JPMorgan Asia Growth & Income

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN ASIA GROWTH AND INCOME INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31ST MARCH 2021

Legal Entity Identifier: 5493006R74BNJSJKCB17

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Performance and the Company's Improved Rating

In the six months to 31st March 2021 the Company's return to shareholders was +19.9%, representing a significant outperformance of the Company's benchmark index, the MSCI All Countries Asia ex Japan Index, which returned +14.1%. The net asset value ('NAV') return was +17.8% (all figures are on a total return basis).

The Company's strong performance alongside the attractive yield has fueled ongoing demand for the Company's shares, particularly from retail investors, with such investors now holding just under 45% of the Company's share capital; having represented circa. 26% of the register in September 2016. This demand has resulted in the Company's shares trading consistently at or close to a premium to NAV over the reporting period, with the Company's shares ending the review period trading at a premium to NAV of 2.4%, having traded at a premium of 0.6% at 30th September 2020.

To manage the demand for the Company's shares and ultimately increase the shareholder base and lower the cost per share, the Board has taken the opportunity to authorise the sale of the Company's entire Treasury stock, effectively re-issuing the stock, over the reporting period. Following the sale of the Treasury Stock, representing 965,500 shares, the Company issued a further 115,000 new shares under a block listing over the reporting period. Since the 31st March 2021, the Company has issued a further 1,255,000 new shares.

Shareholders are reminded that shares will only be issued at a premium to NAV so they do not dilute the price for existing shareholders.

Dividends and Dividend Policy

The Company's dividend policy aims to pay regular quarterly dividends funded from a combination of revenue and capital reserves equivalent to 1% of the Company's NAV on the last business day of each financial quarter, being the end of December, March, June and September. Shareholders are reminded that the dividend policy of the Company does not place any demand on the investment managers to seek a higher income yield from the portfolio, at the expense of total returns available to shareholders. Through dissociating the dividend policy of the Company from the split of capital and revenue returns generated from its current investment policy, the Company has the ability to generate attractive total returns with a low level of attrition to the capital base of the Company.

For the year ended 30th September 2020 dividends paid totalled 15.8 pence (2019: 15.7 pence). In respect of the quarters to 31st December 2020 and to 31st March 2021 dividends of 4.8 pence and 4.9 pence respectively were paid, totaling 9.7 pence and reflecting the strong rebound in the Company's net assets. Two further dividends will be declared on the first business day after 30th June and 30th September 2021. Shareholders are further reminded that the dividends are based upon a percentage of net assets, so the dividend paid to shareholders will reflect the Company's net assets at the particular quarter end and so will be subject to market fluctuations.

Outlook

Most Asian countries have appeared to handle the first wave pandemic better than their global counterparts, and they are emerging in better economic health since governments in Asia have generally refrained from large scale fiscal stimuli. However, as the resurgence of cases in India demonstrates, the risks to economies and markets will remain elevated until the vast majority of the world's population has been vaccinated. Geopolitical tensions are also a concern as China assumes her role as the leading counterpart to the US, particularly in the Asia Pacific region. 

The region continues to offer a broad range of exciting investment opportunities from high quality companies that benefit from the region's developments in technology and increased consumption. JPMorgan Asia Growth & Income is an ideal vehicle to facilitate such exposure, offering a disciplined investment approach whilst simultaneously providing investors with a healthy income yield of approximately 4%, all delivered at one of the lowest 'Ongoing Charges Ratio' within its comparable peer group of actively managed open and closed-ended investment vehicles.

While Asia, and China in particular, has demonstrated comparatively advantageous resilience to the pandemic, India is an exception. At the time of writing it is in the midst of a terrible humanitarian crisis arising from highly virulent variants of the pathogen which are impacting this country nationwide. Our thoughts are with the people of India at this time.

Bronwyn Curtis OBE

Chairman                                                                                                                                          

21st May 2021

INVESTMENT MANAGERS' REPORT

Introduction

In this report, we consider the Company's investment performance for the six months to 31st March 2021. We discuss the improvement in investor sentiment, following one of the most challenging and unprecedented market periods. We also examine the drivers of the Company's performance, and, finally, consider the outlook for Asian stock markets for the remainder of 2021.

What has the macroeconomic and market environment been like?

In the first half of the Company's current financial year, to end March 2021, economic conditions proved comparatively resilient across Asia and investor sentiment continued to improve across the region, spurred on by hopes that the recovery is gathering momentum. China was one of the only major countries to post positive GDP growth in 2020, expanding by 2.3%. Taiwan grew by 3.1%, while economic output in South Korea fell by a modest 1%, in line with the contraction in the emerging Asia economies as a whole. This compares with a 3.5% contraction in the US economy and a 4.7% drop in activity across all advanced economies.

Several pillars supported growth in Asia during the review period and provide reasons for optimism about the area's economic outlook. Firstly, China's relatively robust economic performance has buoyed regional trade. Chinese imports from Asia were almost back at pre-pandemic levels by end March 2021. Much of this is trade being driven by robust global demand for technology and tech-related products. China is a major supplier of tech goods and many of their electronic components are produced in Asia. This has underpinned Chinese appetite for imports, notably from South Korea and Taiwan, which are both major contributors to the international electronics supply chain.

Asia's recovery is not, however, confined to the tech sector. Manufacturing activity, as measured by PMI indices, is improving across Asia and even the tourism and hospitality sectors, worst hit by the pandemic, are planning their re-openings. Tourism is an especially important driver of growth in South East Asia. The World Travel & Tourism Council estimates that tourism contributed 6.5% to South East Asian's GDP in 2019, before the pandemic devastated the sector. But now that several proven vaccines are widely available, the authorities in places such as Thailand are making plans to reopen international borders. Programs include quarantine-free travel to popular destinations for vaccinated tourists.

Economic stimulus and structural reforms will also continue to support and propel activity across Asia. Regional activity is likely to benefit, albeit indirectly, from US President Biden's very ambitious fiscal stimulus and structural reform packages. Closer to home, India's latest budget, announced in February 2021, demonstrated the government's commitment to pro-growth policies. Initiatives included increased infrastructure spending, recapitalisation of public sector banks and measures to reduce private sector non-performing loans. In Indonesia, the government has gone full circle, from being focused on protecting domestic industries and interests, to implementing ambition plans to liberalise the economy and encourage investment, via tax holidays and preferential lending rates. However, such plans come at a cost. Fiscal deficits continue to widen across Asia, reaching 8% of regional GDP in 2020 and projected to remain around 6.5% of GDP in 2021.

All these developments, combined with supportive central bank policies, a de-escalation of geopolitical tensions and the arrival of viable vaccines, helped buoy Asian financial market sentiment in late 2020 and the early months of 2021. The MSCI AC Asia ex Japan Index rose 14.1% (in GBP terms) during the review period, with particularly strong performance in the first two months of 2021. The South Korean and Taiwanese equity markets were the two best performers in the region, thanks to the surge in demand for technology and tech-related products. In general, Asian markets ended the review period 15-20% above their pre-pandemic highs.

Trading volumes on the Hong Kong stock exchange are seeing a marked increase, thanks at least in part to Stock Connect, a collaboration between the Shanghai, Shenzhen and Hong Kong stock exchanges, which facilitates trading across these markets, for Chinese and international investors. Stock Connect witnessed exceptionally high investor flows from December onwards. A record US$8.5bn of 'southbound' purchases of Hong Kong listed stocks were made in the first week of January. Nearly 30% of these trades were executed on the Hong Kong exchange, compared to 18% in 2020 and 12% in 2019. By mid-February, total net purchases on the Hong Kong exchange had surpassed 2020's total of US$87bn.

However, trading conditions became increasingly volatile in March, driven by several factors. The Hong Kong exchange raised stamp duty on all stock trades and this, combined with China's announcement of various liquidity tightening measures, resulted in several large net-sell days. At the same time, investors around the world began to worry about inflation risks. These concerns were greatest in the US, where the economic outlook improved due to a fall in COVID-19 cases, the rapid rollout of vaccines and massive amounts of fiscal stimulus. Despite (or perhaps because of) the Federal Reserve's ongoing commitment to low interest rates, the yield on 10-year US Treasuries rose from 0.92% at end December 2020, to 1.75% at end March 2021, close to its pre-pandemic level. Such an aggressive rise in bond yields had an adverse impact on equity valuations in all markets, especially for the high value tech and other growth stocks that have performed best in the past year. Investors rotated out of these stocks into more economically sensitive, cyclical sectors and companies set to benefit most from the recovery in industrial activity and trade, rising commodity prices and higher interest rates.

How has the Company performed over the six-month period under review?

Over the six months to 31st March 2021, the portfolio outperformed its benchmark index (the MSCI All Countries Asia ex Japan Index). The Company's total return on net assets was 17.8%, compared with a 14.1% total return for the benchmark index (in GBP terms). The value of the Company's shares rose 19.9%, widening the premium at which the shares traded against NAV to 2.4%, from 0.6% at the end of the previous financial year.

PERFORMANCE ATTRIBUTION

FOR THE SIX MONTHS ENDED 31ST MARCH 2021

¹The dividend/residual arises principally from timing differences in the treatment of income flows.

Source: FactSet, JPMAM and Morningstar.

All figures are on a total return basis. Performance attribution analyses how the portfolio achieved its recorded performance relative to its benchmark.

What have been the major contributors to and detractors from performance?

Outperformance was driven by positive stock selection. Our stock selection in technology hardware companies was the top contributor to returns. As discussed above, semi-conductors, other electronic components and data storage are in high demand from companies manufacturing mobile phones, automobiles, personal and high-performance computers and automated business solutions. Industry leaders such as Samsung Electronics and Taiwan Semiconductor Manufacturing, both top 3 holdings for the Company at end March, saw their profits grow by more than 20% in 2020. Within the healthcare sector, Wuxi Biologics significantly enhanced performance. China's healthcare industry is developing at a rapid pace, especially in areas such as biologics manufacturing, and Wuxi Biologics is a leader in the field. It has experienced a rise in demand for drug manufacturing outsourcing, especially for COVID vaccines. Our selection among e-commerce stocks also added to returns, thanks in part to a position in SEA Limited, Southeast Asia's leading e-commerce and mobile gaming company. It is benefiting as these economies catch up with trends already well-established in more developed countries. Furthermore, SEA's management has performed well, winning market share from competitors such as Alibaba-backed Lazada.

The largest detractor from performance during the review period was Budweiser Brewing. This company runs a large restaurant and bar business in China, which has yet to fully recover from the downturn in trade it suffered during China's severe lockdown. The company is also facing rising competition in the South Korean market. Maruti Suzuki, India's largest auto company by market share, also detracted from returns. Although auto sales have recovered from virtually zero earlier in 2020, the rebound has been shallow, as the Indian economy is still sluggish and burdened by its ongoing struggle with the pandemic.

What should investors expect for the next six months?

Market expectations of a strong Asian economic and profit recovery are reasonably firm. The MSCI AC Asia ex Japan Index is trading at 16x forward earnings at the time of writing, above its five-year average of 13x. In 2020, the expansion was concentrated in the technology and software sectors, but the positive outlook for profit growth has quickly become more broad-based, with manufacturing, resources, services and travel on track for sharp rebounds. In addition, the pandemic has given fresh impetus to some of the major trends evolving in Asia and across the globe, and sectors such as e-commerce and online gaming are likely to continuing expanding, supporting activity over the medium term.

As ever, uncertainties remain. There are residual, possibly significant, risks of a resurgence of COVID-19 or its variants as economic activity, travel and social interactions normalise. Investors will also be weighing the rapidly improving global economic outlook against the risks of rising inflation expectations and higher volatility in some related markets. For example, the oil price rose sharply late in Q1 2021, with Brent crude touching nearly US$70/barrel - a full recovery from its 2020 sell-off - while other commodities including nickel and copper have also seen more volatile price action. However, despite these short-term inflation risks, we are relatively sanguine about the longer-term inflation outlook. In our view, there are significant disinflationary forces at work, including changing technological trends, worsening demographics and the eventual need for governments to reduce burgeoning fiscal deficits.

Despite the current uncertainties, we believe that Asian equity markets continue to provide attractive growth opportunities. We will keep striving to navigate safely through the current 'rough waters' and stay focused on seeking out Asia's best investment ideas. It is our firm conviction that having a consistent valuation framework allows us to identify businesses that have been unduly punished for near-term setbacks, such as enforced lockdowns, that they may be well-equipped to surmount over time. Such companies are almost inevitably undervalued. We remain confident that our long experience, local presence and focus on the fundamental analysis of specific stocks will allow us to keep identifying such opportunities, ensuring the Company's portfolio provides our investors with potentially attractive returns over the long-term.

Ayaz Ebrahim

Robert Lloyd

Investment Managers                                                                                                                            

21st May 2021

INTERIM MANAGEMENT REPORT

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

Principal Risks and Uncertainties

The principal and emerging risks faced by the Company fall into the following broad categories: investment and strategy, political and economic, operational risk and cybercrime, climate change and global pandemic. Information on the principal and emerging risks faced by the Company is given in the business review section within the 2020 Annual Report and Financial Statements.

Related Parties Transactions

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

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio (being mainly securities which are readily realisable) and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operational existence for at least 12 months from the date of the approval of this half-yearly financial report. For these reasons, they consider there is reasonable evidence to adopt the going concern basis in preparing the financial statements. This conclusion also takes into account the Board's assessment of the risks arising from the Coronavirus (Covid-19).

Continuation votes are held every three years and the next continuation vote will be put to shareholders at the Annual General Meeting in 2023.

Directors' Responsibilities

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

(i)      the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the state of affairs of the Company and of the assets, liabilities, financial position and net return of the Company, as at 31st March 2021, as required by the UK Listing Authority Disclosure and Transparency Rules 4.2.4R; and

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

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•        select suitable accounting policies and then apply them consistently;

•        make judgements and accounting estimates that are reasonable and prudent;

•        state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

and the Directors confirm that they have done so.

For and on behalf of the Board

Bronwyn Curtis OBE

Chairman                                                                                                                                             

21st May 2021

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31ST MARCH 2021

All revenue and capital items in the above statement derive from continuing operations.

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 period and also the total comprehensive income.

STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31ST MARCH 2021

 ¹  These reserves form the distributable reserves of the Company and may be used to fund distributions to investors.

STATEMENT OF FINANCIAL POSITION

AT 31ST MARCH 2021

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31ST MARCH 2021

 ¹The unrealised exchange gain on the JPMorgan US Dollar Liquidity Fund in the comparative column has been moved from the initial 'Net cash outflow from operations' total to be disclosed separately as the "unrealised gain on foreign currency cash and cash equivalents".

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31ST MARCH 2021

1.       Financial statements

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

The figures and financial information for the year ended 30th September 2020 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and include the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.       Accounting policies

Basis of accounting

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in October 2019.

FRS 104, 'Interim Financial Reporting', issued by the FRC in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 31st March 2021.

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

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 30th September 2020.

3.       Return/(loss) per share

4.       Dividends

A second interim dividend of 4.9p has been declared for payment on 21st May 2021 for the financial year ending 30th September 2021.

Dividend payments in excess of the revenue amount will be paid out of the Company's distributable capital reserve.

5.       Net asset value per share

JPMORGAN FUNDS LIMITED

21st May 2021

For further information, please contact:

Alison Vincent

For and on behalf of

JPMorgan Funds Limited

020 7742 4000

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

ENDS

A copy of the annual report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

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