Annual Financial Report

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN INDIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2024

Legal Entity Identifier: 549300OHW8R1C2WBYK02

Information disclosed in accordance with the DTR 4.1.3

CHAIRMAN'S STATEMENT

Performance

During the 12 month period ended 30th September 2024, the MSCI India Index increased by an impressive +27.7%, outperforming both the MSCI Emerging Markets Index and the MSCI China Index.

Against this positive backdrop, the Company produced a total return on net assets of +18.1% in the year, underperforming its benchmark by -9.6%. Nearly all of this underperformance occurred in the first half of the financial year, and is mainly attributable to the Portfolio Managers' bias towards higher quality corporate names, at a time when lower quality sectors of the market did well. The performance of several portfolio holdings also disappointed over the year. In addition, some areas of the market are now experiencing what the Portfolio Managers believe are unjustifiably high valuations which have precluded them from participating to any meaningful extent, given their focus on quality. Moreover, it must also be noted that of the shortfall compared to the benchmark, 4.4% is attributable to capital gains tax not being included in the benchmark.

In their report on pages 13 to 18 in the Annual Report, the Portfolio Managers provide a detailed and frank commentary on the year's performance. They also discuss portfolio activity and their outlook for the Indian market over the coming year and beyond.

While this relative underperformance is disappointing, the Company's return over the past year at +18.1% is high in absolute terms. Given the Portfolio Managers' long term investment focus, it is sensible to judge their performance over a longer time frame. On this basis, the portfolio has realised an average, annualised return of +9.5% over the ten years ended 30th September 2024. However, this is still behind the benchmark's annualised return of +12.1% over the same period.

Board Review of Investment Manager's Investment Process and Performance

Against this backdrop, the Board has undertaken a detailed review of the Investment Manager's investment process and the drivers of the Company's underperformance, particularly in the most recent period. The Investment Manager's process is designed to identify and invest in superior businesses with growth potential which will likely deliver strong absolute returns and outperform over time. This review confirmed that up to the middle of 2023, premium and quality businesses as defined and favoured by the Investment Manager, had outperformed the broader Indian investment universe, whilst, more recently, cyclical and challenged businesses (again as defined and least favoured by the Investment Manager) outperformed. In summary, since the middle of 2023 companies with riskier characteristics and cheaper initial valuations have materially outperformed higher quality companies with strong governance. In order to improve their opportunities for relative outperformance, the Investment Manager has allocated further resource to their Indian equity strategy, by hiring additional analysts on the ground in India to deepen their local knowledge and to promote idea generation via greater market coverage, particularly in the mid and smaller company area. Recognising that many factors remain outside the control of the Investment Manager, the Board is minded to allow time for these measures to result in a noticeable improvement in long term relative performance, while continuing to keep performance under close scrutiny.

Revised Management Fee Arrangements

As recently announced, with effect from 1st October 2024, the annual investment management fee, calculated as 0.75% on the first £300 million and 0.60% in excess of £300 million, will be charged on a market capitalisation basis instead of on a gross assets basis, as previously.

The Board believes that this change of fee basis will not only be immediately accretive to the Company in monetary terms but will also more closely align the interests of the Manager with those of the shareholders.

Discount and Share Repurchases

At the AGM held in February 2024, shareholders gave approval for the Company to renew the Directors' authority to repurchase up to 14.99% of the Company's shares for cancellation or transfer into Treasury.

The discount at which the Company's shares trade versus its NAV narrowed slightly to 17.8% over the review period (2023: 19.3%). The Board is cognisant that it is in shareholders' interests that the Company's share price should not differ excessively from the underlying NAV under normal market conditions, and as such, it constantly considers the merits of buying back shares, in line with the Company's share buyback policy, to manage the absolute level and volatility of the discount. Given the Board's conviction that the level of the current discount to NAV is unwarranted, during the year, 4,408,623 shares were repurchased, amounting to 4.4% of the shares in issue, and held in Treasury. Since the financial year end, the Company has purchased a further 1,355,248 shares. As shares are only repurchased at a discount to the prevailing net asset value, share buybacks benefit shareholders, as they increase the net asset value per share of remaining shares.

The Board believes that the share buyback facility is an important tool in the management of discount volatility and is, therefore, seeking approval from shareholders to renew the authority to repurchase the Company's shares at the forthcoming AGM in February 2025.

Continuation Vote and Conditional Tender Offer

As stipulated by the Company's Articles of Association, at the AGM held on 13th February 2024, the resolution to continue the Company as an investment trust for a further five years was put to shareholders and duly passed with 96.2% of votes cast in favour. The continuation vote will next be put to a shareholder vote at the Company's AGM to be held in 2029.

Shareholders are reminded that a tender offer will be made to shareholders for up to 25% of the Company's outstanding share capital (excluding shares held in Treasury) at NAV less costs if, over the five years from 1st October 2020, the Company's NAV total return in sterling on a cum income basis does not exceed the total return of the Benchmark index plus 0.5% per annum over the five-year period on a cumulative basis. If the tender offer is triggered, it will be subject to shareholder approval at the relevant time.

The Company is required to pay capital gains tax levied by the Indian government on long-term and short-term capital gains, which the Company's benchmark does not take into account. Until 23rd July 2024, these were on the headline rates of 10% and 15%, respectively, plus associated surcharges of approximately 1-1.5%. On the 23rd July 2024, the headline rates on long-term and short-term capital gains were increased to 12.5% and 20% respectively, plus associated surcharges. Such capital gains charges are not included in the performance of the Benchmark. Therefore, for the avoidance of doubt, to ensure that the terms of the conditional tender offer correctly reflect the Investment Manager's performance in calculating whether the tender offer has been triggered, the NAV per share will be adjusted to add back all such taxes paid or accrued. To enable the tax-adjusted performance to be compared to the Benchmark, the Company publishes the Company's unaudited tax-adjusted NAV per share on a monthly basis, through a Regulatory Information Service platform. The NAV performance since 1st October 2020 before the impact of capital gains tax, stood at +95.5% as at 30th September 2024, compared to +105.4% for the benchmark.

Board

I became Chairman of the Company following the conclusion of the AGM in February 2024, having joined the Board in 2020. I took over from Rosemary Morgan who retired following ten years on the Board, the last three of which she served as Chairman. I would like to take this opportunity on behalf of the Board to thank Rosemary once again for her wise counsel and leadership during her tenure. Vanessa Donegan assumed the role of Senior Independent Director and Chair of the Nomination Committee and Remuneration Committee following my appointment as Chairman.

During the year the Board commenced an external recruitment search for a new Non-executive Director. I am delighted to report that the process concluded with the appointment of Charlotta Ginman on 1st August 2024. Charlotta is a qualified Chartered Accountant and an experienced Non-executive Director. Her professional experience is summarised on page 43 of the Annual Report.

Jasper Judd, our Audit & Risk Committee Chairman, will retire at the conclusion of the 2025 AGM. The Board has benefitted immensely from Jasper's commitment and consistently thoughtful and constructive contributions. He will leave with our gratitude and best wishes for the future. It is intended that Charlotta Ginman will take on the Chairmanship of the Audit and Risk Committee from Jasper upon his retirement.

The Board supports the annual election/re-election for all Directors, as recommended by the AIC Corporate Governance Code, and therefore all the Directors, with the exception of Jasper Judd, will stand for election/re-election at the forthcoming AGM in 2025.

Audit Tender

PricewaterhouseCoopers LLP ('PwC') has been the Company's independent auditors since 2015. The Company's Audit & Risk Committee, taking account of the regulatory requirement to conduct an audit tender at least every ten years, undertook a tender process during the year for the audit of the financial year ending 30th September 2025. Several audit firms, including the incumbent, were invited to participate in the tender process. Following a detailed review of the tender submissions, the Audit & Risk Committee recommended to the Board the continued appointment of PwC, given the firm's breadth of experience within the investment trust sector and the resources and strength of their audit team. PwC are not permitted to continue as auditors beyond the year ending 30th September 2034, by which time a further audit tender must have taken place.

Stay Informed

The Company delivers email updates on the Company's progress with regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via www.tinyurl.com/JII-Sign-Up or by scanning the QR code in the Chairman's Statement of the Annual Report.

Annual General Meeting

The Company's thirty-first AGM will be held at 60 Victoria Embankment, London EC4Y 0JP on 11th February 2025 at 2.00 p.m. We are delighted to invite shareholders to join us in person for the Company's AGM, to hear directly from the Portfolio Managers. Their presentation will be followed by a question-and-answer session. 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 at www.jpmindian.co.uk, or by contacting the Company Secretary at [email protected].

My fellow Board members, representatives of JPMorgan and I look forward to the opportunity to meet and speak with shareholders after the formalities of the meeting have been concluded.

As is best practice, all voting on the resolutions will be conducted on a poll. Your Board encourages all shareholders to support the resolutions proposed. Please note that shareholders viewing the meeting via conferencing software will not be able to vote on the poll and we therefore encourage all shareholders, and particularly those who cannot attend physically, to exercise their votes in advance of the meeting by completing and submitting their proxy. 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 96 to 98 in the Annual Report.

If there are any changes to the above AGM arrangements, the Company will update shareholders through an announcement to the London Stock Exchange, and on the Company's website.

Outlook

The Board shares the Portfolio Managers' view that the investment case for India remains compelling, thanks to the country's strong and improving growth prospects, which are supported by a series of major structural reforms. India's economic outlook is even more impressive given that most major economies, with the exception of China, are forecast to deliver only modest growth over the next couple of years. In addition the attraction of investing in the Indian stock market lies in the ability of listed companies to convert the country's exciting growth prospects into strong earnings growth. This positive outlook should translate into great opportunities for equity investors with a longer-term perspective.

Having undertaken a review of the Investment Manager's process and performance and agreed revised Management Fee arrangements as detailed earlier, my fellow directors and I welcome the steps the Portfolio Managers have taken over the review period to gain broader, more balanced exposure to these opportunities, across a wider range of sectors. We also support their focus on good quality businesses with sustainably high returns on capital and superior growth prospects, and their disciplined approach to valuation, which means they are unwilling to overpay for otherwise attractive companies that fit their investment criteria.

We believe that the Portfolio Managers' focus on identifying interesting and appealing businesses, combined with their disciplined investment process are well positioned to provide patient shareholders with an enduring and reasonable return over the long term.

We thank you for your ongoing support.

Jeremy Whitley

Chairman                                                                                                                                     12th December 2024

INVESTMENT MANAGER'S REPORT

Market review

During the 12 months to end September 2024, the MSCI India Index produced a strong positive return of +27.7%, extending the +14.7% return it delivered in the first half. After several weeks of voting, India's general elections concluded on 1st June 2024. Despite heightened volatility driven by exit polls, markets made gains from the first week of June onwards on the belief that the government will continue with its growth and fiscal consolidation agenda despite not getting an absolute majority on its own. Perceived stability of the BJP-led NDA coalition government and limited changes to the line-up of key economic ministers buoyed investor confidence.

Small and mid-cap stocks (SMID) have continued to outperform the broader market. We remain concerned about elevated valuations here. Since the elections in June however, we have seen a rotation towards defensive/higher quality sectors due to concerns around a slowdown in growth. With single digit earnings growth for the quarter ending in September 2024, the market took a breather in October; however its strength until the end of September was driven by significant flows into domestic mutual funds. Inflows have risen despite an increase in tax rates on both short-term capital gains on equities (from 15% to 20%) and long-term gains (from 10% to 12.5%). With markets awash with liquidity, it is no surprise that deal activity remains strong, including the recent IPO of Hyundai India.

Despite strong domestic flows and the longer-term story remaining intact, we feel that Indian markets could take a cyclical breather in the near-term due to: (1) foreign investors withdrawing money from India to allocate to China (in response to the recent rally there); (2) quarterly results coming in below market expectations; (3) upcoming state elections where the BJP was not expected to do well; and (4) growing concerns around overvaluation, especially in the SMID space, now gaining greater traction. However, the long-term structural investment case for India remains on track and any correction might create opportunities for us to buy names where demanding valuations have precluded us from investing.

Against this backdrop, over the year your Company made a positive outright return of +18.1% on a net asset value basis, which also includes the adverse impact of capital gains tax (more on this below). The share price return over the period was +20.4%, reflecting some narrowing of the discount to NAV.

In this report we review the main drivers of recent performance, discuss portfolio positioning, and consider the long-term outlook for Indian equities.

Performance review

Given the strong market backdrop, we recognise that this is a disappointing period of performance relative to the benchmark.

At this point we believe it is important to highlight the impact of capital gains tax (CGT) in India; it is a pertinent issue for investors and a real cost which does not impact the benchmark.

The drivers of underperformance can be broken down into three areas: (a) the style rotation away from the 'quality' and 'growth' stocks we favour to 'value', due to a step change in interest rates as inflation rose dramatically post-Covid; (b) too much portfolio concentration in slower growing sectors like private banks, staples and IT, and holdings in some names facing company or sector specific issues; and (c) errors of omission which resulted in underweights to certain high quality names in rapid growth sectors such as fixed asset creation, consumer discretionary and disruptive business models.

If we consider the ten best performing stocks in the index over that period, six are businesses that we consider low intrinsic value creating businesses, where we also have governance question marks; two are businesses we owned, while two are businesses we believe we should have held but missed (errors of omission).

With regards to specific stock impact, we would highlight three names which have been disappointing on a relative basis:

•   HDFC Bank: The bank faced central bank induced liquidity challenges, which impacted the rate of deposit collection, following its merger with HDFC Limited (a wholesale funded institution).

•   WNS: The IT services company that provides business process outsourcing (BPO) to global clients was affected by negative sentiment towards the BPO sector, exacerbated by concerns over the impact of Generative AI and a one-off client loss.

•   Hindustan Unilever: The company experienced a slowdown in consumer spending and increased competition from smaller players, impacting its market position.

On the positive side, our large holding in the auto sector (Bajaj Auto and Mahindra Mahindra), produced very strong positive returns over the period driven by strong earnings growth and improved capital allocation. Our long-standing position in Multi Commodity Exchange (MCX) was also another stand out performer as it managed to go live with a new Commodity Derivative Platform. Our underweights in Bajaj Finance and Asian Paints also contributed positively. We have avoided both names given demanding valuations.

Performance Attribution

For the year ended 30th September 2024

¹     See note 8 and 14 in the Annual Report for the increase in the deferred tax liability for Indian capital gains tax which has had a negative impact on performance. The benchmark index does not take into account the effect of capital gains tax.

Source: Factset, JPMAM and MorningStar. All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark index.

A glossary of terms and alternative performance measures is provided on pages 99 to 101 in the Annual Report.

Select Portfolio changes

Before we delve into changes made to the portfolio, a reminder of our investment strategy - invest in great businesses with strong governance standards at attractive valuations. We think about our investments in that order, by first answering the question whether it's a good business and only then looking at valuation. With that in mind, below are select portfolio changes we made during the six-month period.

New initiations

•   Blue Star: Blue Star is a leading player in the commercial air conditioning (AC), commercial refrigeration, and room AC segments in India, boasting strong market shares. The company's DNA is deeply rooted in R&D, enabling continuous innovation and product differentiation.

•   CG Power: CG Power is a manufacturer of industrial products and power equipment. Its product offerings across industrial motors, power transformers and switchgears, is perfectly aligned with the investment priorities of the government around encouraging private sector capex in manufacturing and shoring up power deficit in the county.

•   PB Fintech: PB Fintech operates India's leading insurance platform, Policybazaar. It has firmly established its dominance and pricing power in the life and health segments, by offering better quality customers (better persistency and lower claims ratios) to insurance companies. The company's platform wields significant bargaining power thanks to its high-quality customer base and is further entrenching itself in the customer journey by offering more services such as claims processing.

•   Shriram Finance: Shriram Finance is a quality non-bank financial company (NBFC). It is India's leading second-hand commercial vehicle (CV) financier and this position, combined with the diversification of its loan book following a merger with Shriram City Union Finance, makes the business more resilient. Growth is being driven by decent pricing in secondhand CVs and +30% growth in loans to micro, small and medium sized enterprises.

•   Sundaram Finance: Sundaram Finance is one of the most conservative-run NBFCs in the country with an exemplary track-record on credit costs and governance standards. We especially admire the long-term thinking of the majority owners and management of this business. The company has an impressive track record of compounding growth at 15-17% per annum for more than 50 years, consistently generating an ROE of 16-18% with the lowest non-performing asset (NPA) ratio among its peers. It achieves this by targeting low-risk, high-ticket customers, empowering its salesforce, and expanding its branch network through an apprenticeship model.

•   Tech Mahindra: Tech Mahindra is a mid-sized India IT services company. We expect the new management team to turn this business around by significantly improving its cost cadence, through sub-contracting, offshoring and employee pyramid levers, and potentially also improving the growth profile and earnings quality of the business by stabilising market share losses in the telecom sector, mining existing clients more extensively and delivering faster growth in financial services which is the largest IT outsourcing sector globally.

•   Make My Trip: MakeMyTrip (MMyT) is the dominant online travel agency platform in India, offering both air-ticketing and hotel booking services. The company is well-placed to benefit from increased discretionary spending on travel and leisure. The investment case for MMyT is largely predicated on maintaining its dominant position in the hotel booking business, where barriers to entry are higher and online penetration is lower than in air-ticketing. The company benefits from having aggregated a large, fragmented supply of Indian hotels and from having the largest market share measured by both transactions and value. This ensures a virtuous cycle of consumers transacting on the platform and hotel owners extending their inventory and promotions to MMyT.

•   Tata Motors: Tata Motors is a leading automobile manufacturer with a portfolio that includes a wide range of personal vehicles, trucks and buses. It is the market leader in the commercial vehicle and personal electric vehicle segments in India. It also owns Jaguar Land Rover (JLR) since 2008, which has two niche luxury British car brands: Jaguar and Land/Range Rover. Tata's Indian truck and bus business is a great franchise. We expect the company to continue transitioning JLR to a more premium positioning and increase consumer pull in global markets, further strengthen its market position in commercial vehicles and gain market share in the Indian personal vehicle segment, through leadership in EVs, over the medium-to-long-term.

Complete sales

•   Maruti Suzuki: Maruti's share of the auto market in India has moderated from 52% in FY2019 to ~43% off currently. While the business generates relatively high ROCEs due to its assembly model, we believe it will keep losing market share to local players like Tata Motors and M&M, as well as to Korean car makers. This is due in part to a premiumisation trend in the country and move towards SUVs, both areas which Maruti does not have traditional strengths in. The company's high market share base, increasing competition, and its mass-market positioning, mean it will be tough for Maruti to outgrow, or to even keep pace with growth in the auto market. For these reasons, we have sold our position in Maruti and replaced it with Tata Motors, which offers a more unique investment opportunity.

•   Power Finance Corporation (PFC): Our initial investment in this government-owned energy infrastructure finance provider was based on high and sustained growth in the power sector, and the lack of alternatives due to valuation constraints in higher-quality product companies and in the power utility space. PFC screened well on economics and the duration of its business model. Being a state-owned entity, we always knew governance could be less than satisfactory, but we believed the government would not compromise minority shareholders, especially given the ongoing reforms to improve the financial health of the power sector. However, several data points since making the investment changed our opinion on governance which could compromise the lending standards and diversification of the business outside of the power sectors. Given these developments, we exited our position.

Can Indian markets continue to deliver?

Given the phenomenal run the Indian equity market has seen over the last decade, and more significantly, in the last couple of years, it is unsurprising to see commentary questioning the sustainability of the on-going rally, and the underlying factors that may support it going forward.

We think these are important questions, and we suspect many of our readers share this view. However, we remain confident that the long-term pillars that have allowed Indian companies to deliver superior operating performance and therefore attractive investment returns to equity investors remain firmly in place. Having said that, due to a variety of cyclical reasons (more on this later), there could be some challenges in the near-term. Any potential correction in the near-term we believe is an opportunity for longer-term investors to get/increase exposure to the structurally attractive Indian market.

Short-term cyclical challenges

The near-term challenges that India faces can be broken down into the 3 Es:

1)  Economic - We do not see a material risk to the Indian economy being able to grow around 6%+. It has been growing above trend post-Covid, and growth may slow towards trend, but that would still put India well ahead of any other large economy globally. However, some of the challenges the economy faces stem from a higher rate of inflation, which has kept the central bank from reducing interest rates. We maintain our long-held view that the central bank remains prudent and is in no hurry to start a rate-cutting cycle, especially as the Indian economy does not require stimulus. Inflation is not a new phenomenon, but it is something to keep an eye on, particularly if there are further knock-on effects from geopolitical events. In addition, there has been a notable slowdown in government capital expenditure (capex), which we believe is just a hangover from the general elections, but if this slowdown persists, it will represent a further challenge to near term growth.

2)  Elections - While this year's national elections are behind us, important state elections lie ahead, and these can spark some market volatility. The state elections, particularly in the state of Maharashtra, will be a signal of whether the current ruling party BJP has lost sheen amongst voters and whether it will shift towards populist measures to shore up support in the future.

3)  Earnings - As we write, the earning season has disappointed market expectations which were elevated. We raise this issue in this section on short-term challenges, as we believe that earnings disappointments are just that - short-term. Once the post-election lull abates, we expect to see a resumption of strong earnings growth, although we will continue to monitor the situation.

Connected to this is the topic of valuations on which we engage significantly with internal colleagues and external observers and commentators. As with any purchase, price has to be considered alongside the quality you get in return. Equity markets are the same. That said, we do think there are certain pockets of the market where market valuations have become disconnected from the fundamentals of the business. In these areas, we would certainly advise caution, particularly in the small and mid-cap areas of the market.

Longer term opportunity remains intact

From a top-down perspective, India's macroeconomic investment case remains strong. The country remains one of the world's fastest growing economies. Based on International Monetary Fund (IMF) data, the nation should clock an annual growth rate of 6.1% over the next five years, making it likely to be the world's third-largest economy by 2027 after the U.S. and China. It is expected to double its current annual GDP of $3.5 trillion, to $7 trillion, by 2030.

India's working age population continues to rise and workforce growth will persist unabated for the next couple of decades. While we note the inflation risk above, inflation has trended down significantly over the last decade, driven by government policies and a more hawkish central bank. The balance of payments is also much stronger than before, making the market much more resilient to external shocks. The current account remains under control with a deficit of 1.2% GDP. Indian real rates remain firmly in positive territory, giving the central bank plenty of scope to cut rates if needed.

The number of Indian stocks included in the MSCI Emerging Markets Index has more than doubled in the last ten years and the country's weighting in the MSCI Emerging Markets index is constantly increasing, as its investable market expands. It rose to 20.3% during the year, close to China's weighting of 24.3%.

Fixed Asset Creation

The growth uptick in India over the last three years has been led by a capex cycle, which has further scope to expand over the long-term. Investment spending is split about 35:40:25 between corporates, housing, and government respectively. The housing cycle is in the middle of a large growth phase with volumes expected to grow at a compound annual rate of 10% over the next 3-5 years. While government capex has tripled over the past five years and has thus likely peaked, the mantle is now being passed to the corporate sector. Strong corporate balance sheets and government support via direct investment incentives should start showing actual results in terms of corporate capex spending on the ground with a lag.

The decline in India's investment-to-GDP ratio from 34% in 2012 to 27% in 2021 was primarily driven by reduced household spending on real estate and lower corporate capex on machinery for utilities and manufacturing. The ratio is projected to rebound to 34% by FY2030, driven by house construction, power generation, and new investment areas like green hydrogen, defence, solar modules, robotics, data centres, and energy storage. This growth is expected to be supported by structural demand drivers and a cyclical recovery in real estate and power sectors. This capex cycle appears to be gaining momentum. There is clear buoyancy in capex 'intentions' across sectors such as power, airports, renewable energy and building materials. Given corporate balance sheets remain in good shape, a significant portion of incremental capex is being funded through internal accruals, with banks stepping in later in the project funding phase (post initial construction). This suggests that a more palpable rise in capex activity is likely to be visible in FY2026 and beyond. We are exposed to the capex cycle through names like Tata Steel, Ultratech, Tube Investments and productive asset lending NBFCs like Chola, Shriram Finance, and Sundaram.

India's Power Minister announced plans to invest ~$110 billion between FY24-32 in power transmission, more than doubling the current annual rate. This increase aims to address delays in grid connectivity for new renewable projects and prevent transmission problems from interrupting electricity supply. We prefer to get exposure to the power theme indirectly, through companies which supply goods and services to the sector and tend to have a bigger share of the profit pool and generate higher ROCEs than power companies, including names like CG Power and Triveni Turbine.

India's real estate up-cycle is in the middle of its growth phase and is likely to be sustained for at least a further 3-5 years. We have indirect exposure to real estate via building material names and appliance companies like Havells, Crompton, Blue Star, Cera and Supreme. Other holdings including Embassy REIT, Bajaj Housing Finance and Aavas Financiers are also indirect beneficiaries of the real estate cycle.

Domestic investor flows have further to run

Indian equity markets have enjoyed strong performance primarily as the domestic flows have surged to all-time highs. At more than ~US$7 billion per month, the domestic participation in equities (via both mutual fund investments and individual stock purchases) is high and already accounts for c.25% of financial savings. This could be an unsustainable pace near term, although longer term the financialisation of Indian savings and the still low level of equity investment make domestic flows a structural story.

We believe the financialisation of savings is a structural story because households in India hold just 5.8% of their total assets in equities, compared to 13.3% in bank deposits. Further, household savings are growing. Indian households save $650 billion annually, which is expected to reach $1.6 trillion by 2035. And investors' preferences are shifting away from more risk-averse holdings like fixed deposits, property, and gold, towards return-focused products like mutual funds. Systematic Investment Plans (SIPs) are now a significant driver of flows, accounting for ~80% of annual net flows from households to the mutual fund industry, with AUM through SIPs now at $150 billion. All these factors suggest that households are likely to continue increasing allocations to equities for many years to come. We own CAMS, a mutual fund transfer agency, and HDFC Asset Management Company, both of which benefit from the financialisation of savings theme.

This shift towards investments in higher yielding assets has wider ramifications. For example, it has resulted in a wealth effect, boosting discretionary consumption and luxury spending. We are seeing, for example, demand for leisure travel and premium SUV cars sustain, both of which are reflected in the portfolio through our holdings in MakeMyTrip and Mahindra & Mahindra. Further, encouragingly strong domestic flows are to some extent negating the impact of foreign outflows.

Manufacturing

Manufacturing in India still accounts for less than 20% of the economy - a figure that has remained relatively flat in the last decade, compared with the growth seen in other sectors. However, the government has laid out ambitious plans for goods exports to hit US$1 trillion annually by 2030, as the country hopes to become a top alternative for companies looking to diversify their supply chains away from China. As part of these plans, the government is providing Production Linked Incentives (PLI) across 14 sectors worth Rs2.0Trn and an additional Rs0.7Trn to boost the semiconductor and display manufacturing ecosystem.

India is already benefiting from supply chain diversification in some areas. For example, iPhone production in India has gone up from less than 1% of global shipments in 2017, to 10% in 2023, and Apple has plans to scale production up further, to 25% of global shipments by 2025, thanks in part to the PLI scheme.

Outlook

So, while we expect some near-term volatility, we believe the medium to long term outlook remains robust. The investment universe has materially changed, expanded, and deepened, and this provides an attractive backdrop for stock selection for those with the capabilities to investigate the market deeply. Headline valuations remain elevated with pockets of exuberance but also with opportunities. We believe other than the US, there is no other large market globally that has the same potential for growth and sustained economic returns. Given the structural changes underway, and the market's lower risk relative to its long history, in our view, the opportunities are extremely attractive for investors such as us, who have a long-term investment horizon.

For and on behalf of

JPMorgan Asset Management (UK) Limited

Investment Manager

Amit Mehta

Sandip Patodia

Portfolio Managers                                                                                                                     12th December 2024

PRINCIPAL AND EMERGING RISKS

The Board has overall responsibility for reviewing the effectiveness of the Company's system of risk management and internal control. The Board is supported by the Audit and Risk Committee in the management of risk. The risk management process is designed to identify, evaluate, manage, and mitigate risks faced. 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.

The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. With the assistance of the Investment Manager, the Audit and Risk Committee has drawn up a risk matrix, which identifies the principal and emerging risks to the Company. These are reviewed and noted by the Board through the Audit and Risk Committee, which includes the ways in which these risks are managed or mitigated.

The Board considers that the risks detailed below are the principal risks facing the Company currently. These are the risks that could affect the ability of the Company to deliver its strategy.

EMERGING RISKS

The AIC Code of Corporate Governance also requires the Audit and Risk Committee to put in place procedures to identify emerging risks. Emerging risks, which are not deemed to represent an immediate threat, are considered by the Audit and Risk Committee as they come into view and are incorporated into the existing review of the Company's risk register. However, since emerging risks are likely to be more dynamic in nature, they are considered on a more frequent basis, through the remit of the Board when the Audit and Risk Committee does not meet. The Board considers the following to be an emerging risk:

Geopolitical and Economic - Trade wars might erupt if, for instance, the United States raises tariffs and enacts trade-restrictive measures. This could subsequently limit the growth prospects for Indian equities.

TRANSACTION WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 45 of the Annual Report.

The management fee payable to the Manager for the year was £5,321,000 (2023: £4,974,000) of which £nil (2023: £nil) was outstanding in the financial statements at the year end.

Included in other administration expenses in note 6 on page 78 in the Annual Report are safe custody fees payable to JPMorgan Chase Bank, N.A. as custodian of the Company amounting to £557,000 (2023: £512,000) of which £151,000 (2023: £213,000) was outstanding at the year end.

The Manager carries out some of its dealing transactions through group subsidiaries. These transactions are carried out at arms' length. The commission payable to JPMorgan Securities for the year by the Company was £12,000 (2023: £50,000) of which £nil (2023: £nil) was outstanding in Company's financial statements at the year end.

Handling charges payable on dealing transactions undertaken by overseas sub custodians on behalf of the Company amounted to £14,000 (2023: £14,000) during the year, of which £3,000 (2023: £3,000) was outstanding at the year end.

The Company also holds cash in the JPMorgan GBP Liquidity Fund. At 30th September 2024, the holding in JPMorgan GBP Liquidity Fund was valued at £13,700,000 (2023: £21,210,000). During the year, the Company made purchases in this fund amounting to £217,680,000 (2023: £128,000,000) and sales on this fund amounting to £225,190,000 (2023: £150,790,000). Income receivable from this fund amounted to £1,170,000 (2023: £663,000) of which £nil (2023: £nil) was outstanding at the year end. JPMorgan earns no management fee on this fund.

At the year end, the Company held bank balances of £509,000 with JPMorgan Chase Bank, N.A. (2023: £834,000). A net amount of interest of £9,000 (2023: £5,000) was receivable by the Company during the year, of which £nil (2023: £nil) was outstanding at the year end.

Details of the Directors' shareholdings and the remuneration payable to Directors are given in the Directors' Remuneration Report on page 59 of the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with UK-adopted international accounting standards.

Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing the financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently;

•   state whether applicable UK-adopted international accounting standards 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 safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also 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 have delegated the maintenance and integrity of the Company's website (www.jpmindian.co.uk) to the Company's Manager. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

Each of the Directors, whose names and functions are listed in the Directors' Report confirm that, to the best of their knowledge:

•   the company financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and result of the company; and

•   the Strategic Report and Directors' Report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.

The Board confirms that it is satisfied that the annual report and financial statements taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

For and on behalf of the Board

Jeremy Whitley

Chairman

12^th December 2024

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th September 2024

The Company does not have any income or expense that is not included in the net profit for the year. Accordingly the 'Net profit/(loss)' for the year, is also the 'Total comprehensive income' for the year, as defined in IAS1 (revised).

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

The 'Total' column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS.

The supplementary 'Revenue' and 'Capital' columns are prepared under guidance published by the Association of Investment Companies.

Details of revenue and capital items, together with the associated reserves are contained in note 16.

All of the Net profit/(loss) and total comprehensive income is attributable to the equity shareholders of JPMorgan Indian Investment Trust plc, the Company. There are no minority interests.

The notes on pages 75 to 90 of the Annual Report form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

For the year ended 30th September 2024

¹     These reserves form the distributable reserves of the Company and may be used where there are reserves available.

STATEMENT OF FINANCIAL POSITION

At 30th September 2024

STATEMENT OF CASH FLOWS

For the year ended 30th September 2024

NOTES TO THE FINANCIAL STATEMENTS

1.  Material Accounting Policies and Basis of Preparation

(a)     Basis of accounting

The financial statements of the Company have been prepared under historical cost convention, modified to include fixed asset investments at fair value, and in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. Where presentational guidance set out in the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies ('AIC') in July 2022 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. The accounting policies adopted are consistent with those of the previous financial year. The principal accounting policies adopted are set out below.

The financial statements have been prepared on the going concern basis. The disclosures on going concern in the Audit and Risk Committee's Report on page 56 in the Annual Report form part of these financial statements. The Board has, in particular, considered the impact of heightened market volatility since the Russian invasion of Ukraine, the conflict in the Middle East, the persistent inflationary environment, rising interest rates and other geopolitical risks, and does not believe the Company's going concern status is affected.

In preparing these financial statements the Directors have considered the impact of climate change risk as a principal risk as set out on page 36 in the Annual Report, and have concluded that there was no further impact of climate change to be taken into account as the investments are valued based on market pricing, which incorporates the market's perception of climate risk.

The Company's share capital is denominated in sterling and this is the currency in which its shareholders operate and expenses are generally paid. The Directors have therefore determined the functional currency to be sterling.

2.  Non current assets

(a)     Investments held at fair value through profit or loss

The Company received £297,186,000 (2023: £170,249,000) from investments sold in the year. The book cost of these investments when they were purchased was £219,402,000 (2023: £152,115,000).

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.

(b)    Transaction costs

The above costs comprise mainly brokerage commission.

(c)          Gains from investments held at fair value through profit or loss

3.  Earnings/(loss) per share

¹     Represents both the basic and diluted earnings per share and excludes shares held in Treasury.

4.  Net asset value per share

JPMORGAN FUNDS LIMITED

13th December 2024

For further information, please contact:

Sachu Saji

For and on behalf of

JPMorgan Funds Limited

Telephone: 0800 20 40 20 or or +44 1268 44 44 70

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

ENDS

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

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