CC JAPAN INCOME & GROWTH

TRUST PLC

ANNUAL REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 OCTOBER 2023

CC Japan Income & Growth Trust plc 1

CONTENTS

Page

STRATEGIC REPORT

INVESTMENT OBJECTIVE, FINANCIAL

INFORMATION AND PERFORMANCE SUMMARY 2

CHAIRMAN’S STATEMENT 5

INVESTMENT MANAGER’S REPORT 8

TOP TEN HOLDINGS 10

INVESTMENT POLICY, RESULTS AND

OTHER INFORMATION 11

RISK AND RISK MANAGEMENT 14

APPROACH TO ENVIRONMENTAL, SOCIAL AND

GOVERNANCE (“ESG”) 17

STAKEHOLDER ENGAGEMENT 20

HOLDINGS IN PORTFOLIO 23

TOP TEN SECTORS 25

TOP TEN CONTRACTS FOR DIFFERENCE 25

GOVERNANCE

DIRECTORS’ REPORT 26

CORPORATE GOVERNANCE 31

DIRECTORS’ REMUNERATION IMPLEMENTATION

REPORT 37

REPORT OF THE AUDIT AND RISK COMMITTEE 41

STATEMENT OF DIRECTORS’ RESPONSIBILITIES 44

INDEPENDENT AUDITOR’S REPORT 45

FINANCIAL STATEMENTS

INCOME STATEMENT 51

STATEMENT OF FINANCIAL POSITION 52

STATEMENT OF CHANGES IN EQUITY 53

STATEMENT OF CASH FLOWS 54

NOTES TO THE ACCOUNTS 55

Page

OTHER INFORMATION

GLOSSARY AND ALTERNATIVE PERFORMANCE

MEASURES (“APMS”) 72

THE SECURITIES FINANCING TRANSACTIONS

REGULATION (UNAUDITED) 77

COMPANY INFORMATION 79

NOTICE OF ANNUAL GENERAL MEETING 80

FORM OF PROXY 86

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2 CC Japan Income & Growth Trust plc

INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND

PERFORMANCE SUMMARY

INVESTMENT OBJECTIVE

The investment objective of the CC Japan Income & Growth Trust Plc (the “Company”) is to provide Shareholders with

dividend income combined with capital growth, mainly through investment in equities listed or quoted in Japan.

FINANCIAL INFORMATION

As at

31 October

2023

As at

31 October

2022

Net assets (millions) £235.1m £203.6m

Net asset value (“NAV”) per Ordinary Share (“Share”)

174.5p 151.1p

Share price 162.5p 138.8p

Share price discount to NAV

6.9% 8.1%

Transferable Subscription Share price n/a 0.53p

Ongoing charges

1.06% 1.06%

Gearing (net)

21.2% 20.9%

1 Measured on a cum income basis.

2 ThisisanAlternativePerformanceMeasure(“APM”).DefinitionsofAPMsusedinthisreport,togetherwithhowthesemeasureshavebeencalculated,

are disclosed on pages 72 to 76 of this report.

PERFORMANCE SUMMARY

For the year to

31 October

2023

% change

For the year to

31 October

2022

% change

NAV ex-income total return per Share

+19.3% -6.3%

NAV cum-income total return per Share

+18.9% -5.9%

Share price total return

+20.9% -7.1%

Tokyo Stock Exchange Price Index ("TOPIX") total return +12.0% -9.5%

Revenue return per Share 5.37p 5.14p

Dividends per share:

First interim dividend 1.55p 1.40p

Second interim dividend 3.75p 3.50p

Total dividends per Share for the year 5.30p 4.90p

1 Total returns are stated in sterling, including dividends reinvested.

2 These are APMs.

Source: Chikara Investments LLP – The Company’s Factsheet October 2023.

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CCJI ANNUAL PERFORMANCE SUMMARY

Year to October unless

otherwise stated

Launch to

Oct 2016* 2017 2018 2019 2020 2021 2022 2023

Share price (p) 122.40 152.00 153.00 150.00 119.50 154.00 138.75 162.50

Share price total return (%) +23.5 +27.2 +2.8 +0.7 -17.3 +32.7 -7.1 +20.9

NAV per Share (p) 123.90 146.00 148.60 158.90 136.80 165.40 151.09 174.50

NAV (cum-income) total

return per Share (%) +24.9 +20.7 +4.1 +9.9 -11.1 +24.3 -5.9 +18.9

TOPIX Index total return

in sterling (%) +32.7 +10.1 -0.4 +7.2 +0.3 +11.9 -9.5 +12.0

Revenue return per Share

(Undiluted) (p) 3.60 4.06 4.55 5.26 5.04 4.75 5.14 5.37

Dividends per Share (p) 3.00 3.45 3.75 4.50 4.60 4.75 4.90 5.30**

* Period from the Company’s launch on 15 December 2015 to 31 October 2016.

** Includes second interim dividend of 3.75p for the year ended 31 October 2023.

Dec-15

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

Sep-20

Dec-20

Mar-21

Jun-21

Sep-21

Topix returns (in GBP)

CCJI NAV cum income returns

CCJI Dividend reinvested Share Price returns

Dec-21

Mar-22

Jun-22

Sep-22

Dec-22

Mar-23

Jun-23

Oct-23

100

110

120

130

140

150

160

170

180

190

200

210

220

230

CCJI TOTAL NAV AND SHARE PRICE RETURN SINCE INCEPTION

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4 CC Japan Income & Growth Trust plc

1.00p

2.00p

3.00p

4.00p

5.00p

6.00p

2016

2017 2018 2019 2020 2022 2023

Total Dividends per share

3.00p

3.45p

3.75p

4.50p

4.60p

4.75p

4.90p

5.30p

2021

DIVIDEND PERFORMANCE SINCE INCEPTION

YE Oct 2019

YE Oct 2020

YE Oct 2021

YE Oct 2022 YE Oct 2023 5 Years to

Oct 2023

(cumulative)

CCJI NAV Total Return

Topix Total Return

9.90%

7.20%

-11.10%

-5.90%

-9.50%

0.30%

24.30%

18.90%

12.00%

35.80%

21.80%

11.90%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

COMPARISON OF NAV TOTAL RETURN PERFORMANCE OF THE COMPANY TO TOPIX TOTAL RETURN

OVER 5 YEARS

INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND

PERFORMANCE SUMMARY

continued

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CHAIRMAN’S STATEMENT

Performance Review

I am delighted to report a year of strong performance

to 31 October 2023. The Net Asset Value (“NAV”)

total return of the Company which includes income,

increased by 18.9% in sterling terms. The Share price,

again measured by total return, rose 20.9%. This

representssignificantoutperformanceagainsttheTOPIX

Total Return Index, which rose 12.0% in sterling terms

during the year.

SincelaunchinDecember2015untiltherecentfinancial

year end, the Company’s NAV total return, including

dividend distributions, recorded a 117.4% increase,

continuing to outperform the sterling adjusted TOPIX

total return index, which rose 77.0%. Over the same

period, the Share price total return in sterling has

doubled. An aggregate of 30.5 pence of dividends per

Share has been paid to Ordinary Shareholders since

inception. Our long-term track record and relative

performance against the AIC Japan investment trust peer

group remains robust. This underscores the validity of

our investment mandate which seeks dividend income

combined with capital growth.

Our investment manager, Richard Aston, has had to

navigate another challenging year with an uncertain

geopolitical situation, not least the fallout from wars

on two fronts. Nevertheless, the Japanese stock market

has rebounded after a lacklustre calendar year in 2022

with the Topix rising 21.9% in local currency terms in

thefirst10monthsof2023.Thishasbeenoffsetbythe

weakness of the yen which has fallen by 13.6% against

the US dollar over the same period and 14.0% against

sterling.Thisreflectsthecontinuingdisparitybetween

the ongoing accommodative monetary policy by the

Bank of Japan (“BOJ”) as distinct from rising interest

rates and tighter policy agendas pursued by most other

Central Banks, including the Federal Reserve in the

United States.

Richard Aston and his team have handled the market

volatility with great discipline by retaining focus

within the scope of the investment mandate which

seekstotalreturn.Theyhaveidentifiedandcaptured

opportunities arising from the post Covid reopening of

the Japanese domestic economy with adroit portfolio

positioningnotablybybeingoverweightinfinancialsas

the sector recovered. The team had a notable success

with Socionext participating in a Japanese IPO for the

firsttime.Ourmanager’saimistofindcompanies

withsolidgrowthprospects,improvingcashflowand

dividends. They deservedly picked up the Citywire award

in November 2023 for best performing Japanese equity

investment trust.

Change of investment manager name

On1August2023,CouplandCardiffAssetManagement

LLP, the Company’s Alternative Investment Fund

Manager (“AIFM”) announced that they were changing

their name to Chikara Investments LLP (“Chikara”). There

are no plans at present to change the name of this

Company. Chikara is broadening their product range

with the arrival of the well-regarded Emerging Markets

team from Stewart Investors. It is hoped that this will

raisebothChikaraandyourCompany’sprofile.

Growing the Company

Although the Ordinary Share price discount to NAV

has narrowed slightly to 6.9% at the year end (31

October 2022: 8.1%) we are not able to issue any more

shares until we regain our premium rating. The Board

continues to monitor the share price rating and the

levelofdiscountandhastheflexibilitytobuyback

shares through the authority renewed by Shareholder

Resolution at the Annual General Meeting (“AGM”).

As I reported in the interim statement, it was

unfortunate that The Transferable Subscription Shares

(“TSS”) expired worthless on the last business day of

February 2023. Indeed, we might have raised up to £40

million with a little more time. It is ironic that within

a fairly short period the TSS would have been “in the

money” with the Ordinary shares comfortably cresting

the Subscription price of £1.61. The scheme is unlikely to

be repeated in the near future.

Other options to grow the company include merger and

acquisitiongivenamarkedpickupinactivityreflectingan

increased trend of consolidation within the investment

trust industry not least the Japanese sectors. The Board

remains alert to any opportunities that could arise which

could be incremental to our market capitalisation.

The investment trust industry continues to face

regulatory pressures. The PRIIPS and Key Information

Document (“KID”) cost disclosure requirements give

a misleading reading by including transactional and

financeexpenses,integraltooperations,ratherthan

just ongoing costs (i.e., investment management fees)

and compare unfavourably with the disclosure required

by open ended funds. There is ongoing scrutiny of

this problem by the FCA but so far little traction to

resolve the issue despite pressure from the industry

and Association of Investment Companies (“AIC”).

Although investment trusts are not directly in the scope

of the new Consumer Duty regulations, there may

be unintended consequences potentially deterring

investor appetite not only on the basis of fallacious cost

comparisons but also mitigating against those trusts

tradingatsignificantdiscounts.

The Board continues to invest in various marketing

initiativestoraisetheprofileoftheCompanybyway

of webinars hosted by third parties and continue to

update our website, which you can visit at:

https:// ccjapanincomeandgrowthtrust.com.

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Our Broker and Investment Manager organise

regular schedules of meetings with wealth managers,

institutions and platforms, besides major Shareholders,

whichcontinuetoraisetheprofileandawarenessofour

differentiatedtotalreturnmandate.

Income and Dividends

For the year to 31 October 2023, the revenue return

increased by 4.5% to 5.37p per Ordinary Share. The

underlying trend of Japanese dividend growth remains

intact despite the weakness of the yen. We translate

dividend income into sterling on receipt. In accordance

with our investment policy we do not hedge currency.

We are maintaining our policy of paying a second

interimdividendinsubstitutionforafinaldividend.

Therefore, on the 19 January 2024, the Board declared

a second interim dividend of 3.75p per Ordinary Share,

making a full year distribution of 5.30p per Ordinary

Share and representing an 8.2% increase over last year.

This will be paid on 1 March 2024 to those Shareholders

on the register as at 2 February 2024 with an ex-date of

1 February 2024.

While the Board is committed to growing the dividend,

it considers it prudent to continue to build the revenue

reserve which now represents 40% of this year’s

distribution after the payment of the second interim

dividend. As we have previously reminded Shareholders,

the Company has a Special Reserve of £64.7 million

available for distribution in circumstances where there is

an unforeseen revenue shortfall.

This is the eighth year of dividend increase for the

Company with the annual dividend increasing by 76.7%

since launch in December 2015. We currently pay a

dividend yield of around 3% out of covered income.

Investors looking for equity income can continue to look

to Japan.

Annual General Meeting (“AGM”)

In line with the requirements of the Companies Act

2006, the Company will hold an AGM of Shareholders

to consider the resolutions laid out in the Notice of

Meeting on pages 80 and 81. The Board encourages

Shareholders to attend and participate in the Company’s

forthcoming AGM on 5 March 2024 at 12 noon at the

officesofStephensonHarwoodLLP,1FinsburyCircus,

London EC2M 7SH. Our Investment Manager, Richard

Aston, will provide an update on the portfolio and take

questions after the formal business of the meeting. The

Board will also be available to meet Shareholders and

discuss the Company. I do hope that you will join us.

We recognise it is not possible for everyone to attend

the AGM and I would remind Shareholders that any

questions relating to the business of the AGM, can be

sent by email to ukfundcosec@apexfs.group. To the

extent that it is appropriate to do so, the Company will

respond to any questions received in a Q&A which will

be posted on the Company’s website. If Shareholders

are unable to attend the meeting in person, they are

strongly encouraged to vote by proxy and to appoint the

“Chairman of the AGM” as their proxy. Details of how

to vote, either electronically, by proxy form or through

CREST, can be found in the Notes to the Notice of AGM

on pages 82 to 85. The lodging of a form of proxy (or

an appointment of a proxy through CREST) will not,

however, prevent a Shareholder from attending the

AGM and voting in person if they so wish.

Outlook

Despite decent returns over the last decade, the

Japanese equity market remains undervalued. The

earnings yield dwarfs the negative return from cash.

The Government and The Tokyo Stock Exchange are

committedtocleaningupcapitalinefficienciesand

boosting returns on equity. Companies are being forced

to change their behaviour. TOPIX listed companies are

still sitting on considerable amounts of cash estimated

at the yen equivalent of over US $1 trillion. This should

steadily be reduced through increasing shareholder

distributions, share buy backs, management buyouts

(“MBOs”) and private equity deals. The recent

rationalisation of cross holdings and subsidiaries by

theinfluentialToyotagroupandthegatheringpace

ofMBOsexecutedatsignificantpremiumstoexisting

share prices are examples.Thedriveforefficiency

iscomplementedbyPMKishida‘seffortstomobilise

a shift in the mountain of household savings and

domestic institutional funds into income generating

assets including equities. The recent doubling of NISA

allowances, Japans equivalent of the UK ISA, is one

such initiative to encourage savings into the stock

market. It remains to be seen whether the inevitable

but gradual steps towards normalisation of monetary

policyasacorollaryofinflationservetostimulateequity

investmentflows.Fornow,BOJmonetarypolicyremains

uniquely accommodating compared to other major

Central Banks.

DeflationinJapanhasatlastgivenwaytosomeinflation.

Wage growth should help the consumer. Tourism is

picking up. Reshoring manufacturing capacity has seen

a recovery in capital expenditure. The weakness of the

yen is an export opportunity. Forecasts for corporate

earnings growth are healthy with an estimated growth

of at least 7.5% for both 2024 and 2025. These virtuous

developmentswillbenefitfurtherfromanyrecoveryof

the world economy and improvement in global political

tensions. TherisksofwideningconflictintheMiddle

East quite apart from tensions over Taiwan and Korea

are apparent. The recent earthquake also reminds us

that Japan is susceptible to natural disasters. That aside,

most commentators believe that the USA is heading for

a soft landing rather than a deep recession. World equity

markets tend to take a lead from the policy actions of

the US Federal Reserve, but Japanese equities now stand

out on their own merits. Our mandate is well placed to

CHAIRMAN’S STATEMENT

continued

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

continue to provide solid total returns and the Board

haseveryconfidenceinRichardAstonandtheteamat

Chikara to keep producing them.

Board Composition

Following a search carried out by Cornforth Consulting,

we are pleased to welcome John Charlton–Jones to the

Board. John was appointed as a Director on 1 October

2023. John has had a 36-year career as a Japanese

equities’ stockbroker recently retiring from CLSA where

he headed up the institutional sales desk in London.

John possesses a formidable knowledge of many facets

of Japan and will stand for election at this year’s AGM.

Peter Wolton retired from the Board on 10 October

2023 after serving as Senior Independent Director

since launch. On behalf of the Board and Shareholders,

I would like to thank Peter for his valuable service,

supportandcontributionsoverthefirst8yearsofthe

Company’s life.

As the remaining founder Director, I am retiring at this

year’s AGM and June Aitken will succeed me as Chair.

I am sure that the Company will be in sound hands

under her stewardship, supported by an experienced

and professional Board. Craig Cleland will take over

from June as the Senior Independent Director. The

Board will initially revert to its original complement of

four directors.

One summer’s day back in 2015, conversations with

RichardCardiffinaWiltshirepub,ledtothecreation

oftheCompany.CouplandCardiff,asChikara were

then,hadastutelyidentifiedaverydifferentinvestment

approach to Japan targeting the potential of total return-

growth with income – which still presents a compelling

proposition.WewerethefirstJapaneseinvestment

trust to launch for 25 years. It is gratifying to have been

part of the project. Our original Shareholders are now

enjoying more than a 5% yield on their book cost. I

would like to thank all those involved, particularly the

Boardmemberspastandpresent,foralltheirefforts

and support. Hopefully, this is just the beginning of a

new dawn for a Japanese market renaissance.

Harry Wells

Chairman

24 January 2024

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Performance Review

The Net Asset Value cum-income of the CC Japan Income

& Growth Trust rose by 18.9% in sterling terms in the

twelve-month period to 31 October 2023. The Topix

Total Return Index recorded a rise of 19.8% in yen

terms,butthesterlingreturnswerenegativelyaffected

by the 8.1% depreciation of the yen against the British

Pound with the exchange rate falling from Y170.5/GBP

to Y184.4/GBP. This performance continues the strong

record of total return since inception.

It is not unusual for global developments to have a

significantimpactontheJapaneseeconomyandits

stock market, and this has been particularly evident

during the last twelve months. Over this period, the

Japanese economy has been less synchronised with

its overseas counterparts than in recent years, due

to the later removal of the domestic Covid advisory

procedures at the end of January 2023 and the lifting

of restrictions on international visitors in May 2023.

However, the investment landscape for all assets has

been dominated by the post pandemic re-emergence of

inflationandassociatedresponsefromCentralBanks

around the world. Rising political tensions globally as

well as environmental concerns and the development

of new technologies have also featured as prominent

investmentconsiderations,affectingtheperformance

of individual companies and the dynamics of whole

industries, and we anticipate that each of these will

continue to be relevant going forward.

The Japanese equity market performed strongly in

the twelve months to the end of October 2023. The

portfolio was able to improve on the market’s overall

performance. The standout performer has been the

holding in Socionext in which a holding was established

duringthecompany’sInitialPublicOfferinginOctober

2022. For a number of years, we have been unable to

identify attractive investment opportunities suitable

for this mandate in an increasingly buoyant new

listings market in Japan. However, Socionext, which

was formed through the merger of system LSI (large-

scale integration) businesses of leading Japanese

semiconductor manufacturers, Fujitsu and Panasonic,

listed on the Tokyo Stock Exchange Prime Market

withthegrowthpotentialandthefinancialattributes

required by the investment process. The newly listed

shares performed well as the company exceeded initial

operational performance expectations and its system

on a chip (SoC) technology platform became increasingly

appreciatedforitspotentialintheareaofArtificial

Intelligence (AI).

April 2023 saw the retirement as Governor of the

Bank of Japan of Haruhiko Kuroda, the architect of the

experimental easy monetary policy that has made an

importantcontributiontotamingdeflationinJapan.

Before his departure, in December 2022 he announced

thefirstsignsofareversaloftheprogressivelyeasier

policies introduced over the last 10 years. By expanding

the range of yields tolerated under the policy known

as Yield Curve Control (YCC), he paved the way for his

successor, Kazuo Ueda, to steadily adjust monetary

policy towards more normal conditions. This has had

a favourable impact on the share price performance

ofcompaniesinthefinancialindustry.Leadingbanks

Sumitomo Mitsui Financial Group and Mitsubishi UFJ

Financial Group, which have been long standing holdings

in the portfolio on the basis of the steadily improving

business performance and returns to shareholders,

receivedasignificantboosttotheirshareprices.Other

financialcompanystockssuchasSBIHoldings(broad

rangeoffinancialservices)andJACCS(consumercredit)

also performed strongly.

Despite the uncertain economic outlook, some of

the top performing sectors over the past twelve

monthshaveincludedcyclicalbeneficiariessuchas

iron and steel, marine transportation, construction

and automobiles. These are industries where this

portfolio has little exposure as the key attributes of the

investment strategy – long-term growth and consistent

returns to shareholders – are not evident in their past

performance, or likely in the future under current

operating conditions. While it can be frustrating at times

to observe share price rallies in the sectors in which the

exposure in the Company is low or non-existent, it is

an integral discipline of the process that we believe is

important in generating the long-term track record of

dividend progression and total return.

At an individual stock level, it is disappointing to

have experienced the underperformance of Dip

(internet job recruitment services) and Carta Holdings

(internet advertising). While both companies have

reiterated their commitment to shareholders through

consistent dividends and share buybacks, it is apparent

that corporate spending on business services has

temporarily weakened as consumer facing companies

contemplate strategies to pass on higher costs. These

two companies remain leaders in their sector and can

be expected to recover as corporate Japan adapts to the

endofdeflation.

Portfolio Positioning

We believe there is a growing recognition of the

importance of compound returns in Japan and, with this,

increasing opportunities for investment as corporate

management identify strategies to enhance corporate

value.Wecontinuetofocusonthosethatofferthe

prospect of long-term business growth, accompanied

by rising returns to shareholders, as opposed to those

wherethebenefitfromone-offcapitaleventssuchas

asset disposal or large share buyback will reap only

short-term reward.

Changing corporate attitudes and equity market

volatility continue to create many new and interesting

INVESTMENT MANAGER’S REPORT

CC Japan Income & Growth Trust plc 9

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

investment candidates for us. For example, over the

past twelve months new holdings have been established

in JACCS, En-Japan and Mani, three quite diverse

companies.

JACCSisanaffiliateofJapan’s largest bank Mitsubishi

UFJ Financial Group. It is well established as one of

the leading consumer credit companies in Japan

offeringrevolvingcredit,rentguaranteesandpayment

settlements amongst a range of services which have

been successfully expanding in selective countries

around Asia. Their most recent Mid-term Plan highlights

the management’s intent to optimize these growth

opportunities,financialsoundnessandreturnsto

shareholders through stable and continuous dividend

payments.

En-Japan,whichprovidesonlinerecruitmentandstaffing

services, has announced an interesting investment

planforareasofthelabourmarketthatwillbenefit

from Prime Minister Kishida’s initiative to improve job

mobility. This will limit the potential for short-term

earnings growth, but investors will be compensated

for their patience by a stable dividend until the rapid

growth anticipated by these new business opportunities

isreflectedinacommensurateriseinthedistributionto

shareholders.

Mani is a global high precision manufacturer of

niche medical equipment used in surgical and dental

procedures. The company has been extremely

successful in establishing its products as the premium

devices in parts of Asia and is seeking to replicate this

furtherwithIndiaandNorthAmericaofferingstrong

potential markets. Complementing the anticipated

growth and healthy balance sheet is an attractive

dividend distribution policy.

The prospect of rising interest rates has lowered the

appeal of real estate investment trusts (“REITS”) and

the weighting in these specialist investment products

hasbeenreducedtozeroforthefirsttimesincethe

Trust was established with the disposal of Industrial and

Infrastructure REIT and Star Asia REIT. The holding in

Intagewassoldfollowingapartialtakeoverofferfrom

NTT DoCoMo, Japan’s leading mobile phone operator.

Other disposals have included Fujitec and TRE Holdings

where progress towards each company’s business

objectives has been disappointing.

Outlook

We believe the prospects for Japanese equities remain

favourable following a year of strong performance. The

emergenceofinflationinJapanisanewdynamicfor

companies and investors to address. The consequences

are likely to lead to many potentially positive responses

over the medium term. Central to this will be the

effortsthatPrimeMinisterKishidawillmakewithhis

key policy initiatives to increase job mobility and wage

levels, and also to double the income generated from

the vast pool of personal savings. Of particular note is

the revamped Nippon Individual Saving Account (NISA)

programme which will be relaunched at the beginning of

2024,offeringmoreflexibilityininvestmentapproach,

the potential for larger annual savings amounts and a

perpetual tax exemption period. Given the emergence

ofinflationandrisinglifespans,thisnewsystem

corresponds to the growing need for individuals to take

morefinancialresponsibilitythroughbetterlong-term

management of retirement savings.

Bearing that in mind, it seems more than just a

coincidence that in early 2023, the Tokyo Stock

Exchange announced major initiatives to support the

considerable progress in corporate governance seen

in Japan since the Stewardship Code and Corporate

GovernanceCodewerefirstintroducedin2014and

2015respectively.Theneedforidentificationofthe

relevant cost of capital for each business and requiring

managementeffortsconsistentwithanimprovement

in corporate value is becoming widely acknowledged.

Indeed, this is already being cited by companies seeking

toimprovecapitalefficiencies,forexample,byreducing

cross-shareholdings or raising shareholder returns.

We believe that the ongoing progress in corporate

governance reform has been instrumental for the

strong performance of the Japanese equity market not

only over the last twelve months, but really over the

last decade. We believe that these improvements in

corporate focus will continue in the coming years and

willbereflectedinfavourabletotalreturnsforboth

domestic and international investors.

Richard Aston

Chikara Investments LLP

24 January 2024

10 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

10 CC Japan Income & Growth Trust plc

TOP TEN HOLDINGS

Mitsubishi UFJ Financial Group Inc 7.0%

Mitsubishi UFJ Financial Group was established in

2005 through the merger of Mitsubishi Tokyo Financial

Group and UFJ Holdings. It is now one of Japan’s leading

financialservicesgroupswithestablishedoperations

around the world, most prominently in Asia and North

America. This includes an alliance and 20% stake in

Morgan Stanley entered into in 2008. The company

continues to promote a balanced capital management

policy maintaining a strong capital base, appropriate

allocations to strategic growth opportunities and

enhancing shareholder returns.

Sumitomo Mitsui Financial Group Inc 6.7%

Sumitomo Mitsui Financial Group was established

through the merger of Sumitomo Bank and Sakura bank

in2001.ItisoneofJapan’sleadingfinancialgroups

offeringservicessuchascommercialbanking,leasing,

securities,consumerfinanceandassetmanagement.

The company targets continued growth in shareholder

value by promoting disciplined investment and alliances,

soundfinancesandprogressiveshareholderreturns.

Nippon Telegraph & Telephone Corp 4.3%

NTT provides a broad range of telecommunication and

business services in Japan and increasingly overseas. As

wellasbenefitingfromthefocusondataservicesand

IT infrastructure, the company is also seeking synergies

from the consolidation of mobile telephone subsidiary

NTT DoCoMo and cost cutting initiatives that enhance

the earnings growth and potential for further returns to

shareholders.

Itochu Corp 4.1%

Itochu Corp is one of Japan’s leading trading companies

involved in a broad range of business domains from

upstream raw materials to downstream retail. In recent

years Itochu has successfully introduced a business

investment strategy based on high levels of capital

efficiencyandappropriatecashallocationincluding

increasing returns to shareholders in the form of

dividend and share buybacks.

Shin-Etsu Chemical Co Ltd 3.8%

Shin-Etsu Chemical is a manufacturer with top global

market share in PVC, semiconductor silicon wafers and a

number of other semiconductor related and functional

materials. The company established a global production

base and developed a list of top tier international

customers, which has allowed it to generate a strong

track record of growth despite underlying volatility in

individual markets. The company has, in recent years,

given greater attention to shareholder returns within

their capital policy, giving emphasis on stability and

progression.

SBI Holdings Inc 3.5%

SBIHoldingsisaholdingcompanythatoffersinnovative

financialservicesinareassuchassecuritiesbroking,

banking, insurance and asset management. As a group

itfocusesspecificallyonorganicgrowthineachofits

businesses whilst maintaining a high return on equity

(RoE) to generate value for shareholders.

Sompo Holdings Inc 3.5%

SompoHoldingsisafinancialholdingcompanywhich

operates a leading domestic property and casualty

insurance business as well as life insurance and

healthcare operations in Japan. It has also established

an international presence to increase scale and

diversificationalongsideinitiativestoimprovecorporate

andcapitalefficiency,andimproveshareholderreturns.

Hitachi Ltd 3.4%

Hitachi Ltd is a globally recognised manufacturer of

industrial equipment and developer of software covering

a broad range of industries including Information

Technology, Energy, Automotive, Transportation and

Consumer Electronics. After restructuring the business

operations, management has emphasised capital

efficiencyandimprovingshareholderreturns.

Softbank Corp 3.4%

Softbank Corp provides telecommunication and

associated network services in Japan and is a subsidiary

of the Softbank Group. The company continues to

demonstrate strong growth in its business services

segment and from its “beyond carrier” strategy which

includes e-commerce leader Yahoo Japan, online

fashion retailer Zozo, social network Line and electronic

payment service PayPay.

Noevir Holding Corp 3.1%

Noevir is a leading domestic manufacturer of cosmetics,

specialising in skincare and makeup products, as well as

OTC pharmaceuticals and health foods. The company

focusesonspecificcategoriesintheJapanesemarket

where it continues to gain market share and seeks

incremental growth from markets overseas and duty-

free sales. It aims to deliver a stable and continuous

dividend as the primary source of return to their

shareholders and has increased the annual distribution

for the last 12 consecutive years.

CC Japan Income & Growth Trust plc 11

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Investment policy

The Company intends to invest in equities listed or

quoted in Japan. The Company may also invest in

exchange traded funds in order to gain exposure to such

equities. Investment in exchange traded funds shall be

limited to not more than 20 per cent. of Gross Assets at

the time of investment. The Company may also invest in

listed Japanese real estate investment trusts (“J-REITs”).

The Company may enter into long only contracts for

differenceorequityswapsforgearingandefficient

portfolio management purposes.

No single holding (including any derivative instrument)

will represent more than 10 per cent. of Gross Assets

at the time of investment and, when fully invested, the

portfolio is expected to have between 30 to 40 holdings,

although there is no guarantee that this will be the

case and it may contain a lesser or greater number of

holdings at any time.

TheCompanywillhavetheflexibilitytoinvestupto10

per cent. of its Gross Assets at the time of investment in

unquoted or untraded companies.

The Company will not be constrained by any index

benchmark in its asset allocation.

Borrowing policy

The Company may use borrowings for settlement of

transactions, to meet on-going expenses and may be

geared through borrowings and/or by entering into long

onlycontractsfordifferenceorequityswapsthathave

theeffectofgearingtheCompany’sportfoliotoseek

to enhance performance. The aggregate of borrowings

andlongonlycontractsfordifferenceandequityswap

exposure will not exceed 25 per cent. of Net Asset Value

at the time of drawdown of the relevant borrowings or

entering into the relevant transaction, as appropriate,

although the Company’s normal policy will be to utilise

and maintain gearing to a lower limit of 20 per cent. of

Net Asset Value at the time of drawdown of the relevant

borrowings or entering into the relevant transaction, as

appropriate. It is expected that any borrowings entered

into will principally be denominated in yen.

Hedging policy

The Company does not currently intend to enter into

any arrangements to hedge its underlying currency

exposure to investment denominated in yen, although

the Investment Manager and the Board may review this

from time to time.

Results and dividend

TheCompany’srevenuereturnaftertaxforthefinancial

year amounted to £7,241,000 (2022: £6,930,000). In

August 2023, the Company paid an interim dividend of

1.55p (2022: 1.40p) per Ordinary Share. On 19 January

2024, the Directors declared a second interim dividend

for the year ended 31 October 2023 of 3.75p (2022:

3.50p) per Ordinary Share, which will be paid on 1 March

2024 to Shareholders on the register at 2 February 2024.

Therefore,thetotaldividendinrespectofthefinancial

year to 31 October 2023 will be 5.30p (2022: 4.90p) per

Ordinary Share.

The Company made a capital gain after tax of

£31,099,000 (2022: loss of £19,818,000). The total return,

including income, after tax for the year was a gain of

£38,340,000 (2022: loss of £12,888,000).

The Company’s Purpose, Values and Culture

The primary focus of the Company is to provide

Shareholders with dividend income combined with

capital growth, mainly through investment in equities

listed or quoted in Japan. The Investment Manager

identifiescompanieswhichareundervalued,have

strong balance sheets, strong business franchises, and

favourable attitudes to shareholder returns in the form

of sustainable and growing dividends and share buyback

policies.

The Company aims to meet the needs of investors

through the Investment Manager’s dual mandate of

generating income and capital growth. The Company

has been investing in Japanese equities since launch in

2015. Whilst the Company does not have a benchmark,

the Board measures performance against the TOPIX

Total Return Index and High Yield Indices.

To achieve this, the Board of Directors has engaged

Chikara Investments LLP, who have the appropriate

capability, resources and controls in place to actively

manage the Company’s assets in order to meet its

investment objective. The Investment Manager has a

well-definedinvestmentstrategyandprocesswhichis

regularly and rigorously monitored and reviewed by

the Board. As the Company has no employees and acts

through its service providers, its culture is represented

by the values and behaviour of the Board and third

parties to which it delegates the provision of services.

To ensure that the Company’s purpose, values,

strategy and culture are aligned, the Board comprises

independent Non-Executive Directors, who together

bring a wide range of knowledge, skills and experience.

The Board members contribute to a transparent

cultureensuringeffectiveoversight,criticalsupport

and challenge to the Investment Manager, and all other

third-party suppliers. For more information on the

Board’s engagement with Stakeholders, please refer to

the Company’s section 172 statement on pages 20 to 22.

Key performance indicators (“KPIs”)

The Board measures the Company’s success in attaining

its investment objective by reference to the following

KPIs:

INVESTMENT POLICY, RESULTS AND OTHER INFORMATION

12 CC Japan Income & Growth Trust plc

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Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

(i) Long-term capital growth

The Board considers the Company’s Net Asset Value

(“NAV”)totalreturnfigurestobethebestindicatorof

performance over time and this therefore is the main

indicator of performance used by the Board. The NAV

cum-income total return for the year to 31 October

2023 increased by 18.9% (2022: -5.9%) in sterling terms,

and the NAV total return from the Company’s inception

in December 2015 to 31 October 2023 increased by

117.4%.

The Chairman’s Statement on pages 5 to 7 incorporates

a review of the highlights during the year. The

Investment Manager’s Report on pages 8 and 9 gives

details on investments made during the year and how

performance has been achieved.

(ii) Revenue return per Share and dividends

The Company’s revenue return per Ordinary Share,

based on the weighted average number of shares in

issue during the year, was 5.37p (2022: 5.14p). The

Company’s proposed total dividend payable in respect

of the year ended 31 October 2023, including an interim

dividend of 1.55p per Ordinary Share paid on 4 August

2023 and a second interim dividend of 3.75p payable on

1 March 2024 is 5.30p (2022: 4.90p) per Ordinary Share.

(iii) Discount/premium to NAV

The discount/premium relative to the NAV per share

represented by the share price is closely monitored by

the Board. The share price closed at a 6.9% discount to

the NAV as at 31 October 2023 (2022: 8.1% discount).

(iv) Control of the level of ongoing charges

The Board monitors the Company’s operating costs

carefully.GrowingthesizeoftheCompanyoffers

manybenefits,asnotalloftheCompany’soperating

costs increase in line with the Company’s assets

under management. Based on the Company’s average

net assets for the year ended 31 October 2023, the

Company’songoingchargesfigurecalculatedin

accordance with the AIC methodology was 1.06% (2022:

1.06%).

Other information

Modern slavery disclosure

The Company aims to act to the highest standards

and is committed to integrating responsible business

practices throughout its operations. The prevention of

modern slavery is an important part of good corporate

governance.

As an investment trust, the Company does not

offergoodsorservicestoconsumersanddeals

predominantly with professional advisers and service

providersinthefinancialservicesindustry.Assuchthe

Board considers that the Company is out of scope of the

Modern Slavery Act 2015.

Greenhouse Gas Emissions and Streamlined Energy

and Carbon Reporting (“SECR”)

The Company has no employees, physical assets,

property or operations of its own, does not provide

goods or services and does not have its own customers.

It follows that the Company has little to no direct

environmental impact. In consequence, the Company

has limited greenhouse gas emissions to report from its

operations, nor does it have responsibility for any other

sources of emissions under the Companies Act 2006

(Strategic Report and Directors’ Reports) Regulations

2013. As the Company has no material operations

and therefore has little energy use, it falls below the

threshold to produce an energy and carbon report. The

Company’s ESG policy is contained on pages 17 to 19.

Employees

The Company has no employees. As at 31 October

2023,theCompanyhadfiveDirectors,comprising

three males (60%) and two females (40%). On 1 October

2023, John Charlton-Jones joined the Board, bringing

with him additional experience and skills. Peter Wolton,

having served on the Board since launch in December

2015, stepped down as a Non-Executive Director on

10 October 2023. Biographical details can be found on

pages 31 and 32. As part of the recruitment process,

the Board was, and continues to be, mindful of the

Company’s policy on diversity which is contained in the

Corporate Governance statement (see pages 33 and 34).

Anti-bribery, Corruption and Tax Evasion

It is the Company’s policy to conduct all of its business

in an honest and ethical manner. The Company takes

a zero-tolerance approach to bribery, corruption and

tax evasion and is committed to acting professionally,

fairly and with integrity in all its business dealings and

relationships wherever it operates. Taking account of the

nature of the Company’s business and operations, the

Board has adopted policies and procedures that allow it

to have reasonable assurance that persons associated

with the Company are prevented from engaging in

bribery, corruption or tax evasion; and has adopted the

same standard of zero tolerance.

Viability Statement

The Directors have assessed the viability of the

Company for the period until 31 October 2028 (the

“Period’’) taking into account the long-term nature of

the Company’s investment strategy and the principal

risks and emerging risks outlined on pages 14 to 16.

TheBoardhaschosenafive-yearperiodtoassessthe

Company’s viability because of the expected long-term

nature of equity investment, the Investment Manager’s

holding period and the fact that the investment objective

isunlikelytochangesignificantlyoverthisperiod.

INVESTMENT POLICY, RESULTS AND OTHER INFORMATION

continued

CC Japan Income & Growth Trust plc 13

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

In their assessment of the prospects of the Company,

the Directors have considered each of the principal and

emerging risks and uncertainties set out on pages 14 to

16 and the liquidity and solvency of the Company. The

Directors have considered the Company’s income and

expenditure projections and the fact that the Company’s

investments comprise securities which can be readily

realised and could, if necessary, be sold to meet the

Company’s funding requirements. Portfolio activity

and market developments are discussed at quarterly

Board meetings. The internal control framework of the

Company is subject to a formal review on at least an

annual basis.

The Directors do not expect there to be any material

increase in the annual ongoing charges of the

Company over the Period. The Company’s income

from investments and cash that can be realised from

the sale of its investments provide substantial cover

to the Company’s operating expenses, and any other

costs likely to be faced by the Company over the

period of their assessment. Based on this assessment,

the Directors have a reasonable expectation that the

Company will be able to continue in operation and meet

its liabilities as they fall due over the Period.

The Chairman’s Statement and Investment Manager’s

Report present a positive long-term investment case for

Japanese equities, which also underpins the Company’s

viability for the Period.

The continuation of the Company is subject to approval

by Shareholders every three years with the next

continuation vote due to be held at the AGM in 2025.

This assessment takes into account the impact that

higherlevelsofglobalinflationarehavingonportfolio

companies and the investment environment as

discussed in the Chairman’s Statement on page 5, the

Investment Manager’s Report on page 8 and in the

Principal and Emerging Risks section on page 14.

Outlook

The outlook for the Company is discussed in the

Chairman’s Statement on pages 5 to 7.

Strategic Report

The Strategic Report set out on pages 2 to 25 of this

Annual Report was approved by the Board of Directors

on 24 January 2024.

14 CC Japan Income & Growth Trust plc

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Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

Principal and emerging risks and uncertainties

The Board is responsible for the management of risks

faced by the Company and delegates this role to the

Audit and Risk Committee (the “Committee”).

The Committee carries out, at least annually, a robust

assessment of principal and emerging risks and

uncertainties and monitors the risks on an ongoing

basis. The Committee has a dynamic risk management

andoverseetheeffectivenessofinternalcontrolsand

processes.

The risk management register and associated risk

heatmapprovideavisualreflectionoftheCompany’s

identifiedprincipalandemergingrisks.Thesefallinto

threecategories:strategicandbusinessrisk,financial

and operational risk, and regulatory and compliance

risk. The Committee considers both the impact and

the probability of each risk occurring and ensures

appropriate controls are in place to reduce risk to an

acceptable level.

During the year under review the Committee was

particularly concerned with geopolitical risk following

the outbreak of war in Gaza and Israel, in addition to the

ongoingconflictintheUkraine,andthepoliticaltension

between the US and China.

Highlevelsofinflationglobally,continueduncertainty

concerning the level of interest rates and the threat of

recession have led to investors being more risk averse

and generally shunning equities. In this scenario,

Japan with its exceptionally low interest rates has

outperformed most global markets, but the weakness of

the Japanese yen against the British pound has impacted

the Company’s revenue receipts.

The Committee continues to review the processes in

place to mitigate risk; and to ensure that these are

appropriate and proportionate in the current market

environment. The principal and emerging risks, together

with a summary of the processes and internal controls

used to manage and mitigate risks where possible are

outlined on the following pages 14 to 16.

The Company’s ability to operate as a going concern and

the Company’s longer-term viability can be found on

pages 12 and 13.

RISK AND RISK MANAGEMENT

Principal Risks Mitigation Movement During the Year

Poor investment performance

The Company’s investment

performance depends on the

Investment Manager’s ability to

identify successful investments

in accordance with the

Company’s investment policy.

The Company’s Share price may

notalwaysreflectunderlyingnet

asset value.

TheInvestmentManagerhasawell-defined

investment strategy and process which is regularly

and rigorously reviewed by the Board.

The Board monitors the Company’s investment

performance against its peer group over a range of

periods.

Whilst the Company does not have a benchmark,

the Board measures performance for reference

purposes against the TOPIX and High Yield Indices.

At each meeting, the Board discusses the Japanese

investment environment, and receives reports

on the composition of the portfolio, any recent

sales and purchases, and expectations of dividend

income.

The Management Engagement Committee Reviews

the appointment of the investment manager on an

annual basis.

The Board monitors the share price discount to

NAV and has authority to buy back shares.

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CC Japan Income & Growth Trust plc 15

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Principal Risks Mitigation Movement During the Year

Market Risk

Changes in the investment,

economic or political conditions

in Japan, and/or in the countries

in which the Company’s investee

companies operate could

substantially and adversely

affecttheCompany’sprospects.

In addition to changing

economic factors such as

interest rates, foreign exchange

rates and employment,

unpredictable factors such as

natural disasters, earthquakes

and diplomatic events may

impact market risk.

The Directors acknowledge that market risk is

inherent in the investment process. The Company

maintainsadiversifiedportfolioofquoted

investments.

The Board reviews the impact of economic

indicators on the portfolio with the Investment

Manager at every Board meeting.

The Company’s investment policy states that

no single holding will represent more than 10

per cent. of the Company’s Gross Assets at the

time of investment and the portfolio is expected

to have between 30 to 40 holdings in normal

circumstances.

In addition to regular market updates from

the Investment Manager and reports at Board

meetings, the Board convenes more often during

periods of extreme volatility.

The Company’s policy is not to hedge against any

foreign currency movements. Income received

from investee companies is translated into sterling

on receipt.

Geopolitical Risk

Warandconflictcanimpact

investorconfidenceand

threaten global economic

growth.

Geopolitical instability in the

region may increase volatility,

reduce economic growth, and

affecttheprospectsofthe

companies in the portfolio.

The Board discusses the impact of geopolitics on

the portfolio with the Investment Manager at every

Board meeting.

The increased geopolitical tension between the US

and China is both an opportunity and a threat for

Japan.

The portfolio is comprised of listed, liquid,

realisable securities, which could be sold in the

eventofasignificantdeteriorationinglobal

political stability.

The Company has built up a revenue reserve

and the Board regularly reviews the net income

available for distribution using the Investment

Manager’s sensitivity analysis of revenue

estimates.

The Company also has a Special Reserve available

for distribution in the event of unforeseen revenue

shortfall.

The Manager’s emphasis on companies which can

pay sustainable dividends has helped alleviate the

impact.

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16 CC Japan Income & Growth Trust plc

Principal Risks Mitigation Movement During the Year

Excess leverage

The Company uses borrowings

to seek to enhance investment

returns. While this has the

potential to enhance investment

returns in rising markets, in

falling markets the impact could

be detrimental to performance.

An ability to gear is a unique advantage of

closed-end companies and structural gearing is

a clearly stipulated component of the Company’s

investment policy. This is highlighted in

shareholder communications.

Gearing is monitored and strict restrictions on

borrowings are imposed: gearing continues to

operate within a limit of 25% of NAV at the time of

investment.

The gearing is achieved using derivatives in the

formofContractsforDifference(CFDs).Further

informationonfinancialinstrumentsandriskcan

be found in note 16 to the Financial Statements

beginning on page 64.

Cyber Risk/Fraud

Cybercrime or fraud could

impact any of the Company’s

service providers; the

Investment Manager, the

Depositary or the Administrator.

Business interruption could

mean service providers are

unable to meet their contractual

obligations or that information is

late, misleading or inaccurate.

Increasing geopolitical

turbulence and the use of

artificialintelligencehas

increased the risk from cyber

crime.

The Board has appointed an experienced

independent professional Depositary, Custodian

and Administrator.

All key service providers produce annual internal

control reports for review by the Audit and Risk

Committee. These reviews include consideration of

their business continuity plans and the associated

cyber security risks.

Service providers report on cyber risk mitigation

and management at least annually.

TheBoardmonitorscybersecurityandcertification

of service providers.

ESG and Climate Change

Shareholders expectations

are increasingly focused on

sustainability and ESG factors.

Potential reputational damage

from non-compliance with

regulations or incorrect

disclosures could arise.

Climate change leads to

additional costs and risks for

portfolio companies. These risks

include operating conditions and

reporting obligations.

TheCompanycouldsufferas

a result of increased investor

demand for products which

promote ESG investments.

The Company’s ESG Policy, which is updated

annually is published on the Company’s website

and the AIC website.

The Investment Manager’s approach is to include

ESG factors for consideration in the investment

process, such as climate change, where they are

relevant and may have a material impact on stock

performance.

Examples of responsible engagement are detailed

on page 19 of the Annual Report.

Chikara Investments LLP (the Investment Manager)

is a signatory to the Principles of Responsible

Investment Initiative (“PRI”) and reports annually

according to the PRI reporting framework.

The Investment Manager is also a signatory to

both the UK Stewardship Code and the Japan

Stewardship Code.

Investment trusts are currently exempt from

the Task Force on Climate-Related Financial

Disclosures (“TCFD ”) disclosure, but the Board will

continue to monitor the situation.

RISK AND RISK MANAGEMENT

continued

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CC Japan Income & Growth Trust plc 17

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE

(“ESG”)

The Board believes that ESG related issues can

affectboththeperformanceandsustainabilityof

an investment portfolio and that ESG factors can

be potential indicators of management quality and

operational performance. Companies with strong,

sustainableprofileswill,itbelieves,havegreater

potential to grow and survive in all market conditions.

The Investment Manager is responsible for engagement

onESGmattersandhasastructured,yetflexible

approach to incorporating ESG into the investment

process. Its fundamental, hands-on research approach

allows it to integrate seamlessly its responsible investing

effortsalongsidetheCompany’sinvestmentstrategy

inaneffectivemanner,whichtheBoardbelieveswill

achieve the best long-term results for the Company’s

investors.

ESG Research

The Investment Manager considers whether ESG factors

are relevant and where they may have a material impact

on stock performance. The factors considered by the

Investment Manager vary by the industry and company

under review and may include the following:

– Environmental: Pollution, site management /

consideration, greenhouse gas emissions, climate

change, habitat protection, recycling, water.

– Social: Human/employee rights, working conditions,

healthandsafety,firm-employeerelations,child/

forcedlabour,conflictzones.

– Governance: Board composition, independence,

transparency, compensation and accountability,

shareholder rights and relations, cyber security,

protection of personal data, corruption.

The ESG factors are integrated into the Investment

Manager’s bottom-up investment process and these

issuesareconsideredalongsidefinancialandstrategic

issues during assessment and engagement with

companies. The ESG risks are qualitative factors rather

thanquantitativeinputsinafinancialmodel.

The investment team conducts its own research which

is complemented by data and research of third parties.

Chikara Investments LLP (“Chikara”) has engaged a third

party ESG and climate data provider, who provides ESG

related metrics and analysis. These reports are reviewed

by the investment team where available and assist

them in identifying potential areas for engagement

with companies as it relates to ESG factors. Third party

reporting includes Corporate ESG assessments, Climate

Impact Reporting, Norms Based Research, and EU

Regulatory Reporting.

The Investment Manager has a policy that prohibits

investment in a list of companies that manufacture

controversialweaponsbutdoesnotspecificallyexclude

investment in industries or individual companies on

standardised ESG factors.

Engagement and Stewardship

A key component of the ESG process is engagement. The

InvestmentManagerdedicatesasignificantamountof

time and resource focusing on the ESG characteristics of

the companies in which the Investment Manager invests,

and monitoring is carried out through investment

reviews.

The strategy of the portfolio has an explicit focus on

improving relationships between corporate managers

and shareholders in Japan. Consequently, corporate

governance is a key point of discussion in every meeting

held with company management. The goal in each case

is to help the senior representatives of the company

develop not only an understanding of the role and

requirements of long-term shareholders but also the

realisation that their actions must be consistent with

mutually determined objectives.

The team at Chikara conducts over 300 meetings and

callsayearwiththemanagementofmanydifferent

companies. Engagement serves three main purposes as

it relates to ESG:

1. Due Diligence – engaging with companies,

conducting due diligence, and understanding

potential risks and opportunities relating to the

investment.

2. Education – through engagement with companies,

sharing best practices and providing insights into the

ESG practices of peers (e.g., disclosures, targets, and

benchmarking).

3. Action – engaging with companies to encourage

disclosures and target setting.

Although the Investment Manager does not seek to

agitate management through aggressive behaviour with

public disclosures or proposals, it does and will vote

on resolutions which it believes are consistent with the

future growth and development of the company.

Conversely, it will vote against those that do not and

would be prepared to sell the shareholding if this were

deemed to be the most appropriate course of action.

Japan Stewardship Code: The Investment Manager’s

is a signatory to the Japan Stewardship Code and its

statement of commitment is set out on its website:

https://www.chikarainvestments.com/japan-

stewardship-code

UK Stewardship Code: The Investment Manager

is a signatory to the UK Stewardship Code and its

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APPROACH TO ENVIRONMENTAL, SOCIAL AND

GOVERNANCE (“ESG”)

continued

statement of compliance with the Code can be found

on its website: https://www.chikarainvestments.com/

stewardship-code

Principles of Responsible Investment (“PRI”): Chikara

became a signatory to the UN-supported Principles for

Responsible Investment (“PRI”) on 6 December 2018.

The PRI is a global standard for investment managers’

ESG alignment. As a signatory to the Principles, the

Investment Manager publicly commits to adopt and

implementthem,whereconsistentwithitsfiduciary

responsibilities. The Principles can be found here:

https://www.unpri.org/pri/what-are-the-principles-for-

responsible-investment. The Investment Manager also

commitstoevaluatetheeffectivenessandimprovethe

content of the Principles over time. It believes this will

improveitsabilitytomeetcommitmentstobeneficiaries

as well as better align its investment activities with the

broader interests of society. Chikara reports annually to

thePRIonthefirm’sresponsibleinvestmentinitiatives,

activities and achievements and seeks to meet the

standards expected by the PRI in doing so.

Voting Record*

97.7%

1.7%

0.6%

For (97.7%)

* We vote on 100% of our investor company meetings.

Abstain (1.7%) Against (0.6%)

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

EXAMPLES OF ENGAGEMENT

Company 1 – Online fashion retailer

We have established an open dialogue with Japan’s leading online fashion retailer on

a number of subjects important to our investment decision over recent years. We, and

management, are conscious of problems encountered by a number of its international

peers regarding working conditions for employees. The management of the Japanese

company are aware of the associated operational and reputational risks and have

established adequate procedures to ensure that working conditions for its employees satisfy

appropriate standards of safety and wellbeing. We are particularly impressed by the ‘hands

on’ involvement of the CFO in this. On other topics we believe the company is achieving high

standards with its operational and capital goals and are pleased to see that the company has

recentlyraiseditspayouttargetsforshareholdersfurthertoensuregreaterefficiency.

Company 2 – Internet infrastructure company

We continue to discuss potential value creating initiatives with the management of Japan’s

leading internet infrastructure company. We believe that the current business structure

and devolved relationship with its subsidiaries detracts from the performance of its most

successful operations and has resulted in unnecessary compliance and operating risks.

This has resulted in a sharp valuation discount of the share price. We believe that rationale

of our consistent message is increasingly being considered by senior management and

progress is being made with the recent introduction of some centralised functions and group

management initiatives. This is only the start. The recent Tokyo Stock Exchange initiatives to

enhancecorporatevaluestrengthenourpositionandwearehopefulthatfurtheraffirmative

action by the company will be recognised by investors and encourage management to

pursue further positive change.

Company 3 – Automaker

We continue to maintain an open and regular dialogue with a leading automaker on a wide

variety of relevant stakeholder topics. We believe it is crucial for the Company’s management

to strike the right balance between shareholder value creation and sustainability. While

we have been happy to support a number of management initiatives and vote accordingly

in AGM proposals, we also emphasise the need for visible progress. We are consequently

encouraged in the increased levels of disclosure on environmental issues which has

included a dedicated presentation of the company’s stance and objectives. This can be

used to measure progress in coming years. There has also been an acknowledgement

of the capital inefficienciesofitsextensiveandexcessivegroupcross-shareholdingsand

duringtheyearwehaveseemthefirststepstoreducethese. We will continue to express

our views to management on both of these issues and also other relevant topics to this

particular industry.

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20 CC Japan Income & Growth Trust plc

This section of the Annual Report covers the Board’s considerations and activities in discharging their duties under

s.172(1)oftheCompaniesAct2006,inpromotingthesuccessoftheCompanyforthebenefitofitsmembersasawhole.

This statement includes consideration of the likely consequences of the decisions of the Board in the longer term,

how the Board has taken wider stakeholders’ needs into account and the impact of the Company’s operations on the

environment.

The Board, together with the Investment Manager, sets an overall investment strategy and reviews this on an ongoing

basis. In order to ensure good governance of the Company, the Board has set various limits on the investments in the

portfolio, including the size of individual holdings, investments in exchange traded funds, and the level of gearing. These

limits and guidelines are regularly monitored.

The Board is ultimately responsible for all stakeholder engagement. As an externally managed investment company,

theCompanydoesnothaveanyemployees;ratheritemploysexternalsupplierstofulfilarangeoffunctions,including

investment management, secretarial, administration, public and investor relations, corporate broking, depositary and

banking services, etc. All these service providers, who are stakeholders in the Company themselves, help the Board to

fulfilitsresponsibilitytoengagewiththeShareholdersandotherstakeholders.

TheBoardhasidentifiedthemajorstakeholdersintheCompany’sbusiness.OnanongoingbasistheBoardmonitors

both potential and actual impacts of the decisions it makes in respect of the Company upon those major stakeholders

identified.

Key stakeholders Why it is important to engage Engagement and Key Board Decisions

Shareholders The Board place great importance

on maintaining an open dialogue

with Shareholders. The Investment

Manager along with the Company’s

corporate broker regularly meets

with the Company’s Shareholders

to provide Company updates and to

foster regular dialogue.

Feedback from meetings between the

Investment Manager and Shareholders

is communicated to the Board.

The Board has appointed a

professional PR company,

Cornerstone, and an independent

research consultancy, Kepler, to

ensure that information and news

about the Company is regularly

available for existing and potential

Shareholders.

A fundamental consideration of the

Board is whether the investment

objective of the Company is continuing

to meet shareholder expectations.

The principal forum for communicating with

Shareholders is the Company’s Annual General

Meeting (“AGM”), where Shareholders have the

opportunity to meet with the Board and the

Investment Manager to raise any questions and

concerns.

At each board meeting the Directors are provided

with an analysis of the Shareholder register.

The Board reports formally to Shareholders twice a

year by way of the Annual and Half Yearly Reports.

This information is supplemented by the Company’s

daily publication of the NAV per Share, routine ad

hoc regulatory announcements, monthly factsheets

and other information placed on the Investment

Manager’s website, including a Key Information

Document (‘KID’), portfolio disclosures, terms of

reference and the Company’s share price.

The Chairman and Directors are available to meet

with Shareholders on request. Shareholders wishing

to contact the Board may do so by writing to the

Company Secretary (ukfundcosec@apexfs.group).

During the year the Company’s Broker and

Investment Manager held regular discussions with

larger Shareholders.

The Company’s strategy is validated on a triennial

basis, with the last continuation vote held in March

2022, with 99.97% of shareholders voting for the

continuation of the Company. The next continuation

vote will be proposed at the AGM in 2025.

The Board has declared a total dividend for the 2023

year of 5.30p per Ordinary Share, an increase of

8.2% on last year’s full year distribution of 4.90p per

Ordinary Share; paid out of income received. The

dividend has risen every year since inception.

STAKEHOLDER ENGAGEMENT

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CC Japan Income & Growth Trust plc 21

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Key stakeholders Why it is important to engage Engagement and Key Board Decisions

Investment

Manager

Chikara is the Company’s appointed

Investment Manager. The Investment

Manager is responsible for the

management of the Company’s

portfolio in accordance with the

Company’s investment policy and the

terms of the Investment Management

Agreement.

The Investment Manager has also

been appointed as the Company’s

AIFM in accordance with the

Alternative Investment Fund Managers

Directive (“AIFMD”), for the purpose

of providing portfolio management

and risk management services to the

Company.

The Board monitors the Company’s investment

performance in relation to its objectives and

investment policy and strategy. The Board

regularly assesses the experience and resources

of the Investment Management team and the

commitment of the Investment Manager to promote

the Company, foster Shareholder relations and to

ensure that the Company’s objective of providing

dividend income combined with capital growth for its

investors is met.

An open and active relationship is maintained with

the Investment Manager, at Board meetings, and at

additional meetings which are held when needed.

Richard Aston has managed the investment portfolio

since launch in December 2015.

During the year, the Board received regular reports

from the team at Chikara who are responsible for

marketing the Company.

As AIFM to the Company, Chikara’s Chief Compliance

Officerattendsboardmeetingsandreportson

compliance processes and controls.

The Management Engagement Committee met

during the year and unanimously endorsed

the continued appointment of the Company’s

Investment Manager.

Service Providers As an externally managed investment

trust, the Company conducts all its

business through its key service

providers. Before the engagement of

a service provider, the Board ensures

that the Company’s business outlook

as well as its values are similar to

those of the service provider.

The Board has strong working relationships with the

Company Secretary, Administrator and Depositary,

and Broker.

The continued appointment of all service providers is

reviewed by the Board on an annual basis to ensure

that the Company continues to receive high quality

service at a competitive cost.

The Board receives annual internal control reports

from all service providers. The Board also seeks

annual assurance from its service providers as

regards governance, including whistleblowing,

prevention of tax evasion and anti-bribery policy and

cyber security procedures.

Apex Listed Companies Services (UK) Limited which

provides administrative and company secretarial

services to the Company has been integrating new

systems during the year under review following

changes to their corporate ownership. The Board

continues to work closely with the Company

Secretary to ensure a high standard of service is

maintained.

Following a competitive tender, the Board appointed

a new Auditor to the Company, Johnston Carmichael

LLP who have provided independent audit services

totheCompanyforthefirsttimethisyear.

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22 CC Japan Income & Growth Trust plc

Key stakeholders Why it is important to engage Engagement and Key Board Decisions

Wider

community and

environment

The Company and its appointed

professional suppliers keep abreast of

therulesandregulationsaffectingthe

investment company sector.

The Investment Manager, Chikara,

as steward of the Company’s assets,

engages with investee companies to

ensure high standards of governance.

The investment strategy of the

Company is predicated upon the

improving standards of Shareholder

governance in Japan and the

commitment of investee companies to

act in the interests of all stakeholders.

The Company Secretary and AIFM regularly

report to the Board any changes in the regulatory

environment. As Association of Investment Company

(“AIC”) members, the Board draws on their resources

including the detailing of regulatory changes.

The Company has articulated its policy on ESG

factors involved in the investment decision making

and evidence of constructive engagement with

investee companies. See pages 17 to 19. The

Company has given shareholders the option to

receive electronic copies of annual reports and other

information.

The ESG policy is available on both the Company’s

website and the AIC’s website.

The Investment Manager is committed to being a

responsible investor and applies, and is a signatory

to, the United Nations Principles for Responsible

Investment (PRI), which demonstrates its extensive

effortsintermsofESGintegration,activeownership,

investor collaboration and transparency.

The Investment Manager is a listed signatory to

the UK Stewardship Code 2020 and the Japan

Stewardship Code. Further information on Chikara’s

approach to the principles and guidance of the

2020 Japan Stewardship Code can be found on their

website: https://www.chikarainvestments.com/

legal-disclosures.

The Board reviewed the governance engagement

reports and discussed the voting record with the

Investment Manager.

During the year, the Chairman engaged with the AIC

with respect to the duplication of ongoing costs in

the investment trust industry.

The Directors are cognisant of their duties laid out under Section 172 of the Companies Act 2006 to make decisions

takingintoaccountthelong-termconsequencesofalltheCompany’skeystakeholdersandreflecttheBoard’sbelief

that the long-term sustainable success of the Company is linked directly to its key stakeholders.

For and on behalf of the Board

Harry Wells

Chairman of the Board

24 January 2024

STAKEHOLDER ENGAGEMENT

continued

CC Japan Income & Growth Trust plc 23

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CC Japan Income & Growth Trust plc 23

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

HOLDINGS IN PORTFOLIO

AS AT 31 OCTOBER 2023

Company Sector

Market value

£’000

% of net

assets

Mitsubishi UFJ Financial Group Inc Banks 16,426 7.0

Sumitomo Mitsui Financial Group Inc Banks 15,716 6.7

Nippon Telegraph & Telephone Corp Information & Communications 10,226 4.3

Itochu Corp Wholesale 9,658 4.1

Shin-Etsu Chemical Co Ltd Chemicals 8,865 3.8

SBI Holdings Inc Securities & Commodities 8,171 3.5

Sompo Holdings Inc Insurance 8,147 3.5

Hitachi Ltd Electrical Appliances 8,000 3.4

Softbank Corp Information & Communications 7,936 3.4

Noevir Holding Corp Chemicals 7,306 3.1

Tokio Marine Holdings Inc Insurance 7,102 3.0

Mitsubishi Corp Wholesale 6,819 2.9

DIP Corp Services 6,467 2.8

Socionext Inc Electrical Appliances 6,434 2.7

Jaccs Co Ltd Other Financing Business 5,880 2.5

Mani Inc Precision Instruments 5,537 2.4

Are Holdings Inc Nonferrous Metals 5,451 2.3

Nippon Gas Co Ltd Retail Trade 5,213 2.2

Tokyo Electron Ltd Electrical Appliances 4,834 2.1

Denso Corp Transport Equipment 4,671 2.0

Nissan Chemical Corp Chemicals 4,647 2.0

Orix Corp Other Financing Business 4,437 1.9

Zozo Inc Retail Trade 4,433 1.9

Nippon Parking Development Co Ltd Real Estate 4,388 1.9

Japan Securities Finance Co Other Financing Business 4,342 1.8

Nintendo Co Ltd Other Products 4,235 1.8

Tokyo Ohka Kogyo Co Ltd Chemicals 4,224 1.8

Nitto Denko Corp Chemicals 4,219 1.8

Kao Corp Chemicals 4,039 1.7

Kyocera Corp Electrical Appliances 4,016 1.7

24 CC Japan Income & Growth Trust plc

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24 CC Japan Income & Growth Trust plc

Company Sector

Market value

£’000

% of net

assets

En-Japan Inc Services 3,942 1.6

Nippon Pillar Packing Co Ltd Machinery 3,744 1.6

Technopro Holdings Inc Services 3,517 1.5

Open House Group Co Ltd Real Estate 3,349 1.4

Murata Manufacturing Co Ltd Electrical Appliances 3,229 1.4

Carta Holdings Inc Information & Communications 3,225 1.4

Nareru Group Inc Construction 2,489 1.1

GMO Internet Group Inc Information & Communications 2,377 1.0

Shoei Co Ltd Other Products 2,330 0.9

Aoyama Zaisan Networks Co Ltd Real Estate 1,946 0.8

Total holdings 231,987 98.7

Other net assets 3,131 1.3

Net asset value 235,118 100.0

HOLDINGS IN PORTFOLIO

continued

CC Japan Income & Growth Trust plc 25

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 25

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Sector

% of

net assets

Chemicals 14.2

Banks 13.7

Electrical Appliances 11.3

Information & Communications 10.1

Wholesale 7.0

Insurance 6.5

Other Financing Business 6.2

Services 5.9

Securities & Commodities 4.5

Real Estate 4.1

Top Ten 83.5

Other Sectors* 15.2

Other net assets 1.3

Total 100.0

* Other Sectors comprise of 7 sectors, which individually, is less than 4.1% each of the net assets.

TOP TEN CONTRACTS FOR DIFFERENCE (“CFDs”)

AS AT 31 OCTOBER 2023

Company Sector

Absolute

value

£’000

Absolute

value as a

% of

net assets

Market

value

£’000

Mitsubishi UFJ Financial Group Inc Banks 3,285 1.4 4

Sumitomo Mitsui Financial Group Inc Banks 3,143 1.3 (46)

Nippon Telegraph & Telephone Corp Information & Communications 2,045 0.9 31

Itochu Corp Wholesale 1,932 0.8 73

Shin-Etsu Chemical Co Ltd Chemicals 1,773 0.8 68

SBI Holdings Inc Securities & Commodities 1,634 0.7 51

Sompo Holdings Inc Insurance 1,629 0.7 59

Hitachi Ltd Electrical Appliances 1,600 0.7 101

Softbank Corp Information & Communications 1,587 0.7 27

Noevir Holding Co Chemicals 1,461 0.6 (14)

Top Ten CFDs 20,089 8.6 354

Other CFDs 26,308 11.1 (319)

Total CFDs 46,397 19.7 35

The Strategic Report set out on pages 2 to 25 of this Annual Report was approved by the Board of Directors on

24January 2024.

TOP TEN SECTORS

AS AT 31 OCTOBER 2023

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26 CC Japan Income & Growth Trust plc

The Directors present their report and accounts for the

year ended 31 October 2023.

Strategic report

The Directors’ Report should be read in conjunction with

the Strategic Report on pages 2 to 25.

Corporate governance

The Corporate Governance Statement on pages 31 to 36

forms part of this report.

Legal and taxation status

The Company is an investment company within the

meaning of Section 833 of the Companies Act 2006. The

Companyconductsitsaffairstomeettherequirements

for approval as an investment trust under section 1158

of the Corporation Tax Act 2010. In the opinion of the

Directors, the Company has met the conditions and

requirements for approval as an investment trust for the

year ended 31 October 2023 and intends to continue to

do so.

Management

Chikara has been appointed as the Company’s

Investment Manager and Alternative Investment Fund

Manager (the “Investment Manager” or the “AIFM”).

Chikara is authorised and regulated by the Financial

Conduct Authority.

The Investment Management Agreement is subject to

not less than six months’ written notice. There is no

compensation payable on termination of the agreement.

The Investment Manager is entitled to remuneration

each month at a rate equivalent to one twelfth of 0.75%

of the Net Asset Value of the Company.

In accordance with the Directors’ policy on the allocation

of expenses between revenue and capital, 80% of the

management fee is charged to capital and the remaining

20% to revenue.

The Board reviews this policy on a periodic basis and

confirmsthisallocationremainsconsistentwiththeir

expectations of future returns from the portfolio.

Management engagement

The Board carefully reviewed the Investment Manager’s

appointmentduringtheyear.TheDirectorsaresatisfied

that the Investment Manager has the suitable skills

and experience to manage the Company’s investments

and believes that the continuing appointment of the

Investment Manager is in the interests of Shareholders

as a whole. Since inception, the Company has met

its objectives set out in the prospectus in relation to

the annual dividend, which has risen every year since

inception.

Alternative Investment Fund Managers Directive

(“AIFMD”)

In accordance with the AIFMD, the Company has

appointed Chikara as its Alternative Investment Fund

Manager (“AIFM”). The AIFM must ensure that an annual

report containing certain information on the Company is

madeavailabletoinvestorsforeachfinancialyear.The

FCA Investment Funds Sourcebook (the “Sourcebook”)

details the requirements of the annual report. All the

information required by those rules is included in this

Annual Report or will be made available on the AIFM’s

website: (www.ccjapanincomeandgrowthtrust.com/

ccji-documents/report-accounts).

The AIFM is required to make certain disclosures on

its remuneration in respect of the AIFM’s relevant

reporting period which is the year ended 31 December

2022. These disclosures are available on the AIFM’s

website https://www.chikarainvestments.com/aifm-

remuneration-disclosure) or are available on request

from the AIFM.

Leverage (under AIFMD)

The AIFM is required to set leverage limits as a

percentage of net assets for the Company utilising

methods prescribed under AIFMD. These methods

are known as the gross method and the commitment

method. Under both methods the AIFM has set current

maximum limits of leverage for the Company of 200%.

A leverage percentage of 100% equates to nil leverage.

The Company’s leverage under each of these methods at

its year end is shown below:

Gross

method

Commitment

method

Maximum leverage

limit 200% 200%

Actual leverage at

31 October 2023 120% 119%

Dividend policy

The Company intends to pay dividends on a semi-annual

basis, with dividends normally declared in January/

February and June and paid in March and July/August

each year.

In accordance with regulation 19 of the Investment

Trust (Approved Company) (Tax) Regulations 2011, the

Company will not (except to the extent permitted by

those regulations) retain more than 15% of its income

(as calculated for UK tax purposes) in respect of an

accounting year.

In order to increase the distributable reserves available

to facilitate the payment of future dividends, the amount

standing to the credit of the share premium account

DIRECTORS’ REPORT

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 27

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

of the Company immediately following completion of

thefirstissueofOrdinaryShareson15December2015

was cancelled and transferred to a special distributable

reserve. The Company may, at the discretion of the

Board, pay all or part of any future dividends out of this

special distributable reserve, taking into account the

Company’s investment objective.

Dividends will normally be funded through distributions

from portfolio companies including dividends and other

distributions, taking account of share buybacks by

portfolio companies.

The Company declared an interim dividend of 1.55p

per Ordinary Share in June 2023 which was paid on 4

August 2023. On 19 January 2024, the Directors declared

a second interim dividend in respect of the year ended

31 October 2023 of 3.75p per Ordinary Share, which,

will be paid on 1 March 2024, to Shareholders on the

General authority to issue shares

A general authority to issue up to 13,473,061 Ordinary

Shares and to disapply pre-emption rights when issuing

those shares was granted at the Company’s last Annual

General Meeting. This authority will expire at the time of

the Annual General Meeting to be held in March 2024.

During the year ended 31 October 2023, the Company

did not utilise its authority to issue shares. However,

the Board recommends that the Company is granted a

new authority to issue up to a maximum of 13,473,061

Ordinary Shares (representing approximately 10% of

the shares in issue at the date of this document) and

to disapply pre-emption rights when issuing those

OrdinaryShares.Resolutionstothiseffectwillbeputto

Shareholders at the Annual General Meeting.

Any Ordinary Share issues will be issued at a premium to

(cum income) Net Asset Value.

No shares were issued or bought back during the year.

Treasury shares

The Companies Act allows companies to hold shares

acquired by way of market purchases to be held as

Treasury shares, rather than having to cancel them. This

would give the Company the ability to re-issue Ordinary

Sharesquicklyandcosteffectively,therebyimproving

liquidity and providing the Company with additional

flexibilityinthemanagementofitscapitalbase.No

Ordinary Shares will be sold from Treasury at a price

less than the (cum income) Net Asset Value per existing

Ordinary Share at the time of their sale unless they are

firstofferedproratatoexistingShareholders.

No Ordinary Shares were bought back during the year

ended 31 October 2023 and no Ordinary Shares are

currently held in Treasury.

Discount management

The Directors recognise the importance to existing

Shareholders of the Ordinary Shares not trading at a

significantdiscounttotheirprevailingNAV.Totheextent

thattheOrdinarySharestradeatasignificantdiscount

to their prevailing NAV, the Board will consider whether,

in the light of the prevailing circumstances, the Company

should purchase its own Ordinary Shares, whether

pursuant to the general authority referred to below or

pursuanttotenderoffersmadeonappropriateterms.

There is, however, no guarantee or assurance that any

discount control mechanisms proposed by the Board

will reduce any discount.

The Directors currently have the authority to make

market purchases of up to 20,196,118 Ordinary Shares.

The maximum price (exclusive of expenses) which may

be paid for an Ordinary Share must not be more than

the higher of: (i) 5 per cent. above the average of the

mid-marketvaluesoftheOrdinarySharesforthefive

Business Days before the purchase is made: or (ii) the

higher of the price of the last independent trade and

the highest current independent bid for the Ordinary

Shares. Ordinary Shares will be repurchased only at

prices below the prevailing NAV per Ordinary Share,

whichshouldhavetheeffectofincreasingtheNAVper

Ordinary Share for remaining shareholders.

It is intended that a renewal of the authority to make

market purchases will be sought from Shareholders at

each Annual General Meeting of the Company and such

a resolution will put forward at the forthcoming Annual

General Meeting. Purchases of Ordinary Shares will be

made within guidelines to be established from time to

time by the Board. Any purchase of Ordinary Shares

would be made only out of the available cash resources

of the Company and when shares are trading at a price

that is below the then prevailing NAV per Ordinary

shares. Ordinary Shares purchased by the Company

may be held in Treasury or cancelled.

Purchases of Ordinary Shares may be made only in

accordance with the Companies Act, the Listing Rules

and the Disclosure Guidance and Transparency Rules.

Life of the Company

TheCompanyhasnofixedlifebut,pursuanttothe

Articles, an ordinary resolution for the continuation of

the Company will be proposed at the Annual General

Meeting every three years. The last vote was in March

2022, with 99.97% of shareholders voting for the

continuation of the Company. The next continuation

vote will be proposed at the AGM to be held in 2025.

Upon any such resolution not being passed, within 90

daysproposalswillbeputforwardtotheeffectthatthe

Company be wound up, liquidated, reconstructed or

unitised.

28 CC Japan Income & Growth Trust plc

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28 CC Japan Income & Growth Trust plc

Market information

The Company’s share capital is admitted to the premium

listingsegmentoftheOfficialListoftheFinancial

Conduct Authority and admitted to trading on the

London Stock Exchange. The NAV per share is calculated

in sterling for each business day that the London Stock

Exchange is open for business. The daily NAV per share

is published through a regulatory information service.

Bank overdraft facility

The Company has a bank overdraft facility with The

Northern Trust Company. Under the terms of the

facility a maximum of £12 million, or the equivalent in

Japanese yen, can be drawn down. As at the year end,

the equivalent of £3,180,000 (2022: £1,903,000) of the

overdraft facility was utilised on the Japanese yen bank

account.

Derivatives

TheCompanymayuselongonlycontractsfordifference

orequityswapsforgearingandefficientportfolio

management purposes. Where the Company uses such

instruments, it takes a credit risk with regard to the

parties with whom it trades and may also bear the risk

of settlement default.

As at 31 October 2023, the Company held contracts for

differencewithanabsoluteexposureof£46,397,000

(2022: £39,926,000).

Financial instruments

ThefinancialinstrumentsoftheCompanygenerate

liquidity risk, credit risk and market risk. An explanation

of these risks and how they are managed; and the policy

andpracticewithregardtofinancialinstrumentsare

containedinnote16ofthefinancialstatements.

Depositary and custodian

The depositary is the entity we are required by

regulation to appoint to carry out certain services in

relation to the Company, namely, safekeeping of the

assets, cash monitoring and regulatory oversight. The

trustee and depositary of the Company is Northern Trust

Investor Services Limited (“NTISL”). NTISL is a company

established in England and Wales and is authorised by

the FCA to be a trustee and depositary.

Company Secretary and administrator

Apex Listed Companies Services (UK) Limited provide

company secretarial and administration services to the

Company, including calculation of its daily Net Asset

Value.

Capital structure and voting rights

Atthefinancialyearend,theCompany’sissuedshare

capital comprised 134,730,610 Ordinary Shares of 1p

nominal value. Each Ordinary Share held entitles the

holder to one vote. All shares carry equal voting rights

and there are no restrictions on those voting rights.

Voting deadlines are stated in the Notice of Annual

General Meeting and Form of Proxy and are in

accordance with the Companies Act 2006.

There are no restrictions on the transfer of Ordinary

Shares, nor are there any limitations or special rights

associated with the Ordinary Shares.

Significant Shareholders

As at 31 October 2023, the Directors have been formally

notifiedofthefollowingshareholdingscomprising3%

or more of the issued share capital of the Company in

accordance with DTR 5 (The Disclosure and Guidance

Transparency Directive):

SignificantShareholders Holding %

1607 Capital Partners LLC 18,782,448 13.94

Rathbone Investment

Management Ltd 13,404,704 9.95

Christ Church College,

Oxford University 8,706,850 6.46

Close Asset Management

Limited 6,778,757 5.03

City of London Investment

Management Company

Limited 6,589,431 4.89

WM Thomson 6,454,660 4.79

Charles Stanley Group PLC 5,689,763 4.22

J M Finn Nominees Limited 5,455,300 4.05

Brooks Macdonald Asset

Management Limited 4,725,154 3.51

Sincetheyearend,theCompanyhasbeennotifiedof

one change to the above shareholdings, being 1607

Capital Partners LLC, who have sold 1,356,512 Ordinary

Shares, resulting in a holding of 12.93% of the issued

share capital of the Company.

Settlement of ordinary share transactions

Settlement of Ordinary Share transactions in the

Company are settled by the CREST share settlement

system.

Political donations

The Company does not make political donations.

DIRECTORS’ REPORT continued

CC Japan Income & Growth Trust plc 29

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 29

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Notice of general meetings

For the Annual General Meeting at least twenty-one

days’ notice shall be given to all the members and to

the auditors. All other general meetings shall also be

convened by not less than twenty-one days’ notice to all

those members and to the auditors. A special resolution

will be proposed at the Annual General Meeting to

renew the authority to reduce the period of notice for

General Meetings to fourteen days. Reduced notice will

be used only under exceptional circumstances.

Going concern

The Directors have adopted the going concern basis

in preparing the Company’s accounts. The following is

a summary of the Directors’ assessment of the going

concern status of the Company, which should be read

in conjunction with the Viability Statement on pages 12

and 13.

The Company’s ability to continue as a going concern

is for the period assessed by the Directors, being

the period to 31 January 2025, which is at least 12

monthsfromthedatethefinancialstatementswere

authorised for issue. This assessment took account of

war in Ukraine and the Middle East; and the increase in

geopolitical tension between the US and China. These

uncertaintieshaveshakenmarketconfidenceatatime

whenhighinterestratesandinflationarypressures

worldwide have reduced global economic growth. The

Company’s principal risks are market-related and the

current extreme market conditions have demonstrated

the resilience of the Company and its investment

objective and policy. An explanation of the market,

liquidity and credit risks and how they are managed is

containedinnote16tothefinancialstatements.

The Directors have also considered the liquidity of the

Company’s portfolio of investments as well as its cash

position,income,andexpenseflows.TheCompany’s

net assets as at 31 October 2023 were £235.1 million

(2022: £203.6 million). As at 31 October 2023, the

Company held approximately £232.0 million in quoted

investments (2022: £199.6 million) and had cash of

£0.34 million (2022: £1.4 million). The total expenses

(excludingfinancecostsandtaxation)fortheyearended

31 October 2023 were £2.4 million (2022: £2.3 million),

which represented approximately 1.06% (2022: 1.06%)

of average net assets during the year. At the date of

approval of this report, based on the aggregate net

assets of investments and cash held, the Company has

substantial operating expenses cover.

The Directors have fully considered and assessed the

Company’s portfolio of investments. A prolonged and

deep market decline could lead to falling values of the

investmentsorinterruptionstocashflow.However,the

Companycurrentlyhasmorethansufficientliquidity

available to meet future obligations.

In accordance with the Company’s Articles of

Association, Shareholders have the right to vote on the

continuation of the Company as an investment trust

everythreeyearsandaresolutiontothateffectwaslast

approved at the AGM on March 2022.

Appointment and replacement of Directors

The rules governing the appointment and replacement

of Directors are contained in the Company’s Articles of

Association which require that Board members retire at

every third AGM after appointment. However, the Board

has agreed that all Directors will be subject to annual

re-election.

If a Board member does not put themselves forward

for re-election at the Annual General Meeting, or the

resolution to re-elect them to the Board fails, they will

step down. Furthermore, the Board may determine that

a Board member may decide to step down at any time.

No Board member is subject to compensation for loss of

office.

Articles of Association

Any amendment of the Company’s Articles of

Association requires shareholder approval.

Directors’ indemnities

Details on the Directors’ indemnities in place are

provided in the Directors’ Remuneration Implementation

Report.

Auditor information

Each of the Directors at the date of the approval of this

reportconfirmsthat:

(i) so far as the Director is aware, there is no relevant

audit information of which the Company’s auditor is

unaware; and

(ii) the Director has taken all steps that they ought to

have taken as Director to make themself aware of

any relevant information and to establish that the

Company’s auditor is aware of that information.

Thisconfirmationisgivenandshouldbeinterpreted

in accordance with the provisions of Section 418 of the

Companies Act 2006.

In accordance with Section 489 of the Companies Act

2006, a resolution to re-appoint Johnston Carmichael

LLP as the Company’s auditor will be put forward at the

forthcoming Annual General Meeting.

30 CC Japan Income & Growth Trust plc

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30 CC Japan Income & Growth Trust plc

Future trends

Detailsofthemaintrendsandfactorslikelytoaffect

the future development, performance and position of

the Company’s business can be found in the Investment

Manager’s Report section of this Strategic Report on

pages 8 and 9.Furtherdetailsastotherisksaffecting

the Company are set out in the ‘Principal and Emerging

Risks and Uncertainties’ on pages 14 to 16.

Annual General Meeting

The Company’s forthcoming AGM will be held at 12 noon

on 5 March 2024. The Notice of the AGM can be found

on pages 80 to 81 of this Annual Report and downloaded

from the website.

By order of the Board

Sinead van Duuren

For and on behalf of

Apex Listed Companies Services (UK) Limited

Company Secretary

24 January 2024

DIRECTORS’ REPORT continued

CC Japan Income & Growth Trust plc 31

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 31

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Introduction

The Listing Rules and the Disclosure Guidance and

Transparency Rules of the UK Listing Authority (“Listing

Rules”) require listed companies to disclose how they

have applied the principles and complied with the

provisions of The UK Corporate Governance Code 2018

(the “UK Code”), as issued by the Financial Reporting

Council (“FRC”). The UK Code can be viewed on the FRC’s

website.

The Board of the Company has considered the

Principles and Provisions of the 2019 Association of

Investment Companies Code of Corporate Governance

(the “AIC Code”). The AIC Code addresses the Principles

and Provisions set out in the UK Code, as well as

setting out additional Provisions on issues that are of

specificrelevancetotheCompany,asaninvestment

trust. The AIC Code is available on the AIC website

(www.theaic.co.uk). It includes an explanation of how

the AIC Code adapts the Principles and Provisions

set out in the UK Code to make them relevant for

investment companies.

The Board considers that reporting against the

Principles and Provisions of the AIC Code, which has

been endorsed by the FRC, provides more relevant

information to shareholders. AIC members who report

against the AIC Code fully meet their obligations under

the UK Code and the related disclosure requirements

contained in the Listing Rules.

Duringthefinancialyearended31October2023,the

Company complied with the recommendations of

the AIC Code and the relevant provisions of The UK

Corporate Governance Code, except as set out below.

The UK Corporate Governance Code includes provisions

relating to:

(i) the role of a chief executive;

(ii) executive Directors’ remuneration; and

(iii) the need for an internal audit function.

The Board considers that these provisions are not

relevant to this externally managed investment

company. The Company has no employees and the day-

to-day management and administrative functions are

outsourced to third parties.

The Board of Directors

Asat31October2023,theCompanyhadfiveNon-

Executive Directors including the Chairman, comprising

three male (60%) and two female (40%) directors. On

1 October 2023, John Charlton-Jones joined the Board,

bringing with him additional experience and skills.

Biographical details can be found on pages 31 and 32. As

part of the recruitment process, the Board was mindful

of the Company’s policy on diversity which is contained

in the Corporate Governance statement (see pages 33

and 34).

On 10 October 2023, Peter Wolton retired as a Non-

Executive Director of the Company, having served on the

Board since launch in December 2015.

June Aitken, who joined the Board in February 2022, is

the Senior Independent Director, having been appointed

to succeed Peter Wolton on 10 October 2023. Kate

Cornish-Bowden is the Audit and Risk Committee Chair.

All Directors, including the Chairman, Harry Wells are

regarded as independent of the Company’s Investment

Manager.

The Board believes that during the year ended 31

October 2023 its composition was appropriate for an

investment company of the Company’s nature, meeting

both gender and ethnic diversity guidelines. Further

information can be found on pages 33 and 34.

AlloftheDirectorsareabletoallocatesufficienttimetothe

Companytodischargetheirresponsibilitieseffectively.

The Directors have a broad range of relevant experience

to meet the Company’s requirements and their

biographies are given below:

Harry Wells (Chairman)

Appointed on 10 November 2015

Harry has 48 years’ experience of investment markets,

primarily as an institutional stockbroker specialising

intheAsiaPacificregion,basedinLondonandHong

Kong, latterly as a Managing Director of Salomon Smith

Barney. Harry has extensive investment trust experience

previously serving as a Non-Executive Director and

Chairman of both Martin Currie Asia Unconstrained

Investment Trust PLC and The Establishment Investment

Trust PLC. Harry holds an MA degree in Land Economy

from Cambridge University and is a Fellow of the

Chartered Institute for Securities and Investment and a

Member of the Royal Institution of Chartered Surveyors.

Kate Cornish-Bowden (Director and Chair of the Audit

and Risk Committee)

Appointed on 3 September 2018

Kate worked for Morgan Stanley Investment

Management for 12 years, where she was a Managing

Director and head of Morgan Stanley Investment

Management’s Global Core Equity business. Prior

to joining Morgan Stanley, Kate worked for M&G

Investment Management as a research analyst. Kate

is a Non-Executive Director and Chair of International

Biotechnology Trust plc, a Non-Executive Director

of Finsbury Growth & Income Trust plc and a Non-

CORPORATE GOVERNANCE

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32 CC Japan Income & Growth Trust plc

Executive Director of European Assets Trust plc.

Katewas formerly a Non-Executive Director and Senior

Independent Director of Schroder Oriental Income Fund

Ltd. Kate is an Associate of the Institute of Investment

Management and Research (formerly AIMR, now

Chartered Financial Analyst Institute), holds a Master’s in

Business Administration (MBA), and has completed the

Financial Times Non-Executive Director Diploma. She is

also a Mentor for The Prince’s Trust.

June Aitken (Senior Independent Director)

Appointed on 1 February 2022

June has over 30 years of experience in Asian and

emerging equity markets, and held numerous senior

roles at HSBC Bank plc, London and at UBS AG. June

is a Non-Executive Director of JP Morgan Asia Growth

and Income plc, BBGI Global Infrastructure S.A., and

Schroder Income Growth Fund plc.

June was previously on the board of HSBC Bank Japan,

AquariusFund,anAsianfixedincomefund,Australian

Securities Exchange listed Emerging Markets Masters

Fund and the Asian Masters Fund Limited, Erudine

HoldingsLtd,afinancialsoftwareconsultancyfirm

and the Shepherds Bush Housing Group. She was a

founding partner and investor of Osmosis Investment

Management LLP. June holds a degree in Politics,

Philosophy and Economics from Oxford University and is

a member of the Chartered Banker Institute.

Craig Cleland (Director)

Appointed on 1 February 2022

Craig has over 35 years of investment trust and fund

management experience. Since 2013, he has been Head

of Corporate Development: Investment Trusts (on a

part-time basis) at CQS (UK) LLP, a multi-asset asset

managementfirminLondonbusinesswithafocuson

credit markets. He is also a Non-Executive Director of

Invesco Select Trust plc and BlackRock Latin American

Investment Trust. Craig also served as a member of the

AIC Technical Committee for 10 years and is an Associate

of the Institute of Bankers in Scotland. Craig was a

Managing Director at JPMorgan Asset Management (UK)

Limited as a Client Director of their investment trust

business. He was also Director and Senior Company

Secretary at Fleming Investment Trust Management,

transferring to JPMorgan Chase after the acquisition of

Robert Fleming Holdings Limited.

John Charlton-Jones (Director)

Appointed on 1 October 2023

John has 36 years of experience working with

institutions who invest in the Japanese stock market,

asastockbrokerworkingfirstforJamesCapel/HSBC,

and then for CLSA (UK) Limited, in both cases becoming

Managing Director of Japan equity sales across UK/

Europeforover15years.Duringthistime,hespentfive

years living in Tokyo. John holds a degree in History from

Cambridge University. He is also a Trustee of the Daiwa

Anglo-Japanese Foundation.

Responsibilities of the Chairman, the Board, and

its Committees

The Chairman leads the Board and is responsible for

itsoveralleffectivenessindirectingtheaffairsofthe

Company. The Company has adopted a document

setting out the responsibilities of the Chairman.

Tenure, Independence and Succession

Generally, Directors are initially appointed by the

Board, until the following AGM when, as required by

the Company’s Articles of Association, they will stand

for election by Shareholders. All Directors will stand for

annual re-election on a voluntary basis.

TheBoardrecognisesthebenefitstotheCompany

of having longer serving Directors together with

progressive refreshment of the Board. The Board does

not believe that length of service in itself necessarily

disqualifiesaDirectorfromactingindependently.

However, the Board will take into account the

requirements of the AIC Code when making a

recommendation for a Director’s reappointment.

Accordingly, the Board may decide to recommend

a director with more than nine years’ service for re-

election at the Company’s AGM. In order to ensure

continuity, the Board has adopted corporate governance

best practice and has a succession plan in place that

allows for gradual refreshment.

No Director of the Company has served for nine years

or more and all Directors remain independent of the

Company’s Investment Manager. However, the Board

is mindful of when the Board members will reach their

ninth anniversary.

Following the disclosure within the previous Annual

Report of Peter Wolton’s planned retirement on

10October 2023, the Board began a recruitment process

and engaged the services of recruitment specialists,

Cornforth Consulting Ltd. Cornforth Consulting Ltd

is independent of both the Company and individual

directors. Following an extensive search and thorough

interview and selection process, the Nomination

Committee recommended John Charlton-Jones’

appointment to the Board. The Board subsequently

appointedJohnCharlton-Joneswitheffectfrom1

October 2023. June Aitken, who joined the Board in

February 2022, was appointed to succeed Peter Wolton

as Senior Independent Director on 10 October 2023.

As disclosed within the previous Annual Report and in

the Company’s announcement via the London Stock

Exchange on 19 July 2023, the Chairman will retire at

the AGM in March 2024, having served since launch.

In accordance with the Board’s succession plan, the

CORPORATE GOVERNANCE continued

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CC Japan Income & Growth Trust plc 33

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

process to appoint a new Chair of the Company was led

by Peter Wolton (then Senior Independent Director).

June Aitken, having the requisite skills and experience

for the role, was appointed by the Board to succeed

Harry Wells as the next Chair of the Company, subject to

her re-election as a Director at the Companys AGM on 5

March 2024.

Induction and Training and Performance

Appraisal

On appointment, each Director receives a complete

induction programme including the opportunity to meet

with the Investment manager and other service providers.

The Directors receive other relevant training as necessary.

ApolicyofinsuranceagainstDirectors’andOfficers’

liabilities is maintained by the Company.

A procedure has been adopted for Directors, in the

furtherance of their duties, to take independent

professional advice at the expense of the Company.

Copies of the Directors’ appointment letters are

available on request from the Company Secretary.

Board committees

Audit and Risk Committee

A report on pages 41 to 43 provides details of the role

and composition of the Audit and Risk Committee

together with a description of the work of the Audit

Committee in discharging its responsibilities.

Management Engagement Committee

The Company has a Management Engagement

Committee which is chaired by the Chairman of the

Company, Harry Wells, and consists of all the Directors.

The Management Engagement Committee’s principal

duties are to consider the terms of appointment

of the Investment Manager and to review annually

the appointment and the terms of the Investment

Management Agreement. The Management Engagement

Committee also reviews the continued appointment and

performance of the Company’s other service providers.

Nomination Committee

The Company also has a Nomination Committee which

is chaired by the Senior Independent Director, June

Aitken. The Nomination Committee is responsible for

identifyingandproposingcandidatesfortheofficeof

Director of the Company. The Nomination Committee

also considers and reviews remuneration payable to

the Directors and makes recommendations regarding

Directors’ fees to the Board.

The terms of reference for these committees can be

found on the Company’s website:

https://www.ccjapanincomeandgrowthtrust.com/ccji-

documents/prospectus-terms-of-reference-disclosures

Board diversity

The Company’s policy is that the Board should have

an appropriate level of diversity in the boardroom,

taking into account relevant skills, experience, gender,

social and ethnic backgrounds, cognitive and personal

strengths. Brief biographies of the Directors are shown

on pages 31 and 32. The policy is to ensure that the

Company’s Directors bring a wide range of knowledge,

experience, skills, backgrounds and perspectives to the

Board. There will be no discrimination on the grounds

of gender, religion, race, ethnicity, sexual orientation,

age or physical ability. The overriding aim of the policy

is to ensure that the Board is composed of the best

combinationofpeopleforensuringeffectiveoversight

of the Company and constructive support and challenge

to the Investment Manager. Consideration is given to

the recommendations of the AIC Code and the Board

supports the recommendations of the Hampton

Alexander review, the more recent FTSE Women Leaders

review and the Parker review.

The Board appraises its collective set of cognitive and

personal strengths, independence and diversity on an

annual basis, and especially during the recruitment

process, so as to ensure it is aligned with the Company’s

strategic priorities. The performance appraisal process

is described below. The Board believes its composition is

appropriate for the Company’s circumstances. However,

in line with the Board’s succession planning and tenure

policy, or should strategic priorities change, the Board

will review and, if required, adjust its composition.

As at date of this Report, the Board comprises two

female and three male Board members.

The Board takes account of the FCA’s listing rule

(LR9.8.6R (9)(a)) concerning public disclosures on

whether a company has met the following targets on

board diversity:

a) at least 40% of individuals on the board are women;

b) atleastoneoftheseniorboardpositions(defined

by the FCA as either the chair, senior independent

director,chiefexecutiveorchieffinancialofficer)is

held by a woman; and

c) at least one individual on the board is from a

minority ethnic background.

As at 31 October 2023, the Board meets the criteria of all

three targets as a) 40% of the Board are women, b) the

role of Senior Independent Director is held by a woman,

and c) one Board member is from a minority ethnic

background.

The below tables set out the diversity data required

under LR 9.8.6R(10) as at 31 October 2023. As an

externally managed investment company, the Board

employsnoexecutivestaff,andthereforedoesnothave

achiefexecutiveofficer(CEO)orachieffinancialofficer

34 CC Japan Income & Growth Trust plc

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34 CC Japan Income & Growth Trust plc

(CFO), both of which are deemed senior board positions

bytheFCA.AlthoughnotdefinedassuchunderLR9.8.6R

(9)(a), the Board considers the Chair of the Audit and

Risk Committee to be a senior board position, given

the nature of the Company as an investment trust, the

importance of the position and the time it commands.

The following information has been provided by each

Director. There have been no changes since 31 October

2023.

Board Diversity as at 31 October 2023

Gender

Number

of Board

members

Percentage of

the Board

Number

of senior

positions on

the Board

Men 3 60% 1

Women 2 40% 1

Prefer not to say – – –

Ethnic background

Number

of Board

members

Percentage of

the Board

Number

of senior

positions on

the Board

White British or Other White (including minority-white groups) 4 80% 1

Asian/Asian British 1 20% 1

Prefer not to say – – –

1 Harry Wells is Chairman of the Board.

2 June Aitken is Senior Independent Director.

Meeting attendance

The number of formal meetings of the Board and Committees held during the year ended 31 October 2023 are as

follows, together with individual Directors’ attendance at those meetings.

Quarterly

Board

Audit and Risk

Committee

Management

Engagement

Committee

Nomination

Committee

Number of meetings held 4 3 1 2

Harry Wells 4 3 1 2

Kate Cornish-Bowden 4 3 1 2

June Aitken 4 3 1 2

Craig Cleland 4 3 1 2

John Charlton-Jones* 1 – 1 1

Peter Wolton** 4 3 1 2

* John Charlton-Jones was appointed on 1 October 2023 and has attended all meetings since his appointment.

** Peter Wolton retired from the Board on 10 October 2023.

Several other ad hoc Board and Committee meetings were held during the year to deal with administrative matters,

board selection, market updates and approve documentation.

CORPORATE GOVERNANCE continued

CC Japan Income & Growth Trust plc 35

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 35

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Performance appraisal

A performance review of the Investment Manager

was undertaken using a programme of open and

closed ended questions from each of the Board

members which were reviewed by the Chairman of the

Management Engagement Committee and discussed

with the Board. The results were considered, and the

Board concluded that the continued appointment of

the Investment Manager was in the best interests of the

Company’s shareholders.

The Committee separately considered each of its other

service providers and concluded that their continued

appointment was in the best interests of the Company’s

shareholders. Following a competitive tender process,

the Board appointed Johnston Carmichael LLP as the

Company’s new Independent Auditor for the year

ending 31 October 2023, and subsequently approved by

Shareholders at the 2023 AGM.

A formal annual performance appraisal process is

performed on the Board, the committees and the

individual Directors. A programme consisting of open

and closed-ended questions was used as the basis

for this appraisal. The results were reviewed by the

Chairman of the Nomination Committee and discussed

with the Board. A separate appraisal of the Chairman

has been carried out by the other members of the

Board and the results reported back by the Senior

Independent Director to the Chairman. The results

of the performance evaluation were positive and

demonstrated that the Board, Chairman, Committee

Chairs and individual Directors showed the necessary

commitment and have the requisite experience for the

fulfilmentoftheirduties.

Conflicts of Interest

As required by law, a Director must avoid a situation

whereheorshehasaninterestthatconflictswith

the Company’s interests. The Company’s Articles of

Association provide the Directors authority to authorise

potentialconflictsofinterest.TheDirectorsareableto

impose limits or conditions when giving authorisation if

they think this is appropriate. The procedure observed

bytheBoardinconsideringdealingwithconflicted

matters is as follows:

• AnyBoardmembersoconflictedmustrecuse

themself from the discussion involving the relevant

conflict;

• Only Directors who have no interest in the matter

being considered are able to debate the matter and

take the relevant decision; and

• In taking the decision the Directors must act in a way

they consider, in good faith, will be most likely to

promote the Company’s success.

TheDirectorshavedeclaredanypotentialconflicts

of interest to the Company. These are entered into

theCompany’sregisterofpotentialconflicts,which

is reviewed regularly by the Board. The Directors are

obliged to advise the Company Secretary as soon as they

becomeawareofanypotentialconflictsofinterest.

Internal control

The AIC Code requires the Board to review the

effectivenessoftheCompany’ssystemofinternal

controls. The Board recognises its ultimate responsibility

for the Company’s system of internal controls and for

monitoringitseffectiveness.Thesystemofinternal

controls is designed to manage rather than eliminate

the risk of failure to achieve business objectives. It can

provide only reasonable assurance against material

misstatement or loss. The Board has undertaken a

review of the aspects covered by the guidance and has

identifiedriskmanagementcontrolsinthekeyareasof

strategicandbusinessrisk,financialrisk,operational

risk, and regulatory and compliance risk. The Board

believes that the existing arrangements, set out below,

represent an appropriate framework to meet the

internal control requirements. The Directors have kept

underreviewtheeffectivenessoftheinternalcontrol

system throughout the year and up to the date of this

report. The system in place accords with The FRC’s 2014

‘Guidance on Risk Management, Internal Control and

Related Financial and Business Reporting’.

Financial aspects of internal control

TheDirectorsareresponsiblefortheinternalfinancial

control systems of the Company and for reviewing their

effectiveness.Theseaimtoensurethemaintenanceof

properaccountingrecords,thereliabilityofthefinancial

information upon which business decisions are made

and which is used for publication and that the assets

of the Company are safeguarded. As stated above, the

Board has contractually delegated to external agencies

the services that the Company requires, but it is fully

informed of the internal control framework established

by the Investment Manager, the Administrator and the

Company’s Custodian to provide reasonable assurance

ontheeffectivenessofinternalfinancialcontrols.

The key procedures include a review of the Company’s

management accounts and the Net Asset Value and the

monitoring of performance of the key service providers

at the quarterly Board meetings. The Directors also

employ independent auditors to perform an external

audit. The administrative function is segregated from

that of securities and cash custody, and from the

investment management function. Appropriate Directors

andOfficersinsuranceisinplaceandrenewedannually.

The Company’s key service providers report periodically

to the Board on their procedures to mitigate cyber

security risks. In addition, procedures have been put in

place for the authorisation of all expense payments.

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The Statement of Directors’ Responsibilities in respect

of the accounts is on page 44 and a Statement of Going

Concern is on page 29. The Report of the Independent

Auditor is on pages 45 to 50.

Other aspects of internal control

The Board holds quarterly meetings, and additional

meetings as required. Between these meetings there

is regular contact with the Investment Manager, the

Company Secretary and the Administrator.

The Board has agreed policies with the Investment

Manager on key operational issues. The Investment

Manager reports in writing to the Board on operational

and compliance issues. The Investment Manager reports

direct to the Audit and Risk Committee concerning the

internal controls applicable to the Investment Manager’s

dealing,investmentandgeneralofficeprocedures.

The Board reviews detailed management accounts from

the Administrator, including holdings in the portfolio,

transactions,andotheraspectsofthefinancialposition

of the Company. The Depositary provides oversight

reports detailing performance against key performance

indicators for the quarterly Board meetings. Additional

ad hoc reports are received as required and the

Directors have access at all times to the advice and

services of the Company Secretary, ensuring that Board

procedures are followed and that the Board complies

with applicable rules and regulations.

Regular contact with the Investment Manager and

the other key service providers enables the Board to

monitor the Company’s progress towards its objectives

and encompasses an analysis of the risks involved. The

effectivenessoftheCompany’sriskmanagementand

internal controls systems is monitored and a formal

review, utilising a detailed risk assessment programme

has been completed. This included consideration of

the Administrator’s, the Investment Manager’s, the

Depositary’s and the Registrar’s internal controls report.

Therearenosignificantfindingstoreportfromthe

review.

Principal and emerging risks

TheDirectorsconfirmthattheyhavecarriedouta

robust assessment of the emerging and principal risks

facing the Company, including those that would threaten

its business model, future performance, solvency or

liquidity. The principal risks and how they are being

managed is set out in the Strategic Report.

Shareholder relations

The Notice of AGM sets out the business of the AGM and

any item not of an entirely routine nature is explained in

the Directors’ Report. Separate resolutions are proposed

for each substantive issue. The Investment Manager has

aprogrammeofmeetingswithsignificantShareholders

andreportsbacktotheBoardonitsfindings.The

Chairman and the Board welcome direct feedback from

Shareholders.

Exercise of voting powers and stewardship code

The Company and the Investment Manager support the

UK Stewardship Code issued by the Financial Reporting

Council. The Investment Manager is a signatory to the

UK Stewardship code 2020 and has published its proxy

voting policy and statement of commitment to the

principles of best practice of the Stewardship Code on

its website at https://www.chikarainvestments.com/

stewardship-code It is also a signatory to the Japan

Stewardship Code and has published its statement of

commitment to its principles on its website at https://

www.chikarainvestments.com/japan-stewardship-

code.

CORPORATE GOVERNANCE continued

CC Japan Income & Growth Trust plc 37

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 37

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

DIRECTORS’ REMUNERATION IMPLEMENTATION REPORT

This report has been prepared in accordance with

Schedule 8 of the Large and Medium–sized Companies

and Groups (Accounts and Reports) (Amendment)

Regulations 2013. An ordinary resolution for the

approval of this report will be put forward at the

forthcoming Annual General Meeting.

The Directors’ Remuneration Implementation Report is

put forward for approval by Shareholders on an annual

basis. The result of the Shareholder resolution on the

Implementation Report is non–binding on the Company,

although it gives Shareholders an opportunity to express

their views, which will be taken into account by the

Board. An ordinary resolution to approve this Directors’

Remuneration Implementation Report will be put

forward for approval at the Company’s Annual General

Meeting to be held on 5 March 2024.

The law requires the Company’s auditor to audit certain

of the disclosures provided. Where disclosures are

audited they are indicated as such. The auditor’s opinion

is on page 45.

Remuneration Implementation

TheCompanycurrentlyhasfiveNon–Executive

Directors.

The Board has not established a separate Remuneration

Committee. Board fees are considered annually by the

Board as a whole through the Nomination Committee.

The Board sets its fees by reference to other investment

trusts of a similar nature to that of the Company, to

RPIandCPIandotherinflationarymeasures,thetime

commitment of the Board and the size and the impact to

the Company’s ongoing charges following a rise in fees.

Board fees are not considered against any performance

measure.

No remuneration consultants were appointed during the

financialyearto31October2023.

Directors’fees,witheffectfrom1November2022,were

payable at the rate of £40,500 for the Chairman of the

Company; £32,500 for the Chair of the Audit and Risk

Committee; £28,000 for the Senior Independent Director

and £27,000 per annum for the other Board members.

Following the year end, a review was undertaken and

after careful consideration the Board approved that,

witheffectfrom1November2023anincreasein

annual Directors’ fees was warranted to £42,750 for

the Chairman of the Company; £34,500 for the Chair of

the Audit and Risk Committee; £29,500 for the Senior

Independent Director and £28,500 per annum for the

other Board members.

The Board believes that the level of increase and

resultingfeesappropriatelyreflectsprevailingmarket

rates for an investment trust of the Company’s

complexity and size, the increasing level of regulation

and resultant time spent by the Directors on matters,

and it will also enable the Company to continue to

attract appropriately experienced Directors in the future.

Due to the size and nature of the Company, it was not

deemed necessary to use a remuneration consultant

although the Nomination Committee did take into

consideration views from external search consultants on

the level of the Company’s fees against prevailing market

rates and took these into account in its deliberations.

TheDirectors’feesandtaxablebenefitsareshowninthe

table on page 38.

Directors’ service contracts

The Directors do not have service contracts with

the Company. The Directors are not entitled to

compensationonthelossofofficeandnopaymentwas

madetopastdirectorsforlossofoffice.TheDirectors

have appointment letters which do not provide for any

specificterm.InaccordancewithbestpracticetheBoard

put themselves forward for annual re–election. There

are no restrictions on transfers of the Company’s shares

held by the Directors, or any special rights attached to

such shares. The Directors’ letters of appointment can

beinspectedattheCompany’sregisteredoffice.

Directors’ indemnities

Subject to the provisions of the Companies Act 2006, the

Company may indemnify any person who is a Director,

secretaryorotherofficer(otherthananauditor)ofthe

Company, against (a) any liability whether in connection

with any negligence, default, breach of duty or breach

of trust by them in relation to the Company or any

associated company or (b) any other liability incurred by

or attaching to him in the actual or purported execution

and/or discharge of his duties and/or the exercise or

purported exercise of his powers and/or otherwise in

relation to or in connection with his duties, powers or

office;andpurchaseandmaintaininsuranceforany

personwhoisaDirector,secretary,orotherofficer

(other than an auditor) of the Company in relation to

anything done or omitted to be done or alleged to have

been done or omitted to be done as Director, secretary

orofficer.

ApolicyofinsuranceagainstDirectors’andOfficers’

liabilities is maintained by the Company.

Director search and selection fees

In accordance with the succession plan, the Board began

a recruitment process and engaged the services of

recruitment specialists, Cornforth Consulting. Cornforth

Consulting is independent of both the Company and

individual directors. Following an extensive search

and thorough interview and selection process, the

Nomination Committee recommended John Charlton–

Jones to the Board. The Board subsequently appointed

JohnCharlton–Joneswitheffectfrom1October2023.

Director’s search and selection fees of £23,000 including

expenses were incurred during the year.

38 CC Japan Income & Growth Trust plc

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38 CC Japan Income & Growth Trust plc

Performance

The following chart shows the performance of the Company’s share price by comparison to the TOPIX Index since

inception, on a total return basis. The Board deems the TOPIX Index to be the most appropriate comparator for

this report.

Directors’ emoluments for the year ended 31 October 2023 (audited)

The Directors who served during the year ended 31 October 2023 received the following remuneration for qualifying

services.

Fees and taxable benefits

Fees

Year ended

31October

2023

Taxable

benefits Total

Fees

Year ended

31October

2022

Harry Wells 40,500 – 40,500 39,000

Kate Cornish–Bowden 32,500 – 32,500 31,330

June Aitken* 27,000 – 27,000 19,250

Craig Cleland 27,000 – 27,000 19,250

John Charlton–Jones** 2,250 2,250 –

Peter Wolton*** 26,420 – 26,420 27,040

John Scott**** – – – 10,267

Total 155,670 – 155,670 146,137

* June Aitken was appointed as Senior Independent Director on 10 October 2023.

** John Charlton-Jones was appointed on 1 October 2023.

*** Peter Wolton retired on 10 October 2023.

**** John Scott retired at the AGM in March 2022.

In addition to the above, the Company paid £1,000 (2022: £3,000) in expenses to the Directors. None of the above

fees werepaidtothirdparties.Therewerenotaxablebenefitsclaimedduringtheyearsended31October2023or31

October 2022.

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Oct-15 Oct-16

Oct-17 Oct-18

Oct-19

Oct-20 Oct-23Oct-22

CCJI Share Price

Topix Index

Total Return (%)

Oct-21

DIRECTORS’ REMUNERATION IMPLEMENTATION REPORT

continued

CC Japan Income & Growth Trust plc 39

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 39

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

The current aggregate remuneration that can be paid to Directors under the Company’s Articles of Association is

£500,000 per annum, until otherwise determined by an Ordinary Resolution of the Company.

Annual Percentage Change in Directors’ Remuneration

change

2019 to

2020

change

2020 to

2021

change

2021 to

2022

change

2022 to

2023

Harry Wells 2.0 Nil 4.0 3.8

Kate Cornish-Bowden 15.5 6.4 4.1 3.7

June Aitken* N/A N/A N/A 3.8

Craig Cleland* N/A N/A N/A 3.8

John Charlton-Jones** N/A N/A N/A N/A

Peter Wolton*** 2.0 Nil 4.0 3.6

* Craig Cleland and June Aitken were appointed on 1 February 2022. June Aitken was appointed as Senior Independent Director on 10 October 2023.

** John Charlton-Jones was appointed on 1 October 2023.

*** Peter Wolton retired on 10 October 2023.

A non-binding ordinary resolution to approve the Directors’ Remuneration Implementation Report contained in the

Annual Report for the year ended 31 October 2022 was put forward at the Annual General Meeting held on 1 March

2023. The resolution was passed with proxies representing 99.99% of the shares voted in favour of the resolution.

The Directors’ Remuneration Policy was last put forward at the Annual General Meeting held 1 March 2023. The

resolution was passed with proxies representing 99.99% of the shares voted in favour of the resolution. The Directors’

Remuneration Policy will next be put forward for approval at the Annual General Meeting to be held in 2026.

The Board takes an active role in shareholder engagement and particularly voting outcomes. Shareholders have

the opportunity to express their views and ask questions in respect of the Remuneration Policy and Remuneration

Implementation Report at the Annual General Meeting.

Relative importance of spend on pay

The following table sets out the total level of Directors’ remuneration compared to management fees and other

expenses incurred by the Company and the distributions to Shareholders by way of dividends.

Year to

31 October

2023

£’000

Year to

31 October

2022

£’000

Directors’ fees 156 146

Management fees and other expenses 2,430 2,297

Dividends paid and payable to Shareholders 7,140 6,602

The information in the table above is required by the regulations with the exception of management fees and other

expenses which have been included to show the total operating expenses of the Company.

40 CC Japan Income & Growth Trust plc

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40 CC Japan Income & Growth Trust plc

Directors’ holdings (Audited)

The interests of the Directors in the Ordinary Shares of the Company as at 31 October 2023 and at 31 October 2022 were as

follows.Allshareholdingsarebeneficiallyowned.

Ordinary

Shares as at

31October

2023

Transferable

Subscription

Shares* as at

31 October

2023

Ordinary

Shares as at

31October

2022

Transferable

Subscription

Shares* as at

31October

2022

Harry Wells 40,000 – 40,000 58,000

Kate Cornish-Bowden 50,000 – 40,000 20,000

Craig Cleland 40,000 – 40,000 –

June Aitken 41,631 – 40,372 –

John Charlton-Jones** 12,185 – – –

* On 18 February 2021 Transferable Subscription Shares (“TSS”) were issued on a 1 for 5 basis to all Shareholders. The TSS expired worthless on the

last business day of February 2023.

** John Charlton-Jones was appointed on 1 October 2023.

DirectorsarenotspecificallyrequiredtoownsharesintheCompany.

Statement

On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and

Groups(AccountsandReports)(Amendment)Regulations2013,IconfirmthattheaboveReportonRemuneration

Implementation summarises, as applicable, for the year to 31 October 2023:

(a) the major decisions on Directors’ remuneration;

(b) any substantial changes relating to Directors’ remuneration made during the year; and

Harry Wells

Chairman

24 January 2024

DIRECTORS’ REMUNERATION IMPLEMENTATION REPORT

continued

CC Japan Income & Growth Trust plc 41

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 41

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

The AIC Code recommends that boards should

establish audit committees consisting of at least three

independent Non-Executive Directors. The Board is

required to satisfy itself that at least one member of

the Audit and Risk Committee has recent and relevant

financialexperience.Themainroleandresponsibilities

of the Audit and Risk Committee should be set out in

written terms of reference covering certain matters

described in the Code. The Company complies with the

AIC Code.

Role of the Audit and Risk Committee

The Audit and Risk Committee meets formally at least

two times a year. The responsibilities of the committee

include:

• Ensuring integrity, transparency and accuracy of the

financialreports.

• Assisting in the preparation and review of the annual

and half year reports and accounts.

• Considering the appointment, independence and

objectivity, and remuneration of the auditor.

• Consideringtheeffectivenessoftheannualaudit.

• Reviewing the internal controls of the Company.

• Reviewing the internal controls of the Company’s

service providers.

• Reviewing the principal and emerging risks, and the

Company’s processes to mitigate risk.

Composition

All the Directors of the Board are members of the Audit

and Risk Committee, and each committee member

hasrecentandrelevantfinancialexperience.Following

the retirement of Peter Wolton from the Board, John

Charlton-Jones, the newly appointed Director joined the

Audit and Risk Committee. The UK Code recommends

that the Chair of the Board should not be a member of

the Audit and Risk Committee. However, as permitted by

the AIC Code, the Directors believe that membership of

the Audit and Risk Committee of the independent Chair

of the Board, Harry Wells is appropriate, and welcome

his contribution. Following Harry Wells’ retirement at the

AGM , June Aitken, as the successor Chair, will remain a

member of the Committee.

The Audit and Risk Committee has formal written terms

of reference and copies of these are available on the

Company’s website or on request to the Company

Secretary. The Committee has considered the need for

an internal audit function. Given that the Company has

no employees and outsources all its operating activities

to external providers, the Committee considers that an

internal audit function is not needed. The Committee

keeps the need for an internal audit function under

annual review.

Performance Evaluation

The Audit and Risk Committee are subject to an annual

reviewofitseffectiveness.Furtherdetailsofthe

evaluation of the Committee can be found on page 35.

Internal controls and risk management

The Board has overall responsibility for the Company’s

risk management and systems of internal controls and

forreviewingtheireffectiveness.Incommonwithmost

investment trusts, investment management, accounting,

company secretarial, registrar and depositary services

havebeendelegatedtothirdparties.Theeffectiveness

of the internal controls is assessed on a continuing basis

and the Committee receives regular assurance reports

concerning any errors and omissions. The Company’s

Adminstrator and Company Secretary has been subject

to take over, twice, in the last two years and is now

provided by Apex Company Services (UK) Limited. The

Board has taken particular care to ensure that the

transition to new systems has not disrupted the service.

The Directors have a dynamic risk management

there are measures in place to manage and mitigate

risk;andoverseetheeffectivenessofinternalcontrols

and processes. The risk management register and

associatedriskheatmapprovideavisualreflectionof

theCompany’sidentifiedprincipalandemergingrisks.

These fall into three categories: strategic and business

risk,financialandoperationalrisk,andregulatory

and compliance risk. The Audit and Risk Committee

carries out, at least annually, a robust assessment of

the principal and emerging risks and uncertainties and

monitors the risks on an ongoing basis.

Meetings

There have been three Audit and Risk Committee

meetings in the year ended 31 October 2023. Meeting

attendance is shown on page 34 of this Annual Report.

Financial statements and significant accounting

matters considered during the year

TheCommitteeconsideredthefollowingsignificant

accountingissuesinrelationtotheCompany’sfinancial

statements for the year ended 31 October 2023.

Valuation and existence of investments

The Company holds its assets in quoted investments,

derivatives and cash. The valuation and existence

of these investments is currently the most material

matterintheproductionofthefinancialstatements.

Investments are valued using independent pricing

sources and the holding quantities at the year end

were agreed with the Depositary’s records. The

Committee reviewed the Administrator’s procedures

REPORT OF THE AUDIT AND RISK COMMITTEE

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42 CC Japan Income & Growth Trust plc

in place for ensuring accurate valuation and existence

of investments. The Committee also receives and

reviewsanysignificantpricingorcustodyreconciliation

exceptions and reports from the Depositary.

Recognition of income

Income may not be accrued in the correct period and/

or incorrectly allocated to revenue or capital. The

Committee reviewed the Administrator’s procedures

for recognition of income and reviewed the treatment

of any special dividends receivable in the year. The

Committee also reviewed the Administrator’s forecast

of revenue against actual revenue received at each

Committee meeting.

Geopolitical Tension and Global Inflation

Highinflationandthethreatofeconomicslowdownhas

impacted equity markets across the world during the

year. Rising global interest rates, and both the US dollar

and British pound strengthening against the Japanese

yen have had an impact on dividend receipts from

Japan. During the year, the Board have paid particular

attention to the sensitivity of income received from

investee companies to volatility in the British pound/

Japanese yen foreign exchange rate. War in Ukraine and

the Middle East, and geopolitical tensions between the

USandChinahaveallshakeninvestorconfidencethis

year. Committee members have discussed the risk of

the political dispute over Taiwan and Korean peninsula

increasing, and the possible potential impact on the

Japanese market.

Calculation of management fees

Incorrect amounts may be paid to the Investment

Managerandrecognisedinthefinancialstatementsif

the fees are not calculated correctly. The Committee

reviewed the Administrator’s procedures in place for

the calculation of management fees. A member of the

Committee approves management fee invoices prior to

payment.

S1158 of the Corporation Tax Act 2010

The Committee considers the reports produced by

theAdministratorconfirmingcompliancewiththe

investment trust qualifying rules.

Going concern and viability statements

HavingreviewedtheCompany’sfinancialposition,

liabilities, principal/emerging risks and uncertainties, the

Committee recommended to the Directors that it was

appropriatefortheDirectorstopreparethefinancial

statements on the going concern basis.

The Committee considered the appropriateness of

the assumptions used in the viability satement and is

confidentthatthesearesufficientlyrobust.TheGoing

concern assessment and viability statements can be

found on pages 12 and 29.

Audit tenure

The appointment of the auditor is reviewed annually

by the Committee and is subject to approval by

Shareholders. Ernst & Young LLP was selected as the

Company’s Auditor at the time of the Company’s launch

following a competitive process and review of the

Auditor’s credentials and provided this service for seven

years.Followingsignificantrisesinauditfeesacross

the industry, the Committee considered it prudent

to conduct a tender of audit services during the year.

After carefully considering the resources, experience

and fees proposed by the audit companies taking part

in the tender process, the Committee recommended

that Johnston Carmichael LLP (“Johnston Carmichael”)

be appointed as the Company’s Auditor for the year

ending 31 October 2023. Shareholders approved the

appointment of Johnston Carmichael as the Company’s

Auditor at the AGM in March 2023.

Effectiveness of external audit

The Audit and Risk Committee is responsible for

reviewingtheeffectivenessoftheexternalauditprocess.

The Committee received a presentation of the audit

plan from the auditor prior to the commencement of

the 2023 audit, and a presentation of the results of the

audit following completion of the main audit testing. The

Committee performed a review of the external auditor

following the presentation of the results of the audit.

The review included a discussion of the audit process

andtheabilityoftheexternalauditortofulfilitsrole.

I spoke to Richard Sutherland, the partner at Johnston

Carmichael and his team during the year to discuss

feedback from the external audit and am pleased

toreportthatnosignificantissuesaroseduringthe

process.TheCommitteeissatisfiedthatJohnston

Carmichaelhasprovidedeffectiveindependent

challenge in carrying out its responsibilities.

Provision of non-audit services

The Committee has reviewed the FRC’s Guidance on

Audit Committees and has formulated a policy on

the provision of non-audit services by the Company’s

auditor. The Committee has determined that the

Company’s appointed auditor will not be considered

for the provision of certain non-audit services, such as

accountingandpreparationofthefinancialstatements,

internal audit and custody. The auditor may, if required,

provide other non-audit services although it did not do

so during the year. However, the auditor’s eligibility to

provide non audit services will be judged on a case-by-

case basis.

Audit fees

The audit fee (excluding VAT) incurred during the year

amounted to £37,500 (2022: £49,500) plus an additional

£4,500 (excluding VAT) payable by Apex, the Company’s

Administrator for extra statutory audit work performed

REPORT OF THE AUDIT AND RISK COMMITTEE

continued

CC Japan Income & Growth Trust plc 43

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 43

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

by the auditor. The audit fee represents a decrease from

the prior year.

Auditor independence

The Committee considered the independence of the

auditor and the objectivity of the audit process and

issatisfiedthatJohnstonCarmichaelhasfulfilledits

obligations to shareholders and as independent auditor

to the Company for the year.

After due consideration, the Committee recommends

the re-appointment of Johnston Carmichael and

the proposal will be put forward to the Company’s

Shareholders at the 2024 AGM.

Conclusion with respect to the Annual Report

and financial statements

Following a thorough process of review, the Committee

has concluded that the Annual Report for the year ended

31 October 2023, taken as a whole, is fair, balanced and

understandable and provides the information necessary

for Shareholders to assess the Company’s business

model, strategy and performance. The Committee has

reported its conclusions to the Board of Directors.

Kate Cornish-Bowden

Audit and Risk Committee Chairman

24 January 2024

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44 CC Japan Income & Growth Trust plc

The Directors are responsible for preparing the Annual

Reportandthefinancialstatementsinaccordancewith

applicable laws and regulations.

CompanylawrequirestheDirectorstopreparefinancial

statementsforeachfinancialyear.Underthatlaw,

theDirectorshaveelectedtopreparethefinancial

statements in accordance with United Kingdom

Generally Accepted Accounting Practice, including

FRS 102, which is The Financial Reporting Standard

applicable to the UK and Republic of Ireland and

applicable law. Under company law, the Directors must

notapprovethefinancialstatementsunlesstheyare

satisfiedthattheygiveatrueandfairviewofthestate

oftheCompany’saffairsasattheendoftheyearandof

thenetreturnfortheyear.Inpreparingthesefinancial

statements, the Directors are required to:

• select suitable accounting policies and then apply

them consistently;

• make judgements and estimates, which are

reasonable and prudent;

• state whether applicable accounting standards have

been followed, subject to any material departures

disclosedandexplainedinthefinancialstatements;

and

• preparethefinancialstatementsonagoingconcern

basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping adequate

accountingrecordsthataresufficienttoshowand

explain the Company’s transactions and which 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 also responsible for safeguarding the

assets of the Company and hence for taking reasonable

steps for the prevention and detection of fraud and

other irregularities.

The Directors are also responsible for preparing

a Strategic Report, Director’s Report, Directors’

Remuneration Report and Corporate Governance

Statement that comply with applicable laws and

regulations.

The Company Reports and Accounts are published on

its website at www.ccjapanincomeandgrowthtrust.

com which is maintained by the Company’s Investment

Manager. The work carried out by the auditors does not

involve consideration of the maintenance and integrity

of this website and, accordingly, the auditor accepts no

responsibility for any changes that have occurred to

thefinancialstatementssincebeinginitiallypresented

on the website. Legislation in the United Kingdom

governing the preparation and dissemination of

financialstatementsmaydifferfromlegislationinother

jurisdictions.

Directors’ confirmation statement

TheDirectorseachconfirmtothebestoftheir

knowledge that:

(a) thefinancialstatements,preparedinaccordance

with applicable accounting standards, give a true and

fairviewoftheassets,liabilities,financialposition

andprofitoftheCompany;and

(b) this Annual Report includes a fair review of the

development and performance of the business and

position of the Company, together with a description

of the principal risks and uncertainties that it faces.

Having taken advice from the Audit and Risk Committee,

the Directors consider that 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.

For and on behalf of the Board

Harry Wells

Chairman

24 January 2024

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

CC Japan Income & Growth Trust plc 45

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 45

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Opinion

WehaveauditedthefinancialstatementsofCCJapan

Income & Growth Trust plc (“the Company”), for the year

ended 31 October 2023, which comprise the Income

Statement, the Statement of Financial Position, the

Statement of Changes in Equity, the Statement of Cash

Flows,andnotestothefinancialstatements,including

significantaccountingpolicies.

Thefinancialreportingframeworkthathasbeen

applied in their preparation is applicable law and United

Kingdom Accounting Standards, including Financial

Reporting Standard 102 The Financial Reporting Standard

applicable in the UK and Republic of Ireland (United

Kingdom Generally Accepted Accounting Practice).

Inouropinionthefinancialstatements:

• give a true and fair view of the state of Company’s

affairsasat31October2023andofitsnetreturnfor

the year then ended;

• have been properly prepared in accordance with

United Kingdom Generally Accepted Accounting

Practice; and

• have been prepared in accordance with the

requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable

law. Our responsibilities under those standards are

further described in the Auditor’s responsibilities for the

auditofthefinancialstatementssectionofourreport.

We are independent of the Company in accordance

with the ethical requirements that are relevant to our

auditofthefinancialstatementsintheUK,including

the FRC’s Ethical Standard, as applied to listed public

interestentities,andwehavefulfilledourotherethical

responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained

issufficientandappropriatetoprovideabasisforour

opinion.

Our approach to the audit

Weplannedourauditbyfirstobtainingan

understanding of the Company and its environment,

including its key activities delegated by the Board to

relevant approved third-party service providers and the

controls over provision of those services.

We conducted our audit using information maintained

and provided by Chikara Investment LLP (the

“Investment Manager”), Apex Listed Companies

Services (UK) Limited (the “Company Secretary”, and

“Administrator”), Northern Trust Investor Services

Limited (the “Custodian” and the “Depositary”) and

Link Group (the “Registrar”) to whom the Company has

delegated the provision of services.

We tailored the scope of our audit taking into account

the types of investments within the Company, the

involvement of the Administrator, the accounting

processes and controls, and the industry in which the

Company operates.

Thescopeofourauditwasinfluencedbyourapplication

of materiality. We set certain quantitative thresholds

for materiality. These together with qualitative

considerations, helped us to determine the scope of

our audit and the nature, timing and extent of our audit

proceduresontheindividualfinancialstatementline

itemsanddisclosuresandintheevaluationoftheeffect

of misstatements, both individually and in aggregate on

thefinancialstatementsasawhole.

Key audit matters

Key audit matters are those matters that, in our

professionaljudgement,wereofmostsignificancein

ourauditofthefinancialstatementsofthecurrent

periodandincludethemostsignificantassessedrisks

of material misstatement (whether or not due to fraud)

thatweidentified. These matters included those which

hadthegreatesteffecton:theoverallauditstrategy;the

allocation of resources in the audit; and directing the

effortsoftheengagementteam.Thesematterswere

addressedinthecontextofourauditofthefinancial

statements as a whole, and in forming our opinion

thereon, we do not provide a separate opinion on these

matters.

We summarise below the key audit matters in arriving

at our audit opinion above, together with how our audit

addressed these matters and the results of our audit

work in relation to these matters.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

CCJAPAN INCOME & GROWTH TRUST PLC

46 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

46 CC Japan Income & Growth Trust plc

Key audit matter How our audit addressed the key audit matter and our

conclusions

Valuation and ownership of investments

(as per pages 41 and 42 (Report of the Audit and Risk

Committee), page 56 (Accounting Policies) and Note 3.

As at 31 October 2023 the valuation of the level 1 equity

investment portfolio was £231.99m. The Company also

heldlevel2longContractsforDifference(‘CFDs’)at

year end which have been recognised separately within

the Statement of Financial position as amounts due

in respect of CFDs (£0.77m) and amounts payable in

respect of CFDs (£0.74m).

As the valuation of investments is the largest component

of the Company’s Statement of Financial Position,

accounting for 98.7% of net assets, and a key driver of

the Company’s total return this has been designated

asakeyauditmatter,beingoneofthemostsignificant

assessed risks of material misstatement due to fraud or

error.

There is a risk that investments held at fair value may

not be actively traded and the quoted prices may not be

reflectiveoftheirfairvalue(valuation).

Additionally, there is a risk that the investments

recorded as held by the Company may not represent

property of the Company (ownership).

We obtained and assessed controls reports provided by

the Administrator and the Custodian to evaluate the design

of the process and implementation of key controls.

We compared market prices and exchange rates applied

to all level 1 equity investments and all level 2 CFDs held at

31 October 2023 to an independent third-party source and

recalculated the investment valuations.

We obtained average trading volumes from an

independent third-party source for all investments held at

year as evidence of an active market.

We agreed the ownership of all equity investments and

CFDs held at year end to the independently received

custodian report and broker statement.

Fromourcompletionoftheseprocedures,weidentified

no material misstatements in relation to the valuation and

ownership of the investments.

Revenue recognition, including allocation of special

dividends as revenue or capital returns

(as per page 42 (Report of the Audit and Risk

Committee), page 56 (Accounting Policies) and Note 4.

The income from investments for the year to 31 October

2023 was £9.3m primarily consisting of dividends

received from equity investments.

Revenue-based performance metrics are often one of

the key performance indicators for stakeholders. The

investment income received by the Company during the

year directly impacts these metrics and the minimum

dividend required to be paid by the Company.

There is a risk that revenue is incomplete or inaccurate

through failure to recognise income entitlements or

failure to appropriately account for their treatment. It

has therefore been designated as a key audit matter

beingoneofthemostsignificantassessedrisksof

material misstatement due to fraud or error.

Additionally, judgement is required in determining the

allocation of special dividends as revenue or capital

returns in the Income Statement.

We obtained and assessed the controls reports provided

by the Administrator to evaluate the design of the process

and implementation of key controls.

Weconfirmedthatincomeisrecognisedinaccordance

with the AIC SORP by assessing the accounting policies.

We recalculated 100% of dividends due to the Company,

from equity holdings and CFDs, based on investment

holdings throughout the year and announcements made

by investee companies.

We agreed a sample of investment income recognised to

bank statements.

We assessed the completeness of the special dividend

population with reference to third party market data

and determined whether special dividends recognised

were revenue or capital in nature with reference to the

underlying commercial circumstances of the dividend

payments.

Fromourcompletionoftheseprocedures,weidentifiedno

material misstatements in relation to revenue recognition,

including allocation of special dividends as revenue or

capital returns.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

CCJAPAN INCOME & GROWTH TRUST PLC continued

CC Japan Income & Growth Trust plc 47

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 47

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Our application of materiality

Wedefinematerialityasthemagnitudeofmisstatementinthefinancialstatementsthatmakesitprobablethatthe

economicdecisionsofareasonablyknowledgeablepersonwouldbechangedorinfluenced.Weusematerialityin

determining the nature and extent of our work and in evaluating the results of that work.

Materiality measure Value

Materiality for the financial statements as a whole – we have set materiality as 1% of net

assets as we believe that net assets is the primary performance measure used by investors

and is the key driver of shareholder value. We determined the measurement percentage

to be commensurate with the risk and complexity of the audit and the Company’s listed

status.

£2.35m

Performance materiality – performance materiality represents amounts set by the

auditoratlessthanmaterialityforthefinancialstatementsasawhole,toreducetoan

appropriately low level the probability that the aggregate of uncorrected and undetected

misstatementsexceedsmaterialityforthefinancialstatementsasawhole.

In setting this we consider the Company’s overall control environment and any experience

of the audit that indicates a lower risk of material misstatements. Based on our judgement

ofthesefactors,wehavesetperformancematerialityat50%ofouroverallfinancial

statementmaterialityasthisisourfirstyearasauditor.

£1.18m

Specific materiality – recognising that there are transactions and balances of a lesser

amountwhichcouldinfluencetheunderstandingofusersofthefinancialstatementswe

calculate a lower level of materiality for testing such areas.

Specifically,giventheimportanceofthedistinctionbetweenrevenueandcapitalforthe

Company, we applied a separate testing threshold for the revenue column of the Income

Statement set at the higher of 5% of the revenue net return on ordinary activities before

taxation and our Audit Committee Reporting Threshold.

Wehavealsosetaseparatespecificmaterialityinrespectofrelatedpartytransactionsand

Directors’ remuneration.

We used our judgement in setting these thresholds and considered our experience and

industrybenchmarksforspecificmateriality.

£0.41m

Audit Committee reporting threshold – we agreed with the Audit and Risk Committee that

wewouldreporttothemalldifferencesinexcessof5%ofoverallmaterialityinaddition

tootheridentifiedmisstatementsthatwarrantedreportingonqualitativegrounds,inour

view. For example, an immaterial misstatement as a result of fraud.

£0.12m

During the course of the audit, we reassessed initial

materiality and found no reason to alter the basis of

calculation used at year end.

Conclusions relating to going concern

Inauditingthefinancialstatements,wehaveconcluded

that the Directors’ use of the going concern basis of

accountinginthepreparationofthefinancialstatements

is appropriate. Our evaluation of the Directors’

assessment of the Company’s ability to continue to

adopt the going concern basis of accounting included:

• Evaluating management’s method of assessing

going concern, including consideration of market

conditions and uncertainties;

• Assessingandchallengingtheforecastcashflows

and associated sensitivity modelling, used by

the Directors in support of their going concern

assessment;

• Obtaining and recalculating management’s

assessment of the Company’s ongoing maintenance

of investment trust status; and

• Assessing the adequacy of the Company’s going

concern disclosures included in the Annual Report.

Based on the work we have performed, we have not

identifiedanymaterialuncertaintiesrelatingtoevents

or conditions that, individually or collectively, may cast

significantdoubtontheCompany’sabilitytocontinueas

a going concern for a period of at least twelve months

48 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

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48 CC Japan Income & Growth Trust plc

fromwhenthefinancialstatementsareauthorisedfor

issue.

In relation to the Company’s reporting on how it has

applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation

totheDirectors’statementinthefinancialstatements

about whether the Directors considered it appropriate

to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the

Directors with respect to going concern are described in

the relevant sections of this report.

Other information

The other information comprises the information

includedintheAnnualReportotherthanthefinancial

statements and our auditor’s report thereon. The

Directors are responsible for the other information

contained within the Annual Report. Our opinion on

thefinancialstatementsdoesnotcovertheother

information and, except to the extent otherwise

explicitly stated in our report, we do not express any

form of assurance conclusion thereon.

Our responsibility is to read the other information and,

in doing so, consider whether the other information is

materiallyinconsistentwiththefinancialstatements,

or our knowledge obtained in the course of the audit,

or otherwise appears to be materially misstated. If

we identify such material inconsistencies or apparent

material misstatements, we are required to determine

whether this gives rise to a material misstatement in the

financialstatementsthemselves.If,basedonthework

we have performed, we conclude that there is a material

misstatement of this other information, we are required

to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the

Companies Act 2006

In our opinion, the part of the Directors’ Remuneration

Report to be audited has been properly prepared in

accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the

course of the audit:

• The information given in the Strategic Report and the

Directors’Reportforthefinancialyearforwhichthe

financialstatementsarepreparedisconsistentwith

thefinancialstatements;and

• The Strategic Report and the Directors’ Report have

been prepared in accordance with applicable legal

requirements.

Matters on which we are required to report by

exception

In the light of the knowledge and understanding of the

Company and its environment obtained in the course of

theaudit,wehavenotidentifiedmaterialmisstatements

in the Strategic Report or the Directors’ Report.

We have nothing to report in respect of the following

matters in relation to which the Companies Act 2006

requires us to report to you if, in our opinion:

• Adequate accounting records have not been kept by

the Company, or returns adequate for our audit have

not been received from branches not visited by us; or

• Thefinancialstatementsandthepartofthe

Directors’ Remuneration Report to be audited are

not in agreement with the accounting records and

returns; or

• Certain disclosures of Directors’ remuneration

specifiedbylawarenotmade;or

• We have not received all the information and

explanations we require for our audit; or

• A corporate governance statement has not been

prepared by the Company.

Corporate governance statement

The Listing Rules require us to review the Directors’

statement in relation to going concern, longer-term

viability and that part of the Corporate Governance

Statement relating to the Company’s compliance with

the provisions of the UK Corporate Governance Code

specifiedforourreview.

Based on the work undertaken as part of our audit, we

have concluded that each of the following elements

of the Corporate Governance Statement is materially

consistentwiththefinancialstatementsorour

knowledge obtained during the audit:

• the Directors’ statement with regards to the

appropriateness of adopting the going concern

basis of accounting and any material uncertainties

identifiedsetoutonpage29;

• the Directors’ explanation as to its assessment of the

Company’s prospects, the period this assessment

covers and why the period is appropriate set out on

pages 12 and 13;

• the Directors’ statement on fair, balanced and

understandable set out on page 44;

• the Directors’ statement on whether it has a

reasonable expectation that the Company will be

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

CCJAPAN INCOME & GROWTH TRUST PLC continued

CC Japan Income & Growth Trust plc 49

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 49

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

able to continue in operation and meets its liabilities

set out on page 29;

• theBoard’sconfirmationthatithascarriedouta

robust assessment of the emerging and principal

risks set out on page 36;

• the section of the Annual Report that describes the

reviewoftheeffectivenessofriskmanagementand

internal control systems set out on pages 35 and 36;

and

• the section describing the work of the Audit and Risk

Committee set out on pages 41 to 43.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities

statement set out on page 44, the Directors are

responsibleforthepreparationofthefinancial

statementsandforbeingsatisfiedthattheygivea

true and fair view, and for such internal control as

the Directors determine is necessary to enable the

preparationoffinancialstatementsthatarefreefrom

material misstatement, whether due to fraud or error.

Inpreparingthefinancialstatements,theDirectors

are responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going

concern basis of accounting unless the Directors either

intend to liquidate the Company or to cease operations,

or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the

financial statements

Our objectives are to obtain reasonable assurance

aboutwhetherthefinancialstatementsasawhole

are free from material misstatement, whether due

to fraud or error, and to issue an auditor’s report

that includes our opinion. Reasonable assurance is

a high level of assurance but is not a guarantee that

an audit conducted in accordance with ISAs (UK) will

always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate,

theycouldreasonablybeexpectedtoinfluencethe

economic decisions of users taken on the basis of these

financialstatements.

A further description of our responsibilities for the audit

ofthefinancialstatementsislocatedontheFinancial

Reporting Council’s website at: http://www.frc.org.uk/

auditorsresponsibilities. This description forms part of

our auditor’s report.

Extent the audit was considered capable of detecting

irregularities, including fraud

Irregularities, including fraud, are instances of non-

compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined

above, to detect material misstatements in respect

of irregularities, including fraud. The extent to which

our procedures are capable of detecting irregularities,

including fraud is detailed below.

We assessed whether the engagement team collectively

had the appropriate competence and capabilities to

identify or recognise non-compliance with laws and

regulations by considering their experience, past

performance and support available.

All engagement team members were briefed on relevant

identifiedlawsandregulationsandpotentialfraud

risks at the planning stage of the audit. Engagement

team members were reminded to remain alert to any

indications of fraud or non-compliance with laws and

regulations throughout the audit.

We obtained an understanding of the legal and

regulatory frameworks that are applicable to the

Company and the sector in which it operates, focusing

onthoseprovisionsthathadadirecteffectonthe

determination of material amounts and disclosures in

thefinancialstatements.Themostrelevantframeworks

weidentifiedinclude:

• Companies Act 2006;

• FCA listing and DTR rules;

• The principles of the UK Corporate Governance Code

applied by the AIC Code of Corporate Governance

(the “AIC Code”);

• Industry practice represented by the Statement of

Recommended Practice: Financial Statements of

Investment Trust Companies and Venture Capital

Trusts (“the SORP”) issued in July 2022;

• Financial Reporting Standard 102; and

• TheCompany’squalificationasaninvestmenttrust

under section 1158 of the Corporation Tax Act 2010.

We gained an understanding of how the Company is

complying with these laws and regulations by making

enquiries of management and those charged with

governance. We corroborated these enquiries through

our review of relevant correspondence with regulatory

bodies and board meeting minutes.

We assessed the susceptibility of the Company’s

financialstatementstomaterialmisstatement,including

how fraud might occur, by meeting with management

50 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 14 Black Line Level: 6 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

50 CC Japan Income & Growth Trust plc

and those charged with governance to understand

where it was considered there was susceptibility to

fraud. This evaluation also considered how management

and those charged with governance were remunerated

and whether this provided an incentive for fraudulent

activity. We considered the overall control environment

and how management and those charged with

governance oversee the implementation and operation

ofcontrols.Weidentifiedaheightenedfraudriskin

relation to the completeness and allocation of special

dividends (audit procedures performed in response

to these risks are set out in the section on key audit

matters above) and management override (procedures

in response to this risk are included below).

In addition to the above, the following procedures were

performed to provide reasonable assurance that the

financialstatementswerefreeofmaterialfraudorerror:

• Reviewing minutes of meetings of those charged

with governance for reference to: breaches of laws

and regulation or for any indication of any potential

litigation and claims; and events or conditions that

could indicate an incentive or pressure to commit

fraud or provide an opportunity to commit fraud;

• Performing audit work procedures over the risk

of management override of controls, including

testing of journal entries and other adjustments

for appropriateness, recalculating the investment

management fee, evaluating the business rationale

ofsignificanttransactionsoutsidethenormalcourse

of business and reviewing judgements made by

management in their calculation of accounting

estimates for potential management bias;

• Completion of appropriate checklists and use of our

experience to assess the Company’s compliance with

the Companies Act 2006 and the Listing Rules; and

• Agreementofthefinancialstatementdisclosuresto

supporting documentation.

Our audit procedures were designed to respond to

theriskofmaterialmisstatementsinthefinancial

statements, recognising that the risk of not detecting a

material misstatement due to fraud is higher than the

risk of not detecting one resulting from error, as fraud

may involve intentional concealment, forgery, collusion,

omission or misrepresentation. There are inherent

limitations in the audit procedures described above

and the further removed non-compliance with laws and

regulationsisfromtheeventsandtransactionsreflected

inthefinancialstatements,thelesslikelywewould

become aware of it.

Other matters which we are required to address

Following the recommendation of the Audit and Risk

Committee, we were appointed by the Board on 1 March

2023toauditthefinancialstatementsfortheyearended

31October2023andsubsequentfinancialperiods.The

period of our total uninterrupted engagement is one

year, covering the year ended 31 October 2023.

The non-audit services prohibited by the FRC’s Ethical

Standard were not provided to the Company and we

remain independent of the Company in conducting our

audit.

Our audit opinion is consistent with the additional report

to the Audit and Risk Committee.

Use of our report

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been

undertaken so that we might state to the Company’s

members those matters we are required to state to

them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept

or assume responsibility to anyone other than the

Company and the Company’s members as a body, for

our audit work, for this report, or for the opinions we

have formed.

Richard Sutherland (Senior statutory auditor)

For and on behalf of Johnston Carmichael LLP

Statutory Auditor

Edinburgh, United Kingdom

24 January 2024

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

CCJAPAN INCOME & GROWTH TRUST PLC continued

CC Japan Income & Growth Trust plc 51

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 51

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Year ended

31 October 2023

Year ended

31 October 2022

Note

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Gains/(losses) on investments 3 – 32,435 32,435 – (18,118) (18,118)

Currency gains/(losses) – 209 209 – (209) (209)

Income 4 9,283 – 9,283 8,878 – 8,878

Investment management fee 5 (343) (1,372) (1,715) (327) (1,306) (1,633)

Other expenses 6 (715) – (715) (664) – (664)

Return on ordinary activities before finance

costs and taxation 8,225 31,272 39,497 7,887 (19,633) (11,746)

Finance costs 7 (63) (173) (236) (69) (185) (254)

Return on ordinary activities before taxation 8,162 31,099 39,261 7,818 (19,818) (12,000)

Taxation 8 (921) – (921) (888) – (888)

Return on ordinary activities after taxation 7,241 31,099 38,340 6,930 (19,818) (12,888)

Return per Ordinary Share - undiluted 13 5.37p 23.08p 28.45p 5.14p (14.71)p (9.57)p

Return per Ordinary Share - diluted 13 5.37p 23.08p 28.45p 4.29p (12.26)p (7.97)p

The total column of the Income Statement is the profit and loss account of the Company. All revenue and capital items

in the above statement derive from continuing operations.

Both the supplementary revenue and capital columns are both prepared under guidance from the Association of

Investment Companies. There is no other comprehensive income and therefore the return for the year is also the total

comprehensive income for the year. There was no dilution for the “Return per Ordinary Share - diluted” for the year

ended 31 October 2023 (31 October 2022: dilution was due to the issuance of 26,946,122 Subscription Shares issued

on 18 February 2021 and expired in February 2023).

The notes on pages 55 to 71 form part of these financial statements.

INCOME STATEMENT

FOR THE YEAR ENDED 31 OCTOBER 2023

52 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

52 CC Japan Income & Growth Trust plc

Note

31 October

2023

£’000

31 October

2022

£’000

Fixed assets

Investments at fair value through profit or loss 3 231,987 199,642

Current assets

Cash and cash equivalents 340 1,413

Cash collateral in respect of Contracts for Difference (“CFDs”) 806 433

Amounts due in respect of CFDs 773 2,680

Other debtors 10 3,750 4,434

5,669 8,960

Creditors: amounts falling due within one year

Cash collateral in respect of CFDs (1,266) –

Amounts payable in respect of CFDs (738) (2,780)

Other creditors 11 (534) (2,240)

(2,538) (5,020)

Net current assets 3,131 3,940

Total assets less current liabilities 235,118 203,582

Net assets 235,118 203,582

Capital and reserves

Share capital 12 1,348 1,348

Share premium 98,067 98,067

Special reserve 64,671 64,671

Capital reserve

– Revaluation gains on equity investments held at year end 3 24,636 5,841

– Other capital reserves 38,486 26,182

Revenue reserve 7,910 7,473

Total Shareholders’ funds 235,118 203,582

NAV per share – Ordinary Shares - undiluted (pence) 14 174.51p 151.10p

NAV per share – Ordinary Shares - diluted (pence) 14 174.51p 152.75p

Approved by the Board of Directors and authorised for issue on 24 January 2024 and signed on their behalf by:

Harry Wells

Director

CC Japan Income & Growth Trust plc is incorporated in England and Wales with registration number 9845783.

The notes on pages 55 to 71 form part of these financial statements.

STATEMENT OF FINANCIAL POSITION

AS AT 31 OCTOBER 2023

CC Japan Income & Growth Trust plc 53

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 53

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

For the year ended 31 October 2023

Note

capital

£’000

premium

£’000

Special

reserve

£’000

Capital

reserve

£’000

Revenue

reserve

£’000

Total

£’000

Balance at

1 November 2022 1,348 98,067 64,671 32,023 7,473 203,582

Return on ordinary

activities after taxation – – – 31,099 7,241 38,340

Dividends paid 9 – – – – (6,804) (6,804)

Balance at

31 October 2023 1,348 98,067 64,671 63,122 7,910 235,118

For the year ended 31 October 2022

Note

capital

£’000

premium

£’000

Special

reserve

£’000

Capital

reserve

£’000

Revenue

reserve

£’000

Total

£’000

Balance at

1 November 2021 1,348 98,067 64,671 51,841 6,943 222,870

Return on ordinary

activities after taxation – – – (19,818) 6,930 (12,888)

Dividends paid 9 – – – – (6,400) (6,400)

Balance at

31 October 2022 1,348 98,067 64,671 32,023 7,473 203,582

The Company’s distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable

to realised profits.

The notes on pages 55 to 71 form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 OCTOBER 2023

54 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

54 CC Japan Income & Growth Trust plc

Year ended

31October

2023

£’000

Year ended

31October

2022

£’000

Operating activities cash flows

Return on ordinary activities before finance costs and taxation* 39,497 (11,746)

Adjustment for:

(Gains)/losses on equity investments (24,684) 18,106

Realised (gains)/losses on CFDs (7,656) 184

Movement in CFD balances 758 (646)

Increase in other debtors (500) (6)

Increase in other creditors 19 3

Tax withheld on overseas income (921) (888)

Net cash flow from operating activities 6,513 5,007

Investing activities cash flows

Purchases of equity investments (57,623) (43,572)

Proceeds from sales of equity investments 49,413 46,864

Realised gains/(losses) on CFDs 7,656 (184)

Net cash flow (used in)/from investing activities (554) 3,108

Financing activities cash flows

Equity dividends paid (6,804) (6,400)

Finance costs paid (228) (254)

Net cash used in financing activities (7,032) (6,654)

(Decrease)/increase in cash and cash equivalents (1,073) 1,461

Cash and cash equivalents at the beginning of the year 1,413 (48)

Cash and cash equivalents at the end of the year 340 1,413

* Inflow from dividends was £7,888,000 (2022: £8,038,000).

The notes on pages 55 to 71 form part of these financial statements.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 OCTOBER 2023

CC Japan Income & Growth Trust plc 55

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 55

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

1. GENERAL INFORMATION

CC Japan Income & Growth Trust plc (the “Company”) was incorporated in England and Wales on 28 October

2015 with registered number 9845783, as a closed-ended investment company. The Company commenced its

operations on 15 December 2015. The Company carries on business as an investment trust within the meaning of

Chapter 4 of Part 24 of the Corporation Tax Act 2010.

The Company’s investment objective is to provide Shareholders with dividend income combined with capital

growth, mainly through investment in equities listed or quoted in Japan.

The Company’s shares were admitted to the Official List of the Financial Conduct Authority with a premium listing on

15 December 2015. On the same day, trading of the Ordinary Shares commenced on the London Stock Exchange.

In 2021, the Company’s 26,946,122 TSS were admitted to the London Stock Exchange with the ticker CCJS. The TSS

expired at the end of February 2023.

The Company’s registered office is 6th Floor, 125 London Wall, London EC2Y 5AS.

2. ACCOUNTING POLICIES

The principal accounting policies followed by the Company are set out below:

(a) Basis of accounting

The financial statements have been prepared in accordance with FRS 102 (“the Financial Reporting Standard

applicable in the UK and Republic of Ireland”) issued by the Financial Reporting Council, with the Statement of

Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued

by the Association of Investment Companies in July 2022 and the Companies Act 2006. The financial statements

have been prepared on a historical cost basis except for the modification to a fair value basis for certain financial

instruments as specified in the accounting policies below.

They have also been prepared on the assumption that approval as an investment trust will continue to be granted.

As required by its Articles of Association, the Company’s continuation vote was passed at the AGM in 2022 and will

next put forward a vote for its continuation at the AGM in 2025.

The financial statements have been prepared on a going concern basis. In forming this opinion, the Directors have

considered any potential impact of war in Ukraine and the Middle East; and the increase in geopolitical tension

between the US and China, on the going concern and viability of the Company. In making their assessment,

the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and

considered the mitigation measures which key service providers, including the Investment Manager, continue to

have in place to maintain operational resilience.

In reaching this conclusion, the Directors have also considered the liquidity of the Company’s portfolio of

investments as well as its cash position, income, and expense flows. The Company’s net assets as at 31 October

2023 were £235.1 million (2022: £203.6 million). As at 31 October 2023, the Company held £232.0 million in

quoted investments (2022: £199.6 million) and had cash of £0.3 million (2022: £1.4 million overdraft). The total

expenses (excluding finance costs and taxation) for the year ended 31 October 2023 were £2.4 million (2022:

£2.3million), which represented approximately 1.06% (2022: 1.06%) of average net assets during the year. At the

date of approval of this report, based on the aggregate of investments and cash held, the Company has substantial

operating expenses cover.

The Company’s ability to continue as a going concern for the period assessed by the Directors, being the period to

31 January 2025 which is at least 12 months from the date the financial statements were authorised for issue.

The financial statements have been presented in sterling (£), which is also the functional currency as this is the

currency of the primary economic environment in which the Company operates. The Board, having regard to the

currency of the Company’s share capital and the predominant currency in which it pays distributions, expenses

and its shareholders operate, has determined that sterling is the functional currency.

In preparing these financial statements the Directors have considered the impact of ESG and climate change risk as

an emerging risk as set out on page 16 and have concluded that while climate change impacts operating conditions

of portfolio companies and increases obligations, it does not have a material impact on the value of the Company’s

investments. In line with FRS 102, investments are valued at fair value, which for the Company are quoted bid prices for

investments in active markets at 31 October 2023 and therefore reflect market participants’ view of climate change risk.

NOTES TO THE ACCOUNTS

56 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

56 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

2. ACCOUNTING POLICIES continued

(b) Investments

As the Company’s business is investing in financial assets with a view to profiting from their total return in the form

of increases in fair value, financial assets are held at fair value through profit or loss in accordance with FRS 102

Section 11: ‘Basic Financial Instruments’, and Section 12: ‘Other Financial Instruments’. The Company manages and

evaluates the performance of these investments on a fair value basis in accordance with its investment strategy,

and information about the investments is provided on this basis to the Board of Directors.

Upon initial recognition, investments are classified by the Company as “at fair value through profit or loss”. They

are recognised on the date they are traded and are measured initially at fair value, which is taken to be their

transaction price, excluding expenses incidental to purchases which are expensed to capital on acquisition.

Subsequently investments are revalued at fair value which is the bid market price for listed investments over the

time until they are sold, any unrealised gains/losses are included in the fair value of the investments.

Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are

included in the capital column of the income statement within “gains on investments held at fair value”.

Derivatives comprise Contracts for Difference (“CFD”), which are measured at fair value and valued by reference to

the underlying market value of the corresponding security. CFDs are held for investment purposes. Where the fair

value is positive the CFD is presented as a current asset, and where the fair value is negative the CFD is presented

as a current liability. Gains or losses on these derivative transactions are recognised in the Income Statement.

They are recognised as capital and are shown in the capital column of the Income Statement if they are of a capital

nature and are recognised as revenue and shown in the revenue column of the Income Statement if they are

of a revenue nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are

apportioned between revenue and capital accordingly. The CFD balance is made up of transactions in relation to

the underlying equity held by the Company, with the risks embedded in the CFDs disclosed in Note 16.

(d) Foreign currency

Transactions denominated in foreign currencies including dividends are translated into sterling at actual exchange

rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are

reported at the rates of exchange prevailing at the year end. Foreign exchange movements on investments and

derivatives are included in the Income Statement within gains on investments. Any other gain or loss is included as

an exchange gain or loss to capital or revenue in the Income Statement as appropriate.

(e) Income

Investment income has been accounted for on an ex-dividend basis or when the Company’s right to the income

is established. Special dividends are credited to capital or revenue in the Income Statement, according to the

circumstances surrounding the payment of the dividend. Overseas dividends are included gross of withholding tax

recoverable.

Interest receivable on deposits is accounted for on an accrual basis.

(f) Dividend payable

Interim dividends are recognised when the Company pays the dividend. Final dividends are recognised in the

period in which they are approved by the shareholders. This year, as was also the case last year, a second interim

dividend is being paid in substitution for the final dividend.

(g) Expenses

All expenses are accounted for on an accruals basis and are charged as follows:

• the investment management fee is charged 20% to revenue and 80% to capital;

• CFD finance costs are charged 20% to revenue and 80% to capital;

• investment transactions costs are allocated to capital; and

• other expenses are charged wholly to revenue.

CC Japan Income & Growth Trust plc 57

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 57

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

(h) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is

based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement

because it excludes items of income or expenses that are taxable or deductible in other years and it further

excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax

rates that were applicable at the financial reporting date.

Where expenses are allocated between capital and revenue any tax relief in respect of the expenses is allocated

between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation

taxation for the relevant accounting period.

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the

financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or

right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets

only being recognised if it is considered more likely than not that there will be suitable profits from which the

future reversal of the timing differences can be deducted. Deferred tax assets and liabilities are measured at the

rates applicable to the legal jurisdictions in which they arise.

(i) Other receivables and other payables

Other receivables and other payables do not carry any interest and are short term in nature and are accordingly

stated at their nominal value.

(j) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, that of an

investment trust, as disclosed in note 1.

(k) Accounting estimates, judgements and assumptions

The preparation of financial statements requires the Directors to make estimates and assumptions that affect the

reported amounts of assets and liabilities at the date of the financial statements. Although these estimates are

based on management’s best knowledge of current facts, circumstances and, to some extent, future events and

actions, the Company’s actual results may ultimately differ from those estimates, possibly significantly.

There have not been any instances requiring any significant estimates or judgements in the year.

(l) Cash and cash equivalents

Cash comprises cash and demand deposits. Cash equivalents, include bank overdrafts, and short-term, highly

liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks

of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for

investment or other purposes.

(m) Reserves

Capital reserves

Profits/(losses) from selling investments and changes in fair value arising upon the revaluation of investments that

remain in the portfolio are shown in the capital column of the Statement of Comprehensive Income and allocated

to the capital reserve. Capital reserves attributable to realised profits are distributable.

Special distributable reserve

As stated in the Company’s prospectus dated 13 November 2015, in order to increase the distributable reserves

available to facilitate the flexibility and source of future dividends, the Company resolved that, conditional upon

First Admission to listing on the London Stock Exchange and the approval of the Court, the net amount standing

to the credit of the share premium account of the Company immediately following completion of the First Issue be

cancelled and transferred to a special distributable reserve. This reserve is distributable.

Revenue reserves

The revenue reserve reflects all income and expenditure recognised in the revenue column of the income

statement and is distributable by way of dividends.

Share premium

The Company’s share premium is the excess of the issue price of the share over its nominal value on shares issued

subsequent to the First Issue. The share premium is not available for distribution.

58 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

58 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

3. INVESTMENTS

(a) Summary of valuation

As at

31 October 2023

£’000

As at

31 October 2022

£’000

Investments listed on a recognised overseas investment exchange 231,987 199,642

231,987 199,642

(b) Movements

During the year ended 31 October 2023

2023

£’000

2022

£’000

Book cost at the beginning of the year 193,801 193,643

Revaluation gains on non-derivative investments held at beginning of the year 5,841 26,628

Valuation at beginning of the year 199,642 220,271

Purchases at cost 55,890 45,505

Sales:

– proceeds (48,229) (48,028)

– gains on investment holdings sold during the year 5,889 2,681

Movements in revaluation gains/(losses) on investment held at year end 18,795 (20,787)

Valuation at end of the year 231,987 199,642

Book cost at end of the year 207,351 193,801

Revaluation gains on non-derivative investment held at year end 24,636 5,841

Valuation at end of the year 231,987 199,642

Transaction costs on investment purchases for the year ended 31 October 2023 amounted to £26,000 (2022: £17,000)

and on investment sales for the year amounted to £22,000 (2022: £19,000).

The Company received £48,229,000 (2022: £48,028,000) from investments sold during the year. The book cost of these

investments when they were purchased was £42,340,000 (2022: £45,347,000). 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.

Year ended

31 October 2023

£’000

Year ended

31 October 2022

£’000

Gains on non-derivative investment holdings sold during the year 5,889 2,681

Movements in revaluation gains/(losses) on investment held at year end 18,795 (20,787)

Other capital losses (40) (23)

Total gains/(losses) on non-derivative investments held at fair value 24,644 (18,129)

Realised gains/(losses) on CFD assets and liabilities 7,656 (184)

Unrealised gains on CFD assets and liabilities 135 195

Total gains/(losses) on investments held at fair value 32,435 (18,118)

CC Japan Income & Growth Trust plc 59

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 59

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

4. INCOME

Year ended

31 October 2023

£’000

Year ended

31 October 2022

£’000

Income from investments:

Overseas dividends 9,215 8,878

Deposit interest 68 –

Total 9,283 8,878

Overseas dividend income is translated into sterling on receipt.

5. INVESTMENT MANAGEMENT FEE

Year ended

31 October 2023

£’000

Year ended

31 October 2022

£’000

Fee:

20% charged to revenue 343 327

80% charged to capital 1,372 1,306

Total 1,715 1,633

The Company’s Investment Manager is Chikara Investments LLP. The Investment Manager is entitled to receive a

management fee payable monthly in arrears and is at the rate of one-twelfth of 0.75% of Net Asset Value per calendar

month. There is no performance fee payable to the Investment Manager.

6. OTHER EXPENSES

Year ended

31 October 2023

£’000

Year ended

31 October 2022

£’000

Secretarial services 48 48

Administration and other expenses 474 420

Auditor’s remuneration – statutory audit services 37* 50

Directors’ fees 156 146

Other expenses – Revenue 715 664

* This excludes an additional £4,500 (excluding VAT) payable by Apex, the Company’s Administrator for extra statutory audit work

performed by the auditor.

60 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

60 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

7. FINANCE COSTS

Year ended

31 October 2023

£’000

Year ended

31 October 2022

£’000

Interest paid – 100% charged to revenue 20 23

CFD finance cost and structuring fee – 20% charged to revenue 42 45

Structuring fees – 20% charged to revenue 1 1

63 69

CFD finance cost and structuring fee – 80% charged to capital 169 181

Structuring fees – 80% charged to capital 4 4

173 185

Total finance costs 236 254

8. TAXATION

Year ended 31 October 2023 Year ended 31 October 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

(a) Analysis of tax charge in the year:

Overseas withholding tax 921 – 921 888 – 888

Total tax charge for the year (see note 8 (b)) 921 – 921 888 – 888

(b) Factors affecting the tax charge for the year:

The effective UK corporation tax rate for the year is 23.00% (2022: 19.00%). The tax charge for the Company differs

from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The

differences are explained below:

Year ended 31 October 2023 Year ended 31 October 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Total return before taxation 8,162 31,099 39,261 7,818 (19,818) (12,000)

Effective UK corporation tax at 23.00% (2022: 19.00%) 1,877 7,153 9,030 1,485 (3,765) (2,280)

Effects of:

Overseas withholding tax suffered 921 – 921 888 – 888

Non-taxable overseas dividends (2,119) – (2,119) (1,687) – (1,687)

Capital (gains)/losses not subject to tax – (7,509) (7,509) – 3,482 3,482

Finance costs not tax deductible 14 40 54 13 35 48

Movement in unutilised management expenses 228 316 544 189 248 437

Total tax charge for the year 921 – 921 888 – 888

The Company has an unrecognised deferred tax asset of £1,441,000 (2022: £1,218,000) based on the long-term

prospective corporation tax rate of 25% (2022: 25%). This asset has accumulated because deductible expenses

exceeded taxable income for the year ended 31 October 2023. No asset has been recognised in the accounts because,

given the composition of the Company’s portfolio, it is unlikely that this asset will be utilised in the foreseeable future.

The Company has not provided for deferred tax on any tax losses.

CC Japan Income & Growth Trust plc 61

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STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 61

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

9. DIVIDEND

(i) Dividends paid during the financial year

Year ended

31 October 2023

£’000

Year ended

31 October 2022

£’000

Second Interim – year ended 31 October 2022 3.50p (2021: 3.35p) 4,716 4,514

Interim dividend – year ended 31 October 2023 1.55p (2022: 1.40p) 2,088 1,886

Total 6,804 6,400

(ii) The dividend relating to the year ended 31 October 2023, which is the basis on which the requirements of

Section 1159 of the Corporation Tax Act 2010 are considered is detailed below:

Year ended 31 October 2023 Year ended 31 October 2022

Pence per

Ordinary

£’000

Pence per

Ordinary

£’000

Interim dividend 1.55p 2,088 1.40p 1,886

Second interim dividend* 3.75p 5,052 3.50p 4,716

5.30p 7,140 4.90p 6,602

* Not included as a liability in the year ended 31 October 2023 accounts.

The Directors have declared a second interim dividend for the financial year ended 31 October 2023 of 3.75p per

Ordinary Share. The dividend will be paid on 1 March 2024 to Shareholders on the register at the close of business on

2February 2024.

10. OTHER DEBTORS

As at

31 October 2023

£’000

As at

31 October 2022

£’000

Accrued income 3,552 3,146

Sales for settlement – 1,184

VAT receivable 128 62

Prepayments and other receivables 70 42

Total 3,750 4,434

11. OTHER CREDITORS

As at

31 October 2023

£’000

As at

31 October 2022

£’000

Amounts falling due within one year:

Purchases for future settlement 200 1,933

Accrued finance costs 15 7

Accrued expenses 319 300

Total 534 2,240

62 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

62 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

12. SHARE CAPITAL

Share capital represents the nominal value of shares that have been issued. The share premium includes any

premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted

from share premium.

As at 31 October 2023 As at 31 October 2022

No. of shares £’000 No. of shares £’000

Allotted, issued & fully paid:

Ordinary Shares of 1p

Opening balance 134,730,610 1,348 134,730,610 1,348

Closing balance 134,730,610 1,348 134,730,610 1,348

Since the year end, the Company has issued no Ordinary Shares, with 134,730,610 Ordinary Shares in issue as at

24January 2024.

13. RETURN PER ORDINARY SHARE

Total return per Ordinary Share is based on the return on ordinary activities, including income, a profit for the year

after taxation of £38,340,000 (2022: loss of £12,888,000) and the weighted average number of Ordinary Shares-

undiluted in issue for the year to 31 October 2023 of 134,730,610 (2022: 134,730,610); Ordinary Shares-diluted in issue

for the year to 31 October 2023 of 134,730,610 (2022: 161,676,732). The Company’s Ordinary Shares-diluted in prior

year is due to the 26,946,122 Subscription Shares in issue for the year to 31 October 2022.

The returns per Ordinary Share were as follows:

As at 31 October 2023 As at 31 October 2022

Revenue Capital Total Revenue Capital Total

Return per Ordinary

Share – undiluted 5.37p 23.08p 28.45p 5.14p (14.71)p (9.57)p

Return per Ordinary

Share – diluted* 5.37p 23.08p 28.45p 4.29p (12.26)p (7.97)p

* Diluted figures apply for the year to 31 Oct 2022 and assumed that all the TSS in issue were fully subscribed at the price of £1.61p

per TSS. The TSS expired on the last business day of February 2023 so there is no subsequent dilution.

CC Japan Income & Growth Trust plc 63

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 63

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

14. NET ASSET VALUE PER SHARE

Total Shareholders’ funds and the net asset value (“NAV”) per share attributable to the Ordinary Shareholders at the

year end calculated in accordance with the Articles of Association were as follows:

NAV per Ordinary Share – undiluted

As at

31 October 2023

As at

31 October 2022

Net Asset Value (£’000) 235,118 203,582

Ordinary Shares in issue 134,730,610 134,730,610

NAV per Ordinary Share – undiluted 174.51p 151.10p

NAV per Ordinary Share – diluted

As at

31 October 2023

As at

31 October 2022

Subscription shares issue – 26,946,122

Proceeds from exercise of TSS (£’000) – 43,383

Adjusted Net Asset Value for exercise of TSS (£’000) 235,118 246,954

Ordinary Shares – post exercise of TSS 134,730,610 161,676,732

NAV per Ordinary Share – diluted 174.51p 152.75p

As at the year end, there was no dilution effect on the NAV per share.

15. RELATED PARTY TRANSACTIONS

Transactions with the Investment Manager and the Alternative Investment Fund Manager (“AIFM”)

The Company provides additional information concerning its relationship with the Investment Manager and AIFM,

Chikara Investments LLP. The fees for the period are disclosed in note 5 and amounts outstanding at the year ended

31 October 2023 were £151,000 (2022: £134,000).

Research purchasing agreement

MiFID II treats investment research provided by brokers and independent research providers as a form of

“inducement” to investment managers and requires research to be paid separately from execution costs. In the

past, the costs of broker research were primarily borne by the Company as part of execution costs through dealing

commissions paid to brokers. With effect from 3 January 2018, this practice has changed, as brokers subject to MiFID

II are now required to price, and charge for, research separately from execution costs. Equally, the rules require the

Investment Manager, as an investment Manager, to ensure that the research costs borne by the Company are paid

for through a designated Research Payment Account (“RPA”) funded by direct research charges to the Investment

Manager’s clients; including the Company.

The research charge for the year 1 January 2023 to 31 December 2023, as agreed between the Investment Manager

and the Company, was US $34,000 (31 December 2022: US $34,000). The research charge for the year 1 January 2024

to 31 December 2024, as budgeted by the Investment Manager, is US $31,000.

Directors’ fees and shareholdings

The Directors’ fees and shareholdings are disclosed in the Directors’ Remuneration Implementation Report on pages

37 to 40 in this Annual Report.

64 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

64 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES

Risk Management Policies and Procedures

As an investment trust the Company invests in equities and equity related derivatives for the long term so as to secure

its investment objective stated on page 2. In pursuing its investment objective, the Company is exposed to a variety

of risks that could result in either a reduction in the Company’s net assets or a reduction of the profits available for

dividends.

These risks, include market risk (comprising currency risk, interest rate risk, and other price risk), liquidity risk, and

credit risk, and the Directors’ approach to the management of them are set out follows.

The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out

below.

(a) Market Risk

Economic conditions

Changes in economic conditions in Japan (for example, interest rates and rates of inflation, industry conditions,

competition, political events and other factors) and in the countries in which the Company’s investee companies

operate could substantially and adversely affect the Company’s prospects. The Company is subject to concentration

risk as it only invests in Japanese companies but has diversified investments across the different sectors in the

Japanese market.

Sectoral diversification

The Company has no limits on the amount it may invest in any sector. This may lead to the Company having significant

concentrated exposure to portfolio companies in certain business sectors from time to time.

Concentration of investments in any one sector may result in greater volatility in the value of the Company’s

investments and consequently its NAV and may materially and adversely affect the performance of the Company and

returns to Shareholders.

Unquoted companies

The Company may invest in unquoted companies from time to time. Such investments, by their nature, involve a

higher degree of valuation and performance uncertainties and liquidity risks than investments in listed and quoted

securities and they may be more difficult to realise. However, the Company does not currently hold and has never held

any unquoted securities.

Management of market risk

The Company is invested in a diversified portfolio of investments. The Company’s investment policy states that no

single holding (including any derivative instrument) will represent more than 10% of the Company’s Gross Assets at

the time of investment and, when fully invested, the portfolio is expected to have between 30 to 40 holdings although

there is no guarantee that this will be the case and it may contain a lesser or greater number of holdings at any time. A

maximum of 10% of the Company’s Gross Assets at the time of investment may be invested in unquoted or untraded

companies at time of investment.

The Investment Manager’s approach will in most cases achieve diversification across a number of sectors as shown in

the Holdings in Portfolio on pages 23 and 24.

(b) Currency risk

The majority of the Company’s assets will be denominated in a currency other than sterling (predominantly in yen)

and changes in the exchange rate between sterling and yen may lead to a depreciation of the value of the Company’s

assets as expressed in sterling and may reduce the returns to the Company from its investments and, therefore,

negatively impact the level of dividends paid to shareholders.

Management of currency risk

The Investment Manager monitors the currency risk of the Company’s portfolio on a regular basis. Foreign currency

exposure is regularly reported to the Board by the Investment Manager. The Company does not currently intend to

enter into any arrangements to hedge its underlying currency exposure to investment denominated in yen, although

the Investment Manager and the Board will keep this approach under regular review.

CC Japan Income & Growth Trust plc 65

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 65

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Foreign currency exposures

An analysis of the Company’s assets priced in yen are as follows:

As at

31 October 2023

£’000

As at

31 October 2022

£’000

Equity Investments: yen 231,987 199,642

Receivables (due from brokers, dividends, and other income receivable) 3,552 4,330

CFD: yen (absolute exposure) 35 (100)

Cash and cash equivalent: yen (3,640) (1,927)

Total 231,934 201,945

Foreign currency sensitivity

If the Japanese Yen had appreciated or depreciated by 10% as at 31 October 2023 (2022: 10%) then the value of the

portfolio as at that date would have increased or decreased as shown below.

Increase in

Fair Value

As at

31 October

2023

£’000

Decrease in

Fair Value

As at

31 October

2023

£’000

Increase in

Fair Value

As at

31 October

2022

£’000

Decrease in

Fair Value

As at

31 October

2022

£’000

Impact on capital return – increase/(decrease) 23,193 (23,193) 20,195 (20,195)

Return after taxation – increase/(decrease) 23,193 (23,193) 20,195 (20,195)

Derivative instruments

The Company may utilise long only CFDs or equity swaps for gearing and efficient portfolio management purposes.

Leverage may be generated through the use of CFDs or equity swaps. Such financial instruments inherently contain

much greater leverage than a non-margined purchase of the underlying security or instrument. This is due to the fact

that, generally, only a very small portion (and in some cases none) of the value of the underlying security or instrument

is required to be paid in order to make such leveraged investments. As a result of any leverage employed by the

Company, small changes in the value of the underlying assets may cause a relatively large change in the Net Asset

Value of the Company. Many such financial instruments are subject to variation or other interim margin requirements,

which may force premature liquidation of investment positions.

Borrowing risks

The Company may use borrowings to seek to enhance investment returns. While the use of borrowings can enhance

the total return on the Ordinary Shares where the return on the Company’s underlying assets is rising and exceeds the

cost of borrowing, it will have the opposite effect where the return on the Company’s underlying assets is rising at a

lower rate than the cost of borrowing or falling, further reducing the total return on the Ordinary Shares. As a result,

the use of borrowings by the Company may increase the volatility of the Net Asset Value per Ordinary Share. The

Company had no borrowings at the year end.

Any reduction in the value of the Company’s investments may lead to a correspondingly greater percentage reduction

in its Net Asset Value (which is likely to adversely affect the price of an Ordinary Share). Any reduction in the number

of Ordinary Shares in issue (for example, as a result of buy backs) will, in the absence of a corresponding reduction in

borrowings, result in an increase in the Company’s level of gearing.

To the extent that a fall in the value of the Company’s investments causes gearing to rise to a level that is not

consistent with the Company’s gearing policy or borrowing limits, the Company may have to sell investments in order

to reduce borrowings, which may give rise to a significant loss of value compared to the book value of the investments,

as well as a reduction in income from investments.

66 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

66 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued

Management of leverage risk

The aggregate of borrowings and long only CFD and equity swap exposure will not exceed 25% of Net Asset Value at

the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate, although

the Company’s normal policy will be to utilise and maintain gearing to a lower limit of 20% of Net Asset Value at the

time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate. It is expected

that any borrowings entered into will principally be denominated in yen.

The Company’s level of gearing as at 31 October 2023 is disclosed in the Alternative Performance Measures section on

pages 72 to 76 of this Annual Report.

(d) Interest rate risk

The Company is exposed to interest rate risk specifically through its cash holdings and on positions within the CFD

portfolio. Interest rate movements may affect the level of income receivable from any cash at bank and on deposits.

The effect of interest rate changes on the earnings of the companies held within the portfolio may have a significant

impact on the valuation of the Company’s investments. Movements in interest rates will also have an impact on the

valuation of the CFD derivative contracts. Interest receivable on cash balances or paid on overdrafts is at fixed rate.

Management of interest rate risk

The possible effects on Fair Value and cash flows that could arise as a result of changes in interest rates are taken

into account when making investment decisions. Derivative contracts are not used to hedge against the exposure to

interest rate risk.

Interest income earned on deposits and paid on overdraft by the Company is primarily derived from fixed interest

rates, as such do not have a material exposure to interest rate risk.

The bank overdraft is an integral part of cash management and the Company has a legal right of offset and has the

intention to settle this at net.

Interest rate exposure

The exposure at 31 October 2023 of financial assets and liabilities to interest rate risk is shown by reference to floating

interest rates – when the interest rate is due to be reset. Due to the current low interest rate environment in Japan, no

sensitivity analysis is shown as the total impact will not be material.

As at

31 October 2023

due within

one year

£’000

As at

31 October 2022

due within

one year

£’000

Exposure to floating interest rates: CFD derivative contract – (absolute exposure) 46,397 39,926

Collateral paid in respect of CFDs 806 433

(e) Credit risk

Credit risk is the possibility of a loss to the Company due to the failure of the counterparty to a transaction discharging

its obligations under that transaction.

Cash and other assets held by the Depositary

The cash and other assets held by the Depositary, or its sub-custodians are subject to counterparty credit risk as the

Company’s access to its cash could be delayed should the counterparties become insolvent or bankrupt.

Derivative instruments

The Company’s holdings in CFD contracts present counterparty credit risks, with the risk of the counter party (Morgan

Stanley & Co International plc) defaulting.

CC Japan Income & Growth Trust plc 67

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 67

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Management of credit risk

Cash and other assets held by the Depositary

Cash and other assets that are required to be held in custody will be held by the depositary or its sub-custodians. Cash

and other assets may not be treated as segregated assets and will therefore not be segregated from any custodian’s

own assets in the event of the insolvency of a custodian. Cash held with any custodian will not be treated as client

money subject to the rules of the Financial Conduct Authority (‘FCA’) and may be used by a custodian in the course

of its own business. The Company will therefore be subject to the creditworthiness of its custodians. In the event of

the insolvency of a custodian, the Company will rank as a general creditor in relation thereto and may not be able

to recover such cash in full, or at all. The Company has appointed Northern Trust Investor Services Limited as its

depositary. The credit rating of Northern Trust was reviewed at time of appointment and will be reviewed on a regular

basis by the Investment Manager and/or the Board. The Fitch’s credit rating of Northern Trust is AA-.

Derivative instruments

Where the Company utilises CFDs or equity swaps, it is likely to take a credit risk with regard to the parties with whom

it trades and may also bear the risk of settlement default. These risks may differ materially from those entailed in

exchange-traded transactions that generally are backed by clearing organisation guarantees, daily marking-to-market

and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions

entered into directly between counterparties generally do not benefit from such protections and expose the parties to

the risk of counterparty default. CFD contracts generally require variation margins and the counterparty credit risk is

monitored by the Investment Manager.

The Investment Manager monitors the Company’s exposure to its counterparties on a regular basis and the position is

reviewed by the Directors at Board meetings. Investment transactions are carried out with a number of brokers, whose

credit-standing is reviewed periodically by the Investment Manager, and limits are set on the amount that may be due

from any one broker.

In summary, the exposure to credit risk as at 31 October 2023 was as follows:

As at

31 October 2023

3 months or less

£’000

As at

31 October 2022

3 months or less

£’000

Cash at bank 340 1,413

Amounts due in respect of CFDs 773 2,680

Collateral paid in respect of CFDs 806 433

Debtors 3,750 4,434

Total 5,669 8,960

None of the above assets or liabilities were impaired or past due but not impaired.

68 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

68 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued

(f) Other Price Risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes

are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial

instruments traded in the market.

The Company is exposed to market price risk arising from its equity investments and its exposure to the positions

within the CFD portfolio. The movements in the prices of these investments result in movements in the performance of

the Company.

The Company’s exposure to other changes in market prices at 31 October 2023 on its equity investments was

£231,987,000 (2022: £199,631,000).

In addition, the Company’s gross market exposure to these price changes through its CFD portfolio was £46,397,000

through long positions (2022: £39,926,000).

The Company uses CFDs, as part of its investment policy. These instruments can be highly volatile and potentially

expose investors to a higher risk of loss. The low initial margin deposits normally required to establish a position in

such instruments permit a high degree of leverage. As a result, a relatively small movement in the price of a contract

may result in a profit or loss which is high in proportion to the value of the net exposures in the underlying CFD

positions. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent

prompt liquidation of positions resulting in potentially greater losses.

The Company limits the gross market exposure, and therefore the leverage, of this strategy to approximately 200% of

the Company’s net assets. The CFDs utilised have a linear performance to referenced stocks quoted on exchanges and

therefore have the same volatility profile to the underlying stocks.

Market exposures to derivative contracts are disclosed below.

The Company’s exposure to CFDs is the aggregate of long CFD Positions. The gross and net market exposure is the

same as the Company does not hold Short CFD Positions.

Exposures are monitored daily by the Investment Manager. The Company’s Board also reviews exposures regularly.

The gross underlying notional exposures within the CFD portfolio as at 31 October 2023 were:

As at 31 October 2023 As at 31 October 2022

£’000

% of net

assets £’000

% of net

assets

CFDs – (absolute exposure) 46,397 19.73% 39,926 19.61%

CFDs – (net exposure) 46,397 19.73% 39,926 19.61%

The Board of Directors manages the market price risks inherent in the investment portfolio by ensuring full and timely

access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews

investment performance. The Board monitors the Investment Manager’s compliance with the Company’s objective.

Concentration of exposure to other price risk

A sector breakdown of the portfolio is contained in the Portfolio on page 25.

CC Japan Income & Growth Trust plc 69

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 69

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Other price risk sensitivity

The following table illustrates the sensitivity of the profit after taxation for the period to an increase or decrease of

10% in the fair values of the Company’s equities and CFDs. This level of change is considered to be reasonably possible

based on observation of current market conditions. The sensitivity analysis is based on the notional exposure of the

Company’s equities investments and long CFDs.

As at 31 October 2023 As at 31 October 2022

Increase in

Fair Value

£’000

Decrease in

Fair Value

£’000

Increase in

Fair Value

£’000

Decrease in

Fair Value

£’000

Impact on capital return – increase/(decrease) 27,835 (27,835) 23,967 (23,967)

Return after taxation – increase/(decrease) 27,835 (27,835) 23,967 (23,967)

(g) Liquidity Risk

The securities of small-to-medium-sized (by market capitalisation) companies may have a more limited secondary

market than the securities of larger companies. Accordingly, it may be more difficult to effect sales of such securities

at an advantageous time or without a substantial drop in price than securities of a company with a large market

capitalisation and broad trading market. In addition, securities of small-to-medium-sized companies may have greater

price volatility as they can be more vulnerable to adverse market factors such as unfavourable economic reports.

Management of liquidity risk

The Company’s Investment Manager monitors the liquidity of the Company’s portfolio on a regular basis.

Liquidity risk exposure

The undiscounted gross cash outflows of the financial liabilities as at 31 October 2023, based on the earliest date on

which payment can be required, were as follows:

As at

31 October 2023

less than 3 months

£’000

As at

31 October 2022

less than 3 months

£’000

Amounts payable in respect of CFDs 2,004 2,780

Other payables 534 2,240

Total 2,538 5,020

The Company is exposed to liquidity risks from the leverage employed through exposure to long only CFD positions.

However, timely sale of trading positions can be impaired by many factors including decreased trading volume and

increased price volatility. As a result, the Company could experience difficulties in disposing of assets to satisfy liquidity

demands. Liquidity risk is minimised by holding sufficient liquid investments which can be readily realised to meet

liquidity demands. The Company’s liquidity risk is managed on a daily basis by the Investment Manager in accordance

with established policies and procedures in place.

70 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

70 CC Japan Income & Growth Trust plc

NOTES TO THE ACCOUNTS

continued

16. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued

(h) Fair Value Measurements of Financial Assets and Financial Liabilities

The financial assets and liabilities are either carried in the balance sheet at their Fair Value, or the balance sheet

amount is a reasonable approximation of Fair Value (due from brokers, dividends receivable, accrued income, due to

brokers, accruals and cash and cash equivalents).

The valuation techniques for investments and derivatives used by the Company are explained in the accounting

policies notes 2 (b and c) on page 56.

The table below sets out Fair Value measurements using Fair Value Hierarchy.

31 December 2023

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Assets:

Equity investments 231,987 – – 231,987

CFDs – Unrealised Fair Value gains – 773 – 773

Liabilities:

CFDs – Unrealised Fair Value losses – (738) – (738)

Total 231,987 35 – 232,022

31 December 2022

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Assets:

Equity investments 199,642 – – 199,642

CFDs – Unrealised Fair Value gains – 2,680 – 2,680

Liabilities:

CFDs – Unrealised Fair Value losses – (2,780) – (2,780)

Total 199,642 (100) – 199,542

There were no transfers between levels during the year (2022: same).

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the

Fair Value measurement of the relevant asset as follows:

Level 1 – valued using quoted prices in active markets for identical assets.

Level 2 – valued by reference to valuation techniques using observable inputs including quoted prices.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

There were no Level 3 investments as at 31 October 2023 (2022: nil).

CC Japan Income & Growth Trust plc 71

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 71

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

(i) Capital Management Policies and Procedures

The Company’s capital management objectives are:

– to ensure that the Company will be able to continue as a going concern; and

– to provide dividend income combined with capital growth, mainly through investment in equities listed or quoted in

Japan and by utilising the leverage effect of CFD.

The key performance indicators are contained in the strategic report on pages 11 and 12.

The Company is subject to several externally imposed capital requirements:

– As a public company, the Company has to have a minimum share capital of £50,000.

– In order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to

be able to meet one of the two capital restriction tests imposed on investment companies by company law.

The Company’s capital at 31 October 2023 comprises called up share capital and reserves totalling £235,118,000 (2022:

£203,582,000).

The Board regularly monitors, and has complied with, the externally imposed capital requirements.

17. DISTRIBUTABLE RESERVES

The Company’s distributable reserves consist of the Special reserve, Revenue reserve and Capital reserve attributable

to realised profits. As at 31 October 2023 the total Capital reserve distributable is 38,486,000 (2022: £26,182,000), total

Capital reserve not distributable is £24,636,000 (2022: £5,841,000).

Special reserve: As stated in the Company’s prospectus dated 13 November 2015, in order to increase the distributable

reserves available to facilitate the flexibility and source of future dividends, the Company resolved that, conditional

upon First Admission to listing on the London Stock Exchange and the approval of the Court, the net amount standing

to the credit of the share premium account of the Company immediately following completion of the First Issue be

cancelled and transferred to a special distributable reserve. Following approval by the Court, the cancellation became

effective on 23 March 2016 and an amount of £64,671,250 was transferred to the above Special reserve at that time.

The Special reserve is distributable.

18. POST BALANCE SHEET EVENTS

There were no post balance sheet events other than those already disclosed in this report.

72 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

72 CC Japan Income & Growth Trust plc

GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES

Administrator The Company’s administrator, the current such administrator being Apex

Listed Companies Services (UK) Limited (which acquired Sanne Group).

AIC Association of Investment Companies

Alternative Investment Fund or “AIF” An investment vehicle under AIFMD. Under AIFMD (see below) the

Company is classified as an AIF.

Alternative Investment Fund Managers

Directive or “AIFMD”

The UK version of an European Union Directive which came into force on

22 July 2013 and which is part of UK law by virtue of the European Union

(Withdrawal) Act 2018, as amended by The Alternative Investment Fund

Managers (Amendment etc.) (EU Exit) Regulations 2019.

Alternative Performance Measure or

“APM”

A financial measure of historical or future financial performance, financial

position, or cash flows, other than a financial measure defined or

specified in the applicable financial reporting framework.

Annual General Meeting or “AGM” A meeting held once a year, which Shareholders are entitled to attend,

and where they can vote on resolutions to be put forward at the meeting

and ask Directors questions about the Company.

Absolute exposure The absolute difference between the Company’s long positions and short

positions.

Bonus Issue The distribution of subscription shares to qualifying Shareholders. In

this report pertinent to the issue to qualifying Shareholders of new

Transferable Subscription Shares on the basis of one new Transferable

Subscription Share for every five existing Ordinary Shares.

Cum-dividend A dividend that has been declared but not yet paid out.

CFD or Contract for Difference A financial instrument, which provides exposure to an underlying equity

with the provider financing the cost to the buyer with the buyer receiving

the difference of any gain or paying for any loss.

Custodian An entity that is appointed to hold and safeguard a company’s assets.

Depositary Certain AIFs must appoint depositaries under the requirements of AIFMD.

A depositary’s duties include, inter alia, safekeeping of the Company’s

assets and cash monitoring. Under AIFMD the depositary is appointed

under a strict liability regime. The Company’s Depositary is Northern

Trust Investor Services Limited.

Diluted NAV per Ordinary Share Diluted NAV per Ordinary Share calculates a Company’s NAV if all

subscriptions shares were converted.

Dividend Income receivable from an investment in shares.

CC Japan Income & Growth Trust plc 73

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Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 73

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Discount (APM) The amount, expressed as a percentage, by which the share price is less

than the NAV per Ordinary Share.

As at 31 October 2023 Page

NAV per Ordinary Share (pence) a 2 174.5

Share price (pence) b 2 162.5

Discount (b÷a)-1 6.9%

As at 31 October 2022 Page

NAV per Ordinary Share (pence) a 2 151.1

Share price (pence) b 2 138.8

Discount (b÷a)-1 8.1%

Ex-dividend date The date from which you are not entitled to receive a dividend which has

been declared and is due to be paid to shareholders.

Financial Conduct Authority or “FCA” The independent body that regulates the financial services industry in the

UK.

Gearing (APM) A way to magnify income and capital returns, but which can also magnify

losses. The Company may be geared through the CFDs and if utilised, the

overdraft facility, with The Northern Trust Company.

As at 31 October 2023 Page £’000

CFD notional market value* a n/a 46,397

Non-base cash borrowings** b n/a 3,380

NAV c 235,118

Gearing (net) ((a+b)/c) 21.2%

As at 31 October 2022 Page £’000

CFD notional market value* a n/a 39,926

Non-base cash borrowings** b n/a 2,652

NAV c 203,582

Gearing (net) ((a+b)/c) 20.9%

* CFD positions in underlying asset value.

** Non-base cash borrowings represents borrowings in Yen.

Gross assets (APM) The Company’s total assets including any leverage amount.

Index A basket of stocks which is considered to replicate a particular stock

market or sector.

74 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

74 CC Japan Income & Growth Trust plc

GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)

continued

Gross market exposure The Company’s total exposure investment value in the financial market

prices.

Gross underlying notional exposure The company’s total exposure value on the underlying asset of its

derivatives.

Investment company A company formed to invest in a diversified portfolio of assets.

Investment trust A closed end investment company which is based in the United Kingdom

(“UK”) and which meets certain tax conditions which enables it to be

exempt from UK corporation tax on its capital gains. This Company is an

investment trust.

Leverage (APM) Under the Alternative Investment Fund Managers Directive (“AIFMD”),

leverage is any method by which the exposure of an Alternative

Investment Fund (“AIF”) is increased through borrowing of cash or

securities or leverage embedded in derivative positions.

Under AIFMD, leverage is broadly similar to gearing, but is expressed

as a ratio between the assets (excluding borrowings) and the net assets

(after taking account of borrowing). Under the gross method, exposure

represents the sum of the Company’s positions after deduction of cash

balances, without taking account of any hedging or netting arrangements.

Under the commitment method, exposure is calculated without the

deduction of cash balances and after certain hedging and netting

positions are offset against each other.

Under both methods the AIFM has set current maximum limits of

leverage for the Company of 200%.

As at 31 October 2023

Gross

£’000

Commitment

£’000

Security market value a 231,987 231,987

CFD notional market value b 46,397 46,397

Cash and cash equivalents* c 3,841 321

NAV d 235,118 235,118

Leverage (a+b+c)/d 120% 119%

As at 31 October 2022

Gross

£’000

Commitment

£’000

Security market value a 199,642 199,642

CFD notional market value b 39,926 39,926

Cash and cash equivalents* c 2,676 1,098

NAV d 203,582 203,582

Leverage (a+b+c)/d 119% 118%

* Cash and cash equivalents represent gross overdraft and net overdraft with Northern Trust.

CC Japan Income & Growth Trust plc 75

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 75

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

Market liquidity The extent to which investments can be bought or sold at short notice.

Net assets An investment company’s assets less its liabilities.

Net Asset Value (NAV) per Ordinary

Net assets divided by the number of Ordinary Shares in issue (excluding

any shares held in Treasury).

Net exposure The difference between the Company’s long positions and short

positions.

Ordinary Shares The Company’s Ordinary Shares in issue.

Ongoing charges (APM) A measure, expressed as a percentage of average NAV, of the regular,

recurring annual costs of running an investment company.

Year end 31 October 2023 Page

Average NAV a n/a 228,765,739

Annualised expenses b 39 2,430,000

Ongoing charges (b÷a) 1.06%

Year end 31 October 2022 Page

Average NAV a n/a 217,165,791

Annualised expenses b 39 2,297,000

Ongoing charges (b÷a) 1.06%

Portfolio A composition of different investment holdings constructed and held in

order to deliver returns to Shareholders and to spread risk.

Share Premium to Net Asset Value (APM) The amount, expressed as a percentage, by which the share price is more

than the Net Asset Value per share.

Share buyback A purchase by a company of its own shares. Shares can either be bought

back for cancellation or held in Treasury.

Share price The price of a share as determined by buyers and sellers on the relevant

stock exchange.

Subscription Share Price The price at which the Transferable Subscription Share Rights

are exercised in accordance with the terms and conditions of the

Transferable Subscription shares.

Transferable Subscription Share Rights The right conferred by each Transferable Subscription Share to subscribe

for one Ordinary Share as detailed in the prospectus.

Transferable Subscription Shares (TSS) The transferable subscription shares in the capital of the Company as a

Bonus Issue.

76 CC Japan Income & Growth Trust plc

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Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

76 CC Japan Income & Growth Trust plc

Treasury shares A company’s own shares held in Treasury account by the company but

which are available to be resold in the market.

Total return (APM) A measure of performance that takes into account both income and

capital returns.

Year end 31 October 2023 Page Share price NAV

Opening at 1 November 2022 (in pence) a 2 138.8 151.1

Closing at 31 October 2023 (in pence) b 2 162.5 174.5

Price movement (b÷a)-1 c n/a 17.1% 15.5%

Dividend reinvestment d n/a 3.8% 3.4%

Total return (c+d) 20.9% 18.9%

Year end 31 October 2022 Page Share price Cum-income

NAV

Opening at 1 November 2021 (in pence) a 2 154.0 136.8

Closing at 31 October 2022 (in pence) b 2 138.8 151.1

Price movement (b÷a)-1 c n/a -9.9% 10.4%

Dividend reinvestment* d n/a 2.8% -16.3%

Total return (c+d) -7.1% -5.9%

* The dividend reinvestment is calculated on the assumption that dividends paid out by the Company are reinvested into the shares

of the Company at NAV at the ex-dividend date.

Volatility A measure of how much a market share price, currency or other

instrument moves up and down in price over a period of time.

GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)

continued

CC Japan Income & Growth Trust plc 77

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 77

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

THE SECURITIES FINANCING TRANSACTIONS REGULATION

(UNAUDITED)

The Securities Financing Transactions Regulation (“SFTR”) came into effect on 12 January 2016. Article 13 requires

information to be provided as to the use of securities financing transactions (SFTs) and total return swaps (TRS).

A Securities Financing Transaction (“SFT”) is defined as per Article 3 (11) of the SFTR as:

• a repurchase transaction;

• securities or commodities lending and securities or commodities borrowing;

• a buy-sell back transaction or sell-buy back transaction; or

• a margin lending transaction.

As at 31 October 2023 the Company held the following types of SFTs: None (2022: None)

As at 31 October 2023 the Company held the following types of Total Return Swaps: Contracts for Difference (2022:

Same)

The amount of securities and commodities on loan as a proportion of total lendable assets (excluding cash and cash

equivalents) was 0% as at 31 October 2023 (2022: 0%).

GLOBAL DATA:

Type of Asset

Absolute Amount

£’000

Proportion of AUM

Security lending Nil Nil

Repo Nil Nil

Total return swap (CFDs) 46,397 16.7%

CONCENTRATION DATA:

The largest collateral issuer across all SFTs and Total Return Swaps is as follows:

Collateral Issuers

Volume of the

collateral securities and

commodities

£’000

1 JPY Cash Collateral 460

The top counterparties across all SFTs and Total Return Swaps is as follows:

Counterparty

Gross volume

of outstanding trades

(£’000)

1 Morgan Stanley & Co Intl Plc 46,362

1 Macquarie Bank Limited –

78 CC Japan Income & Growth Trust plc

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

78 CC Japan Income & Growth Trust plc

AGGREGATE TRANSACTION DATA:

Type of

collateral Quality Currency

Maturity

tenor

(collateral)

Maturity

tenor

(SFTs/Total

Return

Swaps)

Country of

counterparty

establishment

(not collateral)

Settlement

and clearing

Total Return Swap

Morgan Stanley & Co

Intl Plc Cash High JPY <1 Day >1 yr UK Bilateral

Macquarie Bank

Limited Cash High JPY <1 Day >1 yr Australia Bilateral

REUSE OF COLLATERAL:

The share of collateral that is reused is 0%, this is in comparison to the maximum of 0% as expressed in the

prospectus.

The cash collateral reinvestment returns to the company were 0.

SAFEKEEPING – Collateral Received:

Custodian Collateral assets safe-kept (£’000)

Northern Trust Global Services Limited 460

SAFEKEEPING – Collateral Granted:

The proportion of collateral held in segregated accounts, in pooled accounts or any other accounts is 0%.

RETURN/COSTS:

Type of Asset

Cost

£’000

Absolute

Returns

£’000

% overall

returns of

Transaction Type

Alternative Investment Fund:

Total Return Swaps (212) 7,691 100

Manager of the Alternative Investment Fund:

Third parties: Nil Nil Nil

THE SECURITIES FINANCING TRANSACTIONS REGULATION

(UNAUDITED) continued

CC Japan Income & Growth Trust plc 79

Job No: 50767 Proof Event: 15 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA

Customer: PraxisFM Project Title: CC Japan Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION

CC Japan Income & Growth Trust plc 79

STRATEGIC REPORTGOVERNANCEFINANCIALSOTHER INFORMATION