2014 Annual Report JPMorgan Overseas Investment … Overseas Investment Trust plc. Annual Report & Accounts 2014 3 repurchase the Company’s shares in the market to achieve this.

Annual Report2014JPMorgan Overseas Investment Trust plc

Annual Report & Accounts for the year ended 30th June 2014

JPMorgan Overseas Investm

ent Trust plc2014

Features

Contents

1 Financial Results

Strategic Report

2 Chairman’s Statement5 Investment Manager’s Report9 Summary of Results10 Performance11 Ten Year Financial Record12 Ten Largest Equity Investments13 Portfolio Analyses 14 List of Investments16 Business Review

Governance

21 Board of Directors23 Directors’ Report25 Corporate Governance31 Directors’ Remuneration Report34 Statement of Directors’

Responsibilities

35 Independent Auditors’ Report

Financial Statements

38 Income Statement39 Reconciliation of Movements in

Shareholders’ Funds40 Balance Sheet41 Cash Flow Statement42 Notes to the Accounts

Shareholder Information

64 Notice of Annual General Meeting67 Subscription Shares68 Glossary of Terms and Definitions73 Information about the Company

ObjectiveCapital growth from world stockmarkets.

Investment PolicyTo provide a diversified portfolio of approximately 70-90 stocks in which the investmentmanager has a high degree of conviction.

Investment Strategy To provide superior long-term capital growth by investing in a high conviction portfolio ofcompanies with strong valuation signals, significant profit growth potential and anidentifiable catalyst to unlock that potential, regardless of industry, region or size.

A significant, global commitment to proprietary research is essential in generatinginvestment ideas. A strong partnership between the investment manager and analysts iskey to understanding valuations and developing conviction.

Gearing A flexible, low cost £25 million borrowing facility is in place and available for theinvestment manager to utilise at times of low absolute valuation or for short termborrowing to finance investment decisions.

Benchmark The Company’s benchmark is the MSCI All Countries World Index in sterling terms (totalreturn with net dividends reinvested).

Capital Structure At 30th June 2014, the Company’s issued share capital comprised 26,457,405 Ordinaryshares of 25p each including 3,172,803 shares held in Treasury and 4,523,695 Subscriptionshares of 0.01p each.

Share Repurchase and Issuance Policy In order for the Company’s shares to trade at a relatively narrow discount, the Companywill repurchase its shares with the aim of maintaining an average discount of around 5%calculated with debt at par value. Any shares repurchased under this policy may be held inTreasury or cancelled. Shares held in Treasury and new shares will only be reissued/issuedat a premium to net asset value.

Management Company and Company SecretaryPrior to 1st July 2014, the Company employed JPMorgan Asset Management (UK) Limited(‘JPMAM’ or the ‘Manager’) to manage its assets. With effect from 1st July 2014, JPMorganFunds Limited (‘JPMF’ or the ‘Manager’), an affiliate of JPMAM was appointed as theCompany’s Alternative Investment Fund Manager (‘AIFM’) and the Company Secretary.

FCA regulation of ‘non-mainstream pooled investments’The Company currently conducts its affairs so that the shares issued by JPMorgan OverseasInvestment Trust plc can be recommended by Independent Financial Advisers to ordinaryretail investors in accordance with the FCA’s rules in relation to non-mainstream investmentproducts and intends to continue to do so for the foreseeable future.

The shares are excluded from the FCA’s restrictions which apply to non-mainstreaminvestment products because they are shares in an investment trust.

AICThe Company is a member of the Association of Investment Companies.

WebsiteThe Company’s website, which can be found at www.jpmoverseas.co.uk, includes usefulinformation on the Company, such as daily prices, factsheets and current and historic half yearand annual reports.

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JPMorgan Overseas Investment Trust plc. Annual Report & Accounts 2014 1

Financial ResultsTotal returns (includes dividends reinvested)

Long Term Performancefor periods ended 30th June 2014

+13.2%Return to shareholders1

(2013: +22.8%)

15.0pDividend4

(2013: 15.0p)

+13.7%Return on net assets2

(2013: +21.6%)

+9.1%Benchmark return3

(2013: +20.6%)

A glossary of terms and definitions is provided on page 68.

1Source: Morningstar.2Source: J.P. Morgan. Based on undiluted net asset value.3Source: MSCI. The Company’s benchmark is the MSCI AC World Index expressed in sterling terms. Prior to 1st July 2008, the benchmark wasthe MSCI World Index expressed in sterling terms.4Dividends are subject to shareholder approval at the Annual General Meeting.

JPMorgan Overseas – return to shareholders1

JPMorgan Overseas – return on net assets2

Benchmark3

JPMorgan Overseas Investment Trust plc. Annual Report & Accounts 20142

Over the year to 30th June 2014, equities continued to rise strongly as economiesaround the world showed signs of recovery amid a prolonged period of low interestrates. Despite the many geopolitical and economic challenges, most developedequity markets rose over the period, with some reaching record highs.

This has been another very positive year for the Company while it continued todeliver a strong performance during the financial year. The Company recorded a totalreturn on net assets of +13.7%, ahead of the total return of +9.1% of the benchmark,the MSCI All Country World Index (in sterling terms). The total return to shareholderswas +13.2% over the reporting period.

Investment Manager Contribution and Excess Performance Total Return vs. Benchmark Index to 30th June 2014

Quarterly Investment Manager Contribution (LHS).

Cumulative undiluted net asset value excess return (RHS).

It is pleasing to note the Company’s impressive net asset value total return over fiveyears of +104.8%, ahead of the benchmark return of +87.7% and over 10 years of+153.1%, significantly outperforming the benchmark which returned +107.6% over thesame period.

The Investment Manager’s Report provides a detailed commentary on the Company’sinvestment strategy and performance.

Dividends

The Directors are proposing, subject to shareholders’ approval at the Annual GeneralMeeting (‘AGM’), to pay a final dividend of 15.0 pence per share (2013: 15.0 pence) on5th December 2014 to shareholders on the register at the close of business on7th November 2014. The Company’s principal aim is to maximise capital growth. TheBoard does however appreciate that many shareholders do like to receive a dividendrather than have to sell shares to obtain income.

Share Buybacks and Issuance

Over the year, the share price to net asset value discount ranged between 2.9% and7.7%. The Board will continue to manage the discount at which the share price tradesrelative to its net asset value at around 5% and should it become necessary,

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Strategic ReportChairman’s Statement


repurchase the Company’s shares in the market to achieve this. The Companyrepurchased 489,215 Ordinary shares into Treasury for a total consideration of£4,553,000. At the year end, a total of 3,172,803 shares were held in Treasury.

During the year, 282,707 Ordinary shares were issued upon exercise of Subscriptionshares. At the year end there were 4,523,695 Subscription shares in issue. Details ofanother opportunity to exercise the Subscription shares at 943 pence by 31st October2014 have been sent to shareholders and are also given on page 67 of this report.

A resolution to renew the authority to permit the Company to continue to repurchaseshares will be submitted to the AGM. Resolutions renewing the authorities to issueshares from Treasury and to issue new shares at a premium to net asset value, andto disapply pre-emption rights over such issues, will also be submitted for approvalat the AGM. Any shares held in Treasury will only be re-issued at a premium to netasset value.

Ongoing Charges

The Board continues to believe that the Company’s ongoing charges (excludingperformance fees) ratio of 0.63% for the year ended 30th June 2014 (2013: 0.65%)represents very good value when compared to other trusts and savings productssuch as open ended funds actively investing in global equities.

Gearing

Gearing is regularly discussed between the Board and the Investment Manager.A borrowing facility of £25 million with National Australia Bank is in place until July2015. This facility is flexible and can be used tactically as investment opportunitiespresent themselves. £20 million of the £25 million facility was drawn down at theyear-end. As in previous financial years, the Investment Manager continued to makeeffective use of gearing which contributed +1.4% to performance during the yearunder review.

Currency Hedging

The Company continues its passive currency hedging strategy (implemented in late2008) that aims to make stock selection the predominant driver of overall portfolioperformance relative to the benchmark, the MSCI World All Countries Index(in sterling terms). This is a risk reduction measure, designed to eliminate most of thedifferences between the portfolio’s currency exposure and that of the Company’sbenchmark. As a result the returns derived from, and the portfolio’s exposure tocurrencies may differ materially from that of the Company’s competitors in theAIC Global Growth sector, who generally do not undertake such a strategy.

Alternative Investment Fund Managers Directive (‘AIFMD’ or the ‘Directive’)

The Company was required to comply with the Alternative Investment Fund ManagersDirective (‘AIFMD’) before 22nd July 2014. As a result of this new European legislationand its incorporation into the local law and regulations in the UK, the Company hasmade a number of changes to its service providers to bring it into compliance with theAIFMD from 1st July 2014. The Company has appointed JPMorgan Funds Limited(‘JPMF’), an affiliate of JPMorgan Asset Management (UK) Limited (‘JPMAM’) as itsAlternative Investment Fund Manager (‘AIFM’) subject to the terms and conditions ofa new investment management agreement. This new agreement leaves the Managers’remuneration and other commercial terms unchanged from the preceding agreement


with JPMAM. From a portfolio management perspective, there will be no change in theresources or team working on behalf of the Trust as JPMF has delegated portfoliomanagement to JPMAM. JPMF also acts as the new Company Secretary from 1st July2014, replacing JPMAM in the role.

In complying with the AIFMD, the Company has also appointed Bank of New YorkMellon to act as its Depositary from 1st July 2014. The Company’s Custodian,JPMorgan Chase Bank will remain as the Custodian as a delegate of the Depositary.

The Board

Having had the pleasure of serving as a Director since 1999 and of chairing the Boardsince 2010, I plan to step down from the Board at the conclusion of the 2015 AGM. Iam pleased to inform you that Nigel Wightman, who has been a Director since 2010,has been selected to succeed me as Chairman when I retire. As part of the Board’ssuccession planning and in anticipation of my retirement, the Board is currentlyconsidering recruitment of another non-executive Director to the Board.

The Board supports annual re-election for all Directors, as recommended by theUK Corporate Governance Code, and therefore all of the Directors will stand forre-election at the forthcoming AGM.

Annual General Meeting

My fellow Directors and I invite you to attend the Company’s AGM which will be held at 60 Victoria Embankment, London EC4Y 0JP on Tuesday, 11th November 2014 at 2.30 p.m. An investment presentation will be made at the meeting by Jeroen Huysinga. If you have any detailed or technical questions, please submit these in advance of the meeting in writing, or via the Company’s website, to the Company Secretary whose contact details are shown on page 73 of this report. Shareholders who are unable to attend the AGM in person are encouraged to use their proxy votes.There will be an opportunity for shareholders to meet the Directors and theInvestment Manager following the AGM. I hope to have the pleasure of meetingyou then.

Outlook

While the global economy continues to expand at a moderate pace, the challengeswithin global financial markets remain both significant and large in number. A greatdeal of investor anxiety lies beneath the calm surface as the attention of Westernauthorities focuses on inflation and the timing of possible interest rate rises.Meanwhile, policy change at both economic and political level continues to bea distortive market force with returns in the short to medium term likely to be muted.Despite this testing and changeable investment backdrop, the Investment Managerbelieves active management is set to remain a key driver of investment returns overthe longer term as many positive investment opportunities are taken advantage of.

Simon DaviesChairman 26th September 2014

Strategic Report continuedChairman’s Statement continued


Market review

Regional equity market returns – 12 months to 30th June 2014

Source: JPMorgan Asset Management based on published MSCI index data.

Over the last 12 months we have continued to see strong performance from globalequity markets. As ever, there was a considerable range of returns across regions.The US led the pack as signs of an economy recovery started to gather pace and theFederal Reserve (Fed) began reducing the economic stimulus that has been in playsince the financial crisis. Closely behind North America was Europe which broke outof its longest ever recession with markets responding positively. More recently,however, as geopolitical events surrounding Russia and Ukraine started to dominatethe headlines investors became nervous that any recovery could be derailed and theEuropean Central Bank (ECB) moved to reassure the market that it remainedcommitted to supporting the recovery.

Marking a reversal on the previous 12 months, Japan was the worst performing regionand weakness in the Japanese Yen meant that the market posted negative returnsin Sterling. Following the election of Shinzo Abe as Prime Minister in December 2012,Japan has launched one of the most aggressive policy moves in the country’s history,seeking to revive the world’s third largest economy which has been stagnant for twodecades. This change was initially well received by investors, however an increasein the consumption tax in April 2014 stoked fears that the economy’s fragile recoverycould stall. These fears were somewhat mitigated as Shinzo Abe unveiled his thirdand final ‘arrow’ of reform, which included promises to reduce the corporate taxrate – currently one of the world’s highest.

As the major western economies continued to improve, particularly the UK and US,expectations for increases in interest rates were brought forward. This has led toconcerns that the significant flows of money we have seen move into emerging

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Investment Manager’s Report


markets over the last five years driven by the search for higher returns, could bereversed. This uncertainty, coupled with currency weakness, rising inflation andconcerns over the banking system in China led emerging markets to lag mostdeveloped markets, despite many continuing to see much higher growth.

Portfolio Review

Over the 12 months to end June 2014, the portfolio outperformed the index byapproximately 4.6% driven by positive stock selection across the majority of regionsand sectors. We have been encouraged to see a turnaround in the performance ofa number of our holdings in more economically sensitive, cyclical sectors. Thisincluded a position in UPM, the Finnish paper company exposed to a consolidatingindustry and an improving pulp market as well as Outokumpu, which is benefitingfrom a turnaround in the European stainless steel market. Additionally, Outokumpuhas taken steps to reduce its level of debt which had increased post the acquisition ofThyssenKrupp’s stainless steel division last year. Shares in each of these companiesgained more than 70% over the period.

Stock selection in healthcare also contributed positively as a number of our holdingswere subject to takeover offers; such as UK-based pharmaceutical company, Shire,which rose sharply after the company received an offer from Abbvie; US-basedbiotech company, Onyx, which Amgen bid for as well as botox producer, Allergen,which received a hostile offer from Valeant. All three stocks rallied strongly and weresubsequently sold in the portfolio.

Stock selection was positive in all regions with the exception of Japan which modestlydragged on performance as our focus on exporters and financials detracted in thefirst half of 2014.

Our underweight exposure to emerging markets contributed positively as the regioncontinued to lag most developed markets. At the stock level, our holding in SandsChina, the Hong Kong-listed operator of casinos and resorts in Macau, was among thestocks to contribute positively. The company benefited from increasing sales atMacau casinos as operators continue to add rooms and entertainment in order todraw a growing number of affluent and middle class customers. We sold our positionin the company earlier this year. Towards the end of 2013 we initiated a position inIndia’s largest private sector bank, ICICI, which has performed strongly this year.Political elections in India saw Narendra Modi announced Prime Minister and sparkedspeculation of reform measures to invigorate the country’s stalled growth.Additionally, ICICI announced positive 2013 results benefiting from continued loangrowth. Banking penetration in India is amongst the lowest in the world; at a third ofChina’s and a fifth of the US – which presents a significant opportunity over thelong-term. We maintain our holding given ICICI’s attractive valuation, strong earningsgrowth potential and stable balance sheet.

Performance attribution for theyear ended 30th June 2014

% %

Contributions to total returns

Benchmark return 9.1

Asset allocation 0.2Stock selection 3.8Currency effect 0.6Gearing/cash 1.4

Investment managercontribution 6.0

Portfolio total return 15.1

Management fee/other expenses –0.6Performance fee –0.9

Net asset value total return — prior to structural effects 13.6

Structural effects (i)Share buy-backs/issuance 0.1Effect of subscription sharesexercised in the period 0.0

Net asset value total return — Undiluted 13.7

Structural effects (ii)Dilution effect of potential exercise of remainingsubscription shares –1.1

Net asset value total return — Diluted 12.6

Ordinary share price total return 13.2

‘Unit’ share price total return 13.1

Source: Xamin/JPMAM and Morningstar.

All figures are on a total return basis.

Performance attribution analyses howthe Company achieved its recordedperformance relative to its benchmarkindex.

A glossary of terms and definitions isprovided on page 68.

Strategic Report continuedInvestment Manager’s Report continued


Portfolio positioning

We have not made any significant changes to the overall shape of the portfolio andmaintain our overweight exposure to a number of more economically sensitivecyclical sectors such as basic industries, industrial cyclicals and autos. Our focusremains on stock picking which has been the main source of returns. Geographically,our investment process of identifying companies which are attractively valuedrelative to global peers continues to lead us towards Europe and the UK and awayfrom North America. The valuation disparity between these two markets remainsattractive. A large proportion of our underweight position in the US is due to our lackof exposure to certain extremely large consumer staple companies which we believeare simply too expensive in their global context. Holdings in companies such asSABMiller, Henkel and Japan Tobacco provide us with exposure to interesting themesin this sector at valuations which are much lower than those of their US peers.

Earlier in 2013 we reduced our position in emerging markets to approximately 7%underweight at the end of June 2013. As valuations have continued to decline, theseregions have started to look increasingly attractive in a global context. There remains,however, much uncertainty over the near-term outlook for these economies and assuch we believe that selectivity is key. We have increased our position, althoughremain around 3% underweight relative to the index. Specifically, we initiateda position in Mr. Price, the South African low-cost retailer which is winning marketshare in its domestic market with the potential for overseas expansion through itsonline business. We also took a position in ICICI, the Indian bank and Bidvest, a SouthAfrican-based food distribution and services company.

We have added to our position in Japan resulting in a modest overweight relative tothe benchmark. We believe foreign investors have become unduly pessimistic aboutthe trajectory of the Japanese economy. This year investors have cut their positionsdue to disappointment over the BoJ’s perceived inaction, and concerns that progressin structural reform is lacking. We believe the BoJ will remain committed tosupporting inflationary pressures in the Japanese economy and will increase itsprogramme of stimulus measures, if required. In terms of the ‘third arrow’ of reform,Prime Minister Shinzo Abe’s public approval ratings remain high, giving him themandate to pursue economic reforms such as special economic zones, free tradeagreements and deregulation. On the basis of our proprietary valuation model,Japanese financials look very compelling by comparison with recently re-ratedEuropean peripheral financials. We maintained our existing positions in Japanesebank, Orix, and added Mitsubishi UFJ to the portfolio.

Market Outlook

While we are unlikely to see the dramatic performance in equity markets that wasexperienced over the last 12 months, we remain positive in our outlook for equities.The key drivers remain in place, namely improving global growth, accommodative


monetary policy, and still-supportive valuations. The company results season hasseen some of this economic growth feed through into corporate earnings, theanticipation of which drove much of the valuation multiple expansion over the lastyear. An environment such as this would typically be positive for more economicallysensitive, cyclical areas of the market. Continued M&A activity would also besupportive of equity markets. Corporate deals have soared this year amid renewedconfidence from company management teams with company margins at all timehighs and cash flows generation strong. Looking forward, we will need to seecontinued economic growth and sensible central bank policy guidance for thisto continue.

Investors will be keenly monitoring the resilience of the global economy in the faceof possible rising interest rates, as the continuing strength of the US economy andimproving labour market has brought forward expectations of rate rises. This neednot be threatening for financial markets and economic growth, provided theUS Federal Reserve communicates any interest rate increase with the same clarityand consistency as they did in reducing the economic stimulus. In contrast, in Europe,the economic and company earnings outlook remains less assured and in the adventof weaker inflation data, the European Central Bank may consider further stimulus asa last resort.

We have maintained a degree of gearing in the portfolio, driven by improvingeconomic sentiment, corporate resiliency and attractive valuation signals acrossa number of holdings. Our focus remains on underlying company fundamentals andour dedicated team of highly experienced research analysts continue to identifyattractive investment opportunities around the world.

Jeroen HuysingaInvestment Manager 26th September 2014

Strategic Report continuedInvestment Manager’s Report continued


2014 2013

Total returns for the year ended 30th JuneReturn to shareholders1 +13.2% +22.8%Return on net assets2 +13.7% +21.6%Benchmark return3 +9.1% +20.6%

% change

Net asset value, share price and discount at 30th JuneShareholders’ funds (£’000) 245,635 221,145 +11.1Diluted net asset value per Ordinary share 1,036.7p 934.4p +10.9Undiluted net asset value per Ordinary share 1,054.9p 941.4p +12.1Diluted net asset value per share with debt at fair value4 1,036.8p 934.6p +10.9Undiluted net asset value per share with debt at fair value4 1,055.0p 941.6p +12.1Ordinary share price 966.0p 867.0p +11.4Ordinary share price discount to diluted net asset value per Ordinary share 5 6.04% 5.80%

Ordinary shares in issue 23,284,602 23,491,110Subscription share price 52.5p 49.5pSubscription shares in issue 4,523,695 4,806,402

Revenue for the year ended 30th JuneNet revenue attributable to shareholders (£’000) 2,915 4,010 –27.3Revenue return per Ordinary share — diluted 12.41p 16.56p –25.1Revenue return per Ordinary share — undiluted 12.41p 16.56p –25.1Dividend per Ordinary share 15.0p 15.0p

Gearing at 30th June6 7.7% 6.9%

Ongoing charges excluding performance fee payable7 0.63% 0.65%Ongoing charges including performance fee payable8 0.85% 0.65%


1Source: Morningstar.2Source: J.P. Morgan. Based on undiluted net asset value.3Source: MSCI. The Company’s benchmark is the MSCI AC World Index expressed in sterling terms.4The fair value of the £200,000 debenture issued by the Company has been calculated by using discounted cash flow techniques using the yield on a similarly dated gilt plus a marginbased on the 5 year average for the AA Barclays Corporate Bond.5Ex-income. Source: Bloomberg.6Gearing represents the excess amount above shareholders’ funds of total assets expressed as a percentage of the shareholders’ funds. Total assets include total investments and netcurrent assets/liabilities less cash/cash equivalents and excluding bank loans of less than one year. If the amount calculated is negative, this is shown as a ‘net cash’ position.7Management fee and all other operating expenses excluding interest and performance fee payable, expressed as a percentage of the average of the daily net assets during the year.The Ongoing charges is calculated in accordance with guidance issued by the Association of Investment Companies.8Management fee, performance fee payable and all other operating expenses excluding interest, expressed as a percentage of the average of the daily net assets during the year.

Summary of Results


Performance Relative to BenchmarkFigures have been rebased to 100 at 30th June 2004

Source: Morningstar/MSCI.

JPMorgan Overseas – share price total return.

JPMorgan Overseas – net asset value total return.

The benchmark index is represented by the grey horizontal line.

Ten Year PerformanceFigures have been rebased to 100 at 30th June 2004




Benchmark.

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At 30th June 20041 20051 2006 2007 2008 2009 2010 2011 2012 2013 2014

Shareholders’ funds (£m) 342.7 375.9 227.6 207.7 165.8 145.5 186.9 231.8 199.9 221.1 245.6

Net asset value per share (p) 488.4 538.9 627.7 681.4 615.4 556.3 726.5 889.0 787.5 941.4 1,054.9

Share price (p) 394.0 467.0 575.0 634.0 566.0 515.5 754.0 862.0 718.7 867.0 966.0

(Discount)/premium (%)2 (17.7) (12.0) (5.3) (5.7) (5.0) (5.0) 5.9 (1.5) (7.0) (5.8) (6.0)

Gearing/(net cash) (%)3 7.8 (1.4) (0.5) 0.2 1.1 7.8 6.1 7.4 (0.7) 6.9 7.7

Year ended 30th June

Revenue attributable toshareholders (£’000) 5,122 5,776 5,457 3,221 3,599 3,241 2,751 3,744 3,278 4,010 2,915

Revenue return per share (p) 7.24 8.27 8.88 9.69 12.62 12.26 10.65 14.51 12.64 16.56 12.41

Dividends per share (p) 7.00 8.00 12.504 10.00 11.50 11.50 13.00 13.50 13.50 15.00 15.00

Ongoing charges excluding performance fee(%)5 0.61 0.56 0.67 0.62 0.61 0.70 0.65 0.64 0.63 0.65 0.63

Ongoing charges including performance fee(%)6 1.41 0.65 0.84 0.62 0.61 1.44 1.29 1.21 0.69 0.65 0.85

Rebased to 100 at 30th June 2004

Return to shareholders7 100.0 120.6 150.8 169.7 154.1 144.0 214.5 249.0 211.5 259.8 294.0

Return on net assets7 100.0 111.9 132.6 146.5 133.8 123.6 164.4 205.3 184.5 224.3 253.1

Benchmark8 100.0 111.3 126.2 143.8 129.5 110.6 136.0 165.0 157.9 190.4 207.6


1Figures have been restated to reflect a change in accounting policy regarding dividends payable. Such dividends are now included in the accounts in the year in which they are paid.2Ex-income. Source: Bloomberg.3Gearing represents the excess amount above shareholders’ funds of total assets expressed as a percentage of the shareholders’ funds. Total assets include total investments and netcurrent assets/liabilities less cash/cash equivalents and excluding bank loans of less than one year. If the amount calculated is negative, this is shown as a ‘net cash’ position.4Includes a special dividend of 4.0p.5Management fee and all other operating expenses excluding interest and performance fee payable, expressed as a percentage of the average of the daily net assets during the year.The Ongoing charges is calculated in accordance with guidance issued by the Association of Investment Companies.6Management fee, performance fee payable and all other operating expenses excluding interest, expressed as a percentage of the average of the daily net assets during the year. 7Source: Morningstar.8Source: MSCI. The Company’s benchmark is the MSCI AC World Index expressed in sterling terms. Prior to 1st July 2008, the benchmark was the MSCI World Index expressed insterling terms.

Ten Year Financial Record


2014 2013Valuation Valuation

Company Country £’000 %1 £’000 %1

InterOil Canada 7,811 3.2 8,988 3.7

UPM-Kymmene2 Finland 7,014 2.9 3,858 1.6

Google4 USA 6,799 2.8 5,906 2.5

Outokumpu ‘A’2 Finland 6,650 2.7 1,657 0.7

Intercontinental Hotels UK 6,017 2.4 5,121 2.1

Bayer Germany 5,765 2.3 5,394 2.2

Solvay Belgium 5,684 2.3 5,166 2.1

Schneider Electric2 France 5,514 2.2 3,524 1.5

Johnson & Johnson2,3 USA 5,501 2.2 — —

SABMiller2 UK 5,171 2.1 3,859 1.6

Total 61,926 25.1

1Based on total assets less current liabilities of £247.2m (2013: £241.4m).2Not included in the ten largest equity investments at 30th June 2013.3Not held in the portfolio at 30th June 2013.4Includes holdings in both Google and Google ‘A’.

At 30th June 2013, the value of the ten largest equity investments amounted to £55.0m representing 22.8% of total assets less current liabilities.

Strategic Report continuedTen Largest Equity Investmentsat 30th June 2014


Geographic Analysis30th June 2014 30th June 2013

Portfolio Benchmark Portfolio Benchmark%1 % %1 %

North America 47.0 52.7 39.6 52.2Continental Europe 25.5 16.9 27.1 15.7United Kingdom 15.7 7.8 15.8 7.9Japan 10.7 7.4 9.2 8.2Emerging Markets 7.1 10.5 3.4 11.0Developed Asia 1.5 4.7 4.3 5.0

Total equities 107.5 100.0 99.4 100.0

Liquidity Fund — — 1.3 —Net current liabilities (7.5) — (0.7) —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £247.2m (2013: £241.4m).

Sector Analysis30th June 2014 30th June 2013

Portfolio Benchmark Portfolio Benchmark%1 % %1 %

Consumer Discretionary 21.2 11.6 19.7 11.6Financials 16.2 21.3 14.0 21.6Industrials 15.2 10.7 19.2 10.5Information Technology 12.5 12.8 10.3 12.0Health Care 12.0 10.6 9.6 10.2Materials 11.3 6.0 7.1 6.1Energy 9.3 10.2 8.0 9.9Consumer Staples 3.9 9.6 7.3 10.5Telecommunication Services 3.0 3.8 1.3 4.2Investment Companies 2.9 — 2.9 —Utilities — 3.4 — 3.4Liquidity Fund — — 1.3 —Net current liabilities (7.5) — (0.7) —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £247.2m (2013: £241.4m).

Portfolio Analyses


ValuationCompany £’000

North AmericaInterOil 7,811Johnson & Johnson 5,501Morgan Stanley 5,114Time Warner 5,104Schlumberger 5,099Bank of America 4,981United Health 4,310eBay 4,225Fluor 4,188First Quantum Minerals 4,136Verizon Communications 3,774TJX Companies 3,720Bristol-Myers Squibb 3,580Adobe Systems 3,547Comcast ‘A’ 3,475Google ‘A’ 3,427Humana 3,407Google 3,372Alcoa 3,148Accenture ‘A’ 2,934CVS Caremark 2,851ACE 2,832Paccar 2,752Ryanair ADR 2,437Metlife 2,380General Motors 2,322Biogen Idec 2,225Lowes 2,139VF Corp 2,091Canadian Pacific Railways 1,957United Continental 1,836LAM Research 1,582Liberty Global ‘A’ 1,261Liberty Global 1,207Methanex 1,198Time 220

116,143


Continental EuropeUPM-Kymmene (Finland) 7,014Outokumpu ‘A’ (Finland) 6,650Bayer (Germany) 5,765Solvay (Belgium) 5,684Schneider Electric (France) 5,514Sodexo (France) 4,999Electrolux ‘B’ (Sweden) 3,270ASML (Netherlands) 2,784Publicis Groupe (France) 2,702AXA (France) 2,697Compagnie de Saint-Gobain (France) 2,549Continental (Germany) 2,521Nokian Renkaat (Finland) 2,469Daimler (Germany) 2,026Unibail-Rodamco (France) 1,992CIE Financiere Richemont (Switzerland) 1,674Henkel (Germany) 1,618Telenor (Norway) 1,052

62,980

United KingdomIntercontinental Hotels 6,017SABMiller 5,171Shire 4,945BG 3,860Petrofac 3,708APR Energy 3,545Prudential 3,374HSBC 3,256Vodafone Group 2,643Tullow Oil 2,416

38,935

Strategic Report continuedList of Investmentsat 30th June 2014



JapanOrix 4,973Daikin Industries 4,168Hitachi 3,821Japan Airlines 3,318Sekisui Chemical 2,812Mitsubishi UFJ Financial Group 2,806Mitsui Fudosan 1,753JPMorgan Japan Smaller Companies Trust1 1,411Ricoh 1,321

26,383

Emerging MarketsJPMorgan Emerging Markets Investment Trust1 3,953Bidvest Group 2,769ICICI Bank 2,571Mr Price Group 2,363Siliconware Precision Industries 2,182JPMorgan Indian Investment Trust1 1,900Samsung Electronics 1,713

17,451

Developed AsiaHutchinson Whampoa (Hong Kong) 2,581Goodman (Australia) 1,212

3,793

Total Portfolio 265,685

1Managed by JPMorgan Asset Management (UK) Limited.


The aim of the Strategic Report is to provide shareholders withthe ability to assess how the Directors have performed theirduty to promote the success of the Company during the yearunder review. To assist shareholders with this assessment, theStrategic Report sets out the structure and objective of theCompany, its investment policies and risk management,performance and key performance indicators, share capital,principal risks and how the Company seeks to manage thoserisks, the Company’s environmental, social and ethical policyand finally its future developments.

Structure of the Company

JPMorgan Overseas Investment Trust plc is an investmenttrust company that has a premium listing on the London StockExchange. The Company employed JPMorgan AssetManagement (UK) Limited (‘JPMAM’ or the ‘Manager’) up to30th June 2014 to actively manage the Company’s assets. Witheffect from 1st July 2014, JPMorgan Funds Limited (‘JPMF’ orthe ‘Manager’), an affiliate of JPMAM has been appointed asthe Company’s Alternative Investment Fund Manager (‘AIFM’)to manage its assets and also to act as the new CompanySecretary. The Board has determined an investment policyand related guidelines and limits as described below.

The Company is subject to UK and European legislation andregulations including UK company law, Financial ReportingStandards, the UK Listing, Prospectus, Disclosure andTransparency Rules, taxation law and the Company’s ownArticles of Association. The Company is an investmentcompany within the meaning of Section 833 of the CompaniesAct 2006 and has been approved by HM Revenue & Customs asan investment trust (for the purposes of Sections 1158 and 1159of the Corporation Tax Act 2010) for the year ended 30th June2013 and future years. The Directors have no reason to believethat approval will not continue to be obtained. The Company isnot a close company for taxation purposes.

Objective

The Company’s objective is to achieve capital growth fromworld stockmarkets. The concentration is on capital growthwith income a secondary consideration.

Investment Policies and Risk Management

In order to achieve the investment objective and to seek tomanage risk, the Company invests in a diversified portfolio ofcompanies.

The Company manages liquidity and borrowings to increasepotential sterling returns to shareholders; the Board has seta normal range of 5% net cash to 20% geared.

The Board sets a minimum limit on the number of investmentsin the portfolio and the Company’s aim is to provide adiversified portfolio in which the investment manager hasa high degree of conviction. At the year end, the number ofinvestments held was 82. To gain the appropriate exposure, theInvestment Managers are permitted to invest in pooled funds.JPMAM is responsible for management of the Company’sassets. On a day-to-day basis the assets are managed by aninvestment manager based in London, supported by a strongequity research team.

The Company has implemented a passive currency hedgingstrategy that aims to make stock selection the predominantdriver of overall portfolio performance relative to thebenchmark, the MSCI AC World Index (in sterling terms). This isa risk reduction measure, designed to eliminate most of thedifferences between the portfolio’s currency exposure and thatof the Company’s benchmark. As a result, the returns derivedfrom and the portfolio’s exposure to currencies may materiallydiffer from that of the Company’s competitors in the AIC GlobalGrowth sector who generally do not undertake such a strategy.

Investment Restrictions and Guidelines

The Board seeks to manage the Company’s risk by imposingvarious investment limits and restrictions:

• Under the rules applying to investment trusts, the Companycannot invest more than 15% of its assets in any oneinvestment, at the time of acquisition. The Company will notinvest more than 5% of its total assets in any one individualstock at the time of acquisition. The aggregate of theCompany’s top 10 holdings and top 20 holdings will notexceed 30% and 50% respectively.

• The Company does not normally invest in unquotedinvestments and to do so requires prior Board approval.

• No more than 25% of the Company’s assets may beinvested in non-OECD countries.

• No more than 75% of the Company’s assets in aggregate,may be invested in the US, Japan and the UK.

• In accordance with the Listing Rules of the UK ListingAuthority, the Company will not invest more than 15% of its

Strategic Report continuedBusiness Review


gross assets in other UK listed investment companies andwill not invest more than 10% of its gross assets incompanies that themselves may invest more than 15% ofgross assets in UK listed investment companies.

• The Company does not normally enter into derivativetransactions, other than foreign currency transactions andto do so requires prior Board approval.

These limits and restrictions may be varied by the Board at anytime at its discretion.

Compliance with the Board’s investment restrictions andguidelines is monitored continuously by the Manager and isreported to the Board on a monthly basis.

Performance

In the year to 30th June 2014, the Company produced a totalreturn to shareholders of +13.2% (2013: +22.8%) and a totalreturn on net assets of +13.7% (2013: +21.6%). This compareswith the return on the Company’s benchmark index of +9.1%(2013: +20.6%). As at 30th June 2014, the value of theCompany’s investment portfolio was £265.7million (2013:£243.0 million). The Investment Manager’s Report on pages 5to 8 includes a review of developments during the year aswell as information on investment activity within theCompany’s portfolio.

Total Return, Revenue and Dividends

Gross total return for the year amounted to £34.1 million (2013:£41.8million) and net total return after deducting managementfee, performance fee, other administrative expenses, financecosts and taxation, amounted to £30.0million (2013:£39.7million). Distributable income for the year amountedto £2.9million (2013: £4.0 million).

The Directors recommend a final dividend of 15.0p (2013: 15.0p)per share payable on 5th December 2014 to holders on theregister at the close of business on 7th November 2014. Thisdistribution will amount to £3,493,000 (2013: £3,524,000). Noother dividends were paid in respect of the year. The revenuereserve after this transfer will amount to £14,334,000 (2013:£14,939,000) subject to the Shareholders’ approval of theproposed final dividend at the forthcoming AGM.

Key Performance Indicators (‘KPIs’)

The Board uses a number of financial KPIs to monitor andassess the performance of the Company. The principal KPIs are:

• Performance against the benchmark index (the MSCI AC WorldIndex expressed in Sterling terms) This is the most important KPI by which performance isjudged. Information on the Company’s performance isgiven in the Chairman’s Statement and the InvestmentManager’s Report.

Performance Relative to Benchmark IndexFigures have been rebased to 100 at 30th June 2004




The benchmark is represented by the grey horizontal line.

Ten Year PerformanceFigures have been rebased to 100 at 30th June 2004




Benchmark.

• Performance against the Company’s peers The principal objective is to achieve capital growth andout-performance relative to the benchmark. However, the

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Board also monitors the performance relative to a range ofcompetitor funds.

• Performance attributionThe purpose of performance attribution analysis is toassess how the Company achieved its performance relativeto its benchmark index, i.e. to understand the impact on theCompany’s relative performance of the variouscomponents such as asset allocation and stock selection.Details of the attribution analysis for the year ended30th June 2014 are given in the Investment Manager’sReport on page 6.

• Share price discount to net asset value (‘NAV’) per share The Board continues to operate a share repurchase policywhich seeks to address imbalances in supply of anddemand for the Company’s shares within the market andthereby minimise the volatility and absolute level of thediscount to NAV at which the Company’s shares trade.Under this policy, the Company repurchases its shares withthe aim of maintaining an average discount of around 5%with any borrowings valued at book value. In the year to30th June 2014, the discount (with debt at par value)ranged between 2.9% and 7.7%.

Discount Performance

Source: Datastream (month end data).

JPMorgan Overseas – discount.

• Ongoing chargesThe Ongoing charges is an expression of the Company’smanagement fee and all other operating expensesexcluding finance costs and performance fee, expressed asa percentage of the average of the daily net assets duringthe year. The Ongoing charges for the year ended 30th June2014 was 0.63% (2013: 0.65%). The Board reviews each

year an analysis which shows a comparison of theCompany’s Ongoing charges and its main expenses withthose of its peers.

Share Capital

The Directors have authority to issue new Ordinary shares andto repurchase shares on behalf of the Company.

During the year, the Company did not re-issue any shares fromTreasury. It repurchased into Treasury 489,215 Ordinary shares,for a total consideration of £4,553,000. Since the year end theCompany has repurchased a further 221,295 Ordinary sharesinto Treasury, for a total consideration of £2,161,000.

No other shares have been repurchased for cancellation duringthe year, or since the year end up to the date of this report.

Resolutions to renew the authority to issue new shares andrepurchase shares will be put to shareholders at theforthcoming Annual General Meeting. The full text of theseresolutions are set out in the Notice of Annual General Meetingon pages 64 and 66.

On 15th January 2013 the Company issued Subscription sharesas a bonus issue to the Ordinary shareholders on the basis ofone Subscription share for every five Ordinary shares held.Each Subscription share confers the right (but not theobligation) to subscribe for one Ordinary share to have effecton 31st October 2014, 30th April 2015, 31st October 2015,30th April 2016 or 30th October 2016, after which the rights onthe Subscription shares will lapse.

Exercise prices have been determined as follows:

(a) If exercised to have effect on 31st October 2013 –900 pence;

(b) If exercised to have effect on 30th April 2014 or31st October 2014 – 943 pence.

(c) If exercised to have effect on 30th April 2015 or30th October 2015 – 986 pence.

Further details of the subscription shares, including theapportionment of base cost for capital gains tax purposes andhow they may be exercised, are given on page 67.

During the year, the Company issued 282,707 Ordinary sharesfor a total consideration of £2,546,727 on the conversion ofSubscription shares. Since the year end, no further Ordinaryshares have been issued.

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Strategic Report continuedBusiness Review continued


Principal Risks

With the assistance of the Manager, the Board has drawn upa risk matrix, which identifies the key risks to the Company.

These key risks fall broadly under the following categories:

• Investment and Strategy: An inappropriate investmentstrategy, for example asset allocation or the level ofgearing, may lead to under-performance against theCompany’s benchmark index and peer companies,resulting in the Company’s shares trading on a widerdiscount. The Board manages these risks by diversificationof investments through its investment restrictions andguidelines which are monitored and reported by theManager. The Manager provides the Directors with timelyand accurate management information, includingperformance data and attribution analyses, revenueestimates, liquidity reports and shareholder analyses.The Board monitors the implementation and results of theinvestment process with the Investment Manager, whoattends all Board meetings, and reviews data which showstatistical measures of the Company’s risk profile.The Investment Manager employs the Company’s gearingwithin a strategic range set by the Board. The Boardmayhold a separate meeting devoted to strategy each year.

• Market: Market risk arises from uncertainty about thefuture prices of the Company’s investments. It representsthe potential loss that the Company might suffer throughholding investments in the face of negative marketmovements. The Board considers asset allocation, stockselection and levels of gearing on a regular basis and hasset investment restrictions and guidelines, which aremonitored and reported on by the Manager. The Boardmonitors the implementation and results of the investmentprocess with the Manager.

• Accounting, Legal and Regulatory: In order to qualify asan investment trust, the Company must comply withSection 1158 of the Corporation Tax Act 2010(‘Section 1158’). Details of the Company’s approval aregiven under ‘Structure of the Company’ within theBusiness Review section above. Were the Company tobreach Section 1158, it might lose investment trust statusand, as a consequence, gains within the Company’sportfolio could be subject to Capital Gains Tax. TheSection 1158 qualification criteria are continuallymonitored by the Manager and the results reported to the

Board each month. The Company must also comply withthe provisions of The Companies Act 2006 and, since itsshares are listed on the London Stock Exchange, the UKLAListing Rules. A breach of the Companies Act 2006 couldresult in the Company and/or the Directors being fined orthe subject of criminal proceedings. Breach of the UKLAListing Rules could result in the Company’s shares beingsuspended from listing, which in turn would breachSection 1158. The Board relies on the services of itsCompany Secretary to ensure compliance with theCompanies Acts and The UKLA Listing Rules.

• Corporate Governance and Shareholder Relations: Detailsof the Company’s compliance with Corporate Governancebest practice, including information on relations withshareholders, are set out in the Corporate Governancereport on pages 25 to 30.

• Operational: Loss of key staff by the Manager, such as theInvestment Manager, could affect the performance of theCompany. Disruption to, or failure of, the Manager ’saccounting, dealing or payments systems or the custodian’srecords could prevent accurate reporting and monitoring ofthe Company’s financial position. Details of how the Boardmonitors the services provided by the Manager and itsassociates and the key elements designed to provideeffective internal control are included with the InternalControl section of the Corporate Governance report onpage 28.

• Going concern: Pursuant to the Sharman Report, Boards arenow advised to consider going concern as a potential risk,whether or not there is an apparent issue arising in relationthereto. Going concern is considered rigorously on anongoing basis and the Board’s statement on going concernis detailed on page 23.

• Financial: The financial risks faced by the Companyinclude market price risk, interest rate risk, liability riskand credit risk. Further details are disclosed in note 26 onpages 56 to 62.

Board Diversity

When recruiting a new Director, the Board’s policy is to appointindividuals on merit. Diversity is important in bringing anappropriate range of skills and experience to the Board and theBoard is diverse on a number of bases, namely gender, raceand nationality. At 30th June 2014, there were three maleDirectors and one female Director on the Board.


Employees, Social, Community and Human Rights Issues

The Company has a management contract with the Manager.It has no employees and all of its Directors are non-executive.The day to day activities are carried out by third parties. Thereare therefore no disclosures to be made in respect ofemployees. The Board notes the Manager’s policy statementsin respect of Social, Community and Environmental and HumanRights issues, as highlighted in italics:

Social, Community, Environmental and Human Rights

The Manager believes that companies should act in a sociallyresponsible manner. Although our priority at all times is the besteconomic interests of our clients, we recognise that, increasingly,non-financial issues such as social and environmental factors havethe potential to impact the share price, as well as the reputation ofcompanies. Specialists within the Manager’s environmental, socialand governance (‘ESG’) team are tasked with assessing howcompanies deal with and report on social and environmental risksand issues specific to their industry.

The Manager is also a signatory to the United Nations Principles ofResponsible Investment, which commits participants to sixprinciples, with the aim of incorporating ESG criteria into theirprocesses when making stock selection decisions and promotingESG disclosure. Our detailed approach to how we implement theprinciples is available on request.

Greenhouse Gas Emissions

The Company is managed by the Manager. It has noemployees and all of its Directors are non-executive, the dayto day activities being carried out by third parties. There aretherefore no disclosures to be made in respect of employees.The Company itself has no premises, consumes no electricity,gas or diesel fuel and consequently does not have ameasurable carbon footprint. The Company’s Manager, isa signatory to the Carbon Disclosure Project and JPMorganChase is a signatory to the Equator Principles on managingsocial and environmental risk in project finance.

Future Developments

Clearly, the future development of the Company is muchdependent upon the success of the Company’s investmentstrategy in the light of economic and equity marketdevelopments and the continued support of its shareholders.The Investment Managers discuss the outlook in their report onpages 7 and 8.

For and on behalf of the Board Simon DaviesChairman

26th September 2014

Strategic Report continuedBusiness Review continued


Simon Davies†§ (Chairman of the Board and Nomination Committee)A Director since November 1999.

Last re-elected to the Board: 2013.

Remuneration: £34,500 p.a.

He began his investment career in 1981 with Rothschild Asset Management, beforemoving to Gartmore where he became Head of International Equities. He joinedThreadneedle as Chief Investment Officer before becoming Chief Executive. He movedto the position of Chairman in 2007. He retired from Threadneedle in 2012. He isChairman of Sound Oil plc and a non-executive Director of Grainger plc and LCH.ClearnetLtd. He is also a Director of Old Mutual Wealth Management Limited and Square MileInvestment Consulting & Research.

Connections with Manager: None.

Shared directorships with other Directors: None.

Shareholding in Company: 33,600 Ordinary shares, Nil Subscription shares.

Jonathan Carey*†§ (Chairman of the Remuneration Committee and Chairman of the Audit andManagement Engagement Committee)

A Director since September 2009.



Previously, chairman of Jupiter Investment Management Group Limited (formerly JupiterInternational Group Plc), a position held since June 2007 until his retirement from theGroup in December 2010. Prior to this he was the Joint Group Chief Executive of JupiterInvestment Management Group Limited, a position he held from May 2000. He is alsoa non-executive Director of Jupiter Second Split Trust plc, BNY Mellon Trust andDepository (UK) Limited and BNY Mellon Trust Company (Ireland) Limited.




GovernanceBoard of Directors

Gay Collins*†§

A Director since 21st February 2012.

Elected to the Board: 2013.


Executive Chairman of MHP, an international corporate communications consultancy.She has over 25 years experience in PR and specialises in advising companies in thefinancial services space. Previous experience includes selling Eurobonds at Merrill Lynchand Dean Witter in London and New York.




Governance continuedBoard of Directors continued


* Member of the Audit and Management Engagement Committee.

† Member of the Nomination Committee.

§ Member of the Remuneration Committee.

Nigel Wightman*†§ (Senior Independent Director)

A Director since September 2010.



Over 35 years experience in the international asset management industry, having heldsenior positions at a number of companies including NM Rothschild and State Street.He is non-executive Chairman of the Multi-Manager UCITS Platform Fund plc. He is alsoa Director of European and Global Investments Limited and sits on the investmentcommittees of several educational charities.





The Directors present their report and the audited financialstatements for the year ended 30th June 2014.

A number of disclosures previously incorporated in theDirectors’ Report are now included in the Strategic Report.These include: Business Strategy of the Company; InvestmentObjective; Investment Policies and Risk Management;Investment Restrictions and Guidelines; Performance; TotalReturn. Revenue and Dividends; KPIs; Share Capital; PrincipalRisks; Board Diversity; Employee, Social, Community andHuman Rights Issues; and Future Developments.

Management of the Company

The Manager and Secretary was JPMAM up to 30th June 2014.JPMAM is a wholly-owned subsidiary of JPMorgan Chase Bankwhich, through other subsidiaries, also provides banking,dealing and custodian services to the Company. With effectfrom 1st July 2014, JPMF, an affiliate of JPMAM has beenappointed the Manager and Secretary.

The Manager is employed under a contract which can beterminated on six months’ notice, without penalty. If theCompany wishes to terminate the contract on shorter notice,the balance of remuneration is payable by way ofcompensation.

The Board conducts a formal evaluation of the Manager on anannual basis. The evaluation includes consideration of theinvestment strategy and process of the Manager, notingperformance against the benchmark over the long term andthe quality of the support that the Company receives from theManager. As a result of the evaluation process, the Boardconfirms that it is satisfied that the continuing appointment ofthe Manager on the terms agreed is in the interests of theshareholders as a whole.

Management and Performance Fees

The management fee is charged at the rate of 0.4% per annumof the Company’s assets less current liabilities. The terms of themanagement contract make allowance for the exclusion ofmanagement charges on investments held in funds on whichthe Manager earns a separate management fee.

A performance fee is payable if the total return attributable toshareholders (change in net asset value plus dividend) exceedsthe total return of the Company’s benchmark by more than0.5%. The performance fee payable is 15% of any excess of thetotal return (excluding the effect of share repurchases) over thebenchmark total return. Payment of any amount earned under

the performance fee in any relevant period is spread equallyover four years. Performance is measured on a cumulativebasis. Any performance fee accrued but not paid is reduced byany underperformance in subsequent years. Any adjustmentin respect of underperformance is deducted at the firstopportunity from any amount accrued in respect of previousyears’ outperformance. The amount of any performance feepaid in any one year is capped at 0.8% of the published netassets of the Company at the end of the relevant period. Anyexcess is carried forward until paid in full (or offset againstsubsequent underperformance).

The results for the year ended 30th June 2014 gave rise toa performance fee of £1,791,000 (2013: £5,000 writeback) asthe total return overperformed the benchmark plus the hurdleof 0.5%. A performance fee of £507,000 (2013: £nil) will bepayable this year of which £59,000 was carried forward fromthe prior years. A balance of £1,343,000 (2013: £59,000)remains payable in future years but will first be reduced byany future underperformance.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 16), risk management policies(see pages 18 and 19), liquidity risk (see note 26(b) on page 61),capital management policies and procedures (see page 63), thenature of the portfolio and expenditure projections that theCompany has adequate resources, an appropriate financialstructure and suitable management arrangements in place tocontinue in operational existence for the foreseeable future.For these reasons, they consider that there is reasonableevidence to continue to adopt the going concern basis inpreparing the accounts.

Directors

The Directors of the Company who held office at the end of theyear are as detailed on pages 21 and 22.

Details of Directors’ beneficial shareholdings may be found inthe Directors’ Remuneration Report on page 32. No changeshave been reported to the Directors’ shareholdings since theyear end.

In accordance with corporate governance best practice, allDirectors will retire by rotation at the forthcoming AnnualGeneral Meeting. The Nomination Committee, havingconsidered their qualifications, performance and contributionto the Board and its committees, confirms that each Director

Directors’ Report

Governance continuedDirectors’ Report continued


continues to be effective and demonstrates commitment to therole, and the Board recommends to shareholders that they bere-elected.

Director Indemnification and Insurance

As permitted by the Company’s Articles of Association, theDirectors have the benefit of a deed of indemnity which isa qualifying third party indemnity, as defined by Section 234 ofthe Companies Act 2006. The indemnities were in place duringthe year and as at the date of this report.

An insurance policy is maintained by the Company whichindemnifies the Directors of the Company against certainliabilities arising in the conduct of their duties. There is nocover against fraudulent or dishonest actions.

Disclosure of information to Auditors

In the case of each of the persons who are Directors of theCompany at the time when this report was approved:

(a) so far as each of the Directors is aware, there is no relevantaudit information (as defined in the Companies Act 2006) ofwhich the Company’s Auditors are unaware; and

(b) each of the Directors has taken all the steps that he oughtto have taken as a Director in order to make himself awareof any relevant audit information and to establish that theCompany’s Auditors are aware of that information.

The above confirmation is given and should be interpreted inaccordance with the provision of Section 418 of the CompaniesAct 2006.

Independent Auditors

PricewaterhouseCoopers LLP have expressed their willingnessto continue in office as Auditors, and a resolution to re-appointthem and authorise the Directors to determine theirremuneration for the ensuing year will be proposed at theAnnual General Meeting.

Section 992 Companies Act 2006

The following disclosures are made in accordance withSection 992 Companies Act 2006.

Capital StructureThe Company’s capital structure is summarised on the insidefront cover of this report.

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares as at thedate of this report are given in note 16 to the Notice of AnnualGeneral Meeting on page 66.

Notifiable Interests in the Company’s Voting Rights

At the date of this report, the following declared a notifiableinterest in the Company’s voting rights:

Number of Shareholders shares held %

Investec Wealth & Investment 1,247,321 6.02

The Company is also aware that approximately 14% of theCompany’s total voting rights are held by individuals throughsavings products managed by the Manager and registered inthe name of Chase Nominees Limited. If those voting rights arenot exercised by the beneficial holders, in accordance with theterms and conditions of the savings products, under certaincircumstances the Manager has the right to exercise thosevoting rights. That right is subject to certain limits andrestrictions and falls away at the conclusion of the relevantgeneral meeting.

The rules concerning the appointment and replacement ofDirectors, amendment of the Articles of Association andpowers to issue or buy back the Company’s shares arecontained in the Articles of Association of the Company andthe Companies Act 2006.

There are no restrictions concerning the transfer of securitiesin the Company; no special rights with regard to controlattached to securities; no agreements between holders ofsecurities regarding their transfer known to the Company;no agreements which the Company is party to that affect itscontrol following a takeover bid; and no agreements betweenthe Company and its Directors concerning compensation forloss of office.

Annual General Meeting

NOTE: THIS SECTION IS IMPORTANT AND REQUIRES YOURIMMEDIATE ATTENTION. If you are in any doubt as to the actionyou should take, you should seek your own personal financialadvice from your stockbroker, bank manager, solicitor or otherfinancial advisor authorised under the Financial Services andMarkets Act 2000.


Resolutions relating to the following items of special businesswill be proposed at the Annual General Meeting:

(i) Authority to issue new shares for cash and disapply pre-emptionrights (Resolutions 10 and 11)

The Directors will seek renewal of the authority at the AGM toissue up to 2,645,741 new shares for cash or shares held inTreasury other than by pro rata issue to existing Shareholdersup to an aggregate nominal amount of £661,435, such amountbeing equivalent to approximately 10% of the present issuedshare capital. The full text of the resolutions is set out in theNotice of Annual General Meeting on page 64.

It is advantageous for the Company to be able to issue newshares to participants purchasing shares through theManager’s savings products and also to other investors whenthe Directors consider that it is in the best interests ofshareholders to do so. Any such issues would only be madeat prices greater than the NAV, thereby increasing the assetsunderlying each share and spreading the Company’sadministrative expenses, other than the management feewhich is charged on the value of the Company’s marketcapitalisation, over a greater number of shares. The issueproceeds would be available for investment in line with theCompany’s investment policies.

(ii) Authority to repurchase the Company’s shares (Resolution 12) The authority to repurchase up to 14.99% of the Company’sissued share capital, granted by shareholders at the 2013Annual General Meeting, will expire on 11th May 2015 unlessrenewed at the forthcoming Annual General Meeting.The Directors consider that the renewal of the authority is inthe interests of shareholders as a whole, as the repurchase ofshares at a discount to NAV enhances the NAV of the remainingshares. The Board will therefore seek shareholder approval atthe Annual General Meeting to renew this authority, which willlast until 10th May 2016 or until the whole of the 14.99% hasbeen acquired, whichever is the earlier. The full text of theresolution is set out in the Notice of Annual General Meeting onpages 64 and 65. Repurchases will be made at the discretion ofthe Board and will only be made in the market at prices belowthe prevailing NAV per share, thereby enhancing the NAV of theremaining shares, as and when market conditions areappropriate.

Recommendation

The Board considers that resolutions 10-12 are likely topromote the success of the Company and are in the bestinterests of the Company and its shareholders as a whole.The Directors unanimously recommend that you vote infavour of the resolutions as they intend to do in respect oftheir own beneficial holdings which amount in aggregate to42,237 shares.

Corporate GovernanceCompliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 34, indicates how theCompany has applied the principles of good governance of theFinancial Reporting Council UK Corporate Governance Code(the ‘UK Corporate Governance Code’) and the AIC’s Code ofCorporate Governance, (the ‘AIC Code’), which complementsthe UK Corporate Governance Code and provides a frameworkof best practice for investment trusts.

The Board is responsible for ensuring the appropriate level ofcorporate governance and considers that the Company hascomplied with the best practice provisions of the UK CorporateGovernance Code and the AIC Code throughout the year underreview and up to the date of approval of the annual report andaccounts.

Role of the Board

A management agreement between the Company and theManager sets out the matters over which the Manager hasauthority. This includes management of the Company’s assetsand the provision of accounting, company secretarial,administration, and some marketing services. All other mattersare reserved for the approval of the Board. A formal scheduleof matters reserved for Board decision has been approved.This includes determination and monitoring of the Company’sinvestment objectives and policy and its future strategicdirection, gearing policy, management of the capital structure,appointment and removal of third party service providers,review of key investment and financial data and the Company’scorporate governance and risk control arrangements.



The Board has procedures in place to deal with potentialconflicts of interest and, following the introduction of TheBribery Act 2010, has adopted appropriate proceduresdesigned to prevent bribery. It confirms that the procedureshave operated effectively during the year under review.

The Board meets at least quarterly during the year and additionalmeetings are arranged as necessary. Full and timely informationis provided to the Board to enable it to function effectively andto allow Directors to discharge their responsibilities.

There is an agreed procedure for Directors to take independentprofessional advice if necessary and at the Company’s expense.This is in addition to the access that every Director has to theadvice and services of the Company Secretary, which isresponsible to the Board for ensuring that Board proceduresare followed and that applicable rules and regulations arecomplied with.

Board Composition

The Board, chaired by Simon Davies, consists of fournon-executive Directors, all of whom are regarded by theBoard as independent, including the Chairman. The Directorshave a breadth of investment knowledge, business andfinancial skills and experience relevant to the Company’sbusiness and brief biographical details of each Director areset out on pages 21 and 22. There have been no changes tothe Chairman’s other significant commitments during theyear under review.

A review of Board composition and balance is included as partof the annual performance evaluation of the Board, details ofwhich may be found below. Nigel Wightman, as the SeniorIndependent Director, leads the evaluation of the performanceof the Chairman and he is available to shareholders if they haveconcerns that cannot be resolved through discussion with theChairman.

Tenure

Directors are initially appointed until the following AnnualGeneral Meeting when, under the Company’s Articles ofAssociation, it is required that they be elected by shareholders.Thereafter, a Director’s appointment will run for a term of threeyears. Subject to the performance evaluation carried out eachyear, the Board will agree whether it is appropriate for theDirector to seek an additional term. The Board does not believethat length of service in itself necessarily disqualifies a Directorfrom seeking re-election but, when making a recommendation,the Board will take into account the requirements of the

UK Corporate Governance Code, including the need to refreshthe Board and its Committees. The Board has adoptedcorporate governance best practice and all Directors will standfor annual re-election.

The terms and conditions of Directors’ appointments are setout in formal letters of appointment, copies of which areavailable for inspection on request at the Company’s registeredoffice and at the Annual General Meeting.

The Board recommends the re-election/election of all Directors.

Induction and Training

On appointment, the Manager and Company Secretary provideall Directors with induction training. Thereafter, regularbriefings are provided on changes in law and regulatoryrequirements that affect the Company and the Directors.Directors are encouraged to attend industry and otherseminars covering issues and developments relevant toinvestment trust companies. Regular reviews of the Directors’training needs are carried out by the Chairman by means of theevaluation process described below.

Meetings and Committees

The Board delegates certain responsibilities and functions tocommittees. Details of membership of Committees are shownwith the Directors’ profiles on pages 21 and 22. Directors whoare not members of Committees may attend at the invitation ofthe Chairman.

The table below details the number of Board and Committeemeetings attended by each Director. During the year, therewere four full Board meetings, two Audit and ManagementEngagement Committee meetings, one Nomination Committeemeeting and one Remuneration Committee meeting.

Audit and Management Engagement Nomination Remuneration

Board Committee Committee Committee Meetings Meetings Meetings Meetings

Director Attended Attended Attended Attended

Simon Davies1 4 2 1 1Jonathan Carey 4 2 1 1Gay Collins 4 2 1 1Nigel Wightman 4 2 1 1

1Mr Davies attends the Audit and Management Engagement Committee meetings byinvitation.


Board Committees

Nomination Committee The Nomination Committee, chaired by Simon Davies, consistsof all of the Directors and meets at least annually to ensure thatthe Board has an appropriate balance of skills and experience tocarry out its fiduciary duties and to select and propose suitablecandidates for appointment when necessary. A variety ofsources, including the use of external search consultants, maybe used to ensure that a wide range of candidates is considered.

The appointment process takes account of the benefits ofdiversity, including gender.

The Board’s policy on diversity, including gender, is to takeaccount of the benefits of these during the appointmentprocess. However, the Board remains committed to appointingthe most appropriate candidate, regardless of gender or otherforms of diversity. Therefore, no targets have been set againstwhich to report.

The Committee conducts an annual performance evaluationof the Board, its committees and individual Directors to ensurethat all Directors have devoted sufficient time and contributedadequately to the work of the Board and its Committees.The evaluation of the Board considers the balance ofexperience, skills, independence, corporate knowledge, itsdiversity, including gender, and how it works together.Questionnaires, drawn up by the Board, with the assistanceof the Manager and a firm of independent consultants, arecompleted by each Director. The responses are collated andthen discussed by the Committee. The evaluation of individualDirectors is led by the Chairman who also meets with eachDirector. The Senior Independent Director leads the evaluationof the Chairman’s performance.

Remuneration Committee The Remuneration Committee, chaired by Jonathan Carey,consists of all of the Directors and meets at least annually toreview Directors’ fees and to make recommendations to theBoard as and when appropriate in relation to remunerationpolicy.

Audit and Management Engagement Committee The Audit and Management Engagement Committee ischaired by Jonathan Carey. The membership is set out onpages 21 and 22, and the committee meets at least twiceeach year. The members of the Audit and ManagementEngagement Committee consider that they have the

requisite skills and experience to fulfil the responsibilitiesof the Committee. For details of their qualifications, seepages 21 and 22.

The Committee reviews the actions and judgements of theManager in relation to the half year and annual accounts andthe Company’s compliance with the UK Corporate GovernanceCode.

During its review of the Company’s financial statements forthe year ended 30th June 2014, the Audit Committeeconsidered the following significant issues, including thosecommunicated by the Auditors during their reporting:

Significant issue How the issue was addressed

The valuation of investments isundertaken in accordance with theaccounting policies, disclosed in note 1to the accounts on page 42. Controlsare in place to ensure that valuationsare appropriate and existence isverified through Custodianreconciliations.

Consideration is given to the methodologyused to calculate fees, matched againstthe criteria set out in the InvestmentManagement Agreement. The Boardconsiders the schedule of performancefees at each Board meeting.

Approval for the Company as aninvestment trust under Sections 1158and 1159 for financial yearscommencing on or after 1st April 2013has been obtained and ongoingcompliance with the eligibility criteriais monitored by the Board on a regularbasis.

The Board was made fully aware of any significant financialreporting issues and judgements made in connection withthe preparation of the financial statements.

As a result of the work performed above, the Committee hasconcluded that the Annual Report for the year ended30th June 2014, taken as a whole, is fair, balanced andunderstandable and provides the information necessary forshareholders to assess the Company’s performance, business

Valuation, existenceand ownership ofinvestments

Calculation ofmanagement andperformance fees

Compliance withSections 1158 and 1159



model and strategy, and has reported on these findings to theBoard. The Board’s conclusions in this respect are set out inthe Statement of Directors’ Responsibilities on page 34.

The Committee reviews the terms of the managementagreement and examines the effectiveness of the Company’sinternal control systems, receives information from theManager’s Compliance department and reviews the scope andresults of the external audit, its effectiveness and costeffectiveness and the independence and objectivity of theexternal auditors including the provision of non-audit servicesand the period of service held by the Senior Auditor.The Committee has reviewed the independence and objectivityof the auditors of the Company and is satisfied that the auditorsare independent. The Committee also has the primaryresponsibility for making recommendations to the Board onthe reappointment and the removal of external auditors.The Committee also receives confirmations from the Auditors,as part of their reporting, in regard to their objectivity andindependence. Representatives of the Company’s auditorsattend the Audit and Management Engagement Committeemeeting at which the draft Annual Report and Accounts areconsidered. Having reviewed the performance of the externalauditors including assessing the quality of work, timing ofcommunications and work with the Manager, the Committeeconsidered it appropriate to recommend their reappointmentand the Board supported this recommendation which will beput to the Shareholders at this year’s Annual General Meeting.Details of the auditors’ fees charged for audit services aredisclosed in note 5 on page 45.

The Directors’ statement on the Company’s system of internalcontrol is set out below.

Terms of Reference The Audit and Management Engagement Committee, theNomination Committee and the Remuneration Committee allhave written terms of reference which define clearly theirrespective responsibilities, copies of which are available on theCompany’s website, on request at the Company’s registeredoffice and at the Company’s Annual General Meeting.

Relations with Shareholders

The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a fullunderstanding of the Company’s activities and performance

and reports formally to shareholders quarterly each year byway of the annual report and accounts, the half year financialreport and two interim management statements. This issupplemented by the daily publication, through the LondonStock Exchange, of the net asset value of the Company’s shares.

All shareholders are encouraged to attend the Company’sAnnual General Meeting at which the Directors andrepresentatives of the Manager are available in person to meetshareholders and answer their questions. In addition,a presentation is given by the Investment Manager who reviewsthe Company’s performance. During the year the Company’sbrokers, the Investment Manager and the Manager hold regulardiscussions with larger shareholders. The Directors are madefully aware of their views. The Chairman and Directors makethemselves available as and when required to addressshareholder queries. The Directors may be contacted throughthe Company Secretary whose details are shown on page 73.

The Company’s Annual Report and Accounts is publishedin time to give shareholders at least 20 working days’ noticeof the Annual General Meeting. Shareholders wishing to raisequestions in advance of the meeting are encouraged to writeto the Company Secretary at the address shown on page 73.

Details of the proxy voting position on each resolution will bepublished on the Company’s website shortly after the AnnualGeneral Meeting.

Risk Management and Internal Control

The UK Corporate Governance Code requires the Directors, atleast annually, to review the effectiveness of the Company’ssystem of risk management and internal control and to reportto shareholders that they have done so. This encompassesa review of all controls, which the Board has identified asincluding business, financial, operational, compliance and riskmanagement.

The Directors are responsible for the Company’s system of riskmanagement and internal control which is designed tosafeguard the Company’s assets, maintain proper accountingrecords and ensure that financial information used within thebusiness, or published, is reliable. However, such a system canonly be designed to manage rather than eliminate the risk offailure to achieve business objectives and therefore can onlyprovide reasonable, but not absolute, assurance against fraud,material misstatement or loss.


Since investment management, custody of assets and alladministrative services are provided to the Company by theManager and its associates, the Company’s system of riskmanagement and internal control mainly comprises monitoringthe services provided by the Manager and its associates,including the operating controls established by them, to ensurethat they meet the Company’s business objectives. There is anongoing process for identifying, evaluating and managing thesignificant risks faced by the Company. This process has been inplace for the year under review and up to the date of approvalof the annual report and accounts, and it accords with theTurnbull guidance. The Company does not have an internalaudit function of its own, but relies on the internal auditdepartment of the Manager which reports any material failingsor weakness. The key elements designed to provide effectiveinternal control are as follows:

Financial Reporting – Regular and comprehensive review by theBoard of key investment and financial data, includingmanagement accounts, revenue projections, analysis oftransactions and performance comparisons.

Management Agreement – Appointment of a manager andcustodian or depositary regulated by the Financial ConductAuthority (FCA), whose responsibilities are clearly defined ina written agreement.

Management Systems – The Manager’s system of riskmanagement and internal control includes organisationalagreements which clearly define the lines of responsibility,delegated authority, control procedures and systems. Theseare monitored by the Manager’s Compliance department whichregularly monitors compliance with FCA rules.

Investment Strategy – Authorisation and monitoring of theCompany’s investment strategy and exposure limits by theBoard.

The Board either directly or through the Audit andManagement Engagement Committee, keeps under review theeffectiveness of the Company’s system of risk management andinternal control by monitoring the operation of the keyoperating controls of the Manager and its associates as follows:

• reviews the terms of the management agreement andreceives regular reports from the Manager’s Compliancedepartment;

• reviews the reports on the risk management and internalcontrols and the operations of its custodian, JPMorganChase Bank, which is itself independently reviewed; and

• reviews every six months an independent report on the riskmanagement and internal controls and the operations ofthe Manager.

By the means of the procedures set out above, the Boardconfirms that it has reviewed the effectiveness of the Company’ssystem of risk management and internal control for the yearended 30th June 2014, and to the date of approval of thisAnnual Report and Accounts.

The Board confirms that any failings or weaknesses identifiedduring the course of its review of the system of riskmanagement and internal control were not significant and didnot impact the Company.

Corporate Governance and Voting Policy

The Company delegates responsibility for voting to theManager. The following is a summary of the Manager’s policystatements on corporate governance, voting policy and socialand environmental issues, which has been reviewed and notedby the Board. Details on social and environmental issues areincluded in the Strategic Report on page 30.

New Zealand Listing

The Company is listed on the London Stock Exchange and theNew Zealand Stock Exchange. The corporate governancerules and principles of the UK Listing Authority and LondonStock Exchange may differ materially from the New ZealandStock Exchange’s corporate governance rules and theprinciples of the Corporate Governance Best Practice Code.Investors may find out more information about the corporategovernance and principles applicable in the United Kingdomfor the UK Listing Authority and London Stock Exchangewebsites: www.fca.org.uk/firms/markets/ukla andwww.londonstockexchange.com

Corporate Governance

The Manager believes that corporate governance is integral to ourinvestment process. As part of our commitment to deliveringsuperior investment performance to our clients, we expect andencourage the companies in which we invest to demonstrate the


highest standards of corporate governance and best businesspractice. We examine the share structure and voting structure ofthe companies in which we invest, as well as the board balance,oversight functions and remuneration policy. These analyses thenform the basis of our proxy voting and engagement activity.

Proxy Voting The Managermanages the voting rights of the shares entrusted toit as it would manage any other asset. It is the policy of the Managerto vote in a prudent and diligent manner, based exclusively on ourreasonable judgement of what will best serve the financial interestsof our clients. So far as is practicable, we will vote at all of themeetings called by companies in which we are invested.

Stewardship/EngagementThe Manager recognises its wider stewardship responsibilities toits clients as a major asset owner. To this end, we support theintroduction of the FRC Stewardship Code, which sets out theresponsibilities of institutional shareholders in respect of investeecompanies. Under the Code, managers should:

– publicly disclose their policy on how they will discharge theirstewardship responsibilities to their clients;

– disclose their policy on managing conflicts of interest;

– monitor their investee companies;

– establish clear guidelines on how they escalate engagement;

– be willing to act collectively with other investors whereappropriate;

– have a clear policy on proxy voting and disclose their votingrecord; and

– report to clients.

The Manager endorses the Stewardship Code for its UK investmentsand supports the principles as best practice elsewhere. We believethat regular contact with the companies in which we invest iscentral to our investment process and we also recognise theimportance of being an ‘active’ owner on behalf of our clients.

Social & EnvironmentalThe Manager believes that companies should act in a sociallyresponsible manner. Although our priority at all times is the besteconomic interests of our clients, we recognise that, increasingly,non-financial issues such as social and environmental factors havethe potential to impact the share price, as well as the reputation ofcompanies. Specialists within the Manager ’s environmental, socialand governance (‘ESG’) team are tasked with assessing howcompanies deal with and report on social and environmental risksand issues specific to their industry.

The Manager is also a signatory to the United Nations Principles ofResponsible Investment, which commits participants to sixprinciples, with the aim of incorporating ESG criteria into theirprocesses when making stock selection decisions and promotingESG disclosure. Our detailed approach to how we implement theprinciples is available on request. The Manager is also a signatoryto Carbon Disclosure Project. JPMorgan Chase is a signatory to theEquator Principles on managing social and environmental risk inproject finance.

The Manager’s Voting Policy and Corporate GovernanceGuidelines are available on request from the CompanySecretary or can be downloaded from The Manager’s website:http://www.jpmorganinvestmenttrusts.co.uk/governance,which also sets out its approach to the seven principles of theFRC Stewardship Code, its policy relating to conflicts of interestand its detailed voting record.

By order of the Board Divya Amin, for and on behalf of JPMorgan Funds Limited, Secretary

26th September 2014



The Board has prepared this report in accordance with therequirements of Section 421 of the Companies Act 2006 asamended.

The law requires the Company’s Auditors to audit certain of thedisclosures provided. Where disclosures have been audited,they are indicated as such. The Auditors’ opinion is included intheir report on pages 35 to 37.

Remuneration of the Directors is considered by theRemuneration Committee on a regular basis. The Committeemakes recommendations to the Board as and whenappropriate.

Directors’ Remuneration Policy

The Directors’ Remuneration Policy is subject to a triennialbinding vote and therefore an ordinary resolution to approvethis policy will be put to shareholders at the forthcomingAnnual General Meeting. The policy subject to the vote, is setout in full below and is currently in force.

The Board’s policy for this and subsequent years is thatDirectors’ fees should properly reflect the time spent by theDirectors on the Company’s business and should be at a levelto ensure that candidates of a high calibre are recruited to theBoard. The Chairman of the Board and the Chairman of theAudit and Management Engagement Committee are paidhigher fees than the other Directors, reflecting the greater timecommitment involved in fulfilling those roles.

The Remuneration Committee, comprising all Directors,reviews fees on a regular basis and makes recommendationsto the Board as and when appropriate. Reviews are based oninformation provided by the Manager and industry research onthe level of fees paid to the directors of the Company’s peersand within the investment trust industry generally. Theinvolvement of remuneration consultants has not beendeemed necessary as part of this review. The Company has noChief Executive Officer and no employees and therefore, noconsultation of employees is required and there is noemployee comparative data to provide in relation to the settingof the remuneration policy for Directors.

All of the Directors are non-executive. There are noperformance-related elements to their fees and the Companydoes not operate any type of incentive, share scheme, award or

pension scheme and therefore no Directors receive bonuspayments or pension contributions from the Company or holdoptions to acquire shares in the Company. Directors are notgranted exit payments and are not provided withcompensation for loss of office. No other payments are madeto Directors, other than the reimbursement of reasonableout-of-pocket expenses incurred in attending the Company’sbusiness.

In the year under review, Directors’ fees were paid at thefollowing rates: Chairman £34,500 per annum; Chairman of theAudit and Management Engagement Committee £27,000 perannum; and, the other Directors £23,000 per annum.

With effect from 1st July 2014, fees were increased to thefollowing levels: Chairman £35,000 per annum; Chairman ofthe Audit and Management Engagement Committee £27,500per annum; and, other Directors £23,500 per annum.

The total Directors’ fees of £107,500 (2013: £106,328) were allpaid to Directors and £nil (2013: £nil) paid to third parties formaking available the services of Directors.

No amounts (2013: nil) were paid to third parties for makingavailable the services of Directors.

The Company’s Articles of Association stipulate that aggregatefees must not exceed £150,000 per annum. Any increase in thisthe maximum aggregate amount requires both Board andshareholder approval.

The Company has no Chief Executive Officer and no employeesand therefore there was no consultation of employees, andthere is no employee comparative data to provide, in relationto the setting of the remuneration policy for Directors.

The Company has not sought shareholder views on itsremuneration policy. The Nomination and RemunerationCommittee considers any comments received fromshareholders on remuneration policy on an ongoing basis andwill take account of these views if appropriate.

The Directors do not have service contracts with the Company.The terms and conditions of Directors’ appointments are setout in formal letters of appointment which are available forreview at the Company’s Annual General Meeting and theCompany’s registered office. Details of the Board’s policy ontenure are set out on page 26.

Directors’ Remuneration Report


The Company’s Remuneration policy also applies to newDirectors.

Remuneration Policy Implementation Report

The Directors’ Remuneration Policy Implementation Reportis subject to an annual advisory vote and therefore an ordinaryresolution to approve this report will be put to shareholders atthe forthcoming Annual General Meeting. There have been nochanges to the policy compared with the year ended 30th June2013 and no changes are proposed for the year ending30th June 2015.

At the Annual General Meeting held on 12th November 2013,of votes cast, 99.4% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theremuneration report and 0.6% voted against. Abstentions werereceived from less than 0.1% of the votes cast.

Details of voting on both the Remuneration Policy andRemuneration Policy Implementation Reports from the 2013Annual General Meeting will be given in the annual report forthe year ending 30th June 2015/2014. Thereafter, the reportingwill be annually for the advisory vote on the RemunerationPolicy Implementation Report and triennially for theRemuneration Policy Report.

The law requires the Company’s Auditors to audit certain of thedisclosures provided. Where disclosures have been audited,they are indicated as such. The Auditors’ opinion is includedin the Independent Auditors’ Report on pages 35 and 37.

Details of the implementation of the Company’s remunerationpolicy are given below. No advice from remunerationconsultants was received during the year under review.

Single total figure of remuneration

The single total figure of remuneration for the Board as a wholefor the year ended 30th June 2015/2014 was £107,500. Thesingle total figure of remuneration for each Director is detailedbelow together with the prior year comparative.

Single total figure table1

Total fees2

2014 2013

Simon Davies £34,500 £32,000Jonathan Carey £27,000 £23,610Gay Collins £23,000 £21,000John Rennocks3 n/a £8,718Nigel Wightman £23,000 £21,000

Total £107,500 £106,328

1Audited information. Other subject headings for the single figure table as prescribed byregulations are not included because there is nothing to disclose in relation thereto.

2Directors’ remuneration comprises an annual fee only. Directors are also reimbursed forout of pocket expenses incurred in attending the Company’s business.

3Resigned as a Director on 6th November 2012.

Directors’ Shareholdings1

There are no requirements pursuant to the Company’s Articlesof Association for the Directors to own shares in the Company.The Directors’ beneficial shareholdings are detailed below.

2014 2013Number of Number of

Directors’ Name shares held shares held

Ordinary sharesSimon Davies 33,600 28,000Jonathan Carey 3,300 3,000Gay Collins 2,337 1,948Nigel Wightman 3,000 2,500

Subscription sharesSimon Davies — 5,600Jonathan Carey — 300Gay Collins — 389Nigel Wightman — 500

1Audited information.

As at the latest practicable date before the publication of thisdocument, there have been no changes to the Directors’shareholdings.

Governance continuedDirectors’ Remuneration Report continued


The Directors have no other share interests or share options inthe Company and no share schemes are available.

In accordance with the Companies Act 2006, a graph showingthe Company’s share price total return compared with itsbenchmark, the MSCI AC World Index expressed in sterlingterms over the last five years, is shown below. The Boardbelieves that this index is the most representative comparatorfor the Company, because the Company’s investment universeis defined at the time of purchase by the countries of theconstituents of the MSCI AC World Index.

Five Year Share Price and Benchmark TotalReturn Performance to 30th June 2014


Share Price total return.

Benchmark.

A table showing the total remuneration for the Chairman overthe five years ended 30th June 2014 is below:

Remuneration for the Chairman over the five years ended 30th June 2014

Performance related benefits received as a

Year ended percentage of 30th June Fees maximum payable1

2014 £34,500 n/a2013 £32,000 n/a2012 £32,000 n/a2011 £28,500 n/a2010 £32,000 n/a

1In respect of one year period and periods of more than one year.

A table showing actual expenditure by the Company onremuneration and distributions to shareholders for the yearand the prior year is below:

Expenditure by the Company on remuneration and distributions toshareholders

Year ended 30th June

2014 2013

Remuneration paid to all Directors £107,500 £106,328

Distribution to shareholders— by way of dividend £3,551,000 £3,285,000— by way of share repurchases £4,553,000 £14,974,000

For and on behalf of the Board Simon Davies Chairman

26th September 2014100

125

150

175

200

225

201420132012201120102009


The Directors are responsible for preparing the annual reportand the accounts in accordance with applicable law andregulations.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law, the Directorshave elected to prepare the financial statements in accordancewith United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards and applicable law).Under Company law the Directors must not approve thefinancial statements unless they are satisfied that, taken asa whole, the annual report and accounts are fair, balanced andunderstandable, provide the information necessary forshareholders to assess the Company’s performance, businessmodel and strategy and that they give a true and fair view ofthe state of affairs of the Company and of the total return orloss of the Company for that period. In order to provide theseconfirmations, and in preparing these financial statements, theDirectors are required to:

• select suitable accounting policies and then apply themconsistently;

• make judgements and estimates that are reasonable andprudent;

• state whether applicable UK Accounting Standards havebeen followed, subject to any material departures disclosedand explained in the financial statements; and

• prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Company willcontinue in business.

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at anytime the financial position of the Company and to enablethem to ensure that the financial statements comply with theCompanies Act 2006. They are also responsible forsafeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of fraudand other irregularities.

The accounts are published on the www.jpmoverseas.co.ukwebsite, which is maintained by the Company’s Manager.Themaintenance and integrity of the website maintained bythe Manager is, so far as it relates to the Company, theresponsibility of the Manager. The work carried out by theauditors does not involve consideration of the maintenanceand integrity of this website and, accordingly, the auditoraccepts no responsibility for any changes that have occurred tothe accounts since they were initially presented on the website.The accounts are prepared in accordance with UK legislation,which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are alsoresponsible for preparing a Directors’ Report, StrategicReport and Directors’ Remuneration Report that comply withthat law and those regulations.

Each of the Directors, whose names and functions are listed onpages 21 and 22 confirm that, to the best of their knowledge:

• the financial statements, which have been prepared inaccordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom AccountingStandards and applicable law), give a true and fair view ofthe assets, liabilities, financial position and return or loss ofthe Company; and

• the Strategic Report includes a fair review of thedevelopment and performance of the business and theposition of the Company, together with a description ofthe principal risks and uncertainties that it faces.

The Board confirms that it is satisfied that the annual reportand accounts taken as a whole are fair, balanced andunderstandable and provide the information necessary forshareholders to assess the strategy and business model of theCompany.

For and on behalf of the Board Simon Davies Chairman

26th September 2014

Governance continuedStatement of Directors’ Responsibilities


To the members of JPMorgan Overseas Investment Trust plc

Report on the financial statements

Our opinionIn our opinion the financial statements, defined below:

• give a true and fair view of the state of the Company’saffairs as at 30th June 2014 and of its net return and cashflows for the year then ended;

• have been properly prepared in accordance with UnitedKingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirementsof the Companies Act 2006.

This opinion is to be read in the context of what we say in theremainder of this report.

What we have auditedThe financial statements, which are prepared by JPMorganOverseas Investment Trust plc (the ‘Company’), comprise:

• the balance sheet as at 30th June 2014;

• the income statement for the year then ended;

• the reconciliation of movements in shareholders’ funds andthe cash flow statement for the year then ended; and

• the notes to the financial statements, which include asummary of significant accounting policies and otherexplanatory information.

The financial reporting framework that has been applied intheir preparation comprises applicable law and UnitedKingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice).

What an audit of financial statements involves We conducted our audit in accordance with InternationalStandards on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’).An audit involves obtaining evidence about the amounts anddisclosures in the financial statements sufficient to givereasonable assurance that the financial statements are freefrom material misstatement, whether caused by fraud or error.This includes an assessment of:

• whether the accounting policies are appropriate to theCompany’s circumstances and have been consistentlyapplied and adequately disclosed;

• the reasonableness of significant accounting estimatesmade by the Directors; and

• the overall presentation of the financial statements.

In addition, we read all the financial and non-financialinformation in the Annual Report & Accounts (the ‘AnnualReport’) to identify material inconsistencies with the auditedfinancial statements and to identify any information that isapparently materially incorrect based on, or materiallyinconsistent with, the knowledge acquired by us in the courseof performing the audit. If we become aware of any apparentmaterial misstatements or inconsistencies we consider theimplications for our report.

Overview of our audit approachMaterialityWe set certain thresholds for materiality. These helped usto determine the nature, timing and extent of our auditprocedures and to evaluate the effect of misstatements, bothindividually and on the financial statements as a whole.

Based on our professional judgement, we determined anoverall materiality for the financial statements as a whole of£2,400,000 which is approximately 1% of Net Assets. We havebased our materiality on net assets as we believe this is anappropriate and consistent benchmark for our audit.

We agreed with the Audit Committee that we would reportto them misstatements identified during our audit above£120,000 as well as misstatements below that amount that,in our view, warranted reporting for qualitative reasons.

Overview of the scope of our auditThe Company is a standalone Investment Trust Company whichwas managed during the year by an independent investmentmanager, JPM Asset Management Limited (the ‘InvestmentManager’).

The financial statements, which remain the responsibility of theDirectors, were prepared on their behalf by the InvestmentManager. The Investment Manager, with the consent of theDirectors, delegated the provision of certain administrativefunctions to JPMorgan Chase & Co., Investor Services (the‘Company Administrator’).

In establishing the overall approach to our audit we assessedthe risks of material misstatement, taking into account thenature, likelihood and potential magnitude of anymisstatement. As part of our risk assessment, we considered

Independent Auditors’ Report


the Company’s interaction with the Investment Manager andCompany Administrator, and we assessed the controlenvironment in place at both organisations to the extentrelevant to our audit of the Company.

Following this assessment, we applied professional judgementto determine the extent of testing required over each item inthe financial statements.

Areas of particular audit focusIn our audit, we tested and examined information, usingsampling and other auditing techniques, to the extent weconsidered necessary to provide a reasonable basis for us todraw conclusions. We obtained audit evidence through testingthe effectiveness of controls, substantive procedures or acombination of both.

We considered the following areas to be those that requiredparticular focus in the current year. This is not a complete list ofall risks or areas of focus identified by our audit.

We discussed these areas of focus with the Audit Committee.Their report on those matters that they considered to besignificant issues in relation to the financial statements is setout on page 27.

How the scope of our audit addressed Area of focus the area of focus

The investment portfolio compriseslisted equity investments.

We tested the valuation of theinvestment portfolio by agreeing thevaluation of investments toindependent third party sources.

We tested the existence of theinvestment portfolio by agreeing100% of the holdings to a confirmationobtained from the independentcustodian.

We performed procedures to testwhether the performance feecalculation was in line with the termsincluded in the Investment ManagementAgreement and agreed the inputs of thecalculation, including the benchmarkdata, to independent third partysources, where applicable.

How the scope of our audit addressed Area of focus the area of focus

We tested journal entries to determinewhether adjustments were supportedby evidence and were appropriatelyauthorised.ence and wereappropriately authorised.

We also built an element of‘unpredictability’ into our detailedtesting.

Going ConcernUnder the Listing Rules we are required to review the Directors’statement, set out on page 23, in relation to going concern. Wehave nothing to report having performed our review.

As noted in the Directors’ statement the Directors haveconcluded that it is appropriate to prepare the financialstatements using the going concern basis of accounting. Thegoing concern basis presumes that the Company has adequateresources to remain in operation, and that the Directors intendit to do so, for at least one year from the date the financialstatements were signed. As part of our audit we haveconcluded that the Directors’ use of the going concern basis isappropriate.

However, because not all future events or conditions can bepredicted, these statements are not a guarantee as to theCompany’s ability to continue as a going concern.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion:

• the information given in the Strategic Report and theDirectors’ Report for the financial year for which thefinancial statements are prepared is consistent with thefinancial statements; and

• the part of the Directors’ Remuneration Report to beaudited has been properly prepared in accordance with theCompanies Act 2006.

Other matters on which we are required to report by exception

Adequacy of accounting records and information and explanationsreceivedUnder the Companies Act 2006 we are required to report toyou if, in our opinion:

Valuation and existenceof investments

We focused on thisarea becauseinvestments representthe principal elementof the financialstatements.

Performance fee

We focused on thisarea because theperformance fee iscalculated using acomplex methodology.

Risk of managementoverride of internalcontrols

ISAs (UK & Ireland)require that weconsider managementoverride of controls.

Independent Auditors’ Reportcontinued


• we have not received all the information and explanationswe require for our audit; or

• adequate accounting records have not been kept, orreturns adequate for our audit have not been received frombranches not visited by us; or

• the financial statements and the part of the Directors’Remuneration Report to be audited are not in agreementwith the accounting records and returns.

We have no exceptions to report arising from thisresponsibility.

Directors’ remunerationUnder the Companies Act 2006 we are required to report if, inour opinion, certain disclosures of Directors’ remunerationspecified by law have not been made. We have no exceptionsto report arising from this responsibility.

Corporate Governance StatementUnder the Listing Rules we are required to review the part ofthe Corporate Governance Statement relating to theCompany’s compliance with nine provisions of the UKCorporate Governance Code (‘the Code’). We have nothing toreport having performed our review.

On pages 27 to 28 of the Annual Report, as required by theCode Provision C.1.1, the Directors state that they consider theAnnual Report taken as a whole to be fair, balanced andunderstandable and provides the information necessary formembers to assess the Company’s performance, businessmodel and strategy. On page 27, as required by C.3.8 of theCode, the Audit Committee has set out the significant issuesthat it considered in relation to the financial statements, andhow they were addressed. Under ISAs (UK & Ireland) we arerequired to report to you if, in our opinion:

• the statement given by the Directors is materiallyinconsistent with our knowledge of the Company acquiredin the course of performing our audit; or

• the section of the Annual Report describing the work of theAudit Committee does not appropriately address matterscommunicated by us to the Audit Committee.


Other information in the Annual ReportUnder ISAs (UK & Ireland), we are required to report to you if, inour opinion, information in the Annual Report is:

• materially inconsistent with the information in the auditedfinancial statements; or

• apparently materially incorrect based on, or materiallyinconsistent with, our knowledge of the Company acquiredin the course of performing our audit; or

• is otherwise misleading.


Responsibilities for the financial statements and the audit

Our responsibilities and those of the Directors As explained more fully in the Statement of Directors’Responsibilities set out on page 34, the Directors areresponsible for the preparation of the financial statements andfor being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on thefinancial statements in accordance with applicable law andISAs (UK & Ireland). Those standards require us to comply withthe Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for andonly for the Company’s members as a body in accordance withChapter 3 of Part 16 of the Companies Act 2006 and for noother purpose. We do not, in giving these opinions, accept orassume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands itmay come save where expressly agreed by our prior consentin writing.

Jeremy Jensen (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondon

26th September 2014


2014 2013Revenue Capital Total Revenue Capital Total

Notes £’000 £’000 £’000 £’000 £’000 £’000

Gains on investments held at fairvalue through profit or loss 2 — 31,243 31,243 — 37,692 37,692

Net foreign currency losses — (1,609) (1,609) — (1,421) (1,421)Income from investments 3 4,405 — 4,405 5,329 — 5,329Other interest receivable and similar income 3 73 — 73 179 — 179

Gross return 4,478 29,634 34,112 5,508 36,271 41,779Management fee 4 (499) (499) (998) (440) (440) (880)Performance fee – (charge)/writeback 4 — (1,791) (1,791) — 26 26Other administrative expenses 5 (497) — (497) (491) — (491)

Net return on ordinary activities before finance costs and taxation 3,482 27,344 30,826 4,577 35,857 40,434

Finance costs 6 (212) (212) (424) (169) (169) (338)

Net return on ordinary activities before taxation 3,270 27,132 30,402 4,408 35,688 40,096

Taxation 7 (355) — (355) (398) — (398)

Net return on ordinary activities after taxation 2,915 27,132 30,047 4,010 35,688 39,698

Return per share – undiluted 9 12.41p 115.55p 127.96p 16.56p 147.39p 163.95pReturn per share – diluted 9 12.41p 115.55p 127.96p 16.56p 147.39p 163.95p

Details of the proposed dividend are given in note 8 on page 47.

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

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columnsrepresent supplementary information prepared under guidance issued by the Association of Investment Companies. The Totalcolumn represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses(‘STRGL’). For this reason a STRGL has not been presented.

The notes on pages 42 to 63 form an integral part of these accounts.

Financial StatementsIncome Statementfor the year ended 30th June 2014


Called up Share Capitalshare premium redemption Capital Revenue

capital account reserve reserves reserve Total£’000 £’000 £’000 £’000 £’000 £’000

At 30th June 2012 6,544 1,015 27,401 147,241 17,738 199,939Repurchase of shares into Treasury — — — (14,974) — (14,974)Bonus issue of Subscription shares 48 (48) — — — —Subscription shares issue costs — (233) — — — (233)Net return on ordinary activities — — — 35,688 4,010 39,698Dividends appropriated in the year — — — — (3,285) (3,285)

At 30th June 2013 6,592 734 27,401 167,955 18,463 221,145Repurchase of shares into Treasury — — — (4,553) — (4,553)Exercise of Subscription shares into

Ordinary shares (3) 3 — — — —Issue of Ordinary shares on exercise

of Subscription shares 71 2,476 — — — 2,547Net return on ordinary activities — — — 27,132 2,915 30,047Dividends appropriated in the year — — — — (3,551) (3,551)

At 30th June 2014 6,660 3,213 27,401 190,534 17,827 245,635


Reconciliation of Movement in Shareholders’ Funds


2014 2013Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 265,685 240,016Investment in liquidity fund held at fair value through profit or loss — 3,000

Total investments 10 265,685 243,016

Current assetsFinancial assets: Derivative financial instruments 11 1,361 938Debtors 12 1,639 2,443Cash and short term deposits 13 2,568 1,966

5,568 5,347

Creditors: amounts falling due within one year 14 (23,340) (5,504)Financial liabilities: Derivative financial instruments 15 (735) (1,455)

Net current liabilities (18,507) (1,612)

Total assets less current liabilities 247,178 241,404

Creditors: amounts falling due after more than one year 16 (200) (20,200)

Provisions for liabilities and charges

Performance fee payable 17 (1,343) (59)

Net assets 245,635 221,145

Capital and reserves Called up share capital 18 6,660 6,592Share premium account 19 3,213 734Capital redemption reserve 19 27,401 27,401Capital reserves 19 190,534 167,955Revenue reserve 19 17,827 18,463

Total equity shareholders’ funds 245,635 221,145

Net asset value per share – undiluted 20 1,054.9p 941.4pNet asset value per share – diluted 20 1,036.7p 934.4p

The accounts on pages 38 to 63 were approved and authorised for issue by the Board of Directors on 26th September 2014 andwere signed on their behalf by:

Nigel WightmanDirector


Company registration number: 24299.

Financial Statements continuedBalance Sheetat 30th June 2014


2014 2013Notes £’000 £’000

Net cash inflow from operating activities 21 2,545 3,510

Returns on investments and servicing of finance Interest paid (422) (352)

Net cash outflow from returns on investments and servicing of finance (422) (352)

Taxation Taxation recovered 115 40

Capital expenditure and financial investment Purchases of investments (164,561) (205,163)Sales of investments 171,763 200,967Other capital charges (15) (16)

Net cash inflow/(outflow) from capital expenditure and financial investment 7,187 (4,212)

Dividend paid (3,551) (3,285)

Net cash inflow/(outflow) before financing 5,874 (4,299)

Financing Issue of Ordinary shares on exercise of Subscription shares 2,547 —Repurchase of shares into Treasury (5,068) (14,954)Subscription share issue expenses — (233)Drawdown of bank loan — 20,000

Net cash (outflow)/inflow from financing (2,521) 4,813

Increase in cash for the year 22 3,353 514


Cash Flow Statementfor the year ended 30th June 2014


1. Accounting policies

(a) Basis of accountingThe accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted AccountingPractice (‘UK GAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companiesand Venture Capital Trusts’ (the ‘SORP’) issued by the Association of Investment Companies in January 2009.

All of the Company’s operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention as modified by therevaluation of investments and derivative financial instruments at fair value through profit or loss.

The policies applied in these accounts are consistent with those applied in the preceding year.

(b) Valuation of investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of incomeand capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, inaccordance with a documented investment strategy and information is provided internally on that basis to the Company’sBoard of Directors. Accordingly, upon initial recognition the investments are designated by the Company ‘as held at fair valuethrough profit or loss’. They are included initially at fair value which is taken to be their cost. Subsequently the investments arevalued at fair value which are quoted bid market prices for investments traded in active markets. For investments which arenot traded in active markets, unlisted and restricted investments, the Board takes into account the latest traded prices, otherobservable market data and asset values based on the latest management accounts.

(c) Accounting for reservesGains and losses on sales of investments including the related foreign exchange gains and losses, realised gains and losses onforeign currency, management fee and finance costs allocated to capital and any other capital charges, are included in theIncome Statement and dealt with in capital reserves within ‘Gains and losses on sales of investments’. Increases and decreasesin the valuation of investments held at the year end including the related foreign exchange gains and losses, are included inthe Income Statement and dealt with in capital reserves within ‘Investment holding gains and losses’. Unrealised gains andlosses on foreign currency contracts are included in the Income Statement and dealt with in capital reserves within‘Investment holding gains and losses’.

All purchases and sales are accounted for on a trade date basis.

(d) IncomeDividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of theBoard, the dividend is capital in nature, in which case it is included in capital.

UK dividends are included net of tax credits. Overseas dividends are included gross of any withholding tax.

Overseas dividends are included gross of any withholding tax.

Special dividends are recognised on an ex-dividend basis and are treated as a capital or an income item depending on thefacts and circumstances of each dividend.

Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount ofthe cash dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of thecash dividend is recognised in capital.

Interest receivable is taken to revenue on an accruals basis.

Stock lending income is taken to revenue on a receipts basis.

Financial Statements continuedNotes to the Accountsfor the year ended 30th June 2014


(e) ExpensesAll expenses are accounted for on an accruals basis. Expenses are allocated wholly to revenue with the following exceptions:

– performance fee is allocated 100% to capital;

– management fee is allocated 50% to revenue and 50% to capital in line with the Board’s expected long term split ofrevenue and capital return from the Company’s investment portfolio;

– expenses incidental to the purchase of an investment are included within the cost of the investment and those incidentalto the sale are deducted from the sales proceeds. These expenses are commonly referred to as transaction costs andinclude items such as stamp duty and brokerage commissions. Details of transaction costs are given in note 10 on page 49.

(f) Finance costsFinance costs are accounted for on an accruals basis using the effective interest rate method in accordance with the provisionsof FRS 25: ‘Financial Instruments: Presentation’ and FRS 26: ‘ Financial Instruments: Measurement’.

Finance costs are allocated 50% to revenue and 50% to capital in line with the Board’s expected long term split of revenueand capital return from the Company’s investment portfolio.

(g) Financial instrumentsCash and short term deposits may comprise cash and demand deposits which are readily convertible to a known amount ofcash and are subject to insignificant risk of changes in value.

Other debtors and creditors do not carry any interest, are short term in nature and are accordingly stated at nominal value asreduced by appropriate allowances for estimated irrecoverable amounts.

Interest bearing bank loans, overdrafts and debenture issues are recorded at the proceeds received net of direct issue costs.Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on anaccruals basis in profit or loss using the effective interest rate method.

Derivative financial instruments, including short term forward currency contracts, are valued at fair value, which is the netunrealised gain or loss, and are included in current assets or current liabilities in the balance sheet in accordance with FRS 26:‘Financial Instruments: Measurement’.

(h) Foreign currencyIn accordance with FRS 23: ‘The effects of changes in Foreign Currency Exchange Rates’, the Company is required to nominatea functional currency, being the currency in which the Company predominantly operates. The Board, having regard to thecurrency of the Company’s share capital and the predominant currency in which its shareholders operate, has determined thatsterling is the functional currency. Sterling is also the currency in which the accounts are presented.

Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction or, inthe case of forward currency contracts, at contractual rates. Monetary assets and liabilities denominated in foreign currenciesat the year end are translated at the rates of exchange prevailing at the year end, or at the related forward currency contractrate.

Any gain or loss on monetary assets arising from a change in exchange rates subsequent to the date of a transaction isincluded as an exchange gain or loss in revenue or capital, depending on whether the gain or loss is of a revenue or capitalnature.


1. Accounting policies continued(i) Taxation

Current tax is provided at the amounts expected to be received or paid.

Deferred taxation is provided on all timing differences that have originated but not reversed by the balance sheet date.Deferred taxation liabilities are recognised for all taxable timing differences but deferred taxation assets are only recognisedto the extent that it is more likely than not that taxable profits will be available against which those timing differences can beutilised.

Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expectedto reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured onan undiscounted basis.

(j) Dividends payableIn accordance with FRS 21: ‘Events after the Balance Sheet Date’, dividends are included in the accounts in the year in whichthey are approved by shareholders.

(k) Value Added Tax (VAT)Irrecoverable VAT is included in the expense on which it has been suffered. VAT recoverable is calculated using the partialexemption method based on the proportion of zero rated supplies to total supplies.

(l) Performance feeAny performance fee falling due for payment immediately is included in ‘Creditors: amounts falling due within one year’.Amounts which are carried forward for payment in future years but are subject to reduction by any future underperformanceare included in ‘Provisions for liabilities and charges’, and dealt with in ‘Capital reserve – unrealised’.

(m)Accounting for shares held in TreasuryThe cost of repurchasing shares into Treasury, including the related stamp duty and transaction costs is charged to capitalreserves and dealt with in the Reconciliation of Movements in Shareholders’ Funds. Share repurchase transactions areaccounted for on a trade date basis. Where shares held in Treasury are subsequently cancelled, the nominal value of thoseshares is transferred out of called up share capital and into capital redemption reserve.

Should shares held in Treasury be reissued, the sales proceeds will be treated as a realised profit up to the amount of thepurchase price of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchaseprice will be transferred to share premium.

2014 2013£’000 £’000

2. Gains on investments held at fair value through profit or loss Gains on sales of investments held at fair value through profit or loss based

on historical cost 23,906 16,963Amounts recognised in investment holding gains and losses in the previous year

in respect of investments sold during the year (15,829) (7,697)

Gains on sales of investments based on the carrying value at the previous balancesheet date 8,077 9,266

Net movement in investment holding gains 23,176 28,439Other capital charges (10) (13)

Total capital gains on investments held at fair value through profit or loss 31,243 37,692

Financial Statements continuedNotes to the Accounts continued


2014 2013£’000 £’000

3. Income UK dividends 645 961Overseas dividends 3,726 4,309Dividends from liquidity fund 6 8Scrip dividends 28 51

4,405 5,329

Other interest receivable and similar incomeStock lending fees 73 179

Total income 4,478 5,508

2014 2013Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

4. Management and performance fee Management fee 499 499 998 440 440 880Performance fee – charge/(writeback) — 1,791 1,791 — (26) (26)

499 2,290 2,789 440 414 854

Details of the management fee and performance fee are given in the Directors’ Report on page 23.

2014 2013£’000 £’000

5. Other administrative expensesOther administration expenses 249 255Directors’ fees1 108 106Savings scheme costs2 110 99Auditors’ remuneration for audit services3 30 31

497 491

1Full disclosure is given in the Directors’ Remuneration Report on page 32.2Paid to the Manager for themarketing and administration of savings scheme products and includes £18,000 irrecoverable VAT.3Includes £3,000 (2013: £3,000) irrecoverable VAT.


6. Finance costs Interest on bank loans and overdrafts 205 205 410 167 167 334Debenture interest 7 7 14 2 2 4

212 212 424 169 169 338


7. Taxation (a) Analysis of tax charge for the year


Overseas withholding tax 355 — 355 398 — 398

Current tax charge for the year 355 — 355 398 — 398

(b) Factors affecting current tax charge for the yearThe tax assessed for the year is lower (2013: lower) than the UK corporation tax rate chargeable for the year of 22.5%(2013: 23.75%). The factors affecting the current tax charge for the year are as follows:


Net return on ordinary activities before taxation 3,270 27,132 30,402 4,408 35,688 40,096

Net return on ordinary activities before taxation multiplied by the applicable rate of corporation tax at 22.5% (2013: 23.75%) 736 6,105 6,841 1,047 8,476 9,523

Effects of:Non taxable capital losses — (6,668) (6,668) — (8,615) (8,615)Non taxable UK dividends (145) — (145) (228) — (228)Non taxable overseas dividends (828) — (828) (967) — (967)Non taxable scrip dividends (6) — (6) (12) — (12)Tax attributable to expenses and finance costs

charged to capital (563) 563 — (139) 139 —Overseas withholding tax 355 — 355 398 — 398Income taxed in different years 2 — 2 — — —Unutilised expenses carried forward to future periods 804 — 804 299 — 299

Current tax charge for the year 355 — 355 398 — 398

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £3,651,000 (2013: £3,376,000) based on a prospective corporation taxrate of 20% (2013: 23%). The reduction in the standard rate of corporation tax was substantively enacted on 2nd July 2013 and iseffective from 1st April 2014. The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxableincome. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable futureand therefore no asset has been recognised in the accounts.

Given the Company’s status as an Investment Trust Company and the intention to continue meeting the conditions requiredto obtain approval, the Company has not provided deferred tax on any capital gains or losses arising on the revaluation ordisposal of investments.



8. Dividends(a) Dividends paid and proposed

2014 2013£’000 £’000

Dividend paidUnclaimed dividends refunded to the Company (5) (4)2013 final dividend of 15.0p (2012: 13.5p) 3,556 3,289

Total dividends paid in the year 3,551 3,285

Dividend proposed2014 final dividend proposed of 15.0p (2013: 15.0p) 3,493 3,524

For the year ended 30th June 2013, the Company declared a dividend of £3,524,000 but the final dividend paid amounted to£3,556,000 due to issue of Ordinary shares on exercise of Subscription shares after the balance sheet date but prior to theshare register record date.

The final dividend proposed in respect of the year ended 30th June 2014 is subject to approval at the forthcoming AnnualGeneral Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts forthe year ending 30th June 2015.

(b) Dividend for the purposes of Section 1158 of the Corporation TaxAct 2010 (‘Section 1158’)The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, as follows:

2014 2013£’000 £’000

Final dividend payable of 15.0p (2013: 15.0p) 3,493 3,524

Total dividends for Section 1158 purposes 3,493 3,524

The revenue available for distribution by way of dividend for the year is £2,915,000 (2013: £4,010,000).


2014 2013£’000 £’000

9. Return per shareRevenue return 2,915 4,010Capital return 27,132 35,688

Total return 30,047 39,698

Weighted average number of Ordinary shares in issue during the period used for the purpose of the undiluted calculation 23,480,245 24,212,969

Weighted average number of Ordinary shares in issue during the period used for the purpose of the diluted calculation 23,480,245 24,212,969

UndilutedRevenue return per share 12.41p 16.56pCapital return per share 115.55p 147.39p

Total return 127.96p 163.95p

DilutedRevenue return per share 12.41p 16.56pCapital return per share 115.55p 147.39p

Total return 127.96p 163.95p

On 15th January 2013, the Company issued Subscription shares as a bonus issue to Ordinary shareholders as detailed on page67. Accordingly, we disclose above the diluted returns per Ordinary share in addition to the undiluted returns per Ordinaryshare.

The diluted return per Ordinary share represents the return on ordinary activities after taxation divided by the weightedaverage number of Ordinary shares in issue during the year as adjusted in accordance with the requirements of FinancialReporting Standard 22 ‘Earnings per share’.



2014 2013£’000 £’000

10. Investments Investments listed on a recognised stock exchange1 265,685 243,016

Opening book cost 202,593 179,293Opening investment holding gains 40,423 19,681

Opening valuation 243,016 198,974

Movements in the year:Purchases at cost 162,445 208,535Sales – proceeds (171,029) (202,198)Gains on sales based on the carrying value at the previous balance sheet date 8,077 9,266Net movement in investment holding gains and losses 23,176 28,439

265,685 243,016

Closing book cost 217,915 202,593Closing investment holding gains 47,770 40,423

Total investments held at fair value 265,685 243,016

12013 figure includes the investment in the JPM Sterling Liquidity Fund.

Transaction costs on purchases during the year amounted to £185,000 (2013: £255,000) and on sales during the yearamounted to £91,000 (2013: £149,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £15,829,000 have been transferred to gains on sales ofinvestments, as disclosed in note 19.

Subsidiary companyThe Company owned the whole of the issued share capital of Foss Securities Limited, which did not trade, and was dissolvedon 5th November 2013.

2014 2013£’000 £’000

11. Financial assets: Derivative financial instrumentsForward foreign currency contracts 1,361 938


2014 2013£’000 £’000

12. DebtorsSecurities sold awaiting settlement 1,328 2,062Overseas withholding tax recoverable 66 99Dividends and interest receivable 215 218Other debtors 30 64

1,639 2,443

The Directors consider that the carrying amount of debtors approximates to their fair value.

13. Cash and short term depositsCash and short term deposits comprises bank balances and short term deposits. The carrying amount of these representstheir fair value. Cash balances in excess of a predetermined amount are placed on short term deposit at market rates ofinterest.

2014 2013£’000 £’000

14. Creditors: amounts falling due within one year Securities purchased awaiting settlement 2,662 4,806Bank loans 20,000 —Repurchase of shares into Treasury awaiting settlement — 515Performance fee payable 507 —Other creditors and accruals 171 183

23,340 5,504

The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.

2014 2013£’000 £’000

15. Financial liabilities: Derivative financial instrumentsForward foreign currency contracts 735 1,455

2014 2013£’000 £’000

16. Creditors: amounts falling due after more than one year Bank loan — 20,000Falling due after more than five years:£200,000 41⁄2% perpetual debenture stock 200 200

200 20,200

The bank loan is unsecured. Further details of the loan facility are given in note 26(a) (ii) on page 59.

The debenture is secured by a floating charge over the assets of the Company.



2014 2013£’000 £’000

17. Provisions for liabilities and charges Performance fee1

Opening balance 59 64Performance fee for the year – charge/(writeback) 1,791 (5)Amount payable at the year end (507) —

Closing balance 1,343 59

1Further details of the performance fee are given in the Director’s Report on page 23.

2014 2013£’000 £’000

18. Called up share capital Allotted and fully paidOpening balance of 23,491,110 (2013: 25,389,017) shares of 25p each,

excluding shares held in Treasury 5,873 6,348Repurchase of 489,215 (2013: 1,897,907) shares into Treasury (122) (475)Issue of 282,707 (2013: nil) Ordinary shares on exercise of Subscription shares 71 —

Sub total 5,822 5,8733,172,803 (2013: 2,683,588) shares held in Treasury 793 671

Closing balance1 6,615 6,544

Subscription shares – allotted and fully paidIssue of 4,806,402 Subscription shares following the Placing and Offer for Subscription 48 48Conversion of 282,707 (2013: nil) shares into Ordinary shares (3) —

Closing balance2 45 48

Total called up share capital 6,660 6,592

1Represented by 26,457,405 (2013: 26,174,698) shares including 3,172,803 (2013: 2,683,588) shares held in Treasury.2Comprises 4,523,695 (2013: 4,806,402) Subscription shares of 0.01p each. The Subscription shares were issued as a bonus issue to the Ordinary shareholders on 11th January2013 on the basis of one Subscription share for every five Ordinary shares held. Each Subscription share confers the right but not the obligation to subscribe for one Ordinaryshare upon exercise of the Subscription share rights and on the payment of the Subscription price as set out below.

(a) if exercised on 31 October 2013 – 900 pence per share.

(b) if exercised on 30 April 2014 or 31 October 2014 – 943 pence per share.

(c) if exercised on 30 April 2014 or 30 October 2015 – 986 pence per share.

During the year 489,215 Ordinary shares were repurchased into Treasury for a total consideration of £4,553,000.

The reason for the repurchase was to seek to manage the volatility and absolute level of the share price discount to net assetvalue per share.


Capital reservesGains and Holding

Called up Capital losses on gains and Capitalshare Share redemption sales of losses on reserve – Revenuecapital premium reserve investments investments unrealised reserve Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

19. Reserves Opening balance 6,592 734 27,401 128,108 40,423 (576) 18,463 221,145 Net losses on foreign currency transactions — — — (2,231) — — — (2,231)Unrealised gains on foreign currency contracts — — — — — 622 — 622 Unrealised gains on forward foreign currency

contracts from prior period now realised — — — (517) — 517 — —Repurchase of shares into Treasury — — — (4,553) — — — (4,553)Conversion of Subscription shares into Ordinary shares (3) 3 — — — — — —Issue of Ordinary shares on exercise of Subscription

shares 71 2,476 — — — — — 2,547Management fee charged to capital — — — (499) — — — (499)Finance costs charged to capital — — — (212) — — — (212)Gain on sales of investments based on the carrying

value at the previous balance sheet date — — — 8,077 — — — 8,077 Net movement in investment holding gains and losses — — — — 23,176 — — 23,176 Transfer on disposal of investments — — — 15,829 (15,829) — — —Other capital charges — — — (10) — — — (10)Performance fee for the year — — — — — (1,791) — (1,791)Performance fee now realised — — — (507) — 507 — —Dividends appropriated in the year — — — — — — (3,551) (3,551)Retained revenue for the year — — — — — — 2,915 2,915

Closing balance 6,660 3,213 27,401 143,485 47,770 (721) 17,827 245,635

2014 2013

20. Net asset value per share UndilutedOrdinary shareholders’ funds (£’000) 245,635 221,145Number of Ordinary shares in issue 23,284,602 23,491,110Net asset value per Ordinary share (pence) 1,054.9 941.4

DilutedOrdinary shareholders funds assuming exercise of Subscription shares (£’000) 288,293 264,402Number of potential Ordinary shares in issue 27,808,297 28,297,512Net asset value per Ordinary share (pence) 1,036.7 934.4



2014 2013£’000 £’000

21. Reconciliation of net return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

Net return on ordinary activities before finance costs and taxation 30,826 40,434Less capital return before finance costs and taxation (27,344) (35,857)Scrip dividends received as income (28) (51)Decrease/(increase) in dividends and interest receivable 3 (22)Decrease in other debtors 34 —(Decrease)/increase in accrued expenses (11) 7Overseas withholding tax (436) (457)Management fee charged to capital (499) (440)Performance fee paid — (104)

Net cash inflow from operating activities 2,545 3,510

At At30th June Exchange 30th June

2013 Cash flow movements 2014£’000 £’000 £’000 £’000

22. Analysis of changes in net debtCash and short term deposits 1,966 3,353 (2,751) 2,568 Bank loan falling due within one year — (20,000) — (20,000)Bank loan falling due after one year

but not more than five years (20,000) 20,000 — —Debenture falling due after more than five years (200) — — (200)

Net (debt)/funds (18,234) 3,353 (2,751) (17,632)

23. Contingent liabilities and capital commitments

There were no (2013: nil) contingent liabilities or capital commitments at the balance sheet date.


24. Transactions with the Manager and affiliates of the Manager

Details of the management contract are set out in the Directors’ Report on page 23. The terms make allowance for the exclusionof management charges on investments held in funds on which the Manager earns a separate management fee. The fee payableto JPMAM for the year was £998,000 (2013: £880,000) of which £nil (2013: £nil) was outstanding at the year end.

A performance fee of £1,791,000 (2013: £5,000 writeback) is applicable for the year and £507,000 (2013: £nil) is immediatelypayable. An amount of £1,343,000 (2013: £59,000) is carried forward and will either be paid or absorbed byunderperformance in subsequent years.

Expenses amounting to £110,000 (2013: £99,000) were payable to the Manager for the marketing and administration of itssavings scheme of which £8,000 (2013: £8,000) was outstanding at the year end.

Included in other administration expenses in note 5 on page 45 are safe custody fees payable to JPMorgan Chase amountingto £24,000 (2013: £25,000) of which £4,000 (2013: £7,000) was outstanding at the year end.

JPMAM carries out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’slength. The commission payable to JPMorgan Securities for the year was £4,000 (2013: £5,000) of which £nil (2013: £nil) wasoutstanding at the year end.

Handling charges incurred on dealing transactions amounting to £10,000 (2013: £14,000) were payable to JPMorgan InvestorServices Limited of which £1,000 (2013: £6,000) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 30th June 2014 these were valued at £7.3 million(2013: £7.1 million) and represented 2.7% (2013: 2.9%) of the Company’s investment portfolio. During the year, the Companymade £nil (2013: £nil) purchases of these investments and £nil (2013: £nil) sales. Income amounting to £39,000 (2013: £32,000)was receivable from these investments during the year of which £nil (2013: £nil) was outstanding at the year end.

During the year, the Company made purchases and sales of units in the JPM Sterling Liquidity Fund, which is managed byJPMorgan Asset Management (Lux) Limited and on which no management fees are charged to the Company. At the year end,the Company’s investment in this fund amounted to £nil (2013: £3.0 million) and represented nil (2013: 1.2%) of the Company’sinvestment portfolio. Income amounting to £6,000 (2013: £8,000) was receivable from this investment during the year ofwhich £nil (2013: £nil) was outstanding at the year end.

Fees amounting to £73,000 (2013: £179,000) were receivable from stock lending transactions during the year. JPMorganInvestor Services Limited commissions in respect of such transactions amounted to £15,000 (2013: £38,000).

At the year end, a bank balance of £2,568,000 (2013: £1,966,000) was held with JPMorgan Chase. A net amount of interest of£121 (2013: £321) was receivable by the Company from JPMorgan Chase for the year of which £6 (2013: £nil) was outstanding atthe year end.



25. Disclosures regarding financial instruments measured at fair value

The Company’s financial instruments within the scope of FRS 29 that are held at fair value comprise its investment portfolioand derivative financial instruments comprising forward foreign currency contracts.

The investments are categorised into a hierarchy consisting of the following three levels:

Level 1 – valued using quoted prices in active markets.

Level 2 – valued by reference to valuation techniques using observable inputs other than quoted market prices includedwithin Level 1.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fairvalue measurement of the financial instrument.

Details of the valuation techniques used by the Company are given in note 1(b) on page 42.

The following table sets out the fair value measurements using the FRS 29 hierarchy at 30th June:

2014Level 1 Level 2 Level 3 Total£’000 £’000 £’000 £’000

Financial instruments held at fair value through profit or loss Equity investments 265,685 — — 265,685Liquidity fund — — — —Financial assets: derivative financial instruments — 1,361 — 1,361Financial liabilities: derivative financial instruments — (735) — (735)

Total 265,685 626 — 266,311

2013Level 1 Level 2 Level 3 Total£’000 £’000 £’000 £’000

Financial instruments held at fair value through profit or loss Equity investments 240,016 — — 240,016Liquidity fund 3,000 — — 3,000Financial assets: derivative financial instruments — 938 — 938Financial liabilities: derivative financial instruments — (1,455) — (1,455)

Total 243,016 (517) — 242,499

There have been no transfers between Levels 1, 2 or 3 during the year.


26. Financial instruments’ exposure to risk and risk management policies

As an investment trust, the Company invests in equities and other securities for the long term in order to secure its investmentobjective stated on the ‘Features’ page. In pursuing this objective, the Company is exposed to a variety of risks that couldresult in a reduction in the Company’s net assets or a reduction in the profits available for dividends. These risks includemarket risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Directors’ policyfor managing these risks is set out below. The Company Secretary, in close cooperation with the Board and the Manager,coordinates the Company’s risk management policy.

The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set outbelow, have not changed from those applying in the comparative year.

The Company’s financial instruments may comprise the following:

– investments in equity shares of overseas companies and a sterling liquidity fund which are held in accordance with theCompany’s investment objective;

– short term debtors, creditors and cash arising directly from its operations;

– forward currency contracts which are bought and sold pursuant to the Company’s passive currency hedging strategy;

– short term forward currency contracts for the purpose of settling short term liabilities; and

– a floating rate loan facility with Scotiabank.

(a) Market risk The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in marketprices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. Information to enablean evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, togetherwith sensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks, and thesepolicies have remained unchanged from those applying in the comparative year. The Manager assesses the exposure tomarket risk when making each investment decision and monitors the overall level of market risk on the whole of theinvestment portfolio on an ongoing basis.

(i) Currency risk Certain of the Company’s assets, liabilities and income are denominated in currencies other than sterling, which is theCompany’s functional currency and the currency in which it reports. As a result, movements in exchange rates may affectthe sterling value of those items.

Management of currency risk Since November 2009, the Company has engaged in a passive currency hedging strategy, the aim of which is to eliminatecurrency risk arising from active stock positions in the portfolio relative to the Benchmark. The Company may also useshort term forward currency contracts to manage working capital requirements. Income receivable denominated inforeign currency is converted into sterling on receipt.



Foreign currency exposureThe fair value of the Company’s monetary items that have foreign currency exposure at 30th June are shown below.Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency, they have beenincluded separately in the analysis in order to show the overall level of exposure.

2014Canadian

US$ Euro Yen Dollars Other Total£’000 £’000 £’000 £’000 £’000 £’000

Current assets 46,957 5,417 655 7,323 16,628 76,980 Creditors (25,139) (36,216) (7,284) (4,812) (4,404) (77,855)

Foreign currency exposure on net monetary items 21,818 (30,799) (6,629) 2,511 12,224 (875)Investments held at fair value through profit or loss

that are equities 111,424 56,983 24,972 7,291 18,816 219,486

Total net foreign currency exposure 133,242 26,184 18,343 9,802 31,040 218,611

2013Canadian

US$ Euro Yen Dollars Other Total£’000 £’000 £’000 £’000 £’000 £’000

Current assets 38,041 7,283 2,346 4,739 17,999 70,408Creditors (7,287) (38,397) (6,368) — (16,635) (68,687)

Foreign currency exposure on net monetary items 30,754 (31,114) (4,022) 4,739 1,364 1,721Investments held at fair value through profit or loss

that are equities 92,364 54,467 20,782 3,267 23,898 194,778

Total net foreign currency exposure 123,118 23,353 16,760 8,006 25,262 196,499

The above year end amounts are broadly representative of the exposure to foreign currency risk during the year.

Foreign currency sensitivityThe following tables illustrate the sensitivity of the return after taxation for the year and net assets with regard to theCompany’s monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on theCompany’s monetary currency financial instruments held at each balance sheet date and the income receivable in foreigncurrency and assumes a 10% (2013: 10%) appreciation or depreciation in sterling against the US$, Euro, Yen, CanadianDollars and other currencies to which the Company is exposed, which is considered to be a reasonable illustration basedon the volatility of exchange rates during the year.


26. Financial instruments’ exposure to risk and risk management policies continued

(a) Market risk continued(i) Currency risk continued

Foreign currency sensitivity continuedIf sterling had weakened by 10% this would have had the following effect:

2014 2013£’000 £’000

Income statement return after taxationRevenue return 375 436Capital return (88) 172

Total return after taxation for the year 287 608

Net assets 287 608

Conversely if sterling had strengthened by 10% this would have had the following effect:

2014 2013£’000 £’000

Income statement return after taxationRevenue return (375) (436)Capital return 88 (172)

Total return after taxation for the year (287) (608)

Net assets (287) (608)

In the opinion of the Directors, the above sensitivity analysis is broadly representative of the whole year.

(ii) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on theCompany’s variable rate cash borrowings.

Management of interest rate risk The Company does not normally hold significant cash balances. Short term borrowings are used when required.

The Company may finance part of its activities through borrowings at levels approved and monitored by the Board.

The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when theCompany borrows on the loan facility. However, amounts drawn down on this facility are for short term periods andtherefore exposure to interest rate risk is not significant.

Interest rate exposure The exposure of financial assets and liabilities to floating interest rates, giving cash flow interest rate risk when rates arereset, is shown below. The £200,000 debenture in issue carries a fixed rate of interest and therefore has no exposure tointerest rate movements.



2014 2013£’000 £’000

Exposure to floating interest rates:JPMorgan Sterling Liquidity Fund — 3,000Cash and short term deposits 2,568 1,966Creditors: amounts falling due within one year – bank loan (20,000) —Creditors: amounts falling due after more than one year – bank loan — (20,000)

Total exposure (17,432) (15,034)

The target interest rate earned on the JPMorgan Sterling Liquidity Fund is the 7 day sterling London Interbank Bid rate.

Interest receivable on cash balances is at a margin below LIBOR.

On 11th July 2011, the Company arranged a £25 million three year revolving credit facility with Scotiabank which expiredsince the year-end on 12th July 2014. Under the terms of the facility, the Company could draw down up to £25 million at aninterest rate of LIBOR as quoted in the market for the relevant currency and loan period, plus a margin of 1.45%. Thefacility was unsecured and was subject to covenants which are customary for a credit agreement of this nature. At the yearend, the Company had £20 million drawn down on the facility.

Since the year-end the Company arranged a new £25 million one year revolving facility on 11th July 2014 with NationalAustralia Bank which will expire on 11th July 2015.

The exposure to floating interest rates has fluctuated during the year as follows:

2014 2013£’000 £’000

Maximum debit interest rate exposure to floating rates – net loan balances (19,743) (19,968)Minimum (debit)/maximum credit interest rate exposure to floating rates –

net (loan)/cash balances (15,034) 1,737

Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2013: 1%)increase or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This levelof change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivityanalysis is based on the Company’s monetary currency financial instruments held at the balance sheet date, with all othervariables held constant.

2014 20131% increase 1%decrease 1% increase 1% decrease

in rate in rate in rate in rate £’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (74) 74 (50) 50Capital return (100) 100 (100) 100

Total return after taxation for the year (174) 174 (150) 150

Net assets (174) 174 (150) 150



(a) Market risk continued(ii) Interest rate risk continued

Interest rate sensitivity continuedIn the opinion of the Directors, the above sensitivity analysis may not be representative of the Company’s future exposureto interest rate changes due to fluctuation in the level of cash balances, investment in the JPMorgan Sterling Liquidity Fundand drawings on the loan facility.

(iii) Other price risk Other price risk includes changes in market prices, other than those arising from interest rate risk or currency risk, whichmay affect the value of investments.

Management of other price risk The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the riskassociated with particular industry sectors. The investment management team has responsibility for monitoring theportfolio, which is selected in accordance with the Company’s investment objectives and seeks to ensure that individualstocks meet an acceptable risk/reward profile.

Other price risk exposure The Company’s exposure to changes in market prices at 30th June comprises its holding in equity investments as follows:

2014 2013£’000 £’000

Equity investments held at fair value through profit or loss 265,685 240,016

The above data is broadly representative of the exposure to other price risk during the current and comparative year.

Concentration of exposure to other price risk An analysis of the Company’s investments is given on pages 14 and 15. This shows that the investments’ value is in a broadspread of countries with the highest proportion in Continental Europe. Accordingly there is a concentration of exposure tothese countries. However, it should be noted that an investment may not be wholly exposed to the economic conditions inits country of domicile or of listing.

Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase ordecrease of 10% (2013: 10%) in the fair value of the Company’s equities. This level of change is considered to bea reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on theCompany’s equities and adjusting for change in the management fee, but with all other variables held constant.

2014 201310% increase 10% decrease 10% increase 10% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (52) 52 (47) 47Capital return 26,517 (26,517) 23,955 (23,955)

Total return after taxation for the year and net assets 26,465 (26,465) 23,908 (23,908)



(b) Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that aresettled by delivering cash or another financial asset.

Management of the risk Liquidity risk is not significant as the Company’s assets comprise readily realisable securities, which can be sold to meetfunding requirements if necessary. Short term flexibility is achieved through the use of overdraft facilities.

The Board’s policy is for the Company to remain fully invested in normal market conditions and that short term borrowings beused to manage short term liabilities, working capital requirements and to gear the Company as appropriate. Details of thecurrent loan facility are given in part (a)(ii) to this note on page 59.

Liquidity risk exposure Contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be requiredare as follows:

2014More than

Three three monthsmonths but not more More thanor less than one year one year Total£’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 2,662 — — 2,662Bank loan 20,012 — — 20,012Other creditors and accruals 171 — — 171Derivative financial instruments 735 — — 735

Creditors: amounts falling due after more than one year Perpetual debenture stock — — 200 200Performance fee payable 507 — 1,343 1,850

24,087 — 1,543 25,630

2013More than

Three three monthsmonths but not more More thanor less than one year one year Total£’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 4,806 — — 4,806 Repurchase of shares into Treasury awaiting settlement 515 — — 515 Bank loan 96 295 20,013 20,404 Other creditors and accruals 183 — — 183 Derivative financial instruments 1,455 — — 1,455

Creditors: amounts falling due after more than one year Perpetual debenture stock — — 200 200 Performance fee payable — — 59 59

7,055 295 20,272 27,622



(c) Credit risk Credit risk is the risk that the counterparty to a transaction fails to discharge its obligations under that transaction which couldresult in loss to the Company.

Management of credit risk Portfolio dealingThe Company invests in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates therisk of losing the principal of a trade during the settlement process. The Manager continuously monitors dealing activity toensure best execution, a process that involves measuring various indicators including the quality of trade settlement andincidence of failed trades. Counterparty lists are maintained and adjusted accordingly.

CashCounterparties are subject to daily credit analysis by the Manager and trades can only be placed with counterparties that havea minimum rating of A1/P1 from Standard & Poor’s and Moody’s respectively.

Exposure to JPMorgan ChaseThe Company’s assets are ring-fenced in client designated accounts. Therefore, these assets are designed to be protected fromcreditors in the event that JPMorgan Chase were to cease trading. However, no absolute guarantee can be given to investorson the protection of all assets of the Company.

Credit risk exposure The amounts shown in the balance sheet under investment in liquidity fund, financial assets – derivative financial instruments,debtors and cash and short term deposits represent the maximum exposure to credit risk at the current and comparative yearends.

The liquidity fund has a AAA (2013: AAA) credit rating.

Cash and short term deposits comprises balances held at banks that have a minimum rating of A1/P1 (2013: A1/P1) fromStandard & Poor’s and Moody’s respectively.

The Company engages in securities lending to generate additional income under a Stock Lending Agreement with JPMorganChase which indemnifies the Company against any counterparty default. The value of securities on loan at 30th June 2014amounted to £5,471,617 (2013: £1,554,000). The highest value of securities on loan during the year ended 30th June 2014amounted to £19,945,363 (2013: £21,636,000). Collateral is obtained by JPMorgan Asset Management and is called in on a dailybasis to a value of 102% of the value of the securities on loan if that collateral is denominated in the same currency asthe securities on loan and 105% if it is denominated in a different currency. Collateral acceptable under the Stock LendingAgreement may comprise: cash in Euros or US$; and, sovereign debt of members of the OECD (Organisation of EconomicCorporation Development). The Company is not indemnified against the risk related to the reinvestment of cash collateral,which it mitigates by investing in highly liquid, constant value short-term investments.

(d) Fair values of financial assets and financial liabilitiesAll financial assets and liabilities are either included in the balance sheet at fair value or the carrying amount in the balancesheet is a reasonable approximation of fair value except for the debenture disclosed below. The fair value of the£200,000 debenture issued by the Company has been calculated using discounted cash flow techniques using the yield ona long dated gilt plus a margin based on the 5 year average for the AA Barclays Corporate Bond.

Accounts value Fair value2014 2013 2014 2013£’000 £’000 £’000 £’000

£200,000 4.5% perpetual debenture stock 200 200 179 165



27. Capital management policies and procedures

The Company’s debt and capital structure comprises the following:

2014 2013£’000 £’000

DebtBank loan 20,000 20,000£200,000 4.5% perpetual debenture stock 200 200

20,200 20,200

EquityShare capital 6,660 6,592Reserves 238,975 214,553

Total Equity 245,635 221,145

Total Debt and Equity 265,835 241,345

The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise capitalreturn to its equity shareholders through an appropriate level of gearing.

The Board’s policy is to limit gearing within the range 5% net cash to 20% geared. Gearing for this purpose is defined as TotalAssets (including net current assets/(liabilities) less cash/cash equivalents and excluding bank loans expressed asa percentage of net assets.

2014 2013£’000 £’000

Investments excluding liquidity fund holdings 265,685 240,016Current assets excluding cash 3,000 3,381Current liabilities excluding bank loans (4,013) (6,959)

Total assets 264,672 236,438

Net assets 245,635 221,145

Gearing 7.7% 6.9%

The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on anongoing basis. This review includes:

– the planned level of gearing, which takes into account the Manager’s views on the market;

– the need to buy back equity shares, either for cancellation or to hold in Treasury, which takes into account the share pricediscount or premium; and

– the need for issues of new shares, including issues from Treasury.

Notice is hereby given that the one hundred and twenty-seventhAnnual General Meeting of JPMorganOverseas Investment Trustplc will be held at 60 Victoria Embankment, London EC4Y 0JPon Tuesday, 11th November 2014 at 2.30 p.m. for the followingpurposes:

1. To receive the Directors’ Report, the Annual Accounts andthe Auditors’ Report for the year ended 30th June 2014.

2. To approve the Directors’ Remuneration Policy.

3. To approve the Directors’ Remuneration Report for theyear ended 30th June 2014.

4. To approve a final dividend of 15p per ordinary share.

5. To reappoint Simon Davies as a Director of the Company.

6. To reappoint Jonathan Carey as a Director of the Company.

7. To reappoint Nigel Wightman as a Director of the Company.

8. To reappoint Gay Collins as a Director of the Company.

9. To reappoint PricewaterhouseCoopers LLP as Auditors tothe Company and to authorise the Directors to determinetheir remuneration.

Special Business

To consider the following resolutions:

Authority to allot new shares – Ordinary Resolution10. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors),pursuant to Section 551 of the Companies Act 2006 (the‘Act’) to exercise all the powers for the Company to allotrelevant securities (within the meaning of Section 551 ofthe Act) up to an aggregate nominal amount of £661,435,representing approximately 10% of the Company’s issuedordinary share capital as at the date of the passing of thisresolution and shall expire at the conclusion of the AnnualGeneral Meeting of the Company to be held in 2014 unlessrenewed at a general meeting prior to such time, save thatthe Company may before such expiry make offers,agreements or arrangements which would or might requirerelevant securities to be allotted after such expiry and so

that the Directors of the Company may allot relevantsecurities in pursuance of such offers, agreements orarrangements as if the authority conferred hereby had notexpired.

Authority to disapply pre-emption rights on allotment of newordinary shares – Special Resolution 11. THAT subject to the passing of Resolution 10 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Sections 570, 571 and 572 of theCompanies Act 2006 (the ‘Act’) to allot equity securities(within the meaning of Section 560 of the Act) pursuant tothe authority conferred by Resolution 10 or by way of saleof Treasury shares as if Section 561(1) of the Act did notapply to any such allotment, provided that this power shallbe limited to the allotment of equity securities for cash upto an aggregate nominal amount of £661,435, representingapproximately 10% of the total ordinary share capital as atthe date of the passing of this resolution at a price of notless than the net asset value per share and shall expire atthe conclusion of the Annual General Meeting of theCompany to be held in 2015 unless renewed at a generalmeeting prior to such time, save that the Company maybefore such expiry make offers, agreements orarrangements which would or might require equitysecurities to be allotted after such expiry and so that theDirectors of the Company may allot equity securities inpursuant of such offers, agreements or arrangements as ifthe power conferred hereby had not expired.

Authority to repurchase shares – Special Resolution 12. THAT the Company be generally and subject as hereinafter

appears unconditionally authorised in accordance withSection 701 of the Companies Act 2006 (the ‘Act’) to makemarket purchases (within the meaning of Section 693 of theAct) of its issued Ordinary shares and Subscription shares inthe capital of the Company

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares andSubscription shares hereby authorised to be purchasedshall be 3,457,190 and 678,102 respectively, or if less,that number of Ordinary shares or Subscription shares


Shareholder InformationNotice of Annual General Meeting


which is equal to 14.99% of the Company’s issued sharecapital as at the date of the passing of this resolution;

(ii) the minimum price which may be paid for an Ordinaryshare shall be 25 pence and Subscription share shall be0.01 pence;

(iii) the maximum price which may be paid for a share, shallbe an amount equal to: (a) 105% of the average of themiddle market quotations for an Ordinary share orSubscription share, taken from and calculated byreference to the London Stock Exchange Daily OfficialList for the five business days immediately precedingthe day on which the share is purchased; or (b) the priceof the last independent trade; or (c) the highest currentindependent bid;

(iv) any purchase of ordinary shares will be made in themarket for cash at prices below the prevailing NAV pershare (as determined by the Directors);

(v) the authority hereby conferred shall expire on 10th May2016 unless the authority is renewed at the Company’sAnnual General Meeting in 2015 or at any other generalmeeting prior to such time; and

(vi) the Company may make a contract to purchaseordinary shares under the authority hereby conferredprior to the expiry of such authority and may makea purchase of shares pursuant to any such contractnotwithstanding such expiry.

By order of the BoardDivya Amin, for and on behalf of JPMorgan Funds Limited, Secretary

26th September 2014

Notes

These notes should be read in conjunction with the notes on thereverse of the proxy form.

1. A member entitled to attend and vote at the Meeting may appointanother person(s) (who need not be a member of the Company) toexercise all or any of his rights to attend, speak and vote at theMeeting. A member can appoint more than one proxy in relation tothe Meeting, provided that each proxy is appointed to exercise therights attaching to different shares held by him.

2. A proxy does not need to be a member of the Company but mustattend the Meeting to represent you. Your proxy could be theChairman, another director of the Company or another person whohas agreed to attend to represent you. Details of how to appointthe Chairman or another person(s) as your proxy or proxies usingthe proxy form are set out in the notes to the proxy form. If a votingbox on the proxy form is left blank, the proxy or proxies willexercise his/their discretion both as to how to vote and whetherhe/they abstain(s) from voting. Your proxy must attend theMeeting for your vote to count. Appointing a proxy or proxies doesnot preclude you from attending the Meeting and voting in person.

3. Any instrument appointing a proxy, to be valid, must be lodged inaccordance with the instructions given on the proxy form no laterthan 12:00 noon two business days prior to the Meeting(i.e. excluding weekends and bank holidays).

4. You may change your proxy instructions by returning a new proxyappointment. The deadline for receipt of proxy appointments (seeabove) also applies in relation to amended instructions. Anyattempt to terminate or amend a proxy appointment received afterthe relevant deadline will be disregarded. Where two or more validseparate appointments of proxy are received in respect of thesame share in respect of the same Meeting, the one which is lastsent shall be treated as replacing and revoking the other or others.

5. To be entitled to attend and vote at the Meeting (and for thepurpose of the determination by the Company of the number ofvotes they may cast), members must be entered on the Company’sregister of members as at 6.00 p.m. two business days prior to theMeeting (the ‘specified time’). If the Meeting is adjourned to a timenot more than 48 hours after the specified time applicable to theoriginal Meeting, that time will also apply for the purpose ofdetermining the entitlement of members to attend and vote (andfor the purpose of determining the number of votes they may cast)at the adjourned Meeting. If however the Meeting is adjourned fora longer period then, to be so entitled, members must be enteredon the Company’s register of members as at 6.00 p.m. twobusiness days prior to the adjourned Meeting or, if the Companygives notice of the adjourned Meeting, at the time specified in thatnotice.

6. Entry to the Meeting will be restricted to shareholders, with guestsadmitted only by prior arrangement.

7. A corporation, which is a shareholder, may appoint an individual(s)to act as its representative(s) and to vote in person at the Meeting(see instructions given on the proxy form). In accordance with theprovisions of the Companies Act 2006 (as amended by theShareholder Rights Directive 2009, each such representative(s)may exercise the same powers as the corporation could exerciseif it were an individual member of the Company, provided that theydo not do so in relation to the same shares. It is therefore no longernecessary to nominate a designated corporate representative.

Representatives should bring to the meeting evidence of theirappointment, including any authority under which it is signed.

8. Members that satisfy the thresholds in Section 527 of theCompanies Act 2006 can require the Company to publish astatement on its website setting out any matter relating to: (a) theaudit of the company’s accounts (including the auditors’ report andthe conduct of the audit) that are to be laid before the AGM; or(b) any circumstances connected with an auditor of the companyceasing to hold office since the previous AGM; which the memberspropose to raise at the meeting. The Company cannot require themembers requesting the publication to pay its expenses.Any statement placed on the website must also be sent to theCompany’s Auditors no later than the time it makes its statementavailable on the website.

9. Pursuant to Section 319A of the Companies Act 2006, the Companymust cause to be answered at the AGM any question relating to thebusiness being dealt with at the AGM which is put by a memberattending the meeting; no answer need be given if it is undesirablein the interests of the Company or the good order of the meeting.

10. Under Sections 338 and 338A of the 2006 Act, members meetingthe threshold requirements in those sections have the right torequire the Company: (i) to give, to members of the Companyentitled to receive notice of the Meeting, notice of a resolutionwhich those members intend to move (and which may properly bemoved) at the Meeting; and/or (ii) to include in the business to bedealt with at the Meeting any matter (other than a proposedresolution) which may properly be included in the business at theMeeting. A resolution may properly be moved, or a matter properlyincluded in the business unless: (a) (in the case of a resolution only)it would, if passed, be ineffective (whether by reason of anyinconsistency with any enactment or the Company’s constitution orotherwise); (b) it is defamatory of any person; or (c) it is frivolous orvexatious. A request made pursuant to this right may be in hardcopy or electronic form, must identify the resolution of whichnotice is to be given or the matter to be included in the business,must be accompanied by a statement setting out the grounds forthe request, must be authenticated by the person(s) making it andmust be received by the Company not later than the date that is sixclear weeks before the Meeting, and (in the case of a matter to beincluded in the business only) must be accompanied by astatement setting out the grounds for the request.

11. A copy of this notice has been sent for information only to personswho have been nominated by a member to enjoy informationrights under Section 146 of the Companies Act 2006 (a ‘NominatedPerson’). The rights to appoint a proxy can not be exercised bya Nominated Person: they can only be exercised by the member.However, a Nominated Person may have a right under anagreement between him and the member by whom he wasnominated to be appointed as a proxy for the Meeting or to havesomeone else so appointed. If a Nominated Person does not havesuch a right or does not wish to exercise it, he may have a rightunder such an agreement to give instructions to the member asto the exercise of voting rights.

12. In accordance with Section 311A of the Companies Act 2006, thecontents of this notice of meeting, details of the total number ofshares in respect of which members are entitled to exercise votingrights at the AGM, the total voting rights members are entitled toexercise at the AGM and, if applicable, any members’ statements,members’ resolutions or members’ matters of business receivedby the Company after the date of this notice will be available on theCompany’s website www.jpmoverseas.co.uk

13. The register of interests of the Directors and connected personsin the share capital of the Company is available for inspection atthe Company’s registered office during usual business hours onany weekday (Saturdays, Sundays and public holidays excepted). Itwill also be available for inspection at the Annual General Meeting.

14. You may not use any electronic address provided in this Notice ofMeeting to communicate with the Company for any purposes otherthan those expressly stated.

15. As an alternative to completing a hard copy Form of Proxy/VotingDirection Form, you can appoint a proxy or proxies electronicallyby visiting www.sharevote.co.uk. You will need your Voting ID,Task ID and Shareholder Reference Number (this is the series ofnumbers printed under your name on the Form of Proxy/VotingDirection Form). Alternatively, if you have already registered withEquiniti Limited’s online portfolio service, Shareview, you cansubmit your Form of Proxy at www.shareview.co.uk. Fullinstructions are given on both websites.

16. As at 25th September 2014 (being the latest business day prior tothe publication of this Notice), the Company’s issued share capitalconsists of 26,457,405 (of which 3,394,098 are held in Treasury)Ordinary shares, carrying one vote for every four shares held and4,523,695 Subscription shares, which do not have any voting rights.Therefore, the total voting rights in the Company are 5,765,826.

Electronic appointment – CREST membersCREST members who wish to appoint a proxy or proxies by utilising theCREST electronic proxy appointment service may do so for the Meetingand any adjournment(s) thereof by using the procedures described inthe CREST Manual. See further instructions on the proxy form.


Shareholder Information continuedNotice of Annual General Meeting continued


On 15th January 2013 the Company issued Subscription sharesas a bonus issue to the Ordinary shareholders on the basis ofone Subscription share for every five Ordinary shares held.Each Subscription share confers the right (but not theobligation) to subscribe for one Ordinary share to have effecton 31st October 2013, 30th April 2014, 31st October 2014,30th April 2015 or 30th October 2015, after which the rights onthe Subscription shares will lapse.

Future exercise prices have been determined as follows:

(a) If exercised to have effect on 31st October2013 – 900 pence;

(b) If exercised to have effect on 30th April 2014 or31st October 2014 – 943 pence.

(c) If exercised to have effect on 30th April 2015 or30th October 2015 – 986 pence.

To be exercised, a notice of exercise must be received by theRegistrar no later than 10 business days before the relevantexercise date and no earlier than 30 business days before therelevant exercise date.

For the purposes of UK taxation, the issue of Subscriptionshares is treated as a reorganisation of the Company’s sharecapital. Whereas such reorganisations do not trigger achargeable disposal for the purposes of the taxation of capitalgains, they do require shareholders to reallocate the base costsof their Ordinary shares between Ordinary shares andSubscription shares received.

At the close of business on 15th January 2013 the middlemarket prices of the Company’s Ordinary shares andSubscription shares were as follows:

Ordinary shares: 803pSubscription shares: 27p

Accordingly an individual investor who on 11th January 2013held five Ordinary shares (or a multiple thereof) would havereceived a bonus issue of one Subscription share (or therelevant multiple thereof) and would apportion the base cost ofsuch holding 99.33% to the five Ordinary shares and 0.67% tothe Subscription share.

The Subscription shares do not carry any voting rights.

If you have any further questions, please visit the Company’swebsite at www.jpmoverseas.co.uk. Alternatively, you can call1:

(1) the Company’s registrars in UK, Equiniti’s ShareholderHelpline on 0871 384 2330 (from within the UK) or on+44 121 415 7047 (if calling from outside the UK). Calls to the0871 384 2330 number are charged at 8 pence per minutefrom BT landline. Other providers’ costs may vary; or

(2) the Company’s registrars in New Zealand, ComputershareInvestor Services Limited on telephone: +64 09 488 8777; or

(3) if you hold your shares through the J.P. Morgan ISA,Investment Account or SIPP, then contact the J.P. MorganUK Retail Client Services team on 0800 20 40 20 or+44(0)20 7742 9995.

1Your calls may be recorded for your security or training purposes.

Subscription Shares


Portfolio returnReturn on net assets, net of management fees andadministration expenses, but excluding both the effect ofSubscription shares which have been converted during theyear and the dilutive impact of Subscription shares in issueat the year end.

Return to Ordinary shareholders/Unit holders

Total return to the Ordinary shareholder, or Unit holder, on amid-market price to mid-market price basis, assuming that alldividends received were reinvested, without transaction costs,in the Ordinary shares of the Company at the time the shareswere quoted ex-dividend.

Diluted net asset value (‘NAV’) per Ordinary share

The NAV per Ordinary share assuming that all outstandingSubscription shares were converted into Ordinary shares at theyear end.

Diluted return on net assets

Return on the diluted net asset value (‘NAV’) per share, on a bidvalue to bid value basis, assuming that all dividends paid outby the Company were reinvested in the shares of the Companyat the NAV per share at the time the shares were quotedex-dividend.

In accordance with industry practice, dividends payable whichhave been declared but which are unpaid at the balance sheetdate are deducted from the diluted NAV per share whencalculating the diluted return on net assets.

Undiluted return on net assets

Return on the undiluted net asset value (‘NAV’) per share, ona bid value to bid value basis, assuming that all dividends paidout by the Company were reinvested in the shares of theCompany at the NAV per share at the time the shares werequoted ex-dividend.

In accordance with industry practice, dividends payable whichhave been declared but which are unpaid at the balance sheetdate are deducted from the undiluted NAV per share whencalculating the undiluted return on net assets.

Benchmark return Total return on the benchmark, on a mid-market value tomid-market value basis, assuming that all dividends receivedwere reinvested in the shares of the underlying companies atthe time the shares were quoted ex-dividend.

The benchmark is a recognised index of stocks which shouldnot be taken as wholly representative of the Company’sinvestment universe. The Company’s investment strategy doesnot follow or ‘track’ this index and consequently, there may besome divergence between the Company’s performance andthat of the benchmark.

Gearing/Net cashGearing represents the excess amount above shareholders’funds of total assets, expressed as a percentage of theshareholders’ funds. Total assets include total investments andnet current assets/liabilities less cash/cash equivalents andexcluding bank loans of less than one year. If the amountcalculated is negative, this is shown as a ‘net cash’ position.

Ongoing charges The ongoing charges represent the Company’s managementfee and all other operating expenses, excluding finance costs,expressed as a percentage of the average of the daily net assetsduring the year. The method of calculating the ongoing chargeshas been changed. From 2009 to 2012, the total expense ratio(‘TER’) was calculated, which represented the Company’smanagement fee and all other operating expenses excludingfinance costs, expressed as a percentage of the average monthend net assets during the year.

Share price discount/Premium to net asset value (‘NAV’) If the share price of an investment trust is lower than the NAVper share, the shares are is said to be trading at a discount.The discount is shown as a percentage of the NAV. The oppositeof a discount is a premium. It is more common for aninvestment trust’s shares to trade at a discount than ata premium.

Performance attribution Analysis of how the Company achieved its recordedperformance relative to its benchmark.

Shareholder Information continuedGlossary of Terms and Definitions


Performance Attribution Definitions:

Asset allocation Measures the impact of allocating assets differently from thosein the benchmark, via the portfolio’s weighting in differentcountries, sectors or asset types.

Stock selection Measures the effect of investing in securities to a greater orlesser extent than their weighting in the benchmark, or ofinvesting in securities which are not included in thebenchmark.

Gearing/Cash effect Measures the impact on returns of borrowings or cashbalances on the Company’s relative performance.

Currency Measures the impact of investing in different currencies on theperformance which is measured in sterling terms.

Management fee/Other expenses The payment of fees and expenses reduces the level of totalassets, and therefore has a negative effect on relativeperformance.

Performance feeMeasures the effect of a performance fee charge or writeback.

Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to beworthless or non-existent, or to buy shares at an inflated price in return for an upfront payment. While high profits are promised, ifyou buy or sell shares in this way you will probably lose your money.

Keep in mind that firms authorised by the FCAare unlikely to contact you out of the blue withan offer to buy or sell shares.

Do not get into a conversation, note the nameof the person and firm contacting you and thenend the call.

Check the Financial Services Register fromwww.fca.org.uk to see if the person and firmcontacting you is authorised by the FCA.

Beware of fraudsters claiming to be from anauthorised firm, copying its website or givingyou false contact details.

Use the firm’s contact details listed on theRegister if you want to call it back.

Call the FCA on 0800 111 6768 if the firm doesnot have contact details on the Register or youare told they are out of date.

Search the list of unauthorised firms to avoid atwww.fca.org.uk/scams.

Consider that if you buy or sell shares from anunauthorised firm you will not have access to theFinancial Ombudsman Service or FinancialServices Compensation Scheme.

Think about getting independent financial andprofessional advice before you hand over anymoney.

Remember: if it sounds too good to be true, itprobably is!

If you are approached by fraudsters please tell theFCA using the share fraud reporting form atwww.fca.org.uk/scams, where you can find outmore about investment scams.

You can also call the FCA Consumer Helpline on0800 111 6768.

If you have already paid money to share fraudstersyou should contact Action Fraud on 0300 123 2040.

5,000 people contact the Financial ConductAuthority about share fraud each year,with victims losing an average of £20,000

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Beware of share fraud

How to avoid share fraud

Report a scam

In association with:

Financial Conduct Authority


Notes


Notes


Notes

HistoryThe Company was formed in 1887. The Company was a general investmenttrust until 1982, when it adopted its current objective. The current name wasadopted in 2006.

The Company is managed by JPMorgan, and the named investmentmanager, Jeroen Huysinga, is responsible for the portfolio.

Company Numbers Company registration number: 24299

Ordinary sharesLondon Stock Exchange SEDOL Number: 0914327Bloomberg Code: JMO LNISIN: GB0009143271

Subscription sharesLondon Stock Exchange SEDOL Number: B8DPQC1Bloomberg Code: JMOSISIN: GB00B8DPQC12

Market Information The Company’s net asset value (‘NAV’) is published daily, via the LondonStock Exchange. The Company’s shares are listed on the London StockExchange and the New Zealand Stock Exchange. The market price is showndaily in the Financial Times, The Times, The Daily Telegraph, The NewZealand Herald, The Scotsman and on the JPMorgan website atwww.jpmoverseas.co.uk, where the share price is updated every 15 minutesduring trading hours.

Website www.jpmoverseas.co.uk

Share Transactions The Company’s shares may be dealt in directly through a stockbroker orprofessional adviser acting on an investor’s behalf. They may also bepurchased and held through the J.P. Morgan Investment Account,J.P. Morgan ISA and J.P. Morgan SIPP. These products are all available on theonline wealth manager service, J.P. Morgan WealthManager+ available atwww.jpmorganwealthmanagerplus.co.uk

Manager and Company Secretary JPMorgan Asset Management (UK) Limited up to 30th June 2014. JPMorganFunds Limited from 1st July 2014 onwards.

Company’s Registered Office 60 Victoria EmbankmentLondon EC4Y 0JPTelephone: 020 7742 4000

For company secretarial and administrative matters please contactDivya Amin.

Custodian JPMorgan Chase Bank, N.A.25 Bank StreetCanary WharfLondon E14 5JP

Depositary (from 1st July 2014) BNY Mellon Trust & Depositary (UK) LimitedBNY Mellon Centre160 Queen Victoria StreetLondon EC4V 4LA

UK Registrars Equiniti LimitedReference 1103Aspect HouseSpencer RoadLancing West Sussex BN99 6DA

Telephone: 0871 384 2330 (calls to this number cost 8p per minute froma BT landline. Other providers’ costs may vary. Lines open 8.30 a.m. to5.30 p.m. Monday to Friday.)

Overseas helpline: +44 121 415 7047.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to the Registrarquoting reference 1103. Registered shareholders can obtain further detailson individual holdings on the internet by visiting www.shareview.co.uk.

New Zealand Registrars Computershare Investor Services LimitedPrivate Bag 92119Auckland 1020Level 2159 Hurstmere RoadTakapuna North Shore CityNew ZealandTelephone 09 522 0022

Notifications of changes of address and enquiries regarding certificatesor dividend cheques should be made in writing to the Registrars.

Independent Auditors PricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors7 More London RiversideLondon SE1 2RT

UK Brokers Winterflood Securities LimitedThe Atrium BuildingCannon Bridge25 Dowgate HillLondon EC4R 2GATelephone: 020 3100 0000

New Zealand Brokers First NZ Capital SecuritiesP.O. Box 396WellingtonNew ZealandTelephone: 0800 800 968 (NZ Toll Free)Please contact Peter Irwin

Savings Products Administrators For queries on the J.P. Morgan Investment Account, J.P. Morgan ISA andJ.P. Morgan SIPP, see contact details on the back cover of this report.

Information about the Company

Financial CalendarFinancial year end 30th JuneHalf year results announced FebruaryFinal results announced SeptemberFinal dividend on shares NovemberInterest payment on 4.5% perpetual debenture stock 1st January, 1st JulyAnnual General Meeting NovemberInterim Management Statements May and November

A member of the AIC


JPMorgan HelplineFreephone 0800 20 40 20 or +44 (0)20 7742 9995

Your telephone call may be recorded for your security

www.jpmoverseas.co.uk

2014 Annual Report JPMorgan Overseas Investment … Overseas Investment Trust plc. Annual Report & Accounts 2014 3 repurchase the Company’s shares in the market to achieve this.

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