Half Year Results

JPMorgan Emerging Mkts Invest Trust

14 June 2024

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EMERGING EUROPE MIDDLE EAST & AFRICA SECURITIES PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH APRIL 2024

Legal Entity Identifier: 549300II3MHI98ZLVH37

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Overview and performance

During the six months ended 30th April 2024, the Company's net asset value on a total return basis increased by 6.9%, an underperformance of 2.2% against the Company's reference index, the S&P Emerging Europe, Middle East & Africa BMI Net Return in GBP, which increased 9.1% on a total return basis to the end of this reporting period. The reasons for the underperformance against the reference index includes the Company's currently high ongoing charges and its holding of Russian assets, which do not form part of the reference index.

As at 30th April 2024, the Company's share price was 89.5 pence, a decrease of 25.4% in the six-month period. As at 12th June 2024 the share price was 107.5 pence.

The tragic events in Ukraine since Russia's military invasion, commenced on 24th February 2022, continue to cast a shadow over the global economy. The strict economic sanctions that followed the invasion remain in place and the valuation of the Company's Russian assets continues to be drastically reduced. Extensive details on the negative impact that the events in Ukraine have had on the Company are provided in my Chairman's Statement included in the Company's 2022 annual report and in the list of question and answers (Q&A) available on the Company's website www.jpmeemeasecurities.com

Revenue, earnings and dividend

The Company's revenue for the six-month period to 30th April 2024 after taxation was £41,000 (30th April 2023: £375,000) and the return per share, calculated on the basis of the average number of shares in issue was 0.10 pence (30th April 2023: 0.93 pence) per share.

One of the main drivers of the reduction in the Company's revenue after taxation compared to the previous year is the increase in the Company's custody fees, charged by JPMorgan Chase Bank, N.A. (the Company's Custodian) for the Company's Russian assets, which have now reverted to being calculated on their local market value which are significantly higher than the written down valuation included in the Company's accounts. The increased custody fees are also a major factor in the increase in the Company's ongoing charge which was 4.4% (on an annualised basis) as at 30th April 2024 (30th April 2023: 2.3%). The management fee charged by JPMorgan Funds Ltd continues to be based on the Company's assets excluding the value of the Russian holdings. The Board are in discussion with the Manager regarding the current level of the custody fee.

At present, the dividends paid from the Russian securities in the Company's portfolio are held in a custody 'S' account in Moscow. The balance on the 'S' account as at 2nd May 2024 was equivalent to approximately £25.2 million at the exchange rate applicable on that date. The Company's Manager is monitoring the receipts into the 'S' account against dividends announced by the portfolio companies although there is no certainty that the sums in the 'S' account will ever be received by the Company. The Board also monitors the underlying local value of the Russian assets, although there is much uncertainty of these values ever being realisable by the Company.

As at 2nd May 2024, an additional £7.9 million has been announced but is yet to be received. Your Board has also taken a keen interest in this in order to be satisfied that all dividends due are in fact recorded in the 'S' Account. As previously detailed, these dividends cannot be remitted to the Company and may never be received. They are not recognised in the Company's net asset value or in its income statement.

As previously announced by the Board via RNS, the Company's Manager confirmed that the Company's assets (both securities and funds) held in custody 'S' accounts in the name of JPMorgan Bank International (the Russian sub-custodian used by JPMorgan Chase Bank, N.A.) are not subject to the freezing order claimed by VTB in the Russian courts on 17th April 2024. However, the possibility of a retaliatory response to current Western governments discussions regarding the use of sanctioned Russian assets to help finance Ukraine's war effort seems to be always possible. We will continue to monitor developments.

Discount control

Due to the current extreme market conditions that have created the unusual situation whereby the Company's shares are currently trading at a very elevated premium to its net asset value, the Board has no plans to reinstate the Company's share discount control programme. As at 30th April 2024, the premium was 81.2%, this a significant reduction from the premium at the year end of 156.7%. The Board believes that this premium arises due to a difference in the view of what the Company's net assets are valued at and should not be interpreted as an indication that investors are more likely to derive any value from the Company's Russian shareholdings.

Investment Management

As detailed in the RNS announcement of 26th March 2024, Pandora Omaset left JPMorgan and Oleg Biryulyov continues to be the Company's Investment Manager supported by JPMorgan Asset Management's Emerging Markets and Asia Pacific equities team (EMAP). JPMAM's EMAP team consists of 100+ investment professionals based in both the UK and overseas.

Board Composition

As noted in the Company's previous Annual Report, the Board has engaged an independent third party search consultant to undertake a search for a fourth non-executive director. We are hopeful that the search will result in the appointment of a new director this year.

Change of Company Registrar

With effect from 3rd June 2024, the Company has transferred the management of its share register from Equiniti Financial Services Limited to Computershare Investor Services PLC ('Computershare'). Shareholders holding their shares directly, rather than via a third-party platform, will be contacted directly by Computershare. Further details are available on the Company's website.

Outlook

With little prospect of Russia's invasion of Ukraine being resolved in the foreseeable future or the limiting of the existing strict economic sanctions, the Company's investment objective at least helps the Company steer through this very difficult period. Although cognisant of the Company's continuing holdings in Russian companies, the challenge for the Board is to use the investment objective to grow the Company's assets in a way that promotes the success of the Company for the benefit of the shareholders as a whole.

The Board is confident that, with the assistance of the JPMorgan EMAP team over the long term and a supportive political and regulatory environment, its investment objective is achievable.

Eric Sanderson

Chairman                                                                                                                                              13th June 2024

INVESTMENT MANAGER'S REPORT

Introduction

As mentioned in the Chairman's Statement of this report, and in previous reporting, the Company's Russian holdings continue to be subject to strict sanctions. This Investment Managers' Report therefore relates to the Company's strategy and portfolio activity under its revised investment objective, which is to maximise total return to shareholders from a diversified portfolio of investments in Emerging Europe (including Russia), Middle East and Africa (EMEA).

This report covers the six-month period commencing 1st November 2023, and ending 30th April 2024.

Performance

We are pleased to report that during this period, the Company's new investments delivered positive returns to shareholders, rising 6.9% on a net asset value (NAV) basis, although returns lagged the reference index, the S&P Emerging Europe, Middle East & Africa BMI Net Return in GBP, which rose by 9.1%.

Portfolio

At the end of the review period, the Company's portfolio comprised 100 stocks, compared to 89 holdings at the end of the financial year (31st October 2023). Of these, 26 were Russian securities, unchanged since the end of the financial year. The Company's Russian securities now comprise approximately 8% of the written down value of the portfolio (versus 9% of the portfolio at the time of the 2023 Annual Report). As mentioned above, the Company's Russian securities are presently subject to strict sanctions and their valuations have been discounted accordingly. The Company's holding in the JPM Liquidity Fund is not included in the above numbers.

Market backdrop

The six months ended 30th April 2024 were positive for the EMEA region, and for Turkey particularly. However, the region marginally underperformed the Global Emerging Markets index and lagged further behind the Global Equity Index. This underperformance relative to global markets was due mainly to the EMEA region's greater focus on value- and income-oriented stocks, which drags on relative performance any time growth stocks, especially those related to technology and artificial intelligence (AI), are in favour with global investors, as they were during the review period. This factor weighted particularly heavily on the UAE market.

Regional markets received support from rising oil prices during the review period. Oil began the period around US$75 pbbl, and ended the half year closer to US$90 pbbl, as the OPEC+ group agreed to limit production by a further 1.5m barrels per day during 2024. This means that daily oil production will be a total of 3.0m bbl lower than in 2023.

Turkey continues to benefit from a resurgence of interest from international investors, who are still very underweight this market. But the major driver is demand from local investors, who use equities as a saving instrument to protect their savings from devaluation. Investors' enthusiasm was not dampened by the opposition's victory in municipal elections in Ankara and Istanbul. As we expected, President Erdogan did not make any subsequent policy concessions, or even meet with opposition leaders, so the result will probably have few implications for economic policy. Small, peripheral markets like Slovenia, Georgia, Kazakhstan and Romania all did reasonably well in the review period, with financials and energy names leading the way. We expect a significant contribution to portfolio income from these holdings in late Q224 and Q324, notably from Kazatomprom, a Kazak supplier of uranium to global markets, with a 5+% dividend yield.

Several major political developments across the region weighed on investor sentiment during the review period:

•        The Israeli invasion of Gaza continued, and Yemeni forces sympathetic to the Palestinian cause have had a significant adverse impact on shipping in the Red Sea. We do not expect the conflict to escalate into outright war across the Arab world, as almost all region players including Iran, Iraq, Syria, Egypt, Turkey, Qatar, Saudi Arabia and United Arab Emirates (UAE), along with the US and other Western governments, are engaged in efforts to resolve the crisis. However, the conflict has sparked a significant escalation of global geopolitical tensions and will have long-lasting economic and political implications across the region and beyond.

•        In South Africa, the run-up to parliamentary elections in late May created major uncertainty for investors.

•        Political instability continues in Kuwait, as the Emir dissolved Parliament due to unresolved disagreements about reform agenda between legislative and executive powers.

Investment strategy

The Company's investment objective is to maximise the total return from investments in EMEA markets. We aim to meet this objective by identifying high quality businesses with high expected returns and the capacity to compound earnings and generate sustainable dividends, over the long term. This includes companies with the potential to grow due to their positions as national or global market leaders. However, we aim to buy stocks at reasonable prices, so recent acquisitions have a value tilt. We adopt a bottom-up stock selection process, drawing on the in-depth fundamental analysis of JPMorgan's Emerging Markets and Asia Pacific (EMAP) equity research team, which includes assessments of the longevity of a business's investment case, and the quality of its management and governance practices.

Our investment approach is permeated by three broad themes:

Commodity sensitivities: EMEA countries are rich in a variety of commodities - not only oil and gas, but also platinum, gold and copper. We are especially interested in companies with exposure to the global transition to renewable energy. For example, the Company is invested in Gold Fields, a South African gold miner. Other portfolio holdings driven by the commodities theme include Motor Oil Hellas, a Greek energy company, MOL (a Hungarian refinery), ARAMCO (the world's largest oil company).

Mass market consumption: 60% of the population of EMEA countries is less than 25 years old, and this percentage is forecast to continue rising. The youthfulness of the population is a major boon for consumption, as this demographic is tech savvy and thus easy for digital marketers to access, and younger people have a higher propensity to spend than older generations.

As incomes across EMEA regions are relatively low by global standards, we look for companies selling affordable products which are differentiated from their competitors by their strong branding and customer service. Many day-to-day household spending decisions are made by women, so companies focused on products of potential interest to them are another focus. Portfolio holdings underpinned by this theme include two pharmaceutical companies, South Africa's Clicks and Hungary's Richter. Clicks focuses on pharmacy, health and beauty items, while Richter specialises in women's healthcare and wellbeing products.

Technology adopters: Many EMEA countries, especially in Africa, are dogged by structural challenges which can often seem intractable, given the economic and fiscal constraints and political uncertainties endemic in the region, so we seek out companies that are able to 'leapfrog' these challenges, or provide much-needed consumer services which the market, or governments, have otherwise failed to supply. For example, Vodafone is empowering consumers in many EMEA countries with electronic payments systems and mobile access to banking and insurance services, including in remote areas, thereby removing the need for customers to travel long distances to access these services. Other portfolio holdings motivated by this theme include Capitec, a South African bank, and Polish company InPost. InPost operates an e-commerce platform providing parcel delivery services.

How have specific sectors and stocks fared over the review period?

Asset allocation detracted from relative performance over the period. Our overweight to Energy was the most significant detractor. Despite the rise in oil prices, this sector was undermined by expectations of a potential new placement of ARAMCO. Health Care, IT and Consumer discretionary did well in the review period, and our underweights to these sectors had more minor adverse impacts on relative returns. However, our underweight to materials added, and gold companies are still outperforming, as they retain their appeal as a safe haven in volatile, uncertain and conflict-ridden times.

At the country level, performance was supported by our decision not to invest in Egypt and by our underweights to Kuwait and the Czech Republic. However, the positive impact of these decisions was more than offset by our overweight in UAE, which detracted given the underperformance referenced above. Our underweight to Turkey meant the ongoing rally in this market proved a further drag on relative returns over the period.

Stock selection made a positive contribution to relative returns over the past six months, although this was not quite sufficient to fully offset the adverse impact of our asset allocation decisions. Our overweight to Tupras, a Turkish oil and gas producer which we purchased during the review period, was the largest contributor, as the stock benefited from its defensive nature, ability to hedge FX risks and generate significant income for shareholders, via dividend's distribution. Our decisions to hold several out-of-index names, and to avoid other names within the index, proved profitable and supportive of relative returns over the period, and we believe this reflects favourably on our stock selection skills. These out-of-index positions included: Halyk Savings Bank, a major Kazak bank with an ROE above 25% and a dividend yield above 7%; Bank of Georgia, another recent acquisition and one of Georgia's largest banks, with a 20+5% ROE and 4+% dividend yield; and another Georgia bank, TBC. JSC Kaspi KZ, an out-of-index Kazak fintech company with a 5+% dividend yield also enhanced performance, as did our decisions to avoid Sasol, a South African chemical and energy company, due to ESG factor and exposure to coal/pollution of this Company, SABIC Agri, a Saudi materials company, and Emirates Telecom, the UAE's major telecoms provider.

The main detractor from returns over the review period at the stock level was our decision not to hold ACWA power, a Saudi engineering and utilities firm. We are very wary of this company due its massive leverage and extraordinarily expensive valuation. We also avoided Saudi Mining Company, due to valuation and excessive CAPEX plans, and we were underweight Naspers, a South African internet content company which has an interest in its Chinese counterpart, Tencent, as this company does not pay an attractive dividend. The stock rallied during the review period, but we did not expect the rally to be sustained, so we took the opportunity to close the position.

Portfolio positioning

Although our investment strategy has a quality bias, it is important to note that the investment universe defined by our reference index is presently dominated by companies rated by JPMorgan analysts as 'standard' stocks, the lowest of their three designations of 'premium', 'quality' and 'standard'. This is in part because regional equity markets are still young, and in the early stages of development, and also because JPMorgan's analytical framework requires companies to possess a track record of at least five years before they can be rated more highly.

Another notable feature of the EMEA investment universe is that financials and commodity names feature heavily, although the index will broaden out over time as economies and financial markets develop, and we are excited about the prospect of exploring these markets more deeply as they evolve. However, despite the current market concentration around these sectors, the Company's reference index already contains more than 680 names - a much larger and more diverse investment universe than the very limited number of stocks previously available to us in Russia, and we see many compelling opportunities across the EMEA regions.

During the review period, we participated on one initial public offering (IPO), the listing of Parking, the largest supplier of parking services in Dubai. This is an infrastructure play, which is well suited to our income strategy given the company's reasonably high, and predictable, income distribution policy. We also opened a significant number of other new positions in addition to Tupras and Bank of Georgia, mentioned above. We initiated several positions in other bank names, including Poland's Pekao and PKO, the National Bank of Greece, two Greek regional banks, Eurobank Ergasias Services and Piraeus, and in two telecom providers, Hungary's Magyar Telekom and South Africa's MTN Group. We also topped up existing positions in several bank names, and in ADNOC Gas, a UAE oil services company with a 4+% dividend yield.

These purchases were funded by the outright sale of a variety of holdings. These disposals were motivated in part by information gleaned during three regional trips we took during the review period. We met with the management teams of many current holdings, as well as some prospective investments. These discussions led us to dispose of several retail and telecom names whose investment cases have either run their course or deteriorated. In addition to the sale of Naspers, mentioned above, we also closed loss-making holdings in Industries Qatar and Woolworths.

These transactions did not significantly alter portfolio structure at the sector level. We maintain our substantial overweights to banks and other financials, due to their low valuations and attractive dividends, and to energy companies, in part because we expect oil prices to continue rising. We are underweight all other sectors, most notably materials, as we do not see much value in Petrochemicals at this stage of commodity cycle.

At the country level, our largest active positions are in Greece, Kazakhstan and UAE, as these markets all offer high income at reasonable valuations. As we noted in the Annual Report, Greece is a particular favourite. We expect this market to continue to re-rate over time, led by Greek banks, which are benefiting from an advantageous funding arrangement provided by the European Central Bank that should lift valuations. Consistent with our focus on income, we especially like the high dividend policy of Greek consumer companies JUMBO and OPAP.

Conversely, we are most negative on Kuwait, Turkey and South Africa. In Kuwait, the latest dissolution of parliament will delay reforms and stifle the economy's capacity to expand. We view investors in the Turkish market as excessively bullish on the economic and market outlook and after a very strong rally so far this year, financial names are now priced at extravagant levels - 2+x price to book value (P/BV) for banks with negative real ROE (ROE less CPI). We remain sceptical of this market and will continue to avoid it until we see clear evidence of an improvement in the investment environment. We do not expect any radical changes or an end to the current economic stagnation following the loss of the ruling ANC party's overall majority in South Africa's General Election on 29th May 2024. We have some positions intended to generate income from this market, but we will not be increasing our overall country exposure.

At the stock level, our top holdings reflect our preference for quality names offering attractive yields at appealing valuations, high expected returns and earnings momentum.

Our top 10 holdings by value are:

Rank	Stock name	Portfolio Weight %
1.	Al Rajhi Bank	4.04
2.	The Saudi National Bank	3.37
3.	Firstrand Ltd	2.71
4.	Saudi Arabian Oil Co (ARAMCO)	2.55
5.	Tupras-Türkiye Petrol Rafinerileri	2.27
6.	Gold Fields Ltd	2.18
7.	Standard Bank Group	2.16
8.	Saudi Telecom Co	2.09
9.	Powszechny Zakład Ubezpieczen´ (PZU)	1.98
10.	Qatar National Bank	1.97

Al Rajhi - Saudi Arabia's largest bank, with a focus on retail business. We like the long duration of the bank's mortgage business.

The Saudi National Bank - the second largest Saudi bank, focused on corporate lending. The bank's attractive valuation and steady return on equity (RoE) make this bank a national leader.

Firstrand -South Africa's largest bank, which we like due to its 20+% RoE and 7+% dividend yield.

ARAMCO - Saudi Arabia's oil giant whose low production costs make it resilient relative to its competitors. We also like its distribution policy, which aims to pass on unexpected oil price rises to shareholders.

Tupras - this Turkish oil and gas producer offers exposure to the energy sector and income, at a relatively low valuation.

Gold Fields - a South African gold mining company which is our key play on the gold price.

Standard Bank - a South African bank which we like for its well-diversified exposure to retail and corporate banking.

Saudi Telecom - provides exposure to trend growth in consumption spending in this economy.

PZU - A Polish general insurance company which we like due to its monopolistic grasp on the national market, and its 7+ dividend yield.

Qatar National Bank - a leading Qatari bank with an attractive valuation.

Outlook

The economic outlook for the EMEA region is mixed. The OPEC+ group's reduction in oil supplies is unprecedented and it will support energy companies and the oil price. (Indeed, we would not be surprised to see oil prices exceed the US$100 pbbl level over the next 18 months.) However, lower oil production will slow growth in the Gulf's major oil-producing nations, although the non-oil sectors of the Saudi and UAE economies are likely to grow by 3-4% over the year. In case of South Africa, the country risk premium will diminish post-election, and may lift the market accordingly, but as mentioned above, we do not expect the election result to have a significant positive impact on the economy. We expect GDP growth of only 0.5-1.0% this year, although any reforms to the electricity sector, which has suffered constant blackouts and political scandal, or transportation, may add 0.5-1.5 percentage points to annual growth.

Growth in Eastern Europe will be mixed. Greece is likely to see growth of 2-3%, while we expect the Turkish economy to slow in response to a post-election tightening in monetary policy intended to quell inflation pressures and support the currency. The Hungarian economy is likely to accelerate after the authorities' apparent victory over inflation, but the prospects for the Polish economy are very difficult to call, as tight fiscal policy will constrain activity, although government handouts to individuals may stimulate a consumption-led recovery.

We are positive on the earnings outlook for 2024, but less so than consensus. We expect EPS to be 5-10% higher than the base results for 2023, a respectable rise, but more cautious than the consensus forecast of 18% EPS growth. We expect banks to lead the way, as net interest margins remain elevated. The portfolio's exposure to financials will continue to benefit accordingly. And with banks comprising almost 40% of the index, this should prove supportive for the entire market.

Stocks with exposure to the AI revolution have been very popular with global investors, but there are limited ways to gain exposure to this theme in the EMEA region. As with advent of the internet in 1990s, we expect a favourable impact on some companies, and on economic activity more broadly. And businesses will need to increase capital expenditure to incorporate AI into their production and administrative processes. But it is too early to say when and how investors will receive a payback from investments in this technology.

Whatever 2024 may hold, we remain optimistic about the longer-term prospects of emerging markets in Europe, the Middle East and Africa. We believe the region already offers equity investors compelling opportunities for growth, value and income, at attractive levels. And these markets will continue to expand and change very rapidly as more companies, offering an increasing range of goods and services, enter the investment universe.

This is a very exciting investment environment in which to seek out high quality, attractively priced investment opportunities. We are well-supported in our quest by the depth and strength of JPMorgan Asset Management's research resources, which we believe provide us with a distinct competitive edge, as the research coverage of much of the region by other investors remains scant and shallow. The portfolio will continue to evolve over coming years as our target markets develop and deepen, and we look forward to reporting on the Company's further progress.

We thank you for your ongoing support.

Oleg I. Biryulyov

Investment Manager                                                                                                                             13th June 2024

INTERIM MANAGEMENT REPORT

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

Principal Risks and Uncertainties

The Company is exposed to a variety of risks and uncertainties. Investors should note that there are significant risks inherent in investing in emerging market securities not typically associated with investing in securities of companies in more developed countries. The Board has undertaken an assessment and review of the principal risks facing the Company, together with a review of any new risks which may have arisen during the year. The Directors have also considered the impact of the continued uncertainty on the Company's financial position regarding the Company's holdings in Russian securities and based on the information available to them at the date of this Report, continue to apply a fair valuation methodology to the Russian securities in response to exchange closures and sanction activities as a result of the conflict in Ukraine. The Directors have concluded that no further adjustments are required to the accounts as at 30th April 2024. The principal risks and uncertainties faced by the Company fall into the following broad categories: investing in emerging markets and holdings Russian securities; share price discount and Net Asset Value per share; investment underperformance and strategy; failure of investment process; loss of investment team and Manager; operational and cyber crime; board relationship and shareholders; political and economic; regulatory and legal; market and financial; climate change. Information on each of these areas is given in the Business Review within the Annual Report and Financial Statements for the year ended 31st October 2023. A review of risks conducted for this report concluded that the principal risks and uncertainties faced by the Company have not changed significantly.

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 and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operation existence for at least 12 months from the date of the approval of this half yearly financial report. For these reasons, the Board consider there is reasonable evidence to continue to adopt the going concern basis in preparing the financial statements.

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/loss of the Company, as at 30th April 2023 as required by the UK Listing Authority Disclosure and Transparency Rule 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

Eric Sanderson

Chairman                                                                                                                                              13th June 2024

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30th April 2024			30th April 2023			31st October 2023
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments
held at fair value through
profit or loss	-	1,323	1,323	-	(223)	(223)	-	(161)	(161)
Net foreign currency losses	-	(36)	(36)	-	(65)	(65)	-	(72)	(72)
Income from investments	429	-	429	360	-	360	641	11	652
Interest receivable and
similar income	21	-	21	182	-	182	209	-	209
Gross return/(loss)	450	1,287	1,737	542	(288)	254	850	(222)	628
Management fee	(32)	(48)	(80)	(10)	(15)	(25)	(41)	(62)	(103)
Other administrative expenses	(353)	-	(353)	(135)	(30)	(165)	(467)	(30)	(497)
Net return/(loss) before
finance costs and taxation	65	1,239	1,304	397	(333)	64	342	(314)	28
Finance costs	-	-	-	-	-	-	(1)	-	(1)
Net return/(loss) before
taxation	65	1,239	1,304	397	(333)	64	341	(314)	27
Taxation	(24)	-	(24)	(22)	-	(22)	(35)	-	(35)
Net return/(loss) after
taxation	41	1,239	1,280	375	(333)	42	306	(314)	(8)
Return/(loss) per share
(note 3)	0.10p	3.07p	3.17p	0.93p	(0.82)p	0.11p	0.76p	(0.78)p	(0.02)p

CONDENSED STATEMENT OF CHANGES IN EQUITY

	Called up	Capital
	share	redemption	Capital	Revenue
	capital	reserve	reserves1	reserve1	Total
	£'000	£'000	£'000	£'000	£'000
Six months ended 30th April 2024 (Unaudited)
At 31st October 2023	405	196	9,772	8,507	18,880
Net return	-	-	1,239	41	1,280
Dividends paid in the period (note 4)	-	-	-	(202)	(202)
At 30th April 2024	405	196	11,011	8,346	19,958
Six months ended 30th April 2023 (Unaudited)
At 31st October 2022	405	196	10,086	8,201	18,888
Net (loss)/return	-	-	(333)	375	42
At 30th April 2023	405	196	9,753	8,576	18,930
Year ended 31st October 2023 (Audited)
At 31st October 2022	405	196	10,086	8,201	18,888
Net (loss)/return	-	-	(314)	306	(8)
At 31st October 2023	405	196	9,772	8,507	18,880

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

CONDENSED STATEMENT OF FINANCIAL POSITION

	(Unaudited)	(Unaudited)	(Audited)
	At	At	At
	30th April 2024	30th April 2023	31st October 2023
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	19,316	17,651	17,370
Current assets
Debtors	114	59	882
Cash and cash equivalents	677	1,263	1,040
	791	1,322	1,922
Current liabilities
Creditors: amounts falling due within one year	(149)	(43)	(412)
Net current assets	642	1,279	1,510
Total assets less current liabilities	19,958	18,930	18,880
Net assets	19,958	18,930	18,880
Capital and reserves
Called up share capital	405	405	405
Capital redemption reserve	196	196	196
Capital reserves	11,011	9,753	9,772
Revenue reserve	8,346	8,576	8,507
Total shareholders' funds	19,958	18,930	18,880
Net asset value per share (note 5)	49.4p	46.8p	46.7p

CONDENSED STATEMENT OF CASH FLOWS

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th April 2024	30th April 2023	31st October 2023
	£'000	£'000	£'000
Cash flows from operating activities
Net return before finance costs and taxation	1,304	64	28
Adjustment for:
Net (gains)/losses on investments held at fair value
through profit or loss	(1,323)	223	161
Net foreign currency losses	36	65	72
Dividend income	(429)	(360)	(652)
Interest income	(21)	(182)	(209)
Realised gains on foreign exchange transactions	(61)	(72)	(78)
Decrease/(Increase) in accrued income and other debtors	(4)	2	(7)
(Decrease)/increase in accrued expenses	(77)	(44)	132
Net cash outflow from operating activities before dividends,
interest and taxation	(575)	(304)	(553)
Dividends received	353	332	577
Interest received	21	179	209
Overseas withholding tax recovered/(paid)	3	(32)	5
Net cash (outflow)/inflow from operating activities	(198)	175	238
Purchases of investments	(5,302)	(16,675)	(19,928)
Sales of investments	5,314	692	3,661
Net cash inflow/(outflow) from investing activities	12	(15,983)	(16,267)
Equity dividends paid	(202)	-	-
Interest paid	-	-	(1)
Net cash outflow from financing activities	(202)	-	(1)
Decrease in cash and cash equivalents	(388)	(15,808)	(16,030)
Cash and cash equivalents at start of period/year	1,040	17,064	17,064
Exchange movements	25	7	6
Cash and cash equivalents at end of period/year	677	1,263	1,040
Cash and cash equivalents consist of:
Cash and short term deposits	163	263	39
Cash held in JPMorgan Liquidity Fund	514	1,000	1,001
Total	677	1,263	1,040

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30th April 2024

1.  Financial statements

The information contained within the condensed 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 31st October 2023 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and including the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.  Accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in July 2022.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 30th April 2024.

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

As reported in the 2023 Annual Report & Financial Statements, the Directors consider that in the absence of observable market data on its Russian investments resulting from the closure of the Moscow Exchange (MOEX) to overseas investors, there has been a material change to the market value of its Russian investments. The fair value valuation methodology applied to those investments held at the 30th April 2024 and 31st October 2023 is in accordance with the established fair valuation policies and procedures of the Manager, JPMorgan Funds Limited. This fair valuation was applied to the last traded price on 25th February 2022 for locally held stock on the MOEX (i.e. when the market was still trading normally) using a 99% provision for valuation purposes. Similarly, for the American Depositary Receipts and Global Depositary Receipts the fair value adjustment has been applied to the last trade price on 2nd March 2022 and a 99% provision for valuation applied. The quantum of the provision applied of 99% is a subjective view designed to acknowledge that there is some intrinsic value in the portfolio, albeit, it is currently untradeable.

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 31st October 2023.

3.  Return/(loss) per share

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2024	30th April 2023	31st October 2023
	£'000	£'000	£'000
Return/(loss) per share is based on the following:
Revenue return	41	375	306
Capital return/(loss)	1,239	(333)	(314)
Total return/(loss)	1,280	42	(8)
Weighted average number of shares in issue	40,436,176	40,436,176	40,436,176
Revenue return per share	0.10p	0.93p	0.76p
Capital gains/(losses) per share	3.07p	(0.82)p	(0.78)p
Total return/(loss) per share	3.17p	0.11p	(0.02)p

4.  Dividends paid

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2024	30th April 2023	31st October 2023
	£'000	£'000	£'000
2023 final dividend of 0.5p (2022: nil)	202	-	-
Total dividends paid in the period/year	202	-	-

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

5. Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2024	30th April 2023	31st October 2023
Net assets (£'000)	19,958	18,930	18,880
Number of shares in issue	40,436,176	40,436,176	40,436,176
Net asset value per share	49.4p	46.8p	46.7p

6.  Fair valuation of investments

The fair value hierarchy disclosures required by FRS 102 are given below:

	(Unaudited)		(Unaudited)		(Audited)
	Six months ended		Six months ended		Year ended
	30th April 2024		30th April 2023		31st October 2023
	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
	£'000	£'000	£'000	£'000	£'000	£'000
Level 1	17,807	-	16,044	-	-	-
Level 31	1,509	-	1,607	-	1,558	-
Total value of investments	19,316	-	17,651	-	1,558	-

¹     Following Russia's invasion of Ukraine and closure of the Moscow Exchange (MOEX) to overseas investors, including the Company, a fair value valuation method was applied to the Company's holdings in Russian stocks. Therefore the Company has applied an alternative valuation method. For its MOEX local stock, a fair value adjustment has been applied to the last trade price on 25th February 2022. The price of these stocks has been determined by taking the live market price as at 25th February 2022 and applying a 99% provision for valuation and for American Depositary Receipts and Global Depositary Receipts a fair value adjustment has been applied to the last trade price on 2nd March 2022.

7.  Analysis of Changes in Net Cash

	As at		Other	As at
	31st October 2023	Cash flows	non-cash charges	30th April 2024
	£'000	£'000	£'000	£'000
Cash and cash equivalents
Cash	39	99	25	163
Cash equivalents	1,001	(487)	-	514
Net Cash	1,040	(388)	25	677

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

JPMORGAN FUNDS LIMITED

14^th June 2024

For further information, please contact:

Paul Winship

For and on behalf of

JPMorgan Funds Limited

020 7742 4000

END

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

The half year will also shortly be available on the Company's website at  www.jpmeemeasecurities.com   where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

Neither the contents of the Company's website

 

END