annual report jpmorgan overseas investment trust plcannual report & accounts 2015 during the...

Annual Report2015JPMorgan Overseas Investment Trust plc

Annual Report & Accounts for the year ended 30th June 2015

Overseas Four page cover A4 28/09/2015 12:27 Page 2

Features

Contents

1 Financial Results

Strategic Report

2 Chairman’s Statement6 Investment Manager’s Report10 Summary of Results11 Performance12 Ten Year Financial Record13 Ten Largest Equity Investments14 Portfolio Analyses 15 List of Investments17 Business Review

Governance

22 Board of Directors24 Directors’ Report27 Corporate Governance33 Directors’ Remuneration Report36 Statement of Directors’

Responsibilities

37 Independent Auditors’ Report

Financial Statements

42 Income Statement43 Reconciliation of Movements in

Shareholders’ Funds44 Balance Sheet45 Cash Flow Statement46 Notes to the Financial Statements

Shareholder Information

68 Notice of Annual General Meeting71 Subscription Shares72 Glossary of Terms and Definitions74 Where to buy J.P. Morgan Investment

Trusts77 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 capital growth and outperform the MSCI All Country World Indexover the long-term by investing in companies based around the world. The manager isfocused on building a high conviction portfolio of typically 50-90 stocks, drawing on aninvestment process underpinned by fundamental research. Portfolio construction isdriven by bottom-up stock selection rather than geographical or sector allocation.Currency exposure is predominantly hedged back towards the benchmark. The Companyuses borrowing to gear the portfolio within a range of 5% cash to 20 geared under normalmarket conditions.

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 2015, the Company’s issued share capital comprised 27,096,058 Ordinaryshares of 25p each including 3,955,541 shares held in Treasury and 3,885,042 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.


%

53.4 51.143.9

51.4

69.3 67.1

168.8

148.9

104.1

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10 Year Performance5 Year Performance3 Year Performance

JPMorgan Overseas Investment Trust plc. Annual Report & Accounts 2015 1

Financial ResultsTotal returns (includes dividends reinvested)

Long Term Performancefor periods ended 30th June 2015

+10.3%Return to shareholders1

(2014: +13.2%)

16.0pDividend4

(2014: 15.0p)

+11.8%Undiluted return on net assets2

(2014: +13.7%)

+9.5%Benchmark return3

(2014: +9.1%)

A glossary of terms and definitions is provided on page 72.

1Source: Morningstar.2Source: J.P. Morgan.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 – diluted return on net assets2

Benchmark3

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JPMorgan Overseas Investment Trust plc. Annual Report & Accounts 20152

During the year ended 30th June 2015, global equity market conditions continued toimprove steadily as the major economies around the world showed signs of ongoingrecovery. It is pleasing to report that the Company recorded another positive yearwith a total diluted return on net assets of +11.8%, ahead of the total return of +9.5%of the benchmark, the MSCI All Country World Index (in sterling terms). The totalreturn to shareholders was +10.3% over the reporting period. The positive return forthe year continues the longer term trend of adding value for shareholders since theappointment of Jeroen Huysinga as the manager in September 2008.

Investment Manager Contribution and Excess Performance Total Return vs. Benchmark Index to 30th June 2015

Quarterly Investment Manager Contribution (LHS).

Cumulative undiluted net asset value excess return (RHS).

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 16.0 pence per share (2014: 15.0 pence)on 11th December 2015 to shareholders on the register at the close of business on13th November 2015. The increase in the dividend reflects the underlying growth individends from the portfolio we hold. While the Company’s principal aim is tomaximise capital growth, the Board does appreciate that many shareholders liketo receive a dividend rather than have to sell shares to obtain income.

Share Issuance and Repurchases

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,repurchase the Company’s shares in the market to achieve this. The Companyrepurchased 782,738 Ordinary shares into Treasury for a total consideration of£8,158,000. At the year end, a total of 3,955,541 shares were held in Treasury.

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Strategic ReportChairman’s Statement

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During the year, 638,653 Ordinary shares were issued upon exercise of Subscriptionshares. At the year end there were 3,885,042 Subscription shares in issue. Detailsof the final opportunity to exercise the Subscription shares at 986 pence by30th October 2015 have been sent to shareholders and are also given on page 71 ofthis 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 0.64% for the year ended 30th June 2015 (2014: 0.63%)represents good value when compared to other trusts and savings products such asopen ended funds actively investing in global equities. An additional 0.27% was paidin performance fees for the year ended 30th June 2015 (2014: 0.22%) as a result ofstrong performance of the manager. The Board continues to actively monitor theCompany’s management fee arrangements to ensure they remain structured in theinterests of shareholders.

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 July2018. This facility is flexible and can be used tactically as investment opportunitiespresent themselves. The £25 million facility was fully drawn down at the year-end.Gearing contributed +0.6% to performance during the year under 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 (insterling 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.

Proposed sub-division of Company’s Share Capital

The Board is proposing to implement a sub-division of the Company’s share capital.The Company’s share price was 1,050.0 pence per share at the year end and a stocksplit would assist with the practicalities of investors choosing to invest throughplatforms, regular savings schemes or by way of dividend reinvestment as theywould be left with a smaller potential cash balance following any investment. Thismay increase the attractiveness of the Company’s shares to potential investors andmay also increase the liquidity in the market for the Company’s shares. In the six years

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to 30th June 2015, the Company’s share price has increased from 515.50 pence pershare to 1,050.0 pence per share. Therefore the Directors believe it is appropriateto recommend a five for one share split, which will increase the number of Ordinaryshares in issue by a factor of five. Shareholders should note that the proposedsub-division of the Company’s share capital will not affect the overall value of theirholdings in the Company because although the share price will effectively be dividedby five, they will have five times the number of shares previously held.

Based on the price per share at the year end, 30th June 2015 of 1,050.0 pence pershare, and following a sub-division, each ordinary shareholder would receive five newshares for every one ordinary share previously held and the five new shares wouldtrade at 210.0 pence per share. This information is provided for illustrative purposeonly. The market price of the shares both before and after the completion of theproposed sub-division, will vary depending on market conditions at the relevant time.The proposed sub-division of the Company’s share capital is subject to shareholderapproval at the Annual General Meeting.

The Board

As previously reported, I plan to retire from the Board immediately after theforthcoming AGM. Accordingly, I will not stand for re-election at that meeting.Nigel Wightman will succeed me as Chairman of the Board and also as Chairmanof the Nomination Committee. I am confident that Nigel will serve the Company andits shareholders very well. Gay Collins will assume the role of Senior IndependentDirector from Nigel.

As part of the Board’s succession planning, the Nominations Committee carriedout a recruitment process which led to the appointment of Tristan Hillgarth as anon-executive director immediately after the Annual General Meeting last November.Tristan has over 30 years of experience in the asset management industry havingbeen a director of Jupiter Asset Management for eight years and before that he wasat Invesco where he held several senior positions over 14 years including CEO ofInvesco’s UK and European business. Shareholders will be asked to elect him at theforthcoming AGM. The Board will revert to being comprised of four Directors after theAGM, however, a regular review of its size and composition will be undertaken by theNomination Committee.

The Board supports annual re-election for all Directors, as recommended by the UKCorporate Governance Code, and therefore all of the remaining Directors will standfor re-election at the forthcoming AGM.

It has been a great pleasure and a privilege to have been a Director of the Companysince 1999 and Chairman since 2010. I would like to thank my Board colleagues forall their help and support over these years. Good investment performance is the vitalingredient to ensure the success of the Company and I am delighted that JeroenHuysinga has proved to be such an able stock picker. I should like to thank allshareholders for supporting the Board over the period during which I have beeninvolved and I would also like to thank J.P. Morgan for the effective managementand administration of the Trust over the time I have been involved. The Board’s toppriority continues to be to deliver the best possible returns for shareholders and Iwish my colleagues every success in the future.

Strategic Report continuedChairman’s Statement continued

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Annual General Meeting

My fellow Directors and I invite you to attend the Company’s Annual GeneralMeeting which will be held at 60 Victoria Embankment, London EC4Y 0JP onThursday, 5th November 2015 at 2.30 p.m. An investment presentation will be madeat 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’swebsite, to the Company Secretary whose contact details are shown on page 77 ofthis report. Shareholders who are unable to attend the AGM in person areencouraged 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

Since the year end the prospect of US interest rates moving upwards in the near term,uncertainties about Greece and issues surrounding China’s economy have causedsignificant volatility in equity markets. However, despite these and other risks, theBoard is confident that the Investment Manager and his team are well positioned toidentify appropriate investment opportunities in this environment and that theCompany’s portfolio is well placed to deliver good performance over the longer term.

Simon DaviesChairman 25th September 2015

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Global equity markets continued to rise during the 12 months to the end of June 2015with the MSCI All Countries World up 9.5% in sterling terms. Since we assumedresponsibility for JPMorgan Overseas in October 2008, global equity markets haveincreased by 96%; an annualised return of around 10%. Both during the 12 months toJune 2015 and since inception in 2008 our strategy has performed better than ourbenchmark with returns of 11% and 12.8% (annualised) respectively.

Last year saw significant dispersion between regions, sectors and currencies.Performance between sectors was very marked last year with investors showing astrong preference for the fastest-growing companies. Healthcare, and interest andsocial media companies (within the Information Technology sector) are leading thisparticular phase of growth investing, within Healthcare up 28% over the period andFacebook’s market cap surpassing that of Walmart, not a bad achievement given thatWalmart has a workforce more than 200 times larger than that of Facebook.Particularly in the US, the market has been increasingly anticipating higher interestrates; the likely beneficiaries of this trend in banks and insurance performed well,while the so-called ‘bond proxies’ (utilities, REITs and the like) have performed poorlyand surrendered much of their relative outperformance versus the rest of the market.With global growth sluggish, and in particular the Chinese economy stilldisappointing, the commodity super cycle has continued to unwind, leaving manyenergy, basic materials and capital goods stocks struggling with falling profits.

The positive relative performance of JPMorgan Overseas was driven by investmentsacross a wide range of sectors and regions including US healthcare, global banks andEuropean industrials.

In healthcare, our exposure to Health Maintenance Organisations (HMOs) such asHumana and UnitedHealth Group in the US has been very positive. With strongenrolment growth in government programmes (Obamacare), vast cash flowgeneration, and clear evidence of consolidation through acquisitions, we continueto have high conviction in both of these stocks. Elsewhere in the sector we havebenefited from investments in Boston Scientific and Shire Pharmaceutical. Boston,a medical equipment company, is an undervalued turnaround story with aninteresting pipeline of new products which is driving an acceleration in revenuesand a sharp, and generally unanticipated, expansion in margins. Shire is a specialistpharmaceutical company with extremely attractive growth prospects, one of thestrongest balance sheets among its peers and an outstanding management team.

Positive performance in banks came from investments in Mitsubishi UFJ FinancialGroup and Barclays. MUFG, Japan’s largest bank, is benefiting operationally from areasonably benign domestic business environment and a growing contribution fromoverseas activities. Capital strength is high with buybacks having been announcedboth in 2014 and 2015. As the group steps up sales of strategic share holdings, capitalreturns may further increase. Barclays is clearly changing its spots. In the same wayas UBS and Morgan Stanley before it, Barclays’ ambitions to be a top player across allaspects of investment banking have been abandoned, and the focus is now very

Strategic Report continuedInvestment Manager’s Report

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much on core retail and commercial banking. With new executive management anda new chairman the focus on costs is intense and the path to higher returns andvaluation is reasonably clear.

In Industrials, our holding in Electrolux, the Swedish appliance company, is benefitingfrom the significant restructuring of its industrial footprint undertaken both in Europeand the US over recent years. As Europe recovers and as housing-related activity inthe US continues to normalise, the potential for operational gearing into these trendsis significant.

First Quantum (copper producer) was a significant detractor last year. Despite veryvisible growth prospects, excellent management and our strong longer-termpreference for copper relative to most other metals, a 20% decline in the commoditytook its toll on the stock price. Having fortified its balance sheet in May, First Quantumremains very well positioned, and extremely cheap, in our scenario of an eventualbottoming-out in the copper price. We have therefore added to our holding.Outokumpu (stainless steel) was also one of our worst performers last year. Despitea large decline in the price of nickel (which informs the price of stainless steel) andan escalation of import pressure from China, we have been happy to add to thisinvestment following significant restructuring of its core European operations,cyclical recovery and our belief that Chinese exports will decelerate.

So how do we position the portfolio for a continuation of positive performance overthe next few years?

Our strategy continues to deviate significantly from the regional and industrialstructure of its benchmark. It’s important to emphasise that our exposure isdetermined not by sweeping macro or top down views but by company-specificvaluation signals derived from intensive company research and long term cashflow models. The latter creates a strong valuation discipline which forms thebedrock of all stock selection decisions.

Despite a very high representation in areas such as internet, software and even retail,which are all in the vanguard of structural change, we are also very happy to haveinvestments in companies which are cheap according to more ‘traditional’ reasonssuch as cyclical recovery, restructuring, new management and, in the longer term,emerging market growth. We would place the above-mentioned First Quantum andOutokumpu in this category but also the likes of Citigroup, LafargeHolcim, Wolseleyand SABMiller. SAB is a case in point: the stock has underperformed as exposure todeclining growth rates in emerging markets such as Columbia, South Africa andChina, coupled with weakening currencies, have eroded near term profits forecasts.The investment attractions, however, remain very strong longer term and we haverecently added to our position. SAB is positioned well for the expansion of beer as acategory in LatAm and Africa. Additionally, the company will benefit from the recentappointment of a new chairman and a new chief financial officer and potentialconsolidation in the industry.

Performance attribution for theyear ended 30th June 2015

% %

Contributions to total returns

Benchmark return 9.5

Asset allocation –0.1Stock selection 2.2Currency effect 0.9Gearing/cash 0.6

Investment managercontribution 3.6

Portfolio total return 13.1

Management fee/other expenses –0.6

Performance fee –0.4

Net asset value total return — prior to structural effects 12.1

Structural effects (i)Share buy-backs/issuance 0.2Effect of subscription sharesexercised in the period –0.5

Net asset value total return — Undiluted 11.8

Structural effects (ii)Dilution effect of potential exercise of remainingsubscription shares –0.5

Net asset value total return — Diluted 11.3

Ordinary share price total return 10.3

‘Unit’ share price total return 10.5

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 72.

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Strategic Report continuedInvestment Manager’s Report continued

Regionally our bottom-up process continues to result in large positions in Europeand the UK whereas North America is an area in which we are underweight. In thelatter region excessive valuation still prevents us from investing in bond equivalentsand many other mega caps. In Japan we are very mindful that the Japanesegovernment’s initiative to boost return on equity and shareholders’ return couldmark a steep change in corporate governance which could unlock significant valuefor shareholders. We are still at a very early stage, however, and we are still meetingwith too many companies which have failed to address the competitiveness of theirbusinesses in a new and harsher global context. Selectively we are findingopportunities in companies like Daikin, which is a global leader in air conditioningequipment, or Japan Airlines, which has restructured its business and its culturecomprehensively since its bankruptcy filing in 2010.

Notable sector exposure includes a large position in airlines through Japan Airlines,Ryanair and United Continental, each of which have very powerful stock specificcatalysts in addition to enjoying the overall benefit of lower oil prices. Our exposureto financials has increased following the purchase of Bankia in Spain, UniCredit inItaly, Aviva in the UK and Mitsui Fudosan in Japan. A powerful combination ofvaluation, balance sheet options, and a very healthy market for commercial realestate in Tokyo – not to mention the forthcoming Olympics in 2020 – gives us theconfidence to maintain a large position in Mitsui. Purchases in Auto Trader, DixonsCarphone, TJX, Amazon and Facebook have resulted in a large position in retail andmedia. We remain tilted towards more cyclical areas and continue to hold no utilitiesor REITs.

With gearing at around 7% we remain constructive on the outlook for global equitymarkets, although, after a phenomenal rise over the last few years, future returns arelikely to be more modest. In the US, after some sharp downward revisions requiredby the rise in the US dollar and fall in the oil price, earnings estimates have stabilisedin recent months. Even with operating margins close to record levels, revenue gainsare still being enhanced by operating margin improvement. In Europe, the recovery isbroadening, as seen in improving economic confidence, as well as continued easingin credit conditions. In contrast to the US, where the expansion is reasonably mature,Europe is in the early stages of a rebound from the double-dip recession. When welook at the differential between earnings in the US and earnings in Europe andreturns on equity between the two regions, we believe that a recovery in Europeshould encourage a move towards normalisation in these relationships. Quantitativeeasing in Japan, as well as Europe, should continue to be supportive of equities inaddition to the improvements which are taking place at a corporate level. Currentlythe main conundrum concerns the growth rate in China. Despite official GDP growthnumbers of around 7%, other factors, like the weakness of commodities and ofindustrial production in the rest of emerging Asia, seem consistent with much weakergrowth in China. Although there is plenty of scope for the Chinese authorities tointroduce further measures to stimulate growth we are hesitant to increase our

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exposure to companies with high Chinese exposure in the absence of verycompelling valuations and clear stock-specific catalysts.

The use of capital remains a very important theme and a differentiator in the currentmarket. In the US, stock buybacks at record levels are boosting earnings growth to asignificant degree, although the market is rewarding buybacks less these days; alogical response to the much higher prices that companies now have to pay whenrepurchasing their own shares. The world ex US is, however, picking up the pace onbuybacks, particularly in Japan. Globally, the M&A cycle is in full swing, driven byabundant cash flow and cheap financing.

Our focus remains, as ever, on underlying company fundamentals and our dedicatedteam of highly experienced research analysts continue to identify attractiveinvestment opportunities around the world.

Jeroen HuysingaInvestment Manager 25th September 2015

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2015 2014

Total returns for the year ended 30th JuneReturn to shareholders1 +10.3% +13.2%Return on net assets2 +11.8% +13.7%Benchmark return3 +9.5% +9.1%

% change

Net asset value, share price and discount at 30th JuneShareholders’ funds (£’000) 269,125 245,635 +9.6Diluted net asset value per Ordinary share 1,137.6p 1,036.7p +9.7Undiluted net asset value per Ordinary share 1,163.0p 1,054.9p +10.2Diluted net asset value per share with debt at fair value4 1,137.5p 1,036.8p +9.7Undiluted net asset value per share with debt at fair value4 1,162.9p 1,055.0p +10.2Ordinary share price 1,050.0p 966.0p +8.7Ordinary share price discount to diluted net asset value

per Ordinary share5 6.91% 6.04%Ordinary shares in issue 23,140,517 23,284,602Subscription share price 63.0p 52.5pSubscription shares in issue 3,885,042 4,523,695

Revenue for the year ended 30th JuneNet revenue attributable to shareholders (£’000) 3,038 2,915 +4.2Revenue return per Ordinary share — diluted 13.08p 12.41p +5.4Revenue return per Ordinary share — undiluted 13.19p 12.41p +6.3Dividend per Ordinary share 16.0p 15.0p

Gearing at 30th June6 7.0% 7.7%

Ongoing charges excluding performance fee payable7 0.64% 0.63%Ongoing charges including performance fee payable8 0.91% 0.85%


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.7Ongoing charges represents the management fee and all other operating expenses excluding interest and performance fee payable, expressed as a percentage of the average dailynet assets during the year and are 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.

Strategic Report continuedSummary of Results

Overseas_pp01_21 28/09/2015 09:29 Page 10


90

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150

20152014201320122011201020092008200720062005

50

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150

200

250

300

20152014201320122011201020092008200720062005

Performance Relative to BenchmarkFigures have been rebased to 100 at 30th June 2005

Source: Morningstar/MSCI.

JPMorgan Overseas – share price total return.

JPMorgan Overseas – diluted net asset value return (based on cum-income NAV; prior to 30th June 2008capital only NAV).

The benchmark index is represented by the grey horizontal line.

Ten Year PerformanceFigures have been rebased to 100 at 30th June 2005


JPMorgan Overseas – share price total return.

JPMorgan Overseas – diluted net asset value return (based on cum-income NAV; prior to 30th June 2008capital only NAV).

Benchmark.

Performance

Overseas_pp01_21 28/09/2015 09:29 Page 11


At 30th June 20051 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Shareholders’ funds (£m) 375.9 227.6 207.7 165.8 145.5 186.9 231.8 199.9 221.1 245.6 269.1

Undiluted net asset valueper share (p) 538.9 627.7 681.4 615.4 556.3 726.5 889.0 787.5 941.4 1,054.9 1,163.0

Share price (p) 467.0 575.0 634.0 566.0 515.5 754.0 862.0 718.7 867.0 966.0 1,050.0

(Discount)/premium (%)2 (12.0) (5.3) (5.7) (5.0) (5.0) 5.9 (1.5) (7.0) (5.8) (6.0) (6.9)

Gearing/(net cash) (%)3 (1.4) (0.5) 0.2 1.1 7.8 6.1 7.4 (0.7) 6.9 7.7 7.0

Year ended 30th June

Revenue attributable toshareholders (£’000) 5,776 5,457 3,221 3,599 3,241 2,751 3,744 3,278 4,010 2,915 3,038

Revenue return per share (p) – undiluted 8.27 8.88 9.69 12.62 12.26 10.65 14.51 12.64 16.56 12.41 13.19

Dividends per share (p) 8.00 12.504 10.00 11.50 11.50 13.00 13.50 13.50 15.00 15.00 16.00

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

Ongoing charges including performance fee(%)6 0.65 0.84 0.62 0.61 1.44 1.29 1.21 0.69 0.65 0.85 0.91

Rebased to 100 at 30th June 2005

Return to shareholders7 100.0 125.0 140.7 127.6 119.2 177.6 206.2 175.2 215.2 243.6 268.8

Return on net assets7 100.0 118.4 130.9 119.5 110.6 147.0 182.6 164.7 198.8 223.8 248.9

Benchmark8 100.0 113.3 129.1 116.3 99.3 122.2 148.2 141.8 170.9 186.4 204.1


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.5Ongoing charges represents the management fee and all other operating expenses excluding interest and performance fee payable, expressed as a percentage of the average of thedaily net assets during the year (2009 to 2011: Total Expense Ratio (‘TER’): the average of the month end net assets; 2008 and prior years: the average of the opening and closing netassets) and are 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. Based on cum-income diluted net asset value; prior to 30th June 2008 capital only diluted net asset value.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.

Strategic Report continuedTen Year Financial Record

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2015 2014Valuation Valuation

Company Country £’000 %1 £’000 %1

InterOil Canada 7,994 3.0 7,811 3.2

Morgan Stanley2 USA 6,672 2.5 5,114 2.1

Mitsui Fudosan2 Japan 6,321 2.3 1,753 0.7

Citigroup3 USA 6,223 2.3 — —

Google ‘A’ USA 6,074 2.2 6,799 2.8

Outokumpu ‘A’ Finland 5,968 2.2 6,650 2.7

Barclays3 UK 5,748 2.1 — —

Bayer Germany 5,607 2.1 5,765 2.3

Intercontinental Hotels UK 5,597 2.1 6,017 2.4

Boston Scientific3 USA 5,507 2.0 — —

Total 61,711 22.8

1Based on total assets less current liabilities of £271.0m (2014: £247.2m).2Not included in the ten largest equity investments at 30th June 2014.3Not held in the portfolio at 30th June 2014.

At 30th June 2014, the value of the ten largest equity investments amounted to £61.9m representing 25.1% of total assets less current liabilities.

Ten Largest Equity Investmentsat 30th June 2015

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Geographic Analysis30th June 2015 30th June 2014

Portfolio Benchmark Portfolio Benchmark%1 % %1 %

North America2 49.1 54.7 47.0 52.7Continental Europe2 23.6 15.7 25.5 16.9United Kingdom 17.9 7.0 15.7 7.8Japan 8.6 7.9 10.7 7.4Emerging Markets 7.6 10.4 7.1 10.5Developed Asia — 4.3 1.5 4.7

Total equities 106.8 100.0 107.5 100.0

Liquidity Fund 2.5 — — —Net current liabilities (9.3) — (7.5) —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £271.0m (2014: £247.2m).2Ryanair ADR (Ireland) has been reclassified to Continental Europe from North America as at 30th June 2015.

Sector Analysis30th June 2015 30th June 2014

Portfolio Benchmark Portfolio Benchmark%1 % %1 %

Financials 22.4 22.1 16.2 21.3Consumer Discretionary 21.5 12.7 21.2 11.6Industrials 14.3 10.2 15.2 10.7Health Care 14.1 12.3 12.0 10.6Information Technology 12.5 13.8 12.5 12.8Materials 8.4 5.3 11.3 6.0Energy 5.4 7.4 9.3 10.2Consumer Staples 4.8 9.5 3.9 9.6Telecommunication Services 1.9 3.7 3.0 3.8Investment Companies 1.5 — 2.9 —Utilities — 3.0 — 3.4Liquidity Fund 2.5 — — —Net current liabilities (9.3) — (7.5) —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £271.0m (2014: £247.2m).

Strategic Report continuedPortfolio Analyses

Overseas_pp01_21 28/09/2015 09:29 Page 14


ValuationCompany £’000

North AmericaInterOil 7,994Morgan Stanley 6,672Citigroup 6,223Google ‘A’ 6,074Boston Scientific 5,507Microsoft 5,316Lowes 5,135Humana 5,055Bank of America 4,810Adobe Systems 4,318TJX Companies 4,315Fluor 4,232United Health 4,216Bristol-Myers Squibb 4,186Amazon.com 4,157Facebook 3,946First Quantum Minerals 3,768Union Pacific 3,498Paccar 3,49521st Century Fox 3,481Fortune Brands Home & Security 2,945United Continental 2,926Mckesson 2,916Lam Research 2,890NXP Semiconductors 2,842ACE 2,804Halliburton 2,635Metlife 2,610Mosaic 2,319Dish Network 2,271Charter Communications 2,211Ralph Lauren 2,098Constellation Brands 1,970Abbott Laboratories 1,755Avago Technologies 1,334

132,924


Continental EuropeOutokumpu ‘A’ (Finland) 5,968Bayer (Germany) 5,607Electrolux ‘B’ (Sweden) 4,837Roche (Switzerland) 4,635Solvay (Belgium) 4,276Unicredit (Italy) 3,883UPM-Kymmene (Finland) 3,817Bankia (Spain) 3,805Henkel (Germany) 3,691Sodexo (France) 3,399Valeo (France) 2,768Lafargeholcim (Switzerland) 2,696ASML (Netherlands) 2,527Continental (Germany) 2,506Ryanair ADR (Ireland) 2,399AXA (France) 2,339Schneider Electric (France) 1,659NN Group (Netherlands) 1,630Thales (France) 1,477

63,919

United KingdomBarclays 5,748Intercontinental Hotels 5,597Vodafone Group 5,107Shire 4,265SABMiller 4,212BG 4,055Prudential 4,020Auto Trader Group 3,087Wolseley 3,031Tui 2,695Dixons Carphone 2,453Aviva 2,223Taylor Wimpey 1,962

48,455

List of Investmentsat 30th June 2015

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Strategic Report continuedList of Investments continued


JapanMitsui Fudosan 6,321Mitsubishi UFJ Financial Group 5,135Japan Airlines 3,717Daikin Industries 3,519Sony 2,831JPMorgan Japan Smaller Companies Trust1 1,766

23,289

Emerging MarketsMr Price Group (South Africa) 3,120Magnit PJSC (Russia) 2,968Bidvest Group (South Africa) 2,863Samsung Electronics (South Korea) 2,684ICICI Bank (India) 2,430JPMorgan Indian Investment Trust1 2,355Naspers (South Africa) 2,345Siliconware Precision Industries (Taiwan) 1,949

20,714

Liquidity FundJPM Sterling Liquidity ‘X’ (Distribution)2 6,792

6,792

Total Portfolio 296,093

1Managed by JPMorgan Asset Management (UK) Limited.2Managed by JPMorgan Asset Management (Lux) Limited.

The portfolio comprises investments in equity shares and aliquidity fund.

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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. With effect from 1st July 2014, JPMorgan FundsLimited (‘JPMF’ or the ‘Manager’), an affiliate of JPMAM, hasbeen appointed as the Company’s Alternative InvestmentFund Manager (‘AIFM’) to manage its assets and also to act asthe Company Secretary. The Board has determined aninvestment policy and related guidelines and limits asdescribed 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 June2014 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 Company’s aim is to provide a diversified portfolio in whichthe Investment Manager has a high degree of conviction. At theyear end, the number of investments held was 82. To gain theappropriate exposure, the Investment Managers are permittedto invest in pooled funds. JPMAM is responsible formanagement of the Company’s assets. On a day-to-day basisthe assets are managed by an Investment Manager based inLondon, supported by a strong equity 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 itsgross 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.

Business Review

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Strategic Report continuedBusiness Review continued

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 2015, the Company produced a totalreturn to shareholders of +10.3% (2014: +13.2%) and a totalreturn on net assets of +11.8% (2014: +13.7%). This compareswith the return on the Company’s benchmark index of +9.5%(2014: +9.1%). As at 30th June 2015, the value of theCompany’s investment portfolio was £296.1 million (2014:£265.7million). The Investment Manager’s Report on pages 6to 9 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 £32.3million (2014:£34.1 million) and net total return after deducting managementfee, performance fee, other administrative expenses, financecosts and taxation, amounted to £28.9million (2014:£30.0million). Distributable income for the year amountedto £3.0million (2014: £2.9 million).

The Directors recommend a final dividend of 16.0p (2014: 15.0p)per share payable on 11th December 2015 to holders on theregister at the close of business on 13th November 2015. Thisdistribution will amount to £3,702,000 (2014: £3,493,000). Noother dividends were paid in respect of the year. The revenuereserve after this transfer will amount to £13,700,000 (2014:£14,334,000) 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 Investment

Manager’s Report. (Also please refer to the graphs onpage 11.)

• Performance against the Company’s peers The principal objective is to achieve capital growth andout-performance relative to the benchmark. However, theBoard 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 2015 are given in the Investment Manager’sReport on page 7.

• 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 2015, the discount (based on the capital only NAVwith debt at par value) ranged between 5.3% and 8.4%using month end data.

Discount Performance

Source: Datastream (month end data).

JPMorgan Overseas – capital NAV discount.

–15

–12

–9

–6

–3

0

3

6

20152014201320122011201020092008200720062005

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• 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 excluding performance feefor the year ended 30th June 2015 was 0.64%(2014: 0.63%). The Ongoing charges including anyperformance fee payable is the ratio, expressed inpercentage terms, of the management fee plus all otheroperating expenses plus any performance fee payable,but excluding finance costs, to the average of the dailynet assets during the year. The Ongoing charges includingperformance fee payable for the year ended 30th June2015 is 0.91% (2014: 0.85%). The Board reviews each yearan analysis which shows a comparison of the Company’sOngoing charges and its main expenses with those of itspeers.

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 782,738 Ordinary shares,for a total consideration of £8,158,000. Since the year end theCompany has repurchased a further 54,982 Ordinary sharesinto Treasury, for a total consideration of £568,000.

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 68 and 69.

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 a Companyappointed trustee can choose to exercise any unexercisedSubscription share rights. If the trustee does not exercise theShare subscription rights, the rights on the Subscription shareswill lapse.

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.

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 71.

Details of the final opportunity to exercise the Subscriptionshares at 986 pence by 30th October 2015 have also been sentto shareholders by post.

During the year, the Company issued 638,653 Ordinary sharesfor a total consideration of £6,258,000 on the conversion ofSubscription shares. Since the year end, no further Ordinaryshares have been issued.

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 Board mayhold a separate meeting devoted to strategy each year.

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Strategic Report continuedBusiness Review continued

• 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 theBoard 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 27 to 32.

• 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 thedepositary’s or custodian’s records could prevent accuratereporting and monitoring of the Company’s financialposition. On 1st July 2014, the Company appointed BNY

Mellon Trust & Depositary (UK) Limited to act as thedepositary, responsible for overseeing the operations of thecustodian, JPMorgan Chase Bank, N.A., and the Company’scash flows. Details of how the Board monitors the servicesprovided by the Manager and its associates and the keyelements designed to provide effective internal control areincluded with the Risk Management and Internal Controlsection of the Corporate Governance report on pages 30and 31. The threat of cyber attack, in all its guises, isregarded as at least as important as more traditionalphysical threats to business continuity and security. TheCompany benefits directly or indirectly from all elementsof JPMorgan’s Cyber Security programme. The informationtechnology controls around the physical security ofJPMorgan’s data centres, security of its networks andsecurity of its trading applications are tested by Deloitteand reported every six months against the AAF Standard.

• 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 25.

• 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 60 to 66.

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 deemed to be diverse. At 30th June 2015, there werefour male Directors 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:

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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 are

therefore 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 Manager discusses the outlook in his reporton pages 6 to 9.

For and on behalf of the Board Simon DaviesChairman

25th September 2015

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

Last re-elected to the Board: 2013.

Remuneration: £35,000 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 BNY Mellon Trust and Depository (UK) Limited and BNYMellon Trust Company (Ireland) Limited.




GovernanceBoard of Directors

Gay Collins*†§

A Director since 21st February 2012.

Elected to the Board: 2013.


Founding partner of Montford Communications, a strategic and financialcommunications company. She has over 26 years experience in PR and specialises inadvising companies in the financial services space. Previous experience includes sellingEurobonds at Merrill Lynch and Dean Witter in London and New York.




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* 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 director of Managed Pension Funds Ltd, SSGA Ireland Unit TrustManagement Ltd and a partner of European and Global Advisers LLP. He also sits on theinvestment committees of several educational charities.




Tristan Hillgarth*†§

A Director since November 2014.

Last re-elected to the Board: n/a.


Over 30 years of experience in the asset management industry having been a director ofJupiter Asset Management for eight years. Before that he was at Invesco where he heldseveral senior positions over 14 years including CEO of Invesco’s UK and Europeanbusiness. He is currently also a non-executive director of Euromoney InstitutionalInvestor plc.




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The Directors present their report and the audited financialstatements for the year ended 30th June 2015.

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.

The Alternative Investment Fund Managers Directive (‘AIFMD’)

JPMF has been appointed as the Company’s alternativeinvestment fund manager (‘AIFM’). JPMF has been approvedas an AIFM by the Financial Conduct Authority (‘FCA’). For thepurposes of the AIFMD the Company is an alternativeinvestment fund (‘AIF’).

The Company entered into a new investment managementagreement with JPMF on 1st July 2014. JPMF has delegatedresponsibility for the day to day management of the Company’sportfolio to JPMAM. JPMF is required to ensure that a depositaryis appointed to the Company. The Company therefore has

appointed BNY Mellon Trust and Depositary (UK) Limited (‘BNY’)as its depositary. BNY has delegated its safekeeping function tothe custodian, JPMorgan Chase Bank, N.A. BNY remainsresponsible for the oversight of the custody of the Company’sassets and for monitoring its cash flows. The AIFMD requirescertain information to be made available to investors in AIFsbefore they invest and requires that material changes to thisinformation be disclosed in the annual report of each AIF. AnInvestor Disclosure Document, which sets out information onthe Company’s investment strategy and policies, leverage, risk,liquidity, administration, management, fees, conflicts of interestand other shareholder information is available on theCompany’s website at www.jpmoverseas.co.uk.

There have been no material changes (other than thosereflected in these financial statements) to this informationrequiring disclosure. Any information requiring immediatedisclosure pursuant to the AIFMD will be disclosed to theLondon Stock Exchange through a primary informationprovider. As an authorised AIFM, JPMF will make the requisitedisclosures on remuneration levels and polices to the FCA atthe appropriate time.

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 underthe 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).

Governance continuedDirectors’ Report

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The results for the year ended 30th June 2015 gave rise toa performance fee of £1,036,000 (2014: £1,791,000) as the totalreturn overperformed the benchmark plus the hurdle of 0.5%.A performance fee of £707,000 (2014: £507,000) will bepayable this year of which £1,343,000 was carried forwardfrom the prior years. A balance of £1,672,000 (2014:£1,343,000) remains payable in future years but will first bereduced by any future underperformance.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 17), risk management policies(see pages 60 to 66), liquidity risk (see note 26(b) on page 65),capital management policies and procedures (see page 67), 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 22 and 23.

Details of Directors’ beneficial shareholdings may be found inthe Directors’ Remuneration Report on page 34. 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, having consideredtheir qualifications, performance and contribution to the Boardand its committees, confirms that each Director continues tobe effective and demonstrates commitment to the role, andthe Board recommends to shareholders that they beelected/re-elected. As part of the Board’s succession planning,Tristan Hillgarth was appointed a non-executive Directorimmediately after the last AGM last November.

SimonDavies will retire from the Board with effect from theconclusion of the AGM. Nigel Wightman will succeed theChairman and will become the Chairman of the NominationCommittee. Gay Collinswill become Senior Independent Director.

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 reappointthem 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 70.

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Governance continuedDirectors’ Report continued


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 323,722 5.59

The Company is also aware that approximately 14.26% 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) Sub-division of existing ordinary shares (Resolution 10)At the Annual General Meeting the Directors will seek authorityto sub-divide each existing ordinary share of 25 pence each

(the ‘Existing Ordinary Shares’) into five new ordinary shares of5 pence each (the ‘New Ordinary Shares’). The full text of thisresolution is set out on page 68. The resolution is conditionalupon the New Ordinary Shares being listed on the Official Listof the UK Listing Authority and admitted to trading on theLondon Stock Exchange.

If resolution 10 is passed at the Annual General Meeting andthe conditions attaching to the resolution are fulfilled there willbe 135,480,290 New Ordinary Shares in issue immediatelyfollowing completion of the sub-division (on the basis thatthere are currently 27,096,058 Ordinary shares in issue).

The Directors consider the sub-division to be in the bestinterests of shareholders as a whole because lowering theprice at which the shares are traded will facilitate investmentthrough platforms, regular savings schemes and dividendreinvestment plans.

The New Ordinary Shares will rank pari passu with each otherand will be subject to the same rights and restrictions as theExisting Ordinary Shares, including the same rights toparticipate in dividends or income of the Company. Mandatesand other instructions for the payment of dividends, includingany dividend reinvestment instruction received in paper formor via CREST, will, unless and until revised, continue to apply tothe New Ordinary Shares. A holding of New Ordinary Sharesfollowing the sub-division will represent the same proportionof the issued ordinary share capital of the Company as thecorresponding holding of Existing Ordinary Shares.

If resolution 10 is approved at the Annual General Meeting it isexpected that: (i) dealings in Existing Ordinary Shares will ceaseas at close of business on 7th January 2016 and that admissionof the New Ordinary Shares to the Official List and to tradingon the London Stock Exchange and dealings will commence inthe New Ordinary Shares on 8th January 2016; (ii) whereExisting Ordinary Shares are held in certificated form, sharecertificates will cease to be valid from 8th January 2016.Certificates in respect of the New Ordinary Shares will beposted, at the risk of shareholders, by 18th January 2016 (thesewill replace existing certificates which should be destroyed);and (iii) shareholders who hold their Existing Ordinary Sharesin uncertificated form will have their CREST accounts creditedwith the relevant entitlements to New Ordinary Shares on8th January 2016.

The New Ordinary Shares have been allocated new stockidentification codes as follows: SEDOL Code BYMKY69; andISIN Code: GB00BYMKY695.

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(ii) Authority to issue new shares for cash and disapply pre-emptionrights (Resolutions 11 and 12)

The Directors will seek renewal of the authority at the AGM toissue up to 2,885,690 New Ordinary shares for cash or sellshares held in Treasury other than by pro rata issue to existingShareholders up to an aggregate nominal amount of £577,138,such amount being equivalent to approximately 10% of thepresent issued share capital. The full text of the resolutions isset out in the Notice of Annual General Meeting on page 68.

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.

(iii) Authority to repurchase the Company’s shares (Resolution 13) The authority to repurchase up to 14.99% of the Company’sissued share capital, granted by shareholders at the 2014Annual General Meeting, will expire on 10th May 2016 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 4th May 2017 unless the authority is renewed at theAGM in 2016 or at a general meeting prior to that. The full textof the resolution is set out in the Notice of Annual GeneralMeeting on pages 68 and 69. Repurchases will be made at thediscretion of the Board and will only be made in the market atprices below the prevailing NAV per share, thereby enhancingthe NAV of the remaining shares, as and when marketconditions are appropriate.

(iv) Amendment of Articles of Association (Resolution 14)In the light of the proposed sub-division of the existingordinary shares on a five for one basis the Board will seekauthority at the Annual General Meeting to amend the Articlesof Association to provide that on a poll every member presentwill have one vote for every Ordinary share that they hold.

Recommendation

The Board considers that resolutions 10-14 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 to45,237 shares.

Corporate GovernanceCompliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 36, 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 The

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Bribery 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 fivenon-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 22 and 23. 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 theUK Corporate Governance Code, including the need to refreshthe Board and its Committees. The Board has adopted

corporate 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 Directorswith the exception of Simon Davies who will not seekre-election.

Induction and Training

On appointment, the Manager and Company Secretary provideall Directors with induction training. Thereafter, regular briefingsare provided on changes in law and regulatory requirements thataffect the Company and the Directors. Directors are encouragedto attend industry and other seminars covering issues anddevelopments relevant to investment trust companies. Regularreviews of the Directors’ training needs are carried out by theChairman by means of the evaluation 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 22 and 23. 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 1Tristan Hillgarth2 2 1 1 1Nigel Wightman 4 2 1 1

1Mr Davies attends the Audit and Management Engagement Committee meetings byinvitation.2Appointed as a Director on 11th November 2014.

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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 22 and 23, and the committee meets at least twiceeach year. The members of the Audit and ManagementEngagement Committee consider that they have therequisite skills and experience to fulfil the responsibilities

of the Committee. For details of their qualifications, seepages 22 and 23.

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 2015, 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 46. 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 recognition of investment incomeis undertaken in accordance withaccounting policy note 1(d) to theaccounts on page 46.

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 ended

Valuation, existenceand ownership ofinvestments

Calculation ofmanagement andperformance fees

Compliance withSections 1158 and 1159

Recognition ofinvestment income

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30th June 2015, taken as a whole, is fair, balanced andunderstandable and provides the information necessary forshareholders to assess the Company’s performance, businessmodel 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 36.

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 audit engagementpartner. The Company’s year ended 30th June 2015 is thecurrent audit partner’s first of a five year maximum term.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.The Committee is aware that, as PwC has been the audit firmfor over 50 years, the EU regulations in relation to the statutoryaudits of EU listed companies will likely require the Company tochange its audit firm by 2020. Details of the auditors’ feescharged for audit services are disclosed in note 5 on page 49.

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 performanceand reports formally to shareholders by way of the annualreport and accounts and the half year financial report. 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 77 orvia the ‘Ask a Question’ link on the Company’s website.

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 77 orvia the ‘Ask a Question’ link on the Company’s website.

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 can

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only 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 2015, 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 pages 20 and 21.

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 thehighest 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.

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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 best

economic 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

25th September 2015


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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 37 to 41.

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 orpension 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 reasonable

out-of-pocket expenses incurred in attending the Company’sbusiness.

In the year under review, Directors’ fees were paid at thefollowing rates: Chairman £35,000 per annum; Chairman of theAudit and Management Engagement Committee £27,500 perannum; and, the other Directors £23,500 per annum.

With effect from 1st July 2015, fees were increased to thefollowing levels: Chairman £36,000 per annum; Chairman ofthe Audit and Management Engagement Committee £28,500per annum; and, other Directors £24,500 per annum.

The total Directors’ fees of £124,474 (2014: £107,500) were allpaid to Directors.

No amounts (2014: 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 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 28.

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 June2014 and no changes are proposed for the year ending30th June 2016.

Directors’ Remuneration Report

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At the Annual General Meeting held on 11th November 2014,of votes cast, 99% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theResolutions to approve the Directors’ Remuneration Policyand the Directors’ Remuneration Report for the year ended30th June 2014, and 1% voted against. Abstentions werereceived from less than 0.1% of the votes cast.

Details of voting on both the Remuneration Policy and theDirectors’ Remuneration Reports from the 2015 AnnualGeneral Meeting will be given in the annual report for the yearending 30th June 2016.

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 was £124,474. The singletotal figure of remuneration for each Director is detailed belowtogether with the prior year comparative.

Single total figure table1

Total fees2

2015 2014

Simon Davies £35,000 £34,500Jonathan Carey £27,500 £27,000Gay Collins £23,500 £23,000Tristan Hillgarth3 £14,974 —Nigel Wightman £23,500 £23,000

Total £124,474 £107,500

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.

3Appointed as a Director on 11th November 2014.

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.

2015 2014Number of Number of

Directors’ Name shares held shares held

Ordinary sharesSimon Davies 33,600 33,600Jonathan Carey 3,300 3,300Gay Collins 2,337 2,337Tristan Hillgarth 3,000 —Nigel Wightman 3,000 3,000

Subscription sharesSimon Davies — —Jonathan Carey — —Gay Collins — —Tristan Hillgarth — —Nigel Wightman — —

1Audited information.

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

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 six 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.

Governance continuedDirectors’ Remuneration Report continued

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Six Year Share Price and Benchmark TotalReturn Performance to 30th June 2015


Share Price total return.

Benchmark.

A table showing the total remuneration for the Chairman overthe five years ended 30th June 2015 is below:

Remuneration for the Chairman over the five years ended 30th June 2015

Performance related benefits received as a

Year ended percentage of 30th June Fees maximum payable1

2015 £35,000 n/a2014 £34,500 n/a2013 £32,000 n/a2012 £32,000 n/a2011 £28,500 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

2015 2014

Remuneration paid to all Directors £124,474 £107,500

Distribution to shareholders— by way of dividend £3,463,000 £3,551,000— by way of share repurchases £8,158,000 £4,553,000

For and on behalf of the Board Simon Davies Chairman

25th September 2015

100

125

150

175

200

225

250

2015201420132012201120102009

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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.The maintenance 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 22 and 23 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

25th September 2015

Governance continuedStatement of Directors’ Responsibilities

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Report on the financial statements

Our opinionIn our opinion, JPMorgan Overseas Investment Trust plc’s financial statements (the “financial statements”):

• give a true and fair view of the state of the company’s affairs as at 30th June 2015 and of its net return and cash flows for theyear then ended;

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

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

What we have auditedThe JPMorgan Overseas Investment Trust plc’s financial statements comprise:

• the Balance Sheet as at 30th June 2015;

• the Income Statement for the year then ended;

• the Cash Flow Statement for the year then ended;

• the Reconciliation of Movements in Shareholders’ Funds for the year then ended; and

• the notes to the financial statements, which include a summary of significant accounting policies and other explanatoryinformation.

Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financialstatements. These are cross-referenced from the financial statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law andUnited Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Our audit approachOverviewMateriality:

• Overall materiality: £2,700,000 which represents approximately 1% of net assets.

Audit scope:

• The company is a standalone Investment Trust Company and engages JPMorgan Funds Limited (the ‘Manager’) to manage itsassets.

• We conducted our audit of the financial statements at JPMorgan Corporate & Investment Bank (the ‘Administrator’) to whomthe Manager has, with the consent of the directors, delegated the provision of certain administrative functions.

• We tailored the scope of our audit taking into account the types of investments within the company, the involvement of thethird parties referred to above, the accounting processes and controls, and the industry in which the company operates.

Areas of focus:

• Income from investments

• Valuation and existence of investments

• Performance fees

The scope of our audit and our areas of focusWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. Asin all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether therewas evidence of bias by the directors that represented a risk of material misstatement due to fraud.

Independent Auditors’ ReportTo the Members of JPMorgan Overseas Investment Trust plc

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The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort,are identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areasin order to provide an opinion on the financial statements as a whole, and any comments we make on the results of ourprocedures should be read in this context. This is not a complete list of all risks identified by our audit.

Area of focus How our audit addressed the area of focus

We assessed the accounting policy for income recognition forcompliance with accounting standards and the AIC SORP and performedtesting to check that income had been accounted for in accordance withthis stated accounting policy.

We found that the accounting policies implemented were in accordancewith accounting standards and the AIC SORP, and that income has beenaccounted for in accordance with the stated accounting policy.

We understood and assessed the design and implementation of keycontrols surrounding income recognition.

In addition, we tested dividend receipts by agreeing the dividend ratesfrom a sample of investments to independent third party sources.

No misstatements were identified by our testing which requiredreporting to those charged with governance.

To test for completeness, we tested that the appropriate dividends hadbeen received in the year by reference to independent data of dividendsdeclared for a sample of investment holdings in the portfolio.

Our testing did not identify any unrecorded dividends.

We tested the allocation and presentation of dividend income betweenthe revenue and capital return columns of the Income Statement in linewith the requirements set out in the AIC SORP. We then tested thevalidity of revenue and capital special dividends to independent thirdparty sources.

We did not find any special dividends that were not treated inaccordance with the AIC SORP.

We tested the valuation of the listed investment portfolio by agreeing theprices used in the valuation to independent third party sources.

No misstatements were identified by our testing which required reportingto those charged with governance.

We tested the existence of the investment portfolio by agreeing theholdings for investments to an independent custodian confirmation fromJPMorgan Chase Bank, N.A.

No differences were identified.

Income from investments

Refer to page 29 (Directors’ Report), page46 (AccountingPolicies) and page49 (notes).

ISAs (UK & Ireland) presume there is a risk of fraud inincome recognition because of the pressure managementmay feel to achieve capital growth in line with theobjective of the company.

We focused on the accuracy and completeness of dividendincome recognition and its presentation in the IncomeStatement as set out in the requirements of TheAssociation of Investment Companies Statement ofRecommended Practice (the ‘AIC SORP’).

This is because incomplete or inaccurate income couldhave a material impact on the company’s net asset value.

Valuation and existence of investments

Refer to page 29 (Directors’ Report), page46 (AccountingPolicies) and page 53 (notes).

The investment portfolio at the year-end principallycomprised of listed equity investments of £296 million.

We focused on the valuation and existence of investmentsbecause investments represent the principal element ofthe net asset value as disclosed on the Balance Sheet inthe financial statements.

Independent Auditors’ Reportcontinued

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Area of focus How our audit addressed the area of focus

We independently recalculated the performance fee using themethodology set out in the Investment Management Agreement andagreed the inputs to the calculation, including the benchmark data, toindependent third party sources, where applicable.

No misstatements were identified which required reporting to thosecharged with governance.

We tested the allocation of the performance fee between the income andcapital return columns of the Income Statement with reference to theaccounting policy.

We found that the allocation of the performance fee was consistent withthe accounting policy.

How we tailored the audit scope

statements as a whole, taking into account the types of investments within the company, the involvement of the Manager andAdministrator, the accounting processes and controls, and the industry in which the company operates.

The company’s accounting is delegated to the Administrator who maintain their own accounting records and controls and reportto the Manager and the directors.

As part of our risk assessment, we assessed the control environment in place at both the Manager and the Administrator to theextent relevant to our audit. This assessment of the operating and accounting structure in place at both organisations involvedobtaining and reading the relevant control reports issued by the independent auditor of the Manager and the Administrator inaccordance with generally accepted assurance standards for such work. We then identified those key controls at theAdministrator on which we could place reliance to provide audit evidence. We also assessed the gap period of three monthsbetween the period covered by the controls report and the year-end of the company. Following this assessment, we appliedprofessional judgement to determine the extent of testing required over each balance in the financial statements, includingwhether we needed to perform additional testing in respect of those key controls to support our substantive work. For thepurposes of our audit, we determined that additional testing of controls in place at the Administrator was not required becauseadditional substantive testing was performed.

MaterialityThe scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extentof our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

£2,700,000 (2014: £2,400,000).

1% of net assets.

We have applied this benchmark, a generally accepted auditing practice for investment trustaudits, in the absence of indicators that an alternative benchmark would be appropriate andbecause we believe this provides an appropriate and consistent year-on-year basis for ouraudit.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £135,000(2014: £120,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Performance fees

Refer to pages 24 and 25 (Directors’ Report), pages 47 and 48(Accounting Policies) and page 49 (notes).

The performance fee charged to the Income Statement forthe year is £1,036,000. We focused on this area becausethe performance fee is calculated using a complexmethodology as set out in the Investment ManagementAgreement between the company and the Manager.

Overall materiality

How we determined it

Rationale for benchmark applied

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Going concernUnder the Listing Rules we are required to review the directors’ statement, set out on page 25, in relation to going concern. Wehave nothing to report having performed our review.

As noted in the directors’ statement, the directors have concluded that it is appropriate to prepare the company’s financialstatements using the going concern basis of accounting. The going concern basis presumes that the company has adequateresources to remain in operation, and that the directors intend it to do so, for at least one year from the date the financialstatements were signed. As part of our audit we have concluded that the directors’ use of the going concern basis is appropriate.

However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the company’sability to continue as a going concern.

Other required reporting

Consistency of other informationCompanies Act 2006 opinion

In our opinion:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statementsare prepared is consistent with the financial statements.

ISAs (UK & Ireland) reporting

We have no exceptions to report arising from thisresponsibility.



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

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

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches notvisited by us; or

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

We have no exceptions to report arising from this responsibility.

• the statement given by the directors on page 36, in accordance with provision

C.1.1 of the UK Corporate Governance Code (the ‘Code’), that they consider the

Annual Report taken as a whole to be fair, balanced and understandable and

provides the information necessary for members to assess the company’s

performance, business model and strategy is materially inconsistent with our

knowledge of the company acquired in the course of performing our audit.

• the section of the Annual Report on pages 29 and 30, as required by provision

C.3.8 of the Code, describing the work of the Audit Committee does not

appropriately address matters communicated by us to the Audit Committee.

• information in the Annual Report is:

− materially inconsistent with the information in the audited financialstatements; or

− apparently materially incorrect based on, or materially inconsistent with,our knowledge of the company acquired in the course of performing ouraudit; or

− otherwise misleading.

Independent Auditors’ Reportcontinued

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Directors’ remunerationDirectors’ Remuneration Report - Companies Act 2006 opinionIn our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with theCompanies Act 2006.

Other Companies Act 2006 reportingUnder the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remunerationspecified by law are not made. We have no exceptions to report arising from this responsibility.

Corporate governance statementUnder the Listing Rules we are required to review the part of the Corporate Governance Statement relating to the company’scompliance with ten provisions of the UK Corporate Governance Code. We have nothing to report having performed our review.

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 36, the directors are responsible for thepreparation of the financial statements and for being satisfied that they give a true and fair view.

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

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance withChapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assumeresponsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come savewhere expressly agreed by our prior consent in writing.

What an audit of financial statements involvesAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonableassurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes anassessment of:

• whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied andadequately disclosed;

• the reasonableness of significant accounting estimates made by the directors; and

• the overall presentation of the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide areasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantiveprocedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies withthe audited financial statements and to identify any information that is apparently materially incorrect based on, or materiallyinconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparentmaterial misstatements or inconsistencies we consider the implications for our report.

Alex Bertolotti (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondon

25th September 2015

Overseas_pp37_45 28/09/2015 09:32 Page 41


2015 2014Revenue Capital Total Revenue Capital Total

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

Gains on investments held at fairvalue through profit or loss 2 — 22,974 22,974 — 31,243 31,243

Net foreign currency gains/(losses) — 4,579 4,579 — (1,609) (1,609)Income from investments 3 4,675 — 4,675 4,405 — 4,405Other interest receivable and similar income 3 29 — 29 73 — 73

Gross return 4,704 27,553 32,257 4,478 29,634 34,112Management fee 4 (553) (553) (1,106) (499) (499) (998)Performance fee 4 — (1,036) (1,036) — (1,791) (1,791)Other administrative expenses 5 (584) — (584) (497) — (497)

Net return on ordinary activities before finance costs and taxation 3,567 25,964 29,531 3,482 27,344 30,826

Finance costs 6 (149) (149) (298) (212) (212) (424)

Net return on ordinary activities before taxation 3,418 25,815 29,233 3,270 27,132 30,402

Taxation 7 (380) — (380) (355) — (355)

Net return on ordinary activities after taxation 3,038 25,815 28,853 2,915 27,132 30,047

Return per share – undiluted 9 13.19p 112.10p 125.29p 12.41p 115.55p 127.96pReturn per share – diluted 9 13.08p 111.16p 124.24p 12.41p 115.55p 127.96p

Details of the proposed dividend are given in note 8 on page 51.

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 46 to 67 form an integral part of these accounts.

Financial StatementsIncome Statementfor the year ended 30th June 2015

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Called up Share Capitalshare premium redemption Capital Revenue

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

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 17,827 245,635Repurchase of shares into Treasury — — — (8,158) — (8,158)Exercise of Subscription shares into

Ordinary shares (6) 6 — — — —Issue of Ordinary shares on exercise

of Subscription shares 160 6,098 — — — 6,258Net return on ordinary activities — — — 25,815 3,038 28,853Dividends appropriated in the year — — — — (3,463) (3,463)

At 30th June 2015 6,814 9,317 27,401 208,191 17,402 269,125


Reconciliation of Movements in Shareholders’ Funds

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2015 2014Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 289,301 265,685Investment in liquidity fund held at fair value through profit or loss 6,792 —

10 296,093 265,685Current assetsDerivative financial assets 11 1,120 1,361Debtors 12 1,256 1,639Cash and short term deposits 13 1,169 2,568

3,545 5,568

Creditors: amounts falling due within one year 14 (26,799) (23,340)Derivative financial liabilities 15 (1,842) (735)

Net current liabilities (25,096) (18,507)

Total assets less current liabilities 270,997 247,178

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

Provisions for liabilities and charges

Performance fee payable 17 (1,672) (1,343)

Net assets 269,125 245,635

Capital and reserves Called up share capital 18 6,814 6,660Share premium account 19 9,317 3,213Capital redemption reserve 19 27,401 27,401Capital reserves 19 208,191 190,534Revenue reserve 19 17,402 17,827

Total equity shareholders’ funds 269,125 245,635

Net asset value per share – undiluted 20 1,163.0p 1,054.9pNet asset value per share – diluted 20 1,137.6p 1,036.7p

The accounts on pages 42 to 67 were approved and authorised for issue by the Board of Directors on 25th September 2015 andwere signed on their behalf by:

Tristan HillgarthDirector


Company registration number: 24299.

Financial Statements continuedBalance Sheetat 30th June 2015

Overseas_pp37_45 28/09/2015 09:32 Page 44


2015 2014Notes £’000 £’000

Net cash inflow from operating activities 21 1,898 2,545

Returns on investments and servicing of finance Interest paid (294) (422)

Net cash outflow from returns on investments and servicing of finance (294) (422)

Taxation Taxation recovered 51 115

Capital expenditure and financial investment Purchases of investments (250,024) (164,561)Sales of investments 241,420 171,763Other capital charges (14) (15)

Net cash (outflow)/inflow from capital expenditure and financial investment (8,618) 7,187

Dividend paid (3,463) (3,551)

Net cash (outflow)/inflowbefore financing (10,426) 5,874

Financing Issue of Ordinary shares on exercise of Subscription shares 6,258 2,547Repurchase of shares into Treasury (8,158) (5,068)Repayment of bank loan (20,000) —Drawdown of bank loan 25,000 —

Net cash inflow/(outflow) from financing 3,100 (2,521)

(Decrease)/increase in cash for the year 22 (7,326) 3,353


Cash Flow Statementfor the year ended 30th June 2015

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1. Accounting policies

(a) Basis of accountingThe financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally AcceptedAccounting Practice (‘UK GAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment TrustCompanies and 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 financial statements 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 financial statements 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 (‘FVTPL’). They are included initially at fair value which is taken to be their cost. Subsequently theinvestments are valued at fair value which are quoted bid market prices for investments traded in active markets. Forinvestments which are not traded in active markets, unlisted and restricted investments, the Board takes into account thelatest traded prices, other observable market data and asset values based on the latest management accounts.

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

(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 within capital reserves within ‘Investment holding gains and losses’. Unrealised gains andlosses on foreign currency contracts are included in the Income Statement and dealt within capital reserves within ‘Investmentholding gains and losses’.

(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.

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 Financial Statementsfor the year ended 30th June 2015

Overseas_pp46_67 28/09/2015 09:33 Page 46


(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 53.

(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.

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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 within 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.

2015 2014£’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 basedon historical cost 28,362 23,906

Amounts recognised in investment holding gains and losses in the previous yearin respect of investments sold during the year (20,937) (15,829)

Gains on sales of investments based on the carrying value at the previous balancesheet date 7,425 8,077

Net movement in investment holding gains 15,564 23,176Other capital charges (15) (10)

Total capital gains on investments held at fair value through profit or loss 22,974 31,243

Financial Statements continuedNotes to the Financial Statements continued

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2015 2014£’000 £’000

3. Income UK dividends 1,017 645Overseas dividends 3,639 3,726Dividends from liquidity fund 19 6Scrip dividends — 28

4,675 4,405

Other interest receivable and similar incomeStock lending 29 73

Total income 4,704 4,478

2015 2014Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

4. Management and performance fee Management fee 553 553 1,106 499 499 998Performance fee — 1,036 1,036 — 1,791 1,791

553 1,589 2,142 499 2,290 2,789

Details of the management fee and performance fee are given in the Directors’ Report on page 24.

2015 2014£’000 £’000

5. Other administrative expensesAdministration expenses 313 249Directors’ fees1 124 108Savings scheme costs2 115 110Auditors’ remuneration for audit services3 30 29Other Auditors’ remuneration for audit of New Zealand shareholder register4 2 1

584 497

1Full disclosure is given in the Directors’ Remuneration Report on page 34.2Paid to the Manager for themarketing and administration of savings scheme products and includes £9,000 irrecoverable VAT.3Includes £3,000 (2014: £3,000) irrecoverable VAT.4Audit services were provided by Grant Thornton (New Zealand).


6. Finance costs Interest on bank loans and overdrafts 144 144 288 205 205 410Debenture interest 5 5 10 7 7 14

149 149 298 212 212 424

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


Overseas withholding tax 380 — 380 355 — 355

Current tax charge for the year 380 — 380 355 — 355

(b) Factors affecting current tax charge for the yearThe tax assessed for the year is lower (2014: lower) than the UK corporation tax rate chargeable for the year of 20.75%(2014: 22.50%). The factors affecting the current tax charge for the year are as follows:


Net return on ordinary activities before taxation 3,418 25,815 29,233 3,270 27,132 30,402

Net return on ordinary activities before taxation multiplied by the applicable rate of corporation tax at 20.75% (2014: 22.50%) 709 5,357 6,066 736 6,105 6,841

Effects of:Non taxable capital gains — (5,718) (5,718) — (6,668) (6,668)Non taxable UK dividends (211) — (211) (145) — (145)Non taxable overseas dividends (744) — (744) (828) — (828)Non taxable scrip dividends — — — (6) — (6)Overseas withholding tax 380 — 380 355 — 355Income taxed in different years — — — 2 — 2Unutilised expenses 246 361 607 241 563 804

Current tax charge for the year 380 — 380 355 — 355

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £4,236,000 (2014: £3,651,000) based on a prospective corporation taxrate of 20% (2014: 20%). 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. The UK Government announced in July 2015 that the corporationtax rate is set to be cut to 19% in 2017 and 18% in 2020. These rate reductions have not been substantively enacted, thereforethe impact of these reductions has not been incorporated into the tax charge for the period.

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.


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8. Dividends(a) Dividends paid and proposed

2015 2014£’000 £’000

Dividend paidUnclaimed dividends refunded to the Company (4) (5)2014 final dividend of 15.0p (2013: 15.0p) 3,467 3,556

Total dividends paid in the year 3,463 3,551

Dividend proposed2015 final dividend proposed of 16.0p (2014: 15.0p) 3,702 3,493

For the year ended 30th June 2014, the Company declared a dividend of £3,493,000 but the final dividend paid amounted to£3,467,000 due to share buybacks after the balance sheet date but prior to the share register record date.

The final dividend proposed in respect of the year ended 30th June 2015 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 2016.

(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:

2015 2014£’000 £’000

Final dividend payable of 16.0p (2014: 15.0p) 3,702 3,493

Total dividends for Section 1158 purposes 3,702 3,493

The revenue available for distribution by way of dividend for the year is £3,038,000 (2014: £2,915,000).

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2015 2014£’000 £’000

9. Return per shareRevenue return 3,038 2,915Capital return 25,815 27,132

Total return 28,853 30,047

Weighted average number of Ordinary shares in issue during the period used for the purpose of the undiluted calculation 23,027,715 23,480,245

Weighted average number of Ordinary shares in issue during the period used for the purpose of the diluted calculation 23,222,638 23,480,245

UndilutedRevenue return per share 13.19p 12.41pCapital return per share 112.10p 115.55p

Total return 125.29p 127.96p

DilutedRevenue return per share 13.08p 12.41pCapital return per share 111.16p 115.55p

Total return 124.24p 127.96p

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’.


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2015 2014£’000 £’000

10. Investments Investments listed on a recognised stock exchange 289,301 265,685Investments in liquidity fund 6,792 —

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

Opening valuation 265,685 243,016

Movements in the year:Purchases at cost 248,267 162,445Sales – proceeds (240,848) (171,029)Gains on sales based on the carrying value at the previous balance sheet date 7,425 8,077Net movement in investment holding gains and losses 15,564 23,176

296,093 265,685

Closing book cost 253,696 217,915Closing investment holding gains 42,397 47,770

Total investments held at fair value 296,093 265,685

Transaction costs on purchases during the year amounted to £260,000 (2014: £185,000) and on sales during the yearamounted to £124,000 (2014: £91,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £20,937,000 have been transferred to gains on sales ofinvestments, as disclosed in note 19.

2015 2014£’000 £’000

11. Derivative financial assetsForward foreign currency contracts 1,120 1,361

2015 2014£’000 £’000

12. DebtorsSecurities sold awaiting settlement 756 1,328Overseas withholding tax recoverable 130 66Dividends and interest receivable 337 215Other debtors 33 30

1,256 1,639

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

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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.

2015 2014£’000 £’000

14. Creditors: amounts falling due within one year Securities purchased awaiting settlement 905 2,662Bank loans 25,000 20,000Performance fee payable 707 507Other creditors and accruals 187 171

26,799 23,340

On 11th July 2014, the Company arranged a £25 million one year revolving credit facility with National Australia Bank (‘NAB’)which expired since the year-end on 11th July 2015. Under the terms of the facility, the Company could draw down up to£25 million at an interest rate of LIBOR as quoted in the market for the relevant currency and loan period, plus a margin of0.7%. The facility was unsecured and was subject to covenants which are customary for a credit agreement of this nature.At the year end, the Company had £25 million drawn down on the facility.

Since the year end, the Company arranged a new £25 million three year revolving facility on 10th July 2015 with NAB which willexpire on 10th July 2018. Under the terms of this new facility, the Company can draw down up to £25 million at an interest rateof LIBOR as quoted in the market for the relevant currency and loan period, plus a margin of 0.85%. The facility is unsecuredand is subject to covenants which are customary for a credit agreement of this nature.

Details of the performance fee are given in the Directors’ Report on pages 24 and 25.

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

2015 2014£’000 £’000

15. Derivative financial liabilitiesForward foreign currency contracts 1,842 735

2015 2014£’000 £’000

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

200 200

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


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2015 2014£’000 £’000

17. Provisions for liabilities and charges Performance fee1

Opening balance 1,343 59Performance fee for the year 1,036 1,791Amount payable at the year end (707) (507)

Closing balance 1,672 1,343

1Further details of the performance fee are given in the Director’s Report on pages 24 and 25.

2015 2015£’000 £’000

18. Called up share capital Allotted and fully paid share capital:Ordinary sharesOpening balance of 23,284,602 (2014: 23,491,110) Ordinary shares of 25p each, excluding shares held in Treasury 5,822 5,873

Repurchase of 782,738 (2014: 489,215) Ordinary shares into Treasury (196) (122)Issue of 638,653 (2014: 282,707) Ordinary shares on exercise of Subscription shares 160 71

5,786 5,8223,955,541 (2014: 3,172,803) Ordinary shares held in Treasury 989 793

Closing balance1 6,775 6,615

Subscription sharesOpening balance of 4,523,695 (2014: 4,806,402) Subscription shares of 0.01p each 45 48Exercise of 638,653 (2014: 282,707) Subscription shares into Ordinary shares (6) (3)

Closing balance2 39 45

Total called up share capital 6,814 6,660

1Represented by 27,096,058 (2014: 26,457,405) Ordinary shares including 3,955,541 (2014: 3,172,803) Ordinary shares held in Treasury.2Comprises 3,885,042 (2014: 4,523,695) 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 782,738 Ordinary shares were repurchased into Treasury for a total consideration of £8,158,000.

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.

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Capital reservesGains and Holding

Called up Capital losses on gains andshare Share redemption sales of losses on Unrealised Revenuecapital premium reserve investments investments reserve reserve Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

19. Reserves Opening balance 6,660 3,213 27,401 143,485 47,770 (721) 17,827 245,635Net gains on foreign currency transactions — — — 5,301 — — — 5,301Unrealised losses on foreign currency contracts — — — — — (722) — (722)Unrealised gains on forward foreign currencycontracts from prior period now realised — — — 622 — (622) — —

Repurchase of shares into Treasury — — — (8,158) — — — (8,158)Exercise of Subscription shares into Ordinary shares (6) 6 — — — — — —Issue of Ordinary shares on exercise of Subscription shares 160 6,098 — — — — — 6,258

Management fee charged to capital — — — (553) — — — (553)Finance costs charged to capital — — — (149) — — — (149)Gain on sales of investments based on the carryingvalue at the previous balance sheet date — — — 7,425 — — — 7,425

Net movement in investment holding gains and losses — — — — 15,564 — — 15,564Transfer on disposal of investments — — — 20,937 (20,937) — — —Other capital charges — — — (15) — — — (15)Performance fee for the year — — — — — (1,036) — (1,036)Performance fee now realised — — — (707) — 707 — —Dividends appropriated in the year — — — — — — (3,463) (3,463)Retained revenue for the year — — — — — — 3,038 3,038

Closing balance 6,814 9,317 27,401 168,188 42,397 (2,394) 17,402 269,125

2015 2014

20. Net asset value per share UndilutedOrdinary shareholders’ funds (£’000) 269,125 245,635Number of Ordinary shares in issue 23,140,517 23,284,602Net asset value per Ordinary share (pence) 1,163.0 1,054.9

DilutedOrdinary shareholders funds assuming exercise of Subscription shares (£’000) 307,431 288,293Number of potential Ordinary shares in issue 27,025,559 27,808,297Net asset value per Ordinary share (pence) 1,137.6 1,036.7


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2015 2014£’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 29,531 30,826Less capital return before finance costs and taxation (25,964) (27,344)Scrip dividends received as income — (28)(Increase)/decrease in dividends and interest receivable (122) 3(Increase)/decrease in other debtors (3) 34Increase/(decrease) in accrued expenses 13 (11)Overseas withholding tax (497) (436)Management fee charged to capital (553) (499)Performance fee paid (507) —

Net cash inflow from operating activities 1,898 2,545

At At30th June Exchange 30th June

2014 Cash flow movements 2015£’000 £’000 £’000 £’000

22. Analysis of changes in net debtCash and short term deposits 2,568 (7,326) 5,927 1,169Bank loan falling due within one year (20,000) (5,000) — (25,000)Debenture falling due after more than five years (200) — — (200)

Net (debt)/funds (17,632) (12,326) 5,927 (24,031)

23. Contingent liabilities and capital commitments

There were no (2014: nil) contingent liabilities or capital commitments at the balance sheet date.

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24. Transactions with the Manager, affiliates of the Manager and related party transactions

Details of the management contract with JPMorgan Funds Limited (JPMF) and JPMorgan Asset Management Limited (JPMAM)are set out in the Directors’ Report on page 24. The terms make allowance for the exclusion of management charges oninvestments held in funds on which the Manager earns a separate management fee. The fee payable to JPMAM for the yearwas £1,106,000 (2014: £998,000) of which £nil (2014: £nil) was outstanding at the year end.

The Manager is entitled to a performance fee and £1,036,000 (2014: £1,791,000) has been charged to the income statement forthe year of which £707,000 (2014: £507,000) was outstanding at the year end. An amount of £1,672,000 (2014: £1,343,000) iscarried forward and will either be paid or absorbed by underperformance in subsequent years.

Expenses amounting to £115,000 (2014: £110,000) were payable to the Manager for the marketing and administration of itssavings scheme of which £nil (2014: £8,000) was outstanding at the year end.

Included in other administration expenses in note 5 on page 49 are safe custody fees payable to JPMorgan Chase Bank N.A.amounting to £22,000 (2014: £24,000) of which £7,000 (2014: £4,000) 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 £2,000 (2014: £4,000) of which £nil (2014: £nil) wasoutstanding at the year end.

Handling charges incurred on dealing transactions amounting to £15,000 (2014: £10,000) were payable to JPMorgan InvestorServices Limited of which £2,000 (2014: £1,000) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 30th June 2015 these were valued at £4.1 million(2014: £7.3 million) and represented 1.4% (2014: 2.7%) of the Company’s investment portfolio. During the year, the Companymade £nil (2014: £nil) purchases of these investments and £4.2 million (2014: £nil) sales. Income amounting to £39,000(2014: £39,000) was receivable from these investments during the year of which £nil (2014: £nil) was outstanding at the yearend.

During the year, the Company made purchases and sales of units in the JPM Sterling Liquidity Fund, and no management feeis charged to the Company. At the year end, the Company’s investment in this fund amounted to £6.8 million (2014: £nil) andrepresented 2.3% (2014: nil) of the Company’s investment portfolio. Income amounting to £19,000 (2014: £6,000) wasreceivable from this investment during the year of which £nil (2014: £nil) was outstanding at the year end.

Fees amounting to £29,000 (2014: £73,000) were receivable from stock lending transactions during the year. JPMorganInvestor Services Limited commissions in respect of such transactions amounted to £5,000 (2014: £15,000).

At the year end, a bank balance of £1,169,000 (2014: £2,568,000) was held with JPMorgan Chase Bank N.A. A net amountof interest of £148 (2014: £121) was receivable by the Company from JPMorgan Chase Bank N.A. for the year of which £48(2014: £6) was outstanding at the year end.

The Company has no related parties other than its Directors. Details of the Directors’ shareholdings and the remunerationpayable to Directors are given in the Directors’ Remuneration Report on page 33.


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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 46.

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

2015Level 1 Level 2 Level 3 Total£’000 £’000 £’000 £’000

Financial instruments held at fair value through profit or loss Equity investments 289,301 — — 289,301Liquidity fund 6,792 — — 6,792Derivative financial assets — 1,120 — 1,120Derivative financial liabilities — (1,842) — (1,842)

Total 296,093 (722) — 295,371

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 — — — —Derivative financial assets — 1,361 — 1,361Derivative financial liabilities — (735) — (735)

Total 265,685 626 — 266,311

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

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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 National Australia Bank (‘NAB’).

(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.


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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.

2015Canadian

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

Current assets 55,090 6,258 2,037 10,360 15,067 88,812Creditors (32,206) (29,751) (6,025) (5,546) (6,000) (79,528)

Foreign currency exposure on net monetary items 22,884 (23,493) (3,988) 4,814 9,067 9,284Investments held at fair value through profit or loss that are equities 136,953 49,351 21,523 3,768 25,129 236,724

Total net foreign currency exposure 159,837 25,858 17,535 8,582 34,196 246,008

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

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% (2014: 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.

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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:

2015 2014£’000 £’000

Income statement return after taxationRevenue return 364 375Capital return 928 (88)

Total return after taxation for the year 1,292 287

Net assets 1,292 287

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

2015 2014£’000 £’000

Income statement return after taxationRevenue return (364) (375)Capital return (928) 88

Total return after taxation for the year (1,292) (287)

Net assets (1,292) (287)

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.


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2015 2014£’000 £’000

Exposure to floating interest rates:JPMorgan Sterling Liquidity Fund 6,792 —Cash and short term deposits 1,169 2,568Creditors: amounts falling due within one year – bank loan (25,000) (20,000)

Total exposure (17,039) (17,432)

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.

Details of the bank loan are given on page 54.

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

2015 2014£’000 £’000

Maximum debit interest rate exposure to floating rates – net loan balances (21,028) (19,743)Minimumdebit interest rate exposure to floating rates – net loan balances (12,925) (15,034)

Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2014: 1%)increase or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. Thislevel of change is considered to be a reasonable illustration based on observation of current market conditions. Thesensitivity analysis is based on the Company’s monetary currency financial instruments held at the balance sheet date, withall other variables held constant.

2015 20141% 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 (45) 45 (74) 74Capital return (125) 125 (100) 100

Total return after taxation for the year (170) 170 (174) 174

Net assets (170) 170 (174) 174

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(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:

2015 2014£’000 £’000

Equity investments held at fair value through profit or loss 289,301 265,685

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 15 and 16. This shows that the investments’ value is in a broadspread of countries with the highest proportion in North America. 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% (2014: 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.

2015 201410% 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 (57) 57 (52) 52Capital return 28,873 (28,873) 26,517 (26,517)

Total return after taxation for the year and net assets 28,816 (28,816) 26,465 (26,465)


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(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 on page 54.

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:

2015Within More than

one year one year Total£’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 905 — 905Bank loan 25,010 — 25,010Other creditors and accruals 187 — 187Derivative financial liabilities 1,842 — 1,842Performance fee payable 707 — 707

Creditors: amounts falling due after more than one year Perpetual debenture stock — 200 200Performance fee payable — 1,672 1,672

28,651 1,872 30,523

2014Within More than

one year one year Total£’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 liabilities 735 — 735Performance fee payable 507 — 507

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

24,087 1,543 25,630

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(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 regular credit analysis by the Manager and trades can only be placed with counterparties thathave been appointed by both the JPMorgan Counterparty Risk Group and the Board.

Exposure to JPMorgan ChaseJPMorgan Chase Bank, N.A. is the Custodian of the Company’s assets. The custody agreement grants a general lien over thesecurities credited to the securities account. The Company’s assets are segregated from JPMorgan Chase’s own trading assetsand are therefore protected from creditors in the event that JPMorgan Chase were to cease trading.

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

The liquidity fund has a AAA (2014: AAA) credit rating.

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 2015amounted to £2,422,407 (2014: £5,471,617). The highest value of securities on loan during the year ended 30th June 2015amounted to £6,805,732 (2014: £19,945,363). 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 value2015 2014 2015 2014£’000 £’000 £’000 £’000

£200,000 4.5% perpetual debenture stock 200 200 215 179


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27. Capital management policies and procedures

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

2015 2014£’000 £’000

DebtBank loan 25,000 20,000£200,000 4.5% perpetual debenture stock 200 200

25,200 20,200

EquityShare capital 6,814 6,660Reserves 262,311 238,975

Total Equity 269,125 245,635

Total Debt and Equity 294,325 265,835

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.

2015 2014£’000 £’000

Investments excluding liquidity fund holdings 289,301 265,685Current assets excluding cash 2,376 3,000Current liabilities excluding bank loans (3,641) (4,075)

Total assets 288,036 264,610

Net assets 269,125 245,635

Gearing 7.0% 7.7%

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.

28. Proposed sub-division of Company’s Share Capital

At the forthcoming Annual General Meeting on 5th November 2015, the Directors will seek authority to sub-divide eachexisting ordinary share of 25 pence each into five new ordinary shares of 5 pence each (the ‘New Ordinary Shares’). Theresolution is conditional upon the New Ordinary Shares being listed on the Official List of the UK Listing Authority andadmitted to trading on the London Stock Exchange. The proposed sub-division of the Company’s share capital will not haveany financial effect on the Company.

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Notice is hereby given that the one hundred and twenty-eighthAnnual General Meeting of JPMorgan Overseas Investment Trustplc will be held at 60 Victoria Embankment, London EC4Y 0JPon Thursday, 5th November 2015 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 2015.

2. To approve the Directors’ Remuneration Policy.

3. To approve the Directors’ Remuneration Report for theyear ended 30th June 2015.

4. To approve a final dividend of 16p per ordinary share.

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

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

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

8. To appoint Tristan Hillgarth 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 for Sub-division of existing ordinary shares – OrdinaryResolution10. THAT each of the issued ordinary shares of 25 pence

each in the capital of the Company be sub-divided intofive ordinary shares of 5 pence each (the ‘New OrdinaryShares’) having the rights and being subject to therestrictions and obligations set out in the articles ofassociation of the Company, such sub-division to takeeffect from the date the New Ordinary Shares areadmitted to the Official List of the UK Listing Authorityand to trading on the main market of the London StockExchange.

Authority to allot new shares – Ordinary Resolution11. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised in substitution ofany authorities previously granted to the Directorspursuant to Section 551 of the Companies Act 2006 (the‘Act’) to exercise all the powers for the Company to allot

relevant securities (within the meaning of Section 551 ofthe Act) up to an aggregate nominal amount of £577,138,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 2016 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 sothat 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 – Special Resolution 12. THAT subject to the passing of Resolution 11 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 11 or by way of sale ofTreasury shares as if Section 561(1) of the Act did not applyto any such allotment, provided that this power shall belimited to the allotment of equity securities for cash up toan aggregate nominal amount of £577,138, 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 2016 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 13. 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 in the capital of theCompany


Shareholder InformationNotice of Annual General Meeting

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PROVIDED ALWAYS THAT:

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 3,460,520, or ifless, that number of Ordinary shares which is equal to14.99% of the Company’s issued share capital as at thedate of the passing of this resolution;

(ii) the minimum price which may be paid for an Ordinaryshare shall be 25 pence or following the sub-division ofthe Company’s Ordinary shares becoming effective inaccordance with Resolution 10, 5 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, takenfrom and calculated by reference to the London StockExchange Daily Official List for the five business daysimmediately preceding the day on which the share ispurchased; or (b) the price of the last independenttrade; or (c) the highest current independent 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 4th May2017 unless the authority is renewed at the Company’sAnnual General Meeting in 2016 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.

Authority to amend the Articles of Association – Special Resolution14. THAT the Articles of Association of the Company, as adopted

by special resolution of the Company on 10th January 2013,be amended by replacing Article 63(b) with the following:

“(b) on a poll every member present in person or by dulyappointed proxy or corporate representative has onevote for every ordinary share of which he is the holderor in respect or which his appointment as proxy orcorporate representative has been made.”

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

25th September 2015

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 2.30 p.m. 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.

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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 by

a 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 24th September 2015 (being the latest business day prior tothe publication of this Notice), the Company’s issued share capitalconsists of 23,085,535 Ordinary shares (excluding 4,010,523 sharesheld in treasury), carrying one vote for every four shares held and3,885,042 Subscription shares, which do not have any voting rights.Therefore, the total voting rights in the Company are 5,771,383.

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

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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 a Companyappointed trustee can choose to exercise any unexercisedSubscription share rights. If the trustee does not exercise theShare subscription rights, the rights on the Subscription shareswill 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.

Details of the final opportunity to exercise the Subscription sharesat 986 pence by 30th October 2015 have been sent to shareholders.

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 registrar in UK, Equiniti’s ShareholdersHelpline on 0871 384 2330 (from within the UK) or on+44 121 415 0225 (if calling from outside the UK). Calls tothe 0871 384 2330 number are charged at 10 pence perminute plus your phone company’s access charge. Linesare open from between 8.30 a.m. to 5.30 p.m. Monday toFriday (excluding English and Welsh public holidays). Callsto the helpline from outside the UK will be charged at theapplicable international rate. Different charges may applyto calls from mobile telephones and calls may be recordedand randomly monitored for security and training purposes.Please note that Equiniti Limited cannot provide advice onthe merits of the Proposals nor give financial, tax,investment or legal advice; 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

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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.

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

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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.

Exercise of Subscription SharesMeasures the negative impact on the NAV per share arisingfrom the exercise of Subscription shares into Ordinary sharesat a price less than the NAV per share.

Subscription Share Dilution EffectMeasures the dilutive effect of the potential conversion of alloutstanding Subscription shares at the year end.

LeverageFor the purposes of the Alternative Investment Fund ManagersDirective (‘AIFMD’), leverage is any method which increases theCompany’s exposure, including the borrowing of cash and theuse of derivatives. It is expressed as a ratio between theCompany’s exposure and its net asset value and is calculatedon a gross method and a commitment method, in accordancewith AIFMD. Under the gross method, exposure represents thesum of the Company’s positions without taking into accountany hedging and netting arrangements. Under thecommitment method, exposure is calculated after certainhedging and netting positions are offset against each other.

Alternative Investment Fund Managers – LeverageThe Company is required to state its maximum and actualleverage levels, calculated as prescribed by the AIFMD, as at30th June 2015, which gives the following figures:

Gross Commitment Leverage Exposure Method Method

Maximum limit 200.00% 200.00%Actual 171.98% 124.23%

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Shareholder Information continuedWhere to buy J.P. Morgan Investment Trusts

Savings Plan

The Company participates in the J.P. Morgan Investment TrustsSavings Plan, which facilitates both regular monthlyinvestments and occasional lump sum investments in theCompany’s ordinary shares. Shareholders who would likeinformation on the Savings Plan should call J.P. Morgan AssetManagement free on 0800 731 1111 or visit its website athttps://am.jpmorgan.co.uk/investor/guidance-and-planning/guides/regular-savings-made-simple-guide.aspx

Stocks & Shares Individual Savings Accounts (ISA)

The Company’s shares are eligible investments withinJ.P. Morgan’s Stocks & Shares ISA. For the 2015/16 tax year,from 6th April 2015 and ending 5th April 2016, the total ISAallowance is £15,240. Details are available from J.P. MorganAsset Management free on 0800 731 1111 or via its website athttps://am.jpmorgan.co.uk/investor/isas/what-is-a-stocks-and-shares-isa.aspx.

There are a number of ways that you can buy shares ininvestment trust companies; you can invest throughJ.P. Morgan WealthManager+ or on the following:

Fund supermarkets:

Alternatively you can invest through an InvestmentProfessional (e.g. a Financial Adviser) on the following3rd party platforms:

Ascentric Nucleus Avalon Praemium Axa Elevate TransactNovia

Please note that these websites are third party websites andJ.P. Morgan Asset Management does not endorse orrecommend any of them. This list is not exhaustive and issubject to change. Please observe each site’s privacy andcookie policies as well as their platform charges structure.

You can also buy investment trusts through stockbrokers,wealth managers and banks.

To familiarise yourself with the Financial Conduct Authority(‘FCA’) adviser charging and commission rules, visitwww.fca.org.uk.

AJ BellAlliance TrustBarclays StockbrokersBestinvestCharles Stanley DirectHalifax Share Dealing ServiceHargreaves Lansdown

Interactive InvestorJames Brearley James HaySelftradeTD DirectThe Share Centre Transact

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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

Overseas_pp68_76 28/09/2015 09:51 Page 75

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,intermediary or professional adviser acting on an investor’s behalf. Theymay also be purchased and held through the J.P. Morgan InvestmentAccount and J.P. Morgan ISA. These products are all available on the onlinewealth manager service, J.P. Morgan WealthManager+ available atwww.jpmorganwealthmanagerplus.co.uk

Manager and Company Secretary JPMorgan Funds Limited.

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

For company secretarial and administrative matters please contactDivya Amin.

DepositaryBNY Mellon Trust & Depositary (UK) LimitedBNY Mellon Centre160 Queen Victoria StreetLondon EC4V 4LA

The Depositary has appointed JPMorgan Chase Bank, N.A. as the Company’scustodian.

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

Telephone: 0871 384 2330 (calls to this number are charged at 10p perminute plus your phone company’s access charge. Lines open 8.30 a.m. to5.30 p.m. Monday to Friday.)

Overseas helpline: +44 121 415 0225.

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 1142Level 2159 Hurstmere RoadTakapuna AucklandNew ZealandTelephone 09 4888777

Notifications of changes of address and enquiries regarding holdingsor dividend payments 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 DecemberInterest payment on 4.5% perpetual debenture stock 1st January, 1st JulyAnnual General Meeting 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


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