REG - JPMorgan Japanese IT - Half-year Financial Report
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RNS Number : 3026G JPMorgan Japanese Inv. Trust PLC 01 June 2026
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPANESE INVESTMENT TRUST PLC
Half Year Report and Financial Statements
for the six months ended 31st March 2026
Legal Entity Identifier: 549300JZW3TSSO464R15
Information disclosed in accordance with the DTR 4.1.3
Highlights
• For the six months ended 31st March 2026 the NAV total return* of
+2.0% compared with +6.7% for the TOPIX Index (in sterling terms), (the
'Benchmark'). Share price return of +3.8%.
• For the year ended 31st March 2026, NAV total return* of +24.5%
compared with +23.4% for the Benchmark. Share price return of +26.7%.
• For the three year annualised period ended 31st March 2026, NAV total
return* of +16.4% compared with +13.3% for the Benchmark. Share price return
of +16.0%.
• For the ten year annualised period ended 31st March 2026, NAV total
return* of +10.2% compared with +9.3% for the Benchmark. Share price return of
+11.0%.
• Over the six-month period to 31st March 2026, the Company repurchased
4.5 million shares at a cost of £33.2 million and an average discount of
8.8%.
*With debt at fair value
Stephen Cohen, Chairman, commented:
"The case for investing in Japan is stronger than ever. The market's ascent to
historic record highs during the period…demonstrates that ongoing corporate
reforms are delivering tangible results. These structural improvements ensure
the market remains attractive for long-term growth portfolios. The Board
shares the Portfolio Managers' view that these reforms are still gathering
momentum and will continue to lift shareholder returns, and support the
market, for the foreseeable future."
Nicholas Weindling, Miyako Urabe and Xuming Tao, Portfolio Managers,
commented:
"Japan is in the midst of a number of transformative developments. Of most
significance are government initiatives to encourage corporate governance
reforms, which have been boosting shareholder returns and supporting the
market in recent years. Our highly experienced Tokyo-based investment
analysts are exceptionally well-placed to identify and capture the myriad
opportunities generated by the changes afoot in Japan."
CHAIRMAN'S STATEMENT
The Japanese equity market delivered a remarkable performance during the six
months leading up to 31st March 2026, even with the late-period volatility
caused by the conflict in Iran. Gains were underpinned by the persistent drive
for corporate governance reforms and increased mergers and acquisitions
activity, which are transforming Japan's corporate landscape, lifting
shareholder returns and attracting increasing foreign interest in Japanese
equities. Investors also welcomed Prime Minister Takaichi's historic victory
in a snap election held in February. The Company's benchmark, the TOPIX Index
(in sterling terms), rose by 6.7% over the period.
In the volatile market environment of the last six months, where 'value'
stocks yet again outperformed 'growth' stocks, the Company's net asset value
('NAV') total return (with debt at fair value) was only +2.0% in sterling
terms, an underperformance of 4.7 percentage points. In contrast to this
short-term outcome, longer-term annualised returns remain encouraging. Over
the three years ended 31st March 2026 the Company returned +16.4%, versus the
benchmark return of +13.3%; and over the ten-year period, the Company
outperformed, returning +10.2% versus +9.3% for the benchmark.
The Investment Manager's Report on pages 11 to 15 of the Half Year Report and
Financial statements discusses recent performance and the investment rationale
behind recent portfolio activity. It also discusses the outlook for Japanese
equities, including the implications of the geopolitical headwinds from the
conflict in the Middle East.
Gearing
The Board is fully committed to strategic gearing, viewing it as a fundamental
mechanism to enhance the Trust's NAV and deliver superior long-term
shareholder value. By reviewing leverage at each Board meeting, the Board
ensures the portfolio is optimally positioned to amplify investment returns
and exploit high-conviction growth opportunities. The Portfolio Managers then
manage gearing within the agreed limits of 5% net cash and 20% geared in
normal market conditions. As at 31st March 2026, gearing stood at 15.3%, up
from 13.5% at the start of the period - a level that reflects the Portfolio
Managers' confidence in the outlook for the Japanese market.
The Board considers it prudent that the Company's gearing capacity is funded
from a mix of funding sources. In addition to the Company's low-cost,
long-term fixed rate borrowings, which benefit from a very competitive
average coupon rate of 1.1%, the Company uses Contracts for Difference
('CFDs'). These derivative instruments are a flexible, low-cost and
capital-efficient alternative to loan facilities which provide economic
exposure to share price movements without owning the underlying shares,
thereby providing geared exposure. The Board closely monitors the use of CFDs
and their cost-effectiveness as part of its ongoing oversight of gearing.
Discount Management and Share Repurchases
The Board keeps the Company's share price discount to NAV under close review.
We recognise that a competitive discount with low volatility is very
important for maintaining investor confidence and ensuring the attractiveness
of the Company's shares. We are committed to maintaining a competitive
discount relative to our peers. By actively managing discount volatility,
through our buyback activity, we aim to provide greater certainty for our
existing shareholders while enhancing our appeal to new investors.
Over the six months to 31st March 2026, the Company repurchased 4,527,000
shares at an average discount of 8.8%, at a total cost of £33.2 million. The
share price discount to NAV (with debt at fair value) ranged between -12.5%
and -4.0% (average -8.4%), ending the period at 9.0%, compared with 10.5% at
30th September 2025.
Since 31st March 2026, the Company has repurchased a further 2,415,000 shares
at an average discount of 8.3%, at a cost of £18.5 million. Shares are only
repurchased when they stand at a discount to prevailing NAV, which is
NAV-accretive for continuing shareholders. Repurchased shares may either be
cancelled or held in treasury for potential reissue at a premium to NAV.
Revenue and Dividends
The Company's investment objective is to seek capital growth from a portfolio
of investment in Japanese companies. Our Portfolio Managers are thus
unconstrained by the requirement to achieve a certain level of income, and
this allows them to select the 'best' stocks, rather than those that fit
a specific income requirement.
In line with the Board's established practice the majority of revenue
available each year is paid as a final dividend rather than as an interim
dividend. For the year ended 30th September 2025, the Company paid a dividend
of 8.70p per share (2024: 6.75p) on 12th February 2026. This reflects the fact
that Japanese companies' dividend payouts and payout ratios have increased
meaningfully in recent years, thanks to improved corporate governance,
stronger balance sheets, and the growing focus on shareholder returns. The
Board hopes to be able to continue its unbroken streak of annual dividend
growth since 2020.
The Board
As outlined in the Company's 2025 Annual Report, in line with the Company's
commitment to good governance and effective Board succession, I will remain as
Chair until the conclusion of the Annual General Meeting (AGM) in January
2027, at which point I will step down. Following a thorough succession
planning process, the Board intends to appoint Sally Duckworth, currently
Chair of the Audit & Risk Committee, as Board Chair on my departure. Sally
brings extensive experience in investment management, governance and Board
leadership. It is intended that Thomas Walker will assume the role of Chair of
the Audit & Risk Committee at that time.
Also, as previously announced and in line with the Company's Board succession
plan, at the beginning of this six month reporting period the Board was
pleased to welcome Takashi Maruyama as a Director and at the Company's 2026
AGM, George Olcott retired from the Board. Anna Dingley took up the role of
Chair of the Remuneration Committee following George's retirement.
After my departure, the Board will comprise six Directors. The Board keeps its
optimal size under regular review, seeking to balance efficiency with the
necessary breadth of expertise; it anticipates that the number of Directors
will typically fluctuate between four and six as part of its long-term
succession strategy. The Board also reaffirms its ongoing commitment to
diversity and independence, in line with regulatory requirements and best
practice.
Stay Informed
The Company provides email updates featuring regular news and commentary,
together with the latest performance information. If you have not already
subscribed and would like to receive these communications, you can register
via
https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JFJ
or by scanning the QR code on page 9 of the Half Year Report and Financial
Statements
Outlook
The case for investing in Japan is stronger than ever. The market's ascent to
historic record highs during the period, with the Nikkei 225 exceeding 58,000
for the first time in February 2026, demonstrates that ongoing corporate
reforms are delivering tangible results. These structural improvements ensure
the market remains attractive for long-term growth portfolios. The Board
shares the Portfolio Managers' view that these reforms are still gathering
momentum and will continue to lift shareholder returns, and support the
market, for the foreseeable future.
Beyond governance, Japan is benefiting from a powerful convergence of
structural tailwinds. The rapid adoption of AI and a strategic surge in
defence spending are driving industrial innovation. Coupled with the Bank of
Japan's successful move towards monetary normalisation and the first
significant rise in real wages in decades, these factors continue to encourage
foreign investment.
The Board is confident that the Company remains well positioned to maintain
its record of long-term capital growth and investment outperformance.
On behalf of the Board, I would like to thank shareholders for their continued
support.
Stephen Cohen
Chairman
29(th) May 2026
INVESTMENT MANAGERS' REPORT
Economic and market backdrop
The Japanese market rallied to all-time highs in February 2026 after new Prime
Minister Sanae Takaichi led the Liberal Democratic Party to a historic
landslide victory in Lower House elections, securing a super-majority of over
two-thirds of seats. This was the most decisive result for a single party in
Japan's post-war history and guarantees a period of political stability that
will allow Takaichi to focus on delivering her agenda of growth and national
security.
The period from October 2025 to February 2026 represents a historic bull run
for the Japanese equity market, marked by the Nikkei 225 decisively breaching
the 50,000-point milestone late in 2025. This surge was initially fuelled by a
convergence of structural factors: the surprise election, the continued
success of Tokyo Stock Exchange (TSE) governance reforms that forced companies
to prioritise shareholder value through record buybacks and the Bank of
Japan's decision to normalise policy by hiking rates to 0.75%.
Sadly, these gains proved short-lived, as the 'Great Japanese Re-rating'
collided with outbreak of conflict in the Middle East. March was the worst
month for the Japanese market since October 2008. Japan is highly dependent on
imported energy. Around half of its crude oil is imported from the Middle
East, so the closure of the Strait of Hormuz had even greater implications for
Japan than for other developed economies. Gasoline subsidies were introduced
to mitigate the impact on consumers and the Japanese Yen (Yen) dropped below
the Yen160/USD level for the first time since mid-2024. This Yen depreciation
came despite short-term interest rates continuing to rise slowly.
The other key news at the end of the period was the announcement of the
results of the Shunto Spring wage negotiations. After decades of wage
stagnation, wages will increase by over 5% for the third successive year this
year, boosting domestic consumption. This confirmed that Japan is now
a 'normal' growing economy, which is attractive for foreign investors.
The Japanese market delivered exceptional performance for the majority of the
period, with the TOPIX surging by over 27% in the first five months. While the
outbreak of conflict in the Gulf triggered a broad global retreat in March,
with the TOPIX dropping by roughly 11% in line with major European and Asian
benchmarks, it still ended the six-month period up 6.7%. This resilience, even
in the face of significant external shocks, underscores the newfound stability
and long-term appeal of the Japanese equity market.
Performance in Sterling Terms
Your Company made a modest return of +2.0% in net asset value terms (with debt
at fair value), over the review period, lagging its benchmark return of +6.7%.
The portfolio returned +24.5% over the 12-month period, outperforming the
benchmark return of +23.4%. Longer-term performance remains strong in absolute
and relative terms. The cumulative NAV total return (with debt at fair value)
over the three-year period to end March 2026 was +57.8%, compared to a
benchmark return of +45.4% on the same basis. While NAV total returns of
+22.9% over the five-year period trailed the benchmark return of +44.2%, over
the ten-year period, the Company's cumulative NAV return was +163.2%, ahead of
the equivalent benchmark return of +143.8%.
Performance attribution
Six months ended 31st March 2026
% %
Contributions to total returns
Benchmark return 6.7
Stock selection (6.7)
Currency (0.1)
Gearing/Cash 1.8
Investment Manager contribution (5.0)
Portfolio return(A) 1.7
Management fee and other expenses (0.2)
Share Buy-Back/Issuance 0.3
Other effects 0.1
Return on net assets - debt at par value(A) 1.8
Impact of fair value of debt 0.2
Return on net assets - debt at fair value(A) 2.0
Return on share price(A) 3.8
Source: Morningstar/J.P. Morgan. 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 30 to 33 of the Half Year
Report and Financial Statements.
Japan is in the midst of a number of transformative developments. Of most
significance are government initiatives to encourage corporate governance
reforms, which have been boosting shareholder returns and supporting the
market in recent years. In addition, after years of ultra loose monetary
policy, the Bank of Japan (BoJ) move towards interest rate normalisation is
benefitting rate sensitive businesses particularly the banking sector.
Simultaneously the Japanese Stock Exchange through its revised Nippon
Individual Savings Account (NISA) scheme is encouraging households to reduce
cash savings in favour of higher-yielding equities. This financial evolution
is occurring alongside a surge in AI and automation which are generating
growth opportunities in the tech sector. At the same time increased defence
spending is now seen as an existential necessity. The historically moribund
Japanese defence sector has been reinvigorated by geopolitical conflict and
the Trump administration's antipathy towards the NATO alliance. This has
compelled NATO members and its allies, like Japan, to boost military spending;
in Japan's case to a target of nearly 2% of GDP.
These developments mean the investment environment is generally very positive,
and we have made substantial changes to the portfolio over the last few years
to increase exposure to these trends. However, one factor undermined the
Company's relative performance in the six-month review period. The Japanese
market is experiencing an ongoing style rotation, which began in 2021 and this
has created a headwind for your Company. Its strategy favours Premium and
Quality-rated stocks (defined in the glossary of terms and APMs provided on
pages 30 to 33 of the Half Year Report and Financial Statements), rather than
lower quality value stocks, as we believe that such stocks deliver the best
long-term performance. Japan's value companies have significantly outperformed
growth companies every year since 2021. In the six-month review period value
outperformed growth by around 12 percentage points. This performance contrasts
with developments in the US market, where AI-related stocks and other growth
companies have been the main drivers of market returns over the past five
years.
There are several reasons why value has performed so well in the Japanese
market:
- Value companies have responded more enthusiastically than growth
businesses to Japan's corporate governance reform efforts, restructuring their
businesses and improving capital efficiency and shareholder returns;
- Interest rate rises are driving earnings growth, especially amongst
financial names;
- Global growth is strong, and this is boosting the earnings of value
cyclicals; and
- Persistent yen weakness is providing Japanese exporters with a
significant competitive advantage, and the lower the quality of the exporter,
the stronger the benefit.
Meanwhile, quality growth stocks are struggling due to higher starting
valuations, strong competition from China and the adverse impact of yen
depreciation, which increases costs for companies that need to import products
and components into Japan. Software companies have also been subject to recent
pressure due to concerns that AI will render their business models obsolete by
replicating many software applications, thereby increasing competition and
reducing licensing revenues.
Despite the headwinds this style rotation has generated, we are encouraged by
the underlying performance of our portfolio holdings. Many are restructuring
their business portfolios and strengthening their balance sheets to improve
capital efficiency and enhance shareholder returns. Such efforts put these
businesses on track to meet our definition of 'Quality', even if they do not
yet exhibit all the characteristics we typically seek, and we expect this
progress to be reflected in valuations over time. Other holdings are also
performing strongly, due in part to their exposure to the AI revolution and
rising defence spending, alongside a range of other supportive factors.
Significant contributors and detractors
The most notable contributors to performance over the six months to 31st March
2026 included Modec, one of the top two global operators of floating platform
and storage and offloading (FPSO) facilities used in ultra deep-sea oil
drilling. Strength in new orders boosted share price performance.
Watchmaker Seiko Group delivered strong results thanks to its luxury watch
division, which is reaping the benefits of a new management team and the
popular Prime Minister Takaichi spotted wearing their watches in the oval
office and numerous other occasions! Advantest, which tests semiconductor
equipment, continued to perform well thanks to AI-related demand.
Key detractors included Rakuten Bank, Japan's largest online bank. Rakuten is
the only Japanese bank we classify as Quality-rated. Its shares fell sharply
following the February 2026 announcement of plans for Rakuten Bank to acquire
Rakuten Group's card and securities businesses. The market is concerned about
the price Rakuten Bank will have to pay for these assets. Gaming companies
Nintendo and Sony also detracted. Both these Quality-rated stocks were hurt by
the rising price of memory chips, which could reduce the profitability of
their consoles. Additionally, sales of Nintendo's new console, the Switch 2,
have fallen short of expectations. Sanrio, the Quality-rated owner of
intellectual property such as Hello Kitty, was hurt by concerns that
deteriorating Sino-Japan relations may weaken Chinese demand for its products.
Portfolio activity
Our efforts to position the portfolio to benefit from key investment themes
such as corporate governance reforms, the AI revolution and increased defence
spending continued over the review period. For example, we purchased Sumitomo
Electric, whose growth is being driven by surging demand for optical devices
and cables integral to the adoption of AI tools and the construction of data
centres. Additionally, the company has committed to enhancing shareholder
returns and improving capital efficiency. The provision of data centre
infrastructure is also supporting the earnings of Mitsubishi Electric, another
recent addition to the portfolio, which is benefiting further from rising
demand for robotics, energy systems and defence equipment. The appeal of this
company is enhanced by the fact that it is undergoing a major restructuring to
improve capital efficiency, including the de-consolidation or sale of its auto
parts business. Japan Tobacco's strong shareholder returns policy was one
reason behind our recent purchase. Furthermore, the company's fundamentals are
very positive. It commands a leading market share and enjoys strong pricing
power, high margins and robust free cash flow.
During the review period we made several outright sales. Most notably, we sold
several companies due to concerns regarding the potential risks AI poses to
their software businesses. Disposals included Hitachi, Nomura Research
Institute, OBIC, Rakus and Toei Animation. We closed positions in convenience
store operator Seven & I Holdings following the withdrawal of a bid for
the company, and Sumitomo Densetsu, an electrical engineering business, which
was the target of a successful takeover bid by Daiwa House. This sale of
Sumitomo Densetsu was part of Sumitomo Electric's reorganisation of its
subsidiaries.
Portfolio Characteristics - Six Months to 31st March 2026 'Index'
Price to Earnings Ratio(1) (next 12 months) 18.6x 16.2x
Return on Equity(1) 13.7% 9.7%
Operating Margin(1) 17.4% 14.1%
Active Share(1) 93%
Gearing - Start/End of period 14.0% - 16.2%
Turnover (annualised)(1) 38%
( )
(1) Term is defined in Glossary of Terms and Alternative Performance
Measures on pages 30 to 33 of the Half Year Report and Financial Statements.
Source: Factset/J.P. Morgan
Outlook
We remain very positive on the outlook for Japanese equities. As we mentioned
in the Annual Report, although the market has performed strongly over the past
two and a half years, we believe the transformation underway in Japan is still
in its early stages. The full impact of corporate governance reforms has yet
to be realised and should continue to support corporate balance sheets and
dividend payouts. While other Asian markets have been following Japan's lead
in adopting corporate reforms, the scale of Japan's efforts and the scope for
improvement is unique. Companies hold too much cash and too many
cross-shareholdings, and this is weighing on returns on equity (RoE) relative
to other major markets. In addition, operating margins are lower in Japan than
in Europe and the US. In our view, corporate reform is now entering a new
phase in which the rationalisation of companies' business portfolios and
balance sheets may lead to long-term improvement in profitability levels that
will be a significant market driver for the foreseeable future.
Other supportive factors are also at work in the Japanese market, creating
opportunities for the precisely the kind of high-quality, innovative companies
we own. Perhaps the most notable trend is the modernisation and expansion of
Japan's defence capabilities. Like the UK and many European countries, Japan
can no longer depend on the military support of the US. Prime Minister
Takaichi wants to increase military spending significantly and possibly change
Japan's pacifist constitution. Export restrictions on military hardware are
also being lifted. These developments mean defence is likely to be one of
Japan's strongest growth areas over the next decade.
These developments have captured the attention of international investors,
especially as valuations remain attractive relative to global peers - Japanese
equities are still trading at a meaningful discount to the US despite the
strong market gains seen in recent years. In 2019 Warren Buffet's Berkshire
Hathaway initiated a widely publicised investment in five highly diversified
Japanese conglomerates, giving it exposure to many sectors including energy,
metals, food, and logistics. Berkshire Hathaway has since built its Japanese
exposure, including the recent purchase of a stake in Tokio Marine, Japan's
largest non-life insurer, which the Company also holds. The company's Japanese
investments now comprise its single largest position outside the US. Another
consequence of increased foreign interest is the surge in merger and
acquisition (M&A) activity, especially unsolicited bids, which is
injecting further dynamism into the market.
As ever, there are risks to monitor. We are keeping a close eye on the
negative effects of AI on software companies and other sectors vulnerable to
disruption. We are also watching events in the Middle East. Japan is a major
energy importer and roughly half its petroleum imports transit the Strait of
Hormuz, although petrol subsidies are currently protecting consumers from the
full impact of global oil price rises., Higher input costs are also a risk to
large swathes of the Japanese stock market, but in the longer run, the
outbreak of conflict with Iran may speed up the restart of Japan's nuclear
facilities. Meantime these nascent energy price pressures further complicate
the BoJ's task, as it seeks to balance the need to hike rates further to
suppress inflation and support the yen against the risk of damaging already
fragile economic growth.
Our highly experienced Tokyo-based investment analysts are exceptionally
well-placed to identify and capture the myriad opportunities generated by the
changes afoot in Japan. The team's on-the-ground location at the heart of this
market allows it to uncover insights and investment ideas often overlooked by
foreign-based analysts. We view this as a significant competitive advantage,
which, allied with the high quality of our portfolio holdings, leaves us
confident in the Company's ability to continue delivering capital growth and
sustained outperformance for shareholders over the long term. We look forward
to reporting on our progress as Japan's exciting transformation unfolds.
Thank you for your investment.
Nicholas Weindling
Miyako Urabe
Xuming Tao
Portfolio Managers
29(th) May 2026
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its half year
report.
Principal and Emerging Risks and Uncertainties
The Directors confirm that they have carried out a robust assessment of the
principal and emerging risks facing the Company, including those that would
threaten its business model, future performance, solvency or liquidity. With
the assistance of JPMF, the Audit & Risk Committee has drawn up a risk
matrix, which identifies the key risks to the Company. These are reviewed and
noted by the Board. The Board believes that the principal and emerging risks
and uncertainties faced by the Company fall into the following broad
categories:
• Market and Economic Risks - including market volatility and external
factors, discount widening and lack of investor demand, liquidity risks.
• Trust Specific Risks - including poor strategy selection, poor
execution of strategy, gearing and loan covenants risk, change in portfolio
manager, statutory and regulatory compliance risk, cybercrime.
• Geopolitical Risks - including natural disasters and climate change
risk.
Information on each of these areas is given on pages 40 to 42 of the Strategic
Report within the Annual Report and Financial Statements for the year ended
30th September 2025.
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 during the period.
Going Concern
In accordance with The Financial Reporting Council's guidance on going concern
and liquidity risk, the Directors have undertaken a rigorous review of the
Company's ability to continue as a going concern.
The Board has, in particular, considered the impact of heightened market
volatility since the conflict between the USA, Israel and Iran caused the
closure of the Strait of Hormuz and the Russian invasion of Ukraine, the
persistent inflationary environment, rising interest rates and other
geopolitical risks, and does not believe the Company's going concern status is
affected. The Company's assets, the vast majority of which are investments in
quoted securities which are readily realisable, exceed its liabilities
significantly under all stress test scenarios reviewed by the Board. Gearing
levels and compliance with borrowing covenants are reviewed by the Board on a
regular basis. Furthermore, the Company's key third party suppliers, including
its Manager are not experiencing any operational difficulties which would
adversely affect their services to the Company.
Accordingly, having assessed the principal and emerging risks and other
matters, the Directors believe that there are no material uncertainties
pertaining to the Company that would prevent its ability to continue in such
operational existence for at least 12 months from the date of the approval of
this half yearly financial report.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the interim
financial report has been prepared in accordance with FRS 104 'Interim
Financial Reporting' and gives a true and fair view of the state of the
affairs of the Company and of the assets, liabilities, financial position and
net return of the Company, as at 31st March 2026, as required by the UK
Listing Authority Disclosure Guidance and Transparency Rule ('DTR') 4.2.4R;
and
(ii) the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R.
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
Stephen Cohen
Chairman
29(th) May 2026
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2026 31st March 2025 30th September 2025
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at
fair value through profit or loss(1) - 17,087 17,087 - 3,155 3,155 - 190,198 190,198
(Losses)/gains on derivative
financial instruments - (5,121) (5,121) - 7,223 7,223 - 36,165 36,165
Net foreign currency exchange gains(2) - 970 970 - 2,207 2,207 - 3,317 3,317
Income from investments 10,749 - 10,749 9,134 53 9,187 17,970 64 18,034
Income from derivative instruments 1,355 - 1,355 1,065 - 1,065 1,889 - 1,889
Interest receivable and similar income 181 - 181 125 - 125 256 - 256
Gross return 12,285 12,936 25,221 10,324 12,638 22,962 20,115 229,744 249,859
Management fee(3) (292) (2,626) (2,918) (91) (814) (905) (357) (3,217) (3,574)
Other administrative expenses (668) - (668) (630) - (630) (1,332) - (1,332)
Net return before finance
costs and taxation 11,325 10,310 21,635 9,603 11,824 21,427 18,426 226,527 244,953
Finance costs (94) (844) (938) (83) (744) (827) (176) (1,581) (1,757)
Net return before taxation 11,231 9,466 20,697 9,520 11,080 20,600 18,250 224,946 243,196
Taxation (1,075) - (1,075) (913) - (913) (1,797) - (1,797)
Net return after taxation 10,156 9,466 19,622 8,607 11,080 19,687 16,453 224,946 241,399
Return per ordinary share (note 3) 6.38p 5.95p 12.33p 5.32p 6.85p 12.17p 10.15p 138.75p 148.90p
( )
(1) Includes foreign currency gains or losses on investments.
(2) Foreign currency gains are due to Yen denominated loan notes and
bank loans.
(3) During the year to 30th September 2025, the Manager waived its
management fee in lieu of its contribution towards the total costs associated
with the Company's combination with JSGI. Further details on the Manager's
Contribution can be found in the 30th September 2025 Annual Report and
Financial Statements.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period. During
the year ended 30th September 2025, the Company acquired the assets of
JPMorgan Japan Small Cap Growth & Income plc (JSGI) following a scheme of
reconstruction.
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 after taxation represents the profit for the period and also
the total comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Share Capital
share premium redemption Other Capital Revenue
capital account reserve(1) reserve(1) reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 31st March 2026
(Unaudited)
At 30th September 2025 46,153 138,549 8,650 166,791 833,079 26,902 1,220,124
Buyback of ordinary shares into Treasury - - - - (33,171) - (33,171)
Net return after taxation - - - - 9,466 10,156 19,622
Dividend paid in the period (note 4) - - - - - (13,855) (13,855)
At 31st March 2026 46,153 138,549 8,650 166,791 809,374 23,203 1,192,720
Six months ended 31st March 2025
(Unaudited)
At 30th September 2024 40,312 - 8,650 166,791 641,289 21,561 878,603
Buyback of ordinary shares into Treasury - - - - (17,711) - (17,711)
Issue of ordinary shares in respect of the
combination with JSGI(2) 5,841 138,713 - - - - 144,554
Costs in relation to issue of ordinary shares - (164) - - - - (164)
Net return after taxation - - - - 11,080 8,607 19,687
Dividend paid in the period (note 4) - - - - - (11,112) (11,112)
At 31st March 2025 46,153 138,549 8,650 166,791 634,658 19,056 1,013,857
Year ended 30th September 2025 (Audited)
At 30th September 2024 40,312 - 8,650 166,791 641,289 21,561 878,603
Buyback of ordinary shares into Treasury - - - - (33,156) - (33,156)
Issue of ordinary shares in respect
of the combination with JSGI(2) 5,841 138,713 - - - - 144,554
Costs in relation to issue of
ordinary shares - (164) - - - - (164)
Net return after taxation - - - - 224,946 16,453 241,399
Dividend paid in the year (note 4) - - - - - (11,112) (11,112)
At 30th September 2025 46,153 138,549 8,650 166,791 833,079 26,902 1,220,124
( )
(1) The Capital redemption reserve is not distributable under the
Companies Act 2006.
The Other reserve of £166,791,000 was created during the year
ended 30th September 1999, following a cancellation of the share premium
account, and forms part of the Company's distributable reserves.
In accordance with the Company's Articles of Association and with
ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable
Profits under the Companies Act 2006, the Capital reserves may be used as
distributable profits for all purposes and, in particular, the buyback by the
Company of its ordinary shares and for payments of dividends.
As at 31st March 2026, the £809,374,000 Capital reserves comprise
net gains on the sale of investments amounting to £461,924,000, a gain from
the revaluation of investments still held totalling £312,688,000 and an
exchange gain on the foreign currency loans of £34,762,000. The £34,762,000
of capital reserves, resulting from the exchange gain on the foreign currency
loan, is not distributable. The remaining Capital reserves, totalling
£774,612,000, are subject to fair value movements, to the extent they
represent realised profits, may not be readily realisable at short notice, and
therefore may not be entirely distributable.
The investments are subject to financial risks, therefore Capital
reserves (arising on investments sold) and Revenue reserve may not be entirely
distributable if a loss occurred during the realisation of these investments.
(2) During the year to 30th September 2025, the Company acquired the
assets of JPMorgan Japan Small Cap Growth & Income plc (JSGI), following
a scheme of reconstruction ('Combination').
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
31st March 31st March 30th September
2026 2025 2025
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 1,169,554 834,776 1,042,303
Investments on loan held at fair value through profit or loss 64,046 199,094 174,115
Total investments held at fair value through profit or loss 1,233,600 1,033,870 1,216,418
Current assets
Derivative financial assets 598 592 7,952
Debtors 9,637 12,185 7,071
Cash at bank 22,052 40,740 58,286
Amounts held with clearing houses and brokers - 11 -
32,287 53,528 73,309
Creditors: amounts falling due within one year (2,620) (1,266) (1,450)
Derivative financial liabilities (8,858) (5,194) (3,020)
Net current assets 20,809 47,068 68,839
Total assets less current liabilities 1,254,409 1,080,938 1,285,257
Creditors: amounts falling due after more than one year (61,689) (67,081) (65,133)
Net assets 1,192,720 1,013,857 1,220,124
Capital and reserves
Called up share capital 46,153 46,153 46,153
Share premium account 138,549 138,549 138,549
Capital redemption reserve 8,650 8,650 8,650
Other reserve 166,791 166,791 166,791
Capital reserves 809,374 634,658 833,079
Revenue reserve 23,203 19,056 26,902
Total equity shareholders' funds 1,192,720 1,013,857 1,220,124
Net asset value per ordinary share (note 5) 762.4p 620.6p 757.9p
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2026 2025 2025
£'000 £'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 21,635 21,427 244,953
Adjustment for:
Net gains on investments held at fair value through
profit or loss (17,087) (3,155) (190,198)
Net losses/(gains) on derivative financial instruments 5,121 (7,223) (36,165)
Net foreign currency exchange gains (970) (2,207) (3,317)
Dividend income (10,749) (9,187) (18,034)
Interest and stock lending income (181) (6) (256)
Income from derivative financial instruments (1,355) (1,065) (1,889)
Realised (losses)/gains on foreign exchange transactions (2,478) 632 (454)
(Increase)/decrease in other debtors (62) (75) 24
(Decrease)/increase in accrued expenses (24) (16) 13
Net cash outflow from operations before dividends and interest (6,150) (875) (5,323)
Dividends received 7,690 8,025 16,786
Interest and stock lending income received 181 6 256
Net cash inflow from operating activities 1,721 7,156 11,719
Purchases of investments (290,825) (187,697) (380,539)
Sales of investments 289,736 261,576 463,846
Net settlement of derivative financial instruments 8,853 11,825 31,233
Income from derivative financial instruments received 835 - 1,102
Amounts held at clearing houses and brokers - (11) -
Interest paid on CFDs (580) (198) (584)
Costs paid in respect of the combination with JSGI - (882) (882)
Net cash inflow from investing activities 8,019 84,613 114,176
Dividend paid (note 4) (13,855) (11,112) (11,112)
Net cash acquired following the combination with JSGI - 5,895 5,895
Costs in relation to issue of ordinary shares - (164) (164)
Buyback of ordinary shares into Treasury (31,767) (17,418) (33,712)
Repayment of bank loan - (50,958) (50,958)
Interest paid (348) (780) (1,305)
Net cash outflow from financing activities (45,970) (74,537) (91,356)
(Decrease)/increase in cash and cash equivalents (36,230) 17,232 34,539
Cash and cash equivalents at start of period/year 58,286 23,497 23,497
Foreign currency exchange movements (4) 11 250
Cash and cash equivalents at end of period/year 22,052 40,740 58,286
Cash and cash equivalents consist of:
Cash at bank 22,052 40,740 58,286
Total 22,052 40,740 58,286
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 31st March 2026
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 auditor.
The information contained within the financial statements in this half year
report does not constitute statutory accounts as defined by sections 434 and
436 of the Companies Act 2006 and has not been audited or reviewed by the
Company's auditors.
The figures and financial information for the year ended 30th September 2025
are extracted from the latest published financial statements of the Company.
The financial statements for the year ended 30th September 2025 have been
delivered to the Registrar of Companies 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
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting
Council ('FRC'), has been applied in preparing this condensed set of financial
statements for the six months ended 31st March 2026.
The condensed 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 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 Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for at least 12 months from the
date of approval of these condensed financial statements. Accordingly, the
Directors consider it appropriate to adopt the going concern basis of
accounting in preparing these condensed financial statements. This conclusion
takes into account the Director's assessment of the risks faced by the Company
as detailed in the Interim Management Report on page 28 of the Half Year
Report and Financial Statements.
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 September 2025.
3. Return per ordinary share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2026 2025 2025
£'000 £'000 £'000
Return per ordinary share is based on the following:
Revenue return 10,156 8,607 16,453
Capital return 9,466 11,080 224,946
Total return 19,622 19,687 241,399
Weighted average number of ordinary shares in issue
during the period/year 159,169,560 161,744,627 162,120,253
Revenue return per ordinary share 6.38p 5.32p 10.15p
Capital return per ordinary share 5.95p 6.85p 138.75p
Total return per ordinary share 12.33p 12.17p 148.90p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2026 2025 2025
Pence £'000 Pence £'000 Pence £'000
Dividend paid
Final dividend in respect of prior year 8.70 13,855 6.75 11,112 6.75 11,112
All dividends paid in the period have been funded from the revenue reserve
(2025: same).
No interim dividend has been declared in respect of the six months ended 31st
March 2026 (2025: nil).
5. Net asset value per ordinary share
The net asset value per ordinary share and the net asset value attributable to
the ordinary shares at the period end are shown below. These were calculated
using 156,451,203 (31st March 2025: 163,370,203 & 30th September 2025:
160,978,203) ordinary shares in issue at the period end (excluding shares held
in Treasury).
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2026 2025 2025
Net asset Net asset Net asset
value attributable value attributable value attributable
£'000 pence £'000 pence £'000 pence
Net asset value - debt at par value 1,192,720 762.4 1,013,857 620.6 1,220,124 757.9
¥13 billion senior secured loan notes:
Add: amortised cost 61,689 39.4 67,081 41.1 65,133 40.5
Less: fair value (45,354) (29.0) (55,461) (34.0) (51,895) (32.2)
Net asset value - debt at fair value 1,209,055 772.8 1,025,477 627.7 1,233,362 766.2
6. Fair valuation of instruments
The fair value hierarchy disclosures required by FRS 102 are given below:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2026 2025 2025
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 1,233,600 - 1,033,870 - 1,216,418 -
Level 2(1) 598 (8,858) 592 (5,194) 7,952 (3,020)
Total 1,234,198 (8,858) 1,034,462 (5,194) 1,224,370 (3,020)
(1) Consists of the fair value of derivative financial instruments
(long CFDs), calculated as the difference between the initial contract price
of the CFD and the market value of the underlying investment, and is presented
as derivative financial assets or derivative financial liabilities in the
Condensed Statement of Financial Position.
7. Analysis of changes in net debt
Foreign
At currency Other At
30th September exchange non-cash 31st March
2025 Cash flows movements transactions(1) 2026
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents
Cash at bank 58,286 (36,230) (4) - 22,052
58,286 (36,230) (4) - 22,052
Borrowings
Debt due after one year (65,133) - 3,452 (8) (61,689)
(65,133) - 3,452 (8) (61,689)
Net debt (6,847) (36,230) 3,448 (8) (39,637)
(1) Other non-cash transactions include amortisation adjustment.
JPMORGAN FUNDS LIMITED
1(st) June 2026
For further information, please contact:
Paul Winship
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
E-mail: jpmam.investment.trusts@jpmorgan.com
(mailto:jpmam.investment.trusts@jpmorgan.com)
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.
ENDS
A copy of the half year will be submitted to the National Storage Mechanism
and will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The Half Year Report will also shortly be available on the Company's website
www.jpmjapanese.co.uk (http://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.
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. END IR BSGDUXXDDGLC
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