JPMorgan Japanese Investment Trust plc · As at 31st March 2019, the Company’s share capital comprised161,248,078(2018: 161,248,078) ordinary shares of 25p each. Management Company

JPMorgan Japanese Investment Trust plc Half Year Report & Financial Statements for the six months ended 31st March 2019

K E Y F E A T U R E S

Your Company

Investment Objective

Capital growth from Japanese investments.

Investment Policy

To maintain a portfolio almost wholly invested in Japan.•

To use gearing to increase potential returns to shareholders. The Company’s gearing policy is to operate within a range of 5% net•cash to 20% geared in normal market conditions.

To invest no more than 15% of its gross assets in any listed company (including investment trusts).•

Benchmark

The Tokyo Stock Exchange First Section Index (‘TOPIX’) expressed in sterling terms.

Capital Structure

UK domiciled. Full listing on the London Stock Exchange. Constituent of the FTSE 250 Index.

As at 31st March 2019, the Company’s share capital comprised 161,248,078 (2018: 161,248,078) ordinary shares of 25p each.

Management Company and Company Secretary

The Company employs JPMorgan Funds Limited (‘JPMF’ or the ‘Manager’) as its Alternative Investment Fund Manager (‘AIFM’) andCompany Secretary. JPMF delegates the management of the Company’s portfolio to JPMorgan Asset Management (UK) Limited (‘JPMAM’),which in turn delegates day to day investment management activity to JPMorgan Asset Management (Japan) Limited in Tokyo.

Find out more

More information about the Company can be found online at www.jpmjapanese.co.uk

J P M O R G A N J A PA N E S E I N V E S T M E N T T R U S T P L C . H A L F Y E A R R E P O R T & F I N A N C I A L S TA T E M E N T S 2 0 1 9

K E Y F E A T U R E S

WH Y I N V E S T I N T H E J P M O R G A N J A P A N E S E I N V E S T M E N T T R U S T

Why invest in the JPMorganJapanese Investment Trust

Our heritage and our team

JPMorgan first opened its Tokyo office in 1969and has over 40 years’ experience in Japan inseeking out the most attractively valuedJapanese sectors.

The Investment Team, based primarily in Tokyo,has a significant depth of experience inJapanese equity investments with an average of13 years’ employment with JPMorgan and some18 years in the industry. They are supported byJPMorgan Asset Management’s extensiveresources around the world.

40Years’ experience

investing in the region

4,000+Japanese company

visits each year

94.9%Active share1

24Investment

professionals in Japan

Our Investment Approach

A combination of desk-based research andcompany meetings contribute to our rating ofa company. We consider the growthopportunity for the industry overall beforeconsidering the company’s competitivepositioning and management. This allows us toassess the company’s potential for growth. Wethen look at financial metrics with a focus oncash flow and balance sheet strength to assessthe overall economics of the business. We alsoconsider governance issues such asshareholder returns, management strengthand the track record on environmental andsocial issues. Only then do we considervaluations – we do not buy companies wherethe short-term valuation looks low if they donot have a strong long term growth outlook.

1 Active share is a measurement of the difference in the Company’s portfolio compared to the benchmark index.

WE ARE EXCITED BY THEOPPORTUNITIES FORINVESTMENT IN JAPANESECOMPANIES

Investment Manager,JPMorgan JapaneseInvestment Trust plcNicholas Weindling

OUR TEAM CONTINUES TODISCOVER INNOVATIVE ANDCOMPETITIVE COMPANIES

Investment Manager,JPMorgan JapaneseInvestment Trust plcShoichi Mizusawa(Head of Equities, Tokyo)

JAPAN IS CHANGING, NEWPRODUCTS, TECHNOLOGIESAND MARKETS PROVIDE USWITH A BROAD UNIVERSE OFATTRACTIVELY PRICEDCOMPANIESInvestment Manager,(effective 22nd May 2019)JPMorgan JapaneseInvestment Trust plcMiyako Urabe

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C O N T E N T S

Half Year Performance 4 Financial Highlights

Chairman’s Statement 7 Chairman’s Statement

Investment Review 10 Investment Managers’ Report

15 Sector Analyses 16 List of Investments

17 Environment, Social and Governance Report (‘ESG’)

Financial Statements 22 Statement of Comprehensive Income 23 Statement of Changes in Equity 24 Statement of Financial Position

25 Statement of Cash Flows 26 Notes to the Financial Statements

Interim Management 30 Report

Shareholder Information 32 Glossary of Terms and Alternative

Performance Measures (APMs)

34 Where to buy J.P. Morgan Investment Trusts

37 Information about the Company

Half Year Performance

F I N A N C I A L H I G H L I G H T S


TOTAL RETURNS (INCLUDING DIVIDENDS REINVESTED)

TO 31ST MARCH 2019

1 Source: Morningstar.2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share with debt at par value.3 Source: Morningstar. The Company’s benchmark is the Tokyo Stock Exchange First Section Index (TOPIX) expressed in sterling terms.AAlternative Performance Measures (‘APM’).

A glossary of terms and APMs is provided on pages 32 to 33.

3 Year 5 Year 10 Year 6 months 1 Year Cumulative Cumulative Cumulative

Return to shareholders1,A

Return on net assets2,A

Benchmark return3,A

Net asset return performanceagainst benchmark return3

–12.0% –8.8% +49.2% +98.3% +257.8%

–12.7% –3.6% +44.4% +100.9% +235.2%

–9.0% –2.1% +39.9% +72.3% +142.7%

–3.7% –1.5% +4.5% +28.6% +92.5%

F I N A N C I A L H I G H L I G H T S

H A L F Y E A R P E R F O R M A N C E | 5

31st March 30th September 2019 2018 % change

Key financial data as at 31st March

Shareholders’ funds (£’000) 734,570 851,540 –13.7

Total Assets 843,663 991,003 –14.8

Net asset value per share with debt at par valueA 455.6p 528.1p –13.71

Net asset value per share with debt a fair valueA 448.9p 523.6p –14.32

Share priceA 398.0p 458.0p –13.13

Share price discount to net asset value per share with debt at par valueA 12.6% 13.3%

Share price discount to net asset value per share with debt at fair valueA 11.4% 12.5%

12 month average share price discount to net asset value per share with debt at fair value4 8.7% 9.2%

Exchange rate 1 = 144.2 1 = 148.1 –2.6

Shares in issue 161,248,078 161,248,078 0.0

GearingA 10.3% 14.7%

Ongoing chargesA 0.69% 0.67%

1 % change, excluding dividend paid. Including dividend, the total return is –12.7%.2 % change, excluding dividend paid. Including dividend, the total return is –13.3%.3% change, excluding dividend paid. Including dividend, the total return is –12.0%.4Morningstar/J.P.Morgan.AAlternative Performance Measures (‘APM’).

A glossary of terms and APMs is provided on pages 32 to 33.

£ ¥ £ ¥

Financial Data

Chairman’s Statement

C H A I R M A N ’ S S T A T E M E N T

C H A I R M A N ’ S S T A T E M E N T | 7

Performance

This is my first statement to you since becoming Chairman of your Company in December last year. For thesix months ended 31st March 2019 the total return on net assets was –12.7%. This compares with a totalreturn for the same period from the Company’s benchmark return, the Tokyo Stock Exchange First Section(TOPIX) Index (in sterling terms), of –9.0%. The share price total return also declined over the same periodby 12.0% (from 458.0p to 398.0p).

The period under review has been disappointing for Japanese equity investors as global stock markets weregenerally under pressure in the latter months of 2018 reflecting, amongst other things, concerns overa slowdown in Chinese growth and global political uncertainties. Whilst improvements were seen in theCompany’s net asset value and share price performance in the latter months of the period this was notsufficient for the Company to post a positive result for the six months to 31st March 2019.

Short-term underperformance has, unfortunately, impacted on the longer term performance; however, theCompany’s long-term performance continues to be strong, with outperformance against the benchmarkindex over 3, 5 and 10 years of 4.5%, 28.6% and 92.5% respectively.

I am pleased to report, however that the net asset value has increased since the half year end by 3.2% as at16th May 2019, compared to the benchmark index decline of 0.9%, over the same period, and the shareprice has risen by 6.0%.

The Investment Managers’ Report on pages 10 to 20 reviews the market and provides more detail onperformance and the stocks in which the Company is invested. In late 2018 the Board agreed that theInvestment Manager could hold investments up to 7.5% (previously 5%) in excess of the benchmarkweighting, a level that is in line with many of the Manager’s other portfolios. The Investment Managers’report on page 11 highlights how this increased flexibility has benefited the running of the portfolio.

Named Investment Manager

The Board is delighted to report that Miyako Urabe will join Nicholas Weindling as Investment Manager,with effect from 22nd May 2019. She has been involved in working on the portfolio for many years and wewelcome her to the team. Shoichi Mizusawa is stepping down as investment manager with effect from22nd May 2019. He will remain as Head of Equities in Tokyo and we thank him for the support he hasprovided to the Board.

Gearing

The Board of Directors believes that gearing can be beneficial to performance and sets the overall strategicgearing policy and guidelines and reviews these at each Board meeting. The Investment Manager thenmanages the gearing within the agreed levels. The Investment Managers’ permitted gearing limit is withinthe range of 5% net cash to 20% geared in normal market conditions. During the period gearing rangedfrom 9.3% to 16.7%.

Revenue and Dividends

Dividend payments from Japanese companies are unpredictable and dividends paid to the Company’sshareholders in past years should not be taken as a guide to future payments. For the year ended30th September 2018, we paid a dividend of 5.0p per share, reflecting the available revenue fordistribution. Consistent with previous years the Company will not be declaring an interim dividend.

Christopher SamuelChairman

Long-termperformancecontinues to bestrong

C H A I R M A N ’ S S T A T E M E N T


Discount Management/share repurchases

The Board has guidelines in place with regard to the management of any discount/premium that maydevelop between the Company’s share price and its net asset value per share and to enhance returns toshareholders. Over the period the share price discount ranged from 4.4% to 12.8%. The Company did notrepurchase any shares during the six month period.

The Board

Andrew Fleming retired as Chairman at the Annual General Meeting in December; I would like again tothank him for his significant contribution to the Company over the years. At that meeting, we welcomedSally Macdonald as a new Director. Sally has a wealth of experience in investment management in theAsian region and is an excellent addition to the Board.

The Board’s annual evaluation concluded that the Board retains the various skills and experience it needsand that it works well together. The Board’s retirement schedule suggests that we would not currentlyanticipate any Board changes until 2022. However, the Board attaches great importance to the principleson diversity in the Hampton-Alexander Review and plans to be in full conformity with its recommendations.

Outlook

Concerns over a trade war between the United States and China continue to overshadow equity marketsand there are mixed indicators from global economic data. However, the stimulus coming from Chinashould help to support growth in Asia and lead to a recovery in global exports. With the prospect ofa pickup in growth in Asia, the outlook for the Japanese economy should also be positive.

Against this background I continue to believe that the investment strategy of JPMorgan JapaneseInvestment Trust plc remains attractive.

Christopher SamuelChairman 22nd May 2019

Investment Review

I N V E S T M E N T M A N A G E R S ’ R E P O R T

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Performance

Firstly, I would like to welcome Miyako Urabe to the team as a named investment manager. She has beeninvolved in working on the portfolio for many years. Turning to the period under review, in the six monthsto 31st March 2019 the Company produced a total return to shareholders of –12.0% and a total return onnet assets of –12.7%. These compare with a total return of –9.0% from the Company’s benchmark index,the TOPIX Index, in sterling terms. Since the half year end the net asset value has increased by 3.2% as at16th May 2019, compared to the benchmark index decline of 0.9% over the same period.

Over the last three and five years to 31st March 2019 the Company has returned 44.4% and 100.9%respectively versus 39.9% and 72.3% for the benchmark. The average level of gearing over the period was11.7%, which detracted from returns in the falling market.

Investment Philosophy and Process

Our investment approach emphasises individual stock selection to build a portfolio of quality growth stockswith strong future growth prospects. This means that, within some broad portfolio risk limits, theCompany’s portfolio is likely to differ materially from the benchmark index as we will avoid companies andsectors that face structural issues even if they are a large constituent of the benchmark index.

The opportunity to find attractive opportunities is assisted by the fact that the Japanese market isunder-researched when compared with other developed equity markets. With well over 50% of theconstituents of the Company’s benchmark index being covered by no more than one provider of brokerresearch, there are significant opportunities to uncover hidden sources of return from Japanese equities.

Portfolio Themes

In building the Company’s investment portfolio we have identified several key themes that underlie much ofour stock selection. We believe that these themes, which we have used in stock selection for over five years,are long-term resilient sources of return for Japanese companies. The extent to which an individualcompany is a beneficiary of one or more of these themes adds to the attractions of the company.Background information on each theme is set out in the Company’s Annual Report and FinancialStatements. As at 31st March 2019 the portfolio breakdown by theme was as follows:

Internet30%

Japan Brand23%

Automation15%

Improvingcorporate

governance11%

Healthcare9%

Stock specific7%

Aging population5%

Nicholas WeindlingInvestment Manager

Shoichi MizusawaInvestment Manager(until 22nd May 2019)Head of Equities, Tokyo.

Miyako UrabeInvestment Manager(with effect from22nd May 2019)


I N V E S T M E N T R E V I E W | 1 1

Investment Performance

The themes to which the portfolio is exposed have not changed during the review period. The financialcharacteristics of the portfolio are also unchanged; balance sheets and cash flows continue to be stronger,earnings growth faster and return on equity higher than the market as a whole. For example, as at31st March 2019 the holdings in the portfolio generated an average return on equity of almost 17%compared to the benchmark return on equity of close to 12%. The portfolio valuation, as measured by theprice-earnings ratio, is higher than the market average but we believe the strong long-term growthprospects of the companies we own more than justifies this.

We also have a bias to mid and smaller sized companies reflecting the fact that coverage by analysts ispoor in this part of the market, providing us with the opportunity to identify investments overlooked by thebroader market. These companies also tend to have more focused business models. Investors shouldexpect to see these characteristics in the portfolio over the economic cycle.

We made a number of changes to the portfolio and reduced the gearing level from 14.7% at the end ofSeptember to 10.3% at the end of March, reflecting the change in our view on the long-term outlook fora number of portfolio companies. The largest new purchases were Fast Retailing and Oriental Land and wemade a significant addition to Pan Pacific. Fast Retailing (Investment Theme – Japan Brand) is the operatorof UNIQLO stores. It is expanding rapidly outside of Japan, with overseas sales accounting for more than50% of total sales, and online. At the same time the company has significantly improved efficiency, mostrecently through a new large distribution center in Tokyo that only requires 10% of the people to operate itcompared to the previous facility. Oriental Land (Investment Theme – Japan Brand) is the operator of TokyoDisneyland which has an entry price half that of equivalent parks in the United States and approximately30 million visitors per year. The company has yet to start using ‘fast passes’, which allow customers tomove to the front of queues for some rides for an additional payment. We believe the company will start tomonetize this hugely popular asset more effectively.

The largest complete sales were Mitsubishi UFJ Financial, Komatsu and Sony. We sold the position in Sonyfollowing Google’s announcement of its new gaming system Stadia which allows computer games to bestreamed directly without the need of a console. This poses a significant threat to one of Sony’s keybusinesses. We believe that games content will continue to be valuable regardless of which systembecomes dominant and retain holdings in Nintendo, Square Enix and Nexon as a result.

Annualised turnover for the six months to 31st March 2019 was just over 20%, down from 30% over thesame period last year.

Commenting on the Trust’s five largest holdings:

Keyence (Investment Theme – Automation) continues to be the Trust’s largest position. It manufacturessensors used in factory production lines and is well-diversified in terms of geography and end-markets.It makes an operating margin of over 55% which is far ahead of its competitors and one of the highestoperating margins of any manufacturing company anywhere in the world. It also generates consistentlystrong free cash flow and has a very strong balance sheet. In short, it exhibits many of the characteristicswe look for in our investments. Its good performance was driven by strong earnings which have provento be more robust than its peers in the recent economic slowdown.

Due to strong share price performance, the holding exceeded the previous 5% overweight benchmarklimit during the six month period. In the past we would have had to reduce the holding. However, we arenow able to maintain the holding up to a maximum 7.5% overweight position compared to thebenchmark weighting.

Recruit (Investment Theme – Internet) operates a number of media businesses in Japan all of which aremarket leaders including those in the real estate, restaurant, bridal and used-car adverts sectors. Theinvestment case centres on its global number one jobs website ‘indeed’. Monetisation of this asset, whichreceives over 250 million visits per month, remains at an early stage. As such, we believe it has strongfuture earnings growth potential.

We believe thatthe long-termgrowthprospects of thecompanies weown more thanjustifies thehigher thanmarket averageprice-earningsratio



Shiseido (Investment Theme – Japan Brand) is a cosmetics manufacturer. The company’s operating profitmargin is lower than global peers at c.10% versus over 15% for domestic and international competitors.However, this is an improvement on the 5% reported last year. We believe that new management isturning the company around and has a strong focus on profitability. Furthermore, Japanese cosmeticscompanies have a significant opportunity to grow in China where per capita usage of these products isstill well below developed markets.

Hikari Tsushin (Investment Theme – Improving Corporate Governance) has a variety of businessesgenerating strong recurring revenues and free cash flow from SMEs. ePark is a reservation system foronline bookings at dental and medical surgeries. To date, approximately 8,000 of the 70,000 dentalsurgeries in Japan have adopted the system, paying a monthly fee. The company is prioritisingshareholder returns, buying back 20% of its shares over the last 10 years.

M3 (Investment Theme – Healthcare) operates the number one website used by doctors in Japan and theUK (amongst other countries). Its use is growing rapidly in China and we expect the company to expandboth its geographic reach and the range of services it provides. The core business enablespharmaceutical companies to reduce their marketing expenses by promoting their products online.Governments are putting increasing pressure on pharmaceutical companies to reduce drug prices asthey try to control healthcare expenditure. Any reduction in marketing expenses will therefore easepressure on research and development costs. During the review period, the company prioritised up-frontinvestment resulting in lower short-term profits and negatively impacting share price performance.However we remain holders as we believe in the company’s strategy to maximise the long-termopportunity.

Relative performance was strong in the first nine months of 2018 calendar year. However, during the finalquarter, being the first three months of the Company’s financial year, performance was very poor. Duringthis period both growth stocks, which tend to trade on higher short-term valuations, and stocks which hadpreviously performed well following good results, were weak. The Company has high exposure to stocks inboth of these categories as we believe that the outstanding long-term growth profiles of the companies weown more than justify their valuations. We do not have a short term trading approach and believe thata recent relative increase in share price is insufficient reason to sell a stock – there are several examples ofstocks we hold that have increased several fold during our ownership.

The market volatility arose largely as a result of uncertainty around rising interest rates in the UnitedStates, concerns over global economic growth and a potential trade war between China and the US. InFebruary and March the Company’s performance significantly improved as concern over rising interestrates dissipated. In this environment investors sought out high quality companies with strong balancesheets and free cash flows with growth that does not depend on the global economic cycle. These areexactly the types of stocks the Company is exposed to. We continue to have confidence in the long-termattraction of these companies.

During the six month period the top contributing stocks were Pan Pacific Holdings, Keyence (discussedabove), GMO Payment Gateway, Nexon and Ci:Z Holdings.

Pan Pacific Holdings (Investment Theme – stock specific) (formerly named Don Quijote) operates a chainof discount stores. It is a major disruptor in the Japanese retail industry with a low cost structure thatallows it consistently to beat incumbents. It adjusts merchandise depending on the prevailing economictrend and has proved itself in both inflationary and deflationary environments. The company isincreasingly successful in new areas such as food and products for tourists. For example the percentageof sales to tourists has increased from roughly 1% five years ago to over 10% now. During the period thecompany announced its acquisition of competitor, Uny. Stores that have completed their conversion intoDon Quijote stores have seen sales rise almost two-fold. The company has a strong track record on suchacquisitions, having bought Nagasakiya in 2007.

During thesix monthperiod the topcontributingstocks werePan PacificHoldings,Keyence,GMO PaymentGateway,Nexon andCi:Z Holdings.



GMO Payment Gateway (Investment Theme – Internet) provides transaction services for cashlesspayments such as those used in eCommerce. 80% of transactions in Japan are still carried out in cash,which is high by global standards. In the United Kingdom, for example, over 55% transactions are nowcashless. There is a strong push from the government to increase the percentage of cashless paymentsin Japan and GMO Payment Gateway is well positioned to benefit from this trend. It performed well dueto continuing high rates of growth with sales and operating profits both growing in excess of 30%.

Nexon (Investment Theme – Internet) is a computer games company that aims to have games whichgenerate steady profits and long-term cash flows. Its Dungeons and Fighters title has been one of themost popular games in China for many years. The shares performed strongly following theannouncement by major shareholder NXC of its intention to sell its 50% holding in Nexon. The marketresponded positively to the news as a number of the potential acquirers would be able to assist withNexon’s games distribution.

Ci:Z Holdings (Investment Theme – Japanese Brand) is a skincare company which we believe has stronggrowth potential outside Japan. Johnson & Johnson acquired the company at a significant premium. It ishighly unusual to see a Japanese company acquired by a foreign corporate but as attitudes to corporategovernance and shareholder value slowly change in Japan it is possible that we see more such deals.

During the six month period the top detracting stocks were M3, Cyber Agent, Zozo, Pigeon and Monotaro.It is notable that four of these five stocks are online businesses. There was little change in long-termoutlooks; however their share prices fell significantly during October’s sell-off in growth stocks. Furtherdetails are set out either in the description of our largest positions earlier in this report, or below. Weremain holders of these positions as we continue to believe in the long term investment case for eachstock.

Cyber Agent (Investment Theme – Internet) is Japan’s number one online advertising agency. It alsooperates games for mobile phones and is investing in online television. The penetration of onlineadvertising in Japan is much lower than other developed markets and CyberAgent continues to takeshare. The shares struggled following the company’s downward revision to its earnings projection due topoor sales in its mobile game business.

Zozo (Investment Theme – Internet) (formerly called Start Today) sells clothing online. The penetration ofclothes bought on the internet in Japan is low relative to other developed markets and, as such, thegrowth outlook is strong over the next few years. However, the share price fell because recent businessinitiatives have not been as successful as anticipated. The company has a good record of responding tosuch challenges. We believe that the long-term outlook is unchanged after the reporting period thecompany announced the closure of its international business.

Pigeon (Investment Theme – Japan Brand) is a manufacturer of baby goods with c.75% of the Japanesebaby bottle market. It is expanding rapidly across the Asian region. The shares have performed stronglyover several years and were caught in the general market weakening rather than there being a particularreason for the underperformance.

MonotaRO (Investment Theme – Internet) is an online supplier of industrial parts and products to smalland medium size enterprises. Many SMEs still order via phone or fax and the opportunity is large. Thecompany is investing for future growth which is suppressing short-term profit. However, in the long-termsuch investment is positive and the outlook is unchanged.

There is astrong pushfrom thegovernment toincrease thepercentage ofcashlesspayments andGMO PaymentGateway is wellpositioned



Investment outlook

The Japanese market is more cyclical than other developed markets and is impacted by global economicdevelopments, both positively and negatively. Currently the concerns about a potential trade war betweenthe United States and China remain ongoing and there is somewhat mixed global economic data,particularly in manufactured goods. However, the recent stimulus measures in China should provefavourable.

Your company, however, focuses on individual stocks rather than attempting to predict global economicgrowth. The companies we have invested in have strong structural growth outlooks, competitive positionsand balance sheets and we believe they will perform well in the long-term view regardless of the twists andturns of the wider global economy. Their competitive positions and balance sheets are strong enough towithstand such issues.

Nicholas WeindlingShoichi Mizusawa Investment Managers 22nd May 2019

S E C T O R A N A L Y S I S


31st March 2019 30th September 2018 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

Processing 68.4 49.7 68.3 50.3

Basic 12.2 10.6 12.4 11.2

Consumer 11.6 15.8 9.7 14.8

Financial 7.8 10.2 9.6 11.3

Utilities — 8.2 — 7.3

Assets — 5.5 — 5.1

Total 100.0 100.0 100.0 100.0

1 Based on the total portfolio investments of £810.0m (2018: £976.7m).

L I S T O F I N V E S T M E N T S


ValuationCompany £’000



PROCESSING

Information & Communications

Hikari Tsushin 29,648

SoftBank 23,658

GMO Payment Gateway 20,361

Obic 17,170

Nexon 16,524

Square Enix 15,034

Mercari 14,554

Digital Garage 9,174

Zenrin 7,829

Otsuka 7,592

Raksul 4,980

Trend Micro 4,959

Money Forward 4,147

Uzabase 3,460

UUUM 3,435

Istyle 3,216

185,741

Services

Recruit 42,376

M3 29,613

CyberAgent 25,698

Nihon M&A Center 17,666

Oriental Land 14,813

Relo 12,757

Infomart 12,703

Welbe 4,946

Tosho 2,900

163,472

Electric Appliances

Keyence 48,004

Nidec 14,988

Murata Manufacturing 11,844

Sysmex 8,117

Lasertec 6,185

89,138

PROCESSING – CONT

Machinery

Miura 13,587

Daikin Industries 11,596

SMC 8,521

Makita 7,910

Shima Seiki Manufacturing 4,463

46,077

Other Products

Pigeon 17,033

Nintendo 16,078

Tomy 3,450

36,561

Precision Instruments

Asahi Intecc 8,985

Nakanishi 5,608

14,593

Transportation Equipment

Suzuki Motor 14,562

14,562

Wholesale Trade

MISUMI 4,268

4,268

TOTAL PROCESSING 554,412

BASIC

Chemicals

Shiseido 39,303

Kao 33,877

Shin-Etsu Chemical 14,319

Milbon 6,463

Nifco 3,280

Kureha 1,828

99,070

TOTAL BASIC 99,070

CONSUMER

Retail Trade

Don Quijote 23,291

MonotaRO 21,905

Fast Retailing 18,226

Start Today 9,539

Cosmos Pharmaceutical 3,049

76,010

Pharmaceuticals

PeptiDream 10,316

Tsumura 7,260

17,576

TOTAL CONSUMER 93,586

FINANCIAL

Insurance

Tokio Marine 33,736

33,736

Other Financing Business

Japan Exchange 17,250

Aruhi 3,343

20,593

Securities & Commodity Futures

SBI 8,667

8,667

TOTAL FINANCIAL 62,996

TOTAL INVESTMENTS 810,064

AT 31ST MARCH 2019

The portfolio comprised only equity investments.

E N V I R O N M E N T A L , S O C I A L A N D G O V E R N A N C E R E P O R T ( ‘ E S G ’ )


How we integrate ESG into our investment process

IntroductionAn increasingly broad spectrum of investors now rightly focus not simply on return, risk and investmentprocess issues but also on ‘ESG’ issues for their portfolios. They want to know that their managers areaware of these issues, that they take them into account in building their portfolios and that they raiseissues directly with investee companies. Simplistic negative or positive screening has dwindled inpopularity. Investors expect to see an integrated approach to ESG and that this approach is clearly linked todriving financial returns, both through portfolio construction and Stewardship. These pages describe theapproach pursued by the Manager on behalf of your Company.

JPMorgan Asset Management has long been a leader in using such an Integrated Approach and believesthis has particular relevance in Japan, where widespread shareholder engagement is a more recentphenomenon but where, equally, it is beginning to prove effective.

The Background to ESG in JapanFrom an investor standpoint, one of the most important changes in Japan since Shinzo- Abe became PrimeMinister has been the move towards better corporate governance. Historically in Japan, corporategovernance has often been poor, with few independent external directors, a lack of board diversity,insufficiently independent audits, significant cross shareholdings and inefficient use of capital.

Although some individual companies took steps much earlier, more widespread improvements only camewith the introduction of the Japanese version of the Stewardship Code in 2014, modelled on theUK Stewardship Code (the ‘Code’). This was partly as a result of Prime Minister Abe’s economicrevitalisation programme, designed to help promote better capital allocation, and partly as a result oflongstanding pressure from foreign investors regarding shareholder rights compared to those of otherstakeholders. In addition, there had been a series of corporate scandals where governance had playeda major role, e.g. Olympus, Toshiba and Tokyo Electric Power. While there had been earlier enhancementsto company law, the introduction of the Code was an important step. Subsequently the Tokyo StockExchange launched the JPX-Nikkei 400 Index and began issuing good corporate governance guidance andthe Japanese FSA began monitoring compliance with the Code. Following the Global Financial Crisis (GFC),the number of activist investors in Japan increased, adding to the pressure for better governance,especially in relation to capital allocation.

The Japanese Code highlights the responsibility for institutional investors to engage constructively withinvestee companies to maximise their growth over the mid to long term. JPMorgan Asset Management(Japan) Ltd. had long followed UN PRI principles in Japan and adopted the local Code in 2014. Japan’sGovernment Pension Investment Fund (GPIF), the largest asset owner in the world, followed with demandson their investment managers to fulfill their stewardship responsibilities. The implementation of theCorporate Governance Code in 2015 introduced fundamental principles for corporate governance to listedcompanies, covering issues such as board structure and capital allocation. It is notable that from 2016/17onwards domestic Japanese equity managers have stepped up their levels of engagement and voting,which ten years ago was largely the province of foreign investors. Following a revision to the StewardshipCode in 2017, investment managers are now also providing details of voting at individual meetings.



As a result of these changes, we have witnessed steady increases in both dividends and share buybacks anda rise in the number of outside directors that sit on company boards, as shown in the table below.

Percentage of Companies with Independent, Outside Directors

Source: Goldman Sachs, Tokyo Stock Exchange, J.P. Morgan Asset Management, data from 2011 to 2018, as of 31st December 2018.

Increasing numbers of companies are officially stating return on equity and/or return on assets targets andraising their announced buyback ceilings, from JPY4.6 billion in 2014 to JPY6.2 billion in 2018 We expectthis trend to continue.

The JPMorgan Asset Management approachWe believe that ESG factors, particularly those related to governance, can play a critical role in a long-terminvestment strategy. Companies that address ESG issues and adopt sustainable business practices arebetter placed to maximise their performance and create enduring value for shareholders.

In our view, corporate governance issues have the most direct bearing on the risk/reward profile of theCompany’s portfolio; as such it is the area most integrated into our investment process. However,environmental concerns are an ever-increasing part of the investment landscape in part due to the impactthey can have on investment returns and cash flows; where relevant we make an assessment ofenvironmental issues and include them in our decision-making process. Where social issues are relevant,again the focus is on the economic impact of the involvement.

We seek to identify investee companies that run their businesses in a sustainable and efficient way, withhigh quality board decision-making, and aim to influence their behaviour and encourage best practicethrough dialogue. While we are always focussed on efficient use of capital and efficient capital structureswe have engaged broadly on multiple topics that affect valuation and propriety. The introduction of theCodes has led to greater willingness on the part of a number of companies to engage.

The Manager uses an active bottom-up process, with emphasis placed on direct contact with companies.ESG factors are systematically and explicitly considered during the investment decision-making process,with a Risk Profile analysis on the economics, duration (which includes sustainability) and governance ofa company undertaken, to ensure there is due focus on potential risks. Three quarters of the issuesaddressed focus on governance and specific ESG questions, including shareholder returns, managementstrength and the track record on environmental and social issues. Through this process, we seek tounderstand the company specific or external factors which could negatively impact the company andidentify issues to be addressed in future engagements.

0

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30

40

50

60

70

80

90

100

20182017201620152014201320122011

91.388.0

79.7

48.4

21.518.016.715.0

%



By way of example, as a result of this process, the Manager did not invest in Nissan Motor, even before theserious allegations of financial misconduct were directed against the former CEO, Carlos Ghosn. A highnumber of red flags were raised against the company on issues ranging from the board structure andmanagement attitude to openness to engage with investors, as well as concerns over future regulatoryimpact aimed at limiting carbon emissions.

Ongoing EngagementOur commitment to sustainable investing extends beyond the initial investment, as we incorporate ESGissues into our ownership policies and practices.

The following are examples of topics discussed during recent engagements:

Recent examples of ongoing engagement include Kao Corporation, Daikin and with major constructioncompanies.

At Kao Corporation, we engaged with the CEO, CFO and IR team on their packaging strategy, given itsspecial impact on the environment, and thus sustainability. Our meetings elucidated not only Kao’s strategyto reduce its carbon footprint by promoting refill products (now c.80% of sales), but also a possiblegame-changer new packaging technology. ‘AFB (Air-in Film Bottle)’ requires less plastic and has 100%recyclability. AFB only uses film and air, so there are both cost and environmental benefits (no metallicmould is needed to make the bottle). Recycling costs will also be significantly lower, since the film issingle-layered using a single type of plastic. We believe that Kao’s sustainability efforts are both genuineand competitive which gives us confidence to maintain an overweight exposure. That said, we will continueto engage with Kao on social and governance issues. Their board structure still requires improvement.While the majority of its product end-users are female, Kao’s board continues to have zero femalerepresentation and lack overall diversity.

We have also engaged with Daikin, a leader in the global air conditioning industry. Extreme weather eventsin recent years suggest that air-conditioning is no longer a luxury but increasingly becoming a basic needto maintain living standards. We identified two potential negatives in environmental terms: 1) energy usageof its air conditioners with regard to Scope 3* (Greenhouse Gas (GHG) emissions); and 2) the use offluorocarbons as refrigerants. We engaged with the company on these issues and now understand 83% ofall the residential air-conditioning units sold by Daikin in 2017 were environmentally conscious productswith two-thirds less global warming potential compared to conventional products.

We believe Daikin’s sustainability mission, ‘providing clean air in an energy efficient way’ is credible, andhave maintained our overweight position, which is based on its long-term growth potential.

The revision to the Japanese Corporate Governance Code in 2018 required companies to disclose theirplans for reducing cross-shareholdings, although it did not go far as saying they should be liquidated. In ourengagements, however, we have observed a wide range of responses on this issue. For example, indiscussions with major construction companies, we have seen an entrenched reluctance to reduce holdings,

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Clean Energy/Carbon Emissions We have requested that a company publicly disclose their greenhouse gasreduction target, like many of its global peers. This will help independent partiesmonitor and track progress of CO2 reduction.

Cyber Security Upon our request, a company delivered a satisfactory plan detailing their policiesand actions taken toward cyber security and data privacy protection.

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Board Structure After numerous exchanges with one company with global operations, we welcomedmanagement's decision to appoint two new foreign directors to the board. Webelieve having external and independent directors on the board is essential.

* Scope 3 GHG emission: all indirect emissions that occur in the value chain of the company, including product usage by customers.



citing a long-established business custom to maintain shareholdings with customers in order to win newbusiness. Little attempt is made to evaluate the financial rationale for the holdings, which in some casesextends to holdings in 60 companies. In our view, this is a poor use of the company’s balance sheet,showing a lack of capital management, as does excess cash on the balance sheet and an inappropriate debtto equity ratio. While many contractors have reported strong earnings, the traditional approach tocross-shareholdings, together with the industry’s anti-competitive practices, have led us to avoidinvestments in this sector.

VotingIn addition to engaging in meaningful interaction with investee companies through dedicated meetings, wevote in a prudent and diligent manner, and in the financial interests of our clients. A summary of key votingstatistics and activity undertaken in respect of stocks in the Company’s portfolio for the first half of fiscalyear 2019 is detailed below.

The highest percentage of votes against management were on income allocation, director and statutoryauditor elections (primarily due to independence concerns) and director remuneration, where the increaseis significant or there is no compensation committee.

JPMorgan Japanese Investment Trust plc: Voting at shareholder meetings held during October 2018to March 2019 Against and Abstain Total % For Against Abstain Total Items Against

Election of Directors 76 17 0 17 93 18.3%

Director Remuneration 6 2 0 2 8 25.0%

Income Allocation 8 4 0 4 12 33.3%

Other items 9 1 0 1 10 0.0%

TOTAL 99 24 0 24 123 19.5%

The Carbon ScorecardThe portfolio companies have low carbon emissions which is unsurprising, given our emphasis on newerindustries. While the carbon footprint is an important starting point to understand the portfolio’s exposureto climate risks, we always review this in combination with the strategic initiatives undertaken by theindividual companies to manage any negative environmental impact. As observed with Kao Corporation andDaikin, we strive to identify companies which are better positioned to manage the investment risks andopportunities associated with climate change through our engagements.

Portfolio 13.3 33.3 35.0 Coverage by Portfolio Weight* 93.1% 93.1% 96.0%

Index 268.0 205.0 121.4 Coverage by Portfolio Weight* 96.3% 96.2% 96.9%

Source: MSCI ESG Carbon Footprint Calculator.

*Coverage may vary by metric because the metrics are calculated using different underlying factors.

JPMorgan Asset Management (Japan) Limited 22nd May 2019

Carbon Emissionstons CO2e / $M invested

Carbon Intensitytons CO2e / $M sales

WeightedAverage

Carbon Intensitytons CO2e / $M sales

Financial Statements


S T A T EMEN T O F C OMPREHENS I V E I N COME

FOR THE SIX MONTHS ENDED 31ST MARCH 2019

(Unaudited) (Unaudited) (Audited)Six months ended Six months ended Year ended31st March 2019 31st March 2018 30th September 2018

Revenue Capital Total Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

(Losses)/gains on investments held at fair value through profit or loss — (107,833) (107,833) — 98,795 98,795 — 179,515 179,515

Net foreign currency losses — (3,473) (3,473) — (1,626) (1,626) — (2,915) (2,915)Income from investments 5,747 — 5,747 6,231 — 6,231 11,665 — 11,665Other interest receivable and similar income 364 — 364 36 — 36 293 — 293

Gross return/(loss) 6,111 (111,306) (105,195) 6,267 97,169 103,436 11,958 176,600 188,558Management fee (426) (1,704) (2,130) (439) (1,755) (2,194) (905) (3,622) (4,527)Other administrative expenses (305) — (305) (322) — (322) (690) — (690)

Net return on ordinary activities before finance costs and taxation 5,380 (113,010) (107,630) 5,506 95,414 100,920 10,363 172,978 183,341

Finance costs (141) (562) (703) (112) (448) (560) (282) (1,127) (1,409)

Net return on ordinary activities before taxation 5,239 (113,572) (108,333) 5,394 94,966 100,360 10,081 171,851 181,932

Taxation (575) — (575) (624) — (624) (1,168) — (1,168)

Net return on ordinary activities after taxation 4,664 (113,572) (108,908) 4,770 94,966 99,736 8,913 171,851 180,764

Return/(loss) per share (note 3) 2.89p (70.43)p (67.54)p 2.96p 58.89p 61.85p 5.53p 106.58p 112.11p

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

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

The net return on ordinary activities after taxation represents the profit for the period and also the total comprehensive Income.

F I N A N C I A L S T A T E M E N T S | 2 3

S T A T E M E N T O F C H A N G E S I N E Q U I T Y


Called up Capitalshare redemption Other Capital Revenuecapital reserve reserve reserves reserve1 Total£’000 £’000 £’000 £’000 £’000 £’000

Six months ended 31st March 2019(Unaudited)

At 30th September 2018 40,312 8,650 166,791 623,207 12,580 851,540 Net return on ordinary activities — — — (113,572) 4,664 (108,908)Dividend paid in the period (note 4) — — — — (8,062) (8,062)

At 31st March 2019 40,312 8,650 166,791 509,635 9,182 734,570

Six months ended 31st March 2018(Unaudited)

At 30th September 2017 40,312 8,650 166,791 451,356 11,729 678,838 Net return on ordinary activities — — — 94,966 4,770 99,736 Dividend paid in the period (note 4) — — — — (8,062) (8,062)

At 31st March 2018 40,312 8,650 166,791 546,322 8,437 770,512

Year ended 30th September 2018(Audited)

At 30th September 2017 40,312 8,650 166,791 451,356 11,729 678,838 Net return on ordinary activities — — — 171,851 8,913 180,764 Dividend paid in the year (note 4) — — — — (8,062) (8,062)

At 30th September 2018 40,312 8,650 166,791 623,207 12,580 851,540

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


S T A T E M E N T O F F I N A N C I A L P O S I T I O N

AT 31ST MARCH 2019

(Unaudited) (Unaudited) (Audited)31st March 2019 31st March 2018 30th September 2018

£’000 £’000 £’000

Fixed assetsInvestments held at fair value through profit or loss 810,064 895,681 976,724

Current assetsDebtors 3,417 4,430 7,001 Cash and cash equivalents 30,182 6,884 7,278

33,599 11,314 14,279 Creditors: amounts falling due within one year (19,485) (2,423) (4,951)

Net current assets 14,114 8,891 9,328

Total assets less current liabilities 824,178 904,572 986,052

Creditors: amounts falling due after more than one year (89,608) (134,060) (134,512)

Net assets 734,570 770,512 851,540

Capital and reservesCalled up share capital 40,312 40,312 40,312 Capital redemption reserve 8,650 8,650 8,650Other reserve 166,791 166,791 166,791Capital reserves 509,635 546,322 623,207 Revenue reserve 9,182 8,437 12,580

Total shareholders’ funds 734,570 770,512 851,540

Net asset value per share (note 5) 455.6p 477.8p 528.1p


S T A T E M E N T O F C A S H F L O W S


(Unaudited) (Unaudited) (Audited)31st March 2019 31st March 2018 30th September 2018

£’000 £’000 £’000

Net cash outflow from operations before dividends and interest (note 6) (1,971) (2,397) (4,461)

Dividends received 5,209 5,056 10,902 Interest paid (723) (579) (1,262)

Net cash inflow from operating activities 2,515 2,080 5,179

Purchases of investments (86,613) (161,104) (404,862)Sales of investments 149,709 137,451 379,693 Settlement of foreign currency contracts (63) 12 15

Net cash inflow/(outflow) from investing activities 63,033 (23,641) (25,154)

Dividends paid (8,062) (8,062) (8,062)Drawdown of bank loan — 32,989 32,990 Drawdown of senior secured loan note — — 88,967 Repayment of bank loan (34,512) — (90,235)

Net cash (outflow)/inflow from financing activities (42,574) 24,927 23,660

Increase in cash and cash equivalents 22,974 3,366 3,685

Cash and cash equivalents at start of period 7,278 3,551 3,551 Exchange movements (70) (33) 42 Cash and cash equivalents at end of period 30,182 6,884 7,278

Increase in cash and cash equivalents 22,974 3,366 3,685

Cash and cash equivalents consist of:Cash and short term deposits 30,182 6,884 7,278


N O T E S T O T H E F I N A N C I A L S T A T E M E N T S


1. Financial statements

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

The figures and financial information for the year ended 30th September 2018 are extracted from the latest published financialstatements of the Company and do not constitute statutory accounts for that year. Those financial statements have beendelivered to the Registrar of Companies including the report of the auditors which was unqualified and did not containa 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 ReportingStandard 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 andVenture Capital Trusts’ (the revised ‘SORP’) issued by the Association of Investment Companies in November 2014 and updated inFebruary 2018.

FRS 104, ‘Interim Financial Reporting’, issued by the Financial Reporting Council (‘FRC’) in March 2015 has been applied inpreparing this condensed set of financial statements for the six months ended 31st March 2019.

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 financialstatements for the year ended 30th September 2018.

3. Return/(loss) per share


£’000 £’000 £’000

Return/(loss) per share is based on the following:Revenue return 4,664 4,770 8,913 Capital (loss)/return (113,572) 94,966 171,851

Total (loss)/return (108,908) 99,736 180,764

Weighted average number of shares in issue 161,248,078 161,248,078 161,248,078 Revenue return per share 2.89p 2.96p 5.53pCapital (loss)/return per share (70.43)p 58.89p 106.58p

Total (loss)/return per share (67.54)p 61.85p 112.11p



4. Dividends paid


£’000 £’000 £’000

2018 final dividend paid of 5.0p (2017: 5.0p) per share 8,062 8,062 8,062

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

No interim dividend has been declared in respect of the six months ended 31st March 2019 (2018: nil).

5. Net asset value per share


Net assets (£’000) 734,570 770,512 851,540 Number of shares in issue 161,248,078 161,248,078 161,248,078

Net asset value per share 455.6p 477.8p 528.1p

6. Reconciliation of total return on ordinary activities before finance costs and taxation to net cashoutflow from operations before dividends and interest


£’000 £’000 £’000

Net return on ordinary activities before finance costs and taxation (107,630) 100,920 183,341

Add capital loss/(less capital return) on ordinary activitiesbefore finance costs and taxation 113,010 (95,414) (172,978)

Decrease/(increase) in accrued income and other debtors 39 (580) 393Decrease in accrued expenses (25) (30) (20)Tax on unfranked investment income (575) (624) (1,168)Management fee charged to capital (1,704) (1,755) (3,622)Dividends received (5,209) (5,056) (10,902)Realised gain on foreign exchange transactions 123 142 495

Net cash outflow from operations before dividends and interest (1,971) (2,397) (4,461)



7. Fair valuation of investments

The fair value hierarchy analysis for financial instruments held at fair value at the period end is as follows:


Assets Liabilities Assets Liabilities Assets Liabilities£’000 £’000 £’000 £’000 £’000 £’000

Level 1 810,064 — 895,681 — 976,724 —

Total 810,064 — 895,681 — 976,724 —

Interim Management Report


I N T E R I M M A N A G E M E N T R E P O R T

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 fall into the following broad categories: investment underperformance andstrategy; market and currency; political, economic and governance; loss of investment team or portfolio manager; discount; change ofcorporate control of the Manager; accounting, legal and regulatory; corporate governance and shareholder relations; operational,cyber crime and financial. Information on each of these areas is given in the Strategic Report within the Annual Report and FinancialStatements for the year ended 30th September 2018.

Related Parties Transactions

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

Going Concern

The Directors believe, having considered the Company’s investment objectives, risk management policies, capital management policiesand procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriatefinancial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future andmore specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in suchoperational existence for at least twelve months from the date of the approval of this half year financial report. For these reasons, theyconsider 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 interim financial report has been prepared in accordance withFRS 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 2019, as required by the UK Listing AuthorityDisclosure 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 andexplained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continuein business;

and the Directors confirm that they have done so.

For and on behalf of the BoardChristopher SamuelChairman 22nd May 2019

Shareholder Information

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMs’) (UNAUDITED)


Return to shareholders (APM)

Total return to shareholders, on a last traded price to last traded price basis, assuming that all dividends received were reinvested,without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.

Six months endedTotal return calculation Page 31st March 2019

Opening share price (p) 5 458.0 (a)Closing share price (p) 5 398.0 (b)Total dividend adjustment factor1 1.012563 (c)Adjusted closing share price (p) (d = c x b) 403.0 (d)

Total return to shareholders (e = d / a – 1) –12.0% (e)

1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the last tradedprice quoted at the ex-dividend date.

Return on net assets with debt at par value (APM)

Total return on net asset value (‘NAV’) per share, on a bid value to bid value basis, assuming that all dividends paid out by the Companywere reinvested, without transaction costs, into the shares of the Company at the NAV per share at the time the shares were quotedex-dividend.

Six months endedTotal return calculation Page 31st March 2019

Opening cum-income NAV per share with debt at par value (p) 5 528.1 (a)Closing cum-income NAV per share with debt at par value (p) 5 455.6 (b)Total dividend adjustment factor2 1.011463 (c)Adjusted closing cum-income NAV per share (p) (d = c x b) 460.8 (d)

Total return on net assets with debt at par value (e = d / a – 1) –12.7% (e)

2 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum-incomeNAV at the ex-dividend date.

Benchmark total return

Total return on the benchmark, on a closing-market value to closing-market value basis, assuming that all dividends received werereinvested, without transaction costs, in the shares of the underlying companies at the time the shares were quoted ex-dividend.

The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company’s investmentuniverse. The Company’s investment strategy does not follow or ‘track’ this index and consequently, there may be some divergencebetween the Company’s performance and that of the benchmark.

Gearing/(net cash) (APM)

Gearing represents the excess amount above shareholders’ funds of total investments, expressed as a percentage of the shareholders’funds. If the amount calculated is negative, this is shown as a ‘net cash’ position.

Six months ended Year ended 31st March 30th September 2019 2018Gearing calculation Page £’000 £’000

Investments held at fair value through profit or loss 24 810,064 976,724 (a)

Net assets 5 734,570 851,540 (b)

Gearing/(net cash) (c = a / b – 1) 5 10.3% 14.7% (c)

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMs’) (UNAUDITED)

S H A R E H O L D E R I N F O R M A T I O N | 3 3

Ongoing charges (APM)

The ongoing charges represent the Company’s management fee and all other operating expenses excluding finance costs payable,expressed as a percentage of the average of the daily cum-income net assets during the year and is calculated in accordance withguidance issued by the Association of Investment Companies.

The figure as at 31st March 2019 is an estimated annualised figure based on the numbers for the six months ended 31st March 2019.

Six months ended Year ended 31st March 30th September Page 2019 2018Ongoing charges calculation £’000 £’000

Management Fee 27 4,260 4,527 Other administrative expenses 22 610 690

Total management fee and other administrative expenses 4,870 5,217 (a)

Average daily cum-income net assets 709,930 783,216 (c)

Ongoing charges (c = a / b) 0.69% 0.67% (d)

Share price discount/premium to Net Asset Value (‘NAV’) per share (APM)

If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The discount isshown as a percentage of the NAV per share.

The opposite of a discount is a premium. It is more common for an investment trust’s shares to trade at a discount than at a premium(page 5).


W H E R E T O B U Y J . P . M O R G A N I N V E S T M E N T T R U S T S

J.P. Morgan investment trusts are eligible investments withina stocks & shares individual savings account (ISA) and Junior ISA.For the 2019/20 tax year, from 6th April 2019 and ending5th April 2020, the annual ISA allowance is £20,000 and JuniorISA allowance is £4,368.

You can invest in a J.P. Morgan investment trust through thefollowing;

1. Via a third party provider

Third party providers include:

Please note this list is not exhaustive and the availability ofindividual trusts may vary depending on the provider. Thesewebsites are third party sites and J.P. Morgan Asset Managementdoes not endorse or recommend any. Please observe each site’sprivacy and cookie policies as well as their platform chargesstructure.

2. Through a professional adviser

Professional advisers are usually able to access the products of allthe companies in the market and can help you find an investmentthat suits your individual circumstances. An adviser will let youknow the fee for their service before you go ahead. You can findan adviser at unbiased.co.uk

You may also buy investment trusts through stockbrokers, wealthmanagers and banks.

To familiarise yourself with the Financial Conduct Authority (FCA)adviser charging and commission rules, visit fca.org.uk

Information for J.P. Morgan Investment Account,Stocks & Shares ISA account holders

In April 2019 JPMorgan Asset Management sent a letter informingrelevant holders of its J.P. Morgan investment account and stocks& shares wrapper products that it had decided to cease managingISA and Investment Accounts. Information regarding the transferarrangements have also been provided, detailing that, unless analternative third party provider is selected, accounts will betransferred to Hargreaves Lansdown and The Share Centre on the27th July 2019 and 28th September 2019 respectively.

AJ BellAlliance Trust SavingsBarclays Smart InvestorCharles Stanley DirectFundsNetwork

Hargreaves LansdownInteractive InvestorSelftradeThe Share Centre

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S H A R E H O L D E R I N F O R M A T I O N

Avoid investment fraud1 Reject cold calls

If you’ve received unsolicited contact about an investment opportunity, chances are it’s a high risk investment or a scam. You should treat the call with extreme caution. The safest thing to do is to hang up.

2 Check the FCA Warning List The FCA Warning List is a list of �rms and individuals we know are operating without our authorisation.

3 Get impartial advice Think about getting impartial �nancial advice before you hand over any money. Seek advice from someone unconnected to the �rm that has approached you.

Report a ScamIf you suspect that you have been approached by fraudsters please tell the FCA using the reporting form at www.fca.org.uk/consumers/report-scam-unauthorised-�rm. You can also call the FCA Consumer Helpline on 0800 111 6768

If you have lost money to investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk

Find out more at www.fca.org.uk/scamsmart

Investment scams are designed to look like genuine investmentsSpot the warning signs

Have you been:

• contacted out of the blue• promised tempting returns

and told the investment is safe• called repeatedly, or• told the offer is only available

for a limited time?

If so, you might have been contacted by fraudsters. Remember: if it sounds too good to be true,

it probably is!

Be ScamSmart

I N F O R M AT I O N A B O U T T H E C O M PA N Y

FINANCIAL CALENDAR

Financial year end 30th September

Final results announced November

Half year end 31st March

Half year results announced May/June

Dividend on ordinary shares paid December

Annual General Meeting December

HistoryThe Company was formed in 1927 as The Capital & National Trust Limited. It wasa general investment trust until 1982, when its shareholders approved a change ofname to The Fleming Japanese Investment Trust plc and the adoption of a policy ofspecialising in investment in Japan. The Company adopted its current name inDecember 2006. Constituent of the FTSE 250 Index.

Company NumbersCompany registration number: 223583 London Stock Exchange number: 0174002ISIN: GB0001740025Bloomberg code: JFJ LNLEI: 549300JZW3TSSO464R15

Market InformationThe Company’s unaudited net asset value (‘NAV’) is published daily via the LondonStock Exchange.

The Company’s shares are listed on the London Stock Exchange. The market priceis shown daily in the Financial Times, The Times, The Daily Telegraph, TheScotsman and on the Company’s website at www.jpmjapanese.co.uk, where theshare price is updated every fifteen minutes during trading hours.

Websitewww.jpmjapanese.co.uk

The Company’s website can be found at www.jpmjapanese.co.uk and includesuseful information about the Company, such as daily prices, factsheets andcurrent and historic half year and annual reports.

Share TransactionsThe Company’s shares may be dealt in directly through a stockbroker orprofessional adviser acting on an investor’s behalf.

Manager and Company SecretaryJPMorgan Funds Limited

Company’s Registered Office60 Victoria EmbankmentLondon EC4Y 0JPTelephone: 020 7742 4000

For company secretarial and administrative matters, please contactFaith Pengelly at the above address.

DepositaryThe Bank of New York Mellon (International) Limited1 Canada SquareLondon E14 5AL

The Depositary has appointed JPMorgan Chase Bank, N.A. as the Company’scustodian.

RegistrarsEquiniti LimitedReference 1090Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0371 384 2328

Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to the helpline will costno more than a national rate call to a 01 or 02 number. Callers from overseasshould dial +44 121 415 0225.

Notifications of changes of address and enquiries regarding share certificates ordividend cheques should be made in writing to the Registrar quoting reference1090. Registered shareholders can obtain further details on their holdings on theinternet by visiting www.shareview.co.uk.

Independent AuditorsPricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors7 More London RiversideLondon SE1 2RT

BrokersInvestec Bank plc30 Gresham StreetLondon EC2V 7OP

Financial Conduct Authority ‘FCA’ regulation of‘non-mainstream pooled investments’ and MiFIDII ‘complexinstruments’The Company currently conducts its affairs so that the shares issued by JPMorganJapanese Investment Trust plc can be recommended by financial advisers toordinary retail investors in accordance with the FCA’s rules in relation tonon-mainstream investment products and intends to continue to do so for theforeseeable future.

The shares are excluded from the FCA’s restrictions which apply to non-mainstreaminvestment products because they are shares in an investment trust.

The Company’s ordinary shares are not considered to be ‘complex instruments’under the FCA’s ‘Appropriateness’ rules and guidance in the COB sourcebook.

A member of the AIC

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Telephone calls may be recorded and monitored for security and training purposes.

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CONTACT J.P. MORGAN

Freephone 0800 20 40 20 or +44 (0) 1268 444470.Telephone lines are open Monday to Friday, 9.00am to 5.30pm.

www.jpmjapanese.co.uk

Documents

JPMorgan Japanese Investment Trust plc · As at 31st March 2019, the Company’s share capital comprised161,248,078(2018: 161,248,078) ordinary shares of 25p each. Management Company