 1.2% to 11.3% and the average discount was 7.4%. This compares with the previous financial year, when the discount ranged from 10.6% to a premium of 2.7% and the average discount was 5.7%.

Since the end of the current review period, the Board has repurchased a further 1,740,000 shares and the discount stood at 8.1% as at 1st December 2023.

Shares are only repurchased at a discount to the prevailing net asset value, which increases the Company's net asset value per share on remaining shares. Shares may either be cancelled or held in Treasury for possible re-issue at a premium to net asset value.

Stewardship

Effective investment stewardship can materially contribute to the construction of stronger portfolios over the long term, and therefore enhance returns. The Company's Investment Manager has a well-established, active approach to investment stewardship, both to understand how companies consider issues related to Environmental, Social and Governance ('ESG') factors (see the ESG Report on pages 24 to 28 in the Annual Report and Financial Statements), and to seek to influence their behaviour and encourage best practices. The portfolio managers, research analysts and investment stewardship specialists engage regularly with investee companies and the Company exercises its voice as a long-term investor through proxy voting. The Board supports the Investment Manager's approach to investment stewardship and its commitment to its stewardship responsibilities.

Task Force on Climate-related Financial Disclosures

As a regulatory requirement, JPMorgan Asset Management (JPMAM) published its first UK Task Force on Climate-related Financial Disclosures ('TCFD') Report for the Company in respect of the year ended 31st December 2022 on 30th June 2023. The report discloses estimates of the Company's portfolio climate-related risks and opportunities according to the Financial Conduct Authority (FCA) Environmental, Social and Governance (ESG) Sourcebook and the Task Force on Climate-related Disclosures (TCFD). The report is available on the Company's website under the ESG documents section:

https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/regional/en/regulatory/esg- information/jpm-japanese-investment-trust-plc-fund-tcfd-report-uk-per.pdf

The Board is aware that best practice reporting under TCFD is still evolving with respect to metrics and input data quality, as well as the interpretation and implications of the outputs produced, and will continue to monitor developments as they occur.

Board Composition and Appointment

The Board has given considerable thought to its succession planning. As mentioned previously, having served as a Director for nine years, I will retire from the Board and Stephen Cohen, our current Audit Chair, will replace me as Chairman at the forthcoming Annual General Meeting. Sally Duckworth, who was appointed to the Board in October 2022, will assume the role of the Company's Audit Chair.

As illustrated on page 58 of the Annual Report and Financial Statements, Stephen Cohen and George Olcott would in the normal course step down together from the Board after nine years in January 2025. The Board has decided, not least because of the challenging investment environment, to avoid losing two Directors in the same year and so has agreed that Stephen Cohen will serve as Chairman for three years meaning he will have been on the Board for ten years when he retires. Sally Macdonald, our Senior Independent Director, will confirm that this has the support of shareholders.

Given these plans, the Company engaged an independent search consultancy to find a suitably qualified Director to join the Board. After a thorough selection process, Lord Jonathan Kestenbaum was appointed as a non-executive Director with effect from 1st October 2023. Lord Kestenbaum has over two decades of private and public markets investing experience across asset classes. He is a non-executive Director of Windmill Hill Asset Management, and an adviser to a range of interests associated with the Rothschild family. Until 2022, he was the Chief Operating Officer at RIT Capital Partners, the publicly quoted investment trust. He was born and spent his early childhood in Japan and has therefore taken an active interest in the country, its companies and markets throughout his professional career.

The Board supports annual re-election for all Directors, as recommended by the AIC Code of Corporate Governance. In compliance with this, all Directors, excluding myself, will stand for re-appointment at the forthcoming AGM.

Board Diversity

The Board is conscious of the increased focus on diversity and recognises the value and importance of diversity in the boardroom. The recommendations of the FTSE Women Leaders Review, which form part of the Listing Rules, set targets for FTSE 350 companies to have 40% female representation, up from 33%. The recommendations also stipulate that a woman occupies the role of either Chair or Senior Independent Director. I am pleased to report that the Company complies with these guidelines - the Board currently has over 40% female representation and, on my retirement, this will increase to 50% - and in the absence of any unforeseen circumstances, it will continue to remain compliant.

More information showing the gender and ethnic composition of the Board is shown in a table on page 57 of the Annual Report and Financial Statements.

Annual General Meeting and Shareholder Contact

The Company's Annual General Meeting (AGM) will be held on Thursday, 11th January 2024 at 12.30 p.m. at 60 Victoria Embankment, London EC4Y 0JP.

We are delighted that this year we will once again be able to invite shareholders to join us in person for the Company's AGM, to hear from the Portfolio Managers. Their presentation will be followed by a question-and-answer session. Shareholders wishing to follow the AGM proceedings but choosing not to attend in person, will be able to view proceedings live and ask questions (but not vote) through conferencing software. Details on how to register, together with access details, will be available shortly on the Company's website at www.jpmjapanese.co.uk, or by contacting the Company Secretary at invtrusts.cosec@jpmorgan.com.

My fellow Board members, representatives of JPMorgan and I look forward to the opportunity to meet and speak with shareholders after the formalities of the meeting have been concluded.

Shareholders who are unable to attend the AGM are strongly encouraged to submit their proxy votes in advance of the meeting, so they are registered and recorded at the AGM. Proxy votes can be lodged in advance of the AGM either by post or electronically, detailed instructions are included in the Notes to the Notice of Annual General Meeting on pages 101 to 104 of the Annual Report and Financial Statements.

If there are any changes to these arrangements for the AGM, the Company will update shareholders via the Company's website, and, if appropriate, through an announcement on the London Stock Exchange.

Stay Informed

The Company delivers email updates with regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JFJ or by scanning the QR code in the Annual Report and Financial Statements.

Outlook

The Board is encouraged by the improvements in the Japanese economy and equity market sentiment over the past year, and shares the Portfolio Managers' optimism about the country's longer-term prospects. We are particularly gratified that corporate governance reforms appear to be gathering momentum, as this has the potential to significantly enhance shareholder returns across the entire market. The Board remains confident in the Portfolio Managers' focus on quality and growth, and their research-driven, unconstrained approach to stock selection.

I have very much enjoyed my time on the Company's Board as a Director, Chair of the Audit Committee and most recently as Chairman and so, as I step down, I would like to thank shareholders, Board colleagues, our Portfolio Managers Nicholas Weindling and Miyako Urabe, and of course everyone else at JPMAM and across all our other service providers for their support over the last nine years. I know that under the Company's new Chairman, Stephen Cohen, and my other Board colleagues, the Company will continue to be very well served.

Finally, as usual, on behalf of the Board, can I thank you, our shareholders, for your continued strong support.

Christopher Samuel

Chairman 5th December 2023

INVESTMENT MANAGERS' REPORT

Performance

Over the twelve months to 30th September 2023, the Company returned +8.0% on a net asset basis (in GBP), compared to its benchmark, the TOPIX index, which returned +14.7%. Over the three years to end September 2023, the Company recorded an annualised decline of 8.0%, versus the average benchmark return of +4.4% pa. However, long term absolute and relative performance remains positive; over the ten years to September 2023, the Company returned +7.6% on an annualised basis, ahead of the benchmark return of +7.5%.

We use an unconstrained investment approach which seeks the very best ideas, with excellent growth prospects. This means the portfolio has a bias towards quality and growth companies, which inevitably leads to poor performance at times, as it has done over the last three years. This performance is disappointing to us. However, we stress that it is the result of the same focus, particularly on quality and growth, that has helped us achieve much stronger performance over the longer-term.

Compared to the US market, the Japanese market has been particularly unusual over the last year, as it has been very driven by lower quality value stocks. The chart on page 12 of the Annual Report and Financial Statements illustrates the recent outperformance of poorer quality stocks, relative to previous periods, while showing how the highest quality companies we favour have lagged.

There are several reasons for this:

(a) Monetary policy divergence between Japan and the US has caused the yen to weaken, boosting the profits of some low-quality export cyclicals;

(b) Expectations of a gradual tightening in Japanese monetary policy have improved the outlook for financial companies, another cyclical sector characterised by intense competition and commoditised product offerings; and

(c) A perception, incorrect in our view, that the recent and ongoing improvements in corporate governance will only help companies trading on a price/book valuation of less than 1. On the contrary, in our assessment, the Tokyo Stock Exchange wants all companies to improve their corporate valuations. As we note elsewhere in our report, the most important consideration in our investment process is how companies compound earnings over the longer term. However, the Company's holdings, which are mostly rated as Premium and Quality, are positioned to benefit from these reforms and many have already begun the process of restructuring and returning cash to shareholders.

Performance attribution

Source: JPMAM and Morningstar. All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark.

A Alternative Performance Measure ('APM').

A glossary of terms and APMs is provided on pages 105 and 106 of the Annual Report and Financial Statements.

Economic and market background

The reforms underway in Japan's corporate sector are not the only positive recent development in the Japanese market. The economy has been on an improving trend since the government lifted its strict border controls in October 2022 and removed the last pandemic related restrictions earlier this year. Since then, tourist numbers have risen very sharply. This activity is benefiting a broad array of tourism and hospitality businesses.

There are also signs of a very welcome shift in Japan's labour market. The country has labour shortages in many fields due to its aging population. Yet historically, companies have been resistant to raising wages to attract and retain workers, and Japanese wages barely increased for 30 years.

However, this is beginning to change. Recent wage increases have been significant and broad-based. For example, NTT, a telecoms company, has raised starting salaries by 14%, and JGC, which designs, constructs and maintains industrial facilities, has increased its base salary by 10%.

Although Japanese inflation remains relatively low in absolute terms and relative to other countries, it is noteworthy that inflation is the highest for decades at around 3%. The Bank of Japan (BoJ) response has been muted so far and it continues to pursue a negative interest rate policy although there have been some recent tweaks to yield curve control. It is possible that we see further shifts in policy and this may, in turn, have implications for the Japanese yen which has been weak against major currencies over the last year.

After a long period during which Japanese equities have been unloved and under-owned by global investors, Japan's improving fundamentals have begun to attract attention. The stock market has reached multi-decade highs and outperformed global markets over the year ended 30th September 2023 - the MSCI ACWI and the S&P 500 both rose by c 11.0% over the period in GBP terms, compared to the TOPIX index's 14.7% rise. One of the most welcome aspects of this market rebound is that it has been driven in part by foreign investors.

Portfolio themes

Investment Trust Portfolio Themes

The portfolio is constructed entirely on a stock-by-stock basis as we seek out the best, most attractive companies. Nonetheless, certain themes underpin our investment decisions. These companies are also well-placed to take advantage of shifts in the corporate governance landscape as, although they are outstanding businesses poised to compound earnings growth for many years, they often have sub-optimal capital allocation policies.

Japan remains well behind most other advanced economies in areas such as online shopping and cloud computing leaving plenty of scope for such trends to continue developing over coming years. For example, the penetration of e-commerce within the Japanese retail market is just over 10% and remains much lower than in China, the UK, South Korea or the US. Portfolio holdings such as Zozo, Japan's number one online apparel retailer, and Monotaro, a top-ranked business-to-business (B2B) e-commerce company, are well placed to benefit. Meanwhile, many companies still use inefficient internally developed software systems which will need to change as employees retire. OBIC, which is a leading provider of software for small and mid-sized companies, has operating margins over 60%. It also has a significant and growing net cash position as well as a portfolio of shareholdings, which are depressing its return on equity. We are engaging with the company on these topics to generate improvement.

Deglobalisation is another trend gathering momentum. The pandemic, and subsequent events such as widespread supply chain shortages, the conflict in Ukraine and simmering US/China geo-political tensions, have increased companies' desire to move production nearer to end customers. With wage inflation now an issue in the US and other markets, businesses establishing new production plants and warehouses have a stronger incentive to incorporate factory automation into these facilities wherever feasible. Japan is fortunate to be home to some of the world's leading automation companies, of which the Company holds several, including Keyence and SMC. Both of these long-held Premium rated companies not only have dominant shares and high profitability but also significant potential for improved shareholder returns. For example, since the son of the founder took the helm at SMC, we have already seen a step up in shareholder returns and an important change in auditor. However, with over ¥600 billion in net cash and shareholdings in over twenty companies there is still much more the company can do.

Japan is a country with few natural resources and there is a clear need to shift its energy mix away from a heavy reliance on imported fossil fuels. Our portfolio includes shares in Japan's leading solar energy REIT (Canadian Solar Infrastructure) and in several companies that help reduce energy usage, such as Daikin, which produces energy-efficient air conditioners. JGC, which constructs liquid natural gas (LNG) production plants, has a net cash position equivalent to 60% of its market capitalisation. It announced a significant share buyback programme earlier in the year but can clearly do far more to improve its capital efficiency. Meanwhile, Hitachi, which is the global leader in cables used for transmitting renewable energy, has made huge strides in corporate governance reducing the number of listed subsidiaries from nine to zero. With a resolute focus on free cash flow, we expect more emphasis on shareholder return from now on.

Japan is home to many global leading consumer brands such as Fast Retailing (operator of the Uniqlo clothing brand) and computer games companies such as Sony and Nintendo. Once again, we can find companies that combine long-term structural growth with significant potential from improved governance. Nintendo, which owns some of the world's strongest intellectual property, with characters such as Super Mario and Pokemon, has roughly a quarter of its market cap in net cash and could do much more in terms of shareholder returns. Meanwhile, Shimano, which has over 75% market share in gears for bicycles and will therefore benefit from a long-term trend of more people cycling, also has close to a quarter of its market cap in net cash. We are engaging with the company to improve its capital efficiency.

One feature of the Japanese market is the relatively low level of sell side analyst coverage. One relatively recent purchase in the medical technology field is Osaka Soda which has the global number one position in an ingredient for anti-obesity drugs and is covered by just one analyst from a large investment bank. We expect profits to grow rapidly due to the uptake of these drugs but also think there will be a significant shift in shareholder returns as the company already has a strong net cash balance sheet.

There are many companies in Japan that are well positioned to compound earnings growth over many years often regardless of the economic cycle. We can own these companies which, as illustrated above, are also very well placed to benefit from the corporate governance changes that we see. There is no need to sacrifice business quality to find such opportunities. Indeed, the companies which have the businesses with the best long-term outlooks are often the same as those with the strongest but most inefficient balance sheets.

Portfolio Characteristics

Over the last two years, the characteristics of the portfolio have changed due to movements in share prices and companies that we have bought and sold such as our purchase of Tokyo Marine, Nippon Telegraph & Telephone, Hitachi and ITOCHU.

This can be seen both in the types of companies invested, comparing the themes as at 30th September 2023 with those from 30th September 2021, and also in the portfolio metrics:

*Return on Equity is a financial ratio which shows how much net income a company generates per dollar of invested capital. It helps investors understand how efficiently a firm uses its money to generate profit. The numbers shown above is a weighted average number for the companies included in the Company's portfolio and the companies included in TOPIX.

Significant contributors and detractors to performance

Top Contributors

The largest contributors to returns over the 12-month review period included ASICS, which manufactures and distributes sporting goods and equipment. The company is Quality rated. The company is continuing to deliver strong results thanks to its decision to refocus on its core product, running shoes, following a difficult period between 2016 and 2020 when it attempted to compete with Nike and Adidas in casual trainers (sneakers). ITOCHU, a trading conglomerate operating in a variety of sectors including textiles, fashion and machinery, also boosted returns. It is rated Standard. Companies in the wholesale trade sector performed well both because of enhanced shareholder returns, and because Warren Buffett announced stakes in the five major companies within the sector. Financial stocks performed well in general, and Tokio Marine, a Quality rated insurance company, has been enhancing its returns to shareholders, which has benefited the share price. Capcom, a Quality rated gaming and multi-media company, continued to post consistent results from its key game software franchises, including Monster Hunter and Resident Evil. Hitachi, an industrial conglomerate focused on digital systems, green energy, metals, construction and automotives, has dramatically changed its business portfolio over the last few years and now owns several businesses which are global leaders in their sectors. Results remain strong. The company is Standard rated.

Top Detractors

The major detractors from performance over the period included Monotaro, Japan's top B2B e-commerce company. It is rated Premium. The company's share price fell due to a slowing sales growth. We retain our view that the business has a long growth runway, but we reduced the position over the year. Our decision not to hold the Standard rated Mitsubishi UFJ Financial Group also detracted from returns. As mentioned above, banks and other financial names performed well on expectations that monetary policy will eventually be tightened, a move that would boost earnings after a long period of negative interest rates. Nihon M&A Center is Japan's leading provider of mergers and acquisitions related services. It has been dogged by concerns about increased competition from new entrants to the sector. We downgraded the stock's strategic classification to Quality accordingly and have since closed the position. The shares of Premium rated Nomura Research Institute, a consultancy that advises companies in their digital strategy, de-rated despite the company's favourable long-term outlook and its good execution. We see no change in the investment case and continue to hold the stock. Benefit One, a Premium rated name, specialises in providing fringe benefits for employees. During the pandemic the company's earnings, and share price, rose sharply as it organised vaccinations for its clients' employees, but the share price has since declined as earnings return to pre-pandemic levels.

Portfolio Activity - New Purchases

The ongoing improvements in corporate governance have put many more companies on the path towards becoming the kind of quality businesses that fit our investment criteria. This is a very exciting development for us, as it means we are seeing many more investment opportunities. One such example is the conglomerate =, which has dramatically reduced its business portfolio, so that it now only holds several world-leading businesses, and no listed subsidiaries, down from nine previously. We have also opened a position in Secom, Japan's largest provider of security systems.

Secom has substantial net cash which has been depressing returns. However, the company recently announced its first price increase in over 20 years and two buybacks, its first for almost 15 years. This led us to upgrade Secom's strategic classification and purchase the shares in anticipation of significantly enhanced shareholder returns. We also added the standard rated T&D Holdings, a leading life insurance provider, for the same reason.

Other new names include Seven & I Holdings. This standard rated company is the largest operator of convenience stores in Japan, under the 7/11 brand. Domestically, the company operates in a three-player oligopoly characterised by high profitability and strong free cash flow. The company is also the market leader in the US's much more fragmented market, where there is an opportunity for it to gain market share. Additionally, the company has started to restructure its non-core businesses in Japan - a process that we hope will continue. Japan Material is a provider of infrastructure services to semiconductor factories. The company is a major beneficiary of the deglobalisation trend intended to shorten, diversify and secure supply chains by relocating semiconductor manufacturing inside Japan. We also opened a position in Unicharm, a leading manufacturer of consumer goods such as adult diapers, feminine hygiene products and pet care items.

Portfolio Activity - Largest Disposals

These purchases above were funded by the outright sale of several holdings whose investment cases had deteriorated, including Nihon M&A Center (see above). We disposed of our positions in Nippon Prologis REIT, a Standard rated company, on concerns of increasing supply in the warehousing industry, and in JSR, a Quality rated specialist chemicals producer operating in the plastics, digital solutions and life sciences industries. Having aggressively restructured to focus on chemicals used in the production of semiconductors, JSR is about to be acquired by the government-led Japan Investment Corporation. With limited upside potential following the bid, we opted to sell. The bulk of the value in Digital Garage, an IT services company focusing on payment platforms, derives from its 20% stake in Kakaku.com, an internet-based provider of product and service reviews. However, Kakaku has been struggling to grow, so we sold this Standard rated name. Misumi, which focuses on factory automation, tools and components, is facing increasing competition, particularly from its Chinese rival, Yiheda, which prompted a downgrade in its strategic classification to Quality. We subsequently closed the position. We also sold CyberAgent, an internet advertiser, as the path to profitability for its digital television service became increasingly unclear, and we sold Oriental Land, the operator of Tokyo Disneyland, and M3, an online information service for doctors, on valuation grounds.

The net effect of these purchases and sales is that the portfolio trades on a significantly lower multiple than over the last three years, at under 20x earnings versus over 30x at the peak. Meanwhile, its quality and growth characteristics are unchanged, with the portfolio generating an ROE almost 38% higher than the market.

Outlook

Recent developments in the Japanese economy and corporate sector have reinforced our optimism about the market's medium to long term prospects. Economic activity is strengthening and encouraging wage trends will be supported by the structurally tight labour market. Wage growth should help end Japan's long period of damaging and seemingly intractable deflation and have a positive impact on consumption and the overall economy. The BoJ will welcome these developments, so, unlike in other major markets, investors need not be overly concerned about aggressive monetary tightening. As discussed above, Japan is also undergoing a major technological transformation as businesses and government increase their efforts to digitise and automate their operations. This will lay the base for significant growth and productivity gains over the medium term and provide a supportive environment for the dynamic, quality businesses in which we invest.

In addition, while we continue to face some headwinds, and we cannot say how long these will last, the spread between value and growth has narrowed and is no longer at extreme levels.

However, for us, the improvements in corporate governance are the most important reason to be excited about the outlook for Japanese equities. This trend is looking increasingly structural in nature, and we are seeing signs that the trend is accelerating. If we are correct, there is potential for the whole market, including the Company's portfolio holdings, to move to a higher valuation.

The value of the local currency is another key consideration for foreign investors, and there is cause for some optimism on this front too. The Economist's Big Mac Index suggests it is 43% undervalued and the table below provides further illustrations of disparities between prices in the UK and Japan. Although we do not know when the yen's weakness will unwind, any reversal should be beneficial for GBP-denominated investors.

The Japanese market offers many exciting investment opportunities for those prepared to seek them out. The market is deep, broad and liquid, with over 3,000 listed stocks. Yet it is under-researched by buy and sell side analysts - over 50% of the stocks have no sell-side coverage, versus the US market where 50% of companies are scrutinised by 20 or more sell-side analysts. In addition, most sell-side analysts who do cover Japan focus on the short term. For example, only two sell-side analysts publish 5-year forecasts for Toyota. This is a great environment for well-resourced, locally based teams such as JPMorgan's to identify interesting companies that are overlooked by other managers.

And although the stock market has reached multi-decade highs, valuations are still compelling when compared to other markets. The Japanese market is still trading at 14x earnings (on a forward PE basis) and at 1.4x book value (trailing PB) - valuations which still appear to reflect past perceptions of the market, rather than the opportunities that lie ahead.

For all these reasons, we believe our optimism about the Japanese market is well-founded, and we are confident about the long-term prospects of our portfolio holdings. But we are not complacent. We will continue our search for companies capable of thriving regardless of the near-term macroeconomic environment. Most importantly, we remain convinced that our investment approach will ensure the Company continues to deliver outright gains and outperformance for shareholders over the long term.

We thank you for your ongoing support.

Nicholas Weindling

Miyako Urabe

Investment Managers 5th December 2023

PRINCIPAL AND EMERGING RISKS

The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. With the assistance of JPMF, the Audit Committee has drawn up a risk matrix, which identifies the key risks to the Company. These are reviewed and noted by the Board. The risks identified and the broad categories in which they fall, and the ways in which they are managed or mitigated are summarised below. The AIC Code of Corporate Governance requires the Audit Committee to put in place procedures to identify emerging risks. Emerging risks, which are not deemed to represent an immediate threat, are considered by Audit Committee as they come into view and are incorporated into the existing review of the Company's risk register. However, since emerging risks are likely to be more dynamic in nature, they are considered on a more frequent basis, through the remit of Board when the Audit Committee does not meet. The key principal and emerging risks identified are summarised below.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES.

Details of the management contract are set out in the Directors' Report on page 49 of the Annual Report and Financial Statements. The management fee payable to the Manager for the year was £4,498,000 (2022: £5,124,000) of which £nil (2022: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 82 are safe custody fees amounting to £104,000 (2022: £74,000) payable to JPMorgan Chase Bank, N.A., of which £36,000 (2022: £nil) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. The commission payable to JPMorgan Securities for the year was £2,000 (2022: £2,000) of which £nil (2022: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £2,000 (2022: £5,000) were payable to JPMorgan Chase Bank N.A. during the year of which £1,000 (2022: £2,000) was outstanding at the year end.

At the year end, total cash of £2,141,000 (2022: £27,974,000) was held with JPMorgan Chase. A net amount of interest of £2,000 (2022: £nil) was receivable by the Company during the year from JPMorgan Chase of which £nil (2022: £nil) was outstanding at the year end.

Stock lending income amounting to £524,000 (2022: £682,000) was receivable by the Company during the year. JPMAM commissions in respect of such transactions amounted to £58,000 (2022: £76,000).

Full details of Directors' remuneration and shareholdings can be found on pages 54 and 55 and in note 6 on page 82 of the Annual Report and Financial Statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report & Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the Annual Report & Financial Statements in accordance with United Kingdom generally accepted accounting practice (United Kingdom Accounting Standards) including FRS 102 'The Financial Reporting Standards applicable in the UK and Republic of Ireland' and applicable laws. Under company law, the Directors must not approve the Annual Report & Financial Statements unless they are satisfied that, taken as a whole, Annual Report & Financial Statements are fair, balanced and understandable, provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period. In order to provide these confirmations, and in preparing these Annual Report & Financial Statements, the Directors are required to:

? select suitable accounting policies and then apply them consistently;

? make judgements and accounting estimates that are reasonable and prudent;

? state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

? prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business;

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the www.jpmjapanese.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The work carried out by the Auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditors accept no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The accounts are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Strategic Report, Statement of Corporate Governance and Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed on pages 47 and 48 of the Annual Report and Financial Statements, confirms that, to the best of their knowledge:

? the financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, and applicable law), (United Kingdom Generally Accepted Accounting Practice) give a true and fair view of the assets, liabilities, financial position and net return or loss of the Company; and

? the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.

The Board confirms that it is satisfied that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period.

For and on behalf of the Board

Christopher Samuel

Chairman

5th December 2023

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th September 2023

1 Foreign currency gains are due to Yen denominated loan notes and bank loans.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.

Net return/(loss) after taxation represents the profit or loss for the year and also total comprehensive income/(expense).

STATEMENT OF CHANGES IN EQUITY

1 See footnote to note 16 on page 86 of the Annual Report & Financial Statements.

STATEMENT OF FINANCIAL POSITION

At 30th September 2023

Included in the investments held at fair valuation through profit or loss are investments of £77,851,000 (2022: £167,908,000) that are on loan under securities lending arrangements.

STATEMENT OF CASH FLOWS

For the year ended 30th September 2023

1 The presentation of the Cash Flow Statement, as permitted under FRS 102, has been changed so as to present the reconciliation of 'net return/(loss) before finance costs and taxation' to 'net cash inflow from operating activities' on the face of the Cash Flow Statement. Previously, this was shown by way of note. Interest paid has also been reclassified to financing activities, previously shown under operating activities, as this relates to the loans drawn down.

Analysis of change in net debt

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30th September 2023

1. Accounting policies

(a) Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in July 2022.

All of the Company's operations are of a continuing nature.

The financial statements have been prepared on a going concern basis. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence up to 31st January 2025 which is at least 12 months from the date of approval of these Financial Statements. In making their assessment the Directors have reviewed income and expense projections, reviewed the liquidity of the investment portfolio and considered the Company's ability to meet liabilities as they fall due. In forming this opinion, the directors have considered direct and indirect impact of the ongoing conflict between Ukraine and Russia and more recently between Israel and Palestine on the going concern and viability of the Company. In making their assessment, the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and considered the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience in light of disruption from pandemics. The disclosures on long term viability and going concern on pages 45 and 63 of the Directors' Report form part of these financial statements.

In preparing these financial statements the Directors have considered the impact of climate change risk as a principal and as an emerging risk as set out on page 41 of the Annual Report and Financial Statements and have concluded that there was no further impact of climate change to be taken into account as the investments are valued based on market pricing, which incorporates market participants view of climate risk.

The policies applied in these financial statements are consistent with those applied in the preceding year.

2. Dividends

(a) Dividends paid and proposed

All dividends paid and proposed in the year are and will be funded from the revenue reserve.

The dividend proposed in respect of the year ended 30th September 2023 is subject to shareholder approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th September 2024.

(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')

The requirements of Section 1158 are considered on the basis of the dividend proposed in respect of the financial year, shown below. The revenue available for distribution by way of dividend for the year is £11,428,000 (2022: £11,686,000). The revenue reserve after payment of the final dividend will amount to £10,610,000 .

3. Return/(loss) per share

The total return per share represents both basic and diluted return per share as the Company has no dilutive shares.

4. Net asset value per share

The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end are shown below. These were calculated using 150,832,089 (2022: 154,702,089) Ordinary shares in issue at the year end (excluding Treasury shares).

5. Status of results announcement

2023 Financial Information

The figures and financial information for 2023 are extracted from the Annual Report and Financial Statements for the year ended 30th September 2023 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements will be delivered to the Registrar of Companies in due course.

2022 Financial Information

The figures and financial information for 2022 are extracted from the published Annual Report and Financial Statements for the year ended 30th September 2022 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

5th December 2023

For further information, please contact:

Priyanka Vijay Anand

For and on behalf of

JPMorgan Funds Limited

0800 20 40 20 (or +44 1268 44 44 70)

ENDS

A copy of the Annual Report will be submitted to the National Storage Mechanism and will be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The Annual Report will also be available shortly on the Company's website at www.jpmjapanese.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

JPMORGAN FUNDS LIMITED