JPB.L Regulatory News (JPB)

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN BRAZIL INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED31ST OCTOBER 2018

Legal Entity Identifier: 5493002T5BE3YCTKTE20

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Introduction and Performance

During the first six months of the financial year to 31st October 2018, Brazilian equities were very volatile. The Company recorded a total return on net assets for the reporting period of -1.2%, whereas the benchmark, the MSCI 10/40 Index (in sterling terms) recorded a return of +3.7% for the same period. The share price return to Ordinary shareholders was -4.4%, reflecting the widening of the share price discount to net asset value. At 31st October 2018, the share price was trading at a discount of 17.0%, compared to 14.0% as at 30th April 2018.

The underperformance was largely attributable to sector allocation, most significantly in the consumer discretionary and energy sectors. The investment managers do not focus significantly on commodity companies, which were the key value drivers of the rally in Latin America during the reporting period.

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 has remained level as at the time of writing, but the share price has fallen by 3.6% as discounts have widened across the sector.

Share repurchases

During the six months to 31st October 2018, the Company did not repurchase any shares. The Board will continue to monitor the absolute level of discount at which the share price trades relative to NAV and the volatility of the discount. Since 1st May 2018, the share price discount to NAV to date has ranged between 7.5% and 21.6%, averaging 14.9%.

Outlook

The outcome of the recent presidential election was generally considered to be favourable to Brazilian business. The market has reacted positively to the political agenda of the new president and to his principal ministerial appointments. It is hoped that the new government will pursue the reforms that are essential to improve the economic outlook; however, it may be difficult to gather the necessary congressional and public support for the successful implementation of the reforms. This uncertainty, the direction of the dollar and the ongoing trade tensions between the US and China may cause investors to be cautious. However, Brazil's stock valuations appear attractive following the selloff earlier this year and given the potential for higher earnings that the market expects over the medium term. The Board continues to believe that the outlook for Brazil can be positive provided that there is real progress on the pensions and social security reforms. The investment managers' strategy remains focussed on high-quality stocks with good prospects.

Howard Myles

Chairman 13th December 2018

INVESTMENT MANAGERS' REPORT

Market review

The six months period to 31st October 2018 saw significant volatility in the price of Brazilian equities, with the Company's benchmark index, the MSCI Brazil 10/40 Index, ultimately returning 3.7% (in sterling terms) for the period.

In May, the much publicised strike by truck drivers, accompanied by road blocks, led to shortages of supplies and froze production in all areas of the economy. As a result, industrial production suffered a double digit decline of 10.9%, one of the biggest monthly declines in recent decades. This event, combined with worsening financial

conditions in the market as a result of both domestic and external factors (namely the October elections and a less favourable environment for equities) weighed on the economy. By September a degree of calm began to return to the markets as it became clearer that the front runners with presidential potential were the right-wing Jair Bolsonaro of the Social Liberal Party and left-wing Fernando Haddad of the Workers' Party. The positive performance continued following Bolsonaro's win in the presidential elections. However, overall the economy showed signs of weakness with growth revised downwards. Expectations for company earnings were also lowered. As noted above, GDP figures for the third quarter were affected by May's truck drivers' strike which led to significant business slowdowns. In addition, since August, the Brazilian currency has suffered a steep double-digit depreciation in common with many other emerging markets currencies.

Portfolio review

Against this backdrop, the Company's net asset value and share price returned -1.2% and -4.4% respectively during the review period, lagging its respective index, the MSCI Brazil 10/40 (in sterling terms). Sector allocation was the key detractor, notably in consumer discretionary and energy. As a reminder, we tend to be underweight some commodity companies as they do not fit our growth focused investment strategy. However, these stocks were and continue to be the drivers of the value rally in Latin America, notably Petrobras, which rose as Bolsonaro's election victory relieved concerns of policy risk that had been priced into the stock

Our holding in Fleury, an operator of clinical laboratories in Brazil, detracted from returns. The stock has come under pressure as companies re-examine their healthcare costs which have continued to rise during the recession. There is also uncertainty around potential industry changes, and how it might affect Fleury, as more companies think about preventative medicine options. However, we expect the company to deliver over the medium and long-term and therefore have maintained our holding.

Also detracting from results was our position in Raia Drogasil, a Brazilian drug store operator. The company announced weaker-than-expected 3Q results. Despite the more challenging short term environment, the message given by management and the Board is very clear; their focus is on taking steps to create long term value.

In terms of positive contributors to performance, our exposure to Lojas Renner, a leading department store retailer, was key. Whilst the stock suffered a de-rating with the rest of consumer discretionary companies it continued to deliver good growth. We added to the position in early September after the fall in share price in August. Our belief in the stock was rewarded as the price subsequently increased strongly on the announcement that the Board had approved a CEO succession plan. Fabio Faccio will be stepping into the CEO role in April 2019. We view the transition as confirmation of the company's strong corporate governance.

Also of note was Cielo, Brazil's largest credit and debit card operator. The company missed earnings targets as a result of higher-than-expected marketing costs and competition which negatively impacted profitability. We have reduced our exposure to this name to zero and therefore this was a positive contributor to relative performance.

Our exposure to non-Brazil stocks was 3.57%. The sole exposure in Argentina, MercadoLibre (1.39%), an e-commerce and payments company operating across LATAM with over 200 million users, was positive. The market was encouraged by their proposed move away from relying on Correios for deliveries to an internal network and the strong growth which has started to be seen in their off marketplace payments business.

In terms of changes to the portfolio, we reduced our position in Linx, a management software company. We have less visibility and conviction in the growth dynamics of the company given its move into new sales areas. We also exited our position in BB Seguridade, a financials name. Although the stock is trading at relatively inexpensive valuations, we believe the financial penetration trend which provided a tailwind to the stock performance has matured. The sale proceeds were rotated into a position in Via Varejo, a white-goods retailer where we increased our exposure in the belief that the company is well positioned to deliver strong results over the short-term. In addition, we believe it is trading cheaply to its competitor, Magazine Luisa. We also increased our exposure to Localiza, a car rental company.

Our exposure continues to remain tilted in favour of domestic themes, especially domestic cyclicals, in anticipation of stronger growth over the coming months.

PERFORMANCE ATTRIBUTION

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2018

Source: Factset/Datastream/Morningstar. All figures are on a total return basis.

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

A glossary of terms and alternative performance measures is provided on page 24 of the half year report.

Outlook

The selloff in emerging market stocks this year has led to valuations that are increasingly attractive relative to historical valuations, particularly considering the forecast double-digit earnings growth for the next 12 months.

The near-term path of markets will likely depend on whether the dollar continues to rally and the market's views on the likelihood of agreement between the US and China on trade.

The uncertainty around the election outcome has finally ended following Jair Bolsonaro's win at the end of October. The focus is now on the new president's ability to deliver on his promises of privatisation and pension reform, amongst other things, and we believe that the appointments made to date to his team and to state companies will be positive in this regard. We will continue to keep an eye on key economic indicators including industrial production, retail sales and consumer confidence. Brazil's markets rallied significantly following the first round of the presidential election in October, but further gains will depend on the ability of the government to deliver comprehensive reforms.

Our portfolio includes long-standing, high-quality companies and we are positioned for a recovery in the economy.

Luis Carrillo

Sophie Bosch De Hood

Investment Managers 13th December 2018

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 2018.

Related Parties 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 2018, 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 13th December 2018

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2018

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

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.

The net return/(loss) on ordinary activities after taxation represents the profit/(loss) for the period/year and also total comprehensive income.

STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2018

1 This reserve forms the distributable reserve for the Company and may be used to fund distribution of profits to investors via dividend payments.

STATEMENT OF FINANCIAL POSITION AT 31ST OCTOBER 2018

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2018

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 31ST OCTOBER 2018

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 2018 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 including 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 have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the revised 'SORP') issued by the Association of Investment Companies in November 2014 and updated in February 2018.

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 2018.

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 2018.

3. (Loss)/return per share

4. Dividends paid

All dividends paid in the period/year have been funded from the revenue reserve.

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.