REG - JPMorgan Emerg Mkts - Final Results
29/09/2025 07:00
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RNS Number : 1091B JPMorgan Emerging Mkts Invest Trust 29 September 2025
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EMERGING MARKETS INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2025
Legal Entity Identifier: 5493001VPQDYH1SSSR77
Information disclosed in accordance with the DTR 4.1.3
HIGHLIGHTS
JPMorgan Emerging Markets Investment Trust plc (JMG or the 'Company')
announces its full year results for the 12-months ended 30th June 2025.
· JMG achieved a share price total return of +9.8%, reflecting a
significant narrowing of the discount. The NAV total return was +4.9% compared
with +6.3% for the MSCI Emerging Markets Index (the 'Benchmark').
· For the ten years ended 30th June 2025, the share price total
return was +128.0%. The NAV total return was +115.9%. Both significantly
outperformed the Benchmark return of +83.7%.
· Final dividend of 1.45p per share, taking the total dividend to
2.10p, an increase of 10.5% on last year.
· The discount to NAV narrowed from 12.0% as at 30th June 2024 to
8.2% at year end.
· During the year, JMG repurchased 97,671,880 shares (8.8% of
shares in issue at the start of the year) at an average discount of 12.2%,
increasing NAV per share by 1.4p (1.1%).
· JMG's ongoing charges ratio remains highly competitive at 0.79%,
unchanged from the prior year and among the lowest in its peer group.
New enhanced dividend policy
· To enhance JMG's position as an attractive investment to both new
and existing shareholders, the Board has proposed adopting a new dividend
policy. The new policy aims to pay annual dividends equal to 4% of the
Company's Net Asset Value (NAV) at the end of the preceding financial year,
distributed in four equal quarterly instalments.
· The enhanced dividend policy will not alter JMG's investment
mandate or strategy.
· The new policy will take effect from 7th November 2025, subject
to shareholder approval at the AGM, and the Company will be renamed JPMorgan
Emerging Markets Growth & Income plc (JMGI). This combination of
high-quality growth and income will further differentiate the Company from
other emerging market offerings.
· The first three quarterly payments (1% each) will be made in
November 2025, February 2026, and May 2026, based on the NAV as at 30th June
2025. Thereafter, quarterly payments will be based on the NAV as at 30th June
of each year with the first payment made in August.
Aidan Lisser, the Chair of JMG, commented:
"I'm pleased to report that JMG grew by 9.8% in terms of share price total
return - materially ahead of our benchmark index which returned 6.3% over the
same period. This was due to narrowing of the share price discount,
particularly in the latter part of the year. JMG also delivered a positive
total return on net assets of 4.9%, but it is disappointing that our full year
result underperformed the index, especially after a solid first half year of
outperformance."
'To enhance JMG's appeal to new as well as existing shareholders, the Board is
proposing a new dividend policy which we believe to be in the best interests
of all shareholders. The Board reviewed the investment trust market and the
relative attractiveness of alternative offerings, and we believe that whilst
size and scale remain important, it is also necessary to be distinctive and to
utilise the advantages offered by the closed-end structure.'
'We recognise that many investors increasingly seek both reliable income and
capital growth from their investments. This need is particularly strong among
retail investors and they represent significant potential demand for
investment trusts. The Board has concluded that attracting their investment
can help improve the demand for JMG shares and reduce the discount over time.'
'Despite ongoing global uncertainty, there are several reasons why we believe
JMG continues to be an attractive prospect for investors. The environment for
emerging markets remains positive with higher GDP rates vs developed
economies, younger populations and cheaper valuations than the rest of the
world.'
Portfolio Managers, Austin Forey and John Citron, commented:
'A weaker dollar, the continued rise of Chinese manufacturing, the realignment
of global trade patterns: these developments continue to influence emerging
markets, and go some way to explaining the better returns, seen from the asset
class this year. That more positive backdrop helps, while our efforts as
managers of your portfolio remain entirely focused on producing the best
outcomes possible in exchange for the risks we take. We continue to believe
that a thorough approach, consistently applied, can help achieve that goal in
the future, as it has in the past.'
CHAIR'S STATEMENT
Dear Shareholders,
I am pleased to report on the performance and activities of the Company for
the financial year ended 30th June 2025. As always, I look forward to further
discussion at our Annual General Meeting ('AGM') in November, arrangements for
which are included below.
Performance overview and final dividend
If there is a single word to aptly describe the year under review, then
'uncertainty' would be a strong contender. Policy changes related to tariffs
and import taxes in the US, following the presidential election in November,
created volatility across markets. The Bloomberg Trade Policy Uncertainty
Index remains higher than at any time in the last ten years. This environment
impacted foreign exchange markets and from the perspective of emerging
markets, we have seen a welcome weakening of the US dollar. Emerging markets
have also begun to benefit from improved investor sentiment, as a result of
allocations away from the US.
JMG grew by 9.8% in terms of share price total return - materially ahead of
our Benchmark index which returned +6.3% over the same period. This was due to
narrowing of the share price discount, particularly in the latter part of the
year, which I discuss further below.
JMG also delivered a positive total return on net assets of 4.9%, but it is
disappointing that our full year result underperformed the index, especially
after a solid first half year of outperformance. Two primary factors explain
this: the portfolio's above index exposure to export-oriented businesses (eg
Globant and Tata Consultancy Services) which were impacted by the onset of
tariff concerns in the second half of the year; and our significant
underweight to Korea, where the government's shareholder value optimisation
programme and the presidential election result in June led to a very sharp
rally with the market rising by more than 30% in a matter of weeks.
In other areas the portfolio performed well, with highlights including
MercadoLibre, a Latin American e-commerce platform, BBVA a Spanish bank with
an extensive emerging markets business and the Hong Kong Exchanges &
Clearing. In addition, several exciting new names have been added to the
portfolio.
The Portfolio Managers provide commentary on all these topics and more in
their illuminating report beginning on page 14 of the 2025 Annual Report. I do
encourage you to read it in detail.
For the financial year ended 30th June 2025, the Board will propose a final
dividend of 1.45 pence per share which, when added to the interim dividend of
0.65 pence paid in April 2025, amounts to a total dividend of 2.10 pence per
share for the full year. This represents a 10.5% increase on the total
dividend of 1.90 pence paid in respect of the 2024 financial year. Subject to
approval by shareholders at the forthcoming AGM, the final dividend will be
paid on 14th November 2025 to shareholders on the register at the close of
business on 10th October 2025 (with ex dividend date of 9th October 2025).
Strategic priorities
It is the job of the Board to navigate the Company, on behalf of shareholders,
through whatever conditions may prevail. To do this effectively, during the
year the Board reaffirmed three strategic priorities:
1. Strengthen investment performance
The Board is resolved to continue to scrutinise investment performance
closely. In addition to detailed portfolio reporting and analysis, we engage
in rigorous reviews with the Portfolio Managers on a quarterly basis.
Following the deep dive review undertaken last year, we are encouraged to see
the measures put in place are starting to have an impact, including enhanced
research resources in the key markets of China and India.
Despite the disappointing return on net assets outlined above, we remain
satisfied that the reasons for this underperformance are well understood.
While recent years have been difficult for active managers with a focus on
duration and growth and a quality bias in terms of portfolio companies, we are
confident that JMG's fundamental investment process remains robust and that
J.P. Morgan's experience of investing in emerging market equities, combined
with the extensive resources it has devoted to it, will deliver long-term
outperformance for shareholders.
As shareholders, you can be assured that our Portfolio Managers will continue
to focus on quality companies and remain true to the investment philosophy, as
previously stated - 'to take a long-term view, find great businesses, not
overpay and hold them for as long as possible'.
2. Proactive discount management
During the year, the Board focused considerable time and effort to manage the
discount to net asset value (NAV). This involved discussion with our brokers
and other advisors and with a number of shareholders to ensure we have a range
of opinions and inputs. Following our strategy review in the second half of
the financial year, we authorised a substantial increase in the use of share
buybacks. This was due to our dissatisfaction with the discount level earlier
in the year, despite consistent buying back of shares at that time.
I am happy to report that this action, alongside improved sentiment for
emerging markets, did lead to a reduced discount. JMG began the financial year
on a discount of 12.0% and ended the year at 8.2%. At the time of writing this
statement the discount was 9.8%. The Board believes that the use of share
buybacks remains an effective tool to manage the absolute level and volatility
of the share price discount. It will continue to authorise meaningful
purchases when required, as long as it judges this to be in the best interests
of all shareholders.
During the financial year, the Company bought back 97,671,880 shares into
Treasury for a total cost of £107,026,000 at an average discount of 12.2%.
It did not issue any shares. These purchases were value accretive for
shareholders, increasing the NAV per share by 1.4 pence or 1.1% over the
year, and underscoring your Board's strong belief that the shares offer
intrinsic value at current levels.
As stated in our market update in June, buybacks are one of several
mechanisms used to manage the discount. A continuation vote will take place at
the AGM in 2026, as it does every three years. In addition, a conditional
tender offer exists for 25% of the shares, based on performance against the
Benchmark over the five-year period to 30th June 2029, subject to shareholder
approval of the tender offer at the relevant time. Shareholders can therefore
be confident that there are several measures in place to protect their
interests.
3. Differentiation including proposed new dividend policy
During the year, in order to enhance JMG's position as an attractive
investment to new as well as existing shareholders, the Board has
systematically reviewed the investment trust market and the relative
attractiveness of alternative product offerings. It believes that whilst size
and scale remain important, it is also necessary to be distinctive and to
utilise the advantages offered by the investment trust's closed-end structure.
It also believes that the continued development of a significant and
sustained cohort of retail investors is important to JMG's future success.
As part of this assessment the Board evaluated the various options available
for the investment trust structure. It recognises that many investors
increasingly seek both reliable income and capital growth from their
investments. This need is particularly strong among retail investors and they
represent significant potential demand for investment trusts. The Board has
concluded that attracting their investment can help improve the demand for JMG
shares and reduce the discount over time.
The Board is therefore proposing a new enhanced dividend policy with effect
from 7th November 2025, immediately after the Annual General Meeting and
believes this change to be in the best interests of all shareholders.
Under the proposed enhanced dividend policy, annual dividends will be paid at
4% of Net Asset Value (NAV) as at the end of the preceding financial year,
payable in four equal quarterly instalments. To transition to this approach,
the first three quarterly payments of 1% each will be made in November 2025,
February 2026 and May 2026, based on the NAV as at 30th June 2025
(i.e. 1.261 pence per share each). Thereafter, 4% of 30th June 2026 NAV will
be paid as dividends via equal quarterly instalments in August 2026, November
2026, February 2027 and May 2027.
If required, any shortfall on the dividend income received from the
portfolio's underlying investments will be paid out of realised capital
reserves. At the forthcoming AGM the Board will propose a special resolution
to amend the Company's Articles of Association in order to enable JMG to
distribute capital as income to allow for the long-term implementation of the
new dividend policy.
These changes are further detailed on page 59 and the in Appendix on page 112
of the 2025 Annual Report.
It is important to emphasise that this enhanced dividend policy will not alter
JMG's investment mandate or strategy.
In line with this new dividend policy, the Company will change its name and
ticker and will in future be called JPMorgan Emerging Markets Growth &
Income plc (JMGI). Conditional on shareholder approval of the AGM resolution
to amend the Company's Articles of Association as explained above, the
Directors will effect the name and ticker change shortly thereafter. This
combination of high-quality growth and income will further differentiate JMG
from other emerging market offerings.
Other board and governance matters
Board governance
As previously reported, Andrew Page retired from the Board at the conclusion
of the 2024 AGM and Helena Coles succeeded him as Senior Independent Director
('SID') and Chair of the Remuneration Committee.
The Board regularly assesses its composition and succession plans, considering
the need to refresh its membership while ensuring continuity of experience. To
maintain an appropriate balance of skills, experience and knowledge, the
Board, guided by the Nomination Committee, undertook a formal recruitment
process for a new Non-executive Director towards the end of 2024, leading to
the appointment of Dean Buckley with effect from 2nd January 2025. Dean is a
highly experienced investment professional who has held senior positions in
several asset management firms. Dean is currently Non-executive Chair of two
investment trusts, Alliance Witan plc and Fidelity Special Values plc.
Recognising the importance of diversity in the boardroom, the Board
continues to meet the FCA Listing Rule targets for diversity and inclusion.
More information can be found on page 40 of the 2025 Annual Report.
The Board endorses the annual re-election of all Directors, as recommended by
the Association of Investment Companies (AIC) Code of Corporate Governance.
Consequently, all Directors will stand for re-election/election at the
upcoming AGM.
During the year, the Nomination Committee conducted a comprehensive formal
evaluation of the Board and Chair's performance, facilitated by Lintstock, an
independent firm. I am pleased to report that the evaluation results
highlighted improvements in a number of areas since the last evaluation, while
also emphasising the importance of maintaining a strong focus on investment
performance. Further details are available on pages 60 and 61 of the 2025
Annual Report.
Promoting JMG and engaging with shareholders
The Board remains committed to engaging with current shareholders and
attracting new investors, including individual investors. Our online
advertising campaigns, along with participation in relevant podcasts and video
interviews are part of this initiative, and throughout the year, the Company
has featured in various articles in both mainstream and specialist media. We
have supported the AIC's call for changes to improve voting access for retail
shareholders and are pleased to see the government's commitment to
implementing a Bill of Shareholder Rights.
JMG actively engages in investor relations and marketing efforts targeting
wealth managers, institutions, and other professional investors. During the
year, the Manager held meetings and regular calls with shareholders, including
webinars, and provided portfolio and market updates on JMG's website.
Our website, www.jpmemergingmarkets.co.uk, offers valuable information,
including videos and sponsored research. We encourage both existing and
potential shareholders to subscribe to our regular email updates for topical
news, insights, and the latest performance information. You can subscribe via
the website at https://tinyurl.com/JMG-Sign-Up or by scanning the QR code on
page 2 of the 2025 Annual Report.
Shareholders wishing to communicate directly with the Board can do so by
contacting the Company Secretary at jpmam.investment.trusts@jpmorgan.com
(mailto:jpmam.investment.trusts@jpmorgan.com) .
Costs, notice periods and Manager
The Board continues to closely monitor JMG's cost base. The Company's Ongoing
Charges Ratio ('OCR') for the year under review was 0.79%. JMG remains one of
the most competitively priced actively managed emerging markets funds
available to UK investors in closed-ended form.
With effect from 1st July 2025 we have negotiated a reduction in the
Manager's notice period under the Investment Management Agreement, from one
year to six months for both sides, in line with good governance.
Under the remit of the Management Engagement Committee, the Board has
evaluated the Manager's performance and fee arrangements. Considering the
long-term performance record and all other relevant factors, including
additional services provided to JMG and its shareholders, the Board remains
confident that JPMorgan Funds Limited (JPMF) should continue as Manager, in
alignment with the best interests of shareholders.
Contracts for Difference (CFDs)
At the forthcoming AGM, the Board is proposing an update to the investment
policy to amend the current investment restriction, so that CFDs (see glossary
of terms on page 115 of the 2025 Annual Report), a form of trading
instrument, can be used by the Portfolio Managers. This will provide increased
flexibility to more efficiently construct JMG's portfolio and facilitate
better cash management. CFDs may also be used for potential gearing in the
future, subject to limits, should the Portfolio Managers consider it
appropriate. The proposed changes are set out in full in the Appendix to the
Notice of AGM on page 112 of the 2025 Annual Report, with the amendments
highlighted for ease of reference. The revised investment restrictions, if
approved by shareholders at the AGM, will come into effect from 7th November
2025.
AGM and required resolutions
JMG's 34th AGM will be held at 60 Victoria Embankment, London EC4Y 0JP on
7th November 2025 at 2.30 p.m.
Portfolio Managers Austin Forey and John Citron will give a presentation to
shareholders on recent performance, portfolio changes and their views on the
outlook for emerging markets. The meeting will be followed by afternoon tea,
which will provide shareholders with an opportunity to meet the Directors and
the Portfolio Managers. Shareholders wishing to follow the AGM remotely will
be able to view it live and ask questions (but not vote) via a weblink.
Further details about the AGM are provided on page 117 of the 2025 Annual
Report.
Outlook
Despite ongoing global uncertainty, there are several reasons why we
believe JMG continues to be an attractive prospect for investors. First,
emerging markets technology companies are underwriting the global AI
revolution, and the technology sector is the largest in JMG's portfolio,
accounting for 32.7%. Second, our overweight exposure to financials and
consumer stocks should enable the portfolio to take advantage of a weaker
dollar, enabling lower interest rates in emerging economies and a boost to
consumer spending on goods and services. Last but not least, the portfolio is
now as attractively valued, in terms of the price earnings multiple against
the Benchmark, as it has been at any point in the last decade and that itself
bodes well for the future.
Meanwhile the environment for emerging markets remains positive with higher
GDP rates vs developed economies, younger populations and cheaper valuations
than the rest of the world. To quote a recent Financial Times article - 'for
the first time in years the scales look set to tip towards emerging
markets…'
In closing, the Board would like to thank you for your continued support and
will continue to ensure that shareholders' interests are central to the
Company's culture and strategy.
Aidan Lisser
Chair
29th September 2025
PORTFOLIO MANAGERS' REPORT
"Among the many things that have mattered in emerging markets over the last
year we could list American trade policy and tariffs, the weakening of the US
dollar, the growing prominence of artificial intelligence and emerging
markets' key position in the supply chain for this, China's real estate woes
combined with rising export competitiveness, and the Korean government's move
to emulate Japan and improve shareholder value in the corporate sector. The
last of these was the biggest detractor as far as our investment performance
over the year was concerned, while technology hardware, especially in Taiwan,
was the biggest single positive."
Purpose and approach
JMG's purpose remains simple, and unchanged: it is to achieve good
investment outcomes for its shareholders. The manner in which we, as the
Company's investment managers, pursue this objective should also be clearly
consistent over time, while constantly adapting to the changing investment
landscape in which we operate. The core of our approach remains the pursuit of
those exceptional companies which compound their intrinsic value over many
years, often thought of as a pursuit of high-quality businesses. It's
important to stress that this focus on specific characteristics in the
investments we seek is not an irrational bias or whim, it's the deliberate
pursuit of the best possible investments, defined as those which produce the
highest returns for the risks taken by those who own them. The power of
compounding, when successfully achieved, produces outcomes that hugely
outstrip all others, which is why we make it the central focus of our process.
It is also worth saying that while many equate the activity of investing with
transacting, we put equal if not greater stress on ownership as an activity in
its own right. Owning an equity, especially if embarked on with the intention
of owning it for a long time, implies a process of engagement which is
a two-way process: we do not simply want to hear from the companies in which
your portfolio is invested, we also want to speak to them on your behalf, to
give them our feedback and encourage them to act in all ways at all times with
the interests of all shareholders in mind. More details on our engagement, and
a wider assessment of sustainability issues, can be found in the separate
section devoted to this subject.
Investment results
The year to 30th June 2025 saw reasonable positive returns from emerging
markets as a whole, though the strength of sterling weighed somewhat on the
outcome for UK-based investors. The total return from our Benchmark index for
your Company's financial year was +6.3% in sterling terms, while the return
from the Company's portfolio was +4.9%. The total return from JMG's share
price, however, was +9.8%, ahead of the index return by a good margin. As
managers of the investment portfolio, we can take no credit for the share
price outcome; we are responsible for the value of the portfolio, but the
share price is set by the market, and was undoubtedly helped over the last
year by the Board's energetic efforts to narrow the discount to net asset
value at which the Company's shares traded.
After many years of managing JMG's investment portfolio, we are keenly aware
that the last few years have been one of the most challenging periods for
investment results since the Company was established in 1991. We are not
satisfied with recent results, and the Board rightly challenges us to explain
what we are doing to improve them. We could write about changing market
conditions, about the shift from 'growth' to 'value', about the rise of
political risk as a factor in market outcomes, but this would be to excuse our
mistakes. Getting things wrong is an unavoidable part of investing, but in the
last few years our mistakes have dragged on performance more than usual, and
so our focus as we look forwards must be to avoid that in the future. We will
explain below why the portfolio's current characteristics make us more
optimistic that this will be the case.
The year and the portfolio
Life is never dull in emerging markets, but the last year has been unusual for
the amount of politically-driven volatility in markets. On top of that,
currencies have played a larger than usual role in overall market returns,
reflective perhaps of a potential turning point in some long cycles that have
driven the world's capital markets for many years. Among the many things that
have mattered in emerging markets over the last year we could list American
trade policy and tariffs, the weakening of the US dollar, the growing
prominence of artificial intelligence and emerging markets' key position in
the supply chain for this, China's real estate woes combined with rising
export competitiveness, and the Korean government's move to emulate Japan and
improve shareholder value in the corporate sector. The last of these was the
biggest detractor as far as our investment performance over the year was
concerned, while technology hardware, especially in Taiwan, was the biggest
single positive. Rather than comment market by market, this report will take
some of the most important themes and try to connect them to actions taken in
the portfolio, before reflecting on what the portfolio looks like today, and
what that might imply for the future.
Politics
Where to begin? The arrival of a new administration in the USA has upended
much of the received wisdom about how the world economy works. For several
decades the liberalisation of emerging economies, and the globalisation of
industries driven by the quest for efficiency, led the US to run persistent
trade deficits, while trade surpluses from those exporting to the US were
recycled into US government bonds. Thus America has been able to borrow to
consume, while others, especially in Asia, save to finance this. It's easy to
see why one might want to change this status quo, though perhaps less obvious
when you consider that the biggest beneficiary of this economic model has been
the US consumer; China's over-investment and excess savings are simply the
other side of the coin to America's over-consumption. Tariffs and an apparent
desire to eliminate trade imbalances are producing several effects, among them
increased costs for businesses (and thus ultimately more inflation), but
whether they achieve their stated goals is a different matter. The fall in
equity markets provoked by the first version of American tariffs in March this
year was severe enough to provoke some revision of the policy, but the more
lasting effect has been increased uncertainty for companies around the world;
equity markets' bullishness in the face of that seems a little surprising.
The dollar
Emerging market investors often get more optimistic when the US dollar
weakens. Why? If we start from the premise that the US is the centre of the
global capital markets, then when the dollar is strong, emerging markets have
to cope with two headwinds. First, capital flows to the centre of the system
and away from the periphery, which raises the cost of capital for emerging
markets and lowers it for the USA; and second, growth is boosted in the US and
constrained elsewhere. When the dollar weakens, both these trends can reverse,
leading investors to move capital away from the US, and thus help finance
stronger growth elsewhere. Over the last decade and a half, in fact since the
financial crisis of 2008-9, the dollar has been the currency of choice, and
the US equity market has been the essential place to be invested. This has
been the case for so long that many cannot remember that there are other
possible scenarios. Yet since the beginning of the year, European and some
Latin American currencies are up by 10-15% against the dollar, while Asian
export-driven economies like Korea and Taiwan are also seeing appreciating
currencies in spite of a policy approach which in the past has tried to keep
currencies competitive. This is a more encouraging environment than we have
seen for some years, and has led to emerging market equities beginning to
deliver better returns.
China
In the portfolio we have more exposure to China in a relative sense than for
many years. As the growth of the economy slows in China, the ability of
companies to grow market share becomes an ever more important consideration.
It's no surprise, then, that our holdings in China are dominated by companies
which we think can take a larger slice of the relevant pie, some with digital
business models that are disrupting traditional structures in industries like
travel and tourism, retail, advertising and music distribution.
In addition to digitally-based business models, where China has produced some
very large and innovative companies, the other area in which we see globally
competitive businesses is manufacturing. While some of China's industrial
success stories are well known and visible in areas like electric vehicles,
others are perhaps lower profile but not necessarily any less impressive.
Chinese companies are diversifying and expanding internationally, often
bringing a combination of product quality and low cost which presents a
formidably competitive proposition. We continue to look for opportunity in
well-managed manufacturing businesses in China, notwithstanding the
uncertainty that American tariffs have introduced this year.
But while some things in China look appealing, there is another side to the
story. Distorted pricing for capital has produced an economy addicted to
investment, with overcapacity in many industries the inevitable result. This
in turn creates deflationary pressures and explains why Chinese interest rates
keep falling. The term 'involution' has been used to describe the resultant
cut-throat competition and price-cutting that plagues many industries, leading
inevitably to a recent 'anti-involution' initiative from the government. Yet
involution is another way of describing market forces; anti-involution implies
the obstruction of market forces. But if the imbalances in the Chinese economy
have been created largely because market forces played too small a role in the
economy in the first place, one could be forgiven for a certain scepticism
when the solution involves further impeding of those same forces.
Technology
The portfolio has a meaningful exposure to both hardware producers and IT
service companies. If there is one area that has stood out in global equity
markets in the last couple of years, it is the excitement around artificial
intelligence and the possibility that technology is embarking on a third
world-changing transition to rival those produced by the computer and the
internet. Ordinarily such excitement would give us some reason for caution,
especially if combined with high valuations. However, in the world of
hardware, leading emerging market businesses - TSMC, SK Hynix, Samsung
Electronics - do not trade at particularly high valuations; yet they are
indispensable parts of the production chain, and without them there can be no
artificial intelligence; we continue to hold large positions in the portfolio
in these and other manufacturers.
For IT service companies, the picture is more complex. Some argue that they
will be victims of the development of AI, though in the near term the
uncertainty introduced by US policy is probably a more important factor; for
this sector the USA is the most important end market, and faced with higher
uncertainty US companies are more likely to tighten their belts when it comes
to spending with external vendors. This has led to some share price weakness
this year; we have reduced some of the portfolio 's exposure here, but still
need to stay alert to the possibility that this industry is maturing and
slowing even apart from the current cycle.
Finally, one area which may prove a surprising beneficiary of some of the
current geopolitical trends is China's own technology industry, which
continues to make rapid advancements. As the US attempts to limit China's
access to cutting edge technology in semiconductors, China is working fast to
become self-sufficient in this critical area, and as the Deepseek moment
showed earlier this year, it may be a mistake to assume that China cannot
emulate Western developments in technology. That has the potential to create
some large companies; determining the winners well in advance will be the
hardest challenge.
Capital allocation: a new era?
When economies grow rapidly companies have many opportunities to reinvest
capital and grow; but when overall growth rates slow, often the capital
generated inside a company cannot all be reinvested profitably, especially
not with the same risk/reward as before. At that stage, managements face a
choice - distribute excess capital to shareholders or keep it in the business
even though there may not be an immediate reason to do so. In general, we like
managements which place a high value on organically generated capital, because
it makes them careful about what they do with it. If they keep it in the bank
and never use it, they are almost certainly failing to justify keeping it in
the business; if it burns a hole in their pockets and they make an over-priced
acquisition, that's even worse; why not just give the money to the
shareholders - after all, it's their money in the first place.
As companies start to produce cash in excess of what they need in the
business, the question of what they do with it becomes critical. If capital is
allocated well, value is optimised; if it is under-utilised or wasted, value
is destroyed. Yet how many chief executives have training in capital
allocation? This is an ever more important issue in emerging markets because
overall economic growth rates, though still above developed markets, are
mostly significantly lower than a couple of decades earlier; as a result,
skill in capital allocation is becoming a bigger differentiator of corporate
performance as far as share prices are concerned.
While this is a relevant issue in many countries, perhaps the starkest example
can be found in South Korea. Korean companies, for all their success in
operational terms, have too often seemed determined to offset that with
capital allocation policies that left international investors deeply
frustrated. Sitting on large piles of cash, making cross investments within
complex group structures in a way that benefitted inside shareholders,
spending money on apparently pointless diversifications - all these led
investors to apply low valuations to Korean stocks because the underlying
value being created by companies seemed to be so reliably diminished by poor
allocation of capital. It is to the government's credit that, spurred by the
success of similar initiatives in Japan, it has increased pressure on Korean
companies to focus on optimising shareholder value in a financial sense, which
often means distributing more cash to shareholders instead of squandering it
in the business. We were, frankly, pretty sceptical about how successful this
government initiative would be; it was obvious that many companies did not
want to go down this path, and that some institutional obstacles, in
particular some tax policies, would need to be changed. Resistance was highest
among family-controlled groups which have always prioritised family control
over value maximisation for all shareholders. So far, the extent of real
change has been modest, but the effect on share prices has been bigger, and we
failed to capture much of this in the portfolio. Nevertheless, Korea serves as
a reminder of just how important capital allocation can be. While some
countries, for example Taiwan, Brazil or Mexico have already reached a mature
stage in paying out surplus capital, in other markets this moment is just
arriving. Nowhere will it be more important in determining equity returns than
in China, where it has implications not only in a direct way (how much
dividend will investors receive?), but also in a wider sense (will less
investment produce more pricing power for companies? can involution turn to
profit maximisation at an industry level?) It's not difficult to argue that
more than macroeconomics, more even than tariffs and political decisions,
capital allocation is going to be critical for the future returns from
equities around the developing world.
New investments
A long-term approach to investing always needs to balance new opportunities
against existing holdings. Often, turnover in your portfolio has been low
because we have preferred the stocks already owned to most of the new
possibilities we looked at. But turnover this year has risen as we have found
a number of interesting new names around the world. The new stocks purchased
have little in common with each other, though several of them are
digitally-based businesses which are disrupting traditional industry
structures in a variety of countries and sectors: Tencent Music Entertainment
(music streaming), Trip.com (online travel booking), PB Fintech (insurance).
We also bought SK Hynix, now the leading-edge producer of advanced memory
chips, and Coforge, a smaller Indian IT services company. Finally, for the
first time since JMG was established, we bought a shipping business (SITC
International) and, since the year end, we invested in a Korean bank for only
the second time ever (JB Financial). If these investments have a common
thread at all, it is that in all cases the management and their ability to do
something different and original is an important part of the investment case;
we bought SITC International, which is a regional shipping business in Asia,
precisely because it is not like other shipping companies, and JB Financial
because it is not like other Korean banks.
If we were to expand this last point a little further to explain what we look
for in a management team, we like to find as many of the following
characteristics as possible:
- we like management teams who think from first principles and
reject received wisdom (don't outsource the thinking)
- we like managers who really understand what creates intrinsic
value, and who understand the economics of the business, especially its
ability to generate cash
- we like management who understand the trade-off that exists in
all businesses between duration and returns, and who opt for duration and
resilience rather than seeking to make a fast buck
- and we like managers who work for all the shareholders and try
to maximise value over the long term - something you might assume should be
universal, but is not.
The portfolio today
Investing always looks easy in hindsight. Looking back over the last few
years it is clear that the performance generated by your portfolio in 2019-21
was aided by an element of valuation expansion, especially in the months
following the outbreak of the Covid pandemic. It is also painfully obvious
that we failed to do enough about this quickly enough; this was partly because
it seemed inconceivable then that global interest rates could rise
significantly given how much additional debt governments were taking on. Yet
rates did rise and financial systems did not collapse; and although we did not
run the portfolio starting from macroeconomics, many of our assumptions four
years ago about valuations were wrong. Deflating that excess valuation has
required changes to the portfolio; broadly speaking the stocks we have bought
in the last few years have been at lower valuations than the existing
portfolio; but as often happens, the market has also corrected excess
valuations by derating share prices even where underlying business performance
has been strong, and that has cost performance as stocks have derated.
Tencent Holdings, one of the larger investments in the portfolio, is a prime
example of this: at its peak in January 2021 the market value of Tencent
reached USD 950 billion; three years later it had fallen to
USD 320 billion, even though profits in 2024 were close to double those
achieved in 2021; as we write, the market value has recovered to
USD 700 billion, while the company's profits continue to grow well. We use
this example for two reasons - first, to give an example of a poor decision
(not selling in 2021) which cost a lot of performance in the subsequent three
years. But also, importantly, to show that once the problem like this has
happened and performance has been lost, it is in the past and the very worst
thing to do is to change the portfolio in response to the underperformance.
Underneath all this, Tencent has continued to grow its profits well in spite
of the slowing economy in China, and a year ago valuations, having corrected
significantly, were no longer a source of downside risk but of upside
opportunity.
This single stock example encapsulates both why we have struggled with
performance, but also why we feel more constructive now. When we look at the
overall portfolio, it has much in common with Tencent a year ago; the
valuation of the whole portfolio has come down, but the underlying quality of
the businesses owned has not. The portfolio now trades at a price/earnings
ratio of about 15x, a modest premium to the index, which is priced about 13x;
its dividend yield is 2.5% compared to 2.7% for the Benchmark. These numbers
are very typical of most of the last decade or more, and leave us thinking
that the risk of losing returns because of further de-rating must be low.
If the portfolio is now much cheaper than it was four years ago, has that
come at the expense of the underlying quality, or capability to create
intrinsic value? We hope not, and can point to the persistent difference in
return on equity (RoE) between the companies owned in your portfolio and that
of the index as a whole; the portfolio RoE is just under 19%, compared to the
Benchmark at slightly less than 13%: so for every pound of shareholders' funds
deployed in the business, our companies generate 46% more profit than the
average across the asset class; this can be paid out as dividends or
reinvested to grow the business. Moreover, this RoE is achieved, for our
non-financial companies, with balance sheets that have net cash, while across
the asset class as a whole, companies need to carry debt to finance their
business and leverage their returns. If we can find and own companies which
make financial returns in their business which are well above the average,
priced at valuations which are close to the average, then we should feel more
confident about the prospect for their share prices, and hence for the
relative performance of the portfolio in the future.
What next?
Sometimes as investors we see a good number of things that interest us in the
market; at other times we see fewer. But in reality, there is always
opportunity somewhere. We can be confident that the process of creative
destruction which has always been essential to markets and capital returns
will continue. If anything the spread of AI seems likely to extend the
disruptive environment for companies which was triggered almost two decades
ago by digitalisation and the invention of the smartphone. That innovation
redefined the nature of competition and radically reshaped industries not just
in the technology sector, but everywhere, even in the most unexpected corners
(as a recent BBC article pointed out, the demise of the TV cookery programme,
long a staple of the schedules, is directly attributable to YouTube, which has
disintermediated broadcasters by allowing content creators to produce and
distribute their own content to a large audience). Such creative destruction
should be welcomed by active investors, because it brings opportunity:
enormous value creation is possible for the winners, while the opposite is
true for those that find themselves on the wrong side of competition. So as we
look ahead, we must keep asking ourselves the same questions about the nature
of competitive advantage, about the effects that innovations have on different
industries, about the permanence or ephemerality of customer needs and
choices. And we should not forget that even in a world increasingly determined
by technological change, the human factor remains essential; much of what
differentiates companies in the long run is management, and the choices that
people make.
If constant change in the corporate world is a persistent state, other
things go in cycles, and some of these make us more constructive when we look
forward to the future. A weaker dollar, the continued rise of Chinese
manufacturing, the realignment of global trade patterns: these developments
continue to influence emerging markets, and go some way to explaining the
better returns, seen from the asset class this year. While that more positive
backdrop helps, our efforts as managers of your portfolio remain entirely
focused on producing the best outcomes possible in exchange for the risks we
take. We continue to believe that a thorough approach, consistently applied,
can help achieve that goal in the future as it has in the past.
Austin Forey
John Citron
Portfolio Managers
29th September 2025
Performance Attribution - Contributions to Total Returns
Contributions to total returns as at 30th June 2025
12 months to
30th June 2025
% %
Benchmark Total return 6.3
Asset allocation 0.9
Stock selection (2.9)
Currency effect 0.3
Gearing/Cash effect(1,APM) 0.0
Manager contribution (1.7)
Portfolio total return 4.6
Management fees and other expenses (0.8)
Share repurchases 1.1
Other effects 0.3
Return on net assets(APM) 4.9
Return on share price(APM) 9.8
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.
(1) The Company does not have any borrowings. Gearing/Cash effect
has had a negligible effect relative to the Benchmark.
(APM) Alternative Performance Measure ('APM').
A list of APMs, with explanations and calculations, and a glossary of terms
are provided on pages 113 to 115 of the 2025 Annual Report.
PRINCIPAL AND EMERGING RISKS
The Board has overall responsibility for reviewing the effectiveness of the
system of risk management and internal control which is operated by the
Manager and the Company's third-party service providers. Through delegation to
the Audit Committee, the Company's ongoing risk management process is designed
to identify, evaluate and mitigate the significant risks that the Company
faces.
In order to monitor and manage risks facing the Company, with the assistance
of the Manager, the Audit Committee maintains a risk matrix, which, as part of
the risk management and internal controls process, details the principal and
emerging risks that have been identified to face the Company at any given
time, together with measures put in place to monitor, manage or mitigate
against them as far as practicable. The Audit Committee considers the
Company's risk matrix at each meeting, and furthermore holds a third meeting
each year dedicated to a thorough review of the risk matrix.
The Directors, through the Audit Committee, 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.
The principal and emerging risks facing the Company, how they have changed
during the year, and how the Board aims to manage or mitigate these risks are
set out below.
Principal risk Description Mitigating activities Movement from prior year
Political and Economic Geopolitical volatility, including tensions, sanctions, and regulatory changes The Manager's investment process incorporates non-financial measures and risks The risk is high and increasing.
impacting economic growth, the stock market outlook, investors reducing/being in the assessment of investee companies to allow the portfolio to adapt to
forced to divest from a market (e.g. China, as a result of a breakdown in changing competitive and political landscapes. There is little direct control of this risk possible. The Company addresses
US/China relations) or being unable to divest at discretion due to an
these global developments in regular questioning of the Manager and with
invasion/the imposition of sanctions (e.g. Russia, a possible invasion of The Board actively monitors the political, economic and regulatory external expertise and continues to monitor these issues, should they develop.
Taiwan by China). environment. Although it cannot fully mitigate the associated risks, the
Company and its Manager has the ability to reduce stock, sector and market
Economic issues, including recession globally or in emerging market economies exposure.
and its impact on the world economy, and the attractiveness and returns of the
emerging market regions. The Board reviews appropriate industry literature (AIC, broker notes,
financial press) and seeks advice from relevant advisers. The Board also
UK political or structural changes such as change in financial or tax regularly invites external experts to present their views on geopolitical and
legislation that may affect onshore and offshore businesses. economic issues particularly relevant to the Company.
Investment Underperformance Performance of the Company's investment portfolio is fundamental to the The Board manages these risks by diversification of investments and through The risk is high and remains stable.
success of the company. Prolonged and substantial underperformance of emerging its investment restrictions and guidelines, which are monitored and reported
markets as an asset class or of the Company resulting from various risks, on by the Manager. The Manager provides the Directors with timely and accurate The Company underperformed the Benchmark. Further discussion on this is in
including restrictions on the free movement of capital, sanctions or management information, including performance data and attribution analyses, both the Chair's Statement and Portfolio Managers' Report
restrictions imposed by the UK or other governments on overseas investments, revenue estimates, liquidity reports and shareholder analyses.
exchange controls, taxation issues, or geopolitical tensions causing
disruptions. The Board maintains proactive engagement and clear communication with
shareholders in relation to performance issues, actions and expectations.
Strategy and Business Management The Company's current business or investment strategy may become outdated or The Board considers at regular intervals if the rationale for the Company This is a broader Principal Risk incorporating both Business Management
no longer appropriate. Although it may outperform the Benchmark, increasing remains appropriate along with the position of competitors and feedback from (including Discount Management) and Strategy. The risk is high and increasing.
competition and the promotion of other competing J.P.Morgan or third-party major shareholders.
products, such as Model Portfolios, and other collective investment schemes
The Board can, with shareholder approval, look to amend the investment policy
could lead to diminished investor demand for the Company's shares. Competition The Board regularly reviews and monitors the Company's objective and and objectives of the Company to avoid exposure to, or mitigate, these risks.
can also come from other investment trusts in the form of mergers & investment policy and strategy, the investment portfolio and its performance.
acquisitions and consolidation unfavourable to the Company.
The Board continually monitors, with assistance from the Manager and its
The Board monitors the implementation and results of the investment process brokers, the level of discount/premium to net asset value at which the shares
Poor implementation of the investment strategy, for example as to thematic with the Portfolio Managers, whose representatives attend all Board meetings, trade and movements in the share register. During the year, the Company
exposure, sector allocation, stock selection, undue concentration of holdings, and reviews data which show statistical measures of the Company's risk continued to conduct share buybacks at an enhanced pace versus the prior year.
or the degree of total portfolio risk, may lead to failure to outperform the profile. The Board holds a separate meeting devoted to strategy each year.
Company's Benchmark index and peer companies, resulting in the Company's
In an initiative to broaden the Company's investor base and appeal, the Board
shares trading on a wider discount. The Board monitors the Company's premium/discount at which the share price is proposing to implement a new enhanced dividend policy.
trades to NAV on both an absolute level and relative to its peers and the
Investment trust shares often trade at discounts to their underlying NAVs; wider investment trust sector.
they can also trade at a premium. Discounts and premiums can fluctuate
considerably leading to volatile returns for shareholders. The Board reviews sector relative performance and sales and marketing activity
to enhance the Company's appeal.
A sudden departure of one or more of the Portfolio Managers could result in
deterioration of investment performance. Board regularly meets additional members of the management team. The Manager
has a strong bench of portfolio managers and is active in raising the whole
team's profile with investors. The Board notes the emphasis placed in
marketing and communications about the well-established, repeatable investment
process and the breadth/depth of resources supporting the Portfolio Managers.
The team-based process and approach would mitigate the impact of any
individual personnel changes or departures.
Operational and Counterparty and Legal Disruption to, or failure of, the Manager's accounting, dealing or payments The Board keeps the services of the Manager and third-party service providers The risk is medium and remains unchanged from the prior year.
systems or the custodian's or depositary's records could prevent accurate under continuous review, and the Management Engagement Committee undertake a
reporting and monitoring of the Company's financial position. formal evaluation of their performance on an annual basis. The Board receives updates from JPMF's information security manager.
The threat of cyber attack, in all its guises such as hacking, malware, The information technology controls around the physical security of the To date the Manager's cyber security arrangements have proven robust and the
phishing (social engineering), disrupted-denial-of-service attacks, etc., is Manager's data centres, security of its networks and security of its trading Company has not been impacted by any cyber attacks threatening its operations.
regarded as at least as important as more traditional physical threats to applications are tested by independent reporting accountants and reported
reputation, business continuity and security. The Manager has received and every six months against the AAF Standard. The Audit Committee receives and reviews a summary of the findings from the
reviewed the cyber security policies for its key third party service providers
independently audited reports on the Manager's and other key third party
and JPMF has assured the Directors that the Company benefits directly or The Manager has procedures in place to maintain the best practices in the service providers' internal controls and any actions taken by the service
indirectly from all elements of J.P. Morgan Chase & Co's comprehensive fight against cybercrime. The Manager ensures all third party providers have providers in response to those findings.
Cyber Security programme. appropriate cyber protection in place.
Corporate Governance and Shareholder Relations Concentration of the share register, and inability to affect its composition, The Board monitors the share register via receipt of formal disclosures of The risk is medium and remains unchanged from the prior year.
i.e., diversification and the balance between institutional and retail significant transactions. The Manager regularly undertakes discussions with
holders, may impact market liquidity, the discount, and voting, including the Broker. The Board monitors the Manager's Sales, Marketing and PR efforts
failure to pass continuation vote. This is further complicated by activist and their effectiveness and it challenges the Manager where it feels it is
shareholder(s) requisitioning the Company, diverting attention from normal appropriate. The Board allocates a budget for such activities. The Manager has
business. a 'play book' on handling any approach from an activist investor.
EMERGING RISKS
The Board has considered and kept under review emerging risks, including but
not limited to the impact of higher long-term interest rates, climate change
& ESG compliance, artificial intelligence, technological advances in asset
management and a new world order. The key emerging risks identified are as
follows:
Higher long-term interest rates and Tariffs
A long-term reduction in returns available from investments as a result of
recession, stagnation, inflation or other prolonged exogenous factors as well
as a higher interest rate environment which may render the Company's
investment objectives and policies unattractive or unachievable.
Global trade dislocation continues to stem from President Trump's 'Liberation
Day' tariff announcement, with China, the EU, and India responding with
retaliatory measures. Most recently, a US appeals court ruled that the
majority of these tariffs are illegal; however, they remain in place pending
further legal review. The ongoing uncertainty is contributing to a reduction
in global trade and economic growth, resulting in lowered earnings forecasts
for companies worldwide.
Climate change & ESG compliance
At the portfolio level, climate change may disrupt business models and
profitability of investee companies, affecting operations of the Company and
its service providers. Additionally, non-compliance with ESG best practice
could impact demand for the Company's shares and the Manager's reputation
regarding adherence to climate change best practices. Furthermore, a major
rollback of climate efforts increases the likelihood of climate and
humanitarian catastrophes, exacerbating these risks.
Artificial intelligence ('AI')
While it might be deemed a great opportunity and force for good, there is an
increasing risk to business and society more widely from AI. Advances in
computing power means that AI has become a powerful tool that will impact a
huge range of areas and with a wide range of applications that include the
potential to disrupt and even to harm. In addition, the use of AI could be a
significant disrupter to business processes and whole companies, leading to
added uncertainty in corporate valuations.
Technological advances in asset management
Challenges in adapting to technological advancements, including blockchain
integration and digital asset management, potentially affecting operational
efficiency and investor engagement. Increased competition from tech-savvy
firms may lead to pressure on traditional investment companies, impacting
market share, regulatory compliance, and the ability to attract younger,
tech-oriented investors.
New world order
Political leadership and foreign policy changes in the US and the developing
relationships between China, Russia and other countries, leading to a
deterioration in international relationships, a rise in protectionist
policies and a pullback in global trade which has a disproportionate impact on
emerging markets.
TRANSACTIONS WITH THE MANAGER
Details of the management contract are set out in the Directors' Report on
page 57 of the 2025 Annual Report. The management fee payable to the Manager
for the year was £8,920,000 (2024: £8,866,000) of which £nil (2024: £nil)
was outstanding at the year end.
Safe custody fees amounting to £547,000 (2024: £484,000) payable during the
year to JPMorgan Chase Bank, N.A. of which £138,000 (2024: £160,000) was
outstanding at the year end.
The Manager may carry out some of its dealing transactions through group
subsidiaries. These transactions are carried out at arm's length. The
commission payable to JPMorgan Securities Limited for the year was £nil
(2024: £nil) of which £nil (2024: £nil) was outstanding at the year end.
Handling charges on dealing transactions amounting to £17,000 (2024:
£36,000) were payable to JPMorgan Chase Bank, N.A. during the year of which
£12,000 (2024: £16,000) was outstanding at the year end.
The Company invests in the JPMorgan USD Liquidity Fund, which is managed by
JPMorgan Asset Management (Europe) S.à r.l. At the year end this was valued
at £14,070,000 (2024: £4,844,000). Interest amounting to £228,000 (2024:
£1,078,000) was received during the year of which £nil (2024: £nil) was
outstanding at the year end.
At the year end, total cash of £4,349,000 (2024: £679,000) was held with
JPMorgan Chase Bank, N.A. A net amount of interest of £36,000 (2024:
£30,000) was receivable by the Company during the year of which £nil (2024:
£nil) was outstanding at the year end.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of Ireland' and
applicable law). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss of the
Company for that period. In preparing the financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable United Kingdom Accounting Standards,
comprising FRS 102, have been followed, subject to any material departures
disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and
prudent; 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.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The accounts are published on the Company's website:
www.jpmemergingmarkets.co.uk, which is maintained by the Company's Manager.
The maintenance and integrity of the website maintained by the Manager is, so
far as it relates to the Company, the responsibility of the Manager. The
Directors are responsible for the maintenance and integrity of the corporate
and financial information on the Company's website. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also responsible for
preparing a Strategic Report, a Directors' Report and Directors' Remuneration
Report that comply with the law and those regulations.
Each of the Directors, whose names and functions are listed in Directors'
Report confirm that, to the best of their knowledge:
• the Company's financial statements, which have been prepared
in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 102 'The Financial
Reporting Standard applicable in the UK and Republic of Ireland', and
applicable law), give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
• the Directors' Report includes a fair review of the
development and performance of the business and the position of the Company,
together with a description of the principal risks that it faces.
The Directors consider that the annual report and accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance, business
model and strategy.
For and on behalf of the Board
Aidan Lisser
Chair
29th September 2025
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th June
Year ended 30th June 2025 Year ended 30th June 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through
profit or loss - 34,763 34,763 - 72,311 72,311
Net foreign currency exchange (losses)/gains - (668) (668) - 1,316 1,316
Income from investments 30,747 125 30,872 29,861 95 29,956
Interest receivable 264 - 264 1,108 - 1,108
Gross return 31,011 34,220 65,231 30,969 73,722 104,691
Management fee (2,676) (6,244) (8,920) (2,660) (6,206) (8,866)
Other administrative expenses (1,541) - (1,541) (1,563) - (1,563)
Net return before finance costs and taxation 26,794 27,976 54,770 26,746 67,516 94,262
Finance costs (6) (15) (21) (1) - (1)
Net return before taxation 26,788 27,961 54,749 26,745 67,516 94,261
Taxation (2,254) (3,016) (5,270) (2,708) (6,586) (9,294)
Net return after taxation 24,534 24,945 49,479 24,037 60,930 84,967
Return per share (note 3) 2.30p 2.33p 4.63p 2.12p 5.37p 7.49p
A final dividend of 1.45p (2024: 1.30p) per Ordinary share has been proposed
in respect of the year ended 30th June 2025, totalling £14.7 million (2024:
£14.4 million). Further details are given in note 10 on page 92 of the 2025
Annual Report.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
Net return/(loss) after taxation represents the profit/(loss) for the year and
also total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30th June
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve reserves reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30th June 2023 33,091 173,631 1,665 69,939 1,027,276 24,220 1,329,822
Repurchase of shares into Treasury - - - - (43,014) - (43,014)
Proceeds from share forfeiture(2) - - - - 1,119 - 1,119
Net return - - - - 60,930 24,037 84,967
Dividends paid in the year (note 12) - - - - - (19,024) (19,024)
Forfeiture of unclaimed dividends(2) (note 12) - - - - - 159 159
At 30th June 2024 33,091 173,631 1,665 69,939 1,046,311 29,392 1,354,029
Repurchase of shares into Treasury - - - (69,939) (37,087) - (107,026)
Net return - - - - 24,945 24,534 49,479
Dividends paid in the year (note 12) - - - - - (21,059) (21,059)
At 30th June 2025 33,091 173,631 1,665 - 1,034,169 32,867 1,275,423
( )
(1) This reserve forms the distributable reserves of the Company and
is used to fund distributions to shareholders by way of dividends.
(2) During the year ended 30th June 2024, the Company undertook an
Asset Reunification Program to reunite inactive shareholders with their shares
and unclaimed dividends. In accordance with the Company's Articles of
Association, the Company exercised its right to forfeit the shares belonging
to untraced shareholders for a period of 12 years or more. These shares were
sold in the open market and the net proceeds returned to the Company.
In addition, any unclaimed dividends older than 12 years from the date of
payment of such dividend were forfeited and returned to the Company.
STATEMENT OF FINANCIAL POSITION
At 30th June
30th June 2025 30th June 2024(1)
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 1,283,313 1,356,705
Current assets
Debtors 6,843 5,337
Current assets investments(1) 14,070 4,844
Cash at bank(1) 4,349 679
25,262 10,860
Current liabilities
Creditors: amounts falling due within one year (20,776) (1,004)
Net current assets 4,486 9,856
Total assets less current liabilities 1,287,799 1,366,561
Provision for liabilities (12,376) (12,532)
Net assets 1,275,423 1,354,029
Capital and reserves
Called up share capital 33,091 33,091
Share premium account 173,631 173,631
Capital redemption reserve 1,665 1,665
Other reserve - 69,939
Capital reserves 1,034,169 1,046,311
Revenue reserve 32,867 29,392
Total shareholders' funds 1,275,423 1,354,029
Net asset value per share (note 4) 126.1p 122.1p
(1) Prior year comparatives have been restated as explained further in
note 1(a).
STATEMENT OF CASH FLOWS
For the year ended 30th June
Year ended Year ended
30th June 2025 30th June 2024
£'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 54,770 94,261
Adjustment for:
Net gains on investments held at fair value through profit or loss (34,763) (72,311)
Net foreign currency losses/(gains) 668 (1,316)
Dividend income (30,851) (29,878)
Interest income (264) (1,108)
Scrip dividends received as income (21) (78)
Realised losses on foreign exchange transactions (503) (180)
Realised foreign currency exchange (losses)/gains on JPMorgan USD
Liquidity Fund (152) 1,055
(Increase)/decrease in accrued income and other debtors (41) 22
Decrease in accrued expenses (20) (218)
Net cash outflow from operating activities before dividends, interest
and taxation (11,177) (9,751)
Dividends received 28,869 26,535
Interest received 264 1,108
Overseas withholding tax recovered 1,080 351
Capital gains tax paid (3,172) (4,182)
Net cash inflow from operating activities 15,864 14,061
Purchases of investments (293,754) (161,350)
Sales of investments 418,823 188,054
Net cash inflow from investing activities 125,069 26,704
Equity dividends paid (21,059) (19,024)
Refund of unclaimed dividends - 159
Repurchase of Ordinary shares into Treasury (106,944) (42,802)
Proceeds from share forfeiture - 1,119
Interest paid (21) (1)
Net cash outflow from financing activities (128,024) (60,549)
Increase/(decrease) in cash and cash equivalents(1) 12,909 (19,784)
Cash and cash equivalents at start of year(1) 5,523 24,866
Foreign currency exchange movements (13) 441
Cash and cash equivalents at end of year(1) 18,419 5,523
Cash and cash equivalents consist of:(1)
Cash at bank 4,349 679
Current assets investments in JPMorgan USD Liquidity Fund 14,070 4,844
Total 18,419 5,523
(1) The term 'cash and cash equivalents' is used for the purposes of
the Statement of Cash Flows, and represents Cash at bank and funds held in the
J.P.Morgan USD Liquidity Fund (shown as Current assets investments in the
Statement of Financial Position).
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30th June 2025
1. Accounting policies
(a) Basis of accounting
The financial statements are prepared under the historical cost convention,
modified to include fixed asset investments at fair value, and 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 believe that having considered the Company's investment
objective (see page 38 of the 2025 Annual Report), risk management policies
(see pages 97 to 102 of the 2025 Annual Report), capital management policies
and procedures (see page 102 of the 2025 Annual Report), the nature of the
portfolio and expenditure projections, the Company has adequate resources, an
appropriate financial structure and suitable management arrangements in place
to continue in operational existence for the foreseeable future. For these
reasons, they consider that there is reasonable evidence to continue to adopt
the going concern basis in preparing the financial statements. They have not
identified any material uncertainties to the Company's ability to continue to
do so over a period of at least 12 months from the date of these financial
statements.
In accordance with the statutory format required by the Companies Act 2006, as
at 30th June 2024, the 'Cash and cash equivalents' line item in the Statement
of Financial Position has been revised to 'Cash at bank' and 'Current assets
investments'. This revision separately reports the £4,844,000 investment in
the JPMorgan USD Liquidity Fund as 'Current assets investments' and £679,000
as 'Cash at bank'. This adjustment does not affect any other line items in the
Statement of Financial Position or the total current assets.
The policies applied in these financial statements are consistent with those
applied in the preceding year.
2 Dividends
(a) Dividends paid and proposed
2025 2024
Pence £'000 Pence £'000
Dividend paid
Final dividend in respect of prior year 1.30 14,249 1.07 12,265
Interim dividend 0.65 6,810 0.60 6,759
Total dividends paid in the year 1.95 21,059 1.67 19,024
Forfeiture of unclaimed dividends over
12 years old(1) - - - (159)
Net dividends 1.95 21,059 1.67 18,865
Dividend proposed
Final dividend proposed 1.45 14,668 1.30 14,420
( )
(1) As a result of the Asset Reunification Program to reunite inactive
shareholders with their shares and unclaimed dividends, any unclaimed
dividends older than 12 years from the date of payment of such dividend were
forfeited and returned to the Company.
All final dividends paid and proposed in the year have been funded from the
revenue reserve.
The final dividend proposed in respect of the year ended 30th June 2025 is
subject to shareholder approval at the forthcoming Annual General Meeting. In
accordance with the accounting policy of the Company, this dividend will be
reflected in the financial statements for the year ending 30th June 2026. The
amount payable will be subject to change based on the number of Ordinary
shares outstanding on the record date, taking into account any Ordinary shares
repurchased after the year end.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act
2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of dividends
declared in respect of the financial year, shown below.
2025 2024
Pence £'000 Pence £'000
Interim dividend 0.65 6,810 0.60 6,759
Final dividend proposed 1.45 14,668 1.30 14,420
Total 2.10 21,478 1.90 21,179
The revenue available for distribution by way of dividend for the year is
£24,534,000 (2024: £24,037,000). The revenue reserve after payment of the
final dividend will amount to £18,199,000 (2024: £14,972,000).
3 Return per share
2025 2024
£'000 £'000
Revenue return 24,534 24,037
Capital return 24,945 60,930
Total return 49,479 84,967
Weighted average number of Ordinary shares in issue during the year 1,068,231,058 1,133,870,299
Revenue return per share 2.30p 2.12p
Capital return per share 2.33p 5.37p
Total return per share 4.63p 7.49p
4. Net asset value per share
2025 2024
Net assets (£'000) 1,275,423 1,354,029
Number of Ordinary shares in issue 1,011,554,630 1,109,226,510
Net asset value per share 126.1p 122.1p
5. Analysis of change in net cash
Foreign Currency
As at 30th June 2024 Exchange Movements As at 30th June 2025
£'000 £'000 £'000
Cash flows
£'000
Cash and cash equivalents
Cash at bank 679 3,648 22 4,349
Current assets investments(1) 4,844 9,261 (35) 14,070
Net cash 5,523 12,909 (13) 18,419
1 JPMorgan USD Liquidity Fund, a AAA rated money market fund which seeks to
achieve a return in line with prevailing money market rates whilst aiming to
preserve capital consistent with such rates and to maintain a high degree of
liquidity.
Status of results announcement
2025 Financial Information
The figures and financial information for 2025 are extracted from the Annual
Report and Accounts for the year ended 30th June 2025 and do not constitute
the statutory accounts for the year. The 2025 Annual Report and Accounts
include the Report of the Independent Auditor, which is unqualified and does
not contain a statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The Annual Report and Accounts will be delivered to the
Register of Companies in due course.
2024 Financial Information
The figures and financial information for 2024 are extracted from the
published Annual Report and Accounts for the year ended 30th June 2024 and do
not constitute the statutory accounts for that year. The Annual Report and
Accounts has been delivered to the Registrar of Companies and includes the
Report of the Independent Auditor, which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the Companies Act
2006.
JPMORGAN FUNDS LIMITED
29th September 2025
For further information, please contact:
Divya Amin
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 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 2025 Annual Report 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 2025 Annual Report will also shortly be available on the Company's website
at www.jpmemergingmarkets.co.uk (http://www.jpmemergingmarkets.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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