Baillie Gifford Japan Trust plc Annual Results

Baillie Gifford Japan Trust PLC

28 October 2026

 

RNS Announcement

The Baillie Gifford Japan Trust PLC

Legal Entity Identifier: 54930037AGTKN765Y741

Regulated Information Classification: Additional regulated information required to be disclosed under the applicable laws and regulations.

Results for the year to 31 August 2026

Over the year to 31 August 2026, The Baillie Gifford Japan Trust PLC's net asset value total return per share was 17.7% compared with a 26.7% total return from the TOPIX index (in sterling terms). The Company's share price total return was 20.9%, with the discount to net asset value narrowing from 11.4% to 9.1%.

• Performance improved significantly in the second half of the financial year, with the Company's net asset value total return of 12.7% outperforming the 3.5% return from TOPIX (in sterling terms).
• As a result of the Board’s engagement with the Managers, we have agreed the           introduction of a conditional tender offer for up to 25% of the Company’s shares, to be triggered in the event that the Company’s NAV total return (cum income, debt at fair value) over the three-year period to 31 August 2029 fails to exceed that of the TOPIX total return (in sterling terms) over the same period. If the tender offer were to be    triggered, it would be undertaken at a 2.0% discount to the formula asset value (FAV), being the net asset value attributable to the tendered shares less costs and expenses of the tender offer; and would be subject to approval by shareholders at a General     Meeting of the Company. The introduction of this measure reflects the importance that the Board attaches to the recent upturn in performance being achieved on a more     sustained basis in the future.
• A final dividend of 10p per ordinary share (2025: 10p per ordinary share) will be put to    shareholders for approval at the Annual General Meeting.
• During the year, the Company repurchased 12,666,500 shares for a total consideration of £116.9 million, representing 16.3% of the Company's issued share capital as at 31 August 2025. These buybacks increased the Company's net asset value per share for continuing shareholders by 1.7%.
• The most significant positive contributors to relative performance were Murata (+1.6ppt), Sumitomo Metal Mining (+1.1ppt), SoftBank Group (+1.1ppt) and         Sumitomo Mitsui Trust Group (+1.0ppt). Murata and SoftBank Group benefited from increasing appreciation of their exposure to the opportunities presented by artificial    intelligence (AI), while Sumitomo Metal    Mining benefited from firm commodity prices and Sumitomo Mitsui Trust Group from rising Japanese interest rates.
• During the year eight new holdings were purchased and ten were sold. New               investments included Yaskawa Electric and Harmonic Drive Systems, which the    Managers believe are well placed to benefit from the development of Physical AI and industrial automation, and Tokyo Electron and Shin-Etsu Chemical, which provide  exposure to continuing investment in semiconductor and computing capacity.
• The Managers continue to see substantial opportunities for long-term growth investing in Japan. In particular, they believe the development and adoption of AI will create significant opportunities for growth companies, while the   portfolio's holdings offer    historic and expected sales growth ahead of the wider   market and trade at attractive valuations. The Managers also believe the materially  undervalued yen provides scope for additional returns for sterling-based investors should it appreciate.

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

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 2026, the Company had total assets of £872.5m (before deduction of borrowings of £103.9m).

The Company is managed by Baillie Gifford, an Edinburgh based fund management group with around £190 billion under management and advice as at 30 September 2026.

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.

The following text is extracted from the Annual Report and Financial Statements of the Company for the year ended 31 August 2026 which was approved by the Board on 27 October 2026. All page numbers below refer to the Annual Report and Financial Statements which will be made available on the Company's website.

See disclaimer at the end of this announcement.

For further information please contact:

Naomi Cherry – Client Director

Baillie Gifford & Co

Tel: [phone]

Jonathan Atkins, Four Communications

Tel: [phone] or 07872 495396

Chairman’s Statement

Having taken over as Chairman of Baillie Gifford Japan Trust immediately following the Annual General Meeting (‘AGM’) in December 2025, this is my first full-year report to you, our shareholders.

Performance

The Company generated a net asset value (NAV) total return over the financial year of 17.7% which compares with a return of 26.7% for the benchmark, the TOPIX total return (in sterling terms). The share price total return over the period was 20.9% reflecting a narrowing in the discount to NAV at which the Company’s shares traded from 11.4% to 9.1%.

Positives for the year included the strong absolute return delivered by the Company. I am also pleased to report that, following marked underperformance relative to its benchmark in the first half of the financial year, the Company delivered 9.2% outperformance of the benchmark in the second half, generating a 12.7% increase in NAV (14.0% increase in the share price) compared with a 3.5% rise for the Company’s benchmark over that six‑month period.

Analysis of performance over the last five years shows a period of relative underperformance against the benchmark following the end of Covid when rising inflation and interest rates led to a strong rally in cyclical stocks and sectors, creating a more challenging environment for the Managers’ growth investment style. Performance during this period was also negatively impacted by investments in a number of stocks where growth in earnings and cashflow lagged revenue growth, and the market focused elsewhere as a result.

The extent of underperformance during this period has impacted the Company’s longer-term record. This and the volatility of returns experienced by shareholders has led the Board to intensify its engagement with the Managers to understand better the factors driving performance and to challenge various aspects of the investment process. In particular, the Board has focused attention on:

• portfolio construction;

• risk control; and

• breadth of research and stock selection.

Further details on performance are provided in the Managers’ Review on pages 09 to 12.

Long Term Performance (Total Return*)

				Compound Annual Returns
	1 year	5 year	10 year	5 year	10 year
Share price	20.9%	11.7%	122.6%	2.2%	8.3%
Net asset value	17.7%	24.4%	137.3%	4.5%	9.0%
Benchmark†	26.7%	67.1%	147.4%	10.8%	9.5%

Conditional Tender Offer

As a result of the Board’s engagement with the Managers, we have agreed the introduction of a conditional tender offer for up to 25% of the Company’s shares, to be triggered in the event that the Company’s NAV total return (cum income, debt at fair value) over the three-year period to 31 August 2029 fails to exceed that of the TOPIX total return (in sterling terms) over the same period. If the tender offer were to be triggered, it would be undertaken at a 2.0% discount to the formula asset value (FAV), being the net asset value attributable to the tendered shares less costs and expenses of the tender offer; and would be subject to approval by shareholders at a General Meeting of the Company. The introduction of this measure reflects the importance that the Board attaches to the recent upturn in performance being achieved on a more sustained basis in the future.

From the next Interim Report, the Company intends to report its NAV performance using NAV with borrowings valued at fair value, rather than book value as has historically been the case. The Board considers that this approach will reflect changes in the market value of the Company’s borrowings, including those arising from movements in interest rates, and ensure consistency with the basis on which performance would be assessed under the conditional tender offer. Further details regarding the NAV calculation are provided in the Alternative Performance Measures on pages 84 to 86.

Gearing

The Company continued to take advantage of the investment trust structure throughout the year by using gearing to amplify returns, the net gearing level reduced from 12.8% at the start of the Company’s financial year to 8.9% at 31 August 2026. It is worth noting that, due to rising yields in the Japanese Government Bond (JGB) market, the long-term fixed-rate borrowings that the Company put in place in 2024 with maturities of 2029, 2034 and 2038 have lower coupon rates (by approximately 0.5ppt each) than it would cost the Japanese government itself to borrow at those tenures today.

Share Capital and Discount Management

As noted, over the year to 31 August 2026, the share price discount to NAV narrowed from 11.4% to 9.1%. The Board continues to believe that, if the Company’s shares trade at anything beyond a high single-digit discount, this presents an attractive opportunity to add value for shareholders through buy backs. During the reporting period, 12,666,500 shares were repurchased for a total consideration of £116.9 million, representing 16.3% of the Company’s issued share capital as at 31 August 2025, meaning that the Company fully utilised the 14.99% buy back authority granted by shareholders at the last AGM, as well as a portion of the additional authority granted by shareholders at a subsequent General Meeting of the Company held in June of this year. This increased the Company’s net asset value per share for continuing shareholders by 1.7%. The repurchased shares are held in treasury and are available to be reissued, at a premium, when market conditions allow.

Your Board believes it is important that the Company retains the power to buy back shares during the year and so, at the AGM, is seeking to renew this authority. Further details of the buy back facility can be found on page 43 of the Annual Report and Financial Statements.

The Company also has authority to issue new shares and to reissue 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 NAV per share for existing shareholders. The Directors are seeking 10% share issuance authority at the AGM.

Dividend

The Board is recommending a dividend of 10p per ordinary share (2025: 10p per ordinary share). This will be put to shareholders for approval at the AGM to be held on 16 December 2026. If approved, the dividend will be paid on 22 December 2026 to shareholders on the register at close of business on 20 November 2026. 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 1 December 2026.

Annual General Meeting (AGM)

The Company’s AGM is scheduled for 11.30am on 16 December 2026 at Baillie Gifford’s offices in Edinburgh (please note the Managers have moved to a new address provided on page 88). The Board encourages shareholders to attend in person but also in any event 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 94 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 [e-mail] or call 0800 917 2113.

Information on the resolutions can be found on pages 89 and 90. 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 favour of them.

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 good support for its continuation, with 88.8% of votes cast in favour. Your Directors believe that there are attractive opportunities in selected, well-run Japanese companies benefiting the long-term favourable outlook for the Company. 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 do likewise.

Board

I would like to reiterate my comments from the half-year report. First, I thank David Kidd for his dedicated service over many years as, variously, non-executive director, Senior Independent Director and ultimately Chairman of the Company. We will greatly miss David’s wisdom, insightful questioning and humour and wish him well for the future.

Second, I am pleased to welcome Robert Talbut, who joined the Board as a non-executive director on 2 March 2026. Robert was appointed following a rigorous market search carried out by an independent professional search firm, with interviews conducted by the Board. He brings to the Board substantial investment management experience from an executive career in the industry encompassing hands-on investing through to team and investment process management as well as significant experience of the investment trust industry from the multiple boards on which he has served.

Outlook

As at the half-year, I would like to take this opportunity to remind readers of the attractions of Japan as an investment market, which include:

• it is a wealthy, educated and democratic country with a high degree of political and social stability, underpinned by strong institutions, and which maintains the fourth largest economy in the world;

• a deep and liquid equity market which, unusually among developed markets, continues to see growth in new listings, thereby expanding the opportunity set and offering diversification for investors concerned about over-concentration elsewhere;

• global leadership across a range of advanced technologies, alongside a range of internationally recognised branded goods companies and content owners/creators;

• a market that remains relatively under-researched compared to a number of its developed market peers, offering potential excess return opportunities for active investors;

• ongoing improvements in corporate governance and increased focus on capital efficiency, contributing to more shareholder-oriented policies; and

• a currency which, on a number of measures, is presently materially under-valued relative to economic fundamentals.

Japan also faces well-known demographic challenges which weigh on overall economic growth, as well as a fiscal position that arguably limits policy options. This creates a situation supporting the thesis that the growth companies in which your Company invests, which typically also boast stronger-than-average balance sheets and return metrics, should command a premium valuation over time. The Board and Managers remain confident that the growth potential offered by the Company’s portfolio holdings is highly attractive relative to their valuations. Due to its mid- and small-cap focus, the portfolio also tends to be overweight domestically focused companies which should be of benefit if the yen strengthens sustainably.

Disappointingly, this positive thesis has not been borne out by the Company’s performance over recent years. That said, the Board continues to believe in the Managers’ differentiated investment strategy and the conditional tender offer we have introduced can be seen as a vote of confidence in the future while providing a liquidity event at close to NAV for investors if this confidence proves misplaced. The Board will continue to monitor performance closely, alongside continued scrutiny of the investment process, risk and portfolio construction and remains focused on building value for shareholders over the long term.

Sam Davis
Chairman
27 October 2026

* Alternative Performance Measure – see Glossary of Terms and Alternative Performance Measures on pages 84 to 86.

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

Source: LSEG and underlying data providers. See disclaimer on page 95.

Past performance is not a guide to future performance.

Managers’ Review

Your Company enjoyed a strong second half to the year with a NAV total return of +12.7%, ahead of the benchmark total return of +3.5%. However, it was not enough to offset the weak first half of the fiscal year and for the 12 months NAV total return was +17.7%, behind the benchmark total return of +26.7%. We continue to believe that there remains substantial opportunity for our style of growth investing in Japan, which should lead to attractive returns over time for shareholders.

Investment Background

As has so often been the case, a more challenging external environment has allowed the strengths of your Company’s holdings to be better appreciated. The war in the Middle East has dominated financial news over the past 6 months and that, combined with continued war in Ukraine presents a challenging background for energy and food inflation and hence for central bank policy makers. Japan is a net energy importer but it is also a very efficient user of energy and the progress of nuclear restarts provides some offset. Your Company’s portfolio also has only half the weighted average carbon intensity of the wider market, which means that higher energy costs have less impact than for the market.

The Bank of Japan raised rates to 1.25% in September, a level last seen in 1995. Whilst there is concern that rising rates could de-stabilise the JGB market, recent evidence suggests that higher yields (the 10-year JGB rate is currently 3%) are encouraging some repatriation of assets so it is also quite possible that if there is a problem for government bonds globally, that problem lies outside Japan. Our view is that the normalisation of Japan’s financial situation has continued and that the higher yields reflect the strength of Japan’s progress. The yen weakened marginally against sterling from Y210/£ six months ago to Y216/£ at the end of the period. Indeed, Japan’s currency remains notably cheap on measures of purchasing power parity to a point that feels quite extreme. As a reminder, a stronger yen would likely be more helpful for your portfolio than the wider stock market because our search for growth naturally leads us towards a smaller companies’ bias, and many of these are domestic. Meanwhile, Prime Minister Takaichi reinforced her position with a successful snap election earlier in the year. Whilst our focus is on investing in individual growth opportunities, the stability of Japan in a conflict-riven world allows the companies in which we invest to focus on building their businesses and returns for shareholders.

Artificial Intelligence

Artificial Intelligence (AI) is something to which we are paying close attention. We think that it is a mega-trend that will likely exceed the development of the internet and the smartphone in its implications – both for society and investment. As investors we think the classic Bill Gates adage “we always overestimate the change that will occur in the next two years and underestimate the change that will occur in ten” will apply, so we are deliberately trying to discern those long-term impacts and opportunities. At a high level, periods of rapid technological change often favour dynamic growth businesses with entrepreneurial management at the helm.

The classic example in Japan is SoftBank Group, your Company’s largest holding. Recognising the huge potential of AI, Mr Son has secured a 13% stake in OpenAI, the owner of the ChatGPT series of models and probably the leading AI model company globally at the time of writing. Indeed, SoftBank Group is currently one of the most straightforward ways to invest in an AI model developer through a listed company globally. This complements his 90% holding in the UK-centred chip design company Arm, which is responsible for the design of almost all smartphone chips and is shifting towards AI applications.

Two areas that we think are currently under-appreciated growth opportunities in AI are Edge AI and Physical AI.

Edge AI refers to AI calculations done on the device itself rather than with reference to the cloud. The advantages are speed, customisation and privacy. However, naturally Edge AI requires more computing power which is likely to lead to an upgrade cycle for mobile phones. Names such as SoftBank Group (through Arm) and Murata (a maker of ceramic capacitors, used in smartphones) are beneficiaries of this trend.

Physical AI refers to the intersection between AI and the real-world. The archetypical case is the humanoid robot but of course many different form-factors can be used. Autonomous cars can be considered a branch of Physical AI for example. But in Japan the big opportunity is in further expansion of industrial automation. High grade mechatronics remains an area of significant Japanese strength. Names such as FANUC (industrial robotics company) have been joined in the portfolio this year by Yaskawa Electric and Harmonic Drive Systems (which have strengths in different types of robot motors and gears).

We remain very interested in the broader application of AI in business areas such as gaming (Nintendo, Square Enix, Sega Sammy), internet businesses with large datasets (Rakuten, Cyberagent), and financial services (SBI Holdings, SBI Shinsei Bank). In these cases, we believe that management are capable of seizing the initiative of using the new technology to create new value, but we need to remain alert to new competition arising.

Finally, in a world where much is changing, there are benefits to operating in businesses where the rate of change is slower. A significant area of the portfolio comprises various high-quality businesses that are currently out of favour. These include holdings manufacturing snacks (Calbee), paint (Nippon Paint and Kansai Paint), cosmetics (Kose, Pola Orbis, Shiseido), nappies and sanitary products (Unicharm), and baby bottles (Pigeon). Because even the most advanced AI cannot build real-world factories, scaled distribution or brand heritage, it is likely that rather than being challenged by new players, these businesses have time to deploy AI to improve the efficiency of their own operations and so the benefits will ultimately flow to their shareholders. As this process unfolds, the durable competitive advantages that manufacturing scale, distribution and brand can provide to businesses are only likely to become better appreciated.

http://www.rns-pdf.londonstockexchange.com/rns/7012A_1-2026-10-27.pdf

Performance Review

Over 5 years the cumulative NAV total return was +24.4% and over 10 years +137.3%. This compares to increases in the benchmark of +67.1% over 5 years and +147.4% over 10 years. The 5-year performance record includes the relative difficulties post-Covid whereas the 10-year record also includes the strong period of performance up to and into Covid. As has been discussed in previous reports we significantly lagged the market in 2022 and 2023, partly due to lack of exposure to the very strong returns from some of Japan’s most cyclical businesses.

Over the past year, 4 stocks contributed +1ppt or more to the relative performance of the gross portfolio, whilst 4 stocks also contributed -1ppt or more to the relative performance of the portfolio.

On the positive side the contributors were Murata (+1.6ppt), Sumitomo Metal Mining (+1.1ppt), SoftBank Group (+1.1ppt), and Sumitomo Mitsui Trust Group (+1.0ppt). Murata (ceramic capacitors) benefitted from increasing expectations of AI-driven profit growth. Sumitomo Metal Mining (miner and smelter) benefitted from firm commodity prices, especially gold. SoftBank Group (technology-focused holding company) continued to become better appreciated as a company central to the AI opportunity. Finally, Sumitomo Mitsui Trust Group (bank and asset manager) benefited from rising Japanese interest rates.

On the negative side the contributors were Rakuten (-2.0ppt), CyberAgent (-2.0ppt), SBI Holdings (-1.7ppt) and GA Technologies (-1.7ppt). These are all larger holdings and 3 of the 4 were highlighted last year as contributing more than 1ppt to positive performance. Each in our view remains a growth business, with year-on-year revenue growth of +13%, +12%, +29%, and +25% respectively. Additionally, areas in which Rakuten (internet and telecoms) and CyberAgent (online advertising, TV, and gaming) have made substantial investments (the mobile phone network and online TV platform respectively) have moved to profitability. Since the operating performance of each has continued to deliver, we retain conviction in the investment cases.

Gearing made a positive contribution to performance of +1.4ppt over the year as the portfolio delivered a positive absolute return in yen terms.

Transactions

During the year we bought 8 new holdings and sold 10. Turnover was 15.7% over the year, reflecting a balance between our long-term time horizon and a more rapidly changing investment environment due to AI.

The AI opportunity drove us to purchase Physical AI related names Yaskawa Electric and Harmonic Drive Systems in the first half of the year. We also took holdings in Tokyo Electron (semiconductor production equipment) and Shin-Etsu Chemical (semiconductor silicon wafers) which we believe are well-placed to benefit from the continuing investment in compute capacity for datacentres and the widening spend into devices.

We also took the opportunity to acquire shares in some eclectic growth companies, including Bandai Namco (toys), Casio Computer (digital watches), and Tokyo Metro (underground operator). Each of these businesses has a strong competitive edge and should be capable of thriving even if AI results in quite radical changes to the broader economy.

Shares were sold for a variety of reasons, including insufficient future upside (Chugoku Marine Paints and Sumitomo Metal Mining), reducing conviction in future growth prospects (Nippon Ceramic and Sawai Group) and, finally, a takeover bid (Raksul).

Gearing

Net gearing ended the year at 8.9%. This reduction compared with the previous year (12.8%) does not reflect a negative view but simply a moderation of our positive view on the medium to long-term prospects of Japanese equities given outsized market returns in recent years. It also means that in the event of a market setback we can deploy more capital.

http://www.rns-pdf.londonstockexchange.com/rns/7012A_2-2026-10-27.pdf

Outlook

Whilst nothing is certain, we would draw shareholders’ attention to 3 important points:

(1) The development of AI will result in widespread change, which in our view creates opportunity for growth investors.

(2) The companies that you hold have both historic and expected sales growth ahead of the market and are cheaper than the market.

(3) The yen remains very cheap on measures of purchasing power parity giving scope for additional returns for sterling-based investors should it appreciate.

Inevitably, there will continue to be volatility in year-to-year returns, but these features strike us as providing an excellent base on which to build good future returns for your Company.

Baillie Gifford
27 October 2026

For a definition of terms, see Glossary of Terms and Alternative Performance Measures on pages 84 to 86.

Past performance is not a guide to future performance.

Relative Contribution

Top Ten Relative Stock Contributors

Year to 31 August 2026

Name	Portfolio (average weight) %	Index (average weight) %	Relative contribution* %
Murata	1.8	0.9	1.6
Sumitomo Metal Mining	0.9	0.2	1.1
SoftBank Group	6.7	1.9	1.1
Sumitomo Mitsui Trust Group	4.4	0.3	1.0
Recruit	1.9	1.3	0.6
Toyota Motor	–	3.3	0.6
Misumi	2.2	0.1	0.5
Kubota	1.1	0.2	0.5
Bandai Namco	0.3	0.2	0.5
Mitsubishi Heavy Industries	–	1.5	0.4

Bottom Ten Relative Stock Contributors

Year to 31 August 2026

Name	Portfolio (average weight) %	Index (average weight) %	Relative contribution* %
Rakuten	4.3	0.1	(2.0)
CyberAgent	3.3	0.1	(2.0)
SBI Holdings	4.7	0.2	(1.7)
GA Technologies	2.7	–	(1.7)
Advantest Corp	0.0	1.4	(0.9)
GMO Internet	3.5	0.0	(0.8)
Mitsubishi UFJ Financial Group	–	3.4	(0.7)
MIXI	1.2	0.0	(0.6)
Sugi	1.0	0.0	(0.6)
Sumitomo Mitsui Financial Group	0.0	2.2	(0.6)

Top Ten Relative Stock Contributors

5 years to 31 August 2026

Name	Portfolio (average weight) %	Index (average weight) %	Relative contribution* %
SoftBank Group	5.9	1.3	5.1
Sumitomo Mitsui Trust Group	3.8	0.3	2.4
INPEX	0.4	0.3	1.7
SWCC Corporation	0.3	0.0	1.2
Recruit	1.9	1.4	1.2
MS&AD Insurance	1.4	0.4	1.1
Murata	1.5	0.8	1.1
Chugoku Marine Paints	0.7	0.0	1.0
SBI Holdings	4.0	0.2	1.0
Toyota Motor	–	3.8	0.7

 

Bottom Ten Relative Stock Contributors

5 years to 31 August 2026

Name	Portfolio (average weight) %	Index (average weight) %	Relative contribution* %
Rakuten	3.7	0.2	(3.8)
CyberAgent	2.9	0.1	(2.9)
Mitsubishi UFJ Financial Group	–	2.5	(2.7)
Shiseido	1.6	0.3	(2.3)
Sysmex	1.7	0.2	(2.0)
Misumi	2.2	0.1	(1.9)
Pola Orbis	1.6	0.0	(1.9)
Unicharm	1.8	0.3	(1.9)
Oisix	1.6	0.0	(1.8)
Calbee	2.8	0.0	(1.8)

Source: Revolution and relevant underlying index providers.

* Baillie Gifford Japan Trust relative to TOPIX total return (in sterling terms).

See disclaimer on page 95.

Portfolio Positioning
As at 31 August 2026

Holding period	Secular Growth	57.0%*	Growth Stalwarts	22.9%*	Special Situations	8.5%*	Cyclical Growth	11.6%*
>10 Years 52.9%	SBI Holdings	4.0	Sony	4.1	SoftBank Group	5.3	Sumitomo Mitsui Trust Group	4.8
	Rakuten	3.6	Unicharm	2.0			Murata	1.2
	GMO Internet	3.4	Nintendo	1.7
	Recruit	3.4	Kose	1.1
	FANUC	2.7	Olympus	1.0
	CyberAgent	2.6	Pigeon	0.8
	MISUMI	2.6	PARK24	0.7
	SMC	2.4
	M3	1.0
	Nidec	1.0
	Broadleaf	1.0
	Sysmex	0.9
	Infomart	0.7
	Lifenet Insurance	0.5
	istyle	0.4
5-10 years 20.0%	GA Technologies	2.5	Calbee	2.1	COLOPL	0.8	Bridgestone	1.1
	Sato	2.5	Pola Orbis	1.4			DMG Mori	0.9
	Keyence	2.4	Sugi	0.7
	Shimano	1.8
	TKP	1.1
	Bengo4.com	1.0
	BASE	0.4
	Demae-Can	0.4
	MonotaRO	0.4
	Rizap	0.3
	PeptiDream	0.2
<5 years 27.1%	Oisix	2.4	Kansai Paint	1.8	Bandai Namco	1.4	Shin-Etsu Chemical	1.5
	Eisai	2.0	Nippon Paint	1.7	Casio Computer	1.0	SBI Shinsei Bank	0.8
	Seria	2.0	Square Enix	1.1			Sega Sammy	0.8
	Daikin Industries	1.3	Shiseido	1.0			Tokyo Electron	0.3
	Yaskawa Electric	1.0	Kao	0.9			Shima Seiki	0.2
	Vector	1.0	Tokyo Metro	0.8
	Money Forward	0.9
	Nihon M&A Center	0.8
	freee K.K.	0.8
	Nakanishi	0.8
	Harmonic Drive Systems	0.8

* % of total investments.

List of Investments
As at 31 August 2026

Name	Business	2026 Value £’000	2026 % of total investments	Absolute* performance %
SoftBank Group	Technology investment and telecommunications conglomerate	44,688	5.3	17.6
Sumitomo Mitsui Trust Group	Trust bank and asset management services	40,061	4.8	60.0
Sony	Electronics, gaming and entertainment conglomerate	34,051	4.1	(5.7)
SBI Holdings	Online financial services holding company	33,548	4.0	(10.8)
Rakuten	E-commerce marketplace and fintech operator	30,013	3.6	(22.5)
GMO Internet	Internet infrastructure and domain services provider	28,455	3.4	(1.3)
Recruit	Human resources and job placement services	28,444	3.4	95.2
FANUC	Industrial automation and robotics manufacturer	22,831	2.7	35.4
CyberAgent	Digital advertising and mobile gaming company	21,680	2.6	(30.3)
MISUMI	Online mechanical components supplier	21,341	2.6	55.4
GA Technologies	AI real estate investment platform	21,102	2.5	(32.2)
Sato	Barcode printer and labelling solutions	20,689	2.5	19.3
Keyence	Industrial automation sensors and equipment	20,479	2.4	36.2
SMC	Pneumatic equipment and automation manufacturer	20,183	2.4	44.4
Oisix	Organic food delivery subscription service	20,061	2.4	(3.2)
Calbee	Snack food and cereal manufacturer	17,963	2.1	8.0
Unicharm	Personal care and hygiene products	17,222	2.0	(5.3)
Eisai	Pharmaceutical drug developer and manufacturer	16,927	2.0	(1.6)
Seria	Retail chain	16,334	2.0	37.6
Kansai Paint	Automotive and industrial paint manufacturer	14,875	1.8	10.4
Shimano	Bicycle and fishing equipment manufacturer	14,868	1.8	13.0
Nintendo	Video game console and software developer	14,144	1.7	(36.4)
Nippon Paint	Paint and coatings manufacturer	13,918	1.7	4.5
Shin-Etsu Chemical#	Chemicals and semiconductor materials manufacturer	12,499	1.5	(16.3)†
Pola Orbis	Direct-sales cosmetics manufacturer	12,048	1.4	2.7
Bandai Namco#	Video games, toys and entertainment company	11,735	1.4	46.3†
Daikin Industries	Air conditioning systems manufacturer	10,963	1.3	6.0
Murata	Electronic components manufacturer	9,718	1.2	180.7
Bridgestone	Tyre and rubber products manufacturer	9,396	1.1	17.3
Square Enix	Video game publisher and developer	9,338	1.1	(18.9)
Kose	Cosmetics and skincare manufacturer	9,307	1.1	(4.0)
TKP	Meeting room rental operator	8,747	1.1	(14.0)
Yaskawa Electric#	Industrial automation and robotics manufacturer	8,736	1.0	16.8†
Olympus	Endoscopy-led medical device company	8,622	1.0	14.0
M3	Healthcare platform and medical services provider	8,363	1.0	(22.2)
Vector	Japan’s largest PR company	8,281	1.0	80.1
Nidec	Electric motor manufacturer	8,275	1.0	(26.6)
Casio Computer#	Consumer electronics and watch manufacturer	8,272	1.0	90.6†
Bengo4.com	Legal services portal operator; provider of CloudSign e-signature/contract management	8,239	1.0	49.6
Shiseido	Global cosmetics and beauty products	8,210	1.0	44.5
Broadleaf	Vertical SaaS and e-ordering platforms for the automotive aftermarket and other industries	8,032	1.0	22.6
DMG Mori	CNC machine tools manufacturer	7,818	0.9	(8.9)
Money Forward	Financial technology and accounting software	7,254	0.9	(8.7)
Kao	Personal care and cleaning products	7,197	0.9	1.7
Sysmex	Medical diagnostics equipment manufacturer	7,151	0.9	(1.6)
Nihon M&A Center	Merger and acquisition advisory services	6,956	0.8	(13.7)
Pigeon	Baby care products manufacturer	6,919	0.8	11.9
COLOPL	Mobile game developer	6,750	0.8	(19.8)
Tokyo Metro#	Urban railway operator	6,725	0.8	7.5†
freee K.K.	Cloud accounting software provider	6,661	0.8	28.1
Nakanishi	Dental equipment manufacturer	6,551	0.8	38.8
Harmonic Drive Systems#	Precision reduction gears and motion control manufacturer	6,418	0.8	47.8†
SBI Shinsei Bank#	Retail and corporate banking services	6,417	0.8	7.0†
Sega Sammy	Video games and entertainment developer	6,370	0.8	(5.9)
PARK24	Parking lot and car-sharing operator	6,263	0.7	(7.8)
Sugi	Drugstore chain operator	6,056	0.7	(34.2)
Infomart	B2B transaction platforms (ordering, e-invoicing, contracts), strong in food-service	5,619	0.7	61.5
Lifenet Insurance	Online life insurance provider	4,620	0.5	(41.3)
BASE	E-commerce platform provider	3,925	0.4	(6.9)
Demae-can	Food delivery platform	3,139	0.4	(1.3)
istyle	Beauty e-commerce platform	3,103	0.4	(20.8)
MonotaRO	Industrial supplies e-commerce platform	3,020	0.4	(29.6)
Rizap	Personal fitness training company	2,602	0.3	(22.6)
Tokyo Electron#	Semiconductor production equipment manufacturer	2,450	0.3	161.6†
Shima Seiki	Textile machinery manufacturer	2,126	0.2	(16.2)
PeptiDream	Biotechnology and drug discovery company	2,023	0.2	(33.4)
Total investments		836,791	100.0
Net liquid assets		35,720
Total assets		872,511
Borrowings		(103,920)
Equity shareholders’ funds		768,591

* Absolute performance has been calculated on a daily basis over the period 1 September 2025 to 31 August 2026 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 Chugoku Marine Paints, Kubota, Nifco, Nippon Ceramic, Noritsu Koki, Rohm, Sumitomo Metal Mining, MIXI, Raksul and Sawai Group.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 95.

Past performance is not a guide to future performance.

Viability Statement

Notwithstanding that the continuation vote of the Company is subject to the approval of shareholders annually, and the conditional tender offer set out in the Chairman’s Statement on page 6, the Directors have, in accordance with provision 31 of the UK Corporate Governance Code, assessed the prospects of the Company over a period of five years from the Balance Sheet date. The Directors continue to believe this period to be appropriate as it reflects the Company’s longer term investment strategy and to be a period during which, in the absence of any adverse change to the regulatory environment and to the tax treatment afforded to UK investment trusts, they do not expect there to be any significant change to the current principal and emerging risks facing the Company nor to the effectiveness of the controls employed to mitigate those risks. Furthermore, the Directors do not reasonably envisage any change in strategy or any events which would prevent the Company from operating over a period of five years. The Directors have no reason to believe that the continuation resolution will not be passed at the AGM.

In considering the viability of the Company, the Directors have conducted a robust assessment of each of the principal and emerging risks and uncertainties detailed on pages 30 to 33, and in particular the impact of market risk where a significant fall in Japanese equity markets would adversely impact the value of the investment portfolio. Specific leverage and liquidity stress testing was conducted during the year, including the impact of heightened market volatility and macroeconomic and geopolitical concerns, including inflation and interest rates. The Company’s investments are listed and readily realisable and can be sold to meet its liabilities as they fall due with the main liability currently being the bank borrowings. 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 addition, all of the key operations required by the Company are outsourced to third party service providers and it is reasonably considered that alternative providers could be engaged at relatively short notice.

The Board has considered the Company’s leverage and liquidity in the context of its borrowings. The leverage stress testing identified the impact of leverage in scenarios where gross assets fall by 25% and 50%, reflecting a range of market conditions that may adversely impact the portfolio. The liquidity stress testing identified the reduction in value of assets that can be liquidated within one month that would result in the value of those assets falling below the value of the borrowings. The stress testing did not indicate any matters of concern.

Based on the Company’s processes for monitoring revenue projections, share price premium/discount, the Managers’ compliance with the investment objective, asset allocation, the portfolio risk profile, leverage, counterparty exposure, liquidity risk and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five years.

Principal and Emerging Risks

As explained on pages 48 and 49, there is an ongoing process for identifying, evaluating and managing the risks, including emerging risks, faced by the Company on a regular basis. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including those that could threaten its business model, future performance, solvency or liquidity.

During the year, the Board and Audit Committee continued to review the Company’s risk management and internal control framework in preparation for the enhanced reporting requirements of Provision 29 of the UK Corporate Governance Code and Provision 34 of the AIC Code. As part of this work, the Company’s existing risk matrix has been consolidated into six Board-level principal risks. The underlying risks continue to be monitored individually and remain mapped to these principal risks.

The Board considers that the following represent the Company’s principal risks. The assessment of each risk reflects the Board’s view of its current significance and direction of travel. Further information on the Board’s oversight of risk management and internal controls is set out in the Corporate Governance Report on pages 48 and 49 and the Audit Committee Report on pages 54 to 56.

Baillie Gifford’s Business Risk Department provides regular updates covering the Company’s principal and emerging risks. The Board considers the current global economic and geopolitical environment to be a factor which may exacerbate a number of the principal risks rather than constituting a separate emerging risk.

Investment, Market, Portfolio & Financial Risk
What is the risk? The Company is exposed to the risk that its investment portfolio performs poorly relative to its benchmark and peer group, reducing the attractiveness of the Company to existing and potential shareholders. The Company pursues an actively managed, differentiated investment approach and its portfolio may therefore differ materially from the benchmark. Periods of significant relative underperformance, or a perception that the Company’s investment style has become less attractive, could reduce demand for the Company’s shares. The value of the portfolio is also exposed to wider market risks, including economic, geopolitical and social developments, natural disasters, changes in interest rates and currencies and other events which may result in significant market volatility or falls in asset values. The risk also encompasses the investment consequences of environmental, social and governance matters, including climate change, the cost and financial sustainability of operating the Company and compliance by the Managers with the Company’s investment objective, policy and investment management arrangements.	How is it managed? The Board reviews investment performance, portfolio positioning, attribution, the investment case for individual holdings and relevant market developments at each regular Board meeting and holds a separate strategy meeting annually. The Board approves the Company’s investment objective, policy and investment guidelines and receives assurance regarding compliance with investment restrictions. Portfolio concentration, liquidity and other risk characteristics are monitored by the Managers and their Investment Risk function. The Managers incorporate financially material governance, sustainability and climate considerations into their investment research and stewardship activities. The Board also monitors the Company’s revenue, expenditure and ongoing charges.	Rating and change HIGH 	Current assessment of risk This remains the Company’s most significant principal risk. During the year the Company’s NAV total return underperformed the benchmark. As set out in the Chairman’s Statement on page 6, the Board have introduced a conditional tender offer.
Discount, Shareholder Demand and Continuation Risk
What is the risk? The Company’s share price may trade at a significant discount or premium to its net asset value. A sustained or widening discount may reduce investor confidence and demand for the Company’s shares and may attract activist shareholders or other corporate activity. Protracted poor investment performance and/or a widening discount could also adversely affect shareholder support for the Company, including support for the annual continuation vote.	How is it managed? The Board regularly monitors the level of discount or premium relative to the Company’s history, peer group and wider market conditions. The Company has authority to buy back shares and to issue or reissue shares where the Board considers this to be in shareholders’ interests. The Board also monitors movements in the share register, shareholder sentiment, continuation-vote support and potential activist activity. The Managers and Broker maintain regular contact with shareholders and potential investors and provide the Board with feedback on investor sentiment, marketing activity and market demand.	Rating and change MODERATE ‑	Current assessment of risk The Company’s shares traded at an average discount of 9.5% throughout the year and it bought back 12,666,500 ordinary shares during the year. The Company held a General Meeting on 17 June 2026 to renew the share buy back authority and, as set out in the Chairman’s Statement on page 6, the Board have introduced a conditional tender offer.
Leverage, Liquidity & Refinancing Risk
What is the risk? The Company uses borrowings with the aim of enhancing long-term shareholder returns. Gearing magnifies movements in net asset value and may therefore increase losses when markets fall. The Company may be unable to obtain new borrowing or refinance existing facilities on acceptable terms. A breach of borrowing covenants or gearing limits could result in borrowings becoming repayable, while insufficient portfolio liquidity could impair the Company’s ability to meet financing obligations or other liabilities as they fall due.	How is it managed? All borrowing arrangements require Board approval. Gearing levels, facility terms and maturity dates are regularly reviewed by the Board. Compliance with loan covenants and gearing limits is monitored and potential breaches are escalated. The Company’s portfolio liquidity is monitored and the Board considers leverage, liquidity and covenant stress testing as part of its viability assessment. Refinancing requirements and lender relationships are monitored sufficiently in advance of facility maturity.	Rating and change LOW ‑	Current assessment of risk The Company renewed its ¥15 billion revolving credit facility with The Bank of New York Mellon during the year on equivalent terms. There were no breaches of loan covenants and leverage and liquidity stress testing did not identify matters of concern.
Regulatory, Legal, Tax & Reporting Risk
What is the risk? Failure to comply with applicable legal, regulatory or tax requirements could result in financial penalties, regulatory sanction, loss of investment trust status or other adverse consequences for the Company and its shareholders. The risk includes compliance with the UK Listing Rules, Disclosure Guidance and Transparency Rules, Companies Act, investment trust tax requirements, AIFMD requirements, market-abuse and inside-information obligations, data protection and other applicable regulation. Errors in NAV calculations, published financial information, regulatory announcements or other shareholder communications could also result in regulatory, financial or reputational consequences.	How is it managed? The Board receives regular reporting from the Managers’ Compliance, Business Risk and Company Secretarial functions and from external advisers where appropriate. Investment trust status and relevant tax requirements are monitored throughout the year. Processes are maintained for the identification and handling of inside information and for AIFMD regulatory reporting and limit monitoring. NAV calculations, the Interim and Annual Reports, regulatory announcements and other published financial information are subject to structured preparation and review procedures before publication.	Rating and change LOW ‑	Current assessment of risk There were no material regulatory or tax compliance matters identified during the year and established monitoring and review processes continued to operate.
Operational Resilience, Third-Party & Asset Safekeeping Risk
What is the risk? The Company is externally managed and relies on Baillie Gifford and other third-party service providers for its day-to-day operations. Failure of the systems, processes, controls, personnel or operational resilience arrangements of a key service provider could disrupt the Company’s operations or result in financial loss, regulatory breach or reputational damage. The risk includes business continuity and crisis management, failure or impairment of a key service provider, counterparty or Custodian failure, fraud or misappropriation of Company assets, inaccurate accounting or shareholder records, failures in reconciliation or asset safeguarding, and key-person dependency.	How is it managed? The Board and Managers monitor the performance, financial standing, control environments and operational resilience arrangements of the Company’s principal service providers. The Audit Committee reviews relevant independently audited internal-control reports and receives reports from the Depositary. Business-continuity and disaster-recovery arrangements are maintained and tested. Cash and investment holdings are independently reconciled to Custodian records. Segregation of duties, authorisation controls and reconciliation processes are designed to safeguard the Company’s assets and prevent or detect fraud or misappropriation. The Management Engagement Committee undertakes a formal annual review of the Managers and other key service providers.	Rating and change LOW ‑	Current assessment of risk No material interruption to services or Board-level control exception was identified during the year. The Board continues to receive assurance over custody, reconciliation, accounting and service-provider controls.
Cyber & Information Security Risk
What is the risk? A cyber attack or other information-security incident affecting Baillie Gifford or a material third-party service provider could compromise the confidentiality, integrity or availability of systems and data and disrupt services provided to the Company. The cyber threat continues to evolve. Emerging technologies, including artificial intelligence (AI) and quantum computing, may create new vulnerabilities or increase existing information-security risks, while regulatory requirements and industry good practice continue to develop.	How is it managed? Baillie Gifford maintains information-security and cyber-resilience arrangements designed to protect the confidentiality, integrity and availability of systems and information. The Audit Committee receives regular reporting from Baillie Gifford’s Business Risk and Information Security functions. Incident-response, business-continuity and disaster-recovery arrangements are maintained and tested. Cyber-security due diligence is undertaken in respect of material third-party providers and relevant control reports are reviewed. Emerging technology risks, including those arising from AI and quantum computing, are incorporated into ongoing risk assessment and reporting.	Rating and change HIGH 	Current assessment of risk Cyber attacks continue to increase in frequency and sophistication and emerging technologies may increase existing information-security risks. The Board therefore considers the direction of risk to be increasing notwithstanding the controls and assurance arrangements in place.
Emerging Risks
As explained on pages 48 and 49, the Board has regular discussions on principal and emerging risks, including any risks which are not an immediate threat but could arise in the longer term. The Board considers emerging risks at each Board meeting and discusses any mitigations required.



Increasing Risk



Decreasing Risk

‑

Stable Risk

Promoting the Success of the Company (Section 172 Statement)

Under section 172 of the Companies Act 2006, the directors of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters and to the extent applicable) to: a) the likely consequences of any decision in the long-term; b) the interests of the company’s employees; c) the need to foster the company’s business relationships with suppliers, customers and others; d) the impact of the company’s operations on the community and the environment; e) the desirability of the company maintaining a reputation for high standards of business conduct; and f) the need to act fairly as between members of the company.

In this context, having regard to Baillie Gifford Japan Trust being an externally managed investment company with no employees, the Board considers the Company’s key stakeholders to be: its existing and potential new shareholders; its externally-appointed Managers and Secretaries (Baillie Gifford); its portfolio companies; other professional service providers (Corporate Broker, Registrar, Auditors, Custodian and Depositary); lenders; and wider society and the environment.

The Board considers that the interests of the Company’s key stakeholders are aligned, in terms of wishing to see the Company deliver sustainable long-term capital growth, in line with the Company’s stated objective and strategy, and meet the highest standards of legal, regulatory, and commercial conduct, with the differences between stakeholders being merely a matter of emphasis on those elements.

The Board recognises the importance of keeping the interests of the Company and its stakeholders, in aggregate, firmly front of mind in its decision making. The Company Secretaries are available at all times to the Board to ensure that suitable consideration is given to the range of factors to which the Directors should have regard. In addition to ensuring that the Company’s stated investment objective was being pursued, key decisions and actions during the year and subsequently which required the Directors to have regard to applicable section 172 factors included:

• as set out in the Chairman’s Statement on page 6, the Board have introduced a conditional tender offer;

• as part of the Board’s succession planning, the completion of the recruitment process and subsequent appointment of Robert Talbut with effect from 2 March 2026 to enhance the Board’s fund management and investment industry expertise. This appointment is consistent with the AIC Corporate Governance Code principle that ‘a successful company is led by an effective board, whose role is to promote the long-term success of the company, generating value for shareholders and contributing to wider society.’ The search was conducted using external consultants Cornforth Consulting with due regard for gender and ethnic diversity;

• the renewal of the Revolving Credit Facility with The Bank of New York Mellon;

• renewal of buy back authority at a General Meeting held on 17 June 2026 in order to provide the Company with sufficient authority to continue to operate its share buy back programme;

• the purchase of 12,666,500 of the Company’s own shares into treasury at a discount to net asset value, for subsequent reissue, in order to ensure the Company’s shareholders found liquidity for their shares when natural market demand was insufficient, and on terms that enhance net asset value for remaining shareholders;

• between 1 September and 23 October 2026, the purchase of 1,505,000 shares, at a discount, enhancing net asset value for continuing shareholders; and,

• the Board’s decision to declare a final dividend of 10p per ordinary share.

Stakeholder	Why we engage	How we engage and what we do
Shareholders	Shareholders are, collectively, the Company’s owners: providing them with a return for their investment in accordance with the Company’s investment policy and objective is the reason for its existence.	The Board places great importance on communication with shareholders. The AGM provides the key forum for the Board and Managers to present to shareholders on the Company’s performance, future plans and prospects. It also allows shareholders the opportunity to meet with the Board and Managers and raise questions and concerns. The Chairman is available to meet with shareholders as appropriate. The Managers meet regularly with shareholders and their representatives, reporting their views back to the Board. Directors also attend certain shareholder presentations, in order to gauge shareholder sentiment first hand. Shareholders may also communicate with members of the Board at any time by writing to them at the Company’s registered office or to the Company’s Broker. These communication opportunities help inform the Board when considering how best to promote the success of the Company for the benefit of all shareholders over the long-term.
Baillie Gifford – Managers and Secretaries	The Company’s Board has delegated the management of the Company’s portfolio, and the administration of the Company’s operations including fulfilment of regulatory and taxation reporting requirements, to Baillie Gifford.	The Board seeks to engage with its Managers, and other service providers, in a collaborative and collegiate manner, encouraging open and constructive discussion and debate, while also ensuring that appropriate and regular challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships with the Company’s providers, with a view to ensuring the interests of the Company’s shareholders are best served by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct.
Portfolio companies	As all of the Company’s operations are conducted by third party professional providers, it is the companies held in its investment portfolio which have the primary real-world impact in terms of social and environmental change, both positively and negatively, as well as generating, through their commercial success, the investment growth sought by the Company’s shareholders.	The Board is cognisant of the need to consider the impact of the Company’s investment strategy and policy on wider society and the environment. In addition to monitoring the performance of the Company’s investment portfolio, the Board considers that its oversight of environmental, social and governance (‘ESG’) matters is an important part of its responsibility to all stakeholders and that proper consideration of ESG factors sits naturally with Baillie Gifford Japan Trust’s aim of providing a sustainable basis for adding value for shareholders. The Board’s review of the Managers includes an assessment of their ESG approach and its application in making investment decisions. Information on how the Managers engage with investee companies can be found on pages 23 to 26.
Service providers • Broker • Depositary • Custodian • Registrar	The Company’s third party service providers ensure the Company’s day-to-day operations run smoothly.	The Board ensures that it promotes the success of the Company by engaging third party service providers who have the resources to deliver the service required. The service providers report regularly to the Board throughout the year and the Managers also engage regularly with the providers and inform the Board should any areas of concern arise. The Management Engagement Committee carries out a review annually of the level of services delivered by each service provider and the terms on which they are engaged. The Board seeks assurance that there has been no disruption to services provided to the Company during the year.
Auditor	The Company’s Auditor has a responsibility to provide an opinion on whether the Company’s Financial Statements as a whole are free from material misstatement, as set out in more detail in the Auditor’s Report to the Members on pages 60 to 66.	The Company’s Auditor meets with the Audit Chair and the Board, in the absence of the Managers where deemed necessary, and the Managers undertake to provide all information requested by the Auditor in connection with the Company’s annual audit promptly and to ensure that it is complete and accurate in all respects.
Lenders	Lenders such as holders of debt instruments (private placement loan notes) and banks providing fixed, floating or revolving credit facilities have an interest in the Company’s ongoing financial health and viability.	The Company’s legal advisers review all legal agreements in connection with the Company’s debt arrangements and advise the Board on the appropriateness of the terms and covenants. The Managers and Secretaries ensure compliance with lenders’ covenants and maintain a good working relationship.
AIC/industry peers	The Association of Investment Companies (‘AIC’) and the Company’s investment trust industry peers have an interest in the Company’s conduct and performance, as adverse market sentiment towards one investment trust can affect attitudes towards the wider industry.	The Company is a member of the AIC, and the Directors and/or the Managers and Secretaries (as appropriate) participate in technical reviews, requests for feedback on proposed legislation or regulatory developments, corporate governance discussions and/or training.

Culture

As an externally managed investment company with no employees, Baillie Gifford Japan’s culture is expressed through its Board and its third party service providers, in particular its Managers, in their interactions with shareholders and other stakeholders. The Board’s assessment of its own interactions is described in its Section 172 Statement on pages 34 and 35 and the Baillie Gifford Statement on Stewardship, which describes the Managers’ culture of constructive engagement, which can be found on the Managers’ website: bailliegifford.com.

Employees, Human Rights and Community Issues

The Board recognises the requirement to provide information about employees, human rights and community issues. As the Company has no employees, all its Directors are non-executive and all its functions are outsourced, there are no disclosures to be made in respect of employees, human rights and community issues. Further information on the Company’s approach to environmental, social and governance (‘ESG’) matters is provided on pages 23 to 26.

Environmental, Social and Governance Policy

Details of the Company’s policy on socially responsible investment can be found on page 23.

The Company considers that it does not fall within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human trafficking statement. In any event, the Company considers its supply chains to be of low risk as its suppliers are typically professional advisers. A statement by the Managers under the Act has been published on the Managers’ website at bailliegifford.com.

Climate Change

The Board recognises that climate change poses a serious threat to our environment, our society and to economies and companies around the globe. Addressing the underlying causes is likely to result in companies that are high emitters of carbon facing greater societal and regulatory scrutiny and higher costs to account for the true environmental impact of their activities. Baillie Gifford’s Task Force on Climate‑Related Financial Disclosures (‘TCFD’) Climate Report is available on the Managers’ website at bailliegifford.com. A Japan Trust specific TCFD climate report is also available on the Company’s pages of the Managers’ website at japantrustplc.co.uk and is a means by which the portfolio’s carbon footprint and exposure to climate risk are measured and reported. Companies disclosing their emissions and communicating emissions plans will be a helpful place from which to begin more useful discussions with management teams, industry experts and regulators. Although this can direct our efforts, the Managers believe that carbon footprint metrics in isolation are unhelpful – that some firms pollute more than others is a mostly meaningless observation. More significant is the Managers’ pursuit of long-term growth opportunities which typically involves investment in entrepreneurial, disruptive and technology-driven businesses. These companies are often capital‑light with a low carbon footprint. The Managers utilise data sourced from a third party provider (MSCI via the Factset platform) to map the carbon footprint of The Baillie Gifford Japan Trust’s portfolio which is estimated to be 68.3% lower than the Company’s benchmark (TOPIX) and is based on 98.6% of the value of the Company’s equity portfolio which reports on carbon emissions and other carbon related characteristics.

The Managers, Baillie Gifford & Co, are signatories to the Carbon Disclosure Project and are also members of the Asian Corporate Governance Association and the International Corporate Governance Network.

Gender Representation

At 31 August 2026, the Board comprises five Directors, two male and three female. The Company has no employees. The Board’s policy on diversity is set out on page 47.

Future Developments of the Company

The outlook for the Company for the next 12 months is set out in the Chairman’s Statement on pages 7 and 8 and the Managers’ Review on page 12.

The Strategic Report which comprises pages 05 to 36 was approved by the Board of Directors and signed on its behalf on 27 October 2026.

Sam Davis
Chairman

Statement of Directors’ Responsibilities
in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and 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 they are required to prepare the Financial Statements in accordance with applicable law and United Kingdom Accounting Standards, including FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.

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 profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable United Kingdom 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;

• assess the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

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 comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with those laws and regulations.

The Directors are responsible for the maintenance and integrity of the Company’s pages of the Managers’ website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in Respect of the Annual Financial Report

We confirm to the best of our knowledge:

• the Financial Statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss 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.

We consider the Annual Report and Financial Statements taken as a whole, is 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
Sam Davis
27 October 2026

Income Statement
For the year ended 31 August

	Notes	2026 Revenue £’000	2026 Capital £’000	2026 Total £’000	2025 Revenue £’000	2025 Capital £’000	2025 Total £’000
Gains on investments	9	–	91,914	91,914	–	114,301	114,301
Currency gains	14	–	7,727	7,727	–	3,155	3,155
Income	2	14,459	–	14,459	14,939	–	14,939
Investment management fee	3	(4,440)	–	(4,440)	(4,190)	–	(4,190)
Other administrative expenses	4	(773)	–	(773)	(781)	–	(781)
Net return before finance costs and taxation		9,246	99,641	108,887	9,968	117,456	127,424
Finance costs of borrowings	5	(2,395)	–	(2,395)	(2,507)	–	(2,507)
Net return on ordinary activities before taxation		6,851	99,641	106,492	7,461	117,456	124,917
Tax on ordinary activities	6	(1,452)	–	(1,452)	(1,487)	–	(1,487)
Net return on ordinary activities after taxation for the financial year attributable to equity shareholders		5,399	99,641	105,040	5,974	117,456	123,430
Return per ordinary share	7	7.47p	137.90p	145.37p	7.32p	143.86p	151.18p

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.

The accompanying notes on pages 71 to 83 are an integral part of the Financial Statements.

Balance Sheet

		As at 31 August		As at 31 August
	Notes	2026 £’000	2026 £’000	2025 £’000	2025 £’000
Fixed assets
Investments	9		836,791		889,768
Current assets
Debtors	10	1,588		2,473
Cash and cash equivalents		35,836		15,515
		37,424		17,988
Creditors
Amounts falling due within one year	11	(50,200)		(59,114)
Net current liabilities			(12,776)		(41,126)
Total assets less current liabilities			824,015		848,642
Creditors
Amounts falling due after more than one year	12		(55,424)		(60,494)
Net assets			768,591		788,148
Capital and reserves
Share capital	13		4,717		4,717
Share premium	14		213,902		213,902
Capital redemption reserve	14		203		203
Capital reserve	14		539,103		556,398
Revenue reserve	14		10,666		12,928
Equity shareholders’ funds			768,591		788,148
Net asset value per ordinary share	15		1,185.6p		1,017.1p

The Financial Statements of The Baillie Gifford Japan Trust PLC (Company registration number SC075954) on pages 67 to 83 were approved and authorised for issue by the Board and were signed on 27 October 2026.

Sam Davis
Chairman

The accompanying notes on pages 71 to 83 are an integral part of the Financial Statements.

Statement of Changes in Equity

For the year ended 31 August 2026

	Notes	Share capital £’000	Share premium account £’000	Capital redemption reserve £’000	Capital reserve £’000	Revenue reserve £’000	Shareholders’ funds £’000
Shareholders’ funds at 1 September 2025		4,717	213,902	203	556,398	12,928	788,148
Ordinary shares bought back	13, 14	–	–	–	(116,936)	–	(116,936)
Net return on ordinary activities after taxation	14	–	–	–	99,641	5,399	105,040
Dividends paid during the year	8	–	–	–	–	(7,661)	(7,661)
Shareholders’ funds at 31 August 2026		4,717	213,902	203	539,103	10,666	768,591

For the year ended 31 August 2025

	Notes	Share capital £’000	Share premium account £’000	Capital redemption reserve £’000	Capital reserve £’000	Revenue reserve £’000	Shareholders’ funds £’000
Shareholders’ funds at 1 September 2024		4,717	213,902	203	514,122	15,435	748,379
Ordinary shares bought back	13, 14	–	–	–	(75,180)	–	(75,180)
Net return on ordinary activities after taxation	14	–	–	–	117,456	5,974	123,430
Dividends paid during the year	8	–	–	–	–	(8,481)	(8,481)
Shareholders’ funds at 31 August 2025		4,717	213,902	203	556,398	12,928	788,148

The accompanying notes on pages 71 to 83 are an integral part of the Financial Statements.

Cash Flow Statement

For the year ended 31 August

	Notes	2026 £’000	2026 £’000	2025 £’000	2025 £’000
Cash flows from operating activities
Net return on ordinary activities before taxation		106,492		124,917
Adjustments to reconcile company profit before tax to net cash flow from operating activities
Net gains on investments	9	(91,914)		(114,301)
Currency gains	14	(7,727)		(3,155)
Finance costs of borrowings	5	2,395		2,507
Other capital movements
Changes in debtors		94		147
Changes in creditors		(35)		136
Taxation
Overseas withholding tax incurred		(1,452)		(1,505)
Cash from operations†			7,853		8,746
Interest paid			(2,390)		(2,371)
Net cash inflow from operating activities			5,463		6,375
Cash flows from investing activities
Acquisitions of investments		(152,365)		(59,469)
Disposals of investments		297,776		169,229
Net cash inflow from investing activities			145,411		109,760
Cash flows from financing activities
Ordinary shares bought back		(118,560)		(76,206)
Dividends paid	8	(7,661)		(8,481)
Bank loans drawn down		107,974		140,219
Loan notes drawn down		–		61,539
Bank loans repaid		(110,178)		(221,146)
Net cash outflow from financing activities			(128,425)		(104,075)
Increase in cash and cash equivalents			22,449		12,060
Exchange movements			(2,128)		(1,850)
Cash and cash equivalents at start of period			15,515		5,305
Cash and cash equivalents at end of period*			35,836		15,515

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

† Cash from operations includes dividends received of £14,541,000 (2025 – £15,054,000) and interest received of £1,000 (2025 – £1,000).

The accompanying notes on pages 71 to 83 are an integral part of the Financial Statements.

Notes to the Financial Statements

The Baillie Gifford Japan Trust PLC (the ‘Company’) is a public company limited by shares and is incorporated in Scotland with registered number SC075954. The Company is an investment company within the meaning of section 833 of the Companies Act 2006 and carries on business as an investment trust.

01 Principal Accounting Policies

The Financial Statements for the year to 31 August 2026 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 July 2022.

a. Basis of Accounting

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 (a factor in Investment, Market, Portfolio & Financial Risk) set out on page 30, 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 29 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 2027, 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 Managers, who are subject to the UK’s regulatory environment, are also UK based.

b. Financial Instruments

The Company’s investments are classified as held at fair value through profit and loss in accordance with sections 11 and 12 of FRS 102.

Purchases and sales of investments are recognised on a trade date basis.

Investments in securities are initially recognised at fair value which is taken to be their cost excluding expenses incidental to purchases, and are subsequently measured at fair value through profit and loss. The fair value of listed investments is the last traded price which is equivalent to the bid price on Japanese markets. Changes in the fair value of investments and gains and losses on disposal are recognised as capital items in the Income Statement.

c.  Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and deposits repayable on demand. Deposits are repayable on demand if they can be withdrawn at any time without notice and without penalty or if they have a maturity or period of notice of not more than one working day.

d.  Income

i. Income from equity investments is brought into account on the date on which the investments are quoted ex‑dividend or, where no ex-dividend date is quoted, when the Company’s right to receive payment is established.

ii. Special dividends are treated as repayments of capital or income depending on the facts of each particular case.

iii. If scrip is taken in lieu of dividends in cash, the net amount of the cash dividend declared is credited to the revenue account. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised as capital.

iv. Interest from fixed interest securities is recognised on an effective yield basis (none were held in the period).

v. Overseas dividends include withholding tax deducted at source.

vi. Interest receivable on bank deposits is recognised on an accruals basis.

e.  Expenses

All expenses including investment management fees, are accounted for on an accruals basis and are charged to the revenue account except where they relate directly to the acquisition or disposal of an investment (transaction costs), in which case they are recognised as capital within gains/losses on investments. Expenses directly relating to the issuance of shares are deducted from the proceeds of such issuance.

f.  Finance Costs

Long-term borrowings are carried in the Balance Sheet at amortised cost, representing the cumulative amount of net proceeds after issue, plus accrued finance costs. The finance costs of such borrowings are allocated to the revenue account at a constant rate on the carrying amount.

Gains and losses on the repurchase or early settlement of debt are wholly charged to capital.

g. Taxation

The taxation charge represents non-recoverable overseas taxes which is charged to the revenue account as it relates to income received. Deferred taxation is provided on all timing differences which have originated but not reversed by the Balance Sheet date, calculated on a non-discounted basis at the tax rates expected to apply when the timing differences reverse, based on what has been enacted or substantially enacted, relevant to the benefit or liability. Deferred tax assets are recognised only to the extent that it is more likely than not that there will be taxable profits from which underlying timing differences can be deducted.

h. Foreign Currencies

Transactions involving foreign currencies are converted at the rate ruling at the time of the transaction. Monetary assets, liabilities and equity investments held at fair value in foreign currencies are translated at the closing rates of exchange at the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the Income Statement and classified as a revenue or capital item as appropriate.

i.  Capital Reserve

Gains and losses on disposal of investments, changes in the fair value of investments held, exchange differences of a capital nature and the amount by which other assets and liabilities valued at fair value differ from their book cost are dealt with in this reserve. Purchases of the Company’s own shares for cancellation are also funded from this reserve.

j. Significant Estimates and Judgements

The Directors do not believe that any accounting judgements or estimates have been applied to these accounting statements that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year. The Directors consider that the preparation of the Financial Statements involves the following key judgements:

(i) the functional currency of the Company is sterling (see rationale in 1(a) above); and

(ii) the determination as to whether special dividends should be treated as a repayment of capital or income depending on the facts of each particular case.

k. Single Segment Reporting

The Company is engaged in a single segment of business, being that of an investment trust company, consequently no business segmental analysis is required.

02 Income

	2026 £’000	2025 £’000
Income from investments
Overseas dividends	14,458	14,938
Other income
Deposit interest	1	1
Total income	14,459	14,939

Special dividends received during the year amounted to £40,000 (2025 – £188,000) with £40,000 (2025 – £188,000) classed as revenue and none (2025 – none) classed as capital.

03 Investment Management Fee

	2026 £’000	2025 £’000
Investment management fee	4,440	4,190

Details of the Investment Management Agreement are disclosed on page 41. For the year to 31 August 2026, 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.

04 Other Administrative Expenses

	2026 £’000	2025 £’000
General administrative expenses	55	103
Directors’ fees	172	176
Marketing*	97	100
Custody charges	71	79
Depositary fees	76	77
Auditors’ remuneration for audit services†	55	53
Stock Exchange Listing fees	45	36
Regulatory fees	38	35
Legal and professional fees	59	32
Broker fees	30	30
Registrar fees	33	24
AIC fees	28	22
Directors’ liability insurance	14	14
	773	781

* The Company is part of a marketing programme which includes all the Investment Trusts managed by the Managers. The marketing strategy has an ongoing objective to stimulate demand for the Company’s shares. The cost of this marketing strategy is borne in partnership by the Company and the Managers. The Managers match the Company’s marketing contribution and provide the resource to manage and run the programme.

† Auditor’s remuneration above is exclusive of VAT. There were no non-audit fees paid to the Auditor during the year (2025 – nil).

05 Finance Costs of Borrowings

	2026 £’000	2025 £’000
Bank loans	1,212	1,501
Loan notes	1,183	1,006
	2,395	2,507

06 Tax on Ordinary Activities

	2026 £’000	2025 £’000
Analysis of charge in year
Overseas taxation	1,452	1,487
Factors affecting tax charge for year
The tax assessed for the year is lower than the average standard rate of corporation tax in the UK of 25% (2025 – 25%). The differences are explained below:
Net return on ordinary activities before taxation	106,492	124,917
Net return multiplied by the average standard rate of corporation tax in the UK of 25% (2025 – 25%)	26,623	31,229
Effects of:
Capital returns not taxable	(24,910)	(29,364)
Income not taxable	(3,615)	(3,734)
Overseas withholding tax	1,452	1,487
Taxable losses in year not utilised	1,902	1,869
Tax charge for the year	1,452	1,487

Factors that may affect Future Tax Charges

At 31 August 2026 the Company had surplus management expenses and losses on non-trading loan relationships of £96,844,000 (2025 – £92,082,000), resulting in a potential deferred tax at 25% £24,211,000 (2025 – £23,020,000). No deferred tax asset has been recognised in respect of these amounts because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will make taxable revenue profits in the future and it is not liable to tax on its capital gains.

Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to maintain that status in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

07  Net Return Per Ordinary Share

	2026 Revenue	2026 Capital	2026 Total	2025 Revenue	2025 Capital	2025 Total
Net return per ordinary share	7.47p	137.90p	145.37p	7.32p	143.86p	151.18p

Net revenue return per ordinary share is based on the net revenue profit after taxation of £5,399,000 (2025 – net revenue profit of £5,974,000) and on 72,255,864 (2025 – 81,645,278) 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 £99,641,000 (2025 – net capital profit of £117,456,000) and on 72,255,864 (2025 – 81,645,278) 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 £105,040,000 (2025 – total profit of £123,430,000) and on 72,255,864 (2025 – 81,645,278) 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.

08 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 £5,399,000. The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable by way of dividend.

	2026	2025	2026 £’000	2025 £’000
Amounts recognised as distributions in the year:
Previous year’s final dividend per ordinary share  (paid 15 December 2025, 2024 paid on 18 December 2024)	10.00p	10.00p	7,661	8,481

	2026	2025	2026 £’000	2025 £’000
Dividends paid and payable in respect of the year:
Proposed final dividend per ordinary share (payable 22 December 2026, 2025 paid 15 December 2025)	10.00p	10.00p	6,482	7,749*

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

09 Investments

	2026 £’000	2025 £’000
Financial assets
Listed equities	836,791	889,768
Total financial asset investments	836,791	889,768

	Listed Equities 2026 £’000	Listed Equities 2025 £’000
Cost of investments held at start of year	795,838	847,222
Unrealised appreciation at start of year	93,930	39,113
Value of investments held at start of year	889,768	886,335
Movements in year:
Purchases at cost	152,095	58,341
Sales – proceeds	(296,986)	(169,209)
Sales – realised gains on sales	102,679	59,484
Movement in unrealised appreciation	(10,765)	54,817
Value of investments held at end of year	836,791	889,768
Cost of investments held at end of year	753,626	795,838
Unrealised appreciation at end of year	83,165	93,930
Value of investments held at end of year	836,791	889,768

The transaction costs of purchases and sales were £55,000 (2025 – £22,000) and £94,000 (2025 – £48,000) respectively.

The Company received £296,986,000 (2025 – £169,209,000) from investments sold during the year. The book costs of these investments when they were purchased was £194,307,000 (2025 – £109,725,000). 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.

	2026 £’000	2025 £’000
Gains on investments
Realised gains on sales	102,679	59,484
Changes in investment holding gains	(10,765)	54,817
	91,914	114,301

10 Debtors

	2026 £’000	2025 £’000
Due within one year:
Income accrued and prepaid expenses	1,577	1,675
Sales for subsequent settlement	–	790
Other debtors	11	8
	1,588	2,473

The carrying amount of debtors is a reasonable approximation of fair value.

11 Creditors – Amounts Falling Due Within One Year

	2026 £’000	2025 £’000
Bank loans	48,496	55,453
Purchases for subsequent settlement	–	270
Buybacks payable	16	1,640
Other creditors and accruals	1,688	1,751
	50,200	59,114

Included in other creditors is £1,119,000 (2025 – £1,146,000) in respect of the investment management fee.

Borrowing facilities

	At 31 August 2026 Drawings	At 31 August 2025 Drawings
Due within one year:
1 year floating rate revolving credit facility with The Bank of New York Mellon for ¥15,000 million, expiring August 2027	¥10,500 million (£48.496 million) at TIBOR 1.52% + 1.15% margin = 2.67%	¥11,000 million (£55.453 million) at TIBOR 0.77% + margin 1.15% = 1.92%

The revolving credit facility in place at 31 August 2025 expired in August 2026 and was renewed for a further year, expiring in August 2027.

The main covenants relating to the above loans are:

i. Total borrowings shall not exceed 30% of the Company’s net asset value; and

ii. The Company’s minimum net asset value shall be ¥48,545,000,000 (£224,000,000).

There were no breaches of loan covenants during the year.

12 Creditors – Amounts Falling Due After More Than One Year

	2026 £’000 Drawings	2025 £’000 Drawings
Loan notes
Due after one year:
Fixed rate unsecured private notes with Canada Life:
– ¥4,000 million Series A Senior Notes due 20 November 2029	¥4,000 million at 1.56% £18,475,000	¥4,000 million at 1.56% (£20,165,000)
– ¥4,000 million Series B Senior Notes due 20 November 2034	¥4,000 million at 2.05% £18,475,000	¥4,000 million at 2.05% (£20,165,000)
– ¥4,000 million Series C Senior Notes due 20 November 2038	¥4,000 million at 2.55% £18,475,000	¥4,000 million at 2.55% (£20,164,000)
	55,424	60,494

The main covenants relating to the above loan notes are:

i. Net borrowings shall not exceed 30% of the Company’s adjusted assets; and

ii. The Company’s minimum net asset value shall be ¥48,545,000,000 (£224,000,000).

There were no breaches of loan covenants during the year.

13 Called-up Share Capital

	2026 Number	2026 £’000	2025 Number	2025 £’000
Allotted, called-up and fully paid ordinary shares of 5p each	64,824,940	3,242	77,491,440	3,875
Treasury shares of 5p each	29,503,269	1,475	16,836,769	842
Total	94,328,209	4,717	94,328,209	4,717

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 2026, 12,666,500 shares with a nominal value of £633,325, representing 16.3% of the issued share capital at 31 August 2025, were bought back at a cost of £116,936,000 and held in treasury (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). At 31 August 2026 the Company had authority to buy back 7,607,735 ordinary shares. Over the period from 1 September 2026 to 23 October 2026 a further 1,505,000 shares have been bought back and held in treasury at a cost of £16,085,000.

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

In the year to 31 August 2026 the Company sold no ordinary shares from treasury (2025 – no ordinary shares). The Company issued no ordinary shares (2025 – no ordinary shares). As at 31 August 2026 the Company had the authority to issue 7,692,144 ordinary shares.

Over the period from 1 September 2026 to 23 October 2026 no further shares were issued by the Company.

14 Capital and Reserves

	Share capital £’000	Share premium account £’000	Capital redemption reserve £’000	Capital reserve £’000	Revenue reserve £’000	Shareholders’ funds £’000
At 1 September 2025	4,717	213,902	203	556,398	12,928	788,148
Ordinary shares bought back	–	–	–	(116,936)	–	(116,936)
Realised gains on sales	–	–	–	102,679	–	102,679
Changes in investment holding gains	–	–	–	(10,765)	–	(10,765)
Exchange differences on borrowings	–	–	–	9,856	–	9,856
Exchange differences on settlement of investment transactions	–	–	–	(967)	–	(967)
Other exchange differences	–	–	–	(1,162)	–	(1,162)
Dividends paid in the year	–	–	–	–	(7,661)	(7,661)
Revenue for the year	–	–	–	–	5,399	5,399
At 31 August 2026	4,717	213,902	203	539,103	10,666	768,591

	Share capital £’000	Share premium account £’000	Capital redemption reserve £’000	Capital reserve £’000	Revenue reserve £’000	Shareholders’ funds £’000
At 1 September 2024	4,717	213,902	203	514,122	15,435	748,379
Ordinary shares bought back	–	–	–	(75,180)	–	(75,180)
Realised gains on sales	–	–	–	59,484	–	59,484
Changes in investment holding gains	–	–	–	54,817	–	54,817
Exchange differences on borrowings	–	–	–	5,005	–	5,005
Exchange differences on settlement of investment transactions	–	–	–	(353)	–	(353)
Other exchange differences	–	–	–	(1,497)	–	(1,497)
Dividends paid in the year	–	–	–	–	(8,481)	(8,481)
Revenue for the year	–	–	–	–	5,974	5,974
At 31 August 2025	4,717	213,902	203	556,398	12,928	788,148

The capital reserve includes unrealised investment holding gains of £83,165,000 (2025 – £93,930,000) as disclosed in note 9.

The revenue reserve of £10,666,000 and the capital reserve (to the extent it constitutes realised profits) of £449,997,000 are distributable.

15 Shareholders’ Funds

The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows:

	2026	2025
Shareholders’ funds	£768,591,000	£788,148,000
Number of ordinary shares in issue at the year end*	64,824,940	77,491,440
Shareholders’ funds per ordinary share	1,185.6p	1,017.1p

* Excluding shares held in treasury at 31 August 2026 and 31 August 2025.

16 Analysis of Change in Net Debt

	At 1 September 2025 £’000	Cash flows £’000	Other non-cash changes £’000	Exchange movement £’000	At 31 August 2026 £’000
Cash at bank and in hand	15,515	22,449	–	(2,128)	35,836
Loans due within one year	(55,453)	2,204	–	4,753	(48,496)
Loan notes due after one year	(60,494)	–	(32)	5,102	(55,424)
	(100,432)	24,653	(32)	7,727	(68,084)

17 Contingent Liabilities, Guarantees and Financial Commitments

There were no contingent liabilities, guarantees or financial commitments as at 31 August 2026.

18 Related Party Transactions and Transactions with Manager

Related Party Transactions

The Directors’ fees for the year and Directors’ shareholdings at 31 August 2026 are detailed in the Directors’ Remuneration Report on page 52. No Director has a contract of service with the Company.

Transactions with Manager

The management fee due to Baillie Gifford & Co Limited is set out in note 3 on page 73 and the amount accrued at 31 August 2026 is set out in note 11 on page 77. Details of the Investment Management Agreement are set out on page 41.

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.

NAV can also be expressed with borrowings valued at an estimate of their market worth rather than at their book value. This is referred to as NAV with borrowings at fair value. The fair value of the loan notes is calculated using a comparable debt approach, by reference to a basket of corporate debt. In general, an increase in market interest rates reduces the fair value of fixed-rate debt, while a decrease increases its fair value, all else being equal. The fair value of the Company’s short-term bank loan is considered to approximate its book value. Further details of the fair value of the Company’s borrowings are provided in Note 19, Financial Instruments, to the Financial Statements on page 83. The reconciliation of NAV with borrowings valued at book value to NAV with borrowings valued at fair value is set out below.

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

	2026 £’000	2025 £’000
Net asset value per ordinary share (borrowings at book value)	1,185.6p	1,017.1p
Shareholders’ funds (borrowings at book value)	768,591	788,148
Add: book value of borrowings	103,920	115,947
Less: fair value of borrowings	(99,513)	(115,856)
Shareholders’ funds (borrowings at fair value)	772,998	788,239
Number of shares in issue	64,824,940	77,491,440
Net asset value per ordinary share (borrowings at fair value)	1,192.4p	1,017.2p

(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 2026.

	31 August 2026		31 August 2025
	NAV (book)	NAV (fair)	NAV (book)	NAV (fair)
NAV	1,185.6p	1,192.4p	1,017.1p	1,017.2p
Share price	1,078.0p	1,078.0p	901.0p	901.0p
Discount	(9.08%)	(9.60%)	(11.4%)	(11.4%)

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.

		2026 NAV (book)	2026 NAV (fair)	2026 Share price	2025 NAV (book)	2025 NAV (fair)	2025 Share price
Closing NAV per ordinary share/share price	(a)	1,185.6p	1,192.4p	1,078.0p	1,017.1p	1,017.2p	901.0p
Dividend adjustment factor*	(b)	1.010	1.010	1.011	1.0127	1.0127	1.0142
Adjusted closing NAV per ordinary share/share price	(c) = (a) x (b)	1,197.2p	1,204.0p	1,089.6p	1,030.0p	1,030.1p	913.8p
Opening NAV per ordinary share/share price	(d)	1,017.1p	1,017.2p	901.0p	855.0p	854.9p	756.0p
Total return	((c) ÷ (d)) –1	17.7%	18.4%	20.9%	20.5%	20.5%	20.9%

* The dividend adjustment factor is calculated on the assumption that the dividend of 10.0p (2025 – 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.

		2026 £’000	2025 £’000
Investment management fee		4,440	4,190
Other administrative expenses		773	781
Total expenses	(a)	5,213	4,971
Average net asset value*	(b)	740,514	698,645
Ongoing charges	(a) ÷ (b) expressed as a percentage	0.70%	0.71%

* 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.

		2026		2025
		Net gearing * £’000	Gross gearing † £’000	Net gearing * £’000	Gross gearing † £’000
Borrowings	(a)	103,920	103,920	115,947	115,947
Cash and cash equivalents	(b)	35,836	–	15,515	–
Shareholders’ funds	(c)	768,591	768,591	788,148	788,148
Gearing		8.9%	13.5%	12.8%	14.7%

* 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.

Third Party Data Provider Disclaimer

No third party data provider (‘Provider’) makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data.

No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom. No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

Sustainable Finance Disclosure Regulation (‘SFDR’)

The EU Sustainable Finance Disclosure Regulation (‘SFDR’) applies to third‑country products marketed in the EU. As The Baillie Gifford Japan Trust PLC 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 stewardship principles and guidelines as its policy on integration of sustainability risks in investment decisions. More detail on the Managers’ approach to sustainability can be found in the stewardship principles and guidelines document, available publicly on the Baillie Gifford website bailliegifford.com and by scanning the QR code below. The underlying investments do not take into account the EU criteria for environmentally sustainable economic activities established under the EU Taxonomy Regulation.

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