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JPMorgan Global Emerging MarketsIncome Trust plcAnnual Report & Accounts for the year ended 31st July 2016

ObjectiveThe Company’s investment objective is to provide investors witha dividend income combined with the potential for long termcapital growth from a diversified portfolio of emerging marketsinvestments.

Investment Policies– The Company invests predominantly in listed equities butretains the flexibility also to invest in other types of securities,including, but not limited to, unlisted equities, convertiblesecurities, preference shares, debt securities, cash and cashequivalents.

– The Company is free to invest in any particular market, sectoror country in the global emerging markets universe.

– There are no fixed limits on portfolio construction with regardto region, country, sector or market capitalisation.

– Despite the absence of specific region, country, sector ormarket capitalisation limits, the Company will at all timesinvest and manage its assets in a manner that is consistentwith spreading investment risk and in accordance with itspublished investment policy.

– No more than 15% of the Company’s gross assets shall beinvested in the securities of any one company or group at thetime the investment is made.

– The Company shall not invest more than 10% of its gross assetsin unlisted securities or in other listed closed-ended investmentfunds at the time the investment is made.

– The Company may undertake option writing in respect of up to10% of the Company’s net assets.

– The Company may use derivative instruments for the purposesof efficient portfolio management. The Company does not havea policy of hedging or otherwise seeking to mitigate foreignexchange risk but reserves the right to do so from time to timeas part of the Company’s efficient portfolio management.

– The Company has power under its Articles of Association toborrow up to an amount equal to 30% of its net assets at thetime of the drawdown.

For further information please see ‘Investment Policies,Investment Guidelines and Risk Management’ on page 15.

Benchmark The Company’s benchmark is the MSCI Emerging Markets Index,with net dividends reinvested, in sterling terms.

Capital Structure At 31st July 2016, the Company’s issued share capital comprised294,339,438 Ordinary shares of 1p each, including 199,277 sharesheld in Treasury.

Continuation VoteAt the annual general meeting of the Company held in 2015, anordinary resolution was be put to shareholders that the Companycontinue in operation. The resolution received the support of98% of voting Shareholders. A further continuation vote will beput to Shareholders at the 2018 AGM.

Management Company The Company employs JPMorgan Funds Limited (‘JPMF’ or the‘Manager’) as its Alternative Investment Fund Manager. JPMFdelegates the management of the Company’s portfolio toJPMorgan Asset Management (UK) Limited (‘JPMAM’).

FCA regulation of ‘non-mainstream pooledinvestments’The Company currently conducts its affairs so that the shares itissues can be recommended by Independent Financial Advisers toordinary retail investors in accordance with the rules of theFinancial Conduct Authority (‘FCA’) in relation to non-mainstreaminvestment products and intends to continue to do so for theforeseeable future. The shares are excluded from the FCA’srestrictions which apply to non-mainstream investment productsbecause they are shares in an investment trust.

AICThe Company is a member of the Association of InvestmentCompanies.

Website The Company’s website can be found atwww.jpmglobalemergingmarketsincome.co.uk which includesuseful information about the Company, such as daily prices,factsheets and current and historic half year and annual reports.

Features

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Contents

02 FINANCIAL RESULTS

STRATEGIC REPORT

03 Chairman’s Statement

06 Investment Managers’ Report

10 Summary of Results

11 Ten Largest Equity Investments

11 Sector Analysis

12 Geographical Analysis

13 List of Investments

15 Business Review

GOVERNANCE

20 Board of Directors

21 Directors’ Report

24 Corporate Governance Statement

29 Directors’ Remuneration Report

31 Statement of Directors’ Responsibilities

32 INDEPENDENT AUDITORS’ REPORT

FINANCIAL STATEMENTS

38 Statement of Comprehensive Income

39 Statement of Changes in Equity

40 Statement of Financial Position

41 Notes to the Financial Statements

REGULATORY DISCLOSURES

58 Alternative Investment Fund Managers DirectiveDisclosures

SHAREHOLDER INFORMATION

59 Notice of Annual General Meeting

62 Glossary of Terms and Definitions

63 Where to buy J.P. Morgan Investment Trusts

65 Information about the Company

2 JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC. ANNUAL REPORT & ACCOUNTS 2016

Financial Results

TOTAL RETURNS (INCLUDES DIVIDENDS REINVESTED) TO 31ST JULY 2016

+16.7%Return on the MSCI Emerging

Markets Index3

(2015: –6.3%)

4.9pDividend(2015: 4.9p)

+21.3%Return to shareholders1

(2015: –14.4%)

+16.9%Return on net assets2

(2015: –7.8%)

Performance to 31st July 2016

JPMorgan Global Emerging Markets – return to shareholders1

JPMorgan Global Emerging Markets – return on net assets2

Benchmark total return3

21.316.9 16.7

3.87.8 9.4

7.59.3

13.3

41.3

52.8

20.7

%

0

10

20

30

40

50

60

Since Inception3 Year Performance2 Year Performance1 Year Performance

Financial Data31st July 31st July %2016 2015 change

Net assets (£’000) 344,423 310,536 +10.94

Number of shares in issue (excluding shares heldin Treasury) 294,140,161 294,339,438 –0.1

Net asset value per share 117.1p 105.5p +11.0

Share price 115.3p 100.3p +15.04

Share price discount to net asset value per share (1.5)% (4.9)%

1 Source: Morningstar.2 Source: J.P. Morgan.3 Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index, with net dividends reinvested, in sterling terms.4 Excludes dividends reinvested

A glossary of terms and definitions is provided on page 62.

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CHAIRMAN’S STATEMENT

PerformanceFor the year ended 31st July 2016 the Company recorded a total return on net assets of+16.9%. This compares with a return on the benchmark index, the MSCI Emerging MarketsIndex with net dividends reinvested (in sterling), of +16.7%. The total return to shareholdersincluding dividends was +21.3%, as the Company’s share price increased from 100.3p to115.3p over the financial year. Since year-end the share price has risen.

Underpinning this performance have been strong returns from emerging market equitiesand a rally in these currencies over the latter half of the year. The Investment Managers’Report reviews these issues at some length. The Company’s income objective results in acomposition of the portfolio that is very different to the composition of the benchmarkindex. This means that the pattern of returns in any given period, may vary meaningfullyfrom the benchmark index, which the Board understands and accepts. The fact that theoutturn for the full year was almost in line with the benchmark is unusual and should not beseen as predictive.

Revenue and DividendsAs explained in the Investment Manager’s Report, dividend receipts over the year to31st July 2016 were below levels of the prior year. Gross revenue return for the yearamounted to £17.2million (2015: £21.4 million). Net revenue return per Ordinary share forthe year, calculated on the average number of shares in issue, was 4.79p (2015: 5.85p).

In the current financial year the Board paid three interim dividends of 1.0p per share andhas announced the payment of a fourth interim dividend of 1.9p per share. This brings thetotal dividend for the year to 4.9p, unchanged from last year. The Board continues theapproach of paying four interim dividends, reflecting the support we have received fromshareholders for a regular and timely income stream. At 31st July 2016, the Company helda revenue reserve of £9.8 million. This compares with £10.2 million as at 31st July 2015. Forthe financial year ended 31st July 2016, the Company paid dividends to shareholders of£14.4 million. The Board has therefore drawn on the revenue reserve to the extent of£0.4 million.

As shareholders are aware, the Company receives dividends in the currencies of developingcountries and US dollars, but pays dividends in sterling. It is not the Company’s policy tohedge currency risk. This policy inevitably means that the Company’s asset values and cashflows will be buffeted by adverse currency movements and flattered by favourable ones.Over the financial year, sterling weakened against the US dollar and Emerging Markets’currencies, especially immediately following the Brexit vote. This factor boosted asset valuesin sterling by approximately 16%.

Share CapitalDuring the year, the Company repurchased 199,277 shares at a cost of £163,000 at an averagediscount to the capital only net asset value of 7.3%. These shares are now held in Treasury.The Board will continue to monitor closely imbalances between the supply of and demandfor the Company’s shares. When appropriate, the Board may buy back more shares and incertain circumstances may resolve to issue shares, but only if the share price reflects apremium to net asset value that justifies the cost of issuance.

Strategic Report


The Board is seeking shareholder authority at the forthcoming Annual General Meeting toissue up to a further 10% of the Company’s issued share capital. We consider 10% to be theappropriate level in order to allow maximum flexibility for share issuance, given that theCompany’s shares are currently trading at, or close to, parity with net asset value. This is afacility that may or may not be used.

The Board is also seeking renewed authority to repurchase up to 14.99% of the Company’sshares. This authority will permit repurchased shares to be held in Treasury or cancelled.This would only be used in appropriate circumstances, to enhance shareholder value andmanage imbalances between the supply and demand of the Company’s shares.

Key Performance Indicators (‘KPIs’)The Board tracks a series of KPIs. Further details may be found on pages 16 and 17. TheBoard pays particular attention to performance, ongoing charges, gearing, income availableto pay dividends and the investment risk of the portfolio.

GearingThe Company has two US$20 million loan facilities with National Australia Bank, due tomature in October 2018 and October 2020. As at 31st July 2016, gearing stood at 4.7%(31st July 2015 : 6.6%)

Corporate GovernanceIn accordance with corporate governance best practice, all Directors will seekreappointment at this year’s Annual General Meeting. Shareholders who wish to contact theChairman or other members of the Board may do so through the Company Secretary or theCompany’s website, details of which appear below. Shareholders are assured that thesecommunications are forwarded to the Chairman accordingly.

Investment ManagerWith effect from 1st August 2016 Jeffrey Roskell took over from Richard Titherington and willwork closely with Omar Negyal and Amit Mehta.

Day to day portfolio responsibility remains with Omar Negyal.

Board ChangesCaroline Gulliver assumed the role of Audit & Risk Committee Chairman on 19th November2015. Sarah Fromson was appointed Senior Independent Director on the same date. On22nd March 2016 it was resolved to establish the Nomination Committee as a separateCommittee, chaired by Sarah Fromson.

Annual General MeetingThe Annual General Meeting will be held at 60 Victoria Embankment, London EC4Y 0JP, onThursday, 24th November 2016 at 2.00 p.m. The meeting will include a presentation fromthe Investment Managers on investment policy and performance. There will also be an

CHAIRMAN’S STATEMENT CONTINUED

Strategic Report continued

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opportunity for shareholders to meet the Board and representatives of JPMorgan after themeeting. It would be helpful if shareholders seeking answers to detailed questions put themin writing beforehand, addressed to the Company Secretary at JPMorgan Funds Limited,60 Victoria Embankment, London EC4Y 0JP. Alternatively, questions may be submitted viathe Company’s website (www.jpmglobalemergingmarketsincome.co.uk). Shareholders whoare unable to attend the Annual General Meeting in person are encouraged to use theirproxy votes. Proxy votes may be lodged electronically, whether shares are held throughCREST or in certificate form and full details are set out on the form of proxy.

OutlookIn my report last year I noted that the prospects for the Company were improving, despitethe various hazards to be navigated. The picture this year is slightly improved again,although both macro-economic and political trends remain challenging.

Andrew HuttonChairman 10th October 2016

INVESTMENT MANAGERS’ REPORT

IntroductionIn the 12 months to 31st July 2016, the Company’s return to shareholders (includingdividends) was 21.3%, while on a net asset value basis the return was 16.9%. The Companymarginally outperformed its benchmark, the MSCI Emerging Markets Index, which returned16.7% (on a total return (net) basis, in sterling terms).

Market reviewEmerging market equities delivered a strong positive return in the 12 months to 31st July2016. The first half of the review period was challenging for the asset class, as sentimentwas hit by concerns over China’s economic slowdown and uncertainty surrounding the pathof interest rate rises in the US. With China being the largest constituent of the MSCIEmerging Markets Index and a major trading partner for other emerging markets, theslower outlook for the Chinese economy as well as the start by the Chinese government tomanage the depreciation of the Renminbi, caused investors to reassess their expectationsfor emerging market growth and corporate profits. Meanwhile, expectations for higher USinterest rates caused international investors to move some of their capital out ofhigher-yielding, riskier assets like emerging market equities.

Emerging market currency weakness was another dominant theme in the first half of thereview period. By the end of 2015, with the dollar boosted by higher interest rateexpectations and emerging market growth under pressure, emerging market currencies hadfallen to valuation levels not seen since the 1998 emerging market crisis. However, emergingmarket equities recovered sharply in the second half of the review period. Sentimenttowards the asset class was boosted by a reduction in US interest rate expectations, a pickupin commodity prices and a stabilisation in Chinese data, while more monetary easing fromthe European Central Bank and Bank of Japan boosted global liquidity, helping to providea further tailwind to both emerging market equities and currencies.

Although the better sentiment in 2016 has seen emerging market equities and currenciesstrengthen slightly from cheap levels, a recovery in corporate earnings is needed for thecurrent rally in emerging markets to be sustained.

Performance reviewThe Company’s share price and net asset value outperformed the benchmark in the12-month period. Asset allocation was a bigger contributor to relative performance thanusual in the review period. This was partly due to the fact that we took advantage ofsignificant dislocations in South Africa and Brazil, which recovered sharply in 2016 aftersuffering severe weakness in 2015. We added to positions in both markets in the period totake advantage of higher dividend yields and attractive valuation opportunities, and ouroverweight positioning contributed positively to the Company’s performance.

From a country perspective, our significant underweight in China also contributed positivelyto relative performance. Although China remains an important driver of emerging marketequities as a whole, from a stock and dividend perspective we feel that there are moreattractive opportunities outside of China. Our underweight positioning – which we increasedin the period – was beneficial for performance as the Chinese market underperformedemerging markets overall.

Stock selection and an overweight position in Taiwan also contributed positively. TheCompany’s country weightings are driven by our individual stock decisions. Our largest

Omar Negyal

Jeffrey Roskell

Amit Mehta



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overweight is in Taiwan, where we have found several attractive stocks with high returns oncapital and positive free cash flow, and where we have confidence in the dividend payout.The positive performance from stock selection in Taiwan was driven by some of ourtechnology holdings, in particular Vanguard and Siliconware Precision Industries. In adifficult operating environment, Vanguard held its dividend in the year, while SiliconwarePrecision Industries was the subject of a takeover bid by a competitor (an indicator thatnon-financial market participants saw attractive valuations in the market).

Stock-level detractors from performance included an overweight holding in MTN, a telecomscompany operating in South Africa and Nigeria, which was hit by a large regulatory fine. Ourview on future dividends deteriorated due to the magnitude of the fine, as well as ourconcern that the operating environment for the company was more difficult than we hadinitially judged. We exited the stock in the year, but it was one of the biggest detractors fromperformance overall.

An overweight position in China Resources Power also held back relative returns. The utilitycompany has stable cash flows and a good dividend payout policy. However, the stocksuffered as growth concerns in China led to a reduction in demand for – and subsequentoversupply of – thermal power, denting the profitability of utility companies. Although thestock lagged, we added to our overweight position as we believe the yield is attractive, whileour meetings with the company have reassured us of the sustainability of its future dividendpayouts.

PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 31ST JULY 2016

% %

Contributions to total returns

Return on MSCI Emerging Markets Index(in sterling terms) 16.7

Investment Manager contribution 1.6

Portfolio total return 18.3

Management fee/other expenses –1.4

Return on net assets 16.9

Impact of change in premium/discount 4.4

Return to shareholders 21.3

Source: JPMAM/Morningstar. All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performancerelative to its benchmark.




INVESTMENT MANAGERS’ REPORT CONTINUED

From a sector perspective, underweight exposure to energy and materials was negative forperformance, as both sectors have performed well on the back of a rise in commodity pricesthis year.

DividendsThe Company’s approach, which is to invest in a diversified portfolio of relativelyhigh-yielding stocks to receive dividends from across sectors and countries, remainsunchanged. However, emerging market dividends remain under pressure, as companiesstruggle to increase their payouts against a challenging growth backdrop. Dividends acrossemerging markets declined in the financial year and we saw dividend receipts from theCompany’s investments also decline. However, the Company held its dividend as the Boardutilised part of the revenue reserve that we had built up in previous years and sterling, ourreporting currency, was especially weak. Our expectation is that payout ratios will be heldsteady by emerging market companies, but the overall earnings environment remains weak,which means we should still be cautious when considering the trajectory of dividend receiptsfrom the portfolio in the near term.

Portfolio changesPortfolio changes over the year have been modest. This is consistent with our desire toinvest for the long term and benefit from the continued dividend streams of the companieswhich we hold.

Sales (whether outright or position size reduction) in the year can generally be divided intothree types:

1. Dividend payout disappointmentsWith our research focus on understanding dividend policies, dividend payoutdisappointments tend to be rare.

An example in the financial year was Turkcell, the Turkish mobile phone operator. AlthoughTurkcell’s management declared a dividend in line with our expectations, this was notratified at the company’s annual general meeting following a dispute between two majorshareholders. We sold out of the stock due to a lack of clarity around its dividend payment.

2. Companies where our fundamental view on dividend sustainability or growthdeteriorated relative to other opportunities

We sold out of Advanced Info Services, a telecom operator in Thailand. The dividend outlookfor the company worsened after a frequency auction resulted in very high prices being paidfor spectrum by domestic competitors. Although Advanced Info itself participated in a morerational manner, this episode highlighted the threat of increasing competition in Thailandand potential downside to margins.

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3. Companies where our view on dividends remained positive but valuations hadincreased to the extent that the stocks looked less attractive

For example, Banco do Brasil. The Brazilian market rallied strongly in early 2016 on the backof hopes for an improvement in the country’s political situation. As a result of priceappreciation Banco do Brasil’s dividend yield declined, prompting us to reduce our position.

Purchases have been driven by individual stock opportunities, but overall we have notmade dramatic changes to the Company’s portfolio. We continue to find many attractivedividend-paying companies in emerging markets.

New names added to the portfolio include:

FirstRand: a high-quality South African bank. We were able to take advantage of the sell-offin the South African market and currency in 2015 to purchase this at an attractive dividendyield.

HKT Trust: an Asian telecom stock with a compelling 5% dividend yield and a managementteam directly targeting dividend payments.

Bolsa Mexicana: the Mexican stock exchange, which offers an attractive return on capitalprofile, generates a large amount of free cash flow and has a clear dividend policy.

OutlookThe outlook for emerging markets remains difficult, but there are positive signs. Somecurrencies are rising from their low levels and trade balances improving, although there arestill few signs of a true earnings recovery taking hold. We stick to our philosophy anddisciplined approach, continuing to look for individual stocks that generate attractive returnson equity, produce positive free cash flow and have clear and understandable dividendpolicies. Even in an uncertain environment, we are able to identify many stocks withattractive dividend yields, which we think bodes well for returns to shareholders over thelong term.

Omar NegyalJeffrey RoskellAmit MehtaInvestment Managers 10th October 2016



SUMMARY OF RESULTS

2016 2015

Total returns for the year ended 31st July

Return to shareholders1 +21.3% –14.4%Return on net assets2 +16.9% –7.8%Benchmark return3 +16.7% –6.3%

Net asset value, share price and discount % change

Net assets (£’000) 344,423 310,536 +10.9Number of shares in issue (excluding shares held in Treasury) 294,140,161 294,339,438 –0.1Net asset value per share 117.1p 105.5p +11.0Share price 115.3p 100.3p +15.0Share price discount to net asset value per share (1.5)% (4.9)%

Revenue for the year ended 31st July

Gross revenue return (£’000) 17,168 21,355 –19.6Net revenue available for shareholders (£’000) 14,101 16,973 –16.9Revenue return per share 4.79p 5.85p –18.1Dividend per share 4.90p 4.90p —

Gearing at 31st July4 4.7% 5.6%

Ongoing charges 1.35% 1.24%

1 Source: Morningstar.2 Source: J.P. Morgan.3 Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index, with net dividends reinvested, in sterling terms.4 The methodology to calculate gearing has been amended during the year to be in line with the current AIC methodology, therefore the comparative figure has been recalculated

for comparative purposes. Please refer to the glossary of terms and definitions on page 62 for the revised calculation.


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TEN LARGEST EQUITY INVESTMENTS AT 31ST JULY 2016

2016 2015 Valuation ValuationCompany Sector £’000 %1 £’000 %1

Taiwan Semiconductor Manufacturing (Taiwan) Information Technology 12,592 3.5 6,891 2.1Vanguard International Semiconductor (Taiwan)2 Information Technology 9,426 2.6 3,815 1.2China Mobile (China & Hong Kong)2 Telecommunication Services 9,261 2.6 3,919 1.2Banco Santander Chile (Chile) Financials 9,006 2.5 6,967 2.1BB Seguridade Participacoes (Brazil)2 Financials 8,966 2.5 5,061 1.5Kimberly-Clark de Mexico (Mexico) Consumer Staples 8,937 2.5 6,715 2.0Ambev (Brazil)2 Consumer Staples 8,673 2.4 5,472 1.7Delta Electronics (Taiwan)2 Information Technology 8,177 2.2 6,186 1.9Komercní banka (Czech Republic)3 Financials 7,983 2.2 — —Fuyao Group (China & Hong Kong)3 Consumer Discretionary 7,901 2.2 — —

Total 90,922 25.2

1 Based on total portfolio of £360.6m (2015: £327.8m)2 Not included in the ten largest investments at 31st July 2015. 3 Not held in the portfolio at 31st July 2015.

SECTOR ANALYSIS AT 31ST JULY 2016

31st July 2016 31st July 2015 Portfolio Benchmark Portfolio BenchmarkSector %1 % %1 %

Financials 25.1 26.2 23.1 29.5 Information Technology 16.8 22.6 15.3 17.5 Consumer Staples 15.3 8.1 10.6 8.5 Telecommunication Services 13.1 6.6 14.5 7.6 Consumer Discretionary 9.6 10.6 10.2 9.0 Materials 5.4 6.6 7.1 6.7 Industrials 4.8 6.2 6.9 7.1 Utilities 4.2 3.2 4.1 3.4 Energy 3.9 7.2 6.3 8.1 Health Care 1.8 2.7 1.9 2.6

Total 100.0 100.0 100.0 100.0

1 Based on total portfolio of £360.6m (2015: £327.8m).



GEOGRAPHICAL ANALYSIS AT 31ST JULY 2016

31st July 2016 31st July 2015 Portfolio Benchmark Portfolio BenchmarkSector %1 % %1 %

Taiwan 20.2 12.2 19.7 12.5China & Hong Kong 17.5 25.3 20.0 23.9South Africa 13.8 7.6 12.4 8.0Brazil 8.9 7.6 9.1 7.1Russia 7.6 3.6 7.3 3.8South Korea 6.0 14.8 4.9 14.2India 3.5 8.4 3.2 8.4Thailand 3.5 2.3 5.1 2.3Mexico 3.3 3.9 2.1 4.7Czech Republic 3.2 0.2 — 0.2Chile 2.5 1.2 2.1 1.2Turkey 2.2 1.2 4.6 1.5Hungary 1.5 0.3 1.4 0.2United Arab Emirates 1.5 0.9 1.5 0.8Indonesia 1.4 2.8 1.7 2.4Malaysia 1.2 2.8 0.4 3.4Saudi Arabia 1.2 — 2.2 —Poland 1.0 1.1 1.9 1.5Philippines — 1.5 — 1.4Qatar — 0.9 — 1.0Colombia — 0.4 — 0.6Greece — 0.4 — 0.3Peru — 0.4 — 0.4Egypt — 0.2 — 0.2Kazakhstan — — 0.4 —

Total 100.0 100.0 100.0 100.0

1 Based on total portfolio of £360.6m (2015: £327.8m).

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LIST OF INVESTMENTS AT 31ST JULY 2016

ValueCompany £’000

TaiwanTaiwan Semiconductor Manufacturing1 12,592Vanguard International Semiconductor 9,426Delta Electronics 8,177Taiwan Mobile 6,499President Chain Store 5,922Cheng Shin Rubber Industries 5,178Mediatek 4,774Novatek Microelectronics 4,202Quanta Computer 3,987Far Eastone Telecommunications 3,630Asustek Computer 2,841Siliconware Precision Industries 2,015Chicony Electronics 1,835Simplo Technology 1,688

72,766

China & Hong KongChina Mobile 9,261Fuyao Group H shares2 7,901Sands China 6,116Hang Seng Bank 5,974HKT Trust & HKT 5,971Midea3 5,850China Resources Power 5,700Zhejiang Expressway H-shares 4,974Jiangsu Expressway H-shares 4,577Hutchison Port 3,883Vtech 2,987

63,194

South AfricaBarclays Africa 7,667FirstRand 7,301AVI 6,847Vodacom 6,698Life Healthcare Group 6,519Bidcorp 6,466MMI Holdings South Africa 4,485Bidvest 3,973

49,956


BrazilBB Seguridade Participacoes 8,966Ambev1 8,673Engie Brasil Energia 7,420Banco Bradesco 3,002AES Tiete Energia 2,121Banco do Brasil 2,024

32,206

RussiaLukoil1 7,806Moscow Exchange MICEX-RTS 6,303MMC Norilsk Nickel1 3,603Mobile Telesystems OJSC1 3,119Severstal1 2,605PhosAgro1 2,130Megafon 1,872

27,438

South KoreaKT&G 7,827Samsung Electronics 5,888SK Telecom1 5,058Kangwon Land 3,010

21,783

IndiaCoal India3 6,429ITC India3 6,232

12,661

ThailandSiam Cement 7,474TISCO Financial 5,002

12,476

MexicoKimberly-Clark de Mexico 8,937Bolsa Mexicana de Valores 2,913

11,850




Czech RepublicKomercní banka 7,983MONETA Money Bank 3,735

11,718

ChileBanco Santander Chile1 9,006

9,006

TurkeyTofas Turk Otomobil 6,534Eregli Demir Celik 1,367

7,901

HungaryOTP Bank 5,467

5,467

United Arab EmiratesFirst Gulf Bank 5,261

5,261

IndonesiaTelekomunikasi Indonesia 4,993

4,993

MalaysiaCarlsberg Malaysia 2,123British American Tobacco Malaysia 2,056

4,179

Saudi ArabiaAl Rajhi Bank3 1,776Yanbu National Petrochemicals3 1,478Yamama Cement3 913

4,167

PolandPowszechny Zaklad Ubezpieczen 3,590

3,590Total Portfolio 360,612

1 Includes ADRs (American Depositary Receipts)/GDRs (Global DepositaryReceipts)/ADSs (American Depositary Shares).

2 Participation notes and common stock.3 Participation notes.

LIST OF INVESTMENTS CONTINUED

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The aim of the Strategic Report is to provide shareholders with theability to assess how the Directors have performed their duty topromote the success of the Company during the year under review.To assist shareholders with this assessment, the Strategic Reportsets out the structure and objective of the Company, its investmentpolicies and risk management, investment limits and restrictions,performance and key performance indicators, share capitalmovements, principal risks and how the Company seeks to managethose risks, the Company’s environmental, long term viability and itssocial and ethical policy and finally its future developments.

Business of the CompanyJPMorgan Global Emerging Markets Income Trust plc is aninvestment trust company that has a premium listing on the LondonStock Exchange. Its objective is to provide investors with a dividendincome combined with the potential for long term capital growthfrom a diversified portfolio of emerging markets investments. Inseeking to achieve this objective, the Company employs JPMorganFunds Limited (‘JPMF’ or the ‘Manager’) which, in turn, delegatesportfolio management to JPMorgan Asset Management (UK) Limited(‘JPMAM’), to manage the Company’s assets actively. The Board hasdetermined an investment policy and related guidelines and limitsas described below.

The Company is subject to UK and European legislation andregulations including UK company law, UK Financial ReportingStandards, the UK Listing, Prospectus, Disclosure Guidance andTransparency Rules, the Market Abuse Regulations, taxation law andthe Company’s own Articles of Association.

The Company is an investment company within the meaning ofSection 833 of the Companies Act 2006 and has been approved byHM Revenue & Customs as an investment trust (for the purposes ofSections 1158 and 1159 of the Corporation Tax Act 2010). As a resultthe Company is not liable for taxation on capital gains. TheDirectors have no reason to believe that approval will not continueto be retained. The Company is not a close company for taxationpurposes.

Investment Policies, Investment Guidelines and RiskManagementIn order to achieve its objective, the Company invests in adiversified portfolio and employs a Manager with a strong focus onresearch and company visits that enables it to identify what itbelieves to be the most attractive stocks in the market.

The Board seeks to manage the Company’s risk by imposing variousinvestment limits and restrictions:

• The Company invests predominantly in listed equities but retainsthe flexibility also to invest in other types of securities, including,

but not limited to, unlisted equities, convertible securities,preference shares, debt securities, cash and cash equivalents.

• The Company is free to invest in any particular market, sector orcountry in the global emerging markets universe. It may alsoinvest in securities issued by companies based in or operating inemerging markets but listed or traded on the stock exchanges ofdeveloped markets and in the securities of issuers based indeveloped markets that have substantial exposure to emergingmarkets.

• The Company’s portfolio will typically contain between 50 and 80holdings.

• There are no fixed limits on portfolio construction with regard toregion, country, sector or market capitalisation. In the normalcourse of business the Company typically invests at least 80% ofits gross assets in listed equities but other security types may beused in the event of adverse equity market conditions or wherethey represent a more efficient means of obtaining investmentincome for the purposes of making dividend payments.Non-equity portfolio assets are expected to comprisepredominantly cash or fixed income securities issued bycompanies, states or supra-national organisations domiciled in,or with a significant exposure to, emerging markets. In the eventof adverse equity market conditions, the Company may increaseits holdings in fixed income securities of any kind to a maximumof 50% of its gross assets.

• Despite the absence of specific region, country, sector or marketcapitalisation limits, the Company will at all times invest andmanage its assets in a manner that is consistent with spreadinginvestment risk and in accordance with its published investmentpolicy. The Company shall not conduct any trading activity that issignificant in the context of the Company as a whole.

• No more than 15% of the Company’s gross assets shall beinvested in the securities of any one company or group at thetime the investment is made.

• The Company shall not invest more than 10% of its gross assets inunlisted securities or in other listed closed-ended investmentfunds at the time the investment is made.

• The Company may undertake option writing in respect of up to10% of the Company’s net assets.

• The Company may use derivative instruments for the purposes ofefficient portfolio management. The Company does not have apolicy of hedging or otherwise seeking to mitigate foreignexchange risk but reserves the right to do so from time to time aspart of the Company’s efficient portfolio management.

• For the purposes of the investment policy, emerging markets arethe capital markets of developing countries, including both

BUSINESS REVIEW



recently industrialised countries and countries in transition fromplanned economies to free-market economies. Many, but not all,emerging market countries are constituents of the MSCI EmergingMarkets Index or, in the case of smaller or less developedemerging markets, the MSCI Frontier Index. The Company mayinvest in securities listed in, or exposed to, these countries orother countries that meet the definition in this paragraph. Thesemarkets will tend to be less mature than developed markets andwill not necessarily have such a long history of substantial foreigninvestment.

• The Company measures its performance against the total returnof the MSCI Emerging Markets Index (in sterling) with netdividends reinvested.

• The Company has power under its Articles of Association toborrow up to an amount equal to 30% of its net assets at thetime of the drawdown, although the Board intends only to utiliseborrowings on such occasions as the Manager believes thatgearing will enhance returns to shareholders.

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

PerformanceIn the year ended 31st July 2016, the Company produced a totalreturn to shareholders of +21.3% and a total return on net assets of+16.9%. This compares with the return on the Company’sbenchmark index of +16.7%. As at 31st July 2016, the value of theCompany’s investment portfolio was £360.6 million. The InvestmentManagers’ Report on pages 6 to 9 includes a review ofdevelopments during the year as well as information on investmentactivity within the Company’s portfolio.

Total Return, Revenue and Dividends Gross return for the year amounted to £54.7 million (2015:£19.6 million loss) and net total return amounted to £48.5 million(2015: £26.6 million loss). Net revenue return for the year amountedto £14.1 million (2015: £17.0 million).

Four interim dividends were paid during the year; one of 1.9p pershare and three of 1.0p per share (2015: one of 1.9p per share andthree of 1.0p per share).

On 10th August 2016 the Board announced the payment of a fourthinterim dividend of 1.9p per share (2015: 1.9p per share), payable on27th October 2016 to shareholders on the register of members as atthe close of business on 26th August 2016. This will bring the total

dividend in respect of the year to 4.9p, unchanged from last year.This distribution will absorb £5,589,000 (2015: £5,592,000).

Key Performance Indicators (‘KPIs’) At each Board meeting the Directors consider a number ofperformance measures to assess the Company’s success inachieving its objectives. The principal KPIs are performance againstthe benchmark index, performance, performance attribution, shareprice premium or discount to net asset value per share, ongoingcharges, income and the amount available to pay dividends, and theinvestment risk of the portfolio (on absolute and relative bases).Unless there is a particular reason for the Board to change the KPIs(which would require an explanation to shareholders), consistencyis maintained. Further details of the principal KPIs are given below:

• Performance against the benchmark indexThis is the most important KPI by which performance is judged.The Company does not have a wholly comparable benchmarkagainst which to measure its performance. Therefore the Boardhas chosen the closest possible index of stocks as its benchmarkfor these purposes. However, the Company’s investment strategydoes not ‘track’ this index and, consequently, there may be somedivergence between the Company’s performance and that of thebenchmark. The Company’s net asset value total return ismeasured against the benchmark’s total return (i.e. both withdividends reinvested). Information on the Company’sperformance is given in the Chairman’s Statement and theInvestment Managers’ Report on pages 3 to 5 and 6 to 9respectively.

Performance Since InceptionFIGURES HAVE BEEN REBASED TO 100 AT 31ST JULY 2010

Source: Morningstar.

Share price total return.

Net asset value total return.

Benchmark.

90

100

110

120

130

140

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160

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31/07/14

31/07/13

31/07/12

31/07/11

29/07/10

BUSINESS REVIEW CONTINUED

17

• Performance The principal objective is to provide investors with a dividendincome combined with the potential for long term capital growth.However, the Board also monitors performance compared with abenchmark index and a broad range of competitor funds.

It is not the Company’s investment objective to target a particularlevel of dividend growth and there is no guarantee that anydividends will be paid in respect of any financial year, the abilityto pay dividends being dependent on the level of dividendsearned from the portfolio.

• Performance attribution The purpose of performance attribution analysis is to assess howthe Company achieved its performance relative to its benchmarkindex. Details of the attribution analysis for the year ended31st July 2016 are given in the Investment Managers’ Report onpage 7.

• Share price premium/discount to cum income net asset value(‘NAV’) per share The Board recognises that the possibility of a narrowing premiumor a widening discount can be a key disadvantage of investmenttrusts that can discourage investors. The share issuance andrepurchase programme therefore seeks to address imbalances insupply of and demand for the Company’s shares within themarket and thereby reduce the volatility and absolute level of thepremium or discount to the cum income NAV at which theCompany’s shares trade.

Premium/(Discount) Performance

Source: Datastream.

Share price premium to cum income net asset value per share.

• Ongoing chargesThe ongoing charges represent the Company’s management feeand all other operating expenses excluding finance costs,expressed as a percentage of the average daily net assets duringthe year. The ongoing charges for the year ended 31st July 2016were 1.35% (2015: 1.24%). Each year, the Board reviews ananalysis which shows a comparison of the Company’s ongoingcharges and its main expenses with those of its peers. The mainreason for the increase for the year ended 31st July 2016 was due

to the reduction in the average daily net assets from £339 millionin 2017 to £284 million this year.

• Income and the amount available to pay dividends The Board recognises the importance of income to shareholdersand undertakes detailed consideration of the forecast income forthe Company with the Investment Managers and the Company’sfund accountants, including reviews of any potential impact ofexchange rate movements, further share issues or potential riskof non-receipt of a particular dividend. The review takes place ona monthly basis.

• The investment risk of the portfolioThe Board considers the risk profile of the Company’s portfolio,on absolute and relative bases, regularly and monitors thechanges in this, challenging the Investment Managers andseeking additional explanations where necessary. See note 21 onpages 51 to 56 for further information.

Share CapitalThe Company has authority both to issue new shares for cash at apremium to net asset value and to repurchase shares in the market(for cancellation or to be held in Treasury) at a discount to net assetvalue.

At the Annual General Meeting held on 19th November 2015,shareholders granted Directors authority to issue 29,433,900 sharesin the Company (being approximately 10% of the issued sharecapital of the Company as at 18th November 2015) for cash.Shareholders also granted the Directors authority to disapplypre-emption rights in respect of these share issues.

During the year 199,277 ordinary shares were repurchased intoTreasury for gross proceeds of £163,000 at an average discount tothe capital only net asset value of 7.3%. Further details are given onpages 3 and 4. Since the year end, the Company has notrepurchased further Ordinary shares.

No new Shares were issued during the year under review orsubsequent to the year end. Shares will only be issued when theshare price is at a premium to the cum income net asset value pershare.

The Company does not have authority to reissue shares fromTreasury at a discount to net asset value and will not seek suchauthority at the forthcoming Annual General Meeting. It willhowever, seek to renew its authority to reissue shares from Treasuryat a premium to net asset value.

Resolutions to renew the authority to issue new shares (up to amaximum of 10% of the issued share capital as at the date of thepassing of the resolution) and to repurchase shares for cancellationor to be held in Treasury will be put to shareholders at theforthcoming Annual General Meeting. The full text of thoseresolutions are set out in the Notice of Meeting on pages 59 and 61.

–15

–12

–9

–6

–3

0

3

6

9

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Principal RisksWith the assistance of the Manager, the Board has drawn up a riskmatrix, which identifies the key risks to the Company. These keyrisks fall broadly into the following categories:

• Investment and Strategy: an inappropriate investment strategy,for example asset allocation or the level of gearing or foreignexchange weakness, may lead to underperformance against theCompany’s benchmark index and peer companies. This may resultin the Company’s shares trading on a narrower premium or awider discount or insufficient local currency income generationwhich may lead to a cut in the dividend. The Board managesthese risks by diversification of investments through itsinvestment restrictions and guidelines, which are monitored andreported on by the Manager. The Manager provides the Directorswith timely and accurate management information, includingperformance data and attribution analyses, revenue estimates,currency performance, liquidity reports and shareholderanalyses. The Board monitors the implementation and results ofthe investment process with the Investment Managers, whoattend Board meetings, and reviews data which show statisticalmeasures of the Company’s risk profile. The Investment Managersemploy the Company’s gearing strategically, within a range set bythe Board.

• Financial: the financial risks faced by the Company includemarket price risk, interest rate risk, liquidity risk and credit risk.Further details are disclosed in note 21 on pages 51 to 56.

• Corporate Governance and Shareholder Relations: Details of theCompany’s compliance with Corporate Governance best practice,including information on relations with shareholders, are set outin the Corporate Governance report on pages 24 to 28.

• Operational: Loss of key staff by the Manager, such as theInvestment Managers, could affect the performance of theCompany. Disruption to, or failure of, the Manager’s accounting,dealing or payments systems or the depositary’s or custodian’srecords could prevent accurate reporting and monitoring of theCompany’s financial position. This includes the risk of cybercrimeand consequent potential threat to security and businesscontinuity. Details of how the Board monitors the servicesprovided by the Manager and its associates and the key elementsdesigned to provide effective internal control are included in theRisk Management and Internal Control section of the CorporateGovernance report on pages 24 to 28.

• Accounting, Legal and Regulatory: in order to qualify as aninvestment trust, the Company must comply with Section 1158 ofthe Corporation Tax Act 2010 (‘Section 1158’). Details of the

Company’s approval are given under ‘Business of the Company’above. Were the Company to breach Section 1158, it would lose itsinvestment trust status and, as a consequence, gains within theCompany’s portfolio could be subject to Capital Gains Tax. TheSection 1158 qualification criteria are continually monitored bythe Manager and the results reported to the Board each month.The Company must also comply with the provisions of theCompanies Act and, since its shares are listed on the LondonStock Exchange, the UKLA Listing Rules and the Disclosure &Transparency Rules (‘DTRs’). A breach of the Companies Act couldresult in the Company and/or the Directors being fined or thesubject of criminal proceedings. Breach of the UKLA Listing Rulesor DTRs could result in the Company’s shares being suspendedfrom listing which in turn would breach Section 1158. The Boardrelies on the services of its Company Secretary, the Manager andits professional advisers to ensure compliance with theCompanies Act, the UKLA Listing Rules, DTRs and the AlternativeInvestment Fund Managers Directive.

Long Term ViabilityTaking account of the Company’s current position and strategy, theprincipal risks that it faces and their potential impact on its futuredevelopment and prospects, the Directors have assessed theprospects of the Company, to the extent that they are able to do so,over the next five years. They have made that assessment byconsidering those principal risks, the Company’s investmentobjective and strategy, the investment capabilities of the Managerand the current outlook for Emerging Markets’ economies andequity markets. They have taken into account the fact that theCompany had a continuation vote at the 2015 AGM which wasstrongly supported with over 98% of votes cast in favour. They havealso taken into account the termination dates of loans and theirbelief that these loans will be replaced by similar facilities upontermination.

In determining the appropriate period of assessment the Directorshad regard to their view that, given the Company’s objective ofproviding investors with dividend income combined with thepotential for long term capital growth, shareholders should considerthe Company as a long term investment proposition. This isconsistent with advice provided by investment advisers, thatinvestors should consider investing in equities for a minimum of fiveyears. Thus the Directors consider five years to be an appropriatetime horizon to assess the Company’s viability.

The Directors confirm that, assuming a successful continuation voteat the 2018 AGM and taking account of the Company’s risk profileset out in note 21 on pages 52 to 56, and other factors set out under

BUSINESS REVIEW CONTINUED


19

this heading. They have a reasonable expectation that the Companywill be able to continue in operation and meet its liabilities as theyfall due over the five year period of assessment.

Board DiversityWhen 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. At 31st July2016, there were two male Directors and two female Directors onthe Board.

The Modern Slavery Act 2015 (the ‘MSA’)The MSA requires companies to prepare a slavery and humantrafficking statement for each financial year of the organisation.As the Company has no employees and does not supply goods andservices, the MSA does not apply directly to it. The MSArequirements more appropriately relate to JPMF and JPMAM.JPMorgan’s statement on Human Rights can be found on thefollowing website: www.jpmorganchase.com/corporate/About-JPMC/ab-human-rights.htm

Employees, Social, Community and Human RightsIssuesThe Company has a management contract with the Manager. It hasno employees and all of its Directors are non-executive. The day today activities are carried out by third parties. There are thereforeno disclosures to be made in respect of employees. The Board notesthe policy statements of J.P. Morgan Asset Management (‘JPMAM’) inrespect of Social, Community and Environmental and Human Rightsissues, as highlighted in italics:

Social, Community, Environmental and HumanRightsJPMAM believes that companies should act in a socially responsiblemanner. Although our priority at all times is the best economicinterests of our clients, we recognise that, increasingly, non-financialissues such as social and environmental factors have the potential toimpact the share price, as well as the reputation of companies.

Specialists within JPMAM’s environmental, social and governance(‘ESG’) team are tasked with assessing how companies deal with andreport on social and environmental risks and issues specific to theirindustry.

JPMAM is also a signatory to the United Nations Principles ofResponsible Investment, which commits participants to six principles,with the aim of incorporating ESG criteria into their processes whenmaking stock selection decisions and promoting ESG disclosure. Ourdetailed approach to how we implement the principles is available onrequest.

Greenhouse Gas EmissionsThe Company is managed by JPMorgan Funds Limited with portfoliomanagement delegated to JPMorgan Asset Management (UK)Limited. It has no employees and all of its Directors arenon-executive, the day to day activities being carried out by thirdparties. There are therefore no disclosures to be made in respectof employees. The Company itself has no premises, consumes noelectricity, gas or diesel fuel and consequently does not havea measurable carbon footprint. J.P. Morgan Asset Management isa signatory to the Carbon Disclosure Project and JPMorgan Chase isa signatory to the Equator Principles on managing social andenvironmental risk in project finance.

Future DevelopmentsClearly, the future development of the Company is much dependentupon the success of the Company’s investment strategy in the lightof economic and equity market developments and the continuedsupport of its shareholders. The Investment Managers discuss theoutlook in their report on page 9.

By order of the Board Juliet Dearlove, for and on behalf of JPMorgan Funds Limited Company Secretary

10th October 2016


Richard RobinsonA Director since December 2011.Investment Director at Paul Hamlyn Foundation. He was previously Group Head of Charities &Foundations at Schroders plc and held a number of senior positions at Rothschild AssetManagement. He was a director of Aurora Investment Trust plc from 2007 to 2011.

Connections with Manager: None.

Shared directorships with other Directors: None.

All Directors are members of the Audit and Nomination Committee and are consideredindependent of the Manager.

All Directors are subject to annual reappointment.

BOARD OF DIRECTORS

Andrew Hutton (Chairman of Board)A Director since June 2010. Appointed Chairman in July 2010.

Owner and Director of A. J. Hutton Ltd, an investment advisory practice. Director of SchroderUK Growth Fund PLC. He is a member of the Governing Body of the Lister Institute of PreventiveMedicine, a Trustee of the National Trust Retirement & Death Benefits Scheme and a Trustee ofKusuma Trust UK. He was a Director of Asia Altitude Fund and Asia Altitude Master Fund,retiring with effect from 30th September 2016. Previously he held senior positions withJ.P. Morgan, Coutts Group and RBS Asset Management.



Sarah Fromson (Chairman of the Nomination Committee and Senior independent Director)A Director since June 2011.

Head of Investment Risk at Wellcome Trust. She was previously at RBS Asset Management(formerly Coutts) where she held a number of senior positions, including Chief Investment RiskOfficer, Co-Head of Investments and Head of the Long-Only Investment team.



Governance

Caroline Gulliver(Chairman of the Audit and Risk Committee)A Director since 1st January 2015.

A Chartered Accountant, she spent 25 years with Ernst & Young LLP, latterly as an ExecutiveDirector before leaving in 2012. During that time she specialised in the asset managementsector and developed an extensive experience of investment trusts and was a member ofThe Association of Investment Companies’ Technical Committee. She is also a director ofInternational Biotechnology Trust plc.



21

DIRECTORS’ REPORT

The Directors present their report and the audited financialstatements for the year ended 31st July 2016.

Management of the CompanyThe Manager and Company Secretary is JPMorgan Funds Limited(‘JPMF’) a company authorised and regulated by the FCA.

The active management of the Company’s assets is delegated byJPMF to an affiliate, JPMorgan Asset Management (UK) Limited(‘JPMAM’).

The Manager is a wholly owned subsidiary of JPMorgan Chase Bankwhich, through other subsidiaries, also provides accounting,banking, dealing and custodian services to the Company.

The Manager is employed under a contract which can be terminatedon six months’ notice, without penalty. If the Company wishes toterminate the contract on shorter notice, the balance ofremuneration is payable by way of compensation.

The Board conducts a formal evaluation of the Manager on anannual basis. The evaluation includes consideration of theinvestment strategy and process of the Manager, performanceagainst the benchmark over the long term and the quality ofsupport that the Company receives from the Manager including themarketing support provided. The latest evaluation of the Managerwas carried out in October 2016. As a result of that process, theBoard confirms that it is satisfied that the continuing appointmentof the Manager is in the interests of shareholders as a whole.

No separate Management Engagement Committee has beenestablished because all Directors are considered to be independentof the Manager and, given the nature of the Company’s business, itis felt that all Directors should take part in the review process.

Management FeeFor the year ended 31st July 2016, the management fee wascharged at the rate of 1.0% per annum on the Company’s totalassets less current liabilities. Loans that are drawn down under aloan facility with an original maturity date of one year or more arenot classified as current liabilities for the purpose of themanagement fee calculation. The fee is calculated and paid monthlyin arrears. Investments made by the Company in investment fundson which the Manager or a member of its group earns a fee areexcluded from the calculation and therefore attract no additionalmanagement fee.

The Investment Management Agreement was amended to providethat no performance fee is payable with effect from 1st August 2015.

Going Concern The Directors believe that, having considered the Company’sinvestment objective (see page 1), risk management policies (seepage 18), capital management policies and procedures (see pages56 and 57), the nature of the portfolio and expenditure and cashflow projections, the Company has adequate resources, anappropriate financial structure and suitable managementarrangements in place to continue in operational existence for theforeseeable future, being at least 12 months from the approval ofthe Annual Report and Accounts.

The Company’s first continuation vote was held at the 2015 AnnualGeneral Meeting. This resolution received strong Shareholdersupport.

For these reasons, they consider that there is reasonable evidenceto continue to adopt the going concern basis in preparing thefinancial statements.

Directors All Directors of the Company who held office at the end of the yearunder review are detailed on page 20. Details of their beneficialshareholdings may be found in the Directors’ Remuneration Reporton pages 29 and 30.

In accordance with corporate governance best practice, all Directorswill retire at the forthcoming Annual General Meeting and, beingeligible, will offer themselves for reappointment by shareholders.

The Nomination Committee, having considered their qualifications,performance and contribution to the Board and to the Committees,confirms that each Director continues to be effective anddemonstrates commitment to the role and the Board recommendsto shareholders that they be reappointed.

Director Indemnification and InsuranceAs permitted by the Company’s Articles of Association, eachDirector has the benefit of an indemnity which is a qualifying thirdparty indemnity, as defined by Section 234 of the Companies Act2006. The indemnities were in place during the year and as at thedate of this report.

An insurance policy is maintained by the Company which insures theDirectors of the Company against certain liabilities arising in theconduct of their duties. There is no cover against fraudulent ordishonest actions.


Governance continued

Disclosure of Information to the AuditorIn 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 Auditor is unaware, and

(b) each of the Directors has taken all the steps that they oughtto have taken as a Director in order to make themselvesaware of any relevant audit information (as defined) and toestablish that the Company’s Auditor is aware of thatinformation.

The above confirmation is given and should be interpreted inaccordance with the provision of Section 418(2) of the CompaniesAct 2006.

Independent AuditorFurther to a full external tender of audit services in the year to31st July 2015, Ernst & Young LLP will continue as the Company’sAuditor. Ernst & Young LLP have expressed their willingness tocontinue in office as Auditor to the Company and a resolutionproposing their reappointment and to authorise the Directors todetermine their remuneration for the ensuing year, will be proposedat the Annual General Meeting.

Section 992 Companies Act 2006The following disclosures are made in accordance with Section 992of the Companies Act 2006.

Capital StructureAs at 31st July 2016, the Company’s issued share capital comprised294,140,161 Ordinary shares of 1p each. There were 199,277 sharesheld in Treasury. The Ordinary shares have a premium listing on theLondon Stock Exchange.

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares as at the date ofthis report are given in note 16 to the Notice of Annual GeneralMeeting on page 61.

Notifiable Interests in the Company’s Voting RightsAt the financial year end, the following had declared a notifiableinterest in the Company’s voting rights:

Number ofShareholders voting rights %

Brewin Dolphin Limited1 44,112,925 14.99Investec Wealth & InvestmentLimited2 24,990,809 8.49

Schroders plc1 20,676,694 7.02Old Mutual1 17,551,007 5.96

1 Indirect holding.2 Direct holding.

There have been no changes to the notifiable interests in theCompany’s voting rights as at the date of this report.

The Company is also aware that, as at 31st July 2016, approximately2.4% of the Company’s total voting rights were held by individualsthrough savings products managed by JPMAM and registered in thename of Chase Nominees Limited. If those voting rights are notexercised by the beneficial holders, in accordance with the termsand conditions of the savings products, under certaincircumstances, JPMAM has the right to exercise those voting rights.That right is subject to certain limits and restrictions and falls awayat the conclusion of the relevant general meeting.

The rules concerning the appointment, reappointment andreplacement of Directors, amendment of the Company’s Articles ofAssociation and powers to issue or repurchase the Company’sshares are contained in the Articles of Association of the Companyand the Companies Act 2006.

There are no restrictions concerning the transfer of securities in theCompany; no special rights with regard to control attached tosecurities; no agreements between holders of securities regardingtheir transfer known to the Company; no agreements to which theCompany is party that affect its control following a takeover bid;and no agreements between the Company and its Directorsconcerning compensation for loss of office.

DIRECTORS’ REPORT CONTINUED

23

Annual General MeetingNOTE: 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 adviser authorised under the Financial Services andMarkets Act 2000.

Resolutions relating to the following items of special business willbe proposed at the forthcoming Annual General Meeting. The fulltext of the resolutions is set out in the Notice of Annual GeneralMeeting on pages 59 to 61.

(i) Authority to allot new shares and to disapply statutorypre-emption rights (resolutions 9 and 10)

The Directors will seek renewal of the authority at the AnnualGeneral Meeting to issue new Ordinary shares in the Company. Theauthority being sought is for up to 29,414,016 new Ordinary sharesfor cash or by way of a sale of Treasury shares up to an aggregatenominal amount of £294,140, such amount being equivalent toapproximately 10% of the issued share capital (excluding Treasuryshares) as at the latest practicable date before the publication ofthis document or, if different, the number of Ordinary shares whichis equal to 10% of the Company’s issued share capital (excludingTreasury shares) as at the date of the passing of the resolution.

This authority will expire at the conclusion of the Annual GeneralMeeting of the Company in 2017 unless renewed at a prior generalmeeting. It is advantageous for the Company to be able to issue newshares (or to sell Treasury shares) to participants purchasing sharesthrough the J.P. Morgan Asset Management savings products andalso to other investors when the Directors consider that it is in thebest interests of shareholders to do so. Any such issues would onlybe made at prices greater than the cum income net asset value,thereby increasing the net asset value per share and spreading theCompany’s administrative expenses, other than the managementfee which is charged on the value of the Company’s assets, over agreater number of shares. The issue proceeds would be availablefor investment in line with the Company’s investment policies.

If Resolution 10 is passed, the Directors will also have the power toallot the shares over which they are granted authority pursuant toResolution 9 for cash on a non pre-emptive basis. Any Ordinaryshares allotted on a non pre-emptive basis will not be issued at aprice less than the prevailing net asset value per Ordinary share.

(ii) Authority to repurchase the Company’s shares(resolution 11)

The authority to repurchase up to 14.99% of the Company’s issuedshare capital, granted by shareholders at the 2015 Annual GeneralMeeting, will expire on 18th May 2017 unless renewed at theforthcoming Annual General Meeting. The Directors consider that therenewal of this authority is in the interests of shareholders asa whole, as the repurchase of shares at a discount to the underlyingnet asset value enhances the net asset value of the remaining shares.

Resolution 11 gives the Company authority to repurchase its ownissued Ordinary shares in the market as permitted by theCompanies Act 2006. The authority limits the number of shares thatcould be purchased to a maximum of 44,091,610 Ordinary shares,representing approximately 14.99% of the Company’s issuedOrdinary shares as at the latest practicable date before thepublication of this document or, if less, the number of Ordinaryshares which is equal to 14.99% of the Company’s issued sharecapital (excluding Treasury shares) as at the date of the passing ofthe resolution. The authority also sets minimum and maximumprices.

If resolution 11 is passed at the Annual General Meeting, the Boardmay repurchase the shares for cancellation or hold them inTreasury pursuant to the authority granted to it for possible reissueat a premium to net asset value.

Any repurchases will be at the discretion of the Board and will bemade in the market only at prices below the prevailing net assetvalue per share, thereby enhancing the net asset value of theremaining shares, as and when market conditions are appropriate.In the normal course of business the Directors would expect toexercise their discretion to repurchase shares if the discount to NAVat which they trade exceeded 5% over any significant period of time.

The authority to repurchase shares will expire on 18th May 2017, butit is the Board’s intention to seek renewal of the authority at the2016 Annual General Meeting.

RecommendationThe Board considers that resolutions 9 to 11 are likely to promote thesuccess of the Company and are in the best interests of the Companyand its shareholders as a whole. The Directors unanimouslyrecommend that you vote in favour of the resolutions, as they intendto do in respect of their own beneficial holdings which, as at the yearend, amounted in aggregate to 157,540 Ordinary shares,representing 0.05% of the voting rights of the Company.




Corporate Governance

Compliance The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 31, indicates how the Companyhas applied the principles of good governance of the FinancialReporting Council 2014 UK Corporate Governance Code (the ‘UKCorporate Governance Code’) and the Association of InvestmentCompanies’ (‘AIC’) Code of Corporate Governance (the ‘AIC Code’),(see www.theaic.co.uk) which complements the UK CorporateGovernance Code and provides a framework of best practice forinvestment 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, insofar as they are relevant to the Company’sbusiness, and the AIC Code throughout the year under review.

Role of the Board A management agreement between the Company and the Managersets out the matters which have been delegated to the Manager.This includes management of the Company’s assets and theprovision of accounting, company secretarial, administration andsome marketing services. All other matters are reserved for theapproval of the Board. A formal schedule of matters reserved to theBoard for decision has been approved. This includes determinationand monitoring of the Company’s investment objectives and policyand its future strategic direction, gearing policy, management of thecapital structure, appointment and removal of third party serviceproviders, review of key investment and financial data and theCompany’s corporate governance and risk control arrangements.

At each Board meeting, Directors’ interests are considered. Theseare reviewed carefully, taking into account the circumstancessurrounding them, and, if considered appropriate, are approved.It was resolved that there were no actual or indirect interests of aDirector which conflicted with the interests of the Company, whicharose during the year.

Following the introduction of The Bribery Act 2010, the Board hasadopted appropriate procedures designed to prevent bribery. Itconfirms that the procedures have operated effectively during theyear under review.

The Board meets on at least four occasions during the year andadditional meetings are arranged as necessary. Full and timelyinformation is provided to the Board to enable it to functioneffectively and to allow Directors to discharge their responsibilities.

There is an agreed procedure for Directors to take independentprofessional advice, if necessary, at the Company’s expense. This isin addition to the access that every Director has to the advice and

services of the Company Secretary, which is responsible to theBoard for ensuring that Board procedures are followed and thatapplicable rules and regulations are complied with.

Board Composition The Board, chaired by Andrew Hutton, currently consists of fournon-executive Directors, all of whom are regarded by the Board asindependent of the Company’s Manager, including the Chairman.The Directors have a breadth of investment knowledge, businessand financial skills and experience relevant to the Company’sbusiness. Brief biographical details of each Director are set out onpage 20. There have been no changes to the Chairman’s othersignificant commitments during the year under review. At the closeof the Annual General Meeting on 19th November 2015, PaulWallace stood down as a Director of the Company, Audit andNomination Committee Chairman and the Senior IndependentDirector. With effect from the close of the AGM on 19th November2015, Caroline Gulliver assumed the chairmanship of the Audit andNomination Committee, and Sarah Fromson assumed the role ofSenior Independent Director. On 22nd March 2016 a separateNomination Committee was established, to which Sarah Fromsonwas appointed Chairman and the Audit and Nomination Committeewas renamed as the Audit and Risk Committee.

A review of Board composition and balance is included as part ofthe annual performance evaluation of the Board, details of whichmay be found below. The Senior Independent Director leads theevaluation of the performance of the Chairman and is available toshareholders if they have concerns that cannot be resolved throughdiscussion with the Chairman.

Tenure Directors are initially appointed until the following Annual GeneralMeeting when, under the Company’s Articles of Association, it isrequired that they be reappointed by shareholders. Thereafter, aDirector’s appointment runs from year to year. In the light of theperformance evaluation carried out each year, the Board will decidewhether it is appropriate for the Director to seek an additional term.The Board does not believe that length of service in itselfnecessarily disqualifies a Director from seeking reappointment but,when making a recommendation, the Board will take into accountthe ongoing requirements of the UK Corporate Governance Code,including the need to refresh the Board and its Committee. TheBoard has adopted corporate governance best practice and allDirectors stand for annual reappointment.

The terms and conditions of Directors’ appointments are set out informal letters of appointment, copies of which are available forinspection on request at the Company’s registered office and at theAnnual General Meeting.

25

Induction and Training On appointment, the Manager and Company Secretary provide allDirectors with induction training. Thereafter, regular briefings areprovided on changes in law and regulatory requirements that affectthe Company and the Directors. Directors are encouraged to attendindustry and other seminars covering issues and developmentsrelevant to investment trust companies. Regular reviews of theDirectors’ training needs are carried out by the Chairman by meansof the evaluation process described below.

Meetings and Committees The Board delegates certain responsibilities and functions to theAudit and Risk Committee and the Nomination Committee of whichall Directors are members.

The table below details the number of Board and Audit and RiskCommittee meetings attended by each Director. During the yearunder review there were four Board meetings and two Audit andRisk Committee meetings. In addition, there were two other ad hocBoard meetings to deal with various corporate initiatives,procedural matters and formal approvals. In addition, there isregular contact between the Directors and the Manager andCompany Secretary throughout the year.

Audit andRisk

Board CommitteeMeetings Meetings

Director Attended Attended

Andrew Hutton 4/4 2/2Sarah Fromson 4/4 2/2Caroline Gulliver 4/4 2/2Richard Robinson 4/4 2/2Paul Wallace1 1/4 1/2

1 Resigned 19th November 2015.

Board CommitteesAudit and Risk Committee The Audit and Risk Committee, chaired by Caroline Gulliver witheffect from 19th November 2015, and comprising all of theindependent Directors, meets at least twice each year. Themembers of the Audit and Risk Committee consider that they havethe requisite skills and experience to fulfil the responsibilities of theCommittee. At least one member of the Committee has recent andrelevant financial experience and the Audit & Risk Committee as awhole has competence relevant to the sector.

The Committee reviews the actions and judgements of the Managerin relation to the half year and annual accounts and the Company’scompliance with the UK Corporate Governance Code. During its

review of the Company’s financial statements for the year ended31st July 2016, the Committee considered the following significantissues, in particular those communicated by the Auditors duringtheir reporting:

Significant issue How the issue was addressed

The valuation of investments is undertaken in accordance with the accounting policies, disclosedin note 1(c) to the financial statements on page 41.Controls are in place to ensure that valuations areappropriate and ownership is verified throughDepositary and Custodian reconciliations. The auditincludes the review of the existence, ownership andvaluation of the investments.

The recognition of investment income is undertakenin accordance with accounting policy note 1(e) to thefinancial statements on page 42. The Board reviewssubjective elements of income such as specialdividends and agrees their treatment is relevant.

Approval for the Company as an investment trust under Sections 1158 and 1159 for financial yearscommencing on or after 1st August 2012 has beenobtained and ongoing compliance with the eligibilitycriteria is monitored on a regular basis.

Having taken all available information into consideration and havingdiscussed the content of the annual report and accounts with theAlternative Investment Fund Manager, Investment Managers,Company Secretary and other third party service providers, theAudit and Risk Committee has concluded that the annual report andaccounts for the year ended 31st July 2016, taken as a whole, arefair, balanced and understandable and provide the informationnecessary for shareholders to assess the Company’s position andperformance, business model and strategy, and has reported thesefindings to the Board. The Board’s conclusions in this respect are setout in the Statement of Directors’ Responsibilities on page 31.

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

The Committee reviews the terms of the management agreementbetween the Company and the Manager, the performance of theManager, the notice period that the Board has with the Managerand makes recommendations to the Board on the continuedappointment of the Manager following these reviews.

The Committee reviews and examines the effectiveness of theCompany’s internal control systems, receives information from theManager’s Compliance department and reviews the scope andresults of the external audit, its cost effectiveness, the balance ofaudit and non-audit services and the independence and objectivity

Valuation, existenceand ownership ofinvestments

Recognition ofinvestment income

Compliance withSections 1158 and1159



of the external Auditor. In the Directors’ opinion the Auditor isconsidered independent. The Board reviews and approves anynon-audit services provided by the independent Auditor andassesses the impact of any non-audit work on the ability of theAuditor to remain independent. In order to safeguard the Auditor’sobjectivity and independence, any significant non-audit services arecarried out through a partner other than the audit engagementpartner. No such work was undertaken during the year underreview. The Committee also receives confirmations from the Auditoras part of its reporting, in regard to its objectivity andindependence. Representatives of the Company’s Auditor attend theAudit and Risk Committee meeting at which the draft annual reportand accounts are considered.

The Audit and Risk Committee has the primary responsibility formaking recommendations to the Board on the reappointment andremoval of external auditors. As part of its review of the continuingappointment of the Auditor, the Audit and Risk Committee considersthe length of tenure of the audit firm, its fees, its independencefrom the Alternative Investment Fund Manager and the InvestmentManagers and any matters raised during the audit. Representativesof the Company’s Auditor attend the Committee meeting at whichthe draft annual report and accounts are considered and alsoengage with the Directors as and when required. Having reviewedthe performance of the external Auditor, including the quality ofwork, timing of communications and work with the Manager, theCommittee considered it appropriate to recommend theirreappointment. The Board supported this recommendation whichwill be put to shareholders at the forthcoming Annual GeneralMeeting.

The current audit firm has audited the Company’s financialstatements since launch in July 2010. During 2015 a tender for auditservices was undertaken and it was resolved to continue to retainErnst & Young LLP. In accordance with present professionalguidelines the Audit Partner is rotated after no more than five yearsand the current year is the second year for which the present AuditPartner, Sarah Williams, has served. Details of the fees paid foraudit services are included in note 6 on page 44.

The Directors’ statement on the Company’s system of RiskManagement and Internal Control is set out on page 27.

Nomination CommitteeThe Nomination Committee, Chaired by Sarah Fromson, meets atleast annually.

The Committee ensures that the Board has an appropriate balanceof skills and experience to carry out its fiduciary duties and to selectand propose suitable candidates, when necessary, for appointment.A variety of sources, including independent search consultants oropen advertising, may be used to ensure that a wide range ofcandidates is considered.

The Board’s policy on diversity, including gender, is to take accountof the benefits of these during the appointment process. However,the Board remains committed to appointing the most appropriatecandidate, regardless of gender or other forms of diversity.Therefore, no targets have been set against which to report.

The Committee undertakes an annual performance evaluation ofthe Board, its Committee and individual Directors to ensure that allDirectors have devoted sufficient time and contributed adequatelyto the work of the Board and its Committee. The evaluation of theBoard considers the balance of experience, skills, independence,corporate knowledge, its diversity, including gender, and how itworks together. Questionnaires, drawn up by an independentevaluation company are completed by each Director. The responsesare then collated and discussed by the Committee. The evaluation ofthe individual Directors is led by the Chairman who also meets witheach Director. The Senior Independent Director leads the evaluationof the Chairman’s performance. The Board reviews Directors’ fees.This takes into account the level of fees paid to the directors of theCompany’s peers and within the investment trust industry generallyto ensure that high quality people are attracted and retained.

Terms of ReferenceThe Committees have written terms of reference which defineclearly its responsibilities, copies of which are available forinspection on the Company’s website, on request, at the Company’sregistered office 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 full understandingof the Company’s activities and performance and reports formally toshareholders quarterly each year by way of the annual report andaccounts and the half year report. These are supplemented by thedaily publication, through the London Stock Exchange, of the netasset value of the Company’s shares.

All shareholders have the opportunity, and are encouraged, toattend the Company’s Annual General Meeting at which theDirectors and representatives of the Manager are available inperson to meet shareholders and answer their questions. Inaddition, a presentation is given by the Investment Managers whoreview the Company’s performance.

During the year the Company’s brokers, the Investment Managersand JPMF hold regular discussions with larger shareholders. TheDirectors are made fully aware of their views. The Chairman andDirectors make themselves available as and when required tosupport these meetings and to address shareholder queries. TheDirectors may be contacted through the Company Secretary whosedetails are shown on page 65.


27

The Company’s annual report and accounts are published in time togive shareholders at least twenty working days’ notice of the AnnualGeneral Meeting. Shareholders wishing to raise questions inadvance of the meeting are encouraged to submit questions via theCompany’s website or write to the Company Secretary at theaddress shown on page 65.

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 ControlThe UK Corporate Governance Code requires the Directors, at leastannually, to review the effectiveness of the Company’s system ofrisk management and internal control and to report to shareholdersthat they have done so. This encompasses a review of all controls,which the Board has identified as including business, financial,operational, compliance and risk management.

The Directors are responsible for the Company’s system of riskmanagement and internal control which is designed to safeguardthe Company’s assets, maintain proper accounting records andensure that financial information used within the business, orpublished, is reliable. However, such a system can only be designedto manage rather than eliminate the risk of failure to achievebusiness objectives and therefore can only provide reasonable, butnot absolute, assurance against fraud, material misstatement orloss.

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 monitoring theservices provided by the Manager and its associates, including theoperating controls established by them, to ensure they meet theCompany’s business objectives. There is an ongoing process foridentifying, evaluating and managing the significant risks faced bythe Company (see Principal Risks on page 18). This process has beenin place for the year under review and up to the date of theapproval of the annual report and accounts, and it accords with theFinancial Reporting Council’s guidance. The Company does not havean internal audit function of its own; the Board considers that it issufficient to rely on the internal audit department of the Manager.This arrangement is kept under review. The key elements designedto provide effective internal controls are as follows:

Financial Reporting – Regular and comprehensive review by theBoard of key investment and financial data, including managementaccounts, revenue projections, analysis of transactions andperformance comparisons.

Management Agreement – Appointment of a manager, depositaryand custodian regulated by the FCA, whose responsibilities areclearly defined in a written agreement.

Management Systems – The Manager’s system of risk managementand internal control includes organisational agreements whichclearly define the lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by the Manager’sCompliance department which regularly monitors compliance withFCA rules.

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

The Board, either directly or through the Audit and Risk Committee,keeps under review the effectiveness of the Company’s system ofrisk management and internal controls by monitoring the operationof the key operating controls of the Manager and its associates asfollows:

• reviews the terms of the management agreement and receivesregular reports from the Manager’s Compliance department;

• reviews reports on the risk management and internal controlsand the operations of its Depositary, BNY Mellon Trust &Depositary (UK) Limited, and its Custodian, JPMorgan Chase Bank,which are independently reviewed; and

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

By means of the procedures set out above, the Board confirms thatit has carried out a robust assessment of the effectiveness of theCompany’s system of risk management and internal controls for theyear ended 31st July 2016, and to the date of approval of this annualreport and accounts.

The Board confirms that any failings or weaknesses identifiedduring the course of its review of the system of risk managementand internal control were not significant and did not affect theCompany.

Corporate Governance and Voting Policy The Company delegates responsibility for voting to the Manager.The following is a summary of the policy statements of J.P. MorganAsset Management (‘JPMAM’) on corporate governance, votingpolicy and social and environmental issues, which has beenreviewed and noted by the Board. Details on social andenvironmental issues are included in the Strategic Report onpage 19.


Corporate Governance JPMAM believes that corporate governance is integral to ourinvestment process. As part of our commitment to delivering superiorinvestment performance to our clients, we expect and encourage thecompanies in which we invest to demonstrate the highest standards ofcorporate governance and best business practice. We examine theshare structure and voting structure of the companies in which weinvest, as well as the board balance, oversight functions andremuneration policy. These analyses then form the basis of our proxyvoting and engagement activity.

Proxy Voting JPMAM manages the voting rights of the shares entrusted to it as itwould manage any other asset. It is the policy of JPMAM to vote in aprudent and diligent manner, based exclusively on our reasonablejudgement of what will best serve the financial interests of our clients.So far as is practicable, we will vote at all of the meetings called bycompanies in which we are invested.

Stewardship/EngagementJPMAM recognises its wider stewardship responsibilities to its clientsas a major asset owner. To this end, we support the introduction of theFRC Stewardship Code, which sets out the responsibilities ofinstitutional shareholders in respect of investee companies. Under theCode, 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 where appropriate;

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

– report to clients.

JPMAM endorses the Stewardship Code for its UK investments andsupports the principles as best practice elsewhere. We believe thatregular contact with the companies in which we invest is central to ourinvestment process and we also recognise the importance of being an‘active’ owner on behalf of our clients.

JPMAM’s Voting Policy and Corporate Governance Guidelines areavailable on request from the Company Secretary or can bedownloaded from JPMAM’s website:http://www.jpmorganinvestmenttrusts.co.uk/governance, which alsosets out its approach to the seven principles of the FRC StewardshipCode, its policy relating to conflicts of interest and its detailedvoting record.

By order of the Board Juliet Dearlove, for and on behalf of JPMorgan Funds Limited, Company Secretary

10th October 2016



29

The Board presents the Directors’ Remuneration Report for the yearended 31st July 2016 which has been prepared in accordance withthe requirements of Section 421 of the Companies Act 2006.

The law requires the Company’s Auditor to audit certain of thedisclosures provided. Where disclosures have been audited they areindicated as such. The Auditor’s opinion is included in their reporton pages 32 to 37.

Remuneration of the Directors is considered by the Board on aregular basis.

Directors’ Remuneration PolicyAn ordinary resolution to approve the Directors’ RemunerationPolicy will be put to shareholders at the forthcoming AnnualGeneral Meeting. The policy subject to the vote, is set out in fullbelow and is currently in force.

The Board’s policy for this and subsequent years is that Directors’fees should properly reflect the time spent by the Directors on theCompany’s business and should be at a level to ensure thatcandidates of a high calibre are recruited to the Board and retained.The Chairman of the Board and the Chairman of the Audit and RiskCommittee are paid higher fees than the other Directors, reflectingthe greater time commitment involved in fulfilling those roles. As aguide, Directors’ fees are generally determined in accordance withthe median level of the fees paid to directors of JPMorganinvestment trusts.

Reviews are based on information provided by the Manager andindustry research carried out by third parties on the level of feespaid to the directors of the Company’s peers and within theinvestment trust industry generally. The involvement ofremuneration consultants has not been deemed necessary as partof this review. The Company has no Chief Executive Officer and noemployees and therefore no consultation of employees is requiredand there is no employee comparative data to provide in relation tothe setting of the remuneration policy for Directors.

All of the Directors are non-executive. There are no performance-related elements to their fees and the Company does not operateany type of incentive, share scheme, award or pension scheme andtherefore no Directors receive bonus payments or pensioncontributions from the Company or hold options to acquire sharesin the Company. Directors are not granted exit payments and arenot provided with compensation for loss of office. No otherpayments are made to Directors, other than the reimbursement ofreasonable out-of-pocket expenses incurred in attending theCompany’s business.

In the year under review, Directors’ fees were paid at the followingrates: Chairman £32,500; Chairman of the Audit and Risk Committee£26,000; and other Directors £22,000. Although the fees for theChairman of the Audit and Risk Committee and NominationCommittee and the other Directors fall below the median level forJPMorgan investment trusts as described above, a decision has beentaken to make no changes to the Directors’ remuneration for theyear ending 31st July 2017.

The Company’s Articles of Association provide that any increase inthe maximum aggregate annual limit on Directors’ fees, currently£175,000, requires both Board and shareholder approval.

The Company has not sought shareholder views on its remunerationpolicy. The Board considers any comments received fromshareholders on remuneration policy on an ongoing basis and takesaccount of those views.

The terms and conditions of Directors’ appointments are set out informal letters of appointment which are available for review at theCompany’s Annual General Meeting and the Company’s registeredoffice. Details of the Board’s policy on tenure are set out on page 24.

Directors’ Remuneration Policy ImplementationThe Directors’ Remuneration Report, which includes details of theDirectors’ remuneration policy and its implementation, is subject toan annual advisory vote and therefore an ordinary resolution toapprove this report will be put to shareholders at the forthcomingAnnual General Meeting. There have been no changes to the policycompared with the year ended 31st July 2015 and no changes arecurrently proposed for the year ending 31st July 2017.

At the Annual General Meeting held on 19th November 2015, ofvotes cast, 99.8% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) both theremuneration policy and the remuneration report and 0.2% votedagainst each resolution. Abstentions were received from 0.3%respectively of the votes cast for each of these resolutions.

Details of voting on both the Remuneration Policy and the Directors’Remuneration Report from the 2016 Annual General Meeting will begiven in the annual report for the year ending 31st July 2017.

Details of the implementation of the Company’s remuneration policyare given below.

Single Total Figure of Remuneration The single total figure of remuneration for each Director is detailedbelow together with the prior year comparative.

DIRECTORS’ REMUNERATION REPORT



Single total figure table1

Total fees1

2016 2015£ £

Andrew Hutton 32,500 32,500Sarah Fromson 22,000 22,000Caroline Gulliver2 24,333 12,800Richard Robinson 22,000 22,000Paul Wallace3 8,356 26,000

Total 109,189 115,300

1 Audited information.2 Appointed 1st January 2015 and appointed chair of the Audit & Risk Committee19th November 2015.

3 Resigned 19th November 2015.

A table showing the total remuneration for the Chairman sincelaunch to 31st July 2016 is below:

Remuneration for the Chairman since launch to31st July 2016 Year ended 31st July Fees

2016 £32,5002015 £32,5002014 £32,5002013 £30,0002012 £25,00020111 £28,109

Total £180,609

1 From appointment as the Company’s first Chairman in 2010.

Directors’ ShareholdingsThere are no requirements pursuant to the Company’s Articles ofAssociation for the Directors to own shares in the Company. TheDirectors’ beneficial shareholdings are detailed below. All sharesare held beneficially.

31st July 31st JulyDirectors’ Name 2016 2015

Andrew Hutton 90,000 90,000Sarah Fromson 21,990 21,990Caroline Gulliver 25,000 10,000Richard Robinson 20,550 20,550Paul Wallace2 n/a 50,000

Total 157,540 192,540

1 Audited information.2 Retired 19th November 2015

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 in theCompany and no share schemes are available.

A graph showing the Company’s share price total return comparedwith its benchmark, the MSCI Emerging Markets Index, with netdividends reinvested, in sterling terms, since the date the Companybegan investing is shown below. The MSCI Emerging Markets Indexhas been chosen as this is the Company’s adopted benchmark index,for reasons given on pages 15 and 16.

Share price and benchmark total return since launchto 31st July 2016

Source: Morningstar.

Share price total return.

Benchmark.

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

Expenditure by the Company on remuneration anddistributions to shareholders

Year ended 31st July2016 2015

£ £

Remuneration paid to all Directors £109,189 £115,300

Distribution to shareholders— by way of dividend £14,418,000 £14,129,000 — by way of share repurchases £163,000 £nil

For and on behalf of the Board Andrew HuttonChairman

10th October 2016

100

110

120

130

140

150

2016201520142013201220112010

DIRECTORS’ REMUNERATION REPORT CONTINUED

31

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the annual report andaccounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statementsfor each financial year. Under that law, the Directors have elected toprepare the financial statements in accordance with UnitedKingdom Generally Accepted Accounting Practice (United KingdomAccounting Standards) including FRS 102 ‘The financial ReportingStandard applicable in the UK Republic of Ireland’ and applicablelaw. Under Company law the Directors must not approve thefinancial statements unless they are satisfied that, taken as a whole,the annual report and accounts are fair, balanced andunderstandable and provide the information necessary forshareholders to assess the Company’s position and performance,business model and strategy and that they give a true and fair viewof the state of affairs of the Company and of the total return or lossof 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 have beenfollowed, subject to any material departures disclosed andexplained in the financial statements; and

• prepare the financial statements on a going concern basis unlessit is inappropriate to presume that the Company will continue inbusiness

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 any time thefinancial position of the Company and to enable them to ensure thatthe financial statements comply with the Companies Act 2006. Theyare also responsible for safeguarding the assets of the Companyand hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.

The accounts are published on thewww.jpmglobalemergingmarketsincome.co.uk website, which ismaintained by the Manager. The maintenance and integrity of thewebsite maintained by the Manager is, so far as it relates to theCompany, the responsibility of the Manager. The work carried out bythe Auditor does not involve consideration of the maintenance andintegrity of this website and, accordingly, the Auditor accepts noresponsibility for any changes that have occurred to the accountssince they were initially presented on the website. The accounts areprepared in accordance with UK legislation, which may differ fromlegislation in other jurisdictions.

Under applicable law and regulations the Directors are alsoresponsible for preparing a Directors’ Report and Directors’Remuneration Report that comply with that law and thoseregulations.

Each of the Directors, whose names and functions are listed onpage 20 confirm that, to the best of their knowledge the financialstatements, which have been prepared in accordance with UnitedKingdom Generally Accepted Accounting Practice (United KingdomAccounting Standards and applicable law), give a true and fair viewof the assets, liabilities, financial position and return or loss of theCompany.

The Board confirms that it is satisfied that the annual report andaccounts taken as a whole are fair, balanced and understandableand provide the information necessary for shareholders to assessthe Company’s position and performance, business and strategy.

The Board also confirms that it is satisfied that the Strategic Reportand Directors’ Report include a fair review of the development andperformance of the business, and the position of the Company,together with a description of the principal risks and uncertaintiesthat the Company faces.

For and on behalf of the Board Andrew HuttonChairman

10th October 2016


Independent Auditor’s Report

Our audit opinion on the financial statements In our opinion:

• the financial statements give a true and fair view of the state of the Company’s affairs as at 31 July 2016 and of the Company’s net returnfor the year then ended;

• the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and

What we have auditedJPMorgan Global Emerging Markets Income Trust plc’s financial statements comprise:

Statement of Comprehensive Income for the year ended 31 July 2016Statement of Changes in Equity for the year ended 31 July 2016Statement of Financial Position as at 31 July 2016Related notes 1 to 23 to the financial statements

The financial reporting framework that has been applied in the preparation of the Company financial statements is applicable law andUnited Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 “The FinancialReporting Standard applicable in the UK and Republic of Ireland”

Overview of our audit approach

Risks of material misstatement • Incomplete or inaccurate income recognition through failure to recognise proper incomeentitlements or apply appropriate accounting treatment.

• Incorrect valuation and existence of the investment portfolio.

Audit scope • We performed an audit of JPMorgan Global Emerging Markets Income Investment Trust plc.

Materiality • Materiality of £3.4m which represents 1% of equity shareholder’s funds (2015: £3.1m)

Our assessment of risk of material misstatement We identified the risks of material misstatement described below as those with the greatest effect on our overall audit strategy, theallocation of resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed theprocedures below which were designed in the context of the financial statements as a whole and, consequently, we do not express anyopinion on these individual areas.

33

Risk Our response to the risk

• We have performed the following procedures:

• We agreed a sample of dividends to the corresponding announcement madeby the investee company and agreed cash received to bank statements.

• We agreed, for a sample of investee companies, the dividend declarationsmade by the investee company from an external third party source to theincome entitlements recorded by the Company.

• We agreed all accrued dividends to third party source and to post year endbank statements to assess the recoverability of these amounts.

• We reviewed the recognition criteria applied to a sample of the specialdividends received during the year and assessed the appropriateness of theconclusion on the relevant treatment as documented by the administrator.

What we concluded to the Audit and Risk Committee

The results of our procedures are:

We noted no issues in agreeing the sample of dividend receipts to and from an independent source and to the bank statements.

We noted no issues in agreeing the sample of dividend declarations to the income entitlements recorded by the Company.

We noted no issues in agreeing the sample of accrued dividend receipts to an independent source and to the bank statements.

We ensured that the accounting treatment adopted for the special dividends was consistent with the evidence provided and ourunderstanding of the underlying circumstances giving rise to the related dividends.

Incomplete or inaccurate income recognition throughfailure to recognise proper income entitlements orapply appropriate accounting treatment (as describedon page 25 in the Report of the Audit and RiskCommittee).

The investment income receivable by the Companyduring the period directly drives the Company’s abilityto make a dividend payment to shareholders. Theinvestment income receivable for the year to 31 July2016 was £17.1m (as disclosed in Note 4 to the financialstatements).

If the Company is not entitled to receive the dividendincome recognised in the financial statements or theincome recognised does not relate to the currentfinancial year, this will impact the extent of the profitsavailable to fund dividend distributions to shareholders.

The accounting treatment adopted has a direct impacton the profits available for distribution to shareholdersof the company by way of dividends.

Given the judgmental aspect of allocating specialdividends between revenue and capital and the risk ofmanagement override from processing of topsidejournals, we consider this an area warranting specificaudit focus.

No material special dividends were received during theyear.


Independent Auditor’s Report continued

Risk Our response to the risk

• We performed the following procedures:

• We have used an independent source to check 100% of the prices used in thevaluation of the Company’s portfolio as at 31 July 2016.

• Russian stocks comprise 7.6% of the investment portfolio. We have checkedthe UK Government and US Treasury’s Sanctions lists to determine whetherthese companies are impacted by sanctions. We have also checked theliquidity of these stocks around the year end date.

• For those investments priced in currencies other than Sterling, we haverecalculated the market value in GBP using the correct exchange rates froman independent source.

• We agreed the number of shares held in each security to a confirmation oflegal title received from both the Company’s custodian and depositary at31 July 2016.

What we concluded to the Audit and Risk Committee

The results of our procedures are:

For all investments, we noted no material differences in market value or exchange rates used.

None of the Russian stocks in the investment portfolio at 31st July 2016 appear on the sanctions lists. We noted no issues with liquidity ofthese stocks around the year end date.

We have not identified any other differences between the custodian and depositary confirmations and the Company’s underlying financialrecords.

In the current year, we recognise a risk of material misstatement in relation to the recognition of revenue. We have assessed this as both afraud risk and a significant risk in the current year, as investment income receivable by the Company during the period directly affects theCompany’s ability to pay a dividend to shareholders and judgement is used in allocating special dividends between revenue and capital.Potentially, these factors could give those charged with governance both the incentive and the opportunity to misstate the revenue of theCompany in order to meet shareholder expectations. In addition, we continue to recognise a risk of material misstatement in relation tovaluation and existence of the investment portfolio.

The scope of our audit Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for theCompany. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of theCompany and effectiveness of controls and changes in the business environment when assessing the level of work to be performed. TheCompany is a single component and we perform a full audit on this Company.

Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the auditand in forming our audit opinion.

Incorrect valuation and existence of the investmentportfolio (as described on page 25 in the Report of theAudit and Risk Committee).

The valuation of the assets held in the investmentportfolio is the key driver of the Company’s investmentreturn. The value of the Company’s investment portfolioat 31 July 2016 was £360.6m, consisting predominantlyof listed equities (movements in the investmentportfolio are shown in Note 11 to the financialstatements).

Incorrect asset pricing or a failure to maintain properlegal title of the assets held by the Company could havea significant impact on portfolio valuation and,therefore, the return generated for shareholders.

35

MaterialityThe magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economicdecisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined planning materiality for the Company to be £3.4m (2015: £3.1m), which is 1% of equity shareholders’ funds. We derived ourmateriality calculation from a proportion of total equity as we consider that to be the most important financial metric on which shareholdersjudge the performance of the Company.

Performance materialityThe application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level theprobability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our judgment was thatoverall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Company should be 75% ofplanning materiality, being £2.6m (2015: £2.3m). We have set performance materiality at this percentage due to our past experience of theaudit that indicates a lower risk of misstatements, both corrected and uncorrected.

Given the importance of the distinction between revenue and capital for the Company we also applied a separate testing threshold of£770,000 (2015: £965,000) for the revenue column of the Income Statement, being 5% of the revenue return on ordinary activities beforetaxation.

Reporting thresholdAn amount below which identified misstatements are considered to be clearly trivial.

We agreed with the audit committee that we would report all audit differences in excess of £170,000 (2015: £160,000) as well as differencesbelow that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in the light of otherrelevant qualitative considerations.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurancethat the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequatelydisclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financialstatements. 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 materially inconsistentwith, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements orinconsistencies we consider the implications for our report.

Respective responsibilities of directors and auditorAs explained more fully in the Statement of Directors’ Responsibilities set out on page 31 the directors are responsible for the preparation ofthe financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion onthe financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standardsrequire us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Ouraudit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in anauditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone otherthan the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.


Opinion on other matters prescribed by the Companies Act 2006In our opinion:

• the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;and

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

Matters on which we are required to report by exception

ISAs (UK & Ireland) reporting

We are required to report to you if, in our opinion, financial and non-financial information in the annualreport is:

• materially inconsistent with the information in the audited financial statements; or

• apparently materially incorrect based on, or materially inconsistent with, our knowledge of theCompany acquired in the course of performing our audit; or

• otherwise misleading.

In particular, we are required to report whether we have identified any inconsistencies between ourknowledge acquired in the course of performing the audit and the directors’ statement that theyconsider the annual report and accounts taken as a whole is fair, balanced and understandable andprovides the information necessary for shareholders to assess the entity’s performance, businessmodel and strategy; and whether the annual report appropriately addresses those matters that wecommunicated to the audit committee that we consider should have been disclosed.

Companies Act 2006 reporting

We are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Company, or returns adequate for our audithave not been received from branches not visited by us; or

• the Company financial statements and the part of the Directors’ Remuneration Report to be auditedare not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

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

Listing Rules review requirements

We are required to review:

• the directors’ statement in relation to going concern set out on page 21, and longer-term viability, setout on page 18; and

• the part of the Corporate Governance Statement relating to the Company’s compliance with theprovisions of the UK Corporate Governance Code specified for our review

We have no exceptions to report.



Independent Auditor’s Report continued

37

Statement on the Directors’ Assessment of the Principal Risks that Would Threaten the Solvency or Liquidityof the Entity

ISAs (UK and Ireland) reporting

We are required to give a statement as to whether we have anything material to add or to drawattention to in relation to:

• the directors’ confirmation in the annual report that they have carried out a robust assessment of theprincipal risks facing the entity, including those that would threaten its business model, futureperformance, solvency or liquidity;

• the disclosures in the annual report that describe those risks and explain how they are beingmanaged or mitigated;

• the directors’ statement in the financial statements about whether they considered it appropriate toadopt the going concern basis of accounting in preparing them, and their identification of anymaterial uncertainties to the entity’s ability to continue to do so over a period of at least twelvemonths from the date of approval of the financial statements; and

• the directors’ explanation in the annual report as to how they have assessed the prospects of theentity, over what period they have done so and why they consider that period to be appropriate, andtheir statement as to whether they have a reasonable expectation that the entity will be able tocontinue in operation and meet its liabilities as they fall due over the period of their assessment,including any related disclosures drawing attention to any necessary qualifications or assumptions.

Sarah Williams (Senior statutory auditor)for and on behalf of Ernst & Young LLPStatutory AuditorLondon

10th October 2016

We have nothing material to addor to draw attention to.


STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST JULY 2016

2016 2015Revenue Capital Total Revenue Capital Total

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

Gains/(losses) on investments held at fair value through profit or loss 3 — 41,205 41,205 — (39,635) (39,635)

Net foreign currency losses — (3,669) (3,669) — (1,369) (1,369)Income from investments 4 17,136 — 17,136 21,338 — 21,338 Interest receivable 4 32 — 32 17 — 17

Gross return/(loss) 17,168 37,536 54,704 21,355 (41,004) (19,649)Management fee 5 (933) (2,176) (3,109) (1,025) (2,391) (3,416)Other administrative expenses 6 (721) — (721) (799) — (799)

Net return/(loss) on ordinary activities before finance costs and taxation 15,514 35,360 50,874 19,531 (43,395) (23,864)

Finance costs 7 (234) (545) (779) (242) (565) (807)

Net return/(loss) on ordinary activities before taxation 15,280 34,815 50,095 19,289 (43,960) (24,671)

Taxation 8 (1,179) (448) (1,627) (2,316) 373 (1,943)

Net return/(loss) on ordinary activities after taxation 14,101 34,367 48,468 16,973 (43,587) (26,614)

Return/(loss) per share 10 4.79p 11.68p 16.47p 5.85p (15.01)p (9.16)p

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

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns representsupplementary information prepared under guidance issued by the Association of Investment Companies.

The return/(loss) on ordinary activities after taxation represents the profit/(loss) for the year and also the total comprehensive income.

The notes on pages 41 to 57 form an integral part of these financial statements.

Financial Statements

39

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST JULY 2016

Called up Capital share redemption Share Other Capital Revenue capital reserve premium reserve reserves reserve1 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 31st July 2014 2,785 13 199,593 101,276 21,229 7,321 332,217Issue of Ordinary shares 158 — 18,956 — — — 19,114Expenses of new share issues — — (52) — — — (52)Net (loss)/return from ordinary activities — — — — (43,587) 16,973 (26,614)Dividends paid in the year — — — — — (14,129) (14,129)

At 31st July 2015 2,943 13 218,497 101,276 (22,358) 10,165 310,536Repurchase of shares into Treasury — — — (163) — — (163)Net return on ordinary activities — — — — 34,367 14,101 48,468 Dividends paid in the year — — — — — (14,418) (14,418)

At 31st July 2016 2,943 13 218,497 101,113 12,009 9,848 344,423

1 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.

The accompanying notes on pages 41 to 57 form an integral part of these financial statements.


Financial Statements continued

STATEMENT OF FINANCIAL POSITION AT 31ST JULY 2016

2016 2015 Notes £’000 £’000

Fixed assetsInvestments held at fair value through profit or loss 11 360,612 327,817 Current assets 12Derivative financial assets 1 —Debtors 5,612 3,476 Cash and cash equivalents1 11,663 5,206

17,276 8,682 Current liabilities 13Creditors: amounts falling due within one year (3,337) (13,145)Derivative financial liabilities — (1)

Net current assets/(liabilities) 13,939 (4,464)

Total assets less current liabilities 374,551 323,353 Creditors: amounts falling due after more than one year 14 (30,128) (12,817)

Net assets 344,423 310,536

Capital and reservesCalled up share capital 15 2,943 2,943 Capital redemption reserve 16 13 13 Share premium 16 218,497 218,497 Other reserve 16 101,113 101,276 Capital reserves 16 12,009 (22,358)Revenue reserve 16 9,848 10,165

Total shareholders’ funds 344,423 310,536

Net asset value per share 17 117.1p 105.5p

1 This line item combines the two lines of ‘Investment in liquidity fund held at fair value through profit or loss’ and ‘Cash and short term deposits’ in the financial statements intoone for the year ended 31st July 2015. Under FRS 102, liquidity funds meet the conditions of cash equivalents as they are held for cash management purposes, are short term,and are convertible to known amount of cash.

The financial statements on pages 38 to 57 were approved by the Directors and authorised for issue on 10th October 2016 and are signed ontheir behalf by:

Andrew HuttonChairman

The accompanying notes on pages 41 to 57 form an integral part of these financial statements.

Company registration number: 7273382

41

1. Accounting policies

(a) Basis of accountingThe financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted AccountingPractice (‘UK GAAP’), including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and with theStatement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the ‘SORP’)issued by the Association of Investment Companies in November 2014.

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

The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 21 of the Directors’Report form part of these financial statements.

(b) Transition to FRS 102This set of financial statements, in accordance with the SORP includes changes arising from the adoption of FRS 102 which theCompany is required to comply with for the first time for the year ended 31st July 2016.

No significant changes have arisen from the adoption of the new standard. Where changes have arisen, they are substantially inrelation to presentation, disclosure and non-quantifiable aspects. There has been no impact to financial position or financialperformance and comparative figures which require restating were in respect of presentation only.

The Company has elected not to prepare a Statement of Cash Flows for the current year, applying the exemption from FRS 102Section 7.1A(c).

Early adoptionIn March 2016, the FRC published amendments to FRS 102 concerning the fair value hierarchy disclosures. These amendments areeffective for accounting periods beginning on or after 1st January 2017. The Company has elected to adopt these amendments earlyin this set of financial statements. Full disclosure is given in note 20 on page 50.

(c) Valuation of investmentsThe Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

The Company’s business is investing in financial assets with a view to providing shareholders with a dividend income and the potentialfor long term capital growth. The 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’s Board ofDirectors. Accordingly, upon initial recognition the investments are designated by the Company as held at fair value through profit orloss. They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which arewritten off to capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bid prices forinvestments traded in active markets. For investments which are not traded in active markets, unlisted and restricted investments,the Board takes into account the latest traded prices, other observable market data and asset values based on the latest managementaccounts.

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

(d) Accounting for reservesGains and losses on sales of investments and realised gains or losses on derivatives, including the related foreign exchange gains andlosses, realised gains and losses on foreign currency, management fee and finance costs allocated to capital and any other capitalcharges, are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Gains and losses on salesof investments’.

Increases and decreases in the valuation of investments, and other derivatives held at the year end, including the related foreignexchange gains and losses, are included in the Statement of Comprehensive Income and dealt with in capital reserves within‘Investment holding gains and losses’.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST JULY 2016


NOTES TO THE FINANCIAL STATEMENTS CONTINUED


1. Accounting policies continued

(e) IncomeDividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of the Board,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.

Special dividends are looked at individually to ascertain the reason behind the payment. This will determine whether they are treatedas income or capital.

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

Deposit interest and interest from the liquidity fund are taken to revenue on an accruals basis.

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

– Management fees are allocated 30% to revenue and 70% to capital in line with the Board’s expected long term split of revenue andcapital return from the Company’s investment portfolio.

– Expenses incidental to the purchase and sale of an investment are charged to capital. These expenses are commonly referred to astransaction costs and comprise brokerage commission and stamp duty. Details of transaction costs are given in note 11 on page 47.

(g) Finance costsFinance costs are accounted for on an accruals basis using the effective interest rate method.

Finance costs are allocated 30% to revenue and 70% to capital in line with the Board’s expected long term split of revenue andcapital return from the Company’s investment portfolio.

(h) Financial instrumentsCash and cash equivalents may comprise cash including demand deposits which are readily convertible to a known amount of cashand are subject to an insignificant risk of change in value. Liquidity funds are considered cash equivalents as they are held for cashmanagement purposes as an alternative to cash, are short term, and readily convertible to a known amount of cash.

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

Derivative financial instruments, including short term forward currency contracts are valued at fair value, which is the net unrealisedgain or loss, and are included in current assets or current liabilities in the Statement of Financial Position. Changes in the fair value ofderivative financial instruments are recognised in the Statement of Comprehensive Income as capital.

Bank loans are classified as financial liabilities measured at amortised cost. They are initially measured at proceeds net of direct issuecosts and subsequently measured at amortised cost. Interest payable on the bank loan is accounted for on an accruals basis in theStatement of Comprehensive Income.

(i) TaxationCurrent tax is provided at the amounts expected to be paid or recovered.

Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferred taxliabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is morelikely than not that taxable profits will be available against which those timing differences can be utilised.

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

43

(j) Value Added Tax (‘VAT’)Expenses are disclosed inclusive of the related irrecoverable VAT. Recoverable VAT is calculated using the partial exemption methodbased on the proportion of zero rated supplies to total supplies.

(k) Foreign currencyThe Company is required to identify its functional currency, being the currency of the primary economic environment in which theCompany operates.

The Board, having regard to the currency of the Company’s share capital and the predominant currency in which its shareholders operate,has determined that sterling is the functional currency. Sterling is also the currency in which the financial statements are presented.

Transactions denominated in foreign currencies are converted at actual exchange rates at the date of the transaction. Monetaryassets, liabilities and equity investments held at fair value, denominated in foreign currencies at the year end are translated at therates of exchange prevailing at the year end.

(l) Dividends payableDividends are included in the financial statements in the year in which they are approved by shareholders.

(m) Repurchase of shares to hold in TreasuryThe cost of repurchasing shares into Treasury, including the related stamp duty and transaction costs is charged to the ‘Other reserve’and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. Whereshares held in Treasury are subsequently cancelled, the nominal value of those shares is transferred out of called up share capital andinto 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 the purchaseprice of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will betransferred to share premium.

(n) Share issue costsShare capital is classified as equity and the costs of new share issues are netted from proceeds and charged to the share premiumaccount and dealt with in the Statement of Changes in Equity.

2. Significant accounting judgements, estimates and assumptionsThe preparation of the Company’s financial statements on occasion requires management to make judgements, estimates andassumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. Theseassumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilitiesaffected in the current and future periods, depending on circumstance.

Management does not believe that any significant accounting judgements or estimates have been applied to this set of financial statements,that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

3. Gains/(losses) on investments held at fair value through profit or loss 2016 20151

£’000 £’000

Losses on investments held at fair value through profit or loss based on historic cost (33,270) (950)Amounts recognised in investment holding gains and losses in the previous year in respect of investments sold during the year 19,358 (5,120)

Losses on sales of investments based on the carrying value at the previous balance sheet date (13,912) (6,070)Net movement in investment holding gains and losses 55,144 (33,554)Other capital charges (27) (11)

Total capital gains/(losses) on investments held at fair value through profit or loss 41,205 (39,635)

1 Relevant figures have been amended in line with the current presentation adopted. Under FRS 102, liquidity funds are classified as cash equivalents.




4. Income 2016 2015£’000 £’000

Income from investments:Overseas dividends 15,879 20,807 Dividends from Participation notes 1,255 531 Scrip dividends 2 —

17,136 21,338

Interest receivable:Interest from liquidity fund 29 13 Deposit interest 3 4

32 17

Total income 17,168 21,355

5. Management fee2016 2015

Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Management fee 933 2,176 3,109 1,025 2,391 3,416

Details of the management fee are given in the Directors’ Report on page 21.

6. Other administrative expenses2016 2015£’000 £’000

Administration expenses 465 515 Directors’ fees1 109 115 Savings scheme costs2 63 69 Depositary fees3 56 73 Auditors’ remuneration for audit services4 28 27

721 799

1 Full disclosure is given in the Directors' Remuneration Report on pages 29 to 30.2 Paid to the Manager for marketing and administration of saving scheme products. Includes £4,000 (2015: £5,000) irrecoverable VAT.3 Includes £3,000 (2015: £5,000) irrecoverable VAT.4 Includes £2,000 (2015: £2,000) irrecoverable VAT.

7. Finance costs 2016 2015


Interest on bank loans and overdrafts 234 545 779 242 565 807

45

8. Taxation

(a) Analysis of tax charge in the year2016 2015


Overseas withholding tax 1,627 — 1,627 1,943 — 1,943Tax relief from expenses charged to capital (448) 448 — 373 (373) —

Total tax charge for the year 1,179 448 1,627 2,316 (373) 1,943

(b) Factors affecting the total tax charge for the yearThe tax charge for the year is lower (2015: lower) than the Company’s applicable rate of corporation tax of 20.00% (2015: 20.67%)The factors affecting the total tax charge for the year are as follows:

2016 2015Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Net return/(loss) on ordinary activities before taxation 15,280 34,815 50,095 19,289 (43,960) (24,671)

Net return/(loss) on ordinary activities before taxation multiplied by the Company’s applicable rate of corporation tax of 20.00% (2015: 20.67%) 3,056 6,963 10,019 3,987 (9,086) (5,099)

Effects of:Non taxable capital (gains)/losses — (7,507) (7,507) — 8,475 8,475Non taxable overseas dividends (3,070) — (3,070) (3,448) — (3,448)Tax attributable to costs charged to capital (544) 544 — (611) 611 —Tax relief on expenses charged to capital (448) 448 — 373 (373) —Income taxed in different periods — — — (53) — (53)Overseas withholding tax 1,627 — 1,627 1,943 — 1,943Unutilised expenses carried forward to futureperiods 558 — 558 125 — 125

Total tax charge for the year 1,179 448 1,627 2,316 (373) 1,943

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £3,077,000 (2015: £2,273,000) based on a prospective corporation tax rateof 18% (2015: 20%). The UK Government announced in July 2015 that the corporation tax rate is set to be cut to 19% in 2017 and 18%in 2020. These reductions in the standard rate of corporation tax were substantively enacted on 26th October 2015 and becameeffective from 18th November 2015. The deferred tax asset has arisen due to the cumulative excess of deductible expenses overtaxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeablefuture and therefore no asset has been recognised in the financial statements.

Given the Company’s status as an investment trust company and the intention to continue meeting the conditions required to retainapproval, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal ofinvestments.




9. Dividends(a) Dividends paid and proposed

2016 2015£’000 £’000

2015 Fourth interim dividend paid of 1.90p (2014: 1.90p) 5,592 5,324First interim dividend paid of 1.00p (2015: 1.00p) 2,944 2,919Second interim dividend paid of 1.00p (2015: 1.00p) 2,941 2,943Third interim dividend paid of 1.00p (2015: 1.00p) 2,941 2,943

Total dividends paid in the year 14,418 14,129

Dividend proposedFourth interim dividend declared of 1.90p (2015: 1.90p) 5,589 5,592

(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’)The requirements of Section 1158 are considered on the basis of the dividend proposed in respect of the financial year, shown below.The revenue available for distribution by way of dividend for the year is £14,101,000 (2015: £16,973,000).

2016 2015£’000 £’000

First interim dividend paid of 1.00p (2015: 1.00p) 2,944 2,919Second interim dividend paid of 1.00p (2015: 1.00p) 2,941 2,943Third interim dividend paid of 1.00p (2015: 1.00p) 2,941 2,943Fourth interim dividend declared of 1.90p (2015: 1.90p) 5,589 5,592

Total dividends for Section 1158 purposes 14,415 14,397

The revenue reserve after paying the proposed dividend will be £4,259,000.

10. Return/(loss) per share2016 2015£’000 £’000

Revenue return 14,101 16,973Capital return/(loss) 34,367 (43,587)

Total return/(loss) 48,468 (26,614)

Weighted average number of shares in issue during the year 294,242,522 290,335,671

Revenue return per share 4.79p 5.85pCapital return/(loss) per share 11.68p (15.01)p

Total return/(loss) per share 16.47p (9.16)p

47

11. Investments 2016 20151

£’000 £’000

Investments listed on a recognised stock exchange and Participation notes 360,612 327,817

Opening book cost 344,092 325,774 Opening investment holding (losses)/gains (16,275) 22,400

Opening valuation 327,817 348,174

Movements in the year:Purchases at cost 94,878 114,048 Sales – proceeds (103,315) (94,781)Losses on sales of investments based on the carrying value at the previous balance sheet date (13,912) (6,070)Net movement in investment holding gains and losses 55,144 (33,554)

360,612 327,817

Closing book cost 302,385 344,092 Closing investment holding gains/(losses) 58,227 (16,275)

Total investments held at fair value through profit or loss 360,612 327,817

1 Relevant figures have been amended in line with the current presentation adopted. Under FRS 102, liquidity funds are classified as cash equivalents.

Transaction costs on purchases during the year amounted to £176,000 (2015: £207,000) and on sales during the year amounted to£211,000 (2015: £198,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £19,358,000 have been transferred to gains on sales ofinvestments as disclosed in note 16.

12. Current assetsDerivative financial assets

2016 2015£’000 £’000

Forward foreign currency contracts 1 —

Debtors2016 2015£’000 £’000

Securities sold awaiting settlement 2,820 25Dividends and interest receivable 2,727 3,371Overseas tax recoverable 39 48Other debtors 26 32

5,612 3,476

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

Cash and cash equivalentsCash and cash equivalents comprise bank balances, short term deposits and liquidity funds. The carrying amount of these representstheir fair value.




13. Current liabilities2016 2015£’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 3,152 112Bank loan — US Dollar 20 million fixed rate loan with National Australia Bank (maturing 2015) — 12,816Other creditors 132 145Loan interest payable 53 72

3,337 13,145

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

Derivative financial liabilities2016 2015£’000 £’000

Forward foreign currency contracts — 1

14. Creditors: amounts falling due after more than one year 2016 2015£’000 £’000

Bank loan – US Dollar 20 million fixed rate loan with National Australia Bank (maturing 2018) 15,064 12,817Bank loan – US Dollar 20 million fixed rate loan with National Australia Bank (maturing 2020) 15,064 —

30,128 12,817

The Company has two US Dollar $20 million fixed rate loans with National Australia Bank, repayable in October 2018 (3.18% perannum) and October 2020 (2.31% per annum).

15. Called up share capital 2016 2015£’000 £’000

Issued and fully paid share capital:Ordinary shares of 1p eachOpening balance of 294,339,438 (2015: 278,514,438) Ordinary shares excluding shares held in Treasury 2,943 2,785

Issue of nil (2015: 15,825,000) Ordinary shares — 158Repurchase of 199,277 (2015: nil) Ordinary shares into Treasury (2) —

Subtotal of 294,140,161 (2015: 294,339,438) Ordinary shares excluding shares held in Treasury 2,941 —199,277 (2015: nil) Ordinary shares held in Treasury 2 —

Closing balance of 294,339,438 (2015: 294,339,438) Ordinary shares including shares held in Treasury 2,943 2,943

Further details of transactions in the Company’s shares are given in the Business Review on page 17.

49

Share capital transactions During the year nil (2015: 15,825,000) Ordinary shares were issued.

The Company has the authority to repurchase shares in the market for cancellation or to be held in Treasury. During the year199,277 shares were repurchased into Treasury for a total consideration of £163,000.

Resolutions to renew the authority to issue new shares and to repurchase shares will be put to shareholders at the forthcomingAnnual General Meeting. More details are given on page 23 and the full text of the resolutions is set out in the Notice of AnnualGeneral Meeting on pages 59 to 61.

16. Reserves Capital reserves

Gains and InvestmentCalled up Capital losses on holding

share redemption Share Other sales of gains and Revenuecapital reserve premium reserve1 investments losses reserve2 Total£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Opening balance 2,943 13 218,497 101,276 (5,391) (16,967) 10,165 310,536 Transfer of prior period unrealised loss on liquidity3 — — — — (6) 6 — —

Net foreign currency gains — — — — 825 — — 825 Unrealised gains on foreign currency contracts — — — — — 1 — 1

Losses on sales of investments based on the carrying value at the previous balance sheet date — — — — (13,912) — — (13,912)

Net movement in investment holding gains and losses — — — — — 55,144 — 55,144

Transfer on disposal of investments — — — — (19,358) 19,358 — —Repurchase of shares into Treasury — — — (163) — — — (163)Unrealised foreign currency losses on loans — — — — — (4,235) — (4,235)

Realised losses on repayment of loans — — — — (260) — — (260)

Transfer re loans repaid in period — — — — (424) 424 — —Management fee and finance costs charged to capital — — — — (2,721) — — (2,721)

Other capital charges — — — — (27) — — (27)Tax relief from expenses charged to capital — — — — (448) — — (448)

Dividends paid in the year — — — — — — (14,418) (14,418)Retained revenue for the year — — — — — — 14,101 14,101

Closing balance 2,943 13 218,497 101,113 (41,722) 53,731 9,848 344,423

1 The balance of the share premium account was cancelled on 20th October 2010 and transferred to the ‘Other reserve’. The ‘Other reserve’ is for the purposes of financing sharerepurchases and it is a non-distributable reserve.

2 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.3 Transfer of opening liquidity fund unrealised loss between reserves as a result of the reclassification of liquidity holdings from Investments to cash equivalent.




17. Net asset value per share2016 2015

Net assets (£'000) 344,423 310,536Number of shares in issue 294,140,161 294,339,438

Net asset value per share 117.1p 105.5p

18. Contingent liabilities and capital commitmentsAt the balance sheet date there were no contingent liabilities or capital commitments (2015: same).

19. Related party transactionsDetails of the management contract are set out in the Directors’ Report on page 21. The management fee payable to the Manager forthe year was £3,109,000 (2015: £3,416,000) of which £nil (2015: £nil) was outstanding at the year end.

During the year £63,000 (2015: £69,000), including VAT, was payable to the Manager for the marketing and administration of savingsscheme products, of which £nil (2015: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 44 are safe custody fees amounting to £175,000 (2015: £198,000) payable toJPMorgan Chase of which £31,000 (2015: £33,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’slength. The commission payable to JPMorgan Securities Limited for the year was £40,000 (2015: £2,000) of which £nil (2015: £nil) wasoutstanding at the year end.

The Company also holds cash in the JPMorgan US Dollar Liquidity Fund, which is managed by JPMorgan. At the year end this wasvalued at £11.3 million (2015: £2.8 million). Income amounting to £29,000 (2015: 13,000) was receivable during the year of which£6,000 (2015: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £27,000 (2015: £11,000) were payable to JPMorgan Chase during the year ofwhich £2,000 (2015: £1,000) was outstanding at the year end.

At the year end, total cash of £381,000 (2015: £2,400,000) was held with JPMorgan Chase. A net amount of interest of £3,000(2015: £4,000) was receivable by the Company during the year from JPMorgan Chase of which £nil (2015: £nil) was outstanding atthe year end.

Full details of Directors’ remuneration and shareholdings can be found on page 30 and in note 6 on page 44.

20. Disclosures regarding financial instruments measured at fair valueThe Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio andderivative financial instruments.

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

(1) The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurementdate

(2) Inputs other than quoted prices included within Level 1 that are observable (ie: developed using market data) for the asset orliability, either directly or indirectly

(3) Inputs are unobservable (ie: for which market data is unavailable) for the asset or liability

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

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The following table sets out the fair value measurements using the FRS 102 hierarchy at 31st July.

2016 2015Assets Liabilities Assets Liabilities £’000 £’000 £’000 £’000

Level 1 360,612 — 327,817 —Level 21 1 — — (1)

Total 360,613 — 327,817 (1)

1 Foreign currency contracts.

There were no transfers between Level 1, 2 or 3 during the year (2015: nil).

21. Financial instruments’ exposure to risk and risk management policies As an investment trust, the Company invests in equities for the long term so as to secure its investment objective stated on the‘Features’ page. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in a reduction in theCompany’s net assets or a reduction in the profits available for dividends.

These financial risks include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk.The Directors’ policy for managing these risks is set out below. The Company Secretary, in close cooperation with the Board and theManager, 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 out below, havenot changed from those applying in the comparative year.

The Company’s classes of financial instruments are as follows:

– investments in equity shares and participation notes of overseas companies, which are held in accordance with the Company’sinvestment objective;

– cash held within a liquidity fund;

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

– two fixed rate loans with National Australia Bank;

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

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices.This market risk comprises three elements – currency risk, interest rate risk and other price risk. Information to enable an evaluationof the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivityanalyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remainedunchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making eachinvestment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.




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

(a) Market risk continued

(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 presentation currency. As a result, movements in exchange rates may affect the sterlingvalue of those items.

Management of currency risk The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board, which meets onat least four occasions each year. The Manager measures the risk to the Company of this exposure by considering the effect onthe Company’s net asset value and income of a movement in rates of exchange to which the Company’s assets, liabilities,income and expenses are exposed. Income denominated in foreign currencies is converted to sterling on receipt. The Companymay use short term forward currency contracts to manage working capital requirements. It is currently not the Company'spolicy to hedge against foreign currency risk.

Foreign currency exposure The fair value of the Company’s monetary items that have foreign currency exposure at 31st July are shown below. Where theCompany’s equity investments (which are not monetary items) are priced in a foreign currency, they have been includedseparately in the analysis so as to show the overall level of exposure.

2016South Hong

US Taiwan African Kong BrazilianDollars Dollars Rand Dollars Real Other Total£’000 £’000 £’000 £’000 £’000 £’000 £’000

Current assets 13,573 1,167 — 2,086 2 1,096 17,924 Creditors (31,551) — — (2,086) — (350) (33,987)

Foreign currency exposure on net monetary items (17,978) 1,167 — — 2 746 (16,063)

Investments held at fair value through profit or loss 95,218 60,174 49,955 47,569 23,533 84,163 360,612

Total net foreign currency exposure 77,240 61,341 49,955 47,569 23,535 84,909 344,549

In the opinion of the Directors, the above year end amounts are broadly representative of the exposure to foreign currencyrisk during the year.

2015South Hong

US Taiwan African Kong BrazilianDollars Dollars Rand Dollars Real Other Total£’000 £’000 £’000 £’000 £’000 £’000 £’000

Current assets 4,366 2,897 — 1,161 2 784 9,210Creditors (25,633) (112) — (516) — (96) (26,357)

Foreign currency exposure on net monetary items (21,267) 2,785 — 645 2 688 (17,147)

Investments held at fair value throughprofit or loss that are equities 76,025 57,724 40,465 58,440 22,583 72,580 327,817

Total net foreign currency exposure 54,758 60,509 40,465 59,085 22,585 73,268 310,670

The current assets and creditors shown above represent only foreign currency items and include the forward currencycontracts on a gross basis, therefore may differ from the amounts shown in the Statement of Financial Position.

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Foreign currency sensitivity

The following table illustrates the sensitivity of return after taxation for the year and net assets with regard to the Company’smonetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’smonetary currency financial instruments held at each balance sheet date and the income receivable in foreign currency andassumes a 10% (2015: 10%) appreciation or depreciation in sterling against the currencies to which the Company is exposed to,which is considered to be a reasonable illustration based on the volatility of exchange rates during the year.

2016 2015If sterling If sterling If sterling If sterling

strengthens weakens strengthens weakensby 10% by 10% by 10% by 10%£’000 £’000 £’000 £’000

Statement of Comprehensive Income – return after taxationRevenue return (1,717) 1,717 (2,135) 2,135Capital return 1,606 (1,606) 1,715 (1,715)

Total return after taxation (111) 111 (420) 420

Net assets (111) 111 (420) 420

In the opinion of the Directors, the above sensitivity analysis is not representative of the whole of the current or comparativeyear due to fluctuations in the Company’s investment in the JPMorgan US Dollar Liquidity Fund.

(ii) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits and the liquidity fund.

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

Interest rate exposure The exposure of financial assets and liabilities to floating interest rates using the year end figures, giving cash flow interest raterisk when rates are reset, is shown below.

2016 2015£’000 £’000

Exposure to floating interest rates:Cash and short term deposits 381 2,400JPMorgan US Dollar Liquidity Fund 11,282 2,806

Total net exposure 11,663 5,206

Interest receivable on cash balances, or paid on overdrafts, is at a margin below or above LIBOR respectively (2015: same). Thetarget interest earned on the JPMorgan US Dollar Liquidity Fund is the 7 day US Dollar London Interbank Bid Rate.





(a) Market risk continued

(ii) Interest rate risk continued

Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2015: 1%) increaseor decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of changeis considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is basedon the Company’s monetary financial instruments held at the balance sheet date with all other variables held constant.

2016 20151% increase 1% decrease 1% increase 1% decrease

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

Statement of Comprehensive Income – return after taxationRevenue return 117 (117) 52 (52)Capital return — — — —

Total return after taxation for the year 117 (117) 52 (52)

Net assets 117 (117) 52 (52)

In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interestrate changes due to fluctuations in the level of cash balances and cash held in the liquidity fund.

(iii) Other price risk Other price risk includes changes in market prices, other than those arising from interest rate risk or currency risk, which mayaffect the value of equity 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 risk associatedwith particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which isselected in accordance with the Company’s investment objectives and seeks to ensure that individual stocks meet an acceptablerisk/reward profile.

Other price risk exposure The Company’s total exposure to changes in market prices at 31st July comprises its holdings in equity investments as follows:

2016 2015£’000 £’000

Equity investments held at fair value through profit or loss 360,612 327,817

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 13 and 14. This shows that the investments’ value is in a broadspread of countries with no concentration of exposure to any one country. However, it should also be noted that an investmentmay not be entirely exposed to the economic conditions in its 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 or decreaseof 10% (2015: 10%) in the market value of equity investments. This level of change is considered to be a reasonable illustration

55

based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities, adjusting forchanges in the management fee but with all other variables held constant.

2016 201510% increase 10% decrease 10% increase 10% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Statement of Comprehensive Income – return after taxationRevenue return (108) 108 (98) 98Capital return 35,809 (35,089) 32,552 (32,552)

Total return after taxation for the year and net assets 35,701 (35,701) 32,454 (32,454)

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

Management of the risk Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meetfunding requirements if necessary.

Liquidity risk exposure Contractual maturities of the financial liabilities, based on the earliest date on which payment can be required are as follows:

2016Within More than

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

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 3,152 — 3,152 Other creditors 132 — 132 Creditors: amounts falling due after more than one yearBank loans including interest 880 31,811 32,691

4,164 31,811 35,975

2015Within More than

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

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 112 — 112Other creditors 145 — 145Derivative financial liabilities 1 — 1Bank loan (maturing 2015) including interest 12,879 — 12,879Creditors: amounts falling due after more than one yearBank loan (maturing 2018) including interest 407 13,712 14,119

13,544 13,712 27,256

The liabilities shown above represent future contractual payments and therefore may differ from the amounts shown in theStatement of Financial Position.





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

Management of credit risk

Portfolio dealing

The Company invests in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates the risk oflosing the principal of a trade during the settlement process. The Manager continuously monitors dealing activity to ensure bestexecution, a process that involves measuring various indicators including the quality of trade settlement and incidence of failedtrades. Counterparty lists are maintained and adjusted accordingly.

Cash and cash equivalents

Counterparties are subject to regular credit analysis by the Manager and deposits can only be placed with counterparties that havebeen approved by JPMAM’s Counterparty Risk Group. The Board regularly reviews the counterparties used by the Manager.

JPMorgan Chase Bank N.A. and the JPMorgan US Dollar Liquidity Fund have S+P credit ratings of A-1 and AAAm respectively.

Exposure to JPMorgan Chase

JPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The Company’s assets are segregated from JPMorgan Chase’sown trading assets. Therefore these assets are designed to be protected from creditors in the event that JPMorgan Chase were tocease trading. The Depositary, BNY Mellon Trust and Depositary (UK) Limited, is responsible for the safekeeping of all custodial assetsof the Company and for verifying and maintaining a record of all other assets of the Company. However, no absolute guarantee canbe given on the protection of all the assets of the Company.

Credit risk exposure The amounts shown in the Statement of Financial Position under debtors and cash and cash equivalents represent the maximumexposure to credit risk at the current and comparative year ends.

(d) Fair values of financial assets and financial liabilitiesAll financial assets and liabilities are either included in the Statement of Financial Position at fair value or the carrying amount isa reasonable approximation of fair value.

22. Capital management policies and proceduresThe Company’s capital management objectives are to ensure that it will continue as a going concern and to provide investors witha dividend income combined with the potential for long term capital growth.

The Company’s debt and capital structure comprises the following: 2016 2015£’000 £’000

DebtUS Dollar 20 million fixed rate loan with National Australia Bank (maturing 2018) 15,064 12,817US Dollar 20 million fixed rate loan with National Australia Bank (maturing 2020) 15,064 12,816

30,128 25,633EquityEquity share capital 2,943 2,943Reserves 341,480 307,593

344,423 310,536

Total debt and equity 374,551 336,169

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The Board’s policy is to employ gearing when the Manager believes it to be appropriate to do so. Gearing will be in the range of 10%net cash to 20% geared in normal market conditions, at the discretion of the Manager.

2016 2015£’000 £’000

Investments held at fair value through profit or loss 360,612 327,817

Net assets 344,423 310,536

Gearing 4.7% 5.6%

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

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

– the opportunity for issues of new shares, including issues from Treasury; and

– the ability to employ gearing when the Manager believes it to be appropriate.

23. Subsequent eventsThe Directors have evaluated the period since the year end and have not noted any subsequent events.


Regulatory Disclosures

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (‘AIFMD’)DISCLOSURES (UNAUDITED)

Leverage

For the purposes of the Alternative Investment Fund Managers Directive (the ‘AIFMD’), leverage is any method which increases theCompany’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposureand its net asset value and is calculated on a gross and a commitment method, in accordance with the AIFMD. Under the gross method,exposure represents the sum of the Company’s positions without taking into account any hedging and netting arrangements. Under thecommitment method, exposure is calculated after certain hedging and netting positions are offset against each other.

The Company is required to state its maximum and actual leverage levels, calculated as prescribed by the AIFMD, as at 31st July 2016, whichgives the following figures:

Gross CommitmentMethod Method

Leverage ExposureMaximum limit 175% 175%Actual 109% 109%

JPMF Remuneration

JPMF is the authorised manager of the Company and is part of the J.P. Morgan Chase & Co. group of companies. In this disclosure, the terms‘J.P. Morgan’ or ‘Firm’ refer to that group, and each of the entities in that group globally, unless otherwise specified.

This disclosure has been prepared in accordance with the AIFMD, the European Commission Delegated Regulation supplementing theAIFMD, the ‘Guidelines on Sound Remuneration Policies’ under the AIFMD issued by the European Securities and Markets Authority and theFinancial Conduct Authority Handbook (SYSC 19B: The AIFM Remuneration Code and FUND 3.3).

JPMF Remuneration Policy

The current remuneration policy for the EMEA Global Investment business of J.P. Morgan can be found at https://am.jpmorgan.com/gb/en/asset-management/gim/adv/emea-remuneration-policy. This policy includes details of the alignment with risk management, thefinancial and non-financial criteria used to evaluate performance and the measures adopted to avoid or manage conflicts of interest.

JPMF Quantitative Disclosures

Disclosures in accordance with FUND 3.3.5, Article 22(2)e and 22(2)f of the AIFMD and Article 107 of the Delegated Regulation are disclosedon the Company’s website at www.jpmglobalemergingmarketsincome.co.uk.

These leverage calculations are made on a different basis to the methodology used for the calculation of gearing.

59

Shareholder Information

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the sixth Annual General Meeting ofJPMorgan Global Emerging Markets Income Trust plc will be heldat the Offices of J.P.Morgan, 60 Victoria Embankment, LondonEC4Y 0JP on Thursday 24th November 2016 at 2.00 p.m. for thefollowing purposes:

1. To receive the Directors’ Report & Accounts and the Auditor’sReport for the year ended 31st July 2016.

2. To approve the Company’s Remuneration Policy.

3. To approve the Directors’ Remuneration Report for the yearended 31st July 2016.

4. To reappoint Andrew Hutton as a Director of the Company.

5. To reappoint Sarah Fromson as a Director of the Company.

6. To reappoint Richard Robinson as a Director of the Company.

7. To reappoint Caroline Gulliver as a Director of the Company.

8. To reappoint Ernst & Young LLP as Auditor of the Companyand to authorise the Directors to determine theirremuneration.

Special Business To consider the following resolutions:

Authority to allot new shares – Ordinary Resolution 9. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors), pursuantto and in accordance with Section 551 of the Companies Act2006 (the ‘Act’) to exercise all the powers for the Company toallot shares in the Company and to grant rights to subscribefor, or to convert any security into, shares in the Company(‘Rights’) up to an aggregate nominal amount of £294,140 or,if different, the aggregate nominal amount representingapproximately 10% of the Company’s issued Ordinary sharecapital as at the date of the passing of this resolution,provided that this authority shall expire at the conclusion ofthe Annual General Meeting of the Company to be held in2017 unless renewed at a general meeting prior to such time,save that the Company may before such expiry make offersor agreements which would or might require shares to beallotted or Rights to be granted after such expiry and so thatthe Directors of the Company may allot shares and grantRights in pursuance of such offers or agreements as if theauthority conferred hereby had not expired.

Authority to disapply pre-emption rights on allotment ofrelevant securities – Special Resolution 10. THAT subject to the passing of Resolution 9 set out above, the

Directors of the Company be and they are hereby empoweredpursuant to Sections 570 and 573 of the Act to allot equitysecurities (within the meaning of Section 560 of the Act) forcash pursuant to the authority conferred by Resolution 9 orby way of a sale of Treasury shares as if Section 561(1) of theAct did not apply to any such allotment, provided that thispower shall be limited to the allotment of equity securities forcash up to an aggregate nominal amount of £294,140 or, ifdifferent the aggregate nominal amount representingapproximately 10% of the issued share capital as at the dateof the passing of this resolution at a price of not less than thenet asset value per share and shall expire upon the expiry ofthe general authority conferred by Resolution 9 above, savethat the Company may before such expiry make offers oragreements which would or might require equity securities tobe allotted after such expiry and so that the Directors of theCompany may allot equity securities in pursuance of suchoffers or agreements as if the power conferred hereby hadnot expired.

Authority to repurchase the Company’s shares – SpecialResolution11. THAT the Company be generally and, subject as hereinafter

appears, unconditionally authorised in accordance withSection 701 of the Act to make market purchases (within themeaning of Section 693 of the Act) of its issued Ordinaryshares of 1p each in the capital of the Company on such termsand in such manner as the Directors may from time to timedetermine.

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 44,091,610 or, ifdifferent, that number of Ordinary shares which isequal to 14.99% of the Company’s issued share capitalas at the date of the passing of this Resolution;

(ii) the minimum price which may be paid for an Ordinaryshare shall be 1p;

(iii) the maximum price which may be paid for an Ordinaryshare shall be an amount equal to the highest of:(a) 105% of the average of the middle marketquotations for an Ordinary share taken from andcalculated by reference to the London Stock ExchangeDaily Official List for the five business days immediately


preceding the day on which the Ordinary share iscontracted to be purchased; or (b) the price of the lastindependent trade; or (c) the highest currentindependent bid;

(iv) any purchase of Ordinary shares will be made in themarket for cash at prices below the prevailing net assetvalue per Ordinary share (as determined by theDirectors);

(v) the authority hereby conferred shall expire on23rd May 2018 unless the authority is renewed at theCompany’s Annual General Meeting in 2017 or at anyother general meeting 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 which contract willor may be executed wholly or partly after the expiry ofsuch authority and may make a purchase of Ordinaryshares pursuant to any such contract.

By order of the BoardJuliet Dearlove, for and on behalf of JPMorgan Funds Limited, Company Secretary

17th October 2016

Notes These notes should be read in conjunction with the notes on the reverse ofthe 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 to theMeeting, provided that each proxy is appointed to exercise the rightsattaching 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 who hasagreed to attend to represent you. Details of how to appoint theChairman or another person(s) as your proxy or proxies using theproxy form are set out in the notes to the proxy form. If a voting box onthe proxy form is left blank, the proxy or proxies will exercise his/theirdiscretion both as to how to vote and whether he/they abstain(s) fromvoting. Your proxy must attend the Meeting for your vote to count.Appointing a proxy or proxies does not preclude you from attendingthe 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 later than2.00 p.m. two business days prior to the Meeting (i.e. excludingweekends and bank holidays).

4. You may change your proxy instructions by returning a new proxyappointment. The deadline for receipt of proxy appointments alsoapplies in relation to amended instructions. Any attempt to terminateor amend a proxy appointment received after the relevant deadline willbe disregarded. Where two or more valid separate appointments ofproxy are received in respect of the same share in respect of the sameMeeting, the one which is last received (regardless of its date or thedate of its signature) shall be treated as replacing and revoking theother or others as regards that share; if the Company is unable todetermine which was last received, none of them shall be treated asvalid in respect of that share.

5. To be entitled to attend and vote at the Meeting (and for the purpose ofthe determination by the Company of the number of votes they maycast), members must be entered on the Company’s register ofmembers as at 6.30 p.m. two business days prior to the Meeting (the‘specified time’). If the Meeting is adjourned to a time not more than48 hours after the specified time applicable to the original Meeting,that time will also apply for the purpose of determining the entitlementof members to attend and vote (and for the purpose of determining thenumber of votes they may cast) at the adjourned Meeting. If, however,the Meeting is adjourned for a longer period then, to be so entitled,members must be entered on the Company’s register of members as at6.30 p.m. two business days prior to the adjourned Meeting or, if theCompany gives notice of the adjourned Meeting, at the time specifiedin that notice. Changes to entries on the register after this time shall bedisregarded in determining the rights of persons to attend or vote atthe Meeting or adjourned Meeting.

Shareholder Information continued

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

61

6. Entry to the Meeting will be restricted to shareholders and their proxyor proxies, with guests admitted only by prior arrangement.

7. A corporation, which is a shareholder, may appoint an individual(s) toact as its representative(s) and to vote in person at the Meeting (seeinstructions given on the proxy form). In accordance with theprovisions of the Companies Act 2006, each such representative mayexercise (on behalf of the corporation) the same powers as thecorporation could exercise if it were an individual member of theCompany, provided that they do not do so in relation to the sameshares. It is therefore no longer necessary to nominate a designatedcorporate representative. Representatives should bring to the Meetingevidence of their appointment, including any authority under which it issigned.

8. Members that satisfy the thresholds in Section 527 of the CompaniesAct 2006 can require the Company to publish a statement on itswebsite setting out any matter relating to: (a) the audit of theCompany’s accounts (including the Auditor’s report and the conduct ofthe audit) that are to be laid before the Annual General Meeting(‘AGM’); or (b) any circumstances connected with the Auditor of theCompany ceasing to hold office since the previous AGM, which themembers propose to raise at the Meeting. The Company cannot requirethe members requesting the publication to pay its expenses. Anystatement placed on the website must also be sent to the Company’sAuditor no later than the time it makes its statement available on thewebsite. The business which may be dealt with at the AGM includes anystatement that the Company has been required to publish on itswebsite pursuant to this right.

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 except in certain circumstances, including if it isundesirable in the interests of the Company or the good order of theMeeting or if it would involve the disclosure of confidential information.

10. Under Sections 338 and 338A of the 2006 Act, members meeting thethreshold requirements in those sections have the right to require theCompany: (i) to give, to members of the Company entitled to receivenotice of the Meeting, notice of a resolution which those membersintend to move (and which may properly be moved) at the Meeting;and/or (ii) to include in the business to be dealt with at the Meeting anymatter (other than a proposed resolution) which may properly beincluded in the business at the Meeting. A resolution may properly bemoved, or a matter properly included in the business unless: (a) (in thecase of a resolution only) it would, if passed, be ineffective (whether byreason of any inconsistency with any enactment or the Company’sconstitution or otherwise); (b) it is defamatory of any person; or (c) it isfrivolous or vexatious. A request made pursuant to this right may be inhard copy or electronic form, must identify the resolution of whichnotice is to be given or the matter to be included in the business, mustbe accompanied by a statement setting out the grounds for therequest, must be authenticated by the person(s) making it and must bereceived by the Company not later than the date that is six clear weeksbefore the Meeting, and (in the case of a matter to be included in the

business only) must be accompanied by a statement setting out thegrounds for the request.

11. A copy of this notice has been sent for information only to persons whohave been nominated by a member to enjoy information rights underSection 146 of the Companies Act 2006 (a ‘Nominated Person’). Therights to appoint a proxy cannot be exercised by a Nominated Person:they can only be exercised by the member. However, a NominatedPerson may have a right under an agreement between him and themember by whom he was nominated to be appointed as a proxy for theMeeting or to have someone else so appointed. If a Nominated Persondoes not have such a right or does not wish to exercise it, he may havea right under 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 of sharesin respect of which members are entitled to exercise voting rights atthe AGM, the total voting rights members are entitled to exercise at theAGM and, if applicable, any members’ statements, members’resolutions or members’ matters of business received by the Companyafter the date of this notice will be available on the Company’s websitewww.jpmglobalemergingmarketsincome.co.uk.

13. The register of interests of the Directors and connected persons in theshare capital of the Company and the Directors’ letters of appointmentare available for inspection at the Company’s registered office duringusual business hours on any weekday (Saturdays, Sundays and publicholidays excepted). It will also be available for inspection at the AGM.No Director has any contract of service with the Company.

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 electronically byvisiting www.sharevote.co.uk. You will need your Voting ID, Task ID andShareholder Reference Number (this is the series of numbers printedunder your name on the Form of Proxy/Voting Direction Form).Alternatively, if you have already registered with Equiniti Limited’sonline portfolio service, Shareview, you can submit your Form of Proxyat www.shareview.co.uk. Full instructions are given on both websites.

16. As at 10th October 2016 (being the latest business day prior to thepublication of this Notice), the Company’s issued share capital consistsof 294,339,438 Ordinary Shares (of which 199,277 are held in Treasury)carrying one vote each. Therefore the total voting rights in theCompany are 294,140,161.

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 Meeting andany adjournment(s) thereof by using the procedures described in the CRESTManual. See further instructions on the proxy form.


GLOSSARY OF TERMS AND DEFINITIONS

Return to ShareholdersTotal return to the investor, on a last traded price to last tradedprice basis, assuming that all dividends received were reinvested,without transaction costs, into the shares of the Company at thetime the shares were quoted ex-dividend.

Return on Net AssetsTotal return on net asset value (‘NAV’) per share, on a bid value tobid value basis, assuming that all dividends paid out by theCompany were reinvested, without transaction costs, into the sharesof the Company at the NAV per share at the time the shares werequoted ex-dividend.

In accordance with industry practice, dividends payable which havebeen declared but which are unpaid at the Balance Sheet Date arededucted from the NAV per share when calculating the total returnon net assets.

Benchmark ReturnTotal return on the benchmark, on a closing market value to closingmarket value basis, assuming that all dividends received werereinvested, without transaction costs, into the shares of theunderlying companies at the time the shares were quotedex-dividend.

The benchmark is a recognised index of stocks which should not betaken as wholly representative of the Company’s investmentuniverse. The Company’s investment strategy does not ‘track’ thisindex and consequently, there may be some divergence betweenthe Company’s performance and that of the benchmark.

Gearing/Net CashGearing represents the excess amount above shareholders’ funds oftotal investments, expressed as a percentage of the shareholders’funds, in line with current AIC methodology. Previously gearingrepresented the excess amount above shareholders’ funds of totalassets expressed as a percentage of shareholders’ funds. Totalassets included total investments and net current assets/liabilitiesless cash/cash equivalents and excluding bank loans of less thanone year. If the amount calculated is negative, this is shown as a‘net cash’ position.

Ongoing Charges The Ongoing Charges represent the Company’s management feesand all other operating expenses, excluding finance costs expressedas a percentage of the average of the daily net assets during theyear.

Share Price Premium/Discount to Net Asset Value(‘NAV’) Per ShareIf the share price of an investment trust is lower than the NAV pershare, the Company’s shares are said to be trading at a discount.The discount is shown as a percentage of the NAV per share. Theopposite of a discount is a premium. It is more common for aninvestment trust’s shares to trade at a discount than at a premium.

H-SharesCompanies incorporated in mainland China and listed in Hong Kongand on other foreign exchanges.

Performance AttributionAnalysis of how the Company achieved its recorded performancerelative to its benchmark.

Performance Attribution Definitions:Management Fees/Other ExpensesThe payment of fees and expenses reduces the level of total assetsand therefore has a negative effect on relative performance.

Emerging MarketsFor the purposes of the investment policy, emerging markets arethe capital markets of developing countries, including both recentlyindustrialised countries and countries in transition from plannedeconomies to free-market economies. Many, but not all, emergingmarket countries are constituents of the MSCI Emerging MarketsIndex or, in the case of smaller or less developed emerging markets,the MSCI Frontier Index. The Company may invest in securities listedin, or exposed to, these countries or other countries that meet thedefinition in this paragraph. These markets will tend to be lessmature than developed markets and will not necessarily have sucha long history of substantial foreign investment.

Shareholder Information continued

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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

WHERE TO BUY J.P. MORGAN INVESTMENT TRUSTS

You can invest in a J.P. Morgan investment trust through the following;

1. Directly from J.P. MorganInvestment AccountThe Company’s shares are available in the J.P. Morgan InvestmentAccount, which facilitates both regular monthly investments andoccasional lump sum investments in the Company’s ordinary shares.Shareholders who would like information on the Investment Accountshould call J.P. Morgan Asset Management free on 0800 20 40 20 orvisit its website at am.jpmorgan.co.uk/investor

Stocks & Shares Individual Savings Accounts (ISA)The Company’s shares are eligible investments within a J.P. MorganISA. For the 2016/17 tax year, from 6th April 2016 and ending 5th April2017, the total ISA allowance is £15,240. The shares are also availablein a J.P. Morgan Junior ISA. Details are available from J.P. Morgan AssetManagement free on 0800 20 40 20 or via its website atam.jpmorgan.co.uk/investor

2. Via a third party provider Third party providers include;

Please note this list is not exhaustive and the availability of individualtrusts may vary depending on the provider. These websites are thirdparty sites and J.P. Morgan Asset Management does not endorse orrecommend any. Please observe each site's privacy and cookie policiesas well as their platform charges structure.

3. Through a professional adviserProfessional advisers are usually able to access the products of all thecompanies in the market and can help you find an investment thatsuits your individual circumstances. An adviser will let you know thefee for their service before you go ahead. You can find an adviser atunbiased.co.uk

You may also buy investment trusts through stockbrokers, wealthmanagers and banks.

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

AJ BellAlliance Trust SavingsBarclays StockbrokersBestinvestCharles Stanley DirectHargreaves Lansdown

Interactive InvestorJames BrearleyJames HaySelftradeTD DirectThe Share Centre


Notes

Information about the Company

HistoryJPMorgan Global Emerging Markets Income Trust plc is an investmenttrust which was launched in July 2010 with assets of £102.3 million.

DirectorsAndrew Hutton (Chairman)Sarah FromsonCaroline GulliverRichard Robinson

Company NumbersCompany registration number: 7273382

Ordinary SharesLondon Stock Exchange ISIN code: GB00B5ZZY915Bloomberg code: JEMISEDOL B5ZZY91

Market InformationThe Company’s unaudited net asset value (‘NAV’) is published daily, via theLondon Stock Exchange.

The Company’s shares are listed on the London Stock Exchange. Themarket price is shown daily in the Financial Times, The Times, The DailyTelegraph, The Scotsman and on the JPMorgan website atwww.jpmglobalemergingmarketsincome.co.uk, where the share price isupdated every fifteen minutes during trading hours.

Share TransactionsThe Company’s shares may be dealt in directly through a stockbroker orprofessional adviser acting on an investor’s behalf. They may also bepurchased and held through the J.P. Morgan Investment Account,J.P. Morgan ISA and J.P. Morgan Junior ISA. These products are allavailable on the online service at jpmorgan.co.uk/online

Manager and Company SecretaryJPMorgan Funds Limited

Company’s Registered Office60 Victoria EmbankmentLondon EC4Y 0JPTelephone number: 020 7742 4000

For company secretarial and administrative matters please contact JulietDearlove at the above address.

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

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

RegistrarsEquiniti LimitedReference 3570Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0371 384 2857

Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to thehelpline will cost no more than a national rate call to a 01 or 02number. Callers from overseas should dial +44 121 415 0225.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 3570. Registered shareholders can obtainfurther details on their holdings on the internet by visitingwww.shareview.co.uk.

Independent AuditorErnst & Young LLP25 Churchill PlaceCanary WharfLondon E14 5EY

BrokersWinterflood SecuritiesThe Atrium Building Cannon Bridge25 Dowgate HillLondon EC4R 2GATelephone number: 020 3100 0000

Savings Product AdministratorsFor queries on the J.P. Morgan Investment Account and J.P. Morgan ISA,see contact details on the back cover of this report.

FINANCIAL CALENDAR

Financial year end 31st July

Final results announced October

Half year end 31st January

Half year results announced March

Interim dividends declared February, June, Augustand November

Annual General Meeting November

A member of the AIC

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Telephone calls may be recorded and monitored for security and training purposes.

J.P. Morgan Helpline

Freephone 0800 20 40 20 or +44 (0) 1268 444470.Telephone lines are open Monday to Friday, 9am to 5.30pm.

www.jpmglobalemergingmarketsincome.co.uk

GB A114 mm/yy

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