JPB.L Regulatory News (JPB)

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN BRAZIL INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED31ST OCTOBER 2016

CHAIRMAN'S STATEMENT

Introduction and Performance

The six months to 31st October 2016 saw a strong recovery in the performance of Brazil's equity market, driven by the improving political environment, expectations that the economy is finally on the path to recovery and currency appreciation. In sterling terms the Company recorded a total return on net assets for the reporting period of 49.8%, compared with the 56.1% return of the benchmark, the MSCI 10/40 Index, over the same period. The significant fall in the value of sterling following the result of the UK referendum to leave the European Union led to a sharp increase in value of overseas investments in sterling terms. In local currency terms the total return on the Company's net assets over the period was 16.7% compared with the benchmark return, again in local currency, of 20.0%. The share price return to Ordinary shareholders was 47.8%. The underperformance in the period was largely attributable to our underweight position in the energy and materials sectors which performed well in the period, and underperformance of Valid, a long term holding in the industrials sector.

The Investment Managers' Report gives a more detailed commentary about the markets and conditions experienced during this period and the outlook for the remainder of the financial year.

Since the period end the Company's NAV and share price have both fallen some 20%, in line with the Company's benchmark, as the market has scaled back its expectations for resumed economic growth in Brazil in 2017 and beyond.

Share repurchases

In the six months to 31st October 2016, the Company continued to use the authority given by shareholders to repurchase its shares in the market to help maintain an orderly market for the Company's shares, thereby reducing the volatility of the discount. The Company repurchased for holding in Treasury a total of 5,829,000 ordinary shares at a discount, for a total consideration of £3,491,000, representing 12.7% of the issued share capital at the beginning of the financial year. Since the period end, 185,000 shares have been repurchased into Treasury.

The Board will continue to monitor the volatility and the absolute level of discount at which the share price trades relative to NAV, and may make further repurchases of the Company's shares in the market. Since 1st May 2016, the share price to NAV has ranged between a premium of 1.52% and a discount of 17.06%, a broad range that reflects the significant moves in exchange rates and sentiment towards investment companies as a whole in the period following the UK's decision to leave the EU, and stands at a discount of 9.4% at the time of writing this report, 16th December 2016.

Outlook

It is pleasing to note Brazil's improving backdrop and a marked improvement in the Compan's returns over the last six months after a prolonged period of poor results. However, given the challenging macro-economic and political trends in Brazil, the risk of volatility in investor sentiment and therefore in share prices and currencies remains high. This volatility in sentiment and prices may be exacerbated by the incoming Trump presidency in the US, although the direct impact of any protectionist moves by the new administration on Brazil are likely to limited given the lack of any favourable trade treaties between the two countries. Despite these factors, the Board believes that the underlying case for investment opportunities in Brazil remains strong for delivering good long-term returns to shareholders.

Howard Myles

Chairman

21st December 2016

INVESTMENT MANAGERS' REPORT

Market review

Brazilian equities rallied strongly in the six months to 31st October 2016 and outperformed broader emerging markets, as sentiment was boosted by a stabilising political landscape and an appreciating currency. Our benchmark index, the MSCI Brazil 10/40 Index, delivered a strong positive return of 56.1% in the period. However, portfolio returns lagged the benchmark, returning 49.8% over the half-year.

The Brazilian equity market was driven by domestic politics in the review period. The period began with the country on the cusp of the impeachment process, with interim president Michel Temer taking office on 13th May following the suspension of Dilma Rousseff. Investors welcomed the transition to Temer and his appointment of market-friendly figures to the Ministry of Finance and central bank, as well as his appointment of a new CEO of state-owned oil producer Petrobras. His introduction of a new head of the lower house of Congress - after Eduardo Cunha was caught up in a corruption scandal - further buoyed sentiment, as the appointment was widely seen as more aligned to the current administration.

By August, Rousseff was officially removed from office following the final impeachment vote in the Senate. Immediately following this decision, the new administration began to push through reforms, beginning with reducing government expenditure. The country's municipal elections, which occurred in October, showed a clear defeat for Rousseff and her Workers' Party, or PT, with Temer's Brazilian Democratic Movement Party, or PMDB, gaining seats.

Alongside the improving political climate, the Brazilian economy began to show tentative signs of stabilisation. Unemployment continued to rise, but inflation started to ease over the summer, leading to expectations that interest rates would soon begin to come down. October brought the first interest rate cut of 0.25%, taking nominal interest rates to 14% and the real interest rate close to 6%. By the end of the period, consumer and industrial confidence had shown signs of improving from their historical lows, supporting the view that the Brazilian economy had turned a corner.

Brazilian equities were further supported by the appreciation of the real against the US dollar, with investors focused in particular on companies that would be beneficiaries of lower interest rates. The UK's vote to leave the European Union in June, while it benefited NAV because of the subsequent decline in sterling, had little effect on the Brazilian market.

Portfolio review

Against this backdrop, the Company's net asset value and share price rose sharply but nevertheless underperformed the benchmark.

At the sector level, our major detractors came from the materials, industrials and energy sectors. Both the materials and energy sectors, where we have for a long time been wary of the exposure in the sectors to domestic political interference and their exposure to global commodity prices, performed strongly. In these sectors performance was adversely affected by our policy of not holding Petrobras which benefited from changes of management and a focus on reducing gearing through a series of asset sales and reductions in capital expenditure. Petrobras also benefited from improved investor sentiment towards the scandal-hit state-owned oil producer as the changes suggested it was on the path to becoming a more rationally managed corporation, with greater independence from government interference.

In the industrial sector, the underperformance was largely attributable to our holding in Valid. The payment and identity company's operations suffered more than we expected in Brazil as Brazilians delayed ID renewals due to a weak economy, while its operations in the US also faced challenges. We have revised our earnings estimates and are confident that management remains focused on turning the company around. We have therefore maintained our position.

Elsewhere in the industrials sector, an overweight position in Copa Airlines contributed positively. We believe that the company has turned a corner as it begins to benefit from the recent painful changes instigated by management. We remain positive on the stock, as we believe it should see positive earnings revisions due to better cost management, route rationalisation and lower fuel prices.

Further positive contributors to relative returns included stock selection and an underweight position in consumer staples, where an underweight position in Anheuser-Busch InBev was among the top contributors at the stock level. We further reduced our position at the end of the period, as we believe that the beer company is losing market share to its competitors, while the valuation had also become stretched. An overweight position in Fleury in the healthcare sector also contributed positively. The company, which operates in the clinical laboratory business, benefited from a change in management and impressive margin expansion.

In the utilities sector, Centrais Eletricas Brasileiras benefited from the expectation of more market-friendly policies by state-owned companies under the new government administration, and so our underweight position detracted from performance. However, we maintain our underweight position due to ongoing concerns over a significant amount of debt on the balance sheet.

Improving sentiment towards Brazilian equities led to some positioning changes over the period. At the beginning of the six months under review, we had a significant portion - close to 9% - of the trust's assets allocated to out-of-Brazil holdings. We have trimmed this allocation, selling some positions, to provide capital for more attractive opportunities within Brazil, while maintaining those with positive momentum. As mentioned above, we also cut our position in brewer Anheuser-Busch InBev following weak earnings. The receipts from these sales were used as a source of cash to fund other acquisitions. In particular, we added to our existing positions in the banks and the commodity sectors, and bought a number of small-cap names, such as travel agency CVC.

Outlook

The rally in Brazilian equities that we've seen so far this year continues, but ultimately will need the support of improved corporate earnings if valuations are to be sustained. If rates continue to come down - which we expect as inflation continues to fade - this will provide a positive environment for many companies, and we should see good earnings momentum over the next few years.

We believe that privatisation and investment in infrastructure will be the engine of growth in Brazil, and that the private sector will be an avid participant in infrastructure projects. Meanwhile, Brazil's Spending Cap Bill, which was approved after the period end, and proposed pension reforms will curb government spending and put Brazil back on track to rein in debt levels, which should help to sustain the economy.

As we move into next year, we will closely monitor the actions of the Trump administration, as his policies could lead to specific US dollar and interest rate moves that could affect the Brazilian currency as well as flows into the market. For example, higher US rates could strengthen the US Dollar causing commodity prices to come down, which could affect Brazil's commodity-heavy index. However, Brazil does not currently benefit from any preferential trade agreements with the US and so may be better protected from any protectionist moves by the new US administration than other emerging markets which currently enjoy such beneficial trading arrangements.

Sophie Bosch De Hood

Luis Carrillo

Investment Managers

21st December 2016

INTERIM MANAGEMENT REPORT

The Company is required to make the following disclosures in its half year report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company have not changed and fall into the following broad categories: investment and strategy; market; accounting, legal and regulatory; corporate governance and shareholder relations; operational and financial. Information on each of these areas is given in the Directors' Report within the Annual Report and Accounts for the year ended 30th April 2016.

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operation existence for at least twelve months from the date of the approval of this half yearly financial report. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the state of affairs of the Company and of the assets, liabilities, financial position and net return of the Company, as at 31st October 2016, as required by the UK Listing Authority Disclosure and Transparency Rules 4.2.4R; and

(ii) the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

In order to provide these confirmations, and in preparing these 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 the 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.

For and on behalf of the Board

Howard Myles

Chairman

21st December 2016

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2016

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF FINANCIAL POSITION AT 31ST OCTOBER 2016

STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31ST OCTOBER 2016

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2016

1. Financial statements

The information contained within the financial statements in this half year report has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 30th April 2016 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2. Accounting policies

The financial statements are prepared 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 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 November 2014.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 31st October 2016.

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

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 30th April 2016.

3. Dividends paid1

 1All dividends paid in the period/year have been funded from the Revenue Reserve.

4. Return/(loss) per share

5. Net asset value per share

For further information, please contact:

Divya Amin

For and on behalf of

JPMorgan Funds Limited, Secretary

020 7742 4000

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.

JPMORGAN FUNDS (UK) LIMITED

ENDS

A copy of the half year will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM 

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