Schroder Japan Trust plc ## Schroder Japan Trust plc | Annual Report and Financial Statements 2025 ### Annual Report and Financial Statements ### for the year ended 31 July 2025 Job No: 101776 Proof Event: 20 Black Line Level: 1 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ## Investment objective ### The principal investment objective of Schroder Japan Trust plc (the “Company”) is ### to achieve capital growth from an actively managed portfolio principally comprising ### securities listed on the Japanese stock markets, with the aim of achieving returns in ### excess of the Tokyo Stock Price Index Total Return in sterling over the longer term. ## Why invest in the Company? ## A supportive macroeconomic environment ### Japan is experiencing encouraging economic conditions. Reinvestment of ### higher profits through wage increases is driving sustainable economic progress. ### Governance reforms are improving returns and growth prospects in Japan’s ### corporate landscape. ## A disciplined and differentiated approach ### Masaki Taketsume, portfolio manager, has crafted a successful and distinctive ### investment approach by identifying mispriced stocks. SJG should appeal to ### income-seeking investors with an aim to pay a dividend of 4% of net asset ### value annually. ## The time for active managers to shine ### This represents an exciting environment for active, high conviction stock pickers. ### By focusing the portfolio towards undervalued businesses with strong growth ### prospects and the potential to improve returns, Masaki is confident in the ### opportunity ahead. ### Please see page 23 for the investment policy. ### Scan this QR code on your smartphone camera ### to sign-up to receive regular updates on ### Schroder Japan Trust plc The Investment Objective of the Company is set out on page 23. For details on the Company’s Investment Policy please see the KID. This report includes the investment policy which you should read in conjunction with the KID before investing; these are also available on our Schroders website. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise. Performance data does not take into account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued and redeemed. Relevant risks as associated with this Company are shown on page 89 and should be carefully considered before making any investment. Job No: 101776 Proof Event: 20 Black Line Level: 1 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ## Contents Section 1: Overview Performance Summary 4 Ten-Year Financial Record 5 Chairman’s Statement 6 Section 2: Investment Manager’s Review Investment Managers’ Report 10 Investment Portfolio 14 Investment Approach and Process 16 Section 3: Strategic Report The Company 22 Stakeholder Engagement – Section 172 Report 26 Risk Report 30 Conclusion 32 Section 4: Governance Board of Directors 36 Directors’ Report 38 Audit and Risk Committee Report 42 Management Engagement Committee Report 45 Nomination Committee Report 46 Directors’ Remuneration Report 48 Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements 52 Section 5: Financials Independent Auditor’s Report 56 Income Statement 61 Statement of Changes in Equity 62 Statement of Financial Position 63 Notes to the Financial Statements 64 Section 6: Other Information (Unaudited) Annual General Meeting – Recommendations 80 Notice of Annual General Meeting 81 Explanatory Notes to the Notice of Meeting 83 Alternative Performance Measures and Glossary 85 Information about the Company 87 Risk Disclosures 89 This is not a sustainable product for the purposes of the Financial Conduct Authority (FCA) rules. References to the consideration of sustainability factors and environmental, social and governance (ESG) integration should not be construed as a representation that the Company seeks to achieve any particular sustainability outcome. Shinkansen bullet train passes in front of Mount Fuji Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 1 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 1: Overview ### Kiyomizu-dera temple ### and Kyoto city. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 2 Job No: 101776 Proof Event: 10 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 1: Overview ## Overview Performance Summary 4 Ten-Year Financial Record 5 Chairman’s Statement 6 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 3 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 1: Overview # Performance Summary At 31 July 2025 Net Asset Value (NAV) per share total return * +6.8% Year ended 2024: +21.0% Share price total return* +5.6% Year ended 2024: +16.1% Benchmark¹ +4.8% Year ended 2024: +16.4% Share price 260.00p Year ended 2024: 266.00p Share price discount to NAV per share* 12.9% Year ended 2024: 11.0% Revenue return per share 6.91p Year ended 2024: 5.53p Gearing*² 13.4% Year ended 2024: 14.8% Ongoing charges* 0.92% Year ended 2024: 0.95% Net revenue return after taxation £8.02m Year ended 2024: £6.56m * Some of the financial measures below are classified as Alternative Performance Measures, as defined by the European Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these performance measures, and other terms used in this report, are given on pages 85 and 86, together with supporting calculations where appropriate. ¹ Now named Tokyo Stock Price Index Total Return, previously known as TSE First Section Total Return Index (the "Benchmark"). ² Gearing represents the percentage by which a portfolio's market exposure exceeds its net assets, expressed as a percentage of net assets. 4 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 1: Overview ## Ten-Year Financial Record Definitions of terms and performance measures are given on pages 85 and 86. At 31 July 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1 Total assets (£’000) 270,783 310,493 333,130 318,944 279,365 323,180 318,321 336,950 365,019 350,305 Shareholders’ funds (£’000) 226,688 269,304 292,268 273,812 236,128 283,859 281,429 302,460 350,888 344,577 NAV per share* (pence) 181.34 215.43 233.80 219.04 189.24 232.4 230.68 252.25 298.88 298.35 Share price (pence) 162.00 195.00 212.00 190.50 161.50 210.00 202.00 234.00 266.00 260.00 Share price discount to NAV per share* (%) 10.7 9.5 9.3 13.0 14.7 9.6 12.4 7.2 11.0 12.9 2 Gearing* (%) 12.1 11.2 11.7 12.3 13.3 10.4 11.1 9.5 14.8 13.4 For the year ended 31 July 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Net revenue return after taxation (£'000) 3,898 4,522 5,106 5,994 6,252 5,401 6,073 6,563 6,565 8,020 Revenue return per share (pence) 3.12 3.62 4.08 4.79 5.00 4.38 4.97 5.41 5.53 6.91 Dividend per share (pence) 2.80 3.50 4.00 4.70 4.90 4.30 4.90 5.40 10.81 11.43 3 Ongoing charges* (%) 1.11 1.00 1.00 1.03 0.92 0.89 0.92 0.94 0.95 0.92 4 Performance 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 NAV total return (%)* 8.2 20.4 10.2 -4.6 -11.7 25.7 1.0 11.7 21.0 6.8 Share price total return (%)* 3.4 22.4 10.6 -8.4 -13.1 33.7 -2.0 18.7 16.1 5.6 5 | Benchmark (%) | 15.7 16.8 9.7 1.0 -6.1 18.0 -1.9 9.4 16.4 4.8 | | --- | --- | | 1 Net assets plus borrowings used for investment purposes. | | | 2 Prior to 2024 the gearing was calculated as borrowings less cash, expressed as a percentage of net assets. Since the introduction of contracts for difference in | | 2024, the calculation has been based on total portfolio exposure expressed as a percentage of net assets. 3 Ongoing charges represents the management fee and all other operating expenses excluding finance costs and transaction costs, expressed as a percentage of the average daily net asset values during the year. | 4 Source: Morningstar/Thomson Reuters. | | --- | | 5 The Company’s Benchmark is the Tokyo Stock Price Index Total Return Index in sterling terms. | | * Alternative performance measures. | 10 Year NAV, share price and benchmark total returns to 31 July 2025 250 200 150 100 50 31 July 2016 31 July 2017 31 July 2018 31 July 2019 31 July 2020 31 July 2021 31 July 2022 31 July 2023 31 July 2024 31 July 2025 NAV Total Return Share Price Total Return Benchmark Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 July 2015. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 5 31 July 2015 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 1: Overview # Chairman’s Statement ![img-0.jpeg](img-0.jpeg) “Masaki Taketsume has now managed the Company’s portfolio for six years and during this period has outperformed the Company’s Benchmark by an impressive 17.02%” ## Performance I am pleased to report that for the year under review, the Company’s net asset vale per share total return increased by 6.8%, outperforming its Benchmark (TOPIX Total Return Index) which rose by 4.8%. The Company’s share price produced a total return of 5.6%, and the average discount to NAV during the period was 11.7%. Performance was driven by a combination of factors, including the portfolio’s emphasis on undervalued companies benefiting from structural change, and its exposure to small and mid-sized businesses – a segment of the market where valuations continue to look compelling and where governance reforms are increasingly taking hold. Importantly, the Investment Manager has demonstrated a consistent and methodical approach, aligning the portfolio to take advantage of evolving market conditions. This has now delivered five years of returns ahead of the Company’s Benchmark. Additional insights into the Company’s investment approach and portfolio developments over the year can be found in the Investment Manager’s Review starting on page 10. ## Enhanced dividend policy Following the adoption of an enhanced dividend policy, the Company has over the last year paid out 4% of its average NAV. Dividends are now declared quarterly based on the trailing 12-month average NAV and the Board will continue with this approach. The shares of the Company had, as at 31 July 2025, a dividend yield of 4.40% which was significantly higher than any other Japanese investment trust. ## Discount management The Company’s discount at the start of the period was 11% and ended at 12.9%. The Company’s three-year average discount was 11.1%, and the one-year average discount was 11.7% during that period. The Board exercised its buy-back authority to acquire 1,905,024 shares to be held in treasury, at an average discount of 12.3%. ## Conditional tender offer The Company announced a new conditional tender offer mechanism in June 2024. Under this arrangement, if the Investment Manager fails to deliver at least Benchmark performance over the five years from 31 July 2024, a tender offer for 25% of issued share capital at NAV less costs will be proposed. The Investment Manager outperformed the Benchmark during the financial year. ## Gearing Throughout the period, the Investment Manager actively geared the portfolio by using contracts for difference (“CFDs”). The gearing level was 14.8% at the start of the period and ended at 13.4%. The Investment Manager typically targets a gearing range of between 10% and 17.5%. Gearing had a positive effect on performance during the year. The Company’s gearing continues to operate within its pre-agreed limit of 25% of net asset value. ## Board changes Angus Macpherson has informed the Board of his intention to step down in July 2026, which will be during his seventh year of tenure since joining the Board in February 2020. On behalf of the Board, I would like to thank Angus for his significant contributions and dedicated service to the Company. Full biographical details of Board members can be found on pages 36 and 37. ## Outlook The current environment is particularly well suited to active stock pickers, and, given the Investment Manager’s disciplined and proven approach, we are confident in the opportunity that lies ahead for the Company’s shareholders. 6 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 1: Overview We continue to believe that Japan offers one of the most compelling long-term investment opportunities globally. Several developments – including the deepening of corporate governance reforms, rising wages and increased business investment – are combining to support a more resilient and self-sustaining domestic economy. These positive changes are helping companies grow profits, improve returns and become more valuable over time, even as financial markets grapple with heightened global uncertainty. Much of this uncertainty stems from recent political developments in the US, prompting many investors to reassess their exposure to US equities. Japan stands out as a potential beneficiary of this rotation, as investors seek regions with greater valuation support and improving fundamentals. As global interest builds and domestic demand for equities increases – supported by initiatives such as the government's new NISA scheme – the outlook for Japan's stock market remains bright. Masaki Taketsume, supported by his team of experienced Tokyo-based research analysts, has now managed the Company's portfolio for six years and during this period the cumulative fair value NAV has outperformed the Company's Benchmark by an impressive 17.02%. ### Company awards I am pleased to confirm that the Company has been shortlisted for the following upcoming awards: - Nominated in the Single Country (Developed Markets) Category at the Investment Week's Investment Company of the Year Awards; and - Nominated in the Japanese Equities Category at Citywire's Investment Trust Awards. ### AGM and shareholder engagement The Company's Annual General Meeting ("AGM") will be held on Monday, 1 December 2025 at 1.00pm at 1 London Wall Place, London EC2Y 5AU. We invite shareholders to join us in person for the Company's AGM, to hear from the Investment Manager. Their presentation will be followed by a question-and-answer session. Sake and light refreshments will be available after the meeting. Shareholders wishing to follow the AGM proceedings but choosing not to attend in person, will be able to view proceedings live and ask questions (but not vote) through conferencing software. Details on how to register, together with access details, will be available shortly on the Company's website: www.schroders.com/japantrust, or by contacting the Company Secretary at: amcompanysecretary@schroders.com. For shareholders who are unable to attend the AGM or those that are joining electronically, it is strongly encouraged to submit their proxy votes in advance of the meeting, so they are registered and recorded at the AGM. Proxy votes can be lodged in advance of the AGM either by post or electronically. Detailed instructions are included in the Notes to the Notice of Annual General Meeting on pages 83 and 84. Ahead of the AGM there will also be a separate webinar on Tuesday, 14 October 2025 at 9.00am and shareholders are encouraged to sign up on the Company's website to hear from the Investment Manager and ask questions. Shareholders can also sign up using this link: https://www.schroders.events/SJGFY25. ### Keeping in touch For regular news about the trust, shareholders are encouraged to sign up to receive communications either on the Company's webpage or by scanning the QR code on this page. Shareholders are also encouraged to follow the Manager's Investment Trust updates via LinkedIn. ![img-1.jpeg](img-1.jpeg) ### Philip Kay Chairman 7 October 2025 Schroder Japan Trust plc Annual Report and Financial Statements 2025 7 ### Section 2: Investment Manager’s Review ### Yokkaichi city and Nagoya city ### from the top of Komono Fuji. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 8 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 2: Investment Manager’s Review ## Section 2: Investment Manager’s Review Investment Managers’ Report 10 Investment Portfolio 14 Investment Approach and Process 16 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 9 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 2: Investment Manager's Review # Investment Manager's Review ![img-2.jpeg](img-2.jpeg) "The Japanese equity market continues to provide one of the most attractive opportunities to be found anywhere in the world, particularly for long-term investors" ## Our investment approach We believe the Japanese equity market ultimately acts efficiently in reflecting the intrinsic value of companies. In the short to medium term, however, considerable inefficiencies are frequently evident in individual stocks. These inefficiencies provide repeatable opportunities to identify and invest in undervalued stocks, with the aim of delivering a better return than the market as a whole on a rolling three-to-five year view. Our investment resource is entirely devoted to this aim, focusing on individual company fundamentals to understand the true worth of a stock and investing in a portfolio of 60-70 of the highest conviction ideas. These then tend to be held for the long term, with value being realised as the market gradually reflects their true value more efficiently. Portfolio holdings tend to fall into three categories of inefficiency: 1. **Market misperception** – companies with self-improving credentials, with management initiatives to sustainably enhance operational performance, being under-appreciated by other investors. 2. **Market oversight** – undervalued companies, especially among small and mid-caps where research coverage is less widespread, with strong and defendable business franchises in niche product areas. 3. **Short-term overreaction** – ideas arising from abrupt but transitory events which push valuations of quality companies temporarily to unsustainably low levels. Outside these three categories, the balance of the portfolio represents 'best in class' stocks with reasonable valuations. The weighting given to each of these segments evolves over time, but a reasonable exposure to each category ensures a good level of diversification for the portfolio as a whole. Meanwhile, the approach tends to result in a bias towards value stocks¹ and smaller companies, as well as an overall focus on quality. The portfolio tends to exhibit a high "active share", which means that its constituents deviate significantly from the benchmark index. We aim to control the gearing (financial leverage) in the range between 10% and 17.5%, allowing shareholders to potentially benefit even more as the inefficiencies we have identified become more appropriately priced by the market. ## Manager's review The Japanese stock market performed strongly during the period under review and ended the year very close to its all-time high. Returns for UK investors were somewhat undermined by yen weakness, but performance in sterling terms was still positive. For the financial year to 31 July 2025, the Company's net asset value per share total return increased by 6.8%, while its benchmark, the TOPIX Total Return Index, rose by 4.8%. Over three years, the Company has now returned 13.0% on an annualised basis, which compares favourably to the 10.1% return from the index. ## Recent performance drivers After several decades of disappointing returns, the Japanese equity market's recent strong momentum continued during the period under review. Domestic economic conditions remained relatively resilient, despite a more challenging global backdrop. A sustained shift away from the era of deflation now appears firmly under way, with inflation holding at positive levels and wage growth broadening out to include smaller companies as well as large. Business investment has trended higher as companies adapt to structural labour shortages and pursue efficiency gains, while exports also contributed positively, despite rising trade tensions. Meanwhile, corporate governance reforms continue to gather pace. The drive to improve the performance of Japanese companies is clearly working, as reflected in greater capital efficiency, as well as higher dividends and share buybacks. Increasingly, the focus is on merger and acquisition activity ¹ The term "value stocks" refers to shares that appear to trade at a lower price than justified by company fundamentals, such as dividends, earnings, sales and book value. 10 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 2: Investment Manager’s Review (M&A) to dissolve cross-shareholdings – long seen as a source of where we see scope for a near-term recovery driven by a cyclical inefficiency and conflicting interests – and to consolidate listed rebound in demand and management’s restructuring efforts to subsidiaries, often referred to as the “parent-child” issue. Further reduce costs. With a price-to-book ratio of less than 1x, Rohm’s reform progress has attracted increased interest from the global valuation also remains appealing. investment community, at a time when many asset allocators are Meanwhile, our lack of exposure to large cap stocks such as considering reducing exposure to the US. Mitsubishi Heavy Industries, Sony and Nintendo, also detracted. This shift in global investor preferences has unfolded against These stocks performed well as obvious ways for investors to a backdrop of heightened uncertainty in financial markets, gain exposure to popular “themes” such as defence spending including Japan, driven by the Trump administration’s trade increases and gaming / intellectual property growth. The portfolio policies and the introduction of “reciprocal” tariffs. While these has exposure to these themes through more compellingly valued developments unsettled markets in the second half of the period, small and mid-sized businesses. progress in US trade negotiations and resilience across major economies helped ease fears of a tariff-driven recession. Attribution – stock selection Within the market, value stocks outperformed growth stocks, Top 5 contributors and detractors which supported the Company’s returns given our portfolio’s 12 months to 31 July 2025 value bias. Outperformance of smaller companies against larger | peers also provided a tailwind. In addition, gearing contributed | | Portfolio | Benchmark | | Portfolio | Benchmark | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | positively on top of strong stock-specific performances. | Top 5 contributors | weight | | weight | return | | return | effect | | The surge of global interest in generative artificial intelligence (AI) | Fujikura 3.0% 0.2% 236% 234% 3.2% | | | | | | | | | continued during the period, proving particularly beneficial for | Sanki Engineering 1.9% 0.0% 93% 92% 1.2% | | | | | | | | Japanese companies involved with the AI infrastructure supply Hitachi 5.7% 2.5% 41% 39% 1.0% chain. We have maintained exposure to AI through market misperception stocks, as we believe their ability to capture Daiichi Sankyo 0.0% 1.0% 0% -40% 0.6% the AI-driven growth opportunity is not yet fully reflected in Shin Etsu Chemical 0.0% 1.2% 0% -36% 0.6% valuations. For example, Fujikura, a leading manufacturer of the advanced Portfolio Benchmark Portfolio Benchmark Total optical connectors and cables deployed in AI datacentres, Top 5 detractors weight weight return return effect performed well as investors began to better recognise its Mitsubishi Heavy dominant market position. Meanwhile, Hitachi, a large cap 0.0% 1.1% 0% 94% -0.7% Industries industrial conglomerate, also delivered strong returns as growing investment in AI infrastructure highlighted the growth potential Sony Group 0.0% 2.9% 0% 33% -0.7% of its power grid business. Nintendo 0.0% 1.6% 0% 49% -0.6% The evolution of corporate governance reforms also contributed Mitsubishi UFJ 0.0% 2.9% 0% 21% -0.5% positively to performance during the period. Efforts to enhance Financial Group shareholder returns – through share buybacks and dividend Mitsui Chemicals 1.2% 0.1% -28% -22% -0.4% hikes – are increasingly spreading to smaller companies, as well as large. In particular, the portfolio’s holdings in construction Portfolio strategy companies such as Sanki Engineering and Nippon Densetsu We continue to find an abundance of undervalued opportunities, Kogyo performed well, supported by more favourable many of which look primed for better performance through shareholder return policies. We view both companies as market corporate governance reforms. These are typically classified oversight opportunities, and their strong positions within within the portfolio as market misperception stocks, which specialised market niches give them the potential to sustain – is currently the biggest category, accounting for almost 40% of and indeed further improve – shareholder returns. assets. This includes companies such as Hitachi, Asahi Group As the focus of reforms has shifted towards improving returns Holdings and LY Corporation, where we see the prospect of through capital reallocation, our holding in NEC Networks sustainable improvements in returns from management efforts and System Integration was acquired at a premium by its that are not yet fully reflected in valuations. parent, NEC Corporation, as part of a groupwide restructuring. In the case of Asahi Group Holdings, Japan’s largest beer maker, This transaction also contributed positively to the portfolio’s we also foresee ongoing improvements in its product mix performance. towards high-margin, premium beers and non-alcoholic beers, By contrast, some of our holdings in cyclical sectors such as supported by its leading position in key markets such as Eastern semiconductors and chemicals suffered short-term weakness due Europe and Australia as well as Japan, which should contribute to a slowdown in end market demand. For example, our market to a more stable and attractive earnings profile. We believe this misperception holdings in semiconductor maker Rohm and to be a classic market misperception opportunity, as these chemicals company Mitsui Chemical, both underperformed after improving fundamentals have not yet been fully reflected in the posting disappointing results. We have since sold the position in share price. Mitsui Chemical. However, we have retained the holding in Rohm, Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2025 ## 11 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ## Section 2: Investment Manager's Review Almost 30% of the portfolio is in **market oversights**, such as Sanki Engineering, Niterra and Aica Kogyo, where we find highly competitive small and mid-sized businesses trading at a significant discount to their large cap and global peers. Sanki Engineering is a specialist provider of electrical engineering works, including air-conditioning and electric wiring for building and industrial plants. It has benefited from a shortage of skilled labour across the industry, successfully raising prices and gaining market share at the expense of even smaller competitors that are struggling to retain talent. This has supported strong earnings growth, alongside improvements in shareholder remuneration. Nevertheless, its shares trade at an unwarranted discount due to its small/mid-cap status in the Japanese equity market. Around 10% of the portfolio is invested in **short-term overreactions**, including leading industrial boiler company Miura and the food packaging specialist FP Corporation. We believe these businesses have been unduly penalised by the market, despite benefiting from powerful long-term structural drivers. FP Corporation is one of the largest food packaging companies in Japan with a strong reputation for quality, especially in recycled products such as food trays. It is well placed to increase market share in grocery and convenience stores, which are seeing growing demand for pre-prepared meals as well as a drive towards better sustainability practices. Despite these structural tailwinds, the company's valuation has come under pressure during a period of rising raw material costs. We believe these cost pressures will ultimately be passed on to customers through higher prices and have therefore viewed the recent share price weakness as a buying opportunity. The remaining portfolio is invested in what we consider to be **best-in-class** operators, such as Sumitomo Mitsui Financial, ORIX and NTT. From a sector perspective, this positioning results in a bias towards Chemicals, Construction, Services and Insurance. As is typical, the portfolio also has a tilt towards value stocks and is well exposed to smaller domestic companies, where valuations look particularly attractive given the improving economic backdrop in Japan. ### Portfolio activity We initiated a position in Fanuc, a leading global provider of industrial robots and computerised control systems, as a new **market misperception** idea. Our investment thesis is based on the company's strong market position in the US robotics market, where we expect stronger growth and improved profit margins. Combined with signs of stabilising fixed costs and better investor communications, we view the current valuation as overly conservative given the company's improving fundamentals. Mizuho Financial, one of Japan's largest banking groups, was also added to the portfolio as a **market misperception** stock. We expect its management team to improve business controls and enhance shareholder returns through the resumption of a share buyback program. Compared to peers like Mitsubishi UFJ Financial and Sumitomo Mitsui Financial, Mizuho's valuation has lagged, but we see strong potential for this gap to close as governance standards improve. In terms of disposals, we sold out of several positions including Amada, Nichias, Mitsui Chemicals, Rheon Automatic Machinery, Yamaha Motor and AGC, mainly due to weaker-than-expected earnings progress. We used the proceeds to build positions in opportunities in which we have increasing confidence, such as those outlined above. ### Outlook We believe that the Japanese equity market continues to provide long-term investors with one of the most attractive opportunities to be found anywhere in the world. Several developments that are unique to Japan should combine to support sustained corporate earnings growth and increasing valuation multiples in the years ahead, even in the environment of greater uncertainty that prevails following recent US political developments. At the heart of this positive investment thesis lies the ongoing roll-out and deepening of Japan's corporate governance reforms. These are now reaching well beyond large-cap companies to smaller peers, as well as expanding in scope – from improving shareholder returns via dividend increases and share buybacks, to optimising capital allocation through M&A, including the dissolution of cross shareholdings and the full consolidation of listed subsidiaries. Together, these efforts are driving improved profitability, returns and capital efficiency across broader swathes of the Japanese stock market. After years of investor apathy, they are also helping to reignite global interest in Japanese equities. Meanwhile, Japan's domestic economy shows encouraging signs of structural improvement. Rising wages, increased business investment and sustained positive inflation suggest that a virtuous economic cycle may finally be taking hold, marking a departure from the deflationary pressures that have defined much of the last three decades. These developments are helping to create a more resilient and self-sustaining economic backdrop, with internal demand playing a greater role than at any point in recent history. As always, there are of course risks to consider. Although the return of inflation is a positive development for investors, it is creating problems for Japanese households. In particular, rising food prices have become politically sensitive, contributing to a decline in public support for the ruling Liberal Democratic Party (LDP). This discontent was brought into sharp focus in Japan's Upper House elections in July. For the first time since 1955, the LDP no longer holds a majority in either chamber of Japan's parliament. This marks a significant moment in Japanese politics and introduces a degree of political uncertainty. From the perspective of monetary policy, the Bank of Japan (BOJ) is poised to continue the process of 'normalisation' through a series of interest rate increases. Care is needed, however, to ensure the pace of change appropriately reflects Japan's improving economic fundamentals while maintaining the confidence of financial markets. Externally, there are obvious uncertainties surrounding US trade policies and their implications for exports. While recent trade agreements have eased fears of the worst-case scenarios for global trade, overall tariff levels remain high compared to recent history. Their full impact on global growth and Japanese 12 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 2: Investment Manager’s Review corporate earnings is yet to be fully realised. However, the Federal NISA (Nippon Individual Savings Account) tax-free investment Reserve (Fed) has scope to reduce US interest rates and looks scheme. Global investors are also taking notice, with inflows focused on achieving a soft economic landing, which should accelerating as Japan’s structural improvements and economic provide support for the global economy. Assuming the Fed is able progress become better understood. Indeed, this comes at a to deliver a benign outcome and given the solid fundamentals of time when many investors are considering reducing exposure the domestic economy, we expect to see continued resilience in to the US, given the introduction of so much policy uncertainty Japanese company earnings this fiscal year and next. in recent months. In this light, Japanese equities offer a rare combination of value, growth, resilience and diversification. From a valuation viewpoint, the overall Japanese stock market does not look stretched. There is, however, a significant valuation All of this makes it an exciting time to be investing in Japan. We disparity evident within the market, which suggests that active believe the Japanese market as a whole will perform well in the stock pickers could be well rewarded in the years ahead. Small years ahead, in both absolute and relative terms. Given the and mid-sized companies generally look more appealing, with abundance of valuation anomalies, the opportunity for active, greater valuation anomalies evident, given the lack of research high-conviction stock pickers looks even more compelling. With coverage in this part of the market. Meanwhile, the prospect of a disciplined investment approach and a strong long-term further structural improvements to returns through corporate track record, we believe the portfolio is well placed to deliver governance reforms provides confidence for a further re-rating additional value for investors through astute stock picking, and of Japanese equity market valuations, especially from those are confident that we can fully capture the opportunity that lies companies that are taking a proactive approach to improving ahead on behalf of the Company’s shareholders. their performance. To conclude, there are many reasons to believe that we may have entered a period of sustained outperformance from the Japanese Schroder Investment Management Limited stock market. Domestic demand for equities is building steadily, 7 October 2025 fuelled by rising wages and supportive initiatives such as the new Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2025 ## 13 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 2: Investment Manager’s Review ## Investment Portfolio As at 31 July 2025 Stocks in bold are the 20 largest investments, which by portfolio exposure account for 50.6% (31 July 2024: 52.5%) of total investments. The Portfolio Exposure column indicates the impact on market price movements resulting from the ownership of shares and derivative instruments. The Fair Value column represents the true value of the portfolio, which is reflected on the Balance Sheet. In the case of holding a Contract for Difference (CFD), the Fair Value reflects the profit or loss generated by the contract since its inception, based on the movement of the underlying share price. However, when the Company solely holds shares, both the Fair Value and the Portfolio Exposure align. | | Fair value Portfolio Exposure | | | | Fair value Portfolio Exposure | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 £’000 % | 1 | | | £’000 £’000 % | 1 | | Electrical Appliances | | | | Services | | | | | Hitachi (shares and long CFD) 11,980 22,323 5.7 | | | | Recruit Holdings (shares and long | | | | 4,919 10,894 2.8 CFD) Fanuc 6,775 6,775 1.7 Japan Post 6,109 6,109 1.6 TDK 6,708 6,708 1.7 Kyoritsu Maintenance 5,158 5,158 1.3 Ricoh 4,381 4,381 1.1 Daiei Kankyo 4,744 4,744 1.2 Ibiden 4,366 4,366 1.1 CTI Engineering 1,471 1,471 0.4 Kohoku Kogyo 3,945 3,945 1.0 Total Services 22,401 28,376 7.3 Nihon Kohden 3,808 3,808 1.0 Megachips 3,308 3,308 0.8 Machinery Rohm 1,616 1,616 0.4 Miura 7,110 7,110 1.8 Total Electrical Appliances 46,887 57,230 14.5 Hosokawa Micron 6,131 6,131 1.6 Disco 5,419 5,419 1.4 Information and Communication Galilei 4,351 4,351 1.1 Nippon Telegraph and Telephone 3,455 7,785 2.0 | (shares and long CFD) | Tazmo 2,356 2,356 0.6 | | --- | --- | | LY Corporation 7,443 7,443 1.9 | Teikoku Piston Rings 1,387 1,387 0.4 | | Nomura Research Institute 5,660 5,660 1.5 | Total Machinery 26,754 26,754 6.9 | Internet Initiative Japan 5,077 5,077 1.3 | WingArc1st 4,804 4,804 1.2 | Insurance | | --- | --- | | Otsuka 2,691 2,691 0.7 | Tokio Marine (shares and long CFD) 6,234 11,724 3.0 | | Total Information and | T&D Holdings 9,336 9,336 2.4 | 29,130 33,460 8.6 Communication Total Insurance 15,570 21,060 5.4 Banks Transportation Equipment Sumitomo Mitsui Financial (shares 7,746 15,036 3.8 Toyota Motor (shares and long CFD) 1,370 14,590 3.7 and long CFD) Suzuki Motor 3,667 3,667 0.9 Mizuho Financial (shares and long 5,500 10,008 2.6 Toyota Industries 2,680 2,680 0.7 CFD) Total Transportation Equipment 7,717 20,937 5.3 Concordia Financial 7,412 7,412 1.9 Total Banks 20,658 32,456 8.3 Wholesale trade Mitsui & Co. (shares and contract for Chemicals 2,050 6,775 1.7 difference) Aica Kogyo 7,089 7,089 1.8 Marubeni 5,511 5,511 1.4 FP Corporation 5,824 5,824 1.4 Doshisha 4,315 4,315 1.1 Nippon Soda 5,279 5,279 1.3 Total Wholesale Trade 11,876 16,601 4.2 NOF 4,989 4,989 1.3 Kuraray 4,496 4,496 1.2 Foods Zacros 2,897 2,897 0.7 Asahi Breweries 9,463 9,463 2.4 Total Chemicals 30,574 30,574 7.7 Nichirei 5,676 5,676 1.5 Total Foods 15,139 15,139 3.9 Construction Sanki Engineering 7,439 7,439 1.9 Retail Trade Mitsubishi Electric 6,880 6,880 1.8 Yaoko 4,642 4,642 1.2 Infroneer 6,326 6,326 1.7 Nippon Gas 3,838 3,838 1.0 Nippon Densetsu Kogyo 5,363 5,363 1.4 Isetan 3,365 3,365 0.9 Sumitomo Forest 2,409 2,409 0.6 Total Retail Trade 11,845 11,845 3.1 Total Construction 28,417 28,417 7.4 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 14 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 2: Investment Manager’s Review | | Fair value Portfolio Exposure | | | | Fair value Portfolio Exposure | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 £’000 % | 1 | | | £’000 £’000 % | 1 | | Nonferrous Metal | | | | Glass & Ceramics Products | | | | | Fujikura 11,721 11,721 3.0 | | | | Niterra 7,605 7,605 2.0 | | | | | Total Nonferrous Metal 11,721 11,721 3.0 | | | | Total Glass & Ceramics Products 7,605 7,605 2.0 | | | | | Real Estate | | | | Rubber Products | | | | | Mitsui Fudosan 6,956 6,956 1.8 | | | | Yokohama Rubber 4,162 4,162 1.1 | | | | | Park24 3,609 3,609 0.9 | | | | Total Rubber Products 4,162 4,162 1.1 | | | | Total Real Estate 10,565 10,565 2.7 Precision Instruments | Iron & Steel | Rigaku 2,999 2,999 0.8 | | --- | --- | | Nippon Steel 6,683 6,683 1.7 | Nifco 506 506 0.1 | | JX Advanced Metals 3,772 3,772 1.0 | Total Precision Instruments 3,505 3,505 0.9 | Total Iron & Steel 10,455 10,455 2.7 Securities Other Financing Business Integral 2,846 2,846 0.7 Orix 9,150 9,150 2.3 Total Securities 2,846 2,846 0.7 Total Other Financing Business 9,150 9,150 2.3 Total investments and financial derivative instruments - 390,617 100.0 Pharmaceutical portfolio exposure Takeda Pharmaceutical (shares and 3,964 7,759 2.0 Total investments and financial long CFD) 330,941 derivative instruments - fair value Total Pharmaceutical 3,964 7,759 2.0 1 Portfolio exposure is expressed as a percentage of total investments and financial derivative instruments. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 15 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 2: Investment Manager's Review # Investment Approach and Process ## Investment ### Investment process – an overview The Manager's Japanese equity investment philosophy is based on the belief that a competitive advantage can be gained from in-house research which should translate into superior investment performance through disciplined portfolio construction. The research focuses on long-term value creation and strength of franchise, targeting undervalued companies where the long-term growth prospects are not fully priced in. The Manager prefers companies that can generate and sustain above average returns on their capital, and also looks for opportunities in turnaround situations where companies can improve returns from depressed levels. The Manager uses a disciplined approach to managing the portfolio. It has a repeatable process that starts with research and portfolio construction and is supported by ongoing monitoring and portfolio control. The research is based on an extensive programme of company meetings, over 2,400 each year. The portfolio manager is Masaki Taketsume, who has been part of Schroders since 2007. ![img-3.jpeg](img-3.jpeg) ## Disciplined and repeatable approach Management of the portfolio is "bottom-up" and long-term: the screening process begins with fundamental company analysis rather than shorter-term macroeconomic impacts like changes in exchange rates. Given the long-term approach, portfolio turnover tends to be low. A stock will not be bought unless the Manager has met the management of the company concerned. Risk monitoring tools check that the bottom-up approach is on track. ## Fundamental research Comprehensive and detailed research is the key driver of our process and we have Tokyo-based analysts who are dedicated to researching Japanese companies. As a result of their experience, our analysts have an exceptional knowledge of the Japanese market and the companies within it. It is this knowledge base, paired with the dedication of our analysts, which truly adds value to our bottom-up approach to stock selection. Company meetings are integral to our research process and we will not purchase a stock unless we have met the management of the company concerned. Our analysts use Schroders' proprietary company valuation model (CVM) to generate three-year earnings and cash flow forecasts, and a range of valuation measures. The analysts are also required to score each company on five qualitative criteria illustrated below. The total of this score determines the premium or discount we give the stock relative to the market, and is used to determine a fair value. We take account of non-financial factors as part of stock evaluation and valuation process. Environmental, social and governance (ESG) issues are integrated into our qualitative assessment on the companies, which determines valuation discounts and premium levels. These 'risks' are addressed with company management and management's failure to improve will be treated as a significant discount factor in our fair value analysis. 16 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 2: Investment Manager’s Review The process for establishing our Fair Value for each stock focuses on the broad factors circled below: EPS (FY3) Market PER Qualitative analysis Analysts’ earnings forecasts (FY3) Premium/discount Quality ranking criteria – Growth – Quality of earnings – Financial strength – Management – Shareholder focus Net cash adjustment Profit cycle adjustment Fair Value Behind those broad factors are a range of specific criteria which analysts explicitly score within the Fair Value model. Specific sustainability factors and ESG criteria are included within the broader categories of “Management” and “Shareholders Value”, detailed below: Growth Quality of Earnings Balance Sheet Management Shareholders Value Growth Quality of Earnings Balance Sheet Management Shareholders Value Growth Quality of Earnings Balance Sheet Management Shareholders Value Growth Quality of Earnings Balance Sheet Management Shareholders Value Growth Quality of Earnings Balance Sheet Management Shareholders Value • 3-year-profit-growth • Accuracy of earnings • Balance Sheet • Environment & Social • Transparency & after FY3 expectation and volatility sufficiency in disclosure • Management & Strategy of earnings to Investors • Relative growth to • Track record of market average • Transparency of • Corporate Governance Management accounting, integrity of • Financial policy - reported earnings Shareholder return, • Regulation risk Efficient allocation of • Proportion of recurring capital earnings • Dependency on major customers/suppliers Scoring including ESG evaluation Valuation Premium/Discount driven by qualitative analysis Valuation Premium/Discount driven by qualitative analysis Valuation Premium/Discount driven by qualitative analysis Valuation Premium/Discount driven by qualitative analysis Valuation Premium/Discount driven by qualitative analysis Analysts are responsible for assigning the scores to each categories of investment opportunities. A substantial portion is component within the Fair Value model, reflecting their allocated to assets classified as “market misperception,” which understanding of best practice within particular industries. To do represent companies where the potential for management- this, analysts will draw on internal and external ESG information led operational improvements has not yet been adequately so they can form an opinion and assign an overall score to the recognized in prevailing market valuations. Another significant stock which will be discussed and challenged during subsequent allocation is directed toward “market oversight” holdings. These discussion within the broader team, including investment typically consist of competitive small and mid-sized enterprises managers. This approach ensures our process is robust and that trade at a discount relative to their larger peers, despite consistent across sectors. benefiting from favorable industry dynamics. Their undervaluation is often attributable to limited market visibility due to their size. ## Portfolio construction A smaller segment of the portfolio is invested in companies affected by “short-term market overreactions.” These positions Portfolio construction for the Company is then the responsibility are predicated on the expectation that temporary valuation of the investment manager. His focus is on the highest conviction pressures will subside, allowing the underlying long-term stock ideas within the context of an appropriate risk management structural growth drivers to reassert themselves. The remaining framework, while also setting, in conjunction with the Board, the investments are concentrated in entities regarded as best-in-class gearing of the portfolio. operators, selected for their consistent performance and robust fundamentals. These holdings then tend to be held for the long The portfolio focuses on stocks in which the investment manager term, with value being realised as the market gradually reflects has a high conviction. The portfolio’s current composition reflects their true value more efficiently. a structured approach to identifying and capitalizing on distinct Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 17 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 2: Investment Manager's Review An important part of the portfolio construction process is regular meetings to debate and receive peer group challenge. These meetings provide a forum to discuss and debate investment views and strategy, together with stock positions and stock ideas, and importantly, serve to ensure vigorous debate. ## Responsible investment and the Company's approach to ESG factors The Company delegates responsibility for considering ESG factors in investment decisions to its Manager. The Company's ESG approach also relies on a bottom-up approach, relying on internal research and company meetings conducted by Schroders' analysts in Tokyo. The investment views are based on a long-term assessment of quality, with a focus on the sustainability of a company's business model. In the evolving Japanese equity market, identifying early signs of positive change and understanding strengths, weaknesses, and changes in ESG areas, particularly governance, strengthens the investment team's understanding of companies and informs investment decisions. ESG analysis is enhanced through the use of Schroders' proprietary models – SustainEx and Context. SustainEx calculates a monetary value of the environmental and social externalities that companies create, which is important to understand because of the risk that these externalities may become internalised over time due to factors like regulation and changes in consumer behaviour. Context provides a systematic framework for analysing the quality of a company's relationship with its most material stakeholders. Schroders believes that companies with strong ESG management are more likely to perform better. It complies with the UK Stewardship Code and provides regular reporting on its policy implementation to the Board. The Board also expects the Manager to engage with investee companies, exercise voting rights, and promote responsible practices. Schroders has a long history of engagement and active ownership and it has engaged with companies on ESG related matters for over 15 years. As active investors, Schroders considers active ownership to be a key channel of influence on management teams so that more sustainable practices are properly considered in managing the companies. Proxy votes are largely aligned with the Manager's corporate governance policy. The Manager's integration of ESG, policy, and engagement details can be found within Schroders' Group-wide Sustainable Investment Policy https://mybrand.schroders.com/n/6197143c26342015/original/Schroders-Group-Sustainable-Investment-Policy.pdf ## The Company's stewardship Schroders' Japanese equity team is committed to local stewardship activities in Japan and, in demonstration of this, we have been signatories to the Japanese Stewardship Code since 2014. In 2015 we established our Stewardship Committee, chaired by Kazuhiro Toyoda and includes four further members from our team in Tokyo. The purpose of the Committee is to engage with companies on their ESG activities with the aim of encouraging best practice and influencing change over time. The Stewardship Committee maintains a Focus List of engagement stocks, in consultation with the broader investment team. There are currently 19 companies on the Focus List and a further 13 companies have been removed from the list during the lifetime of the Committee. The prospects for improvement in these engagement stocks, within a stated timeframe, are judged against the ESG/Context analysis that is integrated into the research output for other positions. The process is designed to ensure that our resources are focussed on positions with the greatest potential for positive impact within our portfolios. The relevant analyst will attend the engagement meetings, ensuring that there is feedback within the process, which enables a robust debate on prioritisation, time horizon and themes for engagement. In addition to the Focus List engagement, the team initiated the programme of Climate Engagement upon the group wide initiatives under the Engagement Blueprint published in February 2022. The team started with 33 Japanese companies in 2022 and have been discussing with company management on their climate policy and its disclosures. In 2024, we narrowed down the list to 15 companies and continue to engage with them periodically to advocate Schroders' approach and expectation and shared our view on their climate disclosure and we aim to identify areas for improvement for individual companies based on our research output. The Stewardship Committee members are also responsible for all proxy voting and the Committee will discuss any contentious items. We are also in regular contact with the proxy voting team in London, which is responsible for voting for the Company, to ensure that our views are aligned and that we are sending consistent messages to companies. All records are disclosed in Japan locally and globally. ## Engagement case studies We share below two examples of engagements we have carried out with investee company management under our Stewardship responsibilities. **NIPPON DENSETSU KOGYO** is a construction company engaged in the railway electrical, general electrical, and information and communication businesses. We have been engaging with Nippon Densetsu to improve asset efficiency and return on capital, particularly through a higher dividend payout and share buybacks. Although the mid-term management plan announced in 2024 fell short of our expectations, the company demonstrated notable improvements in 2025. In our June 2025 meeting with the CEO, we observed a stronger commitment to achieving a ROE of 8% or more by streamlining the overcapitalised balance sheet. The company has raised its dividend payout ratio to a minimum of 40%, and the CEO noted that additional improvements could be explored in the next mid-term plan. Management also outlined plans to accelerate the unwinding of cross-shareholdings, now targeting a 70% reduction by March 2030 compared with March 2024 levels. This represents a significant step-up from the initial plan, which aimed for a 50% reduction by March 2032. Proceeds will be partly allocated to shareholder returns, likely through a continued share buyback programme. Combined with revenue growth and operating margin improvements, these initiatives should support the company in achieving its Return on Equity (ROE) target. This in turn could drive a re-rating of the price to book ratio toward 1x. Importantly, the shift in management's attitude toward shareholder returns further strengthens our conviction in the company's trajectory, reflecting the constructive outcomes of our ongoing engagement. **TOYOTA INDUSTRIES** is a Toyota Motor affiliate auto parts maker and a leading manufacturer of forklifts and material handling systems. We met with the company twice in 2025, in May (prior to the AGM) and June (after the AGM). At the May meeting, our discussions centred on the shareholder proposals and the company's information management framework in relation to the takeover bid (TOB). We regarded the shareholder proposals as broadly reasonable in light of the company's ownership structure 18 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 2: Investment Manager’s Review and the need to protect minority shareholder interests. At the same time, we raised concerns about the handling of the TOB, as details had been reported in the media before any formal disclosure by the company. The June meeting was held shortly after the company announced its plan to delist. Here, we again highlighted our concerns over the premature leakage of detailed information to the media and questioned the adequacy of the company’s information management practices. Given the significant share price volatility that followed, which potentially negatively impacted minority shareholders, we continue to evaluate our approach and next steps regarding this matter. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 19 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 3: Strategic Report ### Tokyo Metropolitan ### Expressway. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 20 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 3: Strategic Report ## Section 3: Strategic Report The Company 22 Stakeholder Engagement – Section 172 Report 26 Risk Report 30 Conclusion 33 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 21 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 3: Strategic Report # The Company ## Purpose, values and culture **The Company's purpose is to create long-term shareholder value, in line with the investment objective.** The Company's culture is driven by its values: transparency, engagement and rigour, with collegial behaviour and constructive, robust challenge. The values are all centred on achieving returns for shareholders in line with the Company's investment objective. The Board also sets out the effective management or mitigation of the risks faced by the Company and, to the extent it does not conflict with the investment objective, aims to structure the Company's operations with regard to all its stakeholders and take account of the impact of the Company's operations on the environment and community. As the Company has no employees and acts through its service providers, its culture is represented by the values and behaviour of the Board and third parties to which it delegates. The Board aims to fulfill the Company's investment objective by encouraging a culture of constructive challenge with all key suppliers and openness with all stakeholders. The Board is responsible for embedding the Company's culture in its operations and does so by actively monitoring third parties on an ongoing basis. ## Business model The Board has appointed Schroder Unit Trusts Limited (the "Manager"), to implement the investment strategy and to manage the Company's assets in line with the appropriate restrictions placed on it by the Board, including limits on the type and relative size of holdings which may be held in the portfolio and on the use of gearing, cash, derivatives and other financial instruments as appropriate. The terms of the appointment of the Manager, and the delegation by the Manager of investment management services to Schroder Investment Management Limited ("SIM" or the "Investment Manager"), are described more completely in the Directors' Report. The Manager also promotes the Company using its sales and marketing teams. The Board and Manager work together to deliver the Company's investment objective, as demonstrated in the diagram below. ![img-4.jpeg](img-4.jpeg) 22 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 3: Strategic Report ## Investment trust status The Company carries on business as an investment trust. Its shares are listed and admitted to trading on the main market of the London Stock Exchange. It has been approved by HM Revenue & Customs as an investment trust in accordance with section 1158 of the Corporation Tax Act 2010, by way of a one-off application and it is intended that the Company will continue to conduct its affairs in a manner which will enable it to retain this status. The Company is domiciled in the UK and is an investment company within the meaning of section 833 of the Companies Act 2006. The Company is not a “close” company for taxation purposes. ## Continuation vote It is not intended that the Company should have a limited life but the Directors consider it desirable that the shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, the Articles of Association contain provisions requiring the Directors to put a proposal for the continuation of the Company to shareholders at five yearly intervals. The next continuation vote will be proposed at the 2029 AGM. In June 2024, the Board announced its proposal for a new conditional tender offer mechanism. In the event that the Investment Manager does not deliver performance at least in line with the Benchmark over a five-year period starting from 31 July 2024, then the Board will put to shareholders a proposal for a tender offer of 25% of the issued share capital at a price equal to the prevailing NAV less costs. ## Investment model ### Investment objective The principal investment objective of the Company is to achieve capital growth from an actively managed portfolio principally comprising securities listed on the Japanese stock markets, with the aim of achieving returns in excess of the Tokyo Stock Price Index Total Return Index in sterling over the longer term. ### Investment policy The Manager utilises an active stock driven investment approach, drawing on Schroders’ extensive research resources in Japan. The portfolio is principally invested in a broad range of companies quoted on the Tokyo Stock Exchange, the regional stock markets of Fukuoka, Hiroshima, Kyoto, Nagoya, Niigata, Osaka and Sapporo and the Japanese over the counter (OTC) market. Investments may also be made in companies listed elsewhere but controlled from Japan or with a material exposure to the Japanese economy. There are no constraints on size of company or sector allocation. This flexibility will allow the Manager to take advantage of changes in market sentiment and in the domestic economic cycle as it develops. The portfolio is mainly invested in equities but may also be invested in warrants, convertibles and other derivative instruments where appropriate. The Company may invest up to 5% of its assets in securities which are not listed on any stock exchange, but would not normally make such investment except where the Manager expects that the securities will shortly become listed on a Japanese stock market. The Company may use gearing (including the use of CFDs) to enhance performance but investment exposure will not exceed 125% of net asset value. ## Investment restrictions and spread of investment risk The key restrictions imposed on the Manager are that: a) no more than 15% of the Company’s total net assets, at the date of acquisition, may be invested in any one company; b) no more than 10% of the value of the Company’s gross assets may be invested in other listed investment companies unless such companies have a stated investment policy not to invest more than 15% of their gross assets in other listed companies; c) the Company will not invest more than 15% of its gross assets in other listed investment companies or investment trusts; d) no more than 15% of the Company’s total net assets may be invested in open-ended funds; and e) no more than 25% of the Company’s total net assets may be invested in the aggregate of unlisted investments and holdings representing 20% or more of the equity capital of any company. In accordance with the investment objective, the Company, while being invested in a single country, ensures that the objective of spreading risk has been achieved through portfolio diversification (65 investments spread over 21 sectors at 31 July 2025), the largest holding being Hitachi with the portfolio weight of 5.7%. ## KPIs The Board’s review of financial performance focuses on a number of key measures, to monitor and assess the Company’s success in achieving its objective. Further comment on performance can be found in the Chairman’s Statement. The following KPIs are used: - Share price discount/premium; - Ongoing charges ratio; and Some KPIs are Alternative Performance Measures (APMs), and definitions of these terms can be found on pages 85 and 86. Schroder Japan Trust plc Annual Report and Financial Statements 2025 23 Section 3: Strategic Report ## Corporate and social responsibility The Board recognises the Company's responsibilities with respect to corporate and social responsibility and engages with its outsourced service providers to safeguard the Company's interests. As part of this ongoing monitoring, the Board receives reporting from its service providers with respect to their anti-bribery and corruption policies; Modern Slavery Act 2015 statements; diversity policies; financial crime policies; greenhouse gas and energy usage reporting. ### Diversity policy The Board has adopted a diversity and inclusion policy. Appointments and succession plans will always be based on merit and objective criteria and, within this context, the Board seeks to promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths. The Board will encourage any recruitment agencies it engages to find a range of candidates that meet the objective criteria agreed for each appointment. Candidates for Board vacancies are selected based on their skills and experience, which are matched against the balance of skills and experience of the overall Board taking into account the criteria for the role being offered. ### Statement on Board diversity – gender and ethnic background The Board has made a commitment to consider diversity when reviewing the composition of the Board and notes the Listing Rules requirements (LR 9.8.6R(9) and (11)) regarding the targets on board diversity: - at least 40% of individuals on the Board are women; - at least one senior Board position is held by a woman; and - at least one individual on the Board is from a minority ethnic background. The FCA defines senior board positions as Chairman, Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO") or Senior Independent Director ("SID"). As an investment trust with no executive officers, the Company has no CEO or CFO. The Board has reflected that the senior positions of the Company are the Chair of the Board and the SID in its diversity tables. The Board has chosen to align its diversity reporting reference date with the Company's financial year end and proposes to maintain this alignment for future reporting periods. The following information has been provided by each Director through the completion of a questionnaire. As at 31 July 2025, the Company met two of the three criteria which were the targets in relation to the number of Board members from a minority ethnic background and the percentage of women Board members. The target for at least one senior Board position to be held be a woman was not met and the Board is conscious that while the Directors are all independent and have a diverse range of views and experience, its small composition will make these targets challenging to fully implement. There have been no changes since 31 July 2025 to the date of publication of the annual report and accounts. Notwithstanding the FCA's definition of senior board positions, the appointment in July 2024 of a new Audit and Risk Committee Chair was to a woman. The below tables set out the gender and ethnic diversity composition of the Board as at 31 July 2025 and at the date of this report. | Gender identity | Number of Board members | Percentage of the Board | Number of senior positions on the Board | | --- | --- | --- | --- | | Men | 2 | 40.0 | 2 | | Women | 3 | 60.0 | 0 | | Not specified/prefer not to say | n/a | n/a | n/a | | Ethnic background | Number of Board members | Percentage of the Board | Number of senior positions on the Board | | --- | --- | --- | --- | | White British or other White (including minority-white groups) | 4 | 80.0 | 2 | | Mixed/Multiple Ethnic Groups | n/a | n/a | n/a | | Asian/Asian British | 1 | 20.0 | n/a | | Black/African/Caribbean/Black British | n/a | n/a | n/a | | Other ethnic group, including Arab | n/a | n/a | n/a | | Not specified/prefer not to say | n/a | n/a | n/a | 24 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 3: Strategic Report ## Promotion The Company promotes its shares to a broad range of investors who have the potential to be long-term supporters of the investment strategy. The Company seeks to achieve this through its Manager and corporate broker, which promote the shares of the Company through regular contact with both current and potential shareholders as well as their advisers. These activities consist of one-on-one meetings, regional road shows and attendance at conferences for investors. In addition, the Company's shares are supported by the Manager's wider marketing of investment companies targeted at all types of investors; this includes maintaining close relationships with adviser and execution-only platforms, advertising in the trade press, maintaining relationships with financial journalists and the provision of information on Schroders' website and LinkedIn. The Board also seeks active engagement with investors, and meetings with the Chairman are offered to investors when appropriate. Shareholders are encouraged to sign up to the Manager's Investment Trusts update, to receive information on the Company directly please use the following link: https://www.schroders.com/en/uk/adviser/fund-centre/funds-in-focus/investment-trusts/schroders-investment-trusts/never-miss-an-update/. ## Relations with shareholders Shareholder relations are given high priority by both the Board and the Manager. The Company communicates with shareholders through its webpages and the annual and half year reports which aim to provide shareholders with a clear understanding of the Company's activities and its results. In addition to the engagement and meetings held during the year described in "Promotion" above, the Chairman of the Board, Committee Chairs and the other Directors attend the AGM and are available to respond to queries and concerns from shareholders. ## Financial crime policy The Company continues to be committed to carrying out its business fairly, honestly and openly, and operates a financial crime policy, covering bribery and corruption, tax evasion, money laundering, terrorist financing and sanctions, as well as seeking confirmations that the Company's service providers' policies are operating soundly. ## Modern Slavery Act 2015 As an investment trust, the Company does not provide goods or services in the normal course of business and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. ## Climate ### Greenhouse gas emissions and energy usage As the Company outsources its operations to third parties, it has no significant greenhouse gas emissions and energy usage to report. ### Taskforce for Climate-Related Financial Disclosures ("TCFD") Investment trusts are currently exempt from the TCFD. The Board will continue to monitor the situation. However, the Company's Manager produces an annual product level disclosure consistent with the TCFD which can be found here: https://mybrand.schroders.com/m/213a35626ddc6f70/original/TCFD-GB72369M-Schroder-Japan-Trust-plc-20241231.pdf Schroder Japan Trust plc Annual Report and Financial Statements 2025 25 ### Section 3: Strategic Report ## Stakeholder Engagement – Section 172 Report ### During the year under review, the Board discharged its duty under section 172 of the ### Companies Act 2006 to promote the success of the Company for the benefit of its members ### as a whole, having regard to the interests of all stakeholders and the desirability of the ### Company maintaining a reputation for high standards of business conduct. As an externally managed investment trust, the Company has no The table below explains how the Directors have engaged with employees, operations or premises. all stakeholders during the year and outlines the key activities undertaken. The key decisions made by the Board during the year The Board has identified its key stakeholders as the Company’s are set out following the table. shareholders, the Investment Manager, other service providers, investee companies and the Company’s lender. Shareholders | Significance | Engagement | 2024/2025 highlights | | --- | --- | --- | | Continued shareholder support | Annual General Meeting (AGM): The | At the AGM in 2024 questions and feedback | | and engagement are critical | Company welcomes attendance and | from shareholders were welcomed. The Board, | | to the continuing existence of | participation from shareholders at the AGM. | along with the Manager, look forward to meeting | | the business and the delivery | Shareholders have the opportunity to meet | and interacting with more shareholders at the | | of the long-term strategy of its | the Directors and the Investment Manager | forthcoming AGM in December 2025. | | business. | and to ask questions. The Board values the | | The Company’s web pages continued to feedback it receives from shareholders which be refreshed and enhanced during the is incorporated into Board discussions. year to optimise the user experience for Publications: The annual and half year shareholders and investors. Shareholders can, results presentations, as well as factsheets, via the Company’s web pages, subscribe to the are available on the Company’s web pages Schroders investment trusts newsletter to receive with their availability announced via the Stock regular updates on the Company. Exchange. Feedback and/or questions received The Chair of the Board met with a number of the from shareholders enable the Company to Company’s major shareholders during the year. evolve its reporting which, in turn, helps to Their views were taken into consideration as part deliver transparent and understandable of the Board’s duty to ensure their interests were updates. taken into account. It was noted that investor Shareholder communication: The sentiment towards the enhanced dividend policy Investment Manager communicates with had been positive. shareholders periodically. All investors are The Manager engaged with a number of the offered the opportunity to meet the Chairman, Company’s shareholders and investors during the Senior Independent Director, or other Board year and regular feedback was provided to the members without using the Manager or Board. Company Secretary as a conduit, by writing to the Company’s registered office. The A number of promotional activities were Board also corresponds with shareholders undertaken during the year including Investment by letter and email. The Board receives Manager interviews, webinars and coverage in regular feedback from its broker on investor key publications. engagement and sentiment. The Board continued to work with Kepler on Investor Relations updates: At every Board promoting the Company through its research meeting, the Directors receive updates on notes which were published during the year. share trading activity, share price performance and any shareholders’ feedback, as well as any publications or comments in the press. To gain a deeper understanding of the views of its shareholders and potential investors, the Manager also undertakes investor roadshows following publications of results. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 26 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 3: Strategic Report The Investment Manager | Significance | Engagement | 2024/2025 highlights | | --- | --- | --- | | Holding the Company’s shares | Maintaining a close and constructive working | Representatives of the Manager, including | | offers investors a liquid | relationship with the Investment Manager | the Investment Manager, attended each | | investment vehicle through | is crucial as the Board and the Investment | Board meeting to provide an update on the | | which they can obtain exposure | Manager both aim to continue to achieve | investment portfolio along with presenting on | | to the Company’s diversified | consistent, long-term returns in line with | macroeconomic issues. | | portfolio of investments. | the investment objective. The Board invites | | The portfolio activities undertaken by the the Investment Manager to attend all Board The Investment Manager’s Investment Manager and the impact of decisions and certain Committee meetings in order to performance is critical for affecting investment performance are set out in update the Directors on the performance of the Company to deliver its the Investment Manager’s Review on pages 10 the investments and the implementation of investment strategy successfully to 13. the investment strategy and objective. and meet its objective. Important components in the Board’s collaboration with the Investment Manager are: • Encouraging open discussion with the Board; • Recognising that the interests of shareholders and the Investment Manager (as well as of its other clients) are, for the most part, well aligned, adopting a tone of constructive challenge, balanced when those interests are not fully congruent by robust negotiation of the Investment Manager’s terms of engagement; and • Drawing on Directors’ individual experience to support the Manager in its monitoring and change management of portfolio companies, for the benefit of all of the Investment Manager’s clients. The Management Engagement Committee reviews the performance of the Investment Manager, its remuneration and the discharge of its contractual obligations at least annually. Investee companies | Significance | Engagement | 2024/2025 highlights | | --- | --- | --- | | The Board actively monitors the | The Investment Management team conducts | The Board received regular updates on | | activities of investee companies | face-to-face and/or virtual meetings with the | engagement with investee companies from the | | through its delegation to the | management teams of all investee companies | Investment Manager at its Board meetings. | | Investment Manager. | to understand current trading and prospects | | During the year, the Investment Manager for their businesses, and to ensure that their engaged with many of its investee companies and ESG investment principles and approach are voted at shareholder meetings (further details understood. can be found on pages 18 and 19). The Investment Manager has discretionary powers to exercise the Company’s voting rights on resolutions proposed by the investee companies within the Company’s portfolio. The Investment Manager reports to the Board on stewardship (including voting) issues and the Board will question the rationale for voting decisions made. By active engagement and exercising voting rights, the Investment Manager actively works with companies to improve corporate standards, transparency, and accountability. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 27 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 3: Strategic Report Lender | Significance | Engagement | 2024/2025 highlights | | --- | --- | --- | | Availability of funding and | Considering how important the availability of | The Investment Manager actively used gearing | | liquidity are crucial to the | funding is, the Company aims to demonstrate | throughout the period and it had a positive effect | | Company’s ability to take | to lenders that it is a well managed business | on performance during the year. The Company’s | | advantage of investment | and, in particular, that the Board focuses | gearing continues to operate well within its pre- | | opportunities as they arise. | regularly and carefully on the management of | agreed limit of 25% of net asset value. | risk. At the 2023 AGM, shareholders approved a The Manager manages the relationship with change of the Investment Policy to allow the the Company’s lender and reports to the Company to use CFDs to provide exposure Board at each meeting as and when required to Japanese equities on a geared basis as an for renewals of terms or negotiation of loan alternative to utilising bank borrowings. CFDs are covenants. The Manager provides a monthly now fully implemented and the Company was statement of compliance of the loan covenants able to fully repay its term loan facility early. to the lender. Other service providers | Significance | Engagement | 2024/2025 highlights | | --- | --- | --- | | In order to operate as an | The Board maintains regular contact with its | Under delegated authority from the Board, the | | investment trust on the main | key external providers, both through Board | Management Engagement Committee reviewed | | market of the London Stock | and Committee meetings, as well as outside of | all material third party service providers. The | | Exchange, the Company relies | the regular meeting cycle. Their advice, as well | Board considered the ongoing appointments of | | on a diverse range of advisers | as their needs and views, are routinely taken | its service providers to be in the best interests of | | to support meeting all relevant | into account. | the Company and its shareholders as a whole and | | obligations. | | will continue to monitor their progress in the year | ahead. During the year the Board considered the potential benefits of changing the Company’s provider of Depositary and Custodian services. I was agreed that it was in the best interest of the Company to change provider to J.P. Morgan Europe Limited. The transition was approved post year end and the migration to the new provider commenced on 5 September 2025. Wider society and the environment | Significance | Engagement | 2024/2025 highlights | | --- | --- | --- | | Whilst strong long-term | The Board engages with the Investment | The Board’s desire for greater engagement | | investment performance is | Manager at each Board meeting in respect | reporting has resulted in the inclusion of case | | essential for an investment | of its ESG considerations on existing and new | studies showcasing how the Investment Manager | | trust, the Board recognises | investments. | supports and integrates responsible investing | | that to provide an investment | | in its investment process set out in this Annual | | vehicle that is sustainable over | | Report. Further details of the ESG practices and | | the longterm, both it and the | | case studies can be found in the Investment | | Investment Manager must | | Process section of this report. | have regard to ethical and environmental issues that impact society. Hence ESG considerations are integrated into the Investment Manager’s investment process and will continue to evolve. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 28 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 3: Strategic Report # Examples of stakeholder consideration during the year The Directors were particularly mindful of stakeholder considerations in reaching the following key decisions during the year ended 31 July 2025: - The declaration of a final dividend of 10.81 pence per Ordinary share which, following approval by shareholders at the AGM held on 10 December 2024, was paid to shareholders on 13 December 2024. - The Board commenced with the previously announced enhanced dividend policy, declaring quarterly dividends amounting to 4% of the average NAV in each financial year. - The Board and Management Engagement Committee undertook reviews of the Investment Manager and the Company's third-party service providers and agreed that their continued appointment and fees remained in the best interests of the Company and its shareholders. - During the year the Board considered the potential benefits of changing the Company's provider of Depositary and Custodian services. It was agreed that it was in the best interest of the Company to change provider to J.P. Morgan Europe Limited. The transition was approved post year end and the appointment of the new provider commenced on 5 September 2025. - Together with the Investment Manager, the Board undertook its annual visit to Japan to conduct due diligence meetings with key personnel from the Investment Manager, consultants, and investee companies. Schroder Japan Trust plc Annual Report and Financial Statements 2025 29 Section 3: Strategic Report # Risk Report The Board itself, and through its delegation to its Audit and Risk Committee, is responsible for the Company's system of risk management and internal control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company's business as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which are monitored by the Audit and Risk Committee on an ongoing basis. This system assists the Board in determining the nature and extent of the risks it is willing to take in achieving the Company's strategic objectives. ## Risk assessment and internal controls review by the Board Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee, including the incidence of significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen outcomes or contingencies that may have a material impact on the Company's performance or condition. Although the Board believes that it has a robust framework of internal controls in place this can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk. Both the principal risks and uncertainties and the monitoring system are also subject to robust review at least annually. The last assessment took place in March 2025. During the year, the Board discussed and monitored a number of risks that could potentially impact the Company's ability to meet its strategic objectives. The Board receives updates from the Investment Manager, Company Secretary and other service providers on emerging risks that could affect the Company. The Board was mindful of the evolving global environment during the year; and the risks posed by volatile markets; geopolitical uncertainty; and inflation and corresponding interest levels which could affect the asset class. The Board concluded that, following the election of President Trump, geopolitical risk had increased. Most notably due to the unfolding global trade wars arising from the evolving tariff regime implemented by the Trump administration and subsequent uncertainties around its execution. No significant control failings or weaknesses were identified from the Audit and Risk Committee's ongoing risk assessment throughout the financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company and that the internal control environment continues to operate effectively. Actions taken by the Board and, where appropriate, its Committees, to manage and mitigate the Company's principal risks and uncertainties are set out in the table below. The "Change" column on the right highlights at a glance the Board's assessment of any increases or decreases in risk during the year after mitigation and management. The arrows show the risks as increased, decreased, or unchanged. | Risk | Mitigation and management | Change during the year | | --- | --- | --- | | **Strategy and competitiveness** | | | | **Investment objective** The Company's investment objectives may become out of line with the requirements of investors, resulting in a wide discount of the share price to underlying NAV per share. Unexpected, potentially catastrophic events whether man-made (conflict, poor trade relations for example) or natural disasters, whether arising from climate change, extreme weather events or pandemic disease could impact investment performance. | The appropriateness of the Company's investment remit is periodically reviewed and the success of the Company in meeting its stated objectives is monitored. The share price relative to NAV per share is monitored and the use of buy back authorities is considered on a regular basis. The marketing and distribution activity is actively reviewed. Proactive engagement with shareholders. | ↔ | 30 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 3: Strategic Report Change during the Risk Mitigation and management year Cost base The ongoing competitiveness of all service The Company’s cost base could become provider fees is subject to periodic benchmarking uncompetitive, particularly in light of open-ended against their competitors. alternatives. Annual consideration of management fee levels. Investment Investment management Review of the Manager’s compliance with its The Manager’s investment strategy, if inappropriate, agreed investment restrictions, investment may result in the Company underperforming the performance and risk against investment market and/or peer group companies, leading to the objectives and strategy; relative performance; the Company and its objectives becoming unattractive to portfolio’s risk profile; and whether appropriate investors. strategies are employed to mitigate any negative impact of substantial changes in markets. Annual review of the ongoing suitability of the Manager is undertaken. Custody The depositary reports on safe custody of the Safe custody of the Company’s assets may be Company’s assets, including cash, and portfolio compromised through control failures by the holdings independently reconciled with the depositary. Manager’s records. The review of audited internal controls reports covering custodial arrangements is undertaken. Regular reports from the depositary on its activities, including matters arising from custody operations is received. Gearing and leverage Gearing is monitored daily and strict restrictions The Company has the option to make use of loan on borrowings are imposed: gearing continues facilities or to use CFDs to invest in equities. These to operate within pre-agreed limits so as not to The introduction of CFDs arrangements increase the funds available for exceed 25% of shareholders’ funds. The Company has improved flexibility in borrowing, reduced investment through borrowing. While this has the has now started to use long CFDs which are the associated cost and potential to enhance investment returns in rising currently cheaper than bank loans and provide on balance, resulted in a markets, in falling markets the impact could be greater flexibility. reduction in overall risk. detrimental to performance. Compliance Accounting, tax and regulatory The confirmation of compliance with relevant In order to continue to qualify as an investment trust, laws and regulations by key service providers is the Company must comply with the requirements of reviewed. Section 1158 of the Corporation Tax Act 2010. Shareholder documents and announcements, Breaches of the UK Listing Rules, the Companies including the Company’s published annual report, Act or other regulations with which the Company are subject to stringent review processes. is required to comply, could lead to a number of Procedures are established to safeguard against detrimental outcomes. the disclosure of inside information. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 31 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 3: Strategic Report | Risk | Mitigation and management | Change during the year | | --- | --- | --- | | **Operational** | | | | **Service providers** The Company has delegated certain functions to a number of service providers, principally the Manager, depositary and registrar. Failure of controls, and poor performance of any service provider could lead to disruption, reputational damage, or loss. | Service providers are appointed subject to due diligence processes and with clearly-documented contractual arrangements detailing service expectations. Regular reporting is provided by key service providers and monitoring of the quality of their services provided. The Directors also receive presentations from the Manager, depositary and custodian, and the registrar on an annual basis. Review of annual audited internal controls reports from key service providers, including confirmation of business continuity arrangements and IT controls, and follow up of remedial actions as required. | ⊖ | | **Technology risks** Disruption to the operations of the Company's service providers whether through inter alia, cyber attacks, failed software updates or data breaches, could impact the accurate reporting and monitoring of the Company's financial position and/or lead to loss of personal or confidential information. | Service providers report on cyber risk mitigation and management at least annually, which includes confirmation of business continuity capability in the event of a cyber attack. | ⊖ | 32 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 3: Strategic Report ## Conclusion Viability statement Based on the Company’s processes for monitoring operating The Directors have assessed the viability of the Company over costs, the Board’s view that the Manager has the appropriate a five year period, taking into account the Company’s position depth and quality of resource to achieve superior returns in the at 31 July 2025 and the potential impacts of the principal risks longer term, the portfolio risk profile, limits imposed on gearing, and uncertainties it faces for the review period. The Directors counterparty exposure, liquidity risk and financial controls, the have assessed the Company’s operational resilience and they are Directors have concluded that there is a reasonable expectation satisfied that the Company’s outsourced service providers will that the Company will be able to continue in operation and meet continue to operate effectively, following the implementation of its liabilities as they fall due over the five year period of their their business continuity plans. assessment. A period of five years has been chosen as the Board believes Going concern that this reflects a suitable time horizon for strategic planning, The Directors have assessed the principal risks, the impact taking into account the investment policy, liquidity of investments, of the emerging risks and uncertainties and the matters potential impact of economic cycles, nature of operating costs, referred to in the viability statement. Based on the work the dividends, and availability of funding. Directors have performed, they have not identified any material In its assessment of the viability of the Company, the Directors uncertainties relating to events or conditions that, individually or have considered each of the Company’s principal risks and collectively, may cast significant doubt on the Company’s ability uncertainties detailed on pages 30 to 32 and in particular the to continue as a going concern for the period assessed by the impact of a significant fall in Japanese equity markets on the Directors, which is at least 12 months from the date the financial value of the Company’s investment portfolio. The Directors statements were authorised for issue. also considered the beneficial tax treatment the Company is By order of the Board eligible for as an investment trust. If changes to these taxation arrangements were to be made it would affect the viability of the Company to act as an effective investment vehicle. Schroder Investment Management Limited The Directors have considered the Company’s income and Company Secretary expenditure projections and the fact that the Company’s 7 October 2025 investments comprise of readily realisable securities which can be sold to meet funding requirements if necessary and on that basis consider that five years is an appropriate time period. The Directors also considered a stress test in which the Company’s NAV dropped by 50% and noted that, based on the assumptions in the test, the Company would continue to be viable over a five year period. Caption Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 33 33 Job No: 101776 Proof Event: 20 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 4: Governance ### Lake Kawaguchiko, ### Fujikawaguchiko. Schroder Japan Trust plc Annual Report and Financial Statements 2025 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 34 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 4: Governance ## Section 4: Governance Board of Directors 36 Directors’ Report 38 Audit and Risk Committee Report 42 Management Engagement Committee Report 45 Nomination Committee Report 46 Directors’ Remuneration Report 48 Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements 52 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 35 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 4: Governance ## Board of Directors ![img-5.jpeg](img-5.jpeg) All Directors are non-executive and independent of the Manager. All Directors are members of the Audit and Risk Committee, the Management Engagement Committee and the Nomination Committee. ### Philip Kay **Status: Chairman** **Length of service:** 3 years – appointed a Director in March 2022. **Experience:** Dr Kay has been involved with Japan for over forty years and is a former Director of Fidelity Japan Trust plc. He has also served on the boards of Smith New Court plc and Schroder Securities Limited and is currently Chairman of Hansard Global plc, a London listed financial services business. **Areas of expertise:** Dr Kay has more than four decades of expertise in the Japanese equity market and is an experienced investment professional. He has held board and senior leadership positions at a series of top financial institutions, including Smith New Court, Schroders and Credit Suisse First Boston. He has more than twenty years' experience of the UK investment trust sector. **Committee membership:** Audit and Risk, Management Engagement, and Nomination Committee (Chairman). **Current remuneration:** £43,500 per annum (effective from 1 July 2025). **Number of shares held:** 26,527* ![img-6.jpeg](img-6.jpeg) ### Helena Coles **Status: Independent Non-Executive Director** **Length of service:** 3 years – appointed a Director in March 2022. **Experience:** Ms Coles has over 20 years' experience in emerging markets and Asian equity investment, which includes co-founding a specialist investment boutique, Rexiter Capital Management, part owned by State Street Global Advisors. She has held roles with Fidelity International and the Bank of England. Helena is currently Senior Independent Director and Chair of the Remuneration Committee at JPMorgan Emerging Markets Investment Trust plc, Chair of the Management Engagement Committee at HgCapital Trust plc, Non-Executive Director and member of the Audit and Risk and Remuneration Committees at RIT Capital Partners plc, and a member of the Joseph Rowntree Charitable Trust Investment Committee. **Areas of expertise:** Ms Coles brings over 20 years' expertise in emerging markets and Asian equity investment, with a background that includes co-founding an investment boutique, and she has held senior positions at leading financial institutions, serving as a director and committee member across several listed and charitable organisations. **Committee membership:** Audit and Risk, Management Engagement, and Nomination Committee. **Current remuneration:** £32,500 per annum (effective from 1 July 2025). **Number of shares held:** 8,432* *Shareholdings are as at 7 October 2025, full details of Directors' shareholdings are set out in the Remuneration Report on page 51. 36 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 4: Governance ## Samantha WrenAngus Macpherson Merryn Somerset Webb Status: Senior Independent Status: Independent Non-Executive Status: Independent Non-Executive Non-Executive Director Director Director and Chair of the Audit and Risk Committee | Length of service: 5 years – appointed a | Length of service: 1 year – appointed a | Length of service: 1 year – appointed a | | --- | --- | --- | | Director in February 2020. | Director on 4 July 2024. | Director on 4 July 2024. | | Experience: Mr Macpherson’s experience | Experience: Ms Somerset Webb is a seasoned | Experience: Ms Wren has extensive | | spans 30 years of working in corporate | financial expert with a comprehensive | accounting and auditing experience. She has | | finance and capital markets, with Noble, | understanding of investment trusts. Known | previously held the position of Chief Executive | | Merrill Lynch and Lazard in London, Asia, | for her role as Editor at Large, UK Wealth for | at IPGL Limited, a private investment firm | | New York and Edinburgh. Mr Macpherson is | Bloomberg and before that as a columnist | where she held a number of directorships | | Chairman of Templeton Emerging Markets | for the FT, she regularly shares her financial | of investee companies across a variety of | | Investment Trust and Noble & Company | insights across various media. She was | sectors. Before her tenure at IPGL, she | | (UK) Limited, Non-Executive Director and | also Editor-in-Chief of MoneyWeek, the UK | served as a board member and Group Chief | | Chairman designate of The Scottish American | personal finance magazine. Ms Somerset | Financial Officer and Group Chief Operating | | Investment Company P.L.C and a Non- | Webb’s previous non-executive directorships | Officer at NEX Group plc as well as holding | | Executive Director of Hampden Bank. | include Murray Income Investment Trust plc, | various senior positions at ICAP plc. Earlier | | | Baillie Gifford Shin Nippon plc, Montanaro | in her career, Ms Wren held various roles at | | Areas of expertise: Mr Macpherson has | European Smaller Companies Trust plc and | The Rank Group plc, where she also served as | | 30 years’ experience in corporate finance | Netwealth Investments Limited. She is | a director of the Rank Pension Plan Trustee | | and capital markets across global financial | currently a director of BlackRock Throgmorton | Limited. Ms Wren is a qualified Chartered | | centres, and currently serves as chairman | Trust plc. Early in her career, Ms Somerset | Management Accountant and holds an | | and non-executive director on several major | Webb worked in Tokyo as an institutional | honours degree in Economics from the | | investment trusts and financial institutions. | salesperson in Japanese equities for UBS | University of Portsmouth. She is currently a | | | Warburg, having previously studied Japanese | Director of AIM listed Chapel Down Group | | Committee membership: Audit and Risk, | at SOAS (University of London) and as a Daiwa | plc where she chairs the Remuneration | | Management Engagement (Chairman), and | scholar in Japan. | Committee, a senior independent non- | | Nomination Committee. | | executive director and Audit Committee | | | Areas of expertise: Ms Somerset Webb is a | Chair of AIM listed Next 15 Group plc, and | | Current remuneration: £33,500 per annum | financial expert and commentator, bringing | a non-executive director and chair of the | | (effective from 1 July 2025). | deep expertise in investment trusts and | nominations committee of Petershill Partners | | | personal finance, with extensive experience | plc. | | Number of shares held: 49,440* | as a senior columnist and editor, as well as | | | | wide-ranging board experience across the | Areas of expertise: Ms Wren has extensive | | | investment sector and a strong background | experience in accounting and auditing, with a | | | in Japanese equities. | strong track record in senior executive roles | at leading investment and financial services | Committee membership: Audit and Risk, | firms, and currently serves as a director | | --- | --- | | Management Engagement, and Nomination | and committee chair across four companies | | Committee. | either listed on the LSE or AIM. | | Current remuneration: £32,500 per annum | Committee membership: Audit and Risk | | (effective from 1 July 2025). | (Chairman), Management Engagement, and | Nomination Committee. Number of shares held: 7,866* Current remuneration: £37,000 per annum (effective from 1 July 2025). Number of shares held: 1,650* *Shareholdings are as at 7 October 2025, full details of Directors’ shareholdings are set out in the Remuneration Report on page 51. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 37 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 4: Governance # Directors' Report The Directors submit their report and the audited financial statements of the Company for the year ended 31 July 2025. ## Corporate governance statement The Company is committed to high standards of corporate governance and has implemented a framework for corporate governance which it considers to be appropriate for an investment trust. The Financial Conduct Authority requires all UK listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code 2018 (the "UK Code") issued by the Financial Reporting Council ("FRC"). The UK Code is available on the FRC's website: www.frc.org.uk. The Company is a member of the Association of Investment Companies ("AIC"), which has published its own Code of Corporate Governance to recognise the special circumstances of investment trusts (www.theaic.co.uk) as endorsed by the FRC. The Board has considered the principles and provisions of the AIC Code of Corporate Governance 2019 (the "AIC Code"), which addresses those set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company as an investment trust. The AIC Code also includes an explanation of how the principles and provisions set out in the UK Code are adapted to make them relevant for investment companies. The Board considers that reporting against the principles and provisions of the AIC Code provides more relevant information to shareholders. The Board confirms that the Company has complied throughout the year under review with the relevant provisions of the UK Code and the principles and provisions of the AIC Code except as set out below. The UK Code includes provisions relating to: - the role of the chief executive; - executive Directors' remuneration; - the need for an internal audit function; - the Chair of the Board not being a member of the Audit Committee; and - the requirement to establish a Remuneration Committee. The Board considers that these provisions, are not relevant to the Company, as an externally managed investment company. Furthermore, all of the Company's day-to-day management and administrative functions are outsourced to third parties and the Company has no executive Directors, employees or internal operations. The Company has not therefore reported further in respect of these provisions. The Nomination Committee fulfils the function of the Remuneration Committee and considers any change in the Directors' remuneration policy. A separate committee has not therefore been established. As permitted under the AIC Code, the Chair is a member of the Audit and Risk Committee. An explanation as to why this is considered appropriate is set out in the Audit and Risk Committee Report on page 42. ## Directors and officers ### Chairman The Chairman is an independent non-executive Director who is responsible for leadership of the Board and ensuring its effectiveness in all aspects of its role. The Chairman's significant commitments are detailed on page 36. He has no conflicting relationships. ### Senior Independent Director ("SID") The SID acts as a sounding board for the Chairman, meets with major shareholders as appropriate, provides a channel for any shareholder concerns regarding the Chairman and takes the lead in the annual evaluation of the Chairman by the independent Directors. ### Company Secretary Schroder Investment Management Limited provides company secretarial support to the Board and is responsible for assisting the Chairman with Board meetings and advising the Board with respect to governance. The Company Secretary also manages the relationship with the Company's service providers, except for the Manager. Shareholders wishing to lodge questions in advance of the AGM are invited to do so by writing to the Company Secretary at the address given on the back cover or by email: amcompanysecretary@schroders.com. ### Role and operation of the Board The Board of Directors, listed on pages 36 and 37 is the Company's governing body; it sets the Company's strategy and is collectively responsible to shareholders for its long-term success. The Board is responsible for appointing and subsequently monitoring the activities of the Manager and other service providers to ensure that the investment objective of the Company continues to be met. The Board also ensures that the Manager adheres to the investment restrictions set by the Board and acts within the parameters set by it in respect of any gearing. The Strategic Report on pages 22 to 33 sets out further detail of how the Board reviews the Company's strategy, risk management and internal controls and also includes other information required for the Directors' Report, and is incorporated by reference. A formal schedule of matters specifically reserved for decision by the Board has been defined and a procedure adopted for Directors, in the furtherance of their duties, to take independent professional advice at the expense of the Company. The Chairman ensures that all Directors receive relevant management, regulatory and financial information in a timely manner and that they are provided, on a regular basis, with key information on the Company's policies, regulatory requirements and internal controls. The Board meets at least quarterly and receives and considers reports regularly from the Manager and other key advisers, and ad hoc reports and information are supplied to the Board as required. 38 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 4: Governance The Board is satisfied that it is of sufficient size with an appropriate balance of diverse skills and experience, independence and knowledge of the Company, its sector, and the wider investment trust industry, to enable it to discharge its duties and responsibilities effectively and that no individual or group of individuals dominates decision-making. The Board has approved a policy on Directors' conflicts of interest. Under this policy, Directors are required to disclose all actual and potential conflicts of interest to the Board as they arise for consideration and approval. The Board may impose restrictions or refuse to authorise such conflicts if deemed appropriate. No Directors have any connections with the Manager, shared directorships with other Directors or material interests in any contract which is significant to the Company's business. ### Committees In order to assist the Board in fulfilling its governance responsibilities, it has delegated certain functions to Committees. The roles and responsibilities of these Committees, together with details of work undertaken during the year under review, are outlined over the next few pages. The reports of the Audit and Risk Committee, Nomination Committee, and Management Engagement Committee are incorporated, and form part of, the Directors' Report. ### Key service providers The Board has adopted an outsourced business model and has appointed the following key service providers: #### Manager The Company is an Alternative Investment Fund as defined by the AIFM Directive and has appointed Schroder Unit Trusts Limited ("SUTL") as the Manager in accordance with the terms of an Alternative Investment Fund Manager ("AIFM") agreement. The AIFM agreement, which is governed by the laws of England and Wales, can be terminated by either party on six months' notice or on immediate notice in the event of certain breaches or the insolvency of either party. As at the date of this report no such notice had been given by either party. SUTL is authorised and regulated by the FCA and provides portfolio management, risk management, accounting and company secretarial services to the Company under the AIFM agreement. The Manager also provides general marketing support for the Company and manages relationships with key investors, in conjunction with the Chairman, other Board members or the corporate broker as appropriate. The Manager has delegated investment management, administrative, accounting and company secretarial services to another wholly owned subsidiary of Schroders plc, Schroder Investment Management Limited. The Company Secretary has an independent reporting line to the Manager and distribution functions within Schroders. The Manager has in place appropriate professional indemnity cover. The Schroders Group manages £776.6 billion (as at 30 June 2025) on behalf of institutional and retail investors, financial institutions and high net worth clients from around the world, invested in a broad range of asset classes across equities, fixed income, multi-asset and alternatives. The Manager is entitled to a fee at the rate of 0.75% per annum on assets up to and including £200 million and 0.65% per annum thereafter, charged on the net value of the Company's assets under management. The management fee payable in respect of the year ended 31 July 2025 amounted to £2,293,000 (2024 : £2,349,000). A marketing support fee of £50,000 per annum is also payable to the Manager in respect of the promotion of the Company. The Manager is also entitled to receive a fee for providing administration, accounting and company secretarial services to the Company. For those services, it receives an annual fee of £90,000. Details of all amounts payable to the Manager are set out in note 4 on page 66. The Management Engagement Committee has reviewed the performance of the Manager during the year under review and continues to consider that it has the appropriate depth of resource to deliver above average returns over the longer term and that the continuing appointment of the Manager on the terms agreed remains in the best interests of shareholders as a whole. #### Depositary With effect from 5 September 2025, J.P. Morgan Europe Limited were appointed to provide depositary and custodian services to the Company. J.P. Morgan Europe Limited which is authorised by the Prudential Regulation Authority ("PRA") and regulated by the FCA and the PRA, carries out certain duties of a depositary specified in the AIFM Directive including, in relation to the Company, as follows: - safekeeping of the assets of the Company which are entrusted to it; - cash monitoring and verifying the Company's cash flows; and - oversight of the Company and the Manager. The Company, the Manager and the depositary may terminate the Depositary Agreement at any time by giving 90 days' notice in writing. The Depositary may only be removed from office when a new Depositary is appointed by the Company. #### Registrar Equiniti Limited ("Equiniti") has been appointed as the Company's registrar. Equiniti's services to the Company include share register maintenance (including the issuance, transfer and cancellation of shares as necessary), acting as agent for the payment of any dividends, management of company meetings (including the registering of proxy votes and scrutineer services as necessary), handling shareholder queries and correspondence and processing corporate actions. Schroder Japan Trust plc Annual Report and Financial Statements 2025 39 ## Section 4: Governance ### Share capital and substantial share interests As at 7 October 2025, the Company had 118,453,286 ordinary shares of 10p in issue. 3,526,595 shares were held in treasury. Accordingly, the total number of voting rights in the Company as at 7 October 2025 were 114,926,691. Details of changes to the Company's share capital during the year are given in note 14 to the accounts on page 70. All shares in issue rank equally with respect to voting, dividends and any distribution on winding up. The Board noted that the Company's shareholders appreciated the Board's discount management. The Board agreed to request renewal of the authorities to issue and buy back shares as described on page 81. As at 31 July 2025 the following had interests in 3% or more of the voting rights attached to the Company's issued share capital. | | Shares at 31 July 2025 | % of total voting rights | | --- | --- | --- | | City of London Investment Management Company Limited | 20,008,013 | 17.31 | | Allspring Global Investments, LLC | 17,723,933 | 15.34 | | 1607 Capital Partners, LLC | 15,862,659 | 13.72 | | Hargreaves Lansdown Nominee Limited | 6,701,149 | 5.80 | | Interactive Investor Services Nominees Limited | 4,822,782 | 4.17 | | Rathbones Investment Management Ltd | 4,040,456 | 3.50 | | Wesleyan Assurance Society | 3,631,262 | 3.14 | Since year end to the date of this report, Allspring Global Investments Holdings increased their holding to 18,575,966 and City of London Investment Management Company Limited decreased their holding to 19,378,013. There have been no further changes to the holdings listed above since year end. ### Revenue, final dividend and dividend policy The net revenue return for the year, before finance costs and taxation, was £9,037,000 (2024: £7,551,000). After deducting finance costs and taxation the revenue amount available for distribution to shareholders was £8,020,000 (2024: £6,565,000 equivalent to net revenue of 6.91p (2024: 5.53p) per ordinary share. Distributable capital reserve amounts will be used to cover the outstanding distribution amount not covered by the revenue reserve. During the financial year, the Board followed its policy to declare dividends on a quarterly basis based upon 4% of the average NAV of the 12 months trailing the quarter. ### Provision of information to the auditor The Directors at the date of approval of this report confirm that, so far as each of them is aware, there is no relevant audit information of which the Company's auditor is unaware; and each Director has taken all the steps that he or she ought to have taken as a Director in order to make himself or herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information. ### Directors' attendance at meetings Four Board meetings are usually scheduled each year to deal with matters including: the setting and monitoring of investment strategy; approval of borrowings and/or cash positions; review of investment performance; the level of premium or discount of the Company's shares to NAV per share and promotion of the Company; and services provided by third parties. Additional meetings of the Board are arranged as required. The number of scheduled meetings of the Board and its Committees held during the financial year, and the attendance of individual Directors, is shown overleaf. Whenever possible all Directors attend the AGM. | Director | Board | Nomination Committee | Audit and Risk Committee | Management Engagement Committee | | --- | --- | --- | --- | --- | | Philip Kay | 4/4 | 1/1 | 2/2 | 1/1 | | Helena Coles | 4/4 | 1/1 | 2/2 | 1/1 | | Angus Macpherson | 4/4 | 1/1 | 2/2 | 1/1 | | Samantha Wren | 4/4 | 1/1 | 2/2 | 1/1 | | Merryn Somerset Webb | 4/4 | 1/1 | 2/2 | 1/1 | The Board is satisfied that the Chairman and each of the other non-executive Directors commits sufficient time to the affairs of the Company to fulfil their duties. 40 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 4: Governance Directors’ and officers’ liability insurance and indemnities Directors’ and officers’ liability insurance cover was in place for the Directors throughout the year. The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for Directors in respect of costs which they may incur relating to the defence of any proceedings brought against them arising out of their positions as Directors, in which they are acquitted or judgement is given in their favour by the court. This is a qualifying third party indemnity provision and was in place throughout the year under review and to the date of this report. By order of the Board Schroder Investment Management Limited Company Secretary 7 October 2025 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 41 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 4: Governance # Audit and Risk Committee Report The duties and responsibilities of the Committee, which include monitoring the integrity of the Company's financial reporting and internal controls, are set out in further detail below, and may be found in the terms of reference which are available on the Company's web pages: https://www.schroders.com/japantrust. ## Ongoing risk review | Risk Management | Internal controls | Accounting policies and judgements | Half year and Annual report | Review of external auditors and their work | | --- | --- | --- | --- | --- | All Directors are members of the Committee and Samantha Wren acts as Audit and Risk Committee Chair. The Board has satisfied itself that at least one of the Committee's members has recent and relevant financial experience and that the Committee as a whole has competence relevant to the sector in which the Company operates. The AJC Code permits the Chair of the Board to be a member of the Audit Committee of an investment trust. Therefore, it is considered appropriate for the Chair of the Board, who was independent on appointment, to be a member of the Committee. ## Approach ### Risk management and internal controls #### Principal and emerging risks and uncertainties To establish a process for identifying, assessing, managing and monitoring the principal and emerging risks of the Company and to explain how these are managed or mitigated. The Committee is responsible for reviewing the adequacy and effectiveness of the Company's internal controls and the whistleblowing procedures operated by the AIFM and other services providers. #### Internal controls To monitor the adequacy and effectiveness of the risk management and internal control systems of the Company's third party services providers, including the Manager, as illustrated in the diagram on the next page. ### Financial reports and valuation #### Financial statements To monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance and valuation. To also review the half-year report and accounts. #### Going concern and viability To review the position and make recommendations to the Board in relation to whether it considers it appropriate to adopt the going concern basis of accounting in preparing its annual and half-year report and accounts. The Committee is also responsible for reviewing the disclosures made by the Company in the viability statement. ### Audit #### Audit results To discuss any matters arising from the audit and recommendations made by the auditor. #### Auditor appointment, independence and performance To make recommendations to the Board, in relation to the appointment, reappointment, effectiveness and removal of the external auditor, to review their independence, and to approve their remuneration and terms of engagement. Reviewing and agreeing the audit plan and engagement letter. 42 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 4: Governance Application during the year The Committee met twice during the year under review and the below table sets out how the Committee discharged its duties during the year under review and up until the approval of this report. Further details on attendance can be found on page 40. Significant issues identified during the year under review and key matters communicated by the auditor during reporting are included below. Risk management and internal controls Financial reports and valuation Audit Principal risks Recognition of investment income Meetings with the auditor Reviewed the principal and emerging risks Considered dividends received against The auditor attended meetings of the faced by the Company together with the forecast and the allocation of special Committee to present their audit plan and systems, processes and oversight in place dividends to income or capital. the findings of the audit. to identify, manage and mitigate. The Committee met the auditor without representatives of the Manager present. Valuation and existence of holdings Service provider controls The Company’s assets are principally The operational controls maintained by invested in quoted equities. The Board Effectiveness of the independent audit the Manager, administrator, depositary reviews detailed reports on portfolio process and auditor performance and registrar were reviewed and included holdings on a quarterly basis. The effectiveness of the independent audit consideration of: The Committee reviewed internal control firm and audit process was evaluated prior • a summary, prepared by the AIFM, reports from the AIFM in the year, to making a recommendation to the Board following review of the internal controls reporting on the systems and controls that the auditor should be re-appointed reports prepared bi-annually by HSBC around the pricing and valuation of at the forthcoming AGM. The Committee in respect of its European Traditional securities. evaluated the auditor’s performance Fund Services, Global Custody Services against agreed criteria including: and Information Technology Services qualification; knowledge, expertise operations; Calculation of the investment and resources; independence policies; management fee and performance fee effectiveness of audit planning; adherence • a summary, prepared by the AIFM Consideration of methodology used to to auditing standards. Overall competence following review, of the internal controls calculate the fees, matched against the was also considered, alongside feedback reports prepared annually by SIM; and criteria set out in the AIFM agreement. from the Manager on the audit process. • the Assurance Report on internal The professional scepticism of the auditor, controls of Equiniti Share Registration during the audit process was questioned Services. Allocation rate of indirect expenses to and the Committee was satisfied with the All internal controls reports were reported capital auditor’s replies. on by independent external accountants. Consideration of policy of allocating certain indirect expenses to capital. Further details | | in note 1(e). | Auditor independence | | --- | --- | --- | | Internal controls and risk | | Deloitte LLP has provided audit services to | | management | | the Company since it was appointed on 19 | | Consideration of several key aspects of | Overall accuracy of the report and | | June 2019. internal control and risk management financial statements The auditors are required to rotate the operating within the Manager, Consideration of the annual report and senior statutory auditor every five years. administrator, depositary and registrar, financial statements and the letter from There are no contractual obligations including assurance reports and the Manager in support of the letter of restricting the choice of external auditors. presentations on these controls. representation to the auditor. This is the second year that Michael Caullay has conducted the audit of the Fair, balanced and understandable Company’s financial statements. Reviewed the annual report and financial statements to advise the Board whether it Audit results was fair, balanced and understandable. Met with and reviewed a comprehensive Reviewed whether performance measures report from the auditor which detailed were reflective of the business, whether the results of the audit, compliance with there was adequate commentary on the regulatory requirements, safeguards that Company’s strengths and weaknesses have been established, and on their own and that the annual report and financial internal quality control procedures. statements, taken as a whole was consistent with the Board’s view of the operation of the Company. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 43 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 4: Governance Risk management and internal | controls | Financial reports and valuation | Audit | | --- | --- | --- | | Compliance with the investment | Going concern and viability | Provision of non-audit services by the | | trust qualifying rules in S1158 of the | Reviewed the impact of risks on going | auditor | | Corporation Tax Act 2010 | concern and longer-term viability. | Reviewed the FRC’s Guidance on Audit | | Consideration of the Manager’s report | | Committees and formulated a policy on | | confirming compliance. | | the provision of non-audit services by the | Company’s auditor. The Committee has determined that the Company’s appointed auditor will not be considered for the provision of certain non-audit services, such as accounting and preparation of the financial statements, internal audit and custody. The auditor may, if required, provide other non-audit services which will be judged on a case-by-case basis. The auditor did not provide any non-audit services to the Company during the year. Consent to continue as auditor Deloitte LLP indicated to the Committee its willingness to continue to act as auditor. Recommendations made to, and approved by, the Board: • The Committee recommended that the Board approve the half year report and the annual report and financial statements. • The Committee recommended the adoption of the going concern basis of accounting in the report and financial statements and the explanations set out in the viability statement. • As a result of the work performed, the Committee has concluded that the annual report for the year ended 31 July 2025, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy and has reported on these findings to the Board. The Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 52. • Having reviewed the performance of the auditor, as described above, the Committee was satisfied that there were no circumstances that affected the independence and objectivity of the auditor and therefore considered it appropriate to recommend the auditor’s re-appointment. Resolutions to re-appoint Deloitte as auditor to the Company, and to authorise the Directors to determine their remuneration will be proposed at the AGM. By order of the Board Samantha Wren Chair of the Audit and Risk Committee 7 October 2025 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 44 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 4: Governance ## Management Engagement Committee Report ### The Management Engagement Committee is responsible for (1) the monitoring and oversight of ### the Manager’s performance and fees, and confirming the Manager’s ongoing suitability, and (2) ### reviewing and assessing the Company’s other service providers, including reviewing their fees. All Directors are members of the Committee. Angus Macpherson is the Chair of the Committee. Its terms of reference are available on the Company’s web pages: https://www.schroders.com/japantrust. Approach The Committee’s key roles and responsibilities are set out in the table below. Oversight of the Manager Oversight of other service providers The Committee: The Committee reviews the performance and competitiveness of the following service providers on at least an annual basis: • reviews the Manager’s performance, over the short and long term, against the Reference Index, peer group and the market; • depositary and custodian; • considers the reporting it has received from the Manager • corporate broker; throughout the year, and the reporting from the Manager to • registrar; and the shareholders; • lender. • assesses management fees including the performance fee on an absolute and relative basis, receiving input from the The Committee also receives a report from the Company Company’s broker, including peer group and industry figures, Secretary on ancillary service providers, and considers any as well as the structure of the fees; recommendations. • reviews the appropriateness of the Manager’s contract, The Committee notes the Audit and Risk Committee’s review of including terms, such as the notice period; the auditor. • visits the Manager’s Asian offices periodically to meet with key personnel from the Investment Manager; and • assesses whether the Company receives appropriate administrative, accounting, company secretarial and marketing support from the Manager. Application during the year Oversight of the Manager Oversight of other service providers The Committee undertook a detailed review of the Manager’s The annual review of each of the service providers was performance and agreed that it has the appropriate depth and satisfactory. quality of resource to deliver superior returns over the longer The Committee noted that the Audit and Risk Committee had term. undertaken a detailed evaluation of the Manager, registrar, and The Committee also reviewed the terms of the AIFM agreement depositary and custodian’s internal controls. and agreed they remained fit for purpose. The Committee reviewed the other services provided by the Manager and agreed they were satisfactory. The Committee reviewed the progress of the Company with respect to the conditional tender offer conditions and noted that for the financial year the Company had delivered performance in excess over the conditions. Recommendations made to, and approved by, the Board: • That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best interests of shareholders as a whole. • That the performance of the Company’s service providers remained satisfactory. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 45 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 4: Governance # Nomination Committee Report The Nomination Committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment during their tenure, (3) the Board's succession, and (4) Directors' fees. Selection and ongoing assessment of Directors | Selection | Induction | Annual evaluation | Annual review of succession policy | Application of succession policy | | --- | --- | --- | --- | --- | All Directors are members of the Committee. Philip Kay is the Chair of the Committee. Its terms of reference are available on the Company's web pages: https://www.schroders.com/japantrust. Approach The Committee's key roles and responsibilities are set out in the table below. Selection and induction - Committee prepares a job specification for each role, and an independent recruitment firm is appointed. For the Chairman and the Chairs of Committees, the Committee considers current Board members too. - Job specification outlines the knowledge, professional skills, personal qualities and experience requirements. - Potential candidates assessed against the Company's diversity policy. - Committee discusses the long list, invites a number of candidates for interview and makes a recommendation to the Board. - Committee reviews the induction and training of new Directors. Board evaluation and Directors' fees - Committee assesses each Director annually. - Evaluation focuses on whether each Director continues to demonstrate commitment to their role and provides a valuable contribution to the Board during the year, taking into account time commitment, independence, conflicts and training needs. - Following the evaluation, the Committee provides a recommendation to shareholders with respect to the annual re-election of Directors at the AGM. - All Directors retire at the AGM and their re-election is subject to shareholder approval. - Committee reviews Directors' fees, taking into account comparative data and reports to shareholders. - Any proposed changes to the remuneration policy for Directors are discussed and reported to shareholders. Succession - The Board's succession policy is that Directors' tenure will be for no longer than nine years, except in exceptional circumstances, and that each Director will be subject to annual re-election at the AGM. - Committee reviews the Board's current and future needs at least annually. Should any need be identified the Committee will initiate the selection process. - Committee oversees the handover process for retiring Directors. 46 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 4: Governance # Application during the year # Board evaluation and Directors' fees - The annual Board evaluation, including evaluation of the Committees was undertaken during the financial year. The evaluation was externally facilitated and conducted by an independent third party, Lintstock, through the completion of questionnaires. - The Committee also reviewed each Director's time commitment and independence by reviewing a complete list of appointments, including pro bono not for profit roles, to ensure that each Director remained free from conflict and had sufficient time available to discharge each of their duties effectively. The SID led the review of these matters in respect of the Chairman. - The Committee considered each Director's contributions, and noted that in addition to extensive experience as professionals and non-executive Directors, each Director had valuable skills and experience, as detailed in their biographies on pages 36 and 37. - All Directors were considered to be independent in character and judgement. - Based on its assessment, the Committee provided individual recommendations for each Director's election or re-election. - The Committee reviewed Directors' fees, using external benchmarking, and recommended an increase in Directors' fees, as detailed in the remuneration report. # Succession - The Committee reviewed the succession policy and agreed it was still fit for purpose. - The Committee considered the future needs of the Company and the effect of individual Directors leaving and whether this would create a skills/knowledge/experience gap. # Recommendations made to, and approved by, the Board: - That an independent third party, Lintstock, be engaged to facilitate an external Board evaluation process through the completion of questionnaires. - That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations of the Board, remuneration of the Directors was appropriate and Directors remain free from conflicts with the Company and its Directors, so should all be recommended for election or re-election at the AGM. - That Directors' fees be increased to £43,500 for the Chairman, £32,500 for non-executive Directors, £33,500 for the Management Engagement Committee Chairman, and £37,000 for the Audit and Risk Committee Chairman. - That the Remuneration Report be put to shareholders for approval. Schroder Japan Trust plc Annual Report and Financial Statements 2025 47 Section 4: Governance # Directors’ Remuneration Report ## Introduction The following remuneration policy is currently in force and is subject to a binding vote every three years. The next vote will take place at the 2026 AGM and the current policy provisions will apply until that date. The below Directors’ annual report on remuneration is subject to an annual advisory vote. An ordinary resolution to approve this report will be put to shareholders at the forthcoming AGM. At the AGM held on 10 December 2023, 99.96% of the votes cast (including votes cast at the Chairman’s discretion) in respect of approval of the Directors’ remuneration policy were in favour, while 0.04% were against and 23,581 votes were withheld. At the AGM held on 10 December 2024, 99.26% of the votes cast (including votes cast at the Chairman’s discretion) in respect of approval of the Directors’ remuneration report for the year ended 31 July 2024 were in favour, while 0.74% were against and 42,920 votes were withheld. ## Directors’ remuneration policy The determination of the Directors’ fees is a matter considered by the Nomination Committee and the Board. It is the Nomination Committee’s policy to determine the level of Directors’ remuneration having regard to amounts payable to non-executive Directors in the industry generally, the role that individual Directors fulfil in respect of Board and Committee responsibilities, and time committed to the Company’s affairs, taking into account the aggregate limit of fees set out in the Company’s Articles of Association. The Chairman of the Board and the Chairman of the Audit and Risk Committee both receive fees at a higher rate than the other Directors to reflect their additional responsibilities. Directors’ fees are set at a level to recruit and retain individuals of sufficient calibre, with the level of knowledge, experience and expertise necessary to promote the success of the Company in reaching its short and long-term strategic objectives. Any Director who performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid additional remuneration to be determined by the Directors, subject to the previously mentioned fee cap. The Board and its Committees are exclusively comprised of non-executive Directors. No Director past or present has an entitlement to a pension, and the Company has not, and does not intend to operate a share scheme for Directors or to award any share options or long-term performance incentives to any Director. No Director has a service contract with the Company. However, Directors have a letter of appointment. Directors do not receive exit payments and are not provided with any compensation for loss of office. No other payments are made to Directors other than the reimbursement of reasonable out-of-pocket expenses incurred in attending to the Company’s business. ## Implementation of policy The terms of Directors’ letters of appointment are available for inspection at the Company’s registered office address during normal business hours and during the AGM at the location of such meeting. The Board did not seek the views of shareholders in setting this policy. Any comments on the policy received from shareholders would be considered on a case-by-case basis. As the Company does not have any employees, no employee pay and employment conditions were taken into account when setting this policy and no employees were consulted in its construction. Directors’ fees are reviewed annually and take into account research from third parties on the fee levels of Directors of peer group companies, as well as industry norms and factors affecting the time commitment expected of the Directors. New Directors are subject to the provisions set out in this remuneration policy. 48 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 4: Governance Directors’ annual report on remuneration This report sets out how the Directors’ remuneration policy was implemented during the year ended 31 July 2025. Fees paid to Directors The following amounts were paid by the Company to Directors for their services in respect of the year ended 31 July 2025 and the preceding financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The performance of the Company over the financial year is presented in the Performance Summary at the start of the report. | | | | Fees Taxable benefits | | | | | 1 | | | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2025 | | 2024 | | 2025 | | 2024 | | 2025 | | 2024 | | | Director | | £ | | £ | | £ | | £ | | £ | | £ | Philip Kay 41,500 40,125 – 641 41,500 40,766 Helena Coles 31,000 30,083 – 284 31,000 30,367 2 Alan Gibbs 11,168 30,083 – 95 11,168 30,178 3,7 Angus Macpherson 31,000 30,083 – 16,042 31,000 46,125 4 Belinda Richards 118 31,441 – – 118 31,441 5 Samantha Wren 35,559 2,672 175 – 35,734 2,672 6,7 Merryn Somerset Webb 31,135 2,250 1,210 – 32,345 2,250 Total 181,480 166,737 1,385 17,062 182,865 183,799 1 Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and NI contributions. | 2 Resigned from the Board on 10 December 2024. | | --- | | 3 The taxable benefits paid in 2024 covered expenses spanning a period of five years since appointment. | | 4 Resigned as Audit Chair, and from the Board on 3 July 2024. | | 5 Appointed as Director and Audit Chair on 4 July 2024. | | 6 Appointed as Director on 4 July 2024. | | 7 The Director resides in Scotland, and incurred taxable expenses associated with attending Board and Committee meetings. | The information in the above table has been audited. The table below compares the remuneration payable to Directors, to distributions made to shareholders during the year under review and the prior period. In considering these figures, shareholders should take into account the Company’s investment objective. Distributions to shareholders (share buy-backs) vs Directors’ remuneration | Year ended | | Year ended | | | --- | --- | --- | --- | | | 31 July | | 31 July | | | 2025 | | 2024 Change | £’000 £’000 % Remuneration payable to Directors 183 184 (0.5) Distributions paid to shareholders – Dividends paid during the year 22,490 6,439 – Share buybacks 4,789 6,160 Total distributions paid to shareholders 27,279 12,599 116.5 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 49 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ## Section 4: Governance ### Consideration of matters relating to Directors' remuneration Following the review of Directors' fees by the Nomination Committee, it was proposed to increase to all Directors' fees by 4% (rounded up to the nearest £500), with an additional £1,000 for the Chair of the Management Engagement Committee, to commence from 1 July 2025. (Chairman £43,500, Audit and Risk Committee Chairman £37,000, Management Engagement Committee Chairman, £33,500, non-executive Directors £32,500). The Board approved this recommendation. The members of the Board at the time that remuneration levels were considered were as set out on pages 36 and 37. Although no external advice was sought in considering the levels of Directors' fees, information on fees paid to Directors of other investment trusts managed by Schroders and peer group companies provided by the Manager and corporate broker was taken into consideration, as was independent third party research. ### Annual percentage change in directors' remuneration | Director | Change in annual fee over years ended 31 July | | | | | | --- | --- | --- | --- | --- | --- | | | 2025 % | 2024 % | 2023 % | 2022 % | 2021 % | | Philip Kay (Chairman) | 1.8 | 12.1 | n/a | n/a | n/a | | Anja Balfour | n/a | n/a | n/a | 9.8 | (1.2) | | Helena Coles | 2.1 | 3.1 | n/a | n/a | n/a | | Alan Gibbs | (63.0) | 3.1 | 0.5 | 7.5 | – | | Angus Macpherson^{1,2} | (32.8) | 3.1 | 2.7 | 5.2 | n/a | | Belinda Richards | (99.6) | (5.2) | 2.0 | 4.5 | – | | Samantha Wren^{3} | n/a | n/a | n/a | n/a | n/a | | Merryn Somerset Webb^{1,4} | n/a | n/a | n/a | n/a | n/a | $^{1}$ The Director, who resides in Scotland, incurred taxable expenses associated with attending Board and Committee meetings. $^{2}$ The taxable benefits in the prior period covered expenses spanning a period of five years since appointment. $^{3}$ Appointed as Director and Audit Chair on 4 July 2024, therefore, no year-on-year change in remuneration is presented in the table above. $^{4}$ Appointed as Director on 4 July 2024, therefore, no year-on-year change in remuneration is presented in the table above. ### Change in annual remuneration payable | Director | 2025 £ | 2024 £ | 2023 £ | 2022 £ | 2021 £ | | --- | --- | --- | --- | --- | --- | | Philip Kay | 41,500 | 40,766 | 35,786 | 9,640 | – | | Anja Balfour | – | – | 15,998 | 41,327 | 37,624 | | Helena Coles | 31,000 | 30,367 | 29,167 | 9,487 | – | | Alan Gibbs | 11,168 | 30,178 | 29,167 | 29,024 | 27,000 | | Angus Macpherson^{1,2} | 31,000 | 46,125 | 29,167 | 28,404 | 27,000 | | Belinda Richards | 118 | 31,441 | 33,167 | 32,504 | 31,100 | | Samantha Wren | 35,734 | 2,672 | – | – | – | | Merryn Somerset Webb^{1} | 32,345 | 2,250 | – | – | – | | | **182,865** | 183,799 | 172,452 | 150,386 | 122,724 | $^{1}$ The Director, who resides in Scotland, incurred taxable expenses associated with attending Board and Committee meetings. $^{2}$ The taxable benefits in the prior period covered expenses spanning a period of five years since appointment. 50 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 4: Governance ## Directors The Company's Articles of Association do not require Directors to own shares in the Company. The interests of Directors, including those of connected persons, at the beginning and end of the financial year under review, are set out below. | | At 31 July 2025 | At 31 July 2024 | | --- | --- | --- | | Helena Coles | 8,432 | 5,000 | | Alan Gibbs^{1} | n/a | 150,000 | | Philip Kay | 26,527 | 26,527 | | Angus Macpherson | 49,440 | 49,440 | | Samantha Wren^{2} | 1,650 | 1,650 | | Merryn Somerset Webb^{3} | 7,866 | nil | $^{1}$ Alan Gibbs resigned as a Director on 10 December 2024. $^{2}$ Samantha Wren was appointed as Director and Audit Chair on 4 July 2024. $^{3}$ Merryn Somerset Webb was appointed as Director on 4 July 2024. The information in the above table has been audited. There have been no changes since the year end. ## Performance A graph showing the Company's share price total return compared with the Reference Index over the last 10 years is set out below. The Reference Index has been selected as an appropriate comparison based on the composition of the Company's investment portfolio. ## Share Price vs Benchmark Graph To promote transparency and uphold effective governance, the Board includes a comparison of the Company's share price performance against its benchmark. This reflects the Board's role in overseeing investment performance, managing the discount, and ensuring alignment with the Company's objectives. The inclusion of this graph supports clear communication with shareholders and aligns with best practice guidance from the Association of Investment Companies (AIC). ## 10 year performance of share price and benchmark total returns ![img-7.jpeg](img-7.jpeg) Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 July 2015. Definitions of terms and performance measures are provided on pages 85 and 86. On behalf of the Board **Philip Kay** Chairman 7 October 2025 Schroder Japan Trust plc Annual Report and Financial Statements 2025 51 Section 4: Governance # Statement of Directors' Responsibilities in respect of the Annual Report and Financial Statements The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. 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 return 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. 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. The Directors 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 Manager is responsible for the maintenance and integrity of the webpage dedicated to the Company. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. ## Directors' statement Each of the Directors, whose names and functions are listed in the Board of Directors on pages 36 and 37 confirm that, to the best of their knowledge: - the Company 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; - the Strategic 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 and uncertainties that it faces; and - that the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy. On behalf of the Board: **Philip Kay** Chairman 7 October 2025 52 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 4: Governance Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 53 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials ### Kiyomizu-dera temple, Kyoto. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 54 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials ## Section 5: Financials Independent Auditor’s Report 56 Income Statement 61 Statement of Changes in Equity 62 Statement of Financial Position 63 Notes to the Financial Statements 64 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 55 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 5: Financials # Independent Auditor's Report to the members of Schroder Japan Trust plc ## Report on the audit of the financial statements ### 1. Opinion In our opinion the financial statements of Schroder Japan Trust plc (the 'company'): - give a true and fair view of the state of the company's affairs as at 31 July 2025 and of its return for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Statement of Recommended Practice issued by the Association of Investment Companies in July 2022 "Financial Statements of Investment Trust Companies and Venture Capital Trusts"; and - have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements which comprise: - the statement of comprehensive income; - the statement of changes in equity; - the statement of financial position; and - the related notes 1 to 20. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice) and the Statement of Recommended Practice issued by the Association of Investment Companies ("SORP") in July 2022 "Financial Statements of Investment Trust Companies and Venture Capital Trusts". ### 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that we have not provided any non-audit services prohibited by the FRC's Ethical Standard to the company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ### 3. Summary of our audit approach | **Key audit matters** | - The key audit matter that we identified in the current year was valuation and existence of listed investments. - Within this report, key audit matter is identified as follows: - Similar level of risk | | --- | --- | | **Materiality** | - The materiality that we used in the current year was £3.45m which was determined on the basis of 1% of net assets. | | **Scoping** | - We performed our audit scoping based upon quantitative and qualitative risk assessment factors for each account balance recorded as at 31 July 2025. | | **Significant changes in our approach** | - There have been no significant changes to our audit approach in the current year. | ### 4. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included: - Considering as part of our risk assessment the nature of the company, its business model and related risks, the requirements of the applicable financial reporting framework and the system of internal control; - Assessing the underlying data and appropriateness of key assumptions used to make the going concern assessment, including assessment of the accuracy of forecasts and evaluation of the directors' plans for future actions in relation to their going concern assessment; - Assessing the liquidity and ability of the Investment Manager to trade in the investment portfolio to cover operational expenditure as appropriate; and - Assessing the appropriateness of the going concern disclosure in note 1 to the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the reporting on how the company has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors' statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. 56 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 5: Financials Our responsibilities and the responsibilities of the directors with 6. Our application of materiality respect to going concern are described in the relevant sections of 6.1. Materiality this report. We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic 5. Key audit matters decisions of a reasonably knowledgeable person would be Key audit matters are those matters that, in our professional changed or influenced. We use materiality both in planning the judgement, were of most significance in our audit of the financial scope of our audit work and in evaluating the results of our work. statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to Based on our professional judgement, we determined materiality fraud) that we identified. These matters included those which had for the financial statements as a whole as follows: the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the Materiality £3.45m (2024: £3.51m) engagement team. These matters were addressed in the context of our audit of | the financial statements as a whole, and in forming our opinion | Basis for | 1% of net assets (2024: 1% of net assets) | | --- | --- | --- | | thereon, and we do not provide a separate opinion on these | determining | | | matters. | materiality | | 5.1. Valuation and existence of listed investments | | | Rationale for | We have used net assets as our | | --- | --- | --- | --- | | Key audit matter | The listed investments of the company | the benchmark | materiality benchmark as we consider it | | description | of £327.2m (2024: £353.9m) make up | applied | to be the most relevant indicator of the | | | 94% (2024: 97%) of total assets of the | | company’s performance for the users of | | | company at 31 July 2025. | | the financial statements, as well as being | a key driver of shareholder value. There is a risk that the listed investments may not be valued correctly or may not represent the assets of the company. Given the nature and size of the balance and its importance to the company, we have considered that there is a potential Net Assets £345m Materiality £3.45m risk of fraud in this area. See the accounting policy in note 1(b) of Net Assets the Financial Statements and also note Audit and Risk Materiality Committee reporting 10 of the Financial Statements. threshold £0.17m How the scope We performed the following procedures 6.2. Performance materiality of our audit to address the key audit matter We set performance materiality at a level lower than materiality responded to the identified: to reduce the probability that, in aggregate, uncorrected and key audit matter undetected misstatements exceed the materiality for the financial • with involvement of financial statements as a whole. Performance materiality was set at 70% instruments specialists assessed the of materiality for the 2025 audit (2024: 70%). In determining valuation methodology applied in performance materiality, we considered the following factors: valuation of listed investments; • inspected the internal controls report a. The company’s structure and operating model. over the administrator to obtain an b. The continuity in place within the business from the previous understanding of relevant controls year with both management and the administrator. relating to existence and valuation of listed investments; c. The lack of changes to accounting policies during the current period which would require significant judgement. • agreed 100% of the company’s listed investment portfolio at the year end to d. Our experience from prior period audits, where there has confirmations received directly from not been a history of uncorrected misstatements or controls the depositary; and deficiencies. • agreed 100% of the bid prices of e. The quality of the control environment and whether we were listed investments on the investment able to rely on controls. ledger at year end to closing bid prices published by an independent pricing 6.3. Error reporting threshold source. We agreed with the Audit and Risk committee that we would report to the Committee all audit differences in excess of £0.17m (2024: £0.18m), as well as differences below that threshold that, Key observations Based on the work performed, we in our view, warranted reporting on qualitative grounds. We also concluded that the valuation and report to the Audit and Risk committee on disclosure matters existence of listed investments are that we identified when assessing the overall presentation of the appropriate. financial statements. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 57 3 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 5: Financials ## 7. An overview of the scope of our audit ### 7.1. Scoping Our audit scope was determined by obtaining an understanding of the company and its environment, including internal controls, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team. ### 7.2. Our consideration of the control environment In assessing the company's control environment, we considered controls in place at the company's service organisation which acts as administrator. As part of this, we reviewed the System and Organisation Controls (SOC 1) Reports of the service organisation, specifically the controls relating to financial reporting and valuation and existence of listed investments. We also reviewed the controls report of the service organisation in respect of general IT controls. Further, we obtained an understanding of relevant business processes and controls that address the risk of material misstatement in financial reporting. ### 7.3. Our consideration of climate-related risks In planning our audit, we have considered the potential impact of climate change on the business and its financial statements. The company continues to develop its model for assessing and assigning an ESG score on existing and potential investments based on assessment of the potential impacts of environmental, social and governance ('ESG') related risks, including climate change, as outlined on page 20 of the annual report. As a part of our audit, we obtained an understanding of the entity's process of identifying climate-related risks and the impact on the company's financial statements. We have read the climate related disclosures in the annual report to consider whether they are materially consistent with the financial statements and our knowledge obtained in the audit. ## 8. Other information The other information comprises the information included in the annual, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ## 9. Responsibilities of directors As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. ## 10. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report. ## 11. Extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. ### 11.1. Identifying and assessing potential risks related to irregularities In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: - the nature of the industry and sector, control environment and business performance including the design of the company's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets; - results of our enquiries of management, the directors and the Audit and Risk committee about their own identification and assessment of the risks of irregularities, including those that are specific to the company's sector; - any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to: - identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; - detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; - the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations. - the matters discussed among the audit engagement team and relevant internal specialists, including tax, IT, and financial instrument specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following area: valuation and existence of listed investments. In common 58 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 5: Financials with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and Investment Trust Tax Legislation. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty. #### 11.2. Audit response to risks identified As a result of performing the above, we identified the valuation and existence of listed investments as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter. In addition to the above, our procedures to respond to risks identified included the following: - reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements; - enquiring of management, the Audit and Risk committee concerning actual and potential litigation and claims; - performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; - reading minutes of meetings of those charged with governance; and - in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. ## Report on other legal and regulatory requirements ### 12. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: - the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and - the strategic report and the directors' report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors' report. ### 13. Corporate Governance Statement The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the company's compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: - the directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 35; - the directors' explanation as to its assessment of the company's prospects, the period this assessment covers and why the period is appropriate set out on page 35; - the directors' statement on fair, balanced and understandable set out on page 46; - the board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 32; - the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 32; and the section describing the work of the Audit and Risk committee set out on pages 44-46. ### 14. Matters on which we are required to report by exception #### 14.1. Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: - we have not received all the information and explanations we require for our audit; or - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or Schroder Japan Trust plc Annual Report and Financial Statements 2025 59 ## Section 5: Financials - the financial statements are not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. ### 14.2. Directors' remuneration Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made or the part of the directors' remuneration report to be audited is not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. ### 15. Other matters which we are required to address #### 15.1. Auditor tenure Following the recommendation of the Audit and Risk committee, we were appointed by the board of directors on 10 April 2019 to audit the financial statements for the year ending 31 July 2019 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 7 years, covering the years ending 31 July 2019 to 31 July 2025. #### 15.2. Consistency of the audit report with the additional report to the Audit and Risk committee Our audit opinion is consistent with the additional report to the Audit and Risk committee we are required to provide in accordance with ISAs (UK). ### 16. Use of our report This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. #### Michael Caullay Senior statutory auditor For and on behalf of Deloitte LLP, Statutory Auditor Glasgow, United Kingdom 7 October 2025 60 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 5: Financials # Statement of Comprehensive Income for the year ended 31 July 2025 | | Note | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Gains on investments held at fair value through profit or loss | 2 | – | 12,834 | 12,834 | – | 52,343 | 52,343 | | Net gains on derivative contracts | 10 | – | 2,080 | 2,080 | – | 929 | 929 | | Net foreign currency (losses)/gains | | – | (89) | (89) | – | 3,055 | 3,055 | | Income from investments and derivatives | 3 | 10,383 | – | 10,383 | 8,917 | – | 8,917 | | Other interest receivable and similar income | 3 | 66 | – | 66 | 54 | – | 54 | | **Gross return** | | **10,449** | **14,825** | **25,274** | **8,971** | **56,327** | **65,298** | | Investment management fee | 4 | (688) | (1,605) | (2,293) | (705) | (1,644) | (2,349) | | Administrative expenses | 5 | (724) | – | (724) | (715) | – | (715) | | **Net return before finance costs and taxation** | | **9,037** | **13,220** | **22,257** | **7,551** | **54,683** | **62,234** | | Finance costs | 6 | (116) | (272) | (388) | (94) | (221) | (315) | | **Net return before taxation** | | **8,921** | **12,948** | **21,869** | **7,457** | **54,462** | **61,919** | | Taxation | 7 | (901) | – | (901) | (892) | – | (892) | | **Net return after taxation** | | **8,020** | **12,948** | **20,968** | **6,565** | **54,462** | **61,027** | | **Return per share (pence)** | 8 | **6.91** | **11.16** | **18.07** | **5.53** | **45.85** | **51.38** | The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items of other comprehensive income and therefore the net return after taxation is also the total comprehensive income for the year. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes on pages 64 to 77 form an integral part of these accounts. Schroder Japan Trust plc Annual Report and Financial Statements 2025 61 ### Section 5: Financials ## Statement of Changes in Equity for the year ended 31 July 2025 | | Called-up | | | | | | Capital | Warrant | | | Shar | e | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | | Shar | e | redemption | | excercise | | purchase | | | Capital | Revenue | | | | | | capital | premium | | | | reserve | reserve | | reserve | | | reserves | reserve | | Total | | Note | | £’000 | | £’000 | | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | £’000 | At 31 July 2023 11,990 7 511 3 86,878 195,135 7,936 302,460 Repurchase of the Company’s own shares for cancellation (145) – 145 – (3,426) – – (3,426) Repurchase of the Company’s own shares into treasury – – – – (2,734) – – (2,734) Net return after taxation – – – – – 54,462 6,565 61,027 Dividend paid in the year 9 – – – – – – (6,439) (6,439) At 31 July 2024 11,845 7 656 3 80,718 249,597 8,062 350,888 Repurchase of the Company’s own shares into treasury – – – – (4,789) – – (4,789) Net return after taxation – – – – – 12,948 8,020 20,968 Dividend paid in the year 9 – – – – – (7,523) (14,967) (22,490) At 31 July 2025 11,845 7 656 3 75,929 255,022 1,115 344,577 The notes on pages 64 to 77 form an integral part of these accounts. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 62 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 5: Financials # Statement of Financial Position at 31 July 2025 | | Note | 2025 £'000 | 2024 £'000 | | --- | --- | --- | --- | | **Fixed assets** | | | | | Investments held at fair value through profit or loss | 10 | 327,209 | 353,898 | | **Current assets** | | | | | Debtors | 11 | 2,213 | 2,382 | | Cash at bank | | 17,028 | 7,396 | | Derivative financial instruments held at fair value through profit or loss | | 3,855 | 1,343 | | | 10 | **23,096** | 11,121 | | **Current liabilities** | | | | | Creditors: amounts falling due within one year | 12 | (2,460) | (13,179) | | Amounts owing to derivative clearing houses and brokers | | (3,145) | (538) | | Derivative financial instruments held at fair value through profit or loss | 10 | (123) | (414) | | | | **(5,728)** | **(14,131)** | | **Net current assets/(liabilities)** | | **17,368** | **(3,010)** | | **Net assets** | | **344,577** | **350,888** | | **Capital and reserves** | | | | | Called-up share capital | 13 | 11,845 | 11,845 | | Share premium | 14 | 7 | 7 | | Capital redemption reserve | 14 | 656 | 656 | | Warrant exercise reserve | 14 | 3 | 3 | | Share purchase reserve | 14 | 75,929 | 80,718 | | Capital reserves | 14 | 255,022 | 249,597 | | Revenue reserve | 14 | 1,115 | 8,062 | | **Total equity shareholders' funds** | | **344,577** | **350,888** | | **Net asset value per share (pence)** | 15 | **298.35** | **298.88** | These financial statements were approved and authorised for issue by the Board of Directors on 7 October 2025 and signed on its behalf by: **Philip Kay** Chairman The notes on pages 64 to 77 form an integral part of these accounts. Registered in England and Wales as a public company limited by shares. Schroder Japan Trust plc Annual Report and Financial Statements 2025 63 Section 5: Financials # Notes to the Financial Statements for the year ended 31 July 2025 ## 1. Accounting Policies ### (a) Basis of accounting Schroder Japan Growth Fund plc ("the Company") is registered in England and Wales as a public company limited by shares. The company's registered office is 1 London Wall Place, London EC2Y 5AU. The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ("UK GAAP"), in particular in accordance with Financial Reporting Standard (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 financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss. The Directors believe that the Company has adequate resources to continue operating for at least 12 months from the date of approval of these accounts. In forming this opinion, the Directors have taken into consideration: the controls and monitoring processes in place; the Company's level of debt and other payables; the level of operating expenses, comprising largely variable costs which would reduce pro rata in the event of a market downturn; and that the Company's assets comprise cash and readily realisable securities quoted in active markets. In forming this opinion, the Directors have also considered any potential impact of climate change, and the risk/impact of elevated and sustained inflation and interest rates on the viability of the Company. The Company has additionally performed stress tests which confirm that a 50% fall in the market prices of the portfolio would not affect the Board's conclusions in respect of going concern. Further details of Directors' considerations regarding this are given in the Chairman's Statement, Portfolio Managers' Review, Going Concern Statement, Viability Statement and under the Emerging Risks and uncertainties heading on page 42. The Company has not presented a statement of cash flows, as it is not required for an investment trust which meets certain conditions; in particular that substantially all of the Company's investments are highly liquid and carried at market value. The financial statements are presented in sterling and amounts have been rounded to the nearest thousand. The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 31 July 2024. No significant judgements, estimates or assumptions have been required in the preparation of the accounts for the current or preceding financial year. ### (b) Valuation of investments The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets and derivative instruments is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy and information is provided internally on that basis to the Company's Board of Directors. Accordingly, upon initial recognition, the investments are classified by the Company as "held at fair value through profit or loss". Investments are included initially at transaction price, excluding expenses incidental to purchase which are written off to capital at the time of acquisition. Subsequently, investments are valued at fair value, which are last traded prices as quoted on the Tokyo Stock Exchange. The Contracts for Difference (CFD) held in the portfolio are valued based on the price of the underlying security or index which they are purchased to reflect. The fair value of the CFDs is the difference between the strike price and the underlying shares in the contract. Investments that are unlisted or not actively traded are valued using a variety of techniques to determine their fair value; all such valuations are reviewed by both the AIFM's Fair Value Pricing Committee and by the directors. No investments held at the current or comparative year end have been valued using other techniques. All purchases and sales are accounted for on a trade date basis. ### (c) Accounting for reserves Gains and losses on sales of investments and increases and decreases in the valuation of investments are included in the statement of comprehensive income and in capital reserves within "gains on investments held at fair value through profit or loss. Gains and losses on sales of CFDs and increases and decreases in the valuation of CFDs are included in the statement of comprehensive income and in capital reserves within "net gains on derivative contracts. Foreign exchange gains and losses on cash and deposit balances and unrealised exchange gains and losses on foreign currency loans are included in the statement of comprehensive income and in capital reserves. ### (d) Income Dividends receivable are recognised on the ex-dividend basis except where, in the opinion of the board, the dividend is capital in nature, in which case it is included in capital. Overseas dividends are included gross of any withholding tax. CFD dividends are included net of any withholding tax. Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital. Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of interest. 64 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 5: Financials ### (e) Expenses All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the income statement with the following exceptions: - The investment management fee is allocated 30% to revenue and 70% to capital in line with the board's expected long-term split of revenue and capital return from the Company's investment portfolio. - Expenses incidental to the purchase or sale of an investment are charged to capital. These expenses are commonly referred to as transaction costs and mainly comprise brokerage commission. Details of transaction costs are given in note 10 on page 69. ### (f) Finance costs Finance costs, including collateral and finance costs paid on CFDs, any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis using the effective interest method in accordance with FRS 102. Finance costs are allocated 30% to revenue and 70% to capital in line with the board's expected long-term split of revenue and capital return from the Company's investment portfolio. ### (g) Other financial instruments Cash and cash equivalents may comprise cash at bank including bank overdrafts and demand deposits which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value. Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with debtors reduced by appropriate allowances for estimated irrecoverable amounts. Bank loans are classified as loans and are initially measured at fair value and subsequently measured at amortised cost. They are recorded at the proceeds received net of direct issue costs. Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis using the effective interest method. ### (h) Taxation The tax charge for the year is based on amounts expected to be received or paid. Deferred tax is accounted for in accordance with FRS 102. Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is probable that taxable profits will be available against which those timing differences can be utilised. Tax relief is allocated to expenses charged to the capital column of the statement of comprehensive income on the "marginal basis". On this basis, if taxable income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to capital. Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates that have been enacted or substantively enacted at the accounting date and is measured on an undiscounted basis. ### (i) Foreign currency In accordance with FRS 102, the Company is required to determine a functional currency, being the currency in which the Company predominantly operates. The Board, having regard to the currency of the Company's share capital and the predominant currency in which its shareholders operate, has determined that sterling is the functional currency and the currency in which the accounts are presented. Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction. Monetary assets, liabilities and equity investments denominated in foreign currencies at the year end, are translated at the rates of exchange prevailing at the year end. ### (j) Dividend payable In accordance with FRS 102, the final dividend is included in the accounts in the year in which it is paid. ### (k) Repurchase of Ordinary Shares The costs of repurchasing Ordinary shares into treasury, including related stamp duty and transaction costs are taken directly to equity and reported through the Statement of Changes in Equity as a charge on the share purchase reserve. Share repurchase transactions are accounted for on a trade date basis. The nominal value of Ordinary share capital repurchased and held in treasury remain in the called up share capital reserve. Schroder Japan Trust plc Annual Report and Financial Statements 2025 65 Section 5: Financials ## 2. Gains on investments held at fair value through profit or loss | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Gains on sales of investments based on historic cost | 19,386 | 40,054 | | Amounts recognised in investment holding gains and losses in the previous year in respect of investments sold in the year | (23,651) | (29,179) | | **(Losses)/gains on sales of investments based on the carrying value at the previous balance sheet date** | **(4,265)** | **10,875** | | Net movement in investment holding gains and losses | 17,099 | 41,468 | | **Gains on investments held at fair value through profit and loss** | **12,834** | **52,343** | ## 3. Income | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | **Income from investments:** | | | | Overseas dividends | 9,018 | 8,917 | | **Derivative income** | | | | Dividends received on long CFDs | 1,365 | – | | **Other interest receivable and similar income** | | | | Deposit interest | 66 | 54 | | **Total income** | **10,449** | **8,971** | ## 4. Investment management fee | | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Management fee | 688 | 1,605 | 2,293 | 705 | 1,644 | 2,349 | The basis for calculating the investment management fee is set out in the Report of the Directors on page 39 and details of all amounts payable to the Manager are given in note 16 on page 71. ## 5. Administrative expenses | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Administration expenses | 352 | 361 | | Directors' fees^{1} | 181 | 167 | | Company secretarial fee | 90 | 90 | | Marketing support fee | 59 | 58 | | Auditors' remuneration for audit services | 42 | 39 | | | **724** | **715** | $^{1}$ Details of all amounts payable to Directors are given in the Remuneration Report on page 49. 66 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 5: Financials ## 6. Finance costs | | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Interest on bank loans | 11 | 27 | 38 | 94 | 221 | 315 | | Interest paid on long CFDs | 105 | 245 | 350 | – | – | – | | **Taxation for the year** | **116** | **272** | **388** | **94** | **221** | **315** | ## 7. Taxation ### (a) Analysis of tax charge for the year | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Irrecoverable overseas tax | 901 | 892 | | **Taxation** | **901** | **892** | ### (b) Factors affecting tax charge for the year The tax assessed for the year is lower (2024: lower) than the Company's applicable rate of corporation tax for the year of 25% (2024: 25%). The factors affecting the tax charge for the year are as follows: | | 2025 | | | 2024 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Net return before taxation | 8,921 | 12,948 | 21,869 | 7,457 | 54,462 | 61,919 | | Net return before taxation multiplied by the Company's applicable rate of corporation tax for the year of 25% (2024: 25%) | 2,230 | 3,237 | 5,467 | 1,864 | 13,616 | 15,480 | | Effects of: | | | | | | | | Capital gains on investments | – | (3,706) | (3,706) | – | (14,082) | (14,082) | | Income not chargeable to corporation tax | (2,596) | – | (2,596) | (2,229) | – | (2,229) | | Unrelieved expenses | 366 | 469 | 835 | 365 | 466 | 831 | | Irrecoverable overseas tax | 901 | – | 901 | 892 | – | 892 | | **Taxation for the year** | **901** | **–** | **901** | **892** | **–** | **892** | ### (c) Deferred taxation The Company has an unrecognised deferred tax asset of £12,348,000 (2024: £11,513,000) based on a prospective corporation tax rate of 25% (2024: 25%). The main rate of corporation tax increased to 25% for fiscal years beginning on or after 1 April 2023. This deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company's portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the accounts. Given the Company's intention to meet the conditions required to retain its status as an investment trust company, no provision has been made for UK capital gains tax on any capital gains or losses arising on the revaluation or disposal of investments. ## 8. Return per share | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Revenue return | 8,020 | 6,565 | | Capital return | 12,948 | 54,462 | | **Total return** | **20,968** | **61,027** | | Weighted average number of ordinary shares in issue during the year | 116,025,982 | 118,779,949 | | Revenue return per share (pence) | 6.91 | 5.53 | | Capital return per share (pence) | 11.16 | 45.85 | | **Total return per share (pence)** | **18.07** | **51.38** | Schroder Japan Trust plc Annual Report and Financial Statements 2025 67 Section 5: Financials ## 9. Dividends ### Dividend paid and proposed | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | 2024 final dividend of 10.81p (2023: 5.40p) | 12,561^{1} | 6,439 | | First interim dividend of 2.82p (2024: nil) | 3,267 | – | | Second interim dividend of 2.89p (2024: nil) | 3,345 | – | | Third interim dividend of 2.87p (2024: nil) | 3,317 | – | | **Total dividends paid in the year** | **22,490** | **6,439** | | | 2025 £'000 | 2024 £'000 | | 2025 Fourth interim dividend proposed of 2.85p (2024: nil) | 3,292 | 12,691 | $^{1}$ The 2024 final dividend amounted to £12,691,000. However the amount actually paid was £12,561,000 as shares were repurchased and cancelled, after the accounting date, but prior to the dividend Record Date. Dividends are initially paid from the revenue reserve; any amounts exceeding this reserve will be funded from the capital reserve. For the final dividend paid on 13 December 2024 £4,499,000 was paid from capital reserve, and £3,024,000 for the second interim dividend paid on 30 April 2025. ### (a) Dividends 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 as shown below. The revenue available for distribution by way of dividend for the year is £8,020,000 (2024: £6,565,000). | | 2025 £'000 | | --- | --- | | First interim dividend of 2.82p | 3,267 | | Second interim dividend of 2.89p | 3,345 | | Third interim dividend of 2.87p | 3,317 | | Fourth interim of 2.85p | 3,292 | | **Total dividends of 11.43p (2024: 10.81p)** | **13,221** | ## 10. Investments held at fair value through profit or loss ### (a) Movement in investments | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Opening book cost | 287,279 | 277,426 | | Opening investment holding gains | 66,619 | 54,330 | | **Opening fair value** | **353,898** | **331,756** | | **Analysis of transactions made during the year** | | | | Purchases at cost | 87,291 | 108,919 | | Sales proceeds received | (126,814) | (139,120) | | Gains on investments held at fair value | 12,834 | 52,343 | | **Closing fair value** | **327,209** | **353,898** | | Closing book cost | 267,142 | 287,279 | | Closing investment holding gains | 60,067 | 66,619 | | **Closing fair value** | **327,209** | **353,898** | All investments are listed on a recognised stock exchange. The Company received £126,814,000 (2024: £139,120,000) from disposal of investments in the year. The book cost of these investments when they were purchased were £107,428,000 (2024: £99,066,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. 68 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 5: Financials (b) Transaction costs The following transaction costs, mainly comprising brokerage commissions, were incurred during the year: 2025 2024 £’000 £’000 On acquisitions 19 23 On disposals 28 30 47 53 (c) Derivative financial instruments 2025 2024 Contracts for Differences (CFDs) £’000 £’000 Movement in investment holding gains on CFDs 2,803 929 Realised losses on CFDs (723) – 2,080 929 2025 2024 | | | Asset | Fair | | Asset | Fair | | --- | --- | --- | --- | --- | --- | --- | | | exposure | | value | exposure | | value | | Derivative financial instruments held at fair value through profit or loss | | £’000 | £’000 | | £’000 | £’000 | CFD assets 59,736 3,855 32,577 1,343 CFD liabilities 3,672 (123) 16,117 (414) 63,408 3,732 48,694 929 The CFDs are held in order to increase exposure to stock movements without the financial commitment of purchasing the stock. The total market exposure on the CFDs held at the year end is £63,408,000 (2024: £48,694,000) and the liability attached to the contract for differences is £59,676,000 (2024: £47,765,000). This resulted in an unrealised gain of £3,732,000 (2024: £929,000). ### 11. Current assets 2025 2024 Debtors £’000 £’000 Securities sold awaiting settlement 1,851 1,960 Dividends and interest receivable 339 398 Other debtors 23 24 2,213 2,382 The Directors consider that the carrying amount of debtors approximates to their fair value. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 69 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials ### 12. Current liabilities 2025 2024 Creditors: amounts falling due within one year £’000 £’000 Securities purchased awaiting settlement 1,546 1,943 Repurchase of ordinary shares into treasury awaiting settlement 114 109 Other creditors and accruals 800 778 Bank loan – 10,349 2,460 13,179 The Directors consider that the carrying amount of creditors approximates to their fair value. The Company has a yen 1.0 billion credit facility available from Sumitomo Mitsui Banking Corporation, London Branch, which was undrawn at the year end (2024: yen 2.0 billion). Further details of the facility are given in note 19 on page 74. ### 13. Called-up share capital 2025 2024 £’000 £’000 Ordinary shares allotted, called-up and fully paid: Ordinary shares in issue: Opening balance of 117,400,528 (2024: 119,903,965) ordinary shares of 10p each 11,740 11,990 Repurchase and cancellation of nil (2024: 1,450,679) shares – (145) Repurchase of 1,905,024 (2024: 1,052,758) shares held in treasury (191) (105) Subtotal of 115,495,504 (2024: 117,400,528) shares 11,549 11,740 2,957,782 (2024: 1,052,758) shares held in treasury 296 105 Closing balance of 118,453,286 (2024: 118,453,286) shares 11,845 11,845 During the year, the Company purchased 1,905,024 of its own shares, nominal value £191,000 to hold in in treasury, for a total consideration of £4,789,000 representing 1.62% of the shares outstanding at the beginning of the year. The reason for these share repurchases was to seek to manage the volatility of the share price discount to net asset value per share. ### 14. Reserves Capital reserves | | | | | | | | | | | | | | Gains and | | Investment | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Capital | | Warrant | | | | Share | | | losses on | | | holding | | | | | | | | Share | redemption | | | exercise | | | purchase | | | | | sales of | gains and | | | Revenue | | | | | premium | | 1 reserve | | 1 | reserve | | 1 | reserve | | 2 | investments | | | 2 | losses | 3 | reserve | | 4 | | Year ended 31 July 2025 | | £’000 | | £’000 | | | £’000 | | | £’000 | | | | £’000 | £’000 | | | | £’000 | | Opening balance 7 656 3 80,718 181,490 68,107 8,062 Gains on sales of investments based on the carrying value at the previous balance sheet date – – – – (4,265) – – Net movement in investment holding gains and losses – – – – – 17,099 – Transfer on disposal of investments – – – – 23,651 (23,651) – (Losses)/gains on contracts for difference – – – – (723) 2,803 – Realised exchange losses on cash and short-term deposits – – – – (304) – – Exchange gains/(losses) on foreign currency loan – – – – 774 (559) – Management fee and finance costs allocated to capital – – – – (1,877) – – Share repurchases into treasury – – – (4,789) – – – Dividend paid – – – – (7,523) – (14,967) Retained revenue for the year – – – – – – 8,020 Closing balance 7 656 3 75,929 191,223 63,799 1,115 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 70 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials Capital reserves | | | | | | | | | | | | | | Gains and | | Investment | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Capital | | Warrant | | | | Share | | | losses on | | | holding | | | | | | | | Share | redemption | | | exercise | | | purchase | | | | sales of | | gains and | | | Revenue | | | | | premium | | 1 reserve | | 1 | reserve | | 1 | reserve | | 2 | investments | | | 2 | losses | 3 | reserve | | 4 | | Year ended 31 July 2024 | | £’000 | | £’000 | | | £’000 | | | £’000 | | | | £’000 | £’000 | | | | £’000 | | Opening balance 7 511 3 86,878 135,027 60,108 7,936 Gains on sales of investments based on the carrying value at the previous balance sheet date – – – – 10,875 – – Net movement in investment holding gains and losses – – – – – 41,468 – Transfer on disposal of investments – – – – 29,179 (29,179) – Gains on contracts for difference – – – – – 929 – Realised exchange losses on cash and short-term deposits – – – – (8) – – Exchange gains/(losses) on foreign currency loan – – – – 8,282 (5,219) – Management fee and finance costs allocated to capital – – – – (1,865) – – Share repurchases for cancellation – 145 – (3,426) – – – Share repurchases into treasury – – – (2,734) – – – Dividend paid – – – – – – (6,439) Retained revenue for the year – – – – – – 6,565 Closing balance 7 656 3 80,718 181,490 68,107 8,062 1 These reserves are not distributable. 2 These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends. 3 This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’s own shares) and those that are unrealised. | 4 The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares. | | | | --- | --- | --- | | 1 5. Net asset value per share | | | | | 2025 | 2024 | | | £’000 | £’000 | Net assets attributable to shareholders (£'000) 344,577 350,888 Shares in issue at the year end 115,495,504 117,400,528 Net asset value per share (pence) 298.35 298.88 ### 16. Transactions with the Manager Under the terms of the AlFM Agreement, the Manager is entitled to receive a management fee, a marketing support fee and a company secretarial fee. Details of the AIFM agreement are given in the Report of the Directors on page 39. Any investments in funds managed or advised by the Manager or any of its associated companies are excluded from the assets used for the purpose of the management fee calculation and therefore incur no fee. The management fee payable in respect of the year ended 31 July 2025 amounted to £2,293,000 (2024: £2,349,000), of which £614,000 (2024: £613,000) was outstanding at the year end. The marketing support fee payable to the Manager amounted to £50,000 (2024: £50,000) of which £13,000 (2024: £13,000) was outstanding at the year end. The company secretarial fee payable to the Manager amounted to £90,000 (2024: £90,000) of which £23,000 (2024: £23,000) was outstanding at the year end. ### 17. Related party transactions Details of the remuneration payable to Directors are given in the Remuneration Report on page 49 and details of Directors’ shareholdings are given in in the Report of the Directors on page 51. Details of transactions with the Manager are given in note 16 above. There have been no other transactions with related parties during the year (2024: nil). Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 71 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 5: Financials ## 18. Disclosures regarding financial instruments measured at fair value The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio and derivative financial instruments. FRS 102 requires financial instruments to be categorised into a hierarchy consisting of the three levels below. Level 1 – valued using unadjusted quoted prices in active markets for identical assets. Level 2 – valued using observable inputs other than quoted prices included within Level 1. Level 3 – valued using inputs that are unobservable. Details of the valuation techniques used by the Company are given in note 1(b) on page 64. The following table sets out the fair value measurements using the FRS 102 hierarchy at 31 July: | | 2025 | | | | | --- | --- | --- | --- | --- | | | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | **Financial instruments held at fair value through profit or loss** | | | | | | Equity investments | 327,209 | – | – | 327,209 | | Derivative financial instruments – contracts for differences – CFD assets | – | 3,855 | – | 3,855 | | Derivative financial instruments – contracts for differences – CFD liabilities | – | (123) | – | (123) | | **Total** | **327,209** | **3,732** | **–** | **330,941** | | **2024** | | | | | | | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | **Financial instruments held at fair value through profit or loss** | | | | | | Equity investments | 353,898 | – | – | 353,898 | | Derivative financial instruments – contracts for differences – CFD assets | – | 1,343 | – | 1,343 | | Derivative financial instruments – contracts for differences – CFD liabilities | – | (414) | – | (414) | | **Total** | **353,898** | **929** | **–** | **354,827** | ## 19. Financial instruments' exposure to risk and risk management policies The investment objective is set out on the inside front cover of this report. In pursuing this objective, the Company is exposed to a variety of risks that could result in a reduction in the Company's net assets or a reduction in profits available for dividends. These risks include market risk (comprising currency risk, interest rate risk and market price risk), liquidity risk and credit risk. The Directors' policy for managing these risks is set out below. The Board coordinates the Company's risk management policy. The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not changed from those applying in the comparative year. The Company's classes of financial instruments are as follows: - investments in shares of Japanese companies which are held in accordance with the Company's investment objective; - a credit facility, the purpose of which are to manage working capital requirements and to gear the Company as appropriate; - short-term debtors, creditors and cash arising directly from its operations; and - Contract for differences, which are used for the purpose to gain exposure to the Japanese market. ### (a) Market risk The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements: currency risk, interest rate risk and market price risk. Information to enable an evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivity analysis where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. ### (i) Currency risk The Company's functional currency and the currency in which it reports, is sterling. However the Company's assets, liabilities and income are almost entirely denominated in yen. As a result, movements in the exchange rate will affect the sterling value of those items. 72 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 5: Financials ### Management of currency risk The Manager monitors the Company's exposure to foreign currencies on a daily basis and reports to the Board, which meets on at least four occasions each year. The Manager measures the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the yen/sterling exchange rate. It is currently not the Company's policy to actively hedge against currency risk. However any yen denominated borrowing acts to reduce the exposure of the Company's portfolio to the yen/sterling exchange rate. Income is converted to sterling on receipt. The Company may use short-term forward currency contracts to manage working capital requirements. ### Foreign currency exposure The fair value of the Company's monetary items that have exposure to the yen at 31 July are shown below. The Company's investments and derivative financial instruments have been included separately in the analysis so as to show the overall level of exposure. | | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Debtors (securities sold awaiting settlement, dividends and interest receivable) | 2,190 | 2,358 | | Cash at bank | 13,650 | 6,247 | | Amounts owing to derivative clearing houses and brokers | (3,145) | (538) | | Creditors (securities purchased awaiting settlement) | (1,546) | (1,943) | | Bank loans (including accrued interest payable) | – | (10,373) | | Interest payable on long CFDs | (11) | – | | Foreign currency exposure on net monetary items | 11,138 | (4,249) | | Investments held at fair value through profit or loss that are equities | 327,209 | 353,898 | | Derivative financial instruments held at fair value through profit or loss | 3,732 | 929 | | **Total net foreign currency exposure** | **342,079** | **350,578** | The above year-end amounts are broadly representative of the exposure to foreign currency risk during the current and comparative year. ### Foreign currency sensitivity The following tables illustrate the sensitivity of return after taxation for the year and net assets with regard to the Company's monetary financial assets, financial liabilities and exchange rates. The sensitivity analysis is based on the Company's monetary currency financial instruments held at each balance sheet date and assumes a 10% (2024: 10%) appreciation or depreciation in sterling against the yen, which is considered to be a reasonable illustration based on the volatility of exchange rates during the year. If sterling had weakened by 10% this would have had the following effect: | Income Statement – return after taxation | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Statement of comprehensive income - return after taxation | | | | Revenue return | 943 | 798 | | Capital return | 1,087 | (447) | | **Total return after taxation for the year** | **2,030** | **351** | | **Net assets** | **2,030** | **351** | Conversely if sterling had strengthened by 10% this would have had the following effect: | Income Statement – return after taxation | 2025 £'000 | 2024 £'000 | | --- | --- | --- | | Statement of comprehensive income - return after taxation | | | | Revenue return | (943) | (798) | | Capital return | (1,087) | 447 | | **Total return after taxation for the year** | **(2,030)** | **(351)** | | **Net assets** | **(2,030)** | **(351)** | In the opinion of the Directors, the above sensitivity analysis with respect to monetary financial assets and liabilities is broadly representative of the whole of the current and comparative year. The sensitivity with regard to the Company's investments, and any derivative instruments held, to changes in foreign currency exchange rates is subsumed into market price risk sensitivity below. Schroder Japan Trust plc Annual Report and Financial Statements 2025 73 ### Section 5: Financials (ii) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on variable rate borrowings when interest rates are re-set. Management of interest rate risk Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company may use gearing to enhance performance (including the use of CFDs) but investment exposure will not exceed 125% of net asset value. The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when the Company borrows on the credit facility. However, amounts drawn down on this facility are for short-term periods and therefore exposure to interest rate risk is not significant. The Company has a revolving credit facility agreement which carries a floating rate of interest and which is therefore exposed to interest rate changes. Interest rate exposure The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown below: 2025 2024 £’000 £’000 Exposure to floating interest rates Cash at bank 17,028 7,396 Creditors: amounts falling due within one year: Bank loan - revolving credit facility – (10,349) Total exposure 17,028 (2,953) The floating rate assets consist of cash deposits on call. Sterling cash deposits at call earn interest at floating rates based on Sterling Overnight Index Average (“SONIA”) rates, (2024: same). The Company has a yen 1 billion, 364 day credit facility arrangement with SMBC, to 10 November 2025. Under the terms of the agreement, interest is payable at the “Compounded Reference Rate”, being the aggregate of the Daily Non-Cumulative Compounded Risk Free Reference Rate plus the applicable Credit Adjustment Spread. At the year end the credit facility was undrawn. The above year-end amounts are not representative of the exposure to interest rates during the year as the level of cash balances has fluctuated. The maximum and minimum exposure during the year was as follows: 2025 2024 £’000 £’000 Maximum debit interest rate exposure during the year – net debt (939) (41,938) Maximum credit interest/(Minimum debit interest) rate exposure during the year – net cash/(debt) 20,596 (3,491) Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2024: 1.0%) increase or decrease in interest rates. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial instruments held at the accounting date and which are exposed to interest rate movements, with all other variables held constant. 2025 2024 | | 1.0% | | 1.0% | | 1.0% | | 1.0% | | --- | --- | --- | --- | --- | --- | --- | --- | | increase | | decrease | | increase | | decrease | | | | in rate | | in rate | in rate | | | in rate | | | £’000 | | £’000 | | £’000 | | £’000 | Income Statement – return after taxation Revenue return 170 (170) 38 (38) Capital return – – (72) 72 Total return after taxation 170 (170) (34) 34 Net assets 170 (170) (34) 34 In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due to fluctuations in the level of cash balances and drawings on the credit facility. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 74 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials (iii) Market price risk Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of the Company’s investments. Management of market price risk The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile. Market price risk exposure The Company’s total exposure to changes in market prices at 31 July comprised its portfolio of investments as follows: 2025 2024 £’000 £’000 Investments held at fair value through profit or loss 327,209 353,898 Derivative financial instruments - portfolio exposure 63,408 48,694 390,617 402,592 The above data is broadly representative of the exposure to market price risk during the year. Concentration of exposure to market price risk An analysis of the Company’s investments is given on pages 14 and 15. The portfolio comprises securities listed on Japanese stock markets and CFDs with exposure to the Japanese stock market. Accordingly there is a concentration of exposure to that country. However it should be noted that an investment may not be entirely exposed to the economic conditions in its country of listing. Market price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 10% (2024: 10%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s exposure to market price risk through its portfolio of investments and includes the impact on the management fee but assumes all other variables are held constant. 2025 2024 | | | 10% | | 10% | | | 10% | | | 10% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | increase | | decrease | | | increase | | | decrease | | | in fair value | | | in fair value | | in fair value | | | in fair value | | | | | | £’000 | | £’000 | | | £’000 | | | £’000 | Income Statement – return after taxation Revenue return (76) 76 (79) 79 Capital return 38,884 (38,884) 40,076 (40,076) Total return after taxation and net assets 38,808 (38,808) 39,998 (39,998) Percentage change in net asset value 11.3% (11.3%) 11.4% (11.4%) (b) Liquidity risk This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Management of the risk Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities and derivative instruments, which can be sold to meet funding requirements if necessary. Short-term flexibility is achieved through the use of a credit facility. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 75 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials Liquidity risk exposure Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows: 2025 2024 | Within | | Within | | | --- | --- | --- | --- | | one year | Total | one year | Total | | £’000 | £’000 | £’000 | £’000 | Creditors: amounts falling due within one year Securities purchased awaiting settlement 1,546 1,546 1,943 1,943 Repurchase of ordinary shares into treasury awaiting settlement 114 114 109 109 Interest payable on long CFDs 11 11 – – Other creditors and accruals 789 789 753 753 Amounts owing to derivative clearing houses and brokers 3,145 3,145 538 538 Interest on revolving credit facility – – 25 25 Bank loan - revolving credit facility – – 10,349 10,349 5,605 5,605 13,717 13,717 (c) Credit risk Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to the Company. Management of credit risk This risk is not significant and is managed as follows: Portfolio dealing The Company invests almost entirely in markets that operate a ‘Delivery versus Payment’ settlement process, ensuring the security of trades and reducing the risk of losing the principal amount. This approach extends to various investment instruments, while Contracts for Difference (CFDs) are settled through cash payments based on the difference between the opening and closing prices, rather than physical delivery of the underlying assets. The Manager continuously monitors dealing activity to ensure best execution, which involves measuring various indicators including the quality of trade settlement and incidence of failed trades. Counterparties and brokers must be pre-approved by the Manager’s credit committee. In relation to CFDs, counterparty risk is limited to the profit on a contract, not the notional value. The value in this regard is shown in the table below under credit risk exposure. Exposure to the custodian The Custodian of the Company’s assets is HSBC Bank plc which has Long-Term Credit Ratings of AA- with Fitch and Aa3 with Moody’s. The Company’s investments are held in accounts which are segregated from the Custodian’s own trading assets. If the Custodian were to become insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the Company’s cash balances are all deposited with the Custodian as banker and held on the Custodian’s balance sheet. In accordance with usual banking practice, the Company will rank as a general creditor to the Custodian in respect of cash balances. Credit risk exposure The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current and comparative year end. 2025 2024 £’000 £’000 Current assets Debtors - securities sold awaiting settlement, dividends and interest receivable and other debtors 2,213 2,382 Cash at bank 17,028 7,396 Derivative financial instruments 3,855 1,343 23,096 11,121 No debtors are past their due date and no provision has been made for impairment. The Company had received an amount of cash denominated in Japanese Yen (JPY) from JPMorgan Chase Bank as collateral in relation to derivative financial instruments. The total amount from JPMorgan Chase Bank as at 31 July 2025 was £3,145,000 (2024: £538,000). (d) Fair values of financial assets and financial liabilities All financial assets and liabilities are either carried at fair value or the amount in the Statement of Financial Position is a reasonable approximation of fair value. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 76 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 5: Financials ### 20. Capital management policies and procedures The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year. The Company’s debt and capital structure comprises the following: 2025 2024 £’000 £’000 Debt Bank loan – 10,349 Equity Called-up share capital 11,845 11,845 Reserves 332,732 339,043 344,577 350,888 Total debt and equity 344,577 361,237 The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the capital return to shareholders through an appropriate level of gearing. The Board’s policy is that the Company may use gearing to enhance performance (including the use of CFDs) but investment exposure will not exceed 125% of net asset value. Following the change in investment policy gearing is calculated as the amounts by which portfolio exposure exceeds net assets expressed as a percentage of net assets. 2025 2024 | Portfolio | | Portfolio | | Portfolio | | Portfolio | | | --- | --- | --- | --- | --- | --- | --- | --- | | exposure | | exposure | | exposure | | exposure | | | | £’000 | | % 1 | | £’000 | | % 1 | Investments 327,209 95.0 353,898 100.9 Portfolio exposure on CFDs 63,408 18.4 48,694 13.9 Total portfolio exposure 390,617 113.4 402,592 114.8 Net assets 344,577 350,888 Total portfolio exposure 13.4 14.8 1 Portfolio exposure to the market expressed as a percentage of net assets. The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes: • the planned level of gearing, which takes into account the Manager’s views on the market; • the need to buy back shares to be held in treasury, which takes into account the share price discount; • the opportunities for issues of new shares; and • the level of dividend distribution in excess of that which is required to be distributed. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 77 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 6: Other Information (Unaudited) ### Nagoya, capital of ### Aichi Prefecture. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 78 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 10 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 6: Other Information (Unaudited) ## Section 6: Other Information (Unaudited) Annual General Meeting – Recommendations 80 Notice of Annual General Meeting 81 Explanatory Notes to the Notice of Meeting 83 Alternative Performance Measures and Glossary 85 Information about the Company 87 Risk Disclosures 89 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 79 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 6: Other Information (Unaudited) # Annual General Meeting – Recommendations The Annual General Meeting ("AGM") of the Company will be held on Monday, 1 December 2025 at 1.00pm. The formal Notice of Meeting is set out on page 81. The following information is important and requires your immediate attention. If you are in any doubt about the action you should take, you should consult an independent financial adviser, authorised under the Financial Services and Markets Act 2000. If you have sold or transferred all of your ordinary shares in the Company, please forward this document with its accompanying form of proxy at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. ## Ordinary business Resolutions 1 to 10 are all ordinary resolutions. Resolution 1 is a required resolution. Resolution 2 concerns the Remuneration Report set out on pages 48 to 51. Resolutions 3 to 7 invite shareholders to re-elect each of the Directors for another year, following the recommendations of the Nomination Committee, set out on pages 46 and 47 (their biographies are set out on pages 36 and 37). Resolutions 8 and 9 concern the re-appointment and remuneration of the Company's auditors, discussed in the Audit and Risk Committee Report on pages 42 to 44. ## Special business ### Resolution 10: Directors' authority to allot shares (ordinary resolution) and Resolution 11: power to disapply pre-emption rights (special resolution) The Directors are seeking authority to allot a limited number of unissued ordinary shares for cash without first offering them to existing shareholders in accordance with statutory pre-emption procedures. Appropriate resolutions will be proposed at the forthcoming AGM and are set out in full in the Notice of AGM. An ordinary resolution will be proposed to authorise the Directors to allot shares up to a maximum aggregate nominal amount of £574,633 (being 5% of the issued share capital as at 7 October 2025, excluding any shares held in treasury). A special resolution will also be proposed to give the Directors authority to allot securities for cash on a non pre-emptive basis up to a maximum aggregate nominal amount of £574,633 (being 5% of the Company's issued share capital as at 7 October 2025). The Directors do not intend to allot shares pursuant to these authorities other than to take advantage of opportunities in the market as they arise and only if they believe it to be advantageous to the Company's existing shareholders to do so and when it would not result in any dilution of NAV per share. If approved, both of these authorities will expire at the conclusion of the AGM in 2026 unless renewed, varied or revoked earlier. ### Resolution 12: Authority to make market purchases of the Company's own shares (special resolution) At the AGM held on 10 December 2024, the Company was granted authority to make market purchases of up to 17,491,548 ordinary shares of 10p each for cancellation or to be held in treasury. As at 7 October 2025 1,046,860 shares have been bought back under this authority granted on 10 December 2024 and the Company therefore has remaining authority to purchase up to 16,444,688 ordinary shares. This authority will expire at the forthcoming AGM. The Directors believe it is in the best interests of the Company and its shareholders to have a general authority for the Company to buy-back its ordinary shares in the market as they keep under review the share price discount to NAV and the purchase of ordinary shares. A special resolution will be proposed at the forthcoming AGM to give the Company authority to make market purchases of up to 14.99% of the ordinary shares in issue as at the date of the Notice of the AGM. The Directors will exercise this authority only if the Directors consider that any purchase would be for the benefit of the Company and its shareholders, taking into account relevant factors and circumstances at the time. Any shares so purchased would be cancelled or held in treasury for potential reissue. If renewed, the authority to be given at the 2025 AGM will lapse at the conclusion of the AGM in 2026 unless renewed, varied or revoked earlier. ### Resolution 13: Notice period for general meetings (special resolution) Resolution 13 set out in the Notice of AGM is a special resolution and will, if passed, allow the Company to hold general meetings (other than AGMs) on a minimum notice period of 14 clear days, rather than 21 clear days as required by the Companies Act 2006. The approval will be effective until the Company's next AGM to be held in 2026. The Directors will only call general meetings on 14 clear days' notice when they consider it to be in the best interests of the Company's shareholders and will only do so if the Company offers facilities for all shareholders to vote by electronic means and when the matter needs to be dealt with expediently. ## Recommendations The Board considers that the resolutions relating to the above items of special business are in the best interests of shareholders as a whole. Accordingly, the Board unanimously recommends to shareholders that they vote in favour of the above resolutions and the other resolutions to be proposed at the forthcoming AGM, as they intend to do in respect of their own beneficial holdings. 80 Schroder Japan Trust plc Annual Report and Financial Statements 2025 Section 6: Other Information (Unaudited) # Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Schroder Japan Trust plc will be held on Monday, 1 December 2025 at 1.00pm at 1 London Wall Place, London EC2Y 5AU to consider the following resolutions of which resolutions 1 to 10 will be proposed as ordinary resolutions and resolutions 11 to 13 will be proposed as special resolutions: ## Ordinary Business 1. To receive the Report of the Directors and the audited Accounts for the year ended 31 July 2025. 2. To approve the Directors' Remuneration Report for the year ended 31 July 2025. 3. To approve the re-election of Philip Kay as a Director of the Company. 4. To approve the re-election of Helena Coles as a Director of the Company. 5. To approve the re-election of Angus Macpherson as a Director of the Company. 6. To approve the re-election of Merryn Somerset Webb as a Director of the Company. 7. To approve the re-election of Samantha Wren as a Director of the Company. 8. To re-appoint Deloitte LLP as auditors to the Company. 9. To authorise the Directors to determine the remuneration of Deloitte LLP as auditors to the Company. ## Special Business 10. To consider, and if thought fit, pass the following resolution as an ordinary resolution: "THAT in substitution for all existing authorities the Directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the 'Act') to exercise all the powers of the Company to allot relevant securities (within the meaning of section 551 of the Act) up to an aggregate nominal amount of £574,633 (being 5% of the issued ordinary share capital, excluding shares held in treasury, as at 7 October 2025) for a period expiring (unless previously renewed, varied or revoked by the Company in a general meeting) at the conclusion of the next Annual General Meeting of the Company, but that the Company may make an offer or agreement which would or might require relevant securities to be allotted after expiry of this authority and the Board may allot relevant securities in pursuance of that offer or agreement." 11. To consider and, if thought fit, to pass the following resolution as a special resolution: "THAT, subject to the passing of Resolution 10 set out above, the Directors be and are hereby empowered, pursuant to Section 571 of the Act, to allot equity securities (including any shares held in treasury) (as defined in section 560(1) of the Act) pursuant to the authority given in accordance with section 551 of the Act by the said Resolution 10 and/or where such allotment constitutes an allotment of equity securities by virtue of section 560(2) of the Act as if Section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities up to an aggregate nominal amount of £574,633 (representing 5% of the aggregate nominal amount of the share capital in issue as at 7 October 2025); and provided that this power shall expire at the conclusion of the next Annual General Meeting of the Company but so that this power shall enable the Company to make offers or agreements before such expiry which would or might require equity securities to be allotted after such expiry." 12. To consider and, if thought fit, to pass the following resolution as a special resolution: "THAT the Company be and is hereby generally and unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the 'Act') to make market purchases (within the meaning of Section 693 of the Act) of ordinary shares of 10p each in the capital of the Company ('Share') at whatever discount the prevailing market price represents to the prevailing net asset value per Share provided that: (a) the maximum number of Shares which may be purchased is 17,227,511, representing 14.99% of the Company's issued ordinary share capital as at 7 October 2025 (excluding treasury shares); (b) the maximum price (exclusive of expenses) which may be paid for a Share shall not exceed the higher of; i) 105% of the average of the middle market quotations for the Shares as taken from the London Stock Exchange Daily Official List for the five business days preceding the date of purchase; and ii) the higher of the last independent bid and the highest current independent bid on the London Stock Exchange; (c) the minimum price (exclusive of expenses) which may be paid for a Share shall be 10p, being the nominal value per Share; (d) this authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company in 2026 (unless previously renewed, varied or revoked by the Company prior to such date); (e) the Company may make a contract to purchase Shares under the authority hereby conferred which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract; and (f) any Shares so purchased will be cancelled or held in treasury." Schroder Japan Trust plc Annual Report and Financial Statements 2025 81 ### Section 6: Other Information (Unaudited) 13. To consider and, if thought fit, to pass the following resolution as a special resolution: “THAT a general meeting, other than an Annual General Meeting, may be called on no less than 14 clear days’ notice.” By order of the Board For and on behalf of Schroder Investment Management Limited Company Secretary 7 October 2025 Registered Office: 1 London Wall Place, London EC2Y 5AU Registered Number: 02930057 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 82 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 6: Other Information (Unaudited) ## Explanatory Notes to the Notice of Meeting 1. Ordinary shareholders are entitled to attend and vote at the If an ordinary shareholder submits more than one valid proxy meeting and to appoint one or more proxies, who need not appointment, the appointment received last before the latest be a shareholder, as their proxy to exercise all or any of their time for receipt of proxies will take precedence. rights to attend, speak and vote on their behalf at the meeting. Shareholders may not use any electronic address provided A proxy form is attached. If you wish to appoint a person other either in this Notice of Annual General Meeting or any related than the Chairman as your proxy, please insert the name of documents to communicate with the Company for any your chosen proxy holder in the space provided at the top of purposes other than expressly stated. the form. If the proxy is being appointed in relation to less Representatives of shareholders that are corporations will than your full voting entitlement, please enter in the box next have to produce evidence of their proper appointment when to the proxy holder’s name the number of shares in relation attending the Annual General Meeting. to which they are authorised to act as your proxy. If left blank your proxy will be deemed to be authorised in respect of your 2. Any person to whom this notice is sent who is a person full voting entitlement (or if this proxy form has been issued nominated under section 146 of the Companies Act 2006 to in respect of a designated account for a shareholder, the full enjoy information rights (a “Nominated Person”) may, under voting entitlement for that designated account). Additional an agreement between him or her and the shareholder by proxy forms can be obtained by contacting the Company’s whom he or she was nominated, have a right to be appointed Registrars, Equiniti Limited, on +44(0) 121 415 0207, or you (or to have someone else appointed) as a proxy for the may photocopy the attached proxy form. Please indicate Annual General Meeting. If a Nominated Person has no such in the box next to the proxy holder’s name the number of proxy appointment right or does not wish to exercise it, he shares in relation to which they are authorised to act as your or she may, under any such agreement, have a right to give proxy. Please also indicate by ticking the box provided if the instructions to the shareholder as to the exercise of voting proxy instruction is one of multiple instructions being given. rights. Completion and return of a form of proxy will not preclude The statement of the rights of ordinary shareholders in a member from attending the Annual General Meeting and relation to the appointment of proxies in note 1 above does voting in person. not apply to Nominated Persons. The rights described in that On a vote by show of hands, every ordinary shareholder who note can only be exercised by ordinary shareholders of the is present in person has one vote and every duly appointed Company. proxy who is present has one vote. On a poll vote, every 3. Pursuant to Regulation 41 of the Uncertificated Securities ordinary shareholder who is present in person or by way of a Regulations 2001, the Company has specified that only those proxy has one vote for every share of which he/she is a holder. shareholders registered in the Register of Members of the However it should be noted that a “Vote Withheld” is not a Company business at 6.30 p.m. two days prior to the date of vote in law and will not be counted in the calculation of the an adjourned meeting, shall be entitled to attend and vote at proportion of the votes ‘For’ and ‘Against’ a resolution. the meeting in respect of the number of shares registered in A proxy form must be signed and dated by the shareholder their name at that time. Changes to the Register of Members or his or her attorney duly authorised in writing. In the case after 6.30 p.m. on 27 November 2025 shall be disregarded in of joint holdings, any one holder may sign this form. The determining the right of any person to attend and vote at the vote of the senior joint holder who tenders a vote, whether meeting. in person or by proxy, will be accepted to the exclusion of the 4. CREST members who wish to appoint a proxy or proxies votes of the other joint holder and for this purpose seniority through the CREST electronic proxy appointment service may will be determined by the order in which the names appear do so by using the procedures described in the CREST manual. on the Register of Members in respect of the joint holding. The CREST manual can be viewed at www.euroclear.com. To be valid, proxy form(s) must be completed and returned A CREST message appointing a proxy (a “CREST proxy to the Company’s Registrars, Equiniti Limited, Aspect House, instruction”) regardless of whether it constitutes the Spencer Road, Lancing, West Sussex BN99 6DA, in the appointment of a proxy or an amendment to the instruction enclosed envelope together with any power of attorney or previously given to a previously appointed proxy must, in other authority under which it is signed or a copy of such order to be valid, be transmitted so as to be received by the authority certified notarially, to arrive no later than 48 hours issuer’s agent (ID RA19) by the latest time for receipt of proxy before the time fixed for the meeting, or an adjourned appointments. meeting. Shareholders may also appoint a proxy to vote on the resolutions being put to the meeting online by going 5. If you are an institutional investor, you may be able to appoint to Equiniti’s Shareview website, http://www.shareview.co.uk, a proxy electronically via the Proxymity platform, a process and logging in to your Shareview Portfolio. Once you have which has been agreed by the Company and approved by logged in, simply click ‘View’ on the ‘My Investments’ page the Registrar. For further information regarding Proxymity, and then click on the link to vote and follow the on-screen please go to www.proxymity.io. Your proxy must be lodged instructions. If you have not yet registered for a Shareview by 1.00p.m. on Thursday, 27 November 2025 in order to be Portfolio, go to http://www.shareview.co.uk and enter the considered valid. requested information. It is important that you register for Before you can appoint a proxy via this process you will a Shareview Portfolio with enough time to complete the need to have agreed to Proxymity’s associated terms and registration and authentication processes. Please note that to conditions. It is important that you read these carefully as you be valid, your proxy instructions must be received by Equiniti will be bound by them, and they will govern the electronic no later than 1.00pm on Thursday 27 November 2025. If you appointment of your proxy. have any difficulties with online voting, you should contact the shareholder helpline on +44(0) 121 415 0207. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 83 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ## Section 6: Other Information (Unaudited) 6. Copies of the terms of appointment of the non-executive Directors and a statement of all transactions of each Director and of his family interests in the shares of the Company, will be available for inspection by any member of the Company at the registered office of the Company during normal business hours on any weekday (English public holidays excepted) and at the Annual General Meeting by any attendee, for at least 15 minutes prior to, and during, the Annual General Meeting. None of the Directors has a contract of service with the Company. 7. The biographies of the Directors offering themselves for re-election are set out on pages 36 and 37 of the Company's annual report and financial statements for the year ended 31 July 2025. 8. As at 7 October 2025, 118,453,286 ordinary shares of 10 pence each were in issue (3,526,595 shares were held in treasury). Therefore the total number of voting rights of the Company as at 7 October 2025 was 114,926,691. 9. A copy of this notice of meeting, which includes details of shareholder voting rights, together with any other information as required under Section 311A of the Companies Act 2006, is available from the Company's webpages, https://www.schroders.com/japantrust. 10. Pursuant to Section 319A of the Companies Act 2006, the Company must cause to be answered at the Annual General Meeting any question relating to the business being dealt with at the Annual General Meeting which is put by a member attending the meeting, except in certain circumstances, including if it is undesirable in the interests of the Company or the good order of the meeting that the question be answered or if to do so would involve the disclosure of confidential information. 11. The Company's privacy policy is available on its webpages. https://www.schroders.com/japantrust. Shareholders can contact Equiniti for details of how Equiniti processes their personal information as part of the AGM. 84 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 6: Other Information (Unaudited) ## Definitions of Terms and Alternative Performance Measures ### The terms and performance measures below are those commonly used by investment ### companies to assess values, investment performance and operating costs. Numerical ### calculations are given where relevant. Some of the financial measures below are classified ### as APMs as defined by the European Securities and Markets Authority. Under this definition, ### APMs include a financial measure of historical financial performance or financial position, other ### than a financial measure defined or specified in the applicable financial reporting framework. ### APMs have been marked with an asterisk (*). ### Net asset value (“NAV”) per share The NAV per share of 298.35p (31 July 2024: 298.88p) represents the net assets attributable to equity shareholders of £344,577,000 (31 July 2024: £350,888,000) divided by the number of shares in issue of 115,495,504 (31 July 2024: 117,400,528). The change in the NAV amounted to -0.2% (year ended 31 July 2024: +18.5%) over the year. However, this performance measure excludes the positive impact of dividends paid out by the Company during the year. When these dividends are factored into the calculation, the resulting performance measure is termed the “total return”. Total return calculations and definitions are given below. ### Total return* The combined effect of any dividends paid, together with the rise or fall in the share price or NAV per share. Total return statistics enable the investor to make performance comparisons between investment companies with different dividend policies. Any dividends received by a shareholder are assumed to have been reinvested in either the assets of the Company at its NAV per share at the time the shares were quoted ex-dividend (to calculate the NAV per share total return) or in additional shares of the Company (to calculate the share price total return). | The NAV total return for the period ended 31 July 2025 is | | | | The share price total return for the period ended 31 July 2025 is | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | calculated as follows: | | | | calculated as follows: | | | | | Opening NAV at 31/7/24 298.88p | | | | Opening Share price at 31/7/24 266.00p | | | | | Closing NAV at 31/7/25 298.35p | | | | Closing Share price at 31/7/25 260.00p | | | | | | NAV on | Cumulative | | | Share price | Cumulative | | | Dividend received XD date | XD date Factor | | Factor | Dividend received XD date | on XD date Factor | | Factor | | 10.81p 7/11/24 282.32p 1.038 1.038 | | | | 10.81p 7/11/24 244.00p 1.044 1.044 | | | | | 2.82p 2/1/25 296.50p 1.010 1.048 | | | | 2.82p 2/1/25 261.00p 1.011 1.056 | | | | | 2.89p 27/3/25 284.40p 1.010 1.059 | | | | 2.89p 27/3/25 246.00p 1.012 1.068 | | | | | 2.87p 3/7/25 280.70p 1.010 1.070 | | | | 2.87p 3/7/25 258.00p 1.011 1.080 | | | | | NAV Total return, being the closing NAV, multiplied by the | | | | Share price total return, being the closing share price, | | | | | cumulative factor, expressed as a percentage change in the | | | | multiplied by the cumulative factor, expressed as a | | | | | opening NAV: 6.8% | | | | percentage change in the opening share price: 5.6% | | | | | The NAV total return for the year ended 31 July 2024 is calculated | | | | The share price total return for the period ended 31 July 2024 is | | | | | as follows: | | | | calculated as follows: | | | | | Opening NAV at 31/7/23 252.25p | | | | Opening Share price at 31/7/23 234.00p | | | | | Closing NAV at 31/7/24 298.88p | | | | Opening Share price at 31/7/24 266.00p | | | | | | NAV on | Cumulative | | | Share price | Cumulative | | | Dividend received XD date | XD date Factor | | Factor | Dividend received XD date | on XD date Factor | | Factor | | 5.40p 2/11/23 250.95p 1.022 1.022 | | | | 5.40p 2/11/23 230.00p 1.022 1.022 | | | | | NAV Total return, being the closing NAV, multiplied by the | | | | Share price total return, being the closing share price, | | | | | cumulative factor, expressed as a percentage change in the | | | | multiplied by the cumulative factor, expressed as a | | | | | opening NAV: 21.0% | | | | percentage change in the opening share price: 16.1% | | | | Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 85 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Section 6: Other Information (Unaudited) ## Benchmark The measure against which the Company compares its performance. The Benchmark is now named Tokyo Stock Price Index Total Return since April 4, 2022, previously known as TSE First Section Total Return Index. ## Discount/premium\* The amount by which the share price of an investment trust is lower (discount) or higher (premium) than the NAV per share. If shares are trading at a discount, investors would be paying less than the value attributable to the shares by reference to the underlying assets. A premium or discount is generally the consequence of supply and demand for the shares on the stock market. The discount or premium is expressed as a percentage of the NAV per share. The discount at the year end amounted to 12.9% (31 July 2024: 11.0%), as the closing share price at 260.00p (31 July 2024: 266.00p) was 12.9% (31 July 2024: 11.0%) lower than the closing NAV of 298.35p (31 July 2024: 298.88p). ## Gearing\* Gearing is the total portfolio exposure which is defined as the amount by which portfolio exposure exceeds the net asset values expressed as percentages of net asset value. The total portfolio exposure will not exceed 125% of the net asset value. If assets rise in value, gearing magnifies the return to ordinary shareholders. Correspondingly, if assets fall in value, gearing magnifies that fall. Contracts for Difference are used as a way of gaining exposure to the price movements of shares without buying the underlying shares directly. | | 2025 Portfolio exposure | | 2024 Portfolio exposure | | | --- | --- | --- | --- | --- | | | £'000 | % | £'000 | % | | Investments at fair value | 327,209 | 95.0 | 353,898 | 100.9 | | CFD notional market value^{1} | 63,408 | 18.4 | 48,694 | 13.9 | | Total portfolio exposure | 390,617 | 113.4 | 402,592 | 114.8 | | Net assets | 344,577 | | 350,888 | | | Total portfolio exposure | | 13.4 | | 14.8 | $^{1}$ The notional market value of a CFD represents the total value of the underlying asset of the CFD contract. ## Leverage\* For the purpose of the Alternative Investment Fund Managers (AIFM) Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as the ratio of the Company's exposure to its net asset value and is required to be calculated both on a "Gross" and a "Commitment" method. Under the Gross method, exposure represents the sum of the absolute values of all positions, so as to give an indication of overall exposure. Under the Commitment method, exposure is calculated in a similar way, but after netting off hedges which satisfy certain strict criteria. The Company's leverage policy and details of its leverage ratio calculation and exposure limits as required by the AIFM Directive are published on the Company's webpages and within this report. The Company is also required to publish periodically its actual leverage exposures. As at 31 July 2025 these were: | Leverage exposure | Maximum | Actual | | --- | --- | --- | | Gross method | 200.0% | 113.4% | | Commitment method | 200.0% | 113.4% | ## Ongoing charges\* Ongoing Charges is calculated in accordance with the AIC's recommended methodology and represents the management fee and all other operating expenses excluding finance costs and transaction costs, amounting to £3,017,000 (31 July 2024: £3,064,000), expressed as a percentage of the average daily net asset values during the year of £329.1 million (31 July 2024: £320.9 million). \* Alternative performance Measures ("APMs"). 86 Schroder Japan Trust plc Annual Report and Financial Statements 2025 ### Section 6: Other Information (Unaudited) ## Information about the Company ### Web pages and share price information Alternative Investment Fund Managers ### The Company has dedicated webpages, which may be found at Directive (AIFMD) disclosures https://www.schroders.com/japantrust. The webpages have been Certain pre-sale, regular and periodic disclosures required by the designed to be utilised as the Company’s primary method of AIFM Directive may be found either in this annual report or on the electronic communication with shareholders. It contains details of Company’s webpages. the Company’s ordinary share price and copies of annual reports and other documents published by the Company as well as The Company’s leverage policy and details of limits on leverage information on the Directors, terms of reference of Committees required under the AIFM Directive are published on the and other governance arrangements. In addition, the webpages Company’s webpages. contain links to announcements made by the Company to the market, Equiniti’s shareview service and Schroders’ website. There ### is also a section entitled “How to Invest”. Illiquid assets The Company releases its NAV on both a cum and ex-income As at the date of this report, none of the Company’s assets are basis to the market on a daily basis. subject to special arrangements arising from their illiquid nature. Share price information may also be found in the Financial Times ### and on the Company’s webpages. Remuneration disclosures Quantitative remuneration disclosures to be made in this annual report in accordance with FCA Handbook ### The Association of Investment Companies rule FUND3.3.5 may also be found in the AIFM’s website The Company is a member of the Association of Investment www.schroders.com/rem-disclosures, which will have the Companies. Further information on the Association can be found information for the reporting period 31 July 2025. on its website, www.theaic.co.uk. ### Publication of Key Information Document ### Individual Savings Account (ISA) status (KID) by the AIFM The Company’s shares are eligible for stocks and shares ISAs. Pursuant to the Packaged Retail and Insurance Based Products (“PRIIPs”) Regulation, the Manager, as the Company’s AIFM, is required to publish a short KID on the Company. KIDs are ### Non-Mainstream Pooled Investments status designed to provide certain prescribed information to retail The Company currently conducts its affairs so that its shares investors, including details of potential returns under different can be recommended by IFAs to ordinary retail investors in performance scenarios and a risk/reward indicator. The accordance with the FCA’s rules in relation to non-mainstream Company’s KID is available on its webpages. investment products and intends to continue to do so for the foreseeable future. The Company’s shares are excluded from ### Dividends the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust. Paying dividends into a bank or building society account helps reduce the risk of fraud and will provide you with quicker access to your funds than payment by cheque. ### Financial calendar Applications for an electronic mandate can be made by contacting the registrar, Equiniti. Half year results announced March This is the most secure and efficient method of payment and Financial year end 31 July ensures that you receive any dividends promptly. Annual results announced September/October If you do not have a UK bank or building society account, please contact Equiniti for details of their overseas payment service. Annual General Meeting December Further information can be found at www.shareview.co.uk, including how to register with shareview Portfolio and manage your shareholding online. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 87 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 6: Other Information (Unaudited) Independent auditor ### Directors Deloitte LLP Philip Kay (Chairman) 2 New Street Square Helena Coles London EC4A 3BZ Angus Macpherson Merryn Somerset Webb Registrar Samantha Wren Equiniti Limited Aspect House Spencer Road ### Registered Office Lancing 1 London Wall Place West Sussex BN99 6DA London EC2Y 5AU Tel: 020 7658 6000 Shareholder Helpline: 0121-415-0207* Website: www.shareview.co.uk *Calls to this number are free of charge from UK landlines. ### Advisers and service providers Communications with shareholders are mailed to the address Alternative Investment Fund Manager (the “Manager” or held on the register. Any notifications and enquiries relating | “AIFM”) | to shareholdings, including a change of address or other | | --- | --- | | Schroder Unit Trusts Limited | amendment should be directed to Equiniti Limited at the address | | 1 London Wall Place | above. | London EC2Y 5AU ### Investment Manager and Company Secretary Other information Schroder Investment Management Limited Shareholder enquiries 1 London Wall Place London EC2Y 5AU General enquiries about the Company should be addressed to Telephone: 020 7658 6189 the Company Secretary at the address set out above. amcompanysecretary@schroders.com Company number Depositary and custodian 02930057 1 J.P. Morgan Europe Limited Dealing Codes 25 Bank Street London E14 5JP ISIN Number: GB0008022849 SEDOL Number: 0871079 Lending bank Ticker: SJG SMBC Bank International plc Global Intermediary Identification Number (GIIN) 99 Queen Victoria Street London EC4V 4EH 7T0909.99999.SL.826 1 Legal Entity Identifier (LEI) Corporate broker J.P. Morgan Cazenove 549300SSPK3AXNJOC673 25 Bank Street Privacy notice Canary Wharf London E14 5JP The Company’s privacy notice is available on its web pages. 1 With effect from 5 September 2025, J.P. Morgan were appointed to provide depositary and custodian services to the Company. ### Warning to shareholders Companies are aware that their shareholders have received unsolicited telephone calls or correspondence concerning investment matters. These are typically from overseas-based ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless or high risk shares or investments. These operations are commonly known as ‘boiler rooms’. These ‘brokers’ can be very persistent and extremely persuasive. Shareholders are advised to be wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. If you receive any unsolicited investment advice: • Make sure you get the correct name of the person and organisation • Check that they are properly authorised by the FCA before getting involved by visiting https://register.fca.org.uk • Report the matter to the FCA by calling 0800 111 6768 or visiting fca.org.uk/consumers/report-scam-unauthorised-firm • Do not deal with any firm that you are unsure about. If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme. The FCA provides a list of unauthorised firms of which it is aware, which can be accessed at fca.org.uk/consumers/ unauthorisedfirmsindividualslist. More detailed information on this or similar activity can be found on the FCA website at fca.org.uk/consumers/ protect-yourself-scams. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 88 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 6: Other Information (Unaudited) ## Risk Disclosures Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the Company, both up or down. Counterparty risk The Company may have contractual agreements with counterparties. If a counterparty is unable to fulfil their obligations, the sum that they owe to the Company may be lost in part or in whole. Currency risk If the Company’s investments are denominated in currencies different to the currency of the Company’s shares, the Company may lose value as a result of movements in foreign exchange rates, otherwise known as currency rates. Derivatives risk Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to manage the portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the Company. Emerging markets & Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty frontier risk operational and liquidity risk than developed markets. Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will increase returns if the value of the investments purchased increase by more than the cost of borrowing, or reduce returns if they fail to do so. In falling markets, the whole of the value in such investments could be lost, which would result in losses to the Company. Liquidity risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net asset value of the Company. In difficult market conditions, investors may not be able to find a buyer for their shares or may not get back the amount that they originally invested. Certain investments of the Company, in particular the unquoted investments, may be less liquid and more difficult to value. In difficult market conditions, the Company may not be able to sell an investment for full value or at all and this could affect performance of the Company. Market risk The value of investments can go up and down and an investor may not get back the amount initially invested. Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the Company. Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macro economic environment, investment objectives may become more difficult to achieve. Share price risk The price of shares in the Company is determined by market supply and demand, and this may be different to the net asset value of the Company. This means the price may be volatile, meaning the price may go up and down to a greater extent in response to changes in demand. Smaller companies risk Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder to buy and sell, and they may also fluctuate in value to a greater extent. Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 89 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 ### Section 6: Other Information (Unaudited) Schroder Japan Trust plc Annual Report and Financial Statements 2025 ## 90 Job No: 101776 Proof Event: 22 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Job No: 101776 Proof Event: 20 Black Line Level: 1 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600 Schroder Japan Trust plc | Annual Report and Financial Statements 2025 ### Schroder Investment Management Limited ### 1 London Wall Place, London EC2Y 5AU, United Kingdom ### T +44 (0) 20 7658 6000 ## schroders.com ## @schroders Important information: This document is intended to be for information purposes investment and/or strategic decisions. Past performance is not a reliable indicator of only and it is not intended as promotional material in any respect. The material future results, prices of shares and the income from them may fall as well as rise and is not intended as an offer or solicitation for the purchase or sale of any financial investors may not get back the amount originally invested. Schroders has expressed instrument. The material is not intended to provide, and should not be relied on for, its own views in this document and these may change. Issued by Schroder Investment accounting, legal or tax advice, or investment recommendations. Information herein Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised and is believed to be reliable but Schroders does not warrant its completeness or accuracy. regulated by the Financial Conduct Authority. For your security, communications may No responsibility can be accepted for errors of fact or opinion. Reliance should not be taped or monitored. be placed on the views and information in the document when taking individual Job No: 101776 Proof Event: 20 Black Line Level: 1 Park Communications Ltd Alpine Way London E6 6LA Customer: Schroders Project Title: Japan Trust Annual Report T: 0207 055 6500 F: 020 7055 6600