Baillie Gifford Japan Trust Final Results

RNS Announcement

The Baillie Gifford Japan Trust PLC

Legal Entity Identifier: 54930037AGTKN765Y741

Regulated Information Classification: Notice of Results

Results for the year to 31 August 2025

Over the year to 31 August 2025, The Baillie Gifford Japan Trust PLC's net asset value total return per share was 20.5% compared to the 12.1% total return in the TOPIX index (in sterling terms). In this period the Company's share price total return was 20.9%.

Over the five years to the end of August 2025, the NAV total return was 27.0% and over ten years 152.2% compared to the TOPIX total return (in sterling terms) of 53.4% and 137.2% respectively.

· The Board believes that if the Company's shares trade at a double-digit discount, this presents an attractive opportunity to add value for shareholders through buybacks. During the financial year, 11.5% of the Company's issued share capital was bought back for a total consideration of £75.2 million. This increased the Company's net asset value by 1.5%.

· The most significant positive contributors to performance were SoftBank Group (+3.8ppt), the technology holding company that has returned to profitability, largely driven by the key themes in its portfolio, including AI, semiconductors and growth technology; and SBI Holdings (+2.7ppt), where progress across many of its business areas including online financial broking and banking are driving strong performance.

· During the period four new investments were made. These were Money Forward (online accounting software), Sega Sammy (computer gaming), Shimano (bicycle component manufacturer) and Square Enix (computer gaming). Six positions were sold during the period while gearing reduced to 13% (2024: 18%).

· A final dividend of 10p per ordinary share (2024: 10p per ordinary share) will be put to shareholders for approval at the Annual General Meeting.

· The Managers believe that there remains a large return opportunity for long-term growth investing in Japan. The Company's portfolio positioning in companies aligned with long-term secular growth - many of which have not been fully appreciated in recent years - presents a good opportunity for outperformance ahead.

The Baillie Gifford Japan Trust PLC aims to achieve long term capital growth principally through investment in medium to smaller sized Japanese companies which are believed to have above average prospects for growth. At 31 August 2025, the Company had total assets of £904.0m (before deduction of borrowings of £115.9m).

The Company is managed by Baillie Gifford, an Edinburgh based fund management group with around £212bn under management and advice as at 16 October 2025.

For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement. Source: Refinitiv/Baillie Gifford. See disclaimer at the end of this announcement.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stock markets in which the Company invests and by the supply and demand for the Company's shares.

You should view your investment as long term. You can find up to date performance information about The Baillie Gifford Japan Trust PLC on the Company website at japantrustplc.co.uk.

See disclaimer at the end of this announcement.

Approved by the Board on 20 October 2025

For further information please contact:

Naomi Cherry - Client Relationship Director

Baillie Gifford & Co

Tel: 0131 474 5548

Jonathan Atkins, Four Communications

Tel: 020 3920 0555 or 07872 495396

Chairman's Statement

Introduction

This past year has seen Japan's equity market continue to build on the momentum of its long-awaited resurgence, with corporate reforms, robust earnings growth, and renewed global investor attention combining to push valuations to levels not seen in decades. Although growth investing has continued to face headwinds in global markets, the Board retains strong conviction that the Company's portfolio of innovative Japanese companies is well positioned to deliver sustainable value creation and attractive returns for shareholders over time.

Performance

In the year to 31 August 2025, the net asset value ('NAV') total return was 20.5% and the share price total return was 20.9%. The comparative index (TOPIX total return in sterling terms) appreciated by 12.1% over the same period.

The Company's objective is to achieve long-term capital growth, and the NAV returns remain ahead of the benchmark on a 10-year time horizon.

Long Term Performance (Total Return*)

Over the financial year to 31 August 2025, the Company delivered improved performance, both in absolute terms and relative to its benchmark. This reflects a combination of strong operational progress from many of the portfolio's holdings and a more supportive market backdrop for growth equities. The Board is encouraged to see that the Managers' patient, bottom-up approach - investing in companies with the potential for sustained and idiosyncratic growth - has been rewarded as earnings delivery and long-term prospects regained investors' focus. The Japanese equity market continues to offer abundant opportunities for discerning stock-pickers, and the Board remains confident that the strategy of concentrating on innovative, growth-oriented businesses positions the Company well to generate superior returns over time. The recovery in performance over the past year provides a timely reminder that, while short-term market conditions can at times be unfavourable, the long-term prospects for the portfolio remain compelling.

Gearing and Borrowing

The Board believes borrowing is likely to enhance long-term returns. It also recognises the risks associated with borrowing. Net gearing decreased from 18.1% to 12.8% for the year ending 31 August 2025. The Board is pleased to announce that in August 2025, the Company secured a ¥15 billion revolving credit facility with The Bank of New York Mellon at a competitive rate. The proceeds were used to repay the ¥15 billion term loan with the same bank which expired in August 2025.

Dividend

The Board is recommending a dividend of 10p per ordinary share (2024: 10p per ordinary share). This will be put to shareholders for approval at the Annual General Meeting ('AGM') to be held on 10 December 2025. If approved, the dividend will be paid on 15 December 2025 to shareholders on the register at close of business on 13 November 2025. A dividend reinvestment plan ('DRIP') is available to shareholders who would prefer to invest their dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last date for receipt of DRIP elections is 24 November 2025.

Share Capital and Discount Management

Over the course of the year, the share price discount to NAV narrowed very slightly from 11.6% to 11.4%. The Board believes that if the Company's shares trade at a double-digit discount, this presents an attractive opportunity to add value for shareholders through buybacks. During the financial year, 11.5% of the Company's issued share capital was bought back for a total consideration of £75.2 million. This increased the Company's net asset value by 1.5%. The shares bought back are held in Treasury and are available to be reissued, at a premium, when market conditions allow.

Issuance and Buybacks

http://www.rns-pdf.londonstockexchange.com/rns/1038E_1-2025-10-20.pdf

Your Board believes it is important that the Company retains the power to buy back equity during the year and so, at the AGM, is seeking to renew this facility. Further details of the buy back facility can be found on page 41 of the Annual Report and Financial Statements.

The Company also has authority to issue new shares and to reissue any shares held in Treasury for cash on a non-pre-emptive basis. Shares are issued or reissued only at a premium to net asset value, thereby enhancing net asset value per share for existing shareholders. The Directors are, once again, seeking 10% share issuance authority at the AGM. This authority would expire at the conclusion of the AGM in 2026.

Annual General Meeting (AGM)

The Company's AGM is scheduled for 11.30am on 10 December 2025 at Baillie Gifford's offices in Edinburgh. The Board encourages shareholders to attend in person but also to exercise their votes by completing and submitting a form of proxy. Shareholders who hold their shares via a platform can find further details on page 92 of the Annual Report and Financial Statements as to how to vote their shares.

We also encourage shareholders to monitor the Company's website at japantrustplc.co.uk where any updates will be posted and market announcements will be made, as appropriate. Should shareholders have questions for the Board or the Managers or any queries as to how to vote, they are welcome to submit these by email to enquiries@bailliegifford.com or call 0800 917 2113.

Information on the resolutions can be found on pages 87 and 88 of the Annual Report and Financial Statements. The Directors consider that all resolutions to be put to shareholders are in their and the Company's best interests as a whole and recommend that shareholders vote in their favour.

In particular, shareholders have the right to vote annually on whether the Company should continue in business and will have the opportunity to do so again this year. Last year, the Company again received support for its continuation, with 85.4% of votes cast in favour. Your Directors believe there are attractive opportunities in selected, well-run Japanese companies benefiting the long-term favourable outlook for the Japan Trust. To that end, my fellow Directors and I intend, where possible, to vote our own shareholdings in favour of the resolution and hope that all shareholders will feel disposed to do likewise.

Board

As detailed in my Chairman's Statement of last year, the Board is cognisant of good corporate governance practice and as such I will be stepping down from the Board at the AGM. Sam Davis will be my successor. Sam joined the Board in 2021 and is currently Chair of the Management Engagement Committee. I am confident that he will be a highly effective Chair of your Company following my retirement at the AGM.

The Board intends to recruit a new director early in 2026 with the assistance of an executive search firm, the selection of which is at an advanced stage.

I would like to thank all of my Board colleagues - past and present - for their friendship, support, and tolerance over the past decade or so. A special note of gratitude is due to Matthew Brett for delivering excellent long-term performance. The entire Baillie Gifford team is to be commended not only for their effective support but also for their responses to my occasionally unconventional questions and requests.

Outlook

The Japanese equity market is reaching new highs. Our investment manager's strategy is once again bearing fruit. I intend to remain a happy, supportive shareholder for a very long time.

Your investment is in fine hands.

David KiddChairman20 October 2025

* Alternative Performance Measure - see Glossary of Terms and Alternative Performance Measures at the end of this document.

† The benchmark is the TOPIX total return (in sterling terms).

Source: LSEG and underlying data providers. See disclaimer at end of this document.

Past performance is not a guide to future performance.

Managers' Review

Summary

The sun has shone on your Company's portfolio this year, with an NAV total return of +20.5%, ahead of the TOPIX total return (in sterling terms) of +12.1%. Most of this positive absolute and relative return came in the second half of the fiscal year, with SoftBank Group making a key positive contribution. We believe that the journey towards realising the substantial opportunity highlighted in recent reports has properly begun.

Investment Background

Artificial Intelligence ('AI') remains a central theme globally. Large language models ('LLMs'), such as ChatGPT, continue to make rapid strides in capability. Investments are being made in training models, chips, data centres, and applications. This will be a mega-theme over the next decade that will likely surpass the development of the internet in its significance. Over time we expect it to result in profound changes to operating environments for businesses and believe that it is important for investors to keep looking forward to maximise the opportunities and avoid the risks.

Right now, it is challenging to speak with confidence about the global macroeconomic backdrop, geopolitical environment, or even domestic Japanese politics. However, your Company's focus is not on these broad and unpredictable factors, but rather on carefully selected individual businesses chosen for their long-term growth potential and resilience.

Performance Review

Superficially it may be surprising that our growth-orientated portfolio has performed so well given political challenges and a slowing global economy. However, our long experience suggests that in slightly tougher conditions, genuine growth businesses are more appreciated as they are able to keep making progress in spite of headwinds. Indeed, our lack of relative returns in recent years has been partly due to a lack of exposure to the very strong returns from some of Japan's most cyclical businesses, which enjoyed a dramatic earnings up-cycle as Covid came to an end. Over 5 years, the cumulative NAV total return was +27.0% and over 10 years +152.2%. This compares to increases in the TOPIX total return (in sterling terms) of +53.4% over 5 years and +137.2% over 10 years.

Over the past year, 6 stocks contributed +1ppt or more to the relative performance of the gross portfolio. These were SoftBank Group (+3.8ppt), SBI Holdings (+2.7ppt), CyberAgent (+1.5ppt), GA Technologies (+1.3ppt), GMO Internet (+1.1ppt), and Topcon (+1.0ppt).

SoftBank Group, the technology holding company and largest position in your Company's portfolio, has become better appreciated as one of the leaders in this area. After doing nothing in the first half of the year, the shares rose 96% in the second half. Mr Son, the founder with a very large personal stake in the company, has regained his position as Japan's richest person. In addition to the 90% stake in Arm Holdings, whose designs power almost every smartphone globally, SoftBank has invested in OpenAI, the company behind ChatGPT, which is a key driver of AI advancements globally. It should stand to benefit accordingly.

SBI Holdings, Japan's leading online financial services company and second-largest position, has continued to make progress across many areas. Its successful transformation from an online financial broker into a diversified financial conglomerate is well underway. Through the integration of Shinsei Bank, which it acquired in 2021, banking has grown to represent over half of the group's core profitability. A doubling of deposits since the acquisition is laying the foundation for a potential partial re-listing, likely at a significant premium to the acquisition price.

CyberAgent, GMO Internet, and GA Technologies all continued to make solid progress. Finally, Topcon accepted an offer from a private equity investor at a significant premium to the prevailing share price.

Just 1 stock contributed more than -1ppt to relative performance. This was Rakuten (-1.3ppt), a large position and the top contributor to relative performance in the previous year. In our view, the market has yet to appreciate fully either the significant operational improvement in the telecoms business, or the long-term growth opportunity ahead of the company. We retain conviction in the holding.

Gearing also made a positive contribution to performance of +2.2ppt as the portfolio delivered a positive absolute return in Yen terms.

Portfolio

During the year we bought 4 new holdings and sold 6 holdings. Turnover was particularly low this year at 7%, reflecting the extreme attractiveness of the starting portfolio.

The new holdings were Money Forward (online accounting software), Shimano (bicycle component manufacturer), Square Enix (computer gaming) and Sega Sammy (also computer gaming). Money Forward is Japan's leading online accounting software platform, scaling into a vast and relevant market. Shimano is the world's leading manufacturer of high-end bicycle components. We sold it during Covid when demand for bicycles became artificially inflated, but the subsequent significant share price correction has presented another opportunity. Square Enix and Sega Sammy are gaming businesses with strong global franchises (Final Fantasy and Sonic the Hedgehog) and significant untapped monetisation potential. Both companies have robust balance sheets and are well placed to capture the structural growth in digital entertainment and gaming revenues.

We sold holdings for a variety of reasons. As previously mentioned, Topcon (positioning systems manufacturer) accepted an offer from private equity at a significant premium. SWCC Corporation (electric cables) delivered a very high return since purchase, and we therefore concluded that there was limited further upside potential. Tokyo Tatemono (real estate) was sold because we saw larger long-term opportunity in online real-estate company GA Technologies. Finally, we sold several internet names (Digital Garage, Mercari, LY Corp) to fund additions to those names where we had higher long-term conviction.

Overall, the portfolio retains significant exposure to entrepreneurial growth companies, particularly those operating in the internet sector. Although it invests across the market cap spectrum, it has much more in medium sized than very large companies compared with the TOPIX index. It has no exposure to car assemblers or many of Japan's manufacturing conglomerates. Reflecting our focus on growth companies, the portfolio has exhibited sales growth significantly ahead of the market over the past 5 years and is forecast to continue to grow faster. While earnings growth has been good over the past 5 years, it has lagged the market due to the lack of exposure to the very strong returns from some of Japan's most cyclical companies, as previously mentioned. However, looking forward, the earnings growth is forecast to be ahead of the market again.

http://www.rns-pdf.londonstockexchange.com/rns/1038E_2-2025-10-20.pdf

Outlook

We believe that there remains a large return opportunity for long-term growth investing in Japan. Our positioning in companies aligned with long-term secular growth - many of which have not been fully appreciated in recent years - presents a good opportunity for outperformance ahead. Reflecting this view, net gearing ended the year at 12.8%, putting us in a healthy position to benefit from further share price appreciation while retaining the flexibility to take advantage of any short-term setbacks. Over the long run, we continue to believe that a long-term approach to investing in Japan's best companies is capable of delivering excellent results for shareholders.

Baillie Gifford20 October 2025

For a definition of terms, see Glossary of Terms and Alternative Performance Measures at the end of this document.

Past performance is not a guide to future performance.

Relative Contribution

Top Ten Relative Stock Contributors

Year to 31 August 2025

Bottom Ten Relative Stock Contributors

Year to 31 August 2025

Top Ten Relative Stock Contributors

5 years to 31 August 2025

Bottom Ten Relative Stock Contributors

5 years to 31 August 2025

Source: Revolution and relevant underlying index providers. Baillie Gifford Japan Trust relative to TOPIX total return (in sterling terms).

See disclaimer at the end of this document.

Portfolio Positioning

As at 31 August 2025

* % of total investments.

List of Investments

As at 31 August 2025

* Absolute performance has been calculated on a daily basis over the period 1 September 2024 to 31 August 2025 using the change in valuation, adjusted for income, purchases, and sales during the period. For investments held for part of the year, the return is for the period they were held. Absolute performance is in sterling terms.

† Figures relate to part period returns.

# New purchase during the year. Complete sales in the year were Digital Garage, LY Corp, Mercari, SWCC Showa, Tokyo Tatemono and Topcon.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer at the end of this document.

Past performance is not a guide to future performance.

Income Statement

For the year ended 31 August

Total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies.

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

A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and total comprehensive income for the year.

Balance Sheet

Statement of Changes in Equity

For the year ended 31 August 2025

For the year ended 31 August 2024

Cash Flow Statement

For the year ended 31 August

* Cash and cash equivalents represent cash at bank and short-term money market deposits repayable on demand.

† Cash from operations includes dividends received of £15,054,000 (2024 - £15,810,000) and interest received of £1,000 (2024 - £3,000).

Notes to the Financial Statements

1. Principal Accounting Policies

The Financial Statements for the year to 31 August 2025 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' on the basis of the accounting policies set out below which are unchanged from the prior year and have been applied consistently.

The Financial Statements have also been prepared in accordance with the Companies Act 2006, and with the AIC's Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in July 2022 with consequential amendments.

All of the Company's operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments and derivative financial instruments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Board has, in particular, considered the impact of heightened market volatility and macroeconomic and geopolitical concerns, including inflation and interest rates. It has reviewed the results of specific leverage and liquidity stress testing and does not believe the Company's going concern status is affected. In addition, the Company is subject to an annual continuation vote which in previous years has been passed with a significant majority. The Directors have no reason to believe that the vote will not continue to be in favour based on their assessment of the Company's performance and the views collated from shareholders. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis.

The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. The Company's primary third party suppliers, including its Managers and Secretaries, Depositary and Custodian, Registrar, Auditor and Broker, are not experiencing significant operational difficulties affecting their respective services to the Company.

In preparing these Financial Statements, the Directors have considered the impact of climate change risk as a principal risk set out on page 34 of the Annual Report and Financial Statements and have concluded that it does not have a material impact on the Company's investments. The Directors consider the impact of climate change on the value of the investments included in the Financial Statements to already be reflected in their prices as quoted on a stock exchange.

Accordingly, the Financial Statements have been prepared on a going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters set out in the Viability Statement on page 27 of the Annual Report and Financial Statements which assesses the prospects of the Company over a period of five years, that the Company will continue in operational existence until at least 31 October 2026, which is for a period of at least twelve months from the date of approval of these Financial Statements.

In order to better reflect the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented.

Financial assets and financial liabilities are recognised in the Company's Balance Sheet when it becomes a party to the contractual provisions of the instrument.

The Directors consider the Company's functional and presentation currency to be sterling, (see consideration in accounting policy (j)), as the Company's shareholders are predominantly based in the UK, the Company pays its dividends and expenses in sterling and the Company and its Manager, who are subject to the UK's regulatory environment, are also UK based.

2. Income

Special dividends received during the year amounted to £188,000 (2024 - £93,000) with £188,000 (2024 - £93,000) classed as revenue and none (2024 - none) classed as capital.

3. Investment Management Fee - All Charged to Revenue

Details of the Investment Management Agreement are disclosed on page 39 of the Annual Report and Financial Statements. For the year to 31 August 2025, the annual management fee is 0.65% on the first £250 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly. For the year to 31 August 2024, the annual management fee was 0.75% on the first £50 million of net assets, 0.65% on the next £200 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly.

4. Net Return Per Ordinary Share

Net revenue return per ordinary share is based on the net revenue profit after taxation of £5,974,000 (2024 - net revenue profit of £7,416,000) and on 81,645,278 (2024 - 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

Capital return per ordinary share is based on the net capital profit for the financial year of £117,456,000 (2024 - net capital profit of £56,343,000) and on 81,645,278 (2024 - 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

Total return per ordinary share is based on the total profit for the financial year of £123,430,000 (2024 - total profit of £63,759,000) and on 81,645,278 (2024 - 90,078,258) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

There are no dilutive or potentially dilutive shares in issue.

5. Ordinary Dividends

Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution out of current year profits by way of dividend for the year is £5,974,000. The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable by way of dividend.

* Based on ordinary shares in issue at 31 August 2025.

6. Total borrowings at 31 August 2025 were ¥23 billion (2024 - ¥26.9 billion) and a detailed in note 11 on page 75 of the Annual Report and Financial Statements.

7. The transaction costs of purchases and sales were £22,000 (2024 - £49,000) and £48,000 (2024 - £45,000) respectively.

8. The Company's authority permits it to hold shares bought back in 'treasury'. Such treasury shares may be subsequently either sold for cash at a premium to net asset value per ordinary share or cancelled. In the year to 31 August 2025, 10,041,174 shares with a nominal value of £502,000, representing 11.5% of the issued share capital at 31 August 2024, were bought back at a cost of £75,180,000 and held in treasury (31 August 2024 - 5,515,000 shares with a nominal value of £276,000 representing 5.9% of the issued share capital at 31 August 2023, were bought back at a cost of £39,186,000 and held in treasury). At 31 August 2025 the Company had authority to buy back 6,318,845 ordinary shares. Over the period from 1 September 2025 to 16 October 2025 a further 570,000 shares have been bought back and held in treasury at a cost of £5,233,000.

Under the provisions of the Company's Articles, the share buy-backs are funded from the capital reserve.

In the year to 31 August 2025, the Company sold no ordinary shares from treasury (2024 - no ordinary shares). The Company issued no ordinary shares (2024 - no ordinary shares). As at 31 August 2025 the Company had the authority to issue 8,608,761 ordinary shares. Over the period from 1 September 2025 to 16 October 2025 no further shares were issued by the Company.

9. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 August 2025 or 2024 but is derived from those accounts. Statutory accounts for 2024 have been delivered to the registrar of companies, and those for 2025 will be delivered in due course. The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report; and, (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

10. The Annual Report and Financial Statements will be available on the Company's page on the Managers' website japantrustplc.co.uk‡ on or around 6 November 2025.

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

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

Glossary of Terms and Alternative Performance Measures ('APM')

Total Assets

The total value of all assets held less all liabilities (other than liabilities in the form of borrowings).

Net Asset Value

Also described as shareholders' funds, net asset value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per ordinary share is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares). Borrowings are valued at their book value. The Company's yen denominated loans are valued at their sterling equivalent.

Net Asset Value can also be expressed with borrowings valued at an estimate of their market worth or "fair value". The value of the borrowings at book and fair value are set out on page 81 of the Annual Report and Financial Statements.

Net Asset Value (reconciliation of NAV at book value to NAV at fair value)

(Discount)/Premium (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per ordinary share it is said to be trading at a discount. The size of the discount is calculated by subtracting the NAV per ordinary share from the share price and is usually expressed as a percentage of the NAV per ordinary share. If the share price is higher than the NAV per ordinary share, this situation is called a premium. Average discount has been calculated on the basis of average daily discount for the year to 31 August 2025.

Total Return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

* The dividend adjustment factor is calculated on the assumption that the dividend of 10.0p (2024 - 10.0p) paid by the Company during the year was invested into shares of the Company at the cum income NAV per ordinary share/share price, as appropriate, at the ex-dividend date.

Turnover

Annual turnover of the investment portfolio shares is calculated on a rolling 12 month basis. The lower of purchases and sales for the 12 months is divided by the average assets, with average assets being calculated on assets as at each month's end.

Ongoing Charges (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value.

* Average of daily net asset values calculated during the year.

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the sensitivity of the value of the portfolio to changes in the level of markets.

Net gearing is the Company's borrowings less cash and cash equivalents expressed as a percentage of shareholders' funds.

Gross gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

* Net gearing: ((a) - (b)) divided by (c), expressed as a percentage.

† Gross gearing: (a) divided by (c), expressed as a percentage.

Leverage (APM)

For the purposes of the UK Alternative Investment Fund Managers ('AIFM') Regulations, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Sustainable Finance Disclosure Regulation ('SFDR')

The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a direct impact in the UK due to Brexit, however, it applies to third-country products marketed in the EU. As Baillie Gifford Japan is marketed in the EU by the AIFM, Baillie Gifford & Co Limited, via the National Private Placement Regime ('NPPR') the following disclosures have been provided to comply with the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co's ESG Principles and Guidelines as its policy on integration of sustainability risks in investment decisions.

Baillie Gifford & Co believes that a company cannot be financially sustainable in the long run if its approach to business is fundamentally out of line with changing societal expectations. It defines 'sustainability' as a deliberately broad concept which encapsulates a company's purpose, values, business model, culture, and operating practices.

Baillie Gifford & Co's approach to investment is based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build up an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment. The likely impact on the return of the portfolio from a potential or actual material decline in the value of investment due to the occurrence of an environmental, social or governance event or condition will vary and will depend on several factors including but not limited to the type, extent, complexity and duration of an event or condition, prevailing market conditions and existence of any mitigating factors.

Whilst consideration is given to sustainability matters, there are no restrictions on the investment universe of the Company, unless otherwise stated within its Investment Objective & Policy. Baillie Gifford & Co can invest in any companies it believes could create beneficial long-term returns for investors. However, this might result in investments being made in companies that ultimately cause a negative outcome for the environment or society.

The underlying investments do not take into account the EU criteria for environmentally sustainable economic activities established under the EU Taxonomy Regulation.

More detail on the Manager's approach to sustainability can be found in the ESG Principles and Guidelines document, available publicly on the Baillie Gifford website bailliegifford.com and by scanning the QR code below.

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