annual report jpmorgan asian investment trust plc...performance in 2015. we thank sonia, in...

JPMorgan Asian Investment Trust plc

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

Annual Report2015

Asian 4pp cover 14/12/2015 13:55 Page 2

Features

Objective

Capital growth, primarily from investing in equities quoted on the stock markets ofAsia, excluding Japan.

Investment Policy

- To have a diversified portfolio of Asian stocks.

- To have a portfolio comprising around 50 to 80 investments.

- To use borrowings from time to time to gear the portfolio within a range of 10% netcash to 20% geared in normal market conditions.

Further details on investment policies and risk management are given in the StrategicReport on page 14.

Benchmark

MSCI AC Asia ex Japan Index with net dividends reinvested, expressed in sterlingterms.

Capital Structure

At 30th September 2015, the Company’s share capital comprised 95,046,993Ordinary shares of 25p each.

ContinuationResolution

A resolution that the Company continue as an investment trust will be proposed atthe Company’s 2016 Annual General Meeting. Going forward and in accordance withthe Company’s Articles of Association, a continuation resolution will be proposed atthe Annual General Meeting to be held in 2017 and every third year thereafter.

Management Company

The Company employs JPMorgan Funds Limited (‘JPMF’ or the ‘Manager’) as itsAlternative Investment Fund Manager. JPMF delegates the management of theCompany’s portfolio to JPMorgan Asset Management (UK) Limited (‘JPMAM’).

FCA regulation of ‘non-mainstream pooled investments’

The Company currently conducts its affairs so that the shares issued by theCompany can be recommended by independent financial advisers to ordinary retailinvestors in accordance with the FCA’s rules in relation to non-mainstreaminvestment products and intends to continue to do so for the foreseeable future.

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

AIC

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

Website

The Company’s website, which can be found at www.jpmasian.co.uk, includes usefulinformation on the Company, such as daily prices, factsheets and current and historichalf year and annual reports.

Contents

1 Financial Results

Strategic Report

2 Chairman’s Statement5 Investment Managers’ Report8 Ten Year Performance9 Ten Year Financial Record10 Ten Largest Investments11 Portfolio Analyses12 Investment Activity13 List of Investments14 Business Review

Governance

18 Board of Directors19 Directors’ Report21 Corporate Governance Statement27 Directors’ Remuneration Report30 Statement of Directors’

Responsibilities

31 Independent Auditors’ Report

Financial Statements

37 Income Statement38 Reconciliation of Movements in

Shareholders’ Funds39 Balance Sheet40 Cash Flow Statement41 Notes to the Financial Statements

Shareholder Information

59 Notice of Annual General Meeting62 Glossary of Terms and Definitions63 Rollover Apportionments64 Where to buy J.P. Morgan Investment

Trusts65 Information about the Company


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

Financial Resultsat 30th September 2015

Total returns (includes dividends reinvested)

–2.9%Return on net assets2

(2014: +6.0%)

–6.3%Benchmark return3

(2014: +8.1%)

–3.2%Return to shareholders1

(2014: +5.2%)

2.5pOrdinary dividend(2014: 2.2p)

Long Term Performance (includes dividends reinvested)for periods ended 30th September 2015

Return to Return on Benchmarkshareholders1 net assets2 return3

1 Year Performance –3.2% –2.9% –6.3%

3 Year Performance 9.3% 9.5% 6.5%

5 Year Performance –4.4% –2.2% 6.1%

10 Year Performance 88.8% 89.2% 117.7%

Since Inception Performance4 205.4% 171.0% 137.2%

A glossary of terms and definitions is provided on pages 62 and 63.

1Source: Morningstar.2Source: J.P. Morgan.3Source: MSCI.4Returns are measured from 30th September 1997 to 30th September 2015.

JPMorgan Asian Investment Trust plc. Annual Report & Accounts 20152

Performance

In the year to 30th September 2015 the Company’s return on net assets was –2.9%and the return to shareholders was –3.2%, reflecting a slight widening of theCompany’s discount from 11.4% to 11.7%. Although the overall return was negativein a difficult market for Asian equities generally, it is at least pleasing to note thatthe Company’s return on net assets represents an outperformance against itsbenchmark, the MSCI Asia ex Japan Index, of 3.4 percentage points.

Continuing appointment of the Manager

You will recall that the Company’s 2014 investment performance, althoughdelivering a positive return on net assets of 6.0%, had been disappointing, in that ithad underperformed the benchmark index by 2.1 percentage points. In light of thatperformance and also of a number of prior years’ mediocre results, the Boardformally advised J.P. Morgan Asset Management (‘JPMAM’ or the ‘Manager’) that ithad to deliver significant performance improvement in 2015 in order to justify itsreappointment as Manager and, indeed, to justify the Board’s recommendation forcontinuation at the 2016 AGM. I can confirm that the Manager has risen to andexceeded the Board’s challenge. The Board now expects significant outperformanceto be sustained.

In October 2015, and after discussions with JPMAM, the Board announced theappointment of Richard Titherington, Chief Investment Officer of JPMAM’s EmergingMarkets & Asia Pacific Equities team, as co-manager of the Company’s portfolio. Theappointment was initiated following the decision of Ted Pulling, co-manager of theCompany’s portfolio since May 2012, to relocate from Hong Kong to the United Statesfor family reasons. Richard, who will manage the portfolio along with Sonia Yu, bringsa vast amount of experience in the management of both Emerging Market and Asianequities and we are encouraged by his enthusiasm for building upon the Company’sperformance in 2015. We thank Sonia, in particular, for her commitment andsuccessful management of the portfolio during the interregnum following Ted’sdeparture.

In light of the 2015 improvement in performance, the Board’s positive opinion of thequalities of the investment team and our confidence that JPMAM should be able tocontinue to deliver outperformance, the Board has resolved that JPMAM remain asthe Company’s Manager for 2015/2016. It is encouraging to note that, since the periodend, the Company has continued to outperform against its benchmark.

Continuation Vote

Shareholders will recall that last year the Board introduced a new and additionalContinuation Vote at the forthcoming Annual General Meeting. The Boardrecommends that shareholders vote in favour of the Company continuing inexistence as an investment trust until the Company’s 2017 Annual General Meeting, atwhich the Company’s triennial continuation vote, in accordance with the Company’sArticles of Association, will be put to shareholders.

Strategic ReportChairman’s Statement

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Discount Management

The Company’s discount widened marginally over the year, very much in line with itspeers, and the Board is cognisant that, whilst an improvement in performance andthence demand for the Company’s shares would help to reduce the discount, thereare times when, subject to market conditions, the Board should also consider buyingback shares. Over the year ended 30th September 2015 the Company repurchased500,000 shares. In normal market conditions, the Board’s objective is to stabilise thediscount at no wider than between 8% and 10%. It is intended that this will be theBoard’s policy for the year ahead and the Directors will therefore propose aresolution at the forthcoming Annual General Meeting to authorise the Company torepurchase its Ordinary shares.

Revenue and Dividends

Revenue per share for the year amounted to 2.99p and the Board is recommendinga final dividend of 2.5p which, if approved by shareholders, will be payable on5th February 2016 to shareholders on the register at the close of business on8th January 2016.

Gearing

The Company has a £25 million three year multi currency loan facility with Scotiabank,which will expire in December 2016. Although at the year end the Company was only0.5% geared, the investment managers constantly monitor the situation and are readyto use gearing to enhance returns to shareholders.

Board of Directors

The Board has procedures in place to ensure that the Company complies fully withthe AIC Code on Corporate Governance and the UK Corporate Governance Code.

In accordance with corporate governance best practice, all Directors will be retiringand seeking re-election at the Company’s forthcoming Annual General Meeting. TheNomination Committee met formally to evaluate the effectiveness of the Board as awhole and of each individual Director and is satisfied that all retiring Directorspossess the experience and attributes required of a Director for this Company.Accordingly, the re-elections of all Directors at the forthcoming Annual GeneralMeeting are recommended to shareholders.

Having had the honour of chairing the Board since 2003, I plan to step down fromthe Board at the conclusion of the 2017 Annual General Meeting. The Company’sSenior Independent Director, Ronald Gould has been charged with overseeing theprocess to select my successor. As part of the Board’s succession planning and inanticipation of my retirement, the Board is currently considering recruitment ofanother non-executive Director to the Board and shareholders will be advised ofthat appointment, which is likely to take place in the first half of 2016.

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Strategic Report continuedChairman’s Statement continued

Directors resolved to implement a small increase in their fees with effect from1st October 2015 by a flat £1,500 per Director, to ensure that the fees payable willbe attractive to candidates for the role going forward. By virtue of the Company’sArticles of Association, the maximum aggregate fee level for Directors’ fees perannum is £150,000. This level was last increased in 2007 and a resolution to increasethe aggregate amount to £200,000 will be put to shareholders at the forthcomingAnnual General Meeting. Shareholders should note that the proposed increase in theaggregate fee is to provide the Board with the flexibility to facilitate the successionplan outlined above.

Annual General Meeting

This year’s Meeting will be held at 60 Victoria Embankment, London EC4Y 0JP onFriday, 29th January 2016 at 10.30 a.m. In addition to the formal proceedings,shareholders will have the opportunity to meet Richard Titherington, who will bepresenting and will be available to respond to questions on the Company’s portfolio,the investment team’s strategy and the outlook for Asian markets. Following theMeeting there will be an opportunity for shareholders to meet the Board, investmentmanagement personnel and other Company advisers and I look forward to seeing asmany of you as possible.

Conclusion

Last year I wrote that the Company’s financial year ended 30th September 2015would be an important one for the Company. I believe that the Managers havecleared the first hurdle on the journey to improving and sustaining performance; theCompany is now ahead of benchmark over three months, six months, one, two andthree years. The Board remains focused on a continuation of this trend and isconfident in the Manager’s ability to deliver above benchmark returns.

James M LongChairman 14th December 2015

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Summary

During the year under review, the Company’s return on net assets was –2.9%,outperforming the Asian stock market, as measured by the MSCI AC Asia ex JapanIndex, which delivered a –6.3% return in sterling terms. In this report, we discuss themarket backdrop, examine the drivers of the Company’s performance and thenconsider the outlook for Asian stock markets in 2016.

Market Review

In the 12 months to 30th September 2015, we saw many of the trends that emerged inthe prior reporting period continue to influence markets, including a slowing China,falling commodity prices, uncertainty over the Federal Reserve’s timing to raiseinterest rates and political reforms in Asia. These factors continued to cause aheightened degree of volatility across global markets, resulting in a broad range ofoutcomes for different countries.

In China, one of the most remarkable highlights was the surge in demand fordomestic A-shares which resulted in daily turnover exceeding US$300 billion andnew brokerage accounts opening at a record pace. However, this liquidity driven bullmarket ended up in an equally dramatic correction when concerns over deterioratingmacroeconomic conditions eventually overtook investor optimism. Although thecorrection was largely isolated by Chinese capital controls, the broader market wasimpacted when China depreciated its currency against the US Dollar, as many marketparticipants interpreted such a move as a reactive act to revive sagging growth. Therepeated interest rate cuts and reduction in required reserve ratio was not effective instabilising the economy, save perhaps in the property space where transaction pricesand volumes finally started to show signs of revival.

China growth fears, combined with the risks related to Federal Reserve tightening,were particularly negative for emerging market currencies and equities. ASEANcurrencies were continuously under pressure from the strengthening US Dollar, whiletheir economies were heavily influenced by the ongoing softness in China’s economyand global exports. While the governments of Indonesia and Thailand took theopportunity of a low commodity price and strong political mandate to reduce fuelsubsidies, the economic and political headwinds faced by these two countries actedas a drag on economic growth within the region, despite the pro-easing stance oftheir respective central banks. The stagnation of government infrastructure spendingalso dampened the already weak economic momentum. The worst hit country withinthis region was Malaysia, as the country was plagued with a commodity-drivencurrency, political turmoil and weak consumption trends.

India stood out in terms of political reform. Prime Minister Modi reduced fuelsubsidies and laid out the groundwork for long-term structural reforms. While marketexpectation on the progress of such reforms ran ahead of fundamentals, we were stillable to find quality companies with secular growth drivers to invest in. We alsostarted to see some green shoots of recovery, mainly within the consumer space. Thecentral bank in India has also remained accommodative so far and has made thenecessary interest rate cuts to stimulate the economy. However, we reiterate thatcorporate earnings need to come through for India equities to rerate further. We also

Investment Managers’ Report

Richard Titherington

Sonia Yu

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expect the Modi government to kick start infrastructure spend to ignite theinvestment side of the economy, but we have yet to see material progress on thisfront.

Towards the end of this reporting year, stock markets were still largely influenced bythe aforementioned factors. As we compile this report, the Federal Reserve has yet tomake its first interest rate hike, concerns over China growth remains prominent andcommodity prices have fallen further. Yet not all hope is lost. We saw meaningfulstimulus packages implemented in Indonesia, Thailand and China. We also startedto see some form of stabilisation in China through some of the high frequency datapoints. Indian private banks continued to post remarkable share gain from theirgovernment run counterparts. The key to investing in such times is to remainselective and stay invested in long term secular growth stories.

Performance

We are pleased to report a turnaround in relative performance for the Company’sfinancial year ended September 2015, although it is disappointing that shareholderssaw a reduction in share price over the year. Positive relative performance was drivenby both country allocation and stock selection, with positions in China and Indiabeing the stand out contributors.

In China, our allocations in the financial sector performed well on the back of asupportive liquidity environment, particularly in the mid-sized bank (China MinshengBank), property (China Vanke) and insurance (China Pacific Insurance) spaces. Wetook profits in some of these positions during the year for stock specific reasons andredeployed the capital into other investments where we had high conviction andvaluations became more appealing, especially following the market sell off in thesummer. Elsewhere, our positions in the technology sector, to include Tencent(internet service provider) and AAC Technology (smartphone components supplier)continued to deliver positive returns with strong top line growth throughout the year.We continue to believe that there are growth opportunities in consumption in Chinaand have recently added to the portfolio’s exposure in this area.

In India, the main contributor to performance came from the portfolio’s bankingpositions, which had also been the case in 2014. HDFC Bank, the largest overweightposition in India, again delivered upbeat earnings with strong loan and fee incomegrowth. The secular growth story in quality Indian private banks remains intact andwe expect them to continue gaining market share from government owned banks.

Elsewhere within the region, stock selection in Korea was strong, as positions in thechemicals and consumer space contributed to performance due to low input cost andstrong convenience store sales respectively. Last but not least, our underweightposition in Malaysia also benefited relative performance, as the country’s economywas mired by a weak Malaysian Ringgit and a collapse in oil prices.

Conversely, our holdings in the energy sector, which suffered from the sharpcorrection in commodity prices, were the biggest detractors from performance. Wehave reduced our exposure to energy as we believe that the slower global growthenvironment will continue to heap pressure on energy exposed stocks.

Performance attribution for theyear ended 30th September 2015

% %

Contributions to total returns

Benchmark –6.3

Stock selection 3.0Currency effect 1.1Gearing/(net cash) 0.1

Investment Managercontribution 4.2

Portfolio return –2.1

Management fee/other expenses –0.8

Other effects –0.8

Return on net assets –2.9

Effect of movement indiscount over the year –0.3

Return to Ordinary shareholders –3.2

Source: FactSet, JPMAM and Morningstar.

All figures are on a total return basis.

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

A glossary of terms and definitions isprovided on pages 62 and 63.

Strategic Report continuedInvestment Managers’ Report continued

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Allocation to the auto supply chain also detracted from returns during the year. Theshare prices of Hyundai Wia, an auto parts supplier to Hyundai Motor Group in Koreaand Tata Motors in India, fell due to margin concerns and slowing auto demand inChina. Despite reducing the portfolio’s overall auto exposure, positions in the sectorhave remained in the portfolio as we believe that valuations for the better managedauto companies in the region still look attractive.

Outlook

Against the backdrop of third-quarter volatility in 2015, the Company’s forthcomingfiscal year is likely to benefit from a firmer environment for stocks, based upon astarting point of lower valuations and bearish sentiment. However, given theimportance of exports to most Asian economies, much will hinge on global growthprospects, particularly in developed markets given China’s moderating growth andapparent reluctance to degrade its balance sheet. In that regard, US demand shouldremain supported by low absolute interest rates (even after the first interest ratehike), low unemployment and lower-for-longer gasoline prices. Meanwhile, Europecontinues to register encouraging signs of cyclical recovery, with the PurchasingManagers’ Index reading hitting new highs in the third quarter.

In addition, while there is little doubt that economic growth in China is slowing, drivenby structural and cyclical factors especially in manufacturing, it is not the full story.The stabilisation of the real estate market, growth in middle class consumption andthe rise of the service sector should provide some stability to the economy andprovide areas of opportunity for investors. We remain comfortable with our positionsin China, namely within the technology and healthcare sectors, and continue to lookfor new investment ideas within these areas.

We are cautiously optimistic about India, driven by our belief that GDP growth andcorporate earnings are set for a cyclical recovery and the recent rate cut by theReserve Bank of India should bolster the economy. We continue to favour theprivate-run banking enterprises over their government-run counterparts, and we alsohave exposure to companies that will benefit from the country’s recovering domesticconsumption. Finally, we still expect commodity dependent ASEAN countries to faceconsiderable headwinds from their weak currencies, low commodity prices, sluggishconsumption growth and political uncertainties.

Richard TitheringtonSonia YuInvestment Managers 14th December 2015

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

Source: Morningstar/MSCI.

JPMorgan Asian – share price total return.

JPMorgan Asian – net asset value total return.

Benchmark total return.

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

Source: Morningstar.

JPMorgan Asian – share price total return.

JPMorgan Asian – net asset value total return.

The Benchmark total return is represented by the grey horizontal dotted line.

80

85

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105

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20152014201320122011201020092008200720062005

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20152014201320122011201020092008200720062005


Strategic Report continuedPerformance

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At30thSeptember 20051 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Shareholders’ funds(£’000) 220,908 242,280 374,406 241,612 341,477 445,002 333,537 324,296 231,456 228,045 218,456

Netassetvaluepershare(p) 134.5 150.1 234.0 151.0 200.4 246.7 196.7 216.8 227.8 238.7 229.8

Shareprice(p) 119.0 134.0 211.0 132.0 184.0 224.0 183.0 192.5 203.5 211.5 202.9

Sharepricediscountto netassetvalueper share (%) 11.5 10.7 9.8 12.6 8.2 9.2 7.0 11.2 10.7 11.4 11.7

Gearing/(net cash) (%)2 (3) 4 9 (7) 5 4 (4) (4) (0) 4 1

Subscriptionshareprice(p)3 — — — — 41.5 50.3 27.0 9.1 14.0 — —

Yearended30thSeptember

Grossrevenuereturn(£’000) 6,260 5,640 6,786 7,280 5,363 7,256 9,175 7,749 5,706 4,799 5,610

Returnpershare (p) 1.74 1.27 1.33 1.71 1.52 1.75 2.19 2.44 2.63 2.23 2.99

Dividendpershare(p) 1.75 1.25 1.30 1.70 1.50 1.70 2.20 2.904 2.60 2.20 2.50

Ongoing charges (%)5 0.97 0.97 0.77 0.95 0.88 0.85 0.87 0.88 0.80 0.86 0.82

Ongoing charges including any performance feepayable (%)6 — — 1.54 0.95 0.88 0.87 0.87 0.88 0.80 0.86 —

Rebasedto100at30thSeptember2005

Sharepricetotal return7 100.0 114.1 181.1 114.0 160.9 197.4 162.4 172.8 185.3 195.0 188.8

Returnonnetassets8 100.0 114.7 180.7 116.2 156.0 193.4 155.1 172.8 183.9 194.9 189.2

Benchmarkreturn9 100.0 116.3 171.4 119.8 169.2 205.2 177.3 204.5 214.9 232.3 217.7

A glossary of terms and definitions is provided on pages 62 and 63.

1Figures have been restated to reflect changes in accounting policy regarding dividends payable. Such dividends are now included in the accounts in the year in which they are paid.2Gearing represents the excess amount above shareholders’ funds of total assets expressed as a percentage of the shareholders’ funds. Total assets include total investments and netcurrent assets/liabilities less cash/cash equivalents and excluding bank loans of less than one year. If the amount calculated is negative, this is shown as a ‘net cash’ position. Thefigure for 2012 has been restated to include net current assets.

3On 31st March 2014, the Subscription share rights lapsed.42012 comprises an ordinary dividend of 2.4p and a special dividend of 0.5p.5Ongoing charges represent the management fee and all other operating expenses, excluding interest and performance fee payable, expressed as a percentage of the average of dailynet assets during the year. The Ongoing Charges are calculated in accordance with guidance issued by the Association of Investment Companies in May 2012 and replaces the TotalExpense Ratio (‘TER’) in previous years. The comparative figure represents the expenses calculated above expressed as a percentage of the average month end net asset valuesduring the year, in line with TER Methodology. As at 30th September 2014 the performance fee arrangement was abolished.

6From 1st October 2014, the Company simplified its fee arrangements by abolishing the performance fee element. Prior to 2007 there was also no performance fee in place.7Source: Morningstar.8Source: J.P. Morgan.9Source: MSCI. The Company’s benchmark is the MSCI AC Asia ex Japan Index with net dividends reinvested, expressed in sterling terms.

Ten Year Financial Record

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2015 2014Valuation Valuation

Company Country £’000 %2 £’000 %2

Taiwan Semiconductor Manufacturing Taiwan 12,208 5.4 10,741 4.5Taiwan Semiconductor manufactures and markets integrated circuits (‘ICs’). The company alsoprovides the following services: wafer manufacturing, wafer probing, assembly and testing,mask production and design services. The company’s ICs are used in computercommunications, consumer electronics, automotive and industrial equipment.

Tencent China & Hong Kong 10,865 4.8 8,727 3.7Tencent provides internet, mobile and telecommunication value-added services in China. Thecompany has an instant messaging community in China. Tencent also provides onlineadvertising services.

Samsung Electronics South Korea 10,823 4.8 11,595 4.9Samsung Electronics produces Internet access network systems and telecommunicationsequipment including mobile phones. The company also manufactures a wide range ofconsumer and industrial electronic equipment and products such as semiconductors, personalcomputers, peripherals, monitors, televisions and home appliances including air conditionersand microwave ovens.

HDFC Bank India 9,580 4.2 6,563 2.8 HDFC Bank provides a wide range of services to the global corporate sector. The bank providescorporate banking and custodial services and is active in the treasury and capital markets. Thecompany also markets project advisory services and capital market products such as GlobalDeposit Receipts, Euro currency loans and Euro currency bonds.

China Construction Bank3 China & Hong Kong 9,242 4.1 4,345 1.8China Construction Bank provides a comprehensive range of commercial banking productsand services to individuals and corporate customers. The bank’s business consists of threeprincipal business segments: corporate banking, personal banking, and treasuryoperations. China Construction Bank also services infrastructure loans, residentialmortgage and bank cards.

AIA China & Hong Kong 9,104 4.0 6,843 2.9AIA provides insurance and financial services. The company writes life insurance forindividuals and businesses, accident and health insurance, retirement planning and wealthmanagement services.

CK Hutchison4 China & Hong Kong 5,997 2.6 — —CK Hutchison holds all of the non-property businesses of the Cheung Kong Group and theHutchison Group, including ports and related services, telecommunications, retail,infrastructure, energy and movable assets leasing operations.

China Merchants Bank4 China & Hong Kong 5,015 2.2 — —China Merchants Bank provides a wide range of commercial banking services includingdeposit, loan, bill discount, government bonds underwriting and trading, interbank lending,letter of credit, bank guarantee and other related services.

Ping An Insurance3 China & Hong Kong 4,804 2.1 2,804 1.2 Ping An Insurance provides a variety of insurance services in China. The company writesproperty, casualty and life insurance. Ping An Insurance also offers financial services.

Ambuja Cements3 India 4,695 2.1 3,495 1.5Ambuja Cements manufactures cement in India. The company owns specially designedships and terminals for bulk transportation of its products. Ambuja Cement sells most of itsproducts domestically, but also has a subsidiary that markets the group’s items in SriLanka.

Total 82,333 36.3

1Excludes investments in liquidity funds which are vehicles for holding cash.2Based on total investments of £226.8m (2014: £238.1m).3Not included in the ten largest investments at 30th September 2014.4Not held in the portfolio at 30th September 2014.

At 30th September 2014, the value of the ten largest investments amounted to £72.9m representing 30.7% of total investments.

Strategic Report continuedTen Largest Investmentsat 30th September1

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Geographic30th September 2015 30th September 2014

Active ActivePortfolio Benchmark Position Portfolio Benchmark Position

%1 % % %1 % %

China and Hong Kong 42.3 40.4 +1.9 37.8 36.9 +0.9South Korea 15.9 18.3 –2.4 21.7 19.3 +2.4India 14.5 10.5 +4.0 13.2 9.1 +4.1Taiwan 13.4 14.8 –1.4 13.4 15.4 –2.0Thailand 4.3 2.7 +1.6 5.2 3.0 +2.2Singapore 2.6 5.3 –2.7 3.2 6.3 –3.1Indonesia 1.8 2.5 –0.7 3.5 3.4 +0.1Philippines 1.7 1.8 –0.1 1.1 1.6 –0.5Malaysia — 3.7 –3.7 0.9 5.0 –4.1

Total portfolio excluding liquidity fund 96.5 100.0 — 100.0 100.0 —

Liquidity fund2 3.5 — +3.5 — — —

Total 100.0 100.0 100.0 100.0

1Based on total investments of £226.8m (2014: £238.1m).2Liquidity funds are utilised as a vehicle for holding cash.

Sector30th September 2015 30th September 2014

Active ActivePortfolio Benchmark Position Portfolio Benchmark Position

%1 % % %1 % %

Financials 45.8 34.2 +11.6 34.4 31.7 +2.7Information Technology 24.7 21.1 +3.6 22.3 21.1 +1.2Industrials 5.2 8.1 –2.9 5.2 8.6 –3.4Health Care 5.0 2.7 +2.3 2.5 1.9 +0.6Utilities 4.3 4.4 –0.1 2.6 4.1 –1.5Consumer Discretionary 3.4 8.2 –4.8 13.4 9.3 +4.1Materials 3.1 4.5 –1.4 7.5 5.3 +2.2Energy 2.3 4.2 –1.9 5.6 5.8 –0.2Consumer Staples 1.7 5.7 –4.0 5.1 5.5 –0.4Telecommunication Services 1.0 6.9 –5.9 1.4 6.7 –5.3

Total portfolio excluding liquidity fund 96.5 100.0 — 100.0 100.0 —

Liquidity fund2 3.5 — +3.5 — — —

Total 100.0 100.0 100.0 100.0

1Based on total investments of £226.8m (2014: £238.1m).2Liquidity funds are utilised as a vehicle for holding cash.

Portfolio Analyses

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Value at Changes Value at30th September 2014 Purchases Sales in value1 30th September 2015£’000 % £’000 £’000 £’000 £’000 %

China and Hong Kong 90,059 37.8 75,853 (70,189) 162 95,885 42.3South Korea 51,614 21.7 36,863 (47,857) (4,617) 36,003 15.9India 31,418 13.2 18,279 (20,073) 3,152 32,776 14.5Taiwan 31,881 13.4 18,923 (17,846) (2,481) 30,477 13.4Thailand 12,339 5.2 10,241 (10,487) (2,436) 9,657 4.3Singapore 7,558 3.2 1,362 (1,459) (1,485) 5,976 2.6Indonesia 8,402 3.5 4,666 (6,992) (1,968) 4,108 1.8Philippines 2,543 1.1 4,300 (3,583) 598 3,858 1.7Australia — — 2,521 (2,700) 179 — —Malaysia 2,245 0.9 — (1,345) (900) — —

Total portfolio excluding liquidity fund2 238,059 100.0 173,008 (182,531) (9,796) 218,740 96.5

Liquidity fund — — 16,765 (8,949) 238 8,054 3.5

Total Portfolio 238,059 100.0 189,773 (191,480) (9,558) 226,794 100.0

1Total capital losses on investments for the year amounted to £9,558,000, comprising gains on sales of investments of £2,870,000 and investment holding losses of £12,428,000.2Liquidity fund trades should be excluded when calculating the turnover of the portfolio.

Strategic Report continuedInvestment Activityduring the year ended 30th September 2015

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ValuationCompany £’000

China and Hong KongTencent 10,865China Construction Bank1 9,242AIA 9,104CK Hutchison 5,997China Merchants Bank1 5,015Ping An Insurance1 4,804BOC Hong Kong Holdings 4,135Cheung Kong Property 3,256China Vanke1 3,245AAC Technologies1 3,171Hongkong Land 2,889CSPC Pharmaceutical 2,766China Pacific Insurance1 2,744China Resources Land 2,689China Taiping Insurance 2,649China Petroleum & Chemical1 2,641China Everbright 2,580China Longyuan Power1 2,448Sino Biopharmaceutical 2,355Beijing Enterprises Water 2,285China Unicom Hong Kong 2,162Ikang Healthcare 2,062China Resources Gas 1,903Phoenix Healthcare 1,839Chongqing Changan Automobile2 1,573Vipshop 1,466

Total 95,885

South KoreaSamsung Electronics 10,823KB Financial 3,441SK Hynix 3,320Korea Electric Power 3,217Samsung Life Insurance 2,898Hyundai Glovis 2,739Lotte Chemical 2,396Hyundai Marine & Fire Insurance 2,216South Korea Investment 1,939E-MART 1,622Naver 1,392

Total 36,003

IndiaHDFC Bank 9,580Ambuja Cements 4,695Axis Bank 3,761Infosys 3,140Maruti Suzuki India 2,935Housing Development Finance Corporation 2,839Lupin 2,413Tata Motors 1,805Mahindra & Mahindra Financial Services 1,608

Total 32,776

ValuationCompany £’000

TaiwanTaiwan Semiconductor Manufacturing 12,208Advanced Semiconductor Engineering 3,469Catcher Technology 3,151Largan Precision 3,131E. Sun Financial 2,750Chailease 2,282President Chain Store 2,158Chipbond Technology 1,328

Total 30,477

ThailandAirports Of Thailand 2,779PTT Public 2,466Sino-Thai Engineering & Construction 2,263Kasikornbank3 2,149

Total 9,657

SingaporeDBS 3,939Global Logistic Properties 2,037

Total 5,976

IndonesiaBank Central Asia 1,684Wijaya Karya 1,350Bumi Serpong Damai 1,074

Total 4,108

PhilippinesGT Capital 2,753BDO Unibank 1,105

Total 3,858

Liquidity fundJPM US Dollar Liquidity ‘X’ Distribution 8,054

Total 8,054

Total Portfolio 226,794

1Hong Kong ‘H’ shares, that is, shares in companies incorporated in mainland China andlisted in Hong Kong and other foreign stock exchanges.2China ‘B’ shares, that is, shares in companies incorporated in mainland China andtraded on the mainland ‘B’ share markets.3Non-voting depository receipts.

List of Investmentsat 30th September 2015

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The aim of the Strategic Report is to provide shareholders withthe ability to assess how the Directors have performed theirduty to promote the success of the Company during the yearunder review. To assist shareholders with this assessment, theStrategic Report sets out the structure and objective of theCompany, its investment policies and risk management,investment limits and restrictions, performance and keyperformance indicators, share capital, principal risks and howthe Company seeks to manage those risks, the Company’senvironmental, social and ethical policy and its long termviability.

Structure and Objective of the CompanyJPMorgan Asian Investment Trust plc is an investment trustcompany that has a premium listing on the London StockExchange. Its objective is to provide capital growth, primarilyfrom investing in equities quoted on the stock markets of Asia,excluding Japan. In seeking to achieve this objective, theCompany employs JPMorgan Funds Limited (‘JPMF’ or the‘Manager’) which, in turn, delegates portfolio management toJPMorgan Asset Management (UK) Limited, to manage theCompany’s assets actively. The Board has determined aninvestment policy and related guidelines and limits asdescribed below.

The Company is subject to UK and European legislation andregulations including UK company law, UK Financial ReportingStandards, the UK Listing, Prospectus, Disclosure andTransparency Rules, taxation law and the Company’s ownArticles of Association.

The Company is an investment company within the meaning ofSection 833 of the Companies Act 2006 and has beenapproved by HM Revenue & Customs as an investment trust(for the purposes of Sections 1158 and 1159 of the CorporationTax Act 2010). As a result the Company is not liable for taxationon capital gains. The Directors have no reason to believe thatapproval will not continue to be retained. The Company is not aclose company for taxation purposes.

A review of the Company’s activities and prospects is given inthe Chairman’s Statement on pages 2 to 4, and in theInvestment Managers’ Report on pages 5 to 7.

Investment Policies, Investment Guidelines and Risk ManagementIn order to achieve its objective, the Company invests in aportfolio of Asian stocks with an emphasis on capital growthrather than income.

Investment risks are managed by diversifying investment overa number of Asian stocks. The number of investments in theCompany’s portfolio will normally range between 50 and 80.

The Board seeks to manage the Company’s risk relative to itsbenchmark index by limiting the active portfolio exposures tothe various countries and stocks covered by the benchmarkindex and, in some cases, to specific stocks. These activeexposure limits may be varied at any time by the Board at itsdiscretion. Currently the maximum permitted active exposureto each country is 12 percentage points above or below thebenchmark index weighting except for Taiwan, South Korea,China and Hong Kong, where the maximum permitted activeexposure is 15 percentage points above or below thebenchmark index weighting. The maximum permittedexposure to any individual company is 8% of the Company’stotal assets, excluding collective vehicles and SamsungElectronics. The maximum permitted portfolio weighting of anyinvestment in Samsung Electronics is 5 percentage pointsabove that company’s weighting in the benchmark index. Themaximum proportion of the Company’s total assets that maybe represented by the five largest holdings in the portfolio is40%. Unlisted investments are permitted with prior approval ofthe Board. The Board also permits investments in Australianlisted companies, subject to a limit of 10% of the Company’sgross assets. The Board also permits investments in countriesconsistent with the Company’s investment objective, other thanAustralia, which are not in the Company’s benchmark, subjectto a limit of 5% of the Company’s gross assets. Such countries,include Vietnam, for example.

The Company does not invest more than 15% of its gross assetsin other UK listed investment companies (including investmenttrusts). The Company does not invest more than 10% of itsgross assets in companies that themselves may invest morethan 15% of their gross assets in UK listed investmentcompanies.

Liquidity and borrowings are managed with the aim ofincreasing returns to shareholders. The Company’s gearingpolicy is to operate within a range of 10% net cash to 20%geared in normal market conditions.

The use of derivatives is permitted within agreed limits.Currency hedging transactions are permitted up to 40% of theportfolio but only back into sterling. In addition, sales andpurchases of country specific index futures are permitted, forgearing and hedging purposes, limited to the aggregate valueof stocks held in the relevant market.

Compliance with investment restrictions and guidelines ismonitored continuously by the Manager and is reported to theBoard on a monthly basis. These active exposure limits andrestrictions may be varied by the Board at any time at itsdiscretion.

Strategic Report continuedBusiness Review

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PerformanceIn the year to 30th September 2015, the Company produceda total return to shareholders of –3.2% and a total return onnet assets of –2.9%. This compares with the return on theCompany’s benchmark index of –6.3%. At 30th September2015, the value of the Company’s investment portfoliowas £226.8 million. The Investment Managers’ Report onpages 5 to 7 includes a review of developments during theyear as well as information on investment activity within theCompany’s portfolio and the factors likely to affect thefuture performance of the Company.

Total Return, Revenue and Dividends Gross total loss for the year amounted to £3.7 million (2014:£13.6 million return) and net total loss after deductinginterest, management expenses and taxation amounted to£6.4 million (2014: £11.0 million return). Distributable incomefor the year amounted to £2,844,000 (2014: £2,156,000).

The Directors recommend a dividend of 2.5p (2014: 2.2p) pershare payable on 5th February 2016 to shareholders on theregister at the close of business on 8th January 2016. Thisdistribution will amount to £2,376,000 (2014: £2,102,000).

Key Performance Indicators (‘KPIs’) The Board uses a number of financial KPIs to monitor andassess the performance of the Company. The principal KPIs are:

• Performance against the benchmark indexThe Board monitors performance against a benchmarkindex. Please refer to the graphs on page 8 for furtherdetail.

• Performance against the Company’s peers The Board also monitors performance relative to a broadrange of competitor funds.

• Performance attributionThe purpose of performance attribution analysis is toassess how the Company achieved its performance relativeto its benchmark index, i.e. to understand the impact on theCompany’s relative performance of the variouscomponents such as gearing, stock selection and currencygains and losses. Details of the attribution analysis for theyear ended 30th September 2015 are given in theInvestment Managers’ Report on page 6.

• Discount to net asset value (‘NAV’) The Board seeks to address imbalances in the supply of anddemand for the Company’s shares in the market andthereby seek to reduce the volatility and absolute level of

the discount to cum income net asset value (‘NAV’) at whichthe Company’s Ordinary shares trade. The discount to NAVat the start of the year was 11.4% and at the end it was 11.7%.The highest and the lowest discounts to NAV during the year(as at month end) were 10.3% and 12.6% respectively andthe average discount over the year was 11.2%.

More information on the Company’s share discountmanagement policy is given in the Chairman’s Statementon page 3.

Discount Performance

Source: Morningstar.

JPMorgan Asian – share price discount to cum income net asset value per share.

• Ongoing charges‘Ongoing charges’ is an expression of the Company’smanagement fee and all other operating expensesexcluding interest and any performance fee payable,expressed as a percentage of the average of the daily netassets during the year. The Ongoing charges ratio for theyear ended 30th September 2015 is 0.82% (2014: 0.86%).The Board reviews each year an analysis which shows acomparison of the Company’s Ongoing charges and its mainexpenses with those of its peers. The Board considers thatthe Company’s Ongoing charges compare favourably withthose of its peers.

Share CapitalDuring the financial year, the Company repurchased 500,000Ordinary shares, for a total consideration of £1,067,000. Aresolution to renew the authority to repurchase shares will beput to shareholders at the forthcoming Annual GeneralMeeting.

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.

–15

–13

–11

–9

–7

201520142013201220112010

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At 30th September 2015, there were four male Directors andone female Director on the Board. The Company has noemployees. The Company’s policy on gender is detailed underthe Nomination Committee section on page 23.

Employees, Social, Community and Human Rights IssuesThe Company is managed by JPMF, it has no employees and allof its Directors are non-executive, the day to day activitiesbeing carried out by third parties. There are therefore nodisclosures to be made in respect of employees. The Boardnotes the JPMAM policy statements in respect of Social,Community, Environmental and Human Rights issues, asoutlined below.

Social, Community, Environmental and Human RightsJPMAM 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 EmissionsThere are no disclosures to be made in respect of employees.The Company itself has no premises, consumes no electricity,gas or diesel fuel and consequently does not have ameasurable carbon footprint. JPMAM is a signatory to theCarbon Disclosure Project and JPMorgan Chase is a signatory tothe Equator Principles on managing social and environmentalrisk in project finance.

Principal RisksThe Directors confirm that they have carried out a thoroughassessment of the principal risks facing the Company, includingthose that would threaten its business model, futureperformance, solvency or liquidity. Three key risks have beenidentified and the ways in which they are managed ormitigated are summarised as follows:

• Investment and Strategy: An inappropriate investmentdecision, in areas such as asset allocation or the level ofgearing, may lead to underperformance against the

Company’s benchmark index and peer companies, and mayresult in the Company’s shares trading on a wider discount.The Board seeks to mitigate these risks by diversification ofinvestments through its investment restrictions andguidelines which are monitored and reported on by theManager. The Manager provides the Directors with timelyand accurate management information, includingperformance data and attribution analysis, revenueestimates and shareholder analysis. The Board monitorsthe implementation and results of the investment processwith the investment managers, who attend all Boardmeetings, and reviews data which show statisticalmeasures of the Company’s risk profile. The Manageremploys the Company’s gearing tactically, within a strategicrange set by the Board. The Board holds a separatemeeting devoted to strategy each year.

• Political and Economic: Changes in financial or taxlegislation, including in the European Union, may adverselyeffect the Company. The Manager makes recommendationsto the Board on accounting, dividend and tax policies andthe Board seeks external advice where appropriate. Inaddition, the Company is subject to political risks, such asthe imposition of restrictions on the free movement ofcapital.

• Operational Risk and Cybercrime: Disruption to, or failureof, the Manager’s accounting, dealing or payments systemsor the custodian’s records could prevent accurate reportingand monitoring of the Company’s financial position. Detailsof how the Board monitors the services provided by theManager and its associates and the key elements designedto provide effective internal control are included with theInternal Control section of the Corporate Governancereport on pages 21 and 26. The threat of cyber attack, in allits guises, is regarded as at least as important as moretraditional physical threats to business continuity andsecurity. The Company benefits directly or indirectly fromall elements of JPMorgan’s Cyber Security programme. Theinformation technology controls around the physicalsecurity of JPMorgan’s data centres, security of its networksand security of its trading applications are tested byDeloitte and reported every six months against the AAFStandard.

The following risks, although not viewed as critical, have alsobeen identified as important in our risk matrix:

• Change of Corporate Control of the Manager: The Boardholds regular meetings with senior representatives ofJPMAM in order to obtain assurance that the Manager

Strategic Report continuedBusiness Review continued

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continues to demonstrate a high degree of commitment toits investment trusts business through the provision ofsignificant resources.

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

• Loss of Investment Team: A sudden departure of severalmembers of the investment management team could resultin a deterioration in investment performance. The Managertakes steps to reduce the likelihood of such an event byensuring appropriate succession planning and the adoptionof a team-based approach.

• Financial: The financial risks faced by the Company includemarket risk (comprising currency risk, interest rate risk andother price risk), liquidity risk, credit risk and the failure ofany counterparty. Further details are disclosed in note 23on pages 51 to 57.

Long Term ViabilityThe Company is an investment trust with an objective ofachieving long term capital growth.

Taking account of the Company’s current position, the principalrisks 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 todo so, over the next five years. They have made thatassessment by considering those principal risks, the Company’sinvestment objective and strategy, the investment capabilities

of the Manager and the current outlook for the Asianeconomies and equity market. The Board has also taken intoaccount the fact that the Company has continuation votes to beconsidered by shareholders at both the 2016 and 2017 AnnualGeneral Meetings and, with input from the Company’s majorshareholders and its brokers, the likelihood of shareholdersvoting in favour of continuation.

In determining the appropriate period of assessment theDirectors had regard to their view that, given the Company’sobjective of achieving long term capital growth, shareholdersshould consider the Company as a long term investmentproposition. This is consistent with advice provided byindependent financial advisers and wealth managers, thatinvestors should consider investing in equities for a minimumof five years. Thus the Directors consider five years to be anappropriate time horizon to assess the Company’s viability.

The Directors confirm that they have a reasonable expectationthat, subject to shareholders voting in favour of continuation atboth the Company’s 2016 and 2017 AGMs, the Company will beable to continue in operation and meet its liabilities as they falldue over the five year period of assessment.

Future Developments The future development of the Company is dependent uponthe success of the Company’s investment strategy in the light ofeconomic and equity market developments. The investmentmanagers report upon their market outlook in their report onpage 7.

By order of the Board Alison Vincent for and on behalf of JPMorgan Funds Limited Secretary

14th December 2015

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Bronwyn Curtis OBE *† Joined the Board in 2013.

Mrs Curtis is an experienced global financial economist who has held senior executivepositions in both the financial and media sectors. Previous roles included Head ofGlobal Research, Executive Editor and Senior Adviser to the Head of Global Banking &Markets at HSBC Bank plc and Head of European Broadcasting at Bloomberg LP. Herother current appointments include Director of the Scottish American InvestmentTrust P.L.C., Vice Chairman of the Society of Business Economists, Governor of theLondon School of Economics, council/board member of the NIESR and the AdvisoryBoard of the Imperial College Business School. Mrs Curtis was awarded an OBE forservices to business economics in 2008.


GovernanceBoard of Directors

James M Long TD (Chairman)† Joined the Board in 1997 and appointed Chairman in 2003.

Mr Long was previously a Director of Risk and Compliance for AstraZenecaEurope, Corporate Finance Director of Inchcape plc and Managing Director, Asiaand Emerging Markets for the ESAB Group. He is chairman of Blackrock IncomeStrategies Trust PLC.

Dean Buckley*† Joined the Board in 2014.

Mr Buckley was previously Chief Executive Officer at Scottish Widows InvestmentPartnership. Prior to this appointment he held several positions at HSBC Bank plc,including Chief Executive Officer for HSBC Asset Management UK and Middle Eastand Chief Investment Officer for HSBC Asset Management, European equities, andheld a number of senior fund manager positions at Prudential Portfolio Managers. Heis a non-executive director of Fidelity Special Values plc. He is a Fellow of the Instituteof Actuaries.

Ronald Gould (Audit Committee Chairman)*† Joined the Board in 2005.

Mr Gould was previously Managing Director and head of the Promontory FinancialGroup in China, CEO of Chi-X Asia Pacific, Senior Adviser to the UK FinancialServices Authority, CEO of investment bank ABG Sundal Collier and Vice Chairmanof Barclays Bank asset management activities. He is a non-executive director ofONE Re Ltd. and Chairman of Think Alliance Asia and Compliance Science Ltd.

James Strachan*† Joined the Board in 2009.

Mr Strachan was previously Chairman of the Audit Commission, Non-ExecutiveDirector of the Bank of England, Legal and General plc, Care UK plc, TowergateInsurance Limited, Ofgem, the Financial Services Authority and Welsh Water Limited,Executive Board Member of Merrill Lynch International and a Senior Visiting Fellow atthe London School of Economics (risk and regulation). He is a non-executive directorof Sarasin & Partners LLP.

* Member of Audit Committee.

† Member of the Nomination Committee.

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

Management of the Company

The Manager and Company Secretary is JPMorgan Funds Limited(‘JPMF’), a company authorised and regulated by the FCA. Priorto 1st July 2014, these roles were undertaken by JPMorgan AssetManagement (UK) Limited (‘JPMAM’). JPMF is an affiliate ofJPMAM and was appointed as the Company’s AlternativeInvestment Fund Manager (‘AIFM’) from 1st July 2014 to ensurethe Company’s compliance with the Alternative Investment FundManagers Directive. JPMF is a wholly-owned subsidiary ofJPMorgan Chase Bank which, through other subsidiaries, alsoprovides marketing, banking, dealing and custodian services tothe Company.

The Manager is employed under a contract which can beterminated on three months notice, if notice is served on thebasis of poor investment performance. The notice period is sixmonths for all other circumstances, without penalty. If theCompany wishes to terminate the contract on shorter notice, thebalance of remuneration is payable by way of compensation.

The Board has evaluated the performance of the Manager andconfirms that it is satisfied that the continuing appointment of theManager is in the best interests of shareholders as a whole. Inarriving at this view, the Board also considered the investmentstrategy and process of the Investment Managers and thesupport that the Company receives from JPMF.

The Alternative Investment Fund Managers Directive (‘AIFMD’)

JPMF is the Company’s alternative investment fund manager(‘AIFM’). JPMF is approved as an AIFM by the Financial ConductAuthority (‘FCA’). For the purposes of the AIFMD the Companyis an alternative investment fund (‘AIF’).

The Company entered into a new investment managementagreement with JPMF on 1st July 2014. JPMF has delegatedresponsibility for the day to day management of the Company’sportfolio to JPMAM.

JPMF is required to ensure that a depositary is appointed to theCompany. The Company appointed BNY Mellon Trust andDepositary (UK) Limited (‘BNY’) as its depositary. BNY hasdelegated its safekeeping function to the custodian, JPMorganChase Bank, N.A. BNY remains responsible for the oversight ofthe custody of the Company’s assets and for monitoring itscash flows.

The AIFMD requires certain information to be made availableto investors in AIFs before they invest and requires that

material changes to this information be disclosed in the annualreport of each AIF. An Investor Disclosure Document, whichsets out information on the Company’s investment strategy andpolicies, leverage, risk, liquidity, administration, management,fees, conflicts of interest and other shareholder information isavailable on the Company’s website at www.jpmasian.co.uk

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

Management Fee

JPMF is paid a management fee based on the Company’s marketcapitalisation. This fee uses the average of the Company’sclosing middle market share price for the last five business daysof the relevant month, calculated monthly and paid quarterly ata rate of 0.60% per annum, based on the average of thepreceding three month end capitalisations. Investments in fundson which JPMorgan charges a management fee are excludedfrom this calculation. It has been agreed with JPMF that in theevent of the Company failing its additional 2016 ContinuationVote, JPMF will waive its full entitlement in relation to the noticeperiods mentioned above.

In addition to the management fee, the Company makes acontribution towards the Manager’s general marketing andclient administration costs.

From 1st October 2014, the Company simplified its feearrangements by abolishing the performance fee element.

Directors

The Directors of the Company who held office at the end of theyear are detailed on page 18.

Details of Directors’ beneficial shareholdings may be found in theDirectors’ Remuneration Report on page 28.

In accordance with corporate governance best practice, allDirectors will retire by rotation at the forthcoming AnnualGeneral Meeting and, being eligible, will offer themselves forreappointment. The Nomination Committee, having consideredtheir qualifications, performance and contribution to the Boardand its committees, confirms that each Director continues to beeffective and demonstrates commitment to the role and theBoard recommends to shareholders that they be re-elected.

Governance continuedDirectors’ Report

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Governance continuedDirectors’ Report continued


Director Indemnification and Insurance

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

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

Disclosure of information to Auditors

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

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

(b) each of the Directors has taken all the steps that he/sheought to have taken as a Director in order to make himself/herself aware of any relevant audit information and toestablish that the Company’s auditors are aware of thatinformation.

The above confirmation is given and should be interpreted inaccordance with the provision of 418(2) of the Companies Act2006.

Independent Auditors

PricewaterhouseCoopers LLP have expressed their willingnessto continue in office as auditors to the Company and aresolution to reappoint them and authorise the Directors todetermine their remuneration for the ensuing year, will beproposed at the Annual General Meeting.

Annual General Meeting

NOTE: THIS SECTION IS IMPORTANT AND REQUIRES YOURIMMEDIATE ATTENTION. If you are in any doubt as to theaction you should take, you should seek your own personalfinancial advice from your stockbroker, bank manager,solicitor or other financial adviser authorised under theFinancial Services and Markets Act 2000.

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

(i) Continuation resolution (resolution 12)The Company’s Articles of Association require the Board toprocure that, at every ‘Relevant General Meeting’, an ordinary

resolution is proposed to shareholders to the effect that theCompany shall continue in being as an investment trust for theperiod expiring at the end of the next following ‘RelevantGeneral Meeting’. The Articles of Association define ‘RelevantGeneral Meeting’ as an annual general meeting of theCompany held in 2002 and in every third year thereafter.

The last Continuation Resolution was passed by shareholdersat the annual general meeting held in January 2014.

Accordingly, the Board is not required to propose aContinuation Resolution to shareholders until the annualgeneral meeting to be held in 2017. However, followingdisappointing relative investment performance in relation tothe Company’s financial year ended 30th September 2014, theBoard resolved to give shareholders an opportunity to vote onthe future of the Company at this Annual General Meeting andtherefore proposes an additional Continuation Resolution (the‘2016 Continuation Resolution’). However, the 2016Continuation Resolution is proposed to the effect that theCompany shall continue in being as an investment trust for theperiod expiring at the conclusion of the annual generalmeeting of the Company to be held in 2017. Therefore, if the2016 Continuation Resolution is passed, the next ContinuationResolution will be proposed at the 2017 annual generalmeeting.

(ii) Authority to allot new shares and to disapply statutorypre-emption rights (resolutions 13 and 14)

The Directors will seek renewal of the authority at the AGM toissue up to 4,752,349 Ordinary shares for cash up to anaggregate nominal amount of £1,188,087 such amount beingequivalent to 5% of the present issued ordinary share capital asat the last practicable date before the publication of thisdocument. The full text of the resolutions is set out in theNotice of Meeting on page 59. This authority will expire at theconclusion of the Annual General Meeting of the Company in2017 unless renewed at a prior general meeting.

It is advantageous for the Company to be able to issue newshares to participants purchasing shares through the JPMorgansavings products and also to other investors when theDirectors consider that it is in the best interests of shareholdersto do so. As such issues are only made at prices greater thanthe net asset value (‘NAV’) per share, they increase the NAV pershare and spread the Company’s administrative expenses,other than the management fee which is charged on theCompany’s market capitalisation, over a greater number ofshares. The issue proceeds are available for investment in linewith the Company’s investment policies. The Companycurrently does not hold any shares in the capital of theCompany in Treasury.

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(iii) Authority to repurchase the Company’s shares (resolution 15) The authority to repurchase up to 14.99% of the Company’sissued Ordinary shares, granted by shareholders at the 2015AGM, will expire on 27th July 2016 unless renewed at theforthcoming Annual General Meeting. The Directors considerthat the renewing of the authority is in the interests ofshareholders as a whole, as the repurchase of shares at adiscount to the underlying NAV enhances the NAV of theremaining shares.

Resolution 15 gives the Company authority to buy back its ownissued Ordinary shares in the market as permitted by theCompanies Act 2006 (the ‘Act’). The authority limits thenumber of shares that could be purchased to a maximum of14,247,544 Ordinary shares, representing approximately14.99% of the Company’s issued Ordinary shares, as at11th December 2015 (being the latest practicable date prior tothe publication of this report). The authority also sets minimumand maximum prices.

If resolution 15 is passed at the Annual General Meeting,Ordinary shares repurchased might not be cancelled but ratherheld as treasury shares and may subsequently be reissued at apremium. The Company does not have authority to reissueOrdinary shares from treasury at a discount to NAV, thereforeany reissue of Ordinary shares from treasury would be at apremium to the prevailing NAV.

(iv) Amendment of Articles of Association – to amend the maximumaggregate Directors’ fees payable (resolution 16)

The Company’s Articles of Association currently state that theremuneration of the Directors should not exceed in aggregatethe sum of £150,000 per annum. The Company proposes toamend its Articles of Association by increasing the maximumaggregate sum to £200,000 per annum.

Recommendation

The Board considers that resolutions 12 to 16 are likely topromote the success of the Company and are in the bestinterests of the Company and its Shareholders as a whole. TheDirectors unanimously recommend that you vote in favour ofthe resolutions as they intend to do, where voting rights areexercisable, in respect of their own beneficial holdings whichamount in aggregate to 52,679 Ordinary shares, representingapproximately 0.1% of the voting rights of the Company.

Corporate Governance StatementCompliance

The Company is committed to high standards of CorporateGovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 30, indicates how theCompany has applied the principles of good governance of theFinancial Reporting Council’s UK Corporate Governance Code(the ‘UK Corporate Governance Code’) and the AIC’s Code ofCorporate Governance (the ‘AIC Code’), which complements theUK Corporate Governance Code and provides a framework ofbest practice for investment trusts.

The Board is responsible for ensuring the appropriate level ofcorporate governance and considers that the Company hascomplied with the best practice provisions of the UK CorporateGovernance Code and with the AIC Code, throughout the yearunder review.

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

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

Role of the Board

A management agreement dated 1st July 2014 between theCompany and JPMF sets out the matters over which theManager has authority. This includes management of theCompany’s assets and the provision of accounting, companysecretarial, administration, and some marketing services. Allother matters are reserved for the approval of the Board. Aformal schedule of matters reserved to the Board for decisionhas previously been approved. This includes determinationand monitoring of the Company’s investment objectives andpolicy and its future strategic direction, gearing policy,management of the capital structure, appointment andremoval of third party service providers, review of keyinvestment and financial data and the Company’s CorporateGovernance and risk control arrangements.

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The Board meets at least five times 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 theirresponsibilities.

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

Board Composition

The Board, chaired by James Long, consists of fivenon-executive Directors, all of whom are regarded by theBoard as independent. The Chairman’s independence wasassessed upon his appointment and annually thereafter. TheDirectors have a breadth of investment knowledge, businessand financial skills and experience relevant to the Company’sbusiness and brief biographical details of each Director areset out on page 18. There have been no changes to theChairman’s other significant commitments during the yearunder review.

A review of Board composition and balance is included aspart of the annual performance evaluation of the Board,details of which may be found below. Ronald Gould, theSenior Independent Director, leads the evaluation of theperformance of the Chairman and is available toshareholders if they have concerns that cannot be resolvedthrough discussion with the Chairman.

Tenure

Directors are initially appointed until the following AnnualGeneral Meeting when, under the Company’s Articles ofAssociation, it is required that they be elected by Shareholders.Thereafter, a Director’s appointment will run for a term of threeyears. Subject to the performance evaluation carried out eachyear, the Board will agree whether it is appropriate for theDirector to seek an additional term. The Board does not believethat length of service in itself necessarily disqualifies a Directorfrom seeking re-election but, when making a recommendation,the Board will take into account the ongoing requirements ofthe UK Corporate Governance Code, including the need torefresh the Board and its Committees. The Board has adoptedcorporate governance best practice and all Directors now standfor annual reappointment. The terms and conditions ofDirectors’ appointments are set out in formal letters of

appointment, copies of which are available for inspection onrequest at the Company’s registered office and at the AnnualGeneral Meeting.

The Nomination Committee, having considered theirqualifications, performance and contribution to the Board andits Committees, confirms that Messrs Long, Buckley, Gould,Strachan and Mrs Curtis continue to be effective anddemonstrate commitment to the role. Notwithstanding the factthat Messrs Long and Gould have served on the Board for morethan nine years, their fellow Directors believe that they remainindependent in character and judgement, and accordingly theBoard recommends to shareholders that all the aboveDirectors be re-elected.

The Company has a succession policy and plan in place. Toensure adequate succession planning and continuity it hasbeen agreed that, bar any unforeseen circumstances, JamesLong, Ronald Gould and James Strachan will retire at theconclusion of the 2017, 2018 and 2019 annual general meetingsrespectively.

Meetings and Committees

The Board delegates certain responsibilities and functions toCommittees. Details of membership of Committees are shownwith the Directors’ profiles on page 18. The Chairman of theBoard may attend the Audit Committee at the invitation of itsChairman.

During the year there were six Board meetings, plus a separatemeeting devoted to strategy, two Audit Committee meetingsand a Nomination Committee meeting. These meetings weresupplemented by additional meetings held to cover proceduralmatters and formal approvals. In addition, there is regularcontact between the Directors and the Manager and CompanySecretary throughout the year.

The table below details the number of Board and Committeemeetings attended by each Director during the year.

Audit NominationBoard Committee Strategy Committee

Meetings Meetings Meetings MeetingsDirector Attended Attended Attended Attended

James Long1 6 2 1 1Dean Buckley 6 2 1 1Bronwyn Curtis 6 2 1 1Ronald Gould 6 2 1 1James Strachan 6 2 1 1

1Attended the Audit Committee meetings by invitation.

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Training and Appraisal

On appointment, the Manager provides all Directors withinduction training. Thereafter, regular briefings are providedon changes in regulatory requirements that affect theCompany and Directors. Directors are encouraged to attendindustry and other seminars covering issues and developmentsrelevant to investment trusts. As part of the Board’s annualevaluation process the Chairman reviews with each Directortheir training and development needs.

The Board conducts a formal evaluation of the Manager, of itsown performance and that of its Committees and individualDirectors. External consultants may be used from time to timewith respect to the evaluation of the Board. For the currentyear, questionnaires were used to assist Directors with theirdeliberations at a private meeting. The evaluation of individualDirectors is led by the Chairman, and the Senior IndependentDirector leads the evaluation of the Chairman’s performance.The Board as a whole evaluates the Manager, its ownperformance and that of its Committees.

Board Committee

Nomination Committee The Nomination Committee, chaired by James Long, consists ofall of the Directors and meets at least annually to ensure thatthe Board has an appropriate balance of skills and experienceto carry out its fiduciary duties and to select and proposesuitable candidates for appointment when necessary. A varietyof sources, including external search consultants, may be usedto ensure that a wide range of candidates is considered.

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

A list of potential conflicts of interest for each Director ismaintained by the Company. These are considered carefully,taking into account the circumstances surrounding them, and,if considered appropriate, are approved. There were no actualor indirect interests of a Director which conflicted with theinterests of the Company, which arose during the year.

The Nomination Committee also reviews the levels ofremuneration of the Directors taking into account boards ofother trusts to ensure that high quality people are attractedand retained.

Audit Committee The Audit Committee, chaired by Ronald Gould, consists of allDirectors other than the Chairman and meets at least twiceeach year. The members of the Audit Committee consider thatthey have the requisite skills and experience to fulfil theresponsibilities of the Committee.

The Committee reviews the actions and judgements of theManager in relation to the Half Year Report and Annual Report& Accounts and the Company’s compliance with the UKCorporate Governance Code. At the request of the Board, theAudit Committee provides confirmation to the Board as to howit has discharged its responsibilities so that the Board can besatisfied that information presented is fair, balanced andunderstandable.

During its review of the Company’s financial statements for theyear ended 30th September 2015, the Audit Committeeconsidered the following significant issues, including thosecommunicated by the Auditors during their reporting:

Significant issue How the issue was addressed

The recognition of investment income is undertaken inaccordance with accounting policy note 1(d) to theaccounts on page 41.

The valuation of investments is undertaken inaccordance with the accounting policies, disclosed innote 1(b) to the accounts on page 41. Controls are inplace to ensure that valuations are appropriate andexistence is verified through custodian reconciliations.

Having taken all available information into consideration andhaving discussed the content of the annual report and accountswith the AIFM, the Investment Managers, the CompanySecretary and other third party service providers, the AuditCommittee has concluded that the annual report for the yearended 30th September 2015, taken as a whole, is fair, balancedand understandable and provides the information necessaryfor shareholders to assess the Company’s performance,business model and strategy, and has reported on thesefindings to the Board. The Board’s conclusions in this respectare set out in the Statement of Directors’ Responsibilities onpage 30.

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

The Audit Committee also examines the effectiveness of theCompany’s internal control systems, receives information from

Recognition ofinvestment income

Valuation, existenceand ownership ofinvestments

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the Manager’s compliance department and also reviews thescope and results of the external audit, its cost effectivenessand the independence and objectivity of the external auditors.In the Directors’ opinion the Auditors are independent.

The Audit Committee also has a primary responsibility formaking recommendations to the Board on the reappointmentand removal of external auditors. Representatives of theCompany’s Auditors attended the Audit Committee meeting atwhich the draft Annual Report & Accounts were considered.Having reviewed the performance of the external auditors,including assessing the quality of work, timing ofcommunications and work with the Manager, the Committeeconsidered it appropriate to recommend their reappointment.The Board supported this recommendation which will be put toshareholders at the forthcoming Annual General Meeting. Thecurrent audit firm has audited the Company’s financialstatements since the formation of the Company and a newaudit partner from PricewaterhouseCoopers has overseen theaudit of the Company in 2015, following the rotation off themandate by the prior partner who had completed hismaximum five year term.

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

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 14), risk management policies(see pages 51 to 57), capital management policies andprocedures (see page 58), the nature of the portfolio andexpenditure projections that the Company has adequateresources, an appropriate financial structure and suitablemanagement arrangements in place to continue in operationalexistence for the foreseeable future. For these reasons, theDirectors consider it appropriate to continue to adopt the goingconcern basis of accounting in preparing the Company’sfinancial statements. They have not identified any materialuncertainties to the Company’s ability to continue to do so overa period of at least twelve months from the date of approval ofthese financial statements.

Terms of ReferenceBoth the Nomination Committee and the Audit Committee havewritten terms of reference which define clearly their respectiveresponsibilities, copies of which are available for inspection onrequest at the Company’s registered office and at theCompany’s Annual General Meeting.

Relations with Shareholders

The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a fullunderstanding of the Company’s activities and performanceand report formally to shareholders twice a year by way of theAnnual Report & Accounts and the Half Year Report. This issupplemented by the daily publication, through the LondonStock Exchange, of the net asset value of the Company’s sharesand the Company’s level of gearing.

All shareholders are encouraged to attend the Company’sAnnual General Meeting at which the Directors andrepresentatives of the Manager are available in person to meetshareholders and answer their questions. In addition, apresentation is usually given by the investment managers whoreview the Company’s performance. During the year theCompany’s brokers, the investment managers and otherrepresentatives of the Manager hold regular discussions withlarger shareholders. The Directors are made fully aware of theirviews. The Chairman and Directors make themselves availableas and when required to meet with shareholders and addressshareholder queries. The Directors may be contacted throughthe Company Secretary whose details are shown on page 65.

The Company’s Annual Report & Accounts is published in timeto give shareholders at least 20 working days’ notice of theAnnual General Meeting. Shareholders wishing to raisequestions in advance of the meeting are encouraged to submitquestions via the Company’s website or write to the CompanySecretary at the address 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.

Section 992 Companies Act 2006

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

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

Voting Rights in the Company’s sharesAs at 11th December 2015 (being the latest business day prior tothe publication of this report), the Company’s issued sharecapital consists of 95,046,993 Ordinary shares, carrying onevote each. Therefore the total voting rights in the Company are95,046,993.

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Notifiable Interests in the Company’s Voting RightsAt the date of this report, the following had declared anotifiable interest in the Company’s voting rights:

Number of Shareholders voting rights %

City of London Investment Management Co. Ltd. 20,054,027 21.1

Lazard Asset Management Limited 5,727,798 6.0BAE System Pension Funds Investment Management Ltd. 3,351,695 3.5

The Company is also aware that approximately 11% of theCompany’s total voting rights are held by individuals throughsavings products managed by JPMAM, registered in the nameof Chase Nominees Limited. If those voting rights are notexercised by the beneficial holders, in accordance with theterms and conditions of the savings products, under certaincircumstances JPMAM has the right to exercise those votingrights. That right is subject to certain limits and restrictions andfalls away at the conclusion of the relevant general meeting.

Risk Management and Internal Control

The UK Corporate Governance Code requires the Directors, atleast annually, to review the effectiveness of the Company’ssystem of internal control and to report to shareholders thatthey 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 ofinternal control which is designed to safeguard the Company’sassets, maintain proper accounting records and ensure thatfinancial information used within the business, or published,is reliable. However, such a system can only be designed tomanage rather than eliminate the risk of failure to achievebusiness objectives and therefore can only provide reasonable,but not absolute, assurance against fraud, materialmis-statement or loss.

Since investment management, custody of assets and alladministrative services are provided to the Company by JPMAMand its associates, the Company’s system of internal controlmainly comprises monitoring the services provided by JPMAMand its associates, including the operating controls establishedby them, to ensure that they meet the Company’s businessobjectives. There is an ongoing process for identifying,evaluating and managing the significant risks faced by theCompany (see Principal Risks on pages 16 and 17). This processhas been in place for the year under review and up to the date

of the approval of the Annual Report & Accounts, and it accordswith the Turnbull guidance. The Company does not have aninternal audit function of its own, but relies on the internal auditdepartment of the Manager. This arrangement is kept underannual review.

The key elements designed to provide effective internal controlare as follows:

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

Management Agreement – Evaluation and appointment of amanager and custodian regulated by the Financial ConductAuthority (‘FCA’), whose responsibilities are clearly defined in awritten agreement.

Management Systems – The Manager’s system of internalcontrol includes organisational agreements which clearly definethe lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by JPMAM’scompliance department which regularly monitors compliancewith FCA rules and reports to the Board.

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

The Board, either directly or through the Audit Committee,keeps under review the effectiveness of the Company’s systemof internal control by monitoring the operation of the keyoperating controls of the Manager and its associates as follows:

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

• reviews the report on the internal controls and theoperations of its custodian, JPMorgan Chase Bank, which isitself independently reviewed; and

• reviews every six months an independent report on theinternal controls and the operations of JPMF and JPMAM.

By the means of the procedures set out above, the Boardconfirms that it has reviewed the effectiveness of theCompany’s system of internal control for the year ended30th September 2015, and to the date of approval of thisAnnual Report & Accounts.

During the course of its review of the system of internal control,the Board has not identified nor been advised of any failings orweaknesses which it has determined to be significant.

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Corporate Governance and Voting Policy

The Company delegates responsibility for voting to theManager. The following is a summary of JPMAM’s policystatements on corporate governance, voting policy and socialand environmental issues, which has been reviewed and notedby the Board. Details of social and environmental issues areincluded in the Strategic Report on page 16.

Corporate Governance JPMAM believes that corporate governance is integral to its investmentprocess. As part of its commitment to delivering superior investmentperformance to clients, it expects and encourages the companies inwhich it invests to demonstrate the highest standards of corporategovernance and best business practice. JPMAM examines the sharestructure and voting structure of the companies in which it invests, as wellas the board balance, oversight functions and remuneration policy. Theseanalyses then form the basis of JPMAM’s proxy voting and engagementactivity.

Proxy Voting JPMAM manages the voting rights of the shares entrusted to it as it wouldmanage any other asset. It is the policy of JPMAM to vote in a prudent anddiligent manner, based exclusively on reasonable judgement of what willbest serve the financial interests of clients. So far as is practicable, JPMAMwill vote at all of the meetings called by companies in which it is invested.

Stewardship/EngagementJPMAM recognises its wider stewardship responsibilities to its clients as amajor asset owner. To this end, it supports the introduction of the FRCStewardship Code, which sets out the responsibilities of institutionalshareholders in respect of investee companies. Under the Code,managers should:

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

– disclose their policy on managing conflicts of interest;

– monitor their investee companies;

– establish clear guidelines on how they escalate engagement;

– be willing to act collectively with other investors where appropriate;

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

– report to clients.

JPMAM endorses and complies with the Stewardship Code for its UKinvestments and supports the principles as best practice elsewhere. Webelieve that regular contact with the companies in which we invest iscentral to our investment process and we also recognise the importanceof being an ‘active’ owner on behalf of our clients.

JPMAM’s Voting Policy and Corporate Governance Guidelinesare available on request from the Company Secretary or can bedownloaded from JPMAM’s website:http://www.jpmorganinvestmenttrusts.co.uk/governance. This alsosets out its approach to the seven principles of the FRCStewardship Code, its policy relating to conflicts of interest andits detailed voting record.

By order of the Board Alison Vincent, for and on behalf of JPMorgan Funds Limited, Secretary

14th December 2015


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The Board presents the Directors’ Remuneration Report for theyear ended 30th September 2015 which has been prepared inaccordance with the requirements of Section 421 of theCompanies Act 2006.

The law requires the Company’s Auditors to audit certain of thedisclosures provided. Where disclosures have been auditedthey are indicated as such. The Auditors’ opinion is included intheir report on pages 31 to 36.

Remuneration of the Directors is considered by the NominationCommittee on a regular basis. The Committee makesrecommendations to the Board as and when appropriate.

Directors’ Remuneration Policy

The Directors’ Remuneration Policy is subject to a triennialbinding vote and an ordinary resolution to approve this reportwas put to shareholders at the 2015 Annual General Meeting.The Board has resolved that for good governance purposes,the policy vote will be put to shareholders every year.Accordingly a resolution to approve the policy will be put toshareholders at the 2016 Annual General Meeting. The policy,subject to the vote, is set out in full below and is currently inforce.

At the Annual General Meeting held on 28th January 2015, ofvotes cast, 99.5% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theDirectors’ remuneration policy and 0.5% voted against.

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

The Nomination Committee, comprising all Directors, reviewsfees on a regular basis and makes recommendations to theBoard as and when appropriate. Reviews are based oninformation provided by the Manager, and includes researchcarried out by third parties on the level of fees paid to thedirectors of the Company’s peers and within the investmenttrust industry generally. The involvement of remunerationconsultants has not been deemed necessary as part of thisreview.

All of the Directors are non-executive. There are noperformance-related elements to their fees and the Companydoes not operate any type of incentive, share scheme, award orpension scheme and therefore no Directors receive bonuspayments or pension contributions from the Company or holdoptions to acquire shares in the Company. Directors are notgranted exit payments and are not provided withcompensation for loss of office. No other payments are madeto Directors, other than the reimbursement of reasonableout-of-pocket expenses.

In the year under review, Directors’ fees were paid at thefollowing rates: Chairman £36,500; Chairman of the AuditCommittee £29,000; and other Directors £23,500 (allunchanged from the prior year). With effect from 1st October2015, the fees have been increased to the following rates:Chairman £38,000; Chairman of the Audit Committee £30,500;and other Directors £25,000.

No amounts (2014: nil) were paid to third parties for makingavailable the services of Directors.

The Company’s Articles of Association stipulate that aggregatefees must not exceed £150,000 per annum. This level was lastincreased in 2007. Any increase the maximum aggregateamount requires both Board and shareholder approval. TheDirectors propose that the aggregate maximum be increasedto £200,000 per annum to provide the Board with flexibility toincrease the number of directors as part of the Board’ssuccession plan. A resolution proposing the above amendmentwill be put to the shareholders at the Annual General Meetingto be held on 29th January 2016. The full text of the resolutionis set out in the Notice of Meeting on page 60.

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

The Company has not sought shareholder views on itsremuneration policy. The Nomination Committee considers anycomments received from shareholders on remuneration policyon an ongoing basis and will take account of these views ifappropriate.

The Directors do not have service contracts with the Company.The terms and conditions of Directors’ appointments are setout in formal letters of appointment which are available forreview at the Company’s Annual General Meeting and theCompany’s registered office. Details of the Board’s policy ontenure are set out on page 22.

Governance continuedDirectors’ Remuneration Report

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RemunerationReport

The Directors’ Remuneration Report is subject to an annualadvisory vote and therefore an ordinary resolution toapprove this report will be put to shareholders at theforthcoming Annual General Meeting. There have been nochanges to the policy compared with the year ended30th September 2014 and no changes are proposed for theyear ending 30th September 2016.

At the Annual General Meeting held on 28th January 2015, ofvotes cast, 99.5% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theremuneration report and 0.5% voted against.

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

Single total figure of remuneration

The single total figure of remuneration for the Board as a wholefor the year ended 30th September 2015 was £136,000. Thesingle total figure of remuneration for each Director is detailedbelow together with the prior year comparative.

There are no performance targets in place for the Directors ofthe Company and there are no benefits for any of the Directorswhich will vest in the future. There are no benefits, pension,bonus, long term incentive plans, exit payments orarrangements in place on which to report.

Single total figure table1

Total amount of fees2

2015 2014

James Long £36,500 £36,500Dean Buckley3 £23,500 £1,033Bronwyn Curtis £23,500 £23,500Ronald Gould £29,000 £25,023James Strachan £23,500 £23,500Andrew Sykes4 — £22,493

Total £136,000 £132,049

1Audited information.2Other columns have been omitted as no other benefits, to include performance relatedbenefits or pension benefits, are payable.3Appointed 18th September 2014.4Retired on 20th June 2014.

Directors’ Shareholdings1

There are no requirements pursuant to the Company’s Articlesof Association for the Directors to own shares in the Company.The Directors’ beneficial shareholdings are detailed below. TheDirectors have no other share interests or share options in theCompany and no share schemes are available.

Number of shares held

Director’s Name 2015 2014

James Long 22,133 22,020Dean Buckley 10,000 10,000Bronwyn Curtis 5,000 —Ronald Gould2 11,221 10,482James Strachan 4,209 4,209

Total 52,563 46,711

1Audited information.2Since the year end, Mr Gould’s holding has increased by 116 shares.

In accordance with the Companies Act 2006, a graph showingthe Company’s share price total return compared with itsbenchmark, the MSCI AC Asia ex Japan Index, expressed inSterling terms, is shown below. The Board believes this Index isthe most representative comparator for the Company, giventhe Company’s investment objective.

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

Source: Morningstar/Datastream.

Share price total return.

Benchmark.

100

110

120

130

140

2015201420132012201120102009

Governance continuedDirectors’ Remuneration Report continued

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

Remuneration for the Chairman over the five years ended30th September 2015

Performancerelated benefitsreceived as a

Year ended percentage of 30th September Fees maximum payable

2015 £36,500 n/a2014 £36,500 n/a2013 £34,000 n/a2012 £34,000 n/a2011 £31,000 n/a

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

Expenditure by the Company on remuneration and distributions toshareholders

Year ended 30th September

2015 2014

Remuneration paid to all Directors £136,000 £132,049Distribution to shareholders— by way of dividend £2,376,000 £2,091,000— by way of share repurchases1 £1,067,000 £11,876,000

Total distribution to shareholders £3,443,000 £13,967,000

1Includes tender offers.

For and on behalf of the Board James M Long Chairman

14th December 2015

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

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

• select suitable accounting policies and then apply themconsistently;

• make judgements and accounting estimates that arereasonable and prudent;

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

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

and the Directors confirm that they have done so.

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

The accounts are published on the www.jpmasian.co.ukwebsite, which is maintained by the Company’s Manager. Themaintenance and integrity of the website maintained by the

Manager is, so far as it relates to the Company, theresponsibility of the Manager. The work carried out by theAuditors does not involve consideration of the maintenanceand integrity of this website and, accordingly, the Auditorsaccept no responsibility for any changes that have occurredto the accounts since they were initially presented on thewebsite. The accounts are prepared in accordance with UKlegislation, which may differ from legislation in otherjurisdictions.

Under applicable law and regulations the Directors are alsoresponsible for preparing a Directors’ Report, StrategicReport, Statement of Corporate Governance and Directors’Remuneration Report that comply with that law and thoseregulations.

Each of the Directors, whose names and functions are listedon page 18 confirm that, to the best of their knowledge:

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

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

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

The Board also confirms that it is satisfied that the StrategicReport and Directors’ Report include a fair review of thedevelopment and performance of the business, and theposition of the Company, together with a description of theprinciple risks and uncertainties that the Company faces.

For and on behalf of the Board James M LongChairman

14th December 2015

Governance continuedStatement of Directors’ Responsibilities

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Independent Auditors’ Reportto the members of JPMorgan Asian Investment Trust plc

Report on the financial statements

Our opinionIn our opinion, JPMorgan Asian Investment Trust plc’s financial statements (the ‘financial statements’):

• give a true and fair view of the state of the Company’s affairs as at 30th September 2015 and of its net return and cash flowsfor the year then ended;

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

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

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

• the Balance Sheet as at 30th September 2015;

• the Income Statement for the year then ended;

• the Cash Flow Statement for the year then ended;

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

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

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

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

Our audit approachOverviewMateriality:

• Overall materiality: £2.2 million which represents approximately 1% of net assets.

Audit scope:

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

• We conducted our audit of the financial statements using information from JPMorgan Corporate & Investment Bank (the‘Administrator’) to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrativefunctions.

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

Areas of focus:

• Income from investments.

• Valuation and existence of investments.

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

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. Inparticular, we looked at where the Directors made subjective judgements, for example in respect of significant accountingestimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we

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also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias bythe Directors that represented a risk of material misstatement due to fraud.

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

Area of focus How our audit addressed the area of focus

We assessed the accounting policy for income recognition forcompliance with accounting standards and the AIC SORP andperformed testing to check that income had been accountedfor in accordance with this stated accounting policy.

We found that the accounting policies implemented were inaccordance with accounting standards and the AIC SORP, andthat income has been accounted for in accordance with thestated accounting policy.

We understood and assessed the design and implementationof key controls surrounding income recognition.

In addition, we tested dividend receipts by agreeing thedividend rates from a sample of investments to independentthird party sources. No misstatements were identified by ourtesting which required reporting to those charged withgovernance.

To test for completeness, we tested that the appropriatedividends had been received in the year by reference toindependent data of dividends declared by a sample ofinvestment holdings in the portfolio. Our testing did notidentify any unrecorded dividends.

We tested the allocation and presentation of income frominvestments between the revenue and capital return columnsof the Income Statement in line with the requirements set outin the AIC SORP.

We tested the valuation of the listed equity investments byagreeing the prices used in the valuation to independentthird party sources.

No misstatements were identified by our testing whichrequired reporting to those charged with governance.

We tested the existence of the investment portfolio byagreeing the holdings for investments to an independentCustodian confirmation from JPMorgan Chase Bank, N.A. Nodifferences were identified.

How we tailored the audit scopeThe Company is a standalone Investment Trust Company and engages JPMorgan Funds Limited (the ‘Manager’) to manage itsassets.

Income from investments

Refer to page 23 (Directors’ Report), page41 (Accounting Policies) andpage43 (Notes to the Financial Statements).

We focused on the accuracy and completeness of income frominvestments and its presentation in the Income Statement asset out in the requirements of The Association of InvestmentCompanies Statement of Recommended Practice (the ‘AICSORP’).

This is because incomplete or inaccurate income could have amaterial impact on the Company’s net asset value.

Valuation and existence of investments

Refer to page 23 (Directors’ Report), page41 (Accounting Policies) andpage46 (Notes to the Financial Statements).

The investment portfolio at the year-end principally comprisedlisted equity investments valued at £227 million.

We focused on the valuation and existence of investmentsbecause investments represent the principal element of the netasset value as disclosed on the Balance Sheet in the financialstatements.

Independent Auditors’ Reportcontinued

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We conducted our audit of the financial statements at JPMorgan Chase Bank N.A., Investor Services (the ‘Administrator’) to whomthe Manager has, with the consent of the Directors, delegated the provision of certain administrative functions.

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

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financialstatements as a whole, taking into account the types of investments within the Company, the involvement of the Manager andAdministrator, the accounting processes and controls, and the industry in which the Company operates.

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

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

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

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

£2.2 million (2014: £2.3 million).

1% of net assets.

We have applied this materiality threshold, a generally accepted auditing practice forinvestment trust audits, in the absence of indicators that an alternative benchmark wouldbe appropriate and because we believe this provides an appropriate and consistentyear-on-year basis for our audit.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £109,000(2014: £115,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Going concernUnder the Listing Rules we are required to review the Directors’ statement, set out on page 24, in relation to going concern. Wehave nothing to report having performed our review.

Under ISAs (UK & Ireland) we are also required to report to you if we have anything material to add or to draw attention to inrelation to the Directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparingthe financial statements. We have nothing material to add or to draw attention to.

As noted in the Directors’ statement, the Directors have concluded that it is appropriate to adopt the going concern basis inpreparing the financial statements. The going concern basis presumes that the Company has adequate resources to remain in

Overall materiality

How we determined it

Rationale for benchmark applied

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operation, and that the Directors intend it to do so, for at least one year from the date the financial statements were signed. Aspart of our audit we have concluded that the Directors’ use of the going concern basis is appropriate.

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

Other required reporting

Consistency of other informationCompanies Act 2006 opinion

In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financialstatements are prepared is consistent with the financial statements.

ISAs (UK & Ireland) reporting

We have no exceptions to report.



The Directors’ assessment of the principal risks that would threaten the solvency or liquidity of the CompanyUnder ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relationto:

We have nothing material to addor to draw attention to.



• information in the Annual Report is:

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

− apparently materially incorrect based on, or materially inconsistent with, ourknowledge of the Company acquired in the course of performing our audit; or

− otherwise misleading.

• the statement given by the Directors on page 30, in accordance with provision C.1.1 of theUK Corporate Governance Code (the ‘Code’), that they consider the Annual Report takenas a whole to be fair, balanced and understandable and provides the informationnecessary for members to assess the company’s performance, business model andstrategy is materially inconsistent with our knowledge of the company acquired in thecourse of performing our audit.

• the section of the Annual Report on pages 23 and 24, as required by provision C.3.8 of theCode, describing the work of the Audit Committee does not appropriately addressmatters communicated by us to the Audit Committee.

• the Directors’ confirmation on page 16 in the Annual Report, in accordance withprovision C.2.1 of the Code, that they have carried out a robust assessment of theprincipal risks facing the Company, including those that would threaten its businessmodel, future performance, solvency or liquidity.

• the disclosures in the Annual Report that describe those risks and explain how they arebeing managed or mitigated.

• the Directors’ explanation on page 17 in the Annual Report, in accordance with provisionC.2.2 of the Code, as to how they have assessed the prospects of the Company, over whatperiod they have done so and why they consider that period to be appropriate, and theirstatement as to whether they have a reasonable expectation that the Company will beable to continue in operation and meet its liabilities as they fall due over the period oftheir assessment, including any related disclosures drawing attention to any necessaryqualifications or assumptions.


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Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of theprincipal risks facing the group and the Directors’ statements in relation to the longer-term viability of the group, set out onpages 16 and 17. Our review was substantially less in scope than an audit and only consisted of making inquiries and consideringthe Directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions ofthe Code; and considering whether the statements are consistent with the knowledge acquired by us in the course of performingour audit. We have nothing to report having performed our review.

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

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

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

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

We have no exceptions to report arising from this responsibility.

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

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

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

Responsibilities for the financial statements and the audit

Our responsibilities and those of the Directors As explained more fully in the Statement of Directors’ Responsibilities set out on page 30, the Directors are responsible for thepreparation of the financial statements and for being satisfied that they give a true and fair view.

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

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

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

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

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

• the overall presentation of the financial statements.

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We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our ownjudgements, and evaluating the disclosures in the financial statements.

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

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

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

14th December 2015


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2015 2014Revenue Capital Total Revenue Capital Total

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

(Losses)/gains on investments held at fair value through profit or los 2 — (9,603) (9,603) — 9,101 9,101

Net foreign currency gains/(losses) — 328 328 — (272) (272)Income from investments 3 5,609 — 5,609 4,794 — 4,794Other interest receivable and similar

income 3 1 — 1 5 — 5

Gross return/(loss) 5,610 (9,275) (3,665) 4,799 8,829 13,628Management fee 4 (1,317) — (1,317) (1,194) — (1,194)Other administrative expenses 5 (707) — (707) (739) — (739)

Net return/(loss) on ordinary activities before finance costs and taxation 3,586 (9,275) (5,689) 2,866 8,829 11,695

Finance costs 6 (229) — (229) (292) — (292)

Net return/(loss) on ordinary activities before taxation 3,357 (9,275) (5,918) 2,574 8,829 11,403

Taxation 7 (513) — (513) (418) — (418)

Net return/(loss) on ordinary activities after taxation 2,844 (9,275) (6,431) 2,156 8,829 10,985

Return/(loss) per share 9 2.99p (9.76)p (6.77)p 2.23p 9.13p 11.36p

A final dividend of 2.5p (2014: 2.2p) per share is proposed in respect of the year ended 30th September 2015, costing£2,376,000 (2014: £2,091,000). Further information on dividends is given in note 8(b) on page 46.

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

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

The notes on pages 41 to 58 form an integral part of these accounts.

Financial StatementsIncome Statementfor the year ended 30th September 2015

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Called up Exercised Capitalshare Share warrant redemption Capital Revenuecapital premium reserve reserve reserves reserve Total£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 30th September 2013 25,280 31,539 977 23,670 145,656 4,334 231,456Repurchase of Ordinary shares for cancellation (1,326) — — 1,326 (11,876) — (11,876)Repurchase of Subscription shares for

cancellation (72) 72 — — — — —Issue of Ordinary shares on exercise of

Subscription shares 5 35 — — — — 40Expenses in relation to tender offers — — — — (69) — (69)Net return from ordinary activities — — — — 8,829 2,156 10,985Dividends appropriated in the year — — — — — (2,491) (2,491)

At 30th September 2014 23,887 31,646 977 24,996 142,540 3,999 228,045Repurchase of Ordinary shares for cancellation (125) — — 125 (1,067) — (1,067)Net return from ordinary activities — — — — (9,275) 2,844 (6,431)Dividends appropriated in the year — — — — — (2,091) (2,091)

At 30th September 2015 23,762 31,646 977 25,121 132,198 4,752 218,456


Financial Statements continuedReconciliation of Movements in Shareholders’ Funds

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2015 2014Notes £’000 £’000

Fixed assets 10Investments held at fair value through profit or loss 218,740 238,059Investments in liquidity funds at fair value through profit or loss 8,054 —

226,794 238,059

Current assets 11Debtors 897 982Cash and short term deposits 963 5,438

1,860 6,420Creditors: amounts falling due within one year 12 (197) (1,434)Financial liability: Derivative financial instruments 13 (1) —

Net current assets 1,662 4,986

Total assets less current liabilities 228,456 243,045Creditors: amounts falling due after more than one year 14 (10,000) (15,000)

Net assets 218,456 228,045

Capital and reserves Called up share capital 15 23,762 23,887Share premium 16 31,646 31,646Exercised warrant reserve 16 977 977Capital redemption reserve 16 25,121 24,996Capital reserves 16 132,198 142,540Revenue reserve 16 4,752 3,999

Total equity shareholders’ funds 218,456 228,045

Net asset value per share 17 229.8p 238.7p

The accounts on pages 37 to 58 were approved and authorised for issue by the Board of Directors on 14th December 2015 andwere signed on their behalf by:

James M LongChairman


Company registration number: 3374850.

Financial Statements continuedBalance Sheetat 30th September 2015

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2015 2014Notes £’000 £’000

Net cash inflow from operating activities 18 2,824 2,571

Returns on investments and servicing of finance Interest paid (252) (245)

Net cash outflow from returns on investments and servicing of finance (252) (245)

TaxationTaxation recovered 71 —

Capital expenditure and financial investment Purchases of investments (190,840) (152,299)Sales of investments 191,598 154,477Other capital charges (47) (52)

Net cash inflow from capital expenditure andfinancial investment 711 2,126

Dividends paid (2,091) (2,491)

Net cash inflowbefore financing 1,263 1,961

Financing Bank loan drawdown 5,000 15,000Bank loan repayment (10,000) (6,262)Issue of Ordinary shares on exercise of Subscription shares — 40Repurchase of Ordinary shares for cancellation (1,067) (11,945)

Net cash outflow from financing (6,067) (3,167)

Decrease in cash in the year 19 (4,804) (1,206)


Financial Statements continuedCash Flow Statementfor the year ended 30th September 2015

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1. Accounting policies

(a) Basis of accountingThe financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally AcceptedAccounting Practice (‘UK GAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment TrustCompanies and Venture Capital Trusts’ (the ‘SORP’) issued by the AIC in January 2009.

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

The financial statements have been prepared on a going concern basis under the historical cost convention, as modified bythe revaluation of investments at fair value.

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

(b) Valuation of investments The Company’s business is investing in financial assets with a view to profiting from their total return in the form of incomeand capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, inaccordance with a documented investment strategy and information is provided internally on that basis to the Company’sBoard of Directors. Accordingly, upon initial recognition the investments are designated by the Company as ‘held at fair valuethrough profit or loss’. They are included initially at fair value which is taken to be their cost, excluding expenses incidental topurchase which are written off to capital at the time of acquisition. Subsequently the investments are valued at fair valuewhich are quoted bid market prices for investments traded in active markets. Where there is a valuation technique commonlyused by market participants to price an instrument and that technique has been demonstrated to provide reliable estimates ofprices, obtained in actual market transactions, that technique is used.

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

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

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

Overseas dividends are included gross of any withholding tax.

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

Deposit interest receivable and stock lending income are taken to revenue on an accruals basis.

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

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

– expenses incidental to the purchase of an investment are included within the cost of the investment and those incidentalto the sale are deducted from the sale proceeds. These expenses are commonly referred to as transaction costs andinclude items such as stamp duty and brokerage commissions. Details of transaction costs are given in note 10 on page 46.

Notes to the Financial Statementsfor the year ended 30th September 2015

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Financial Statements continuedNotes to the Financial Statements continued


1. Accounting policies continued

(f) Finance costs Finance costs are accounted for on an accruals basis and in accordance with the provisions of FRS 25 ‘Financial Instruments:Presentation’ and FRS 26 ‘Financial Instruments: Measurement’.

Finance costs are allocated wholly to revenue.

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

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

Bank loans are recorded at the proceeds received net of direct issue costs. Finance costs, including any premiums payable onsettlement or redemption and direct issue costs, are accounted for on an accruals basis in profit or loss using the effectiveinterest rate method.

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

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

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

Any gain or loss arising on monetary assets from a change in exchange rates subsequent to the date of the transaction isincluded as an exchange gain or loss in revenue or capital, depending on whether the gain or loss is of a revenue or capitalnature. Gains and losses on investments and loans arising from a change in exchange rates are included in ‘Holding gains andlosses on investments’.

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

Deferred taxation is accounted for in accordance with FRS 19: ‘Deferred Tax’.

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

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

Tax relief is allocated to expenses charged to capital on the ‘marginal basis’. On this basis, if taxable income is capable of beingentirely offset by revenue expenses, then no tax relief is allocated to capital.

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

(k) Value added tax (VAT)

Irrecoverable VAT is included in the expense on which it has been suffered. Recoverable VAT is calculated using the partialexemption method, based on the proportion of zero rated supplies to total supplies.

(l) Repurchases of Ordinary shares for cancellation The cost of repurchasing Ordinary shares including the related stamp duty and transaction costs is charged to ‘Capitalreserves’ and dealt with in the ‘Reconciliation of Movement in Shareholders’ Funds. Share repurchase transactions areaccounted for on a trade date basis. The nominal value of Ordinary share capital repurchased and cancelled is transferred outof called up share capital and into the capital redemption reserve.

(m) Conversion of Subscription shares When the holders of Subscription shares exercise their right to convert their shares into Ordinary shares, the nominal value ofthose Subscription shares is transferred to the credit of share premium. The nominal value of the Ordinary shares into whichthe Subscription shares convert is credited to called up share capital and the balance of the consideration received is creditedto share premium.

2015 2014£’000 £’000

2. (Losses)/gains on investments held at fair value through profit or loss Gains from sales of investments held at fair value through profit or loss based on

historical cost 6,447 239Amounts recognised in investment holding gains in the previous year in respect of

investments sold during the year (3,577) (3,125)

Gains/(losses) on sales of investments based on the carrying value at the previous balance sheet date 2,870 (2,886)

Net movement in investment holding (losses)/gains (12,428) 12,036Other capital charges (45) (49)

Total capital (losses)/gains on investments held at fair value through profit or loss (9,603) 9,101

2015 2014£’000 £’000

3. Income Income from investmentsIncome from liquidity fund 18 —Overseas dividends 5,478 4,697Scrip dividends 113 97

5,609 4,794

Other interest receivable and similar incomeDeposit interest 1 5

Total income 5,610 4,799

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

4. Management fees Management fee 1,317 — 1,317 1,194 — 1,194

Details of the management fee are given in the Directors’ Report on pages 19.

2015 2014£’000 £’000

5. Other administrative expensesOther administration expenses 355 397Custody fees 136 137Directors’ fees1 136 132Saving scheme costs2 55 49Auditors’ remuneration for audit services 25 24

Total 707 739

1Full disclosure is given in the Directors’ Remuneration Report on page 28.2Paid to JPMF for the marketing and administration of saving scheme products.

2015 2014£’000 £’000

6. Finance costsInterest on bank loans 229 292

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


Overseas withholding tax 513 — 513 418 — 418

Current tax charge for the year 513 — 513 418 — 418

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(b) Factors affecting current tax charge for the yearThe tax assessed for the year is higher (2014: lower) than the Company’s applicable rate of Corporation tax for the year of20.5% (2014: 22.0%). The difference is explained below:


Net return/(loss) on ordinary activities before taxation 3,357 (9,275) (5,918) 2,574 8,829 11,403

Net return/(loss) on ordinary activities before taxation multiplied by the standard rate of corporation tax of 20.5% (2014: 22.0%) 688 (1,901) (1,213) 566 1,942 2,508

Effects of:Non taxable capital losses/(gains) — 1,901 1,901 — (1,942) (1,942)Non taxable overseas dividends (1,123) — (1,123) (1,033) — (1,033)Non taxable scrip dividends (23) — (23) (21) — (21)Overseas withholding tax 513 — 513 418 — 418Excess allowable expenses 458 — 458 488 — 488

Current tax charge for the year 513 — 513 418 — 418

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £3,431,000 (2014: £2,977,000) based on a prospective corporation taxrate of 20% (2014: 20%). The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxableincome. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeablefuture and therefore no asset has been recognised in the accounts. The UK Government announced in July 2015 that thecorporation tax rate is set to be cut to 19% in 2017 and 18% in 2020. These rate reductions have not been substantivelyenacted, therefore the impact of these reductions has not been incorporated into the tax charge for the period.

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

8. Dividends(a) Dividends paid and proposed

2015 2014£’000 £’000

2014 final dividend paid of 2.2p1 (2013: 2.6p) 2,091 2,491

2015 final dividend proposed of 2.5p (2014: 2.2p) 2,376 2,102

1The final dividend disclosed for the year ended 30th September 2014 was £2,102,000, however, the actual payment amounted to £2,091,000 due to share buybacks after thebalance sheet date but prior to the share register record date.

The final dividend proposed in respect of the year ended 30th September 2015 is subject to approval at the forthcomingAnnual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in theaccounts for the year ending 30th September 2016.

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8. Dividends continued

(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 dividends proposed in respect of the financial year as follows:

2015 2014£’000 £’000

2015 final dividend proposed of 2.5p (2014: 2.2p paid) 2,376 2,091

Total dividends for Section 1158 purposes 2,376 2,091

The revenue available for distribution by way of dividend for the year is £2,844,000 (2014: £2,156,000).

9. Return per share The revenue return per share is based on the revenue earnings attributable to the ordinary shares of £2,844,000 (2014:£2,156,000) and on the weighted average number of shares in issue throughout the year of 95,049,733 (2014: 96,703,852).

The capital loss per share is based on the capital loss attributable to the ordinary shares of £9,275,000 (2014 return:£8,829,000) and on the weighted average number of shares in issue throughout the year of 95,049,733 (2014: 96,703,852).

The total loss per share is based on the total loss attributable to the ordinary shares of £6,431,000 (2014 return: £10,985,000)and on the weighted average number of shares in issue throughout the year of 95,049,733 (2014: 96,703,852).

2015 2014£’000 £’000

10. Investments held at fair value through profit or lossInvestments listed on a recognised stock exchange 218,740 238,059Investments in liquidity funds 8,054 —

226,794 238,059

Opening book cost 218,642 220,082Opening investment holding gains 19,417 10,506

Opening valuation 238,059 230,588

Movement in the year:Purchases at cost 189,773 152,400Sales – proceeds (191,480) (154,079)Gains/(losses) on sales of investments based on the carrying value at the previous balance

sheet date 2,870 (2,886)Net movement in investment holdings (losses)/gains (12,428) 12,036

Closing valuation 226,794 238,059

Closing book cost 223,382 218,642Closing investment holding gains 3,412 19,417

Total 226,794 238,059

Transaction costs on purchases during the year amounted to £413,000 (2014: £367,000) and on sales during the yearamounted to £554,000 (2014: £458,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £3,577,000 have been transferred to gains and losses onsales of investments as disclosed in note 16 on page 48.

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2015 2014£’000 £’000

11. Current assetsDebtorsSecurities sold awaiting settlement 612 730Overseas tax recoverable 14 64Dividends and interest receivable 246 155Other debtors 25 33

Total 897 982

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

Cash and short term depositsCash and short term deposits comprises bank balances and cash held by the Company including, short term bank deposits.The carrying amount of these approximates their fair value. Cash balances in excess of a predetermined amount are placed onshort term deposit at market rates of interest.

2015 2014£’000 £’000

12. Creditors: amounts falling due within one yearSecurities purchased awaiting settlement — 1,180Other creditors and accruals 197 254

Total 197 1,434

2015 2014£’000 £’000

13. Financial liability: derivative financial instrument Forward foreign currency contracts 1 —

2015 2014£’000 £’000

14. Creditors: amounts falling due after more than one yearBank loan – Scotiabank 10,000 15,000

Total 10,000 15,000

The Company has a three year unsecured multicurrency revolving loan facility with Scotiabank (Ireland) Limited, which will expirein December 2016. Under the terms of this facility, the Company may draw down up to £25 million, or its foreign currencyequivalent, at a money market rate offered for the loan period by prime banks in the London market as quoted in the market forthe loan period, plus a margin of 1.10%, plus mandatory costs. The facility is subject to covenants and restrictions which arecustomary for a facility of this nature, all of which have been met during the year.

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2015 2014£’000 £’000

15. Called up share capital Issued and fully paidOrdinary shares of 25p each Opening balance of 95,546,993 (2014: 100,829,335) Ordinary shares 23,887 25,208Repurchase and cancellation of 500,000 (2014: 5,301,946) Ordinary shares (125) (1,326)Issue of nil (2014: 19,604) Ordinary shares on exercise of Subscription shares — 5

Closing balance1 23,762 23,887

Opening balance of nil (2014: 7,253,150) Subscriptions shares — 72Conversion of nil (2014: 19,604) Subscription shares into Ordinary shares — —Repurchase and cancellation of nil (2014: 7,233,546) Subscription shares — (72)

Closing balance2 — —

1Represented by 95,046,993 (2014: 95,546,993) Ordinary shares of 25p each. 2The Company’s Subscription shares expired and their rights lapsed on 31st March 2014.

Capital reservesGains and Holding

Exercised Capital losses on gains andShare warrant redemption sales of losses on Revenue

premium reserve reserve investments investments reserve£’000 £’000 £’000 £’000 £’000 £’000

16. Reserves Opening balance 31,646 977 24,996 123,122 19,418 3,999Realised exchange gains on cash and short term deposits — — — 329 — —Unrealised losses on foreign currency contracts — — — — (1) —Gains on sales of investments based on the carrying value at

the previous balance sheet date — — — 2,870 — —Net movement in investment holding losses — — — — (12,428) —Transfer on disposal of investments — — — 3,577 (3,577) —Repurchase of Ordinary shares for cancellation — — 125 (1,067) — —Other capital charges — — — (45) — —Dividends appropriated in the year — — — — — (2,091)Net revenue for the year — — — — — 2,844

Closing balance 31,646 977 25,121 128,786 3,412 4,752

17. Net asset value per shareThe net asset value per share is based on the net assets attributable to the Ordinary shareholders of £218,456,000 (2014:£228,045,000) and on the 95,046,993 (2014: 95,546,993) shares in issue at the year end.

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2015 2014£’000 £’000

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

Net total (loss)/return on ordinary activities before finance costs and taxation (5,689) 11,695Add capital loss/(less capital return) on ordinary activities before finance costs and taxation 9,275 (8,829)Scrip dividends received as income (113) (97)Increase in accrued income (91) (27)Decrease/(increase) in other debtors 8 (13)(Decrease)/increase in accrued expenses (33) 28Overseas taxation (533) (426)Expenses charged to capital — 240

Net cash inflow from operating activities 2,824 2,571

Exchange2014 Cash flow movements 2015£’000 £’000 £’000 £’000

19. Analysis of changes in net fundsCash and short term deposits 5,438 (4,804) 329 963Bank loans falling due after more than one year (15,000) 5,000 — (10,000)

Closing net debt (9,562) 196 329 (9,037)

20. Capital commitments and contingent liabilities

At the balance sheet date there were no capital commitments or contingent liabilities (2014: none).

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

Details of the management agreement are set out in the Directors’ Report on page 19. The terms make allowance for theexclusion of management charges on investments held in funds managed by JPMorgan Asset Management (‘JPMAM’). The feepayable to the Manager for the year was £1,317,000 (2014: £1,194,000) of which £nil (2014: £nil) was outstanding at the yearend.

Expenses amounting to £55,000 (2014: £49,000) were payable to JPMAM for the marketing and administration of savingsscheme products of which £nil (2014: £15,000) was outstanding at the year end.

Safe custody fees amounting to £136,000 (2014: £137,000) of which £33,000 (2014: £43,000) was outstanding at the year end.These fees were paid to third party custodians by JPMorgan Chase on behalf of the Company.

The Manager carries out some of its dealing transactions through subsidiaries. These transactions are carried out at armslength. The commission payable to JPMorgan Securities for the year was £22,000 (2014: £23,000) of which £nil (2014: £nil) wasoutstanding at the year end. Handling charges, incurred on dealing transactions undertaken by overseas custodians duringthe year, amounting to £45,000 (2014: £49,000) were payable to JPMorgan Chase of which £12,000 (2014: £13,000) wasoutstanding at the year end.

The Company has no related parties other than its Directors. Details of the Directors’ shareholdings and the remunerationpayable to Directors are given in the Directors’ Remuneration Report on page 28.

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

The Company holds an investment in JPMorgan US Dollar Liquidity Fund which is managed by the Manager. At 30th September2015 this investment was valued at £8,054,000 (2014: £nil) and represented 3.5% (2014: nil) of the Company’s investmentportfolio. During the year the Company made £16,765,000 purchases of this investment (2014: £nil) and sales with a total valueof £8,949,000 (2014: £nil). Income amounting to £18,000 (2014: £nil) was received from this investment during the year.

At the year end, a bank balance of £963,000 (2014: £5,438,000) was held with JPMorgan Chase and placed on deposit with anapproved list of banks. A net amount of interest of £1,000 (2014: 5,000) was receivable by the Company during the year fromJPMorgan Chase of which £nil (2014: £nil) was outstanding at the year end.

22. Disclosures regarding financial instruments measured at fair value

The disclosures required by the amendment to FRS 29: ‘Improving Disclosures about Financial Instruments’ are given below.The Company’s financial instruments within the scope of FRS 29 that are held at fair value comprise its investment portfolioand derivative financial instruments comprising forward foreign currency contracts.

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

Level 1 – valued using quoted prices in active markets.

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

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

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

Details of the valuation techniques used by the Company are given in note 1 on page 41.

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

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

Financial instruments held at fair value through profit or lossFinancial instruments held at fair value through profit or lossEquity investments1 218,740 — — 218,740Liquidity fund 8,054 — — 8,054Derivative financial instruments – forward foreign currency contracts — (1) — (1)

Total 226,794 (1) — 226,793

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

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

Financial instruments held at fair value through profit or lossEquity investments 238,059 — — 238,059

Total 238,059 — — 238,059

1Where a premium is paid on investment purchases, the investment is designated as Level 1 providing there is an active market for resale at that price.

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

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

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

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

The Company’s financial instruments may comprise the following:

– investments in equity shares and participatory notes of overseas companies which are held in accordance with theCompany’s investment objective;

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

– derivative financial instruments including forward currency contracts; and

– multicurrency loan facilities.

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

(i) Currency risk Certain of the Company’s assets, liabilities and income are denominated in currencies other than sterling (the Company’sfunctional currency and the currency in which the accounts are presented). As a result, movements in exchange rates mayaffect the sterling value 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, whichmeets on at least four occasions each year. The Manager measures the risk to the Company of the foreign currencyexposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchangeto which the Company’s assets, liabilities, income and expenses are exposed. Foreign currency borrowing may be used tolimit the Company’s exposure to changes in exchange rates which might otherwise adversely affect the value of theportfolio of investments. Income denominated in foreign currencies is converted to sterling on receipt. The Company mayuse short term forward currency contracts to manage working capital requirements.

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

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

Foreign currency exposureThe fair values of the Company’s monetary items that have foreign currency exposure at 30th September are shownbelow. Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency, theyhave been included separately in the analysis in order to show the overall level of exposure.

2015South

Hong Kong Korea Singapore Taiwan Thailand India Indonesia US Dollars Won Dollars Dollars Baht Rupees Rupiah Dollars Other Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Investment held at fair value through profit or loss that are monetary items — — — — — — — 8,054 — 8,054

Debtors (securities sold awaiting settlement, dividends and interest receivable) 238 299 — — — — — 26 309 872

Cash and short term deposits 145 — 330 131 — — — 136 — 742Creditors (securities purchased awaiting

settlement and accrued expenses) — (225) — — — — — 224 — (1)

Foreign currency exposure on net monetary items 383 74 330 131 — — — 8,440 309 9,667

Equity investments held at fair value 89,468 36,003 5,976 30,477 9,657 30,971 4,108 8,222 3,858 218,740

Total net foreign currency exposure 89,851 36,077 6,306 30,608 9,657 30,971 4,108 16,662 4,167 228,407

2014South

Hong Kong Korea Singapore Taiwan Thailand India Indonesia US Dollars Won Dollars Dollars Baht Rupees Rupiah Dollars Other Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Debtors (securities sold awaiting settlement, dividends and interest receivable) 201 201 — — 530 — — 17 — 949

Cash and short term deposits 3,858 — 75 989 5 10 — 141 6 5,084Creditors (securities purchased awaiting

settlement and accrued expenses) (228) — — — (804) — — (148) — (1,180)

Foreign currency exposure on net monetary items 3,831 201 75 989 (269) 10 — 10 6 4,853

Equity investments held at fair value 84,317 51,614 7,558 31,881 12,339 26,731 — 10,429 13,190 238,059

Total net foreign currency exposure 88,148 51,815 7,633 32,870 12,070 26,741 — 10,439 13,196 242,912

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

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Foreign currency sensitivityThe following tables illustrate the sensitivity of return after taxation for the year and net assets with regard to theCompany’s monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on theCompany’s overseas income and monetary currency financial instruments held at each balance sheet date and assumes a10% (2014: 10%) appreciation or depreciation in sterling against the currencies to which the Company is exposed, which isconsidered to be a reasonable illustration based on the volatility of exchange rates during the year.

If sterling had weakened by 10% this would have had the following effect:

2015 2014£’000 £’000

Income statement return after taxationRevenue return 561 479Capital return 967 485

Total return after taxation for the year 1,528 964

Net assets 1,528 964

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

2015 2014£’000 £’000

Income statement return after taxationRevenue return (561) (479)Capital return (967) (485)

Total return after taxation for the year (1,528) (964)

Net assets (1,528) (964)

In the opinion of the Directors, the above sensitivity analysis with respect to monetary financial assets and liabilities isbroadly representative of the whole year. The sensitivity with regard to the Company’s investments and foreigncurrency is subsumed into other price risk sensitivity on page 54.

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

Management of interest rate risk Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company’s actual gearingrange may fluctuate between 10% net cash to 20% geared.

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

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

Interest rate exposureThe exposure of financial assets and liabilities to floating interest rates, giving cash flow interest rate risk when rates arereset, is shown below.

2015 2014£’000 £’000

Exposure to floating interest rates:Cash and short term deposits 963 5,438JPMorgan US Dollar Liquidity Fund 8,054 —Creditors: amounts falling due after more than one year – bank loan (10,000) (15,000)

Total exposure (983) (9,562)

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

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

2015 2014£’000 £’000

Maximum debit interest rate exposure to floating rates – net cash balances (9,974) (9,562)Minimum credit interest rate exposure to floating rates – net cash balances 2,608 80

Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 0.5% (2014: 0.5%)increase or decrease in interest rates in regard to the Company’s monetary financial assets and financial liabilities. This level ofchange is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysisis based on the Company’s monetary financial instruments held at the balance sheet date, with all other variables held constant.

2015 20141

0.5% increase 0.5% decrease 0.5% increase 0.5% decreasein rate in rate in rate in rate £’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (5) 5 (48) 48Capital return — — — —

Total return after taxation for the year (5) 5 (48) 48

Net assets (5) 5 (48) 48

1Restated to include the loan balance.

In the opinion of the Directors, the above sensitivity analysis may not be representative of the Company’s future exposureto interest rate changes due to changes in the balances drawn down on the loan facility.

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

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

Other price risk exposure The Company’s exposure to changes in market prices at 30th September comprises its holdings in equity investments asfollows:

2015 2014£’000 £’000

Equity investments held at fair value through profit or loss 218,740 238,059

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 10 to 13. This shows that the portfolio comprises investmentsquoted on Asian stockmarkets. Accordingly, there is a concentration of exposure to that region. However, it should benoted that an investment may not necessarily be wholly exposed to the economic conditions in its country of domicile.

The following table illustrates the sensitivity of return after taxation for the year and net assets to an increase or decreaseof 10% (2014: 10%) in the fair value of the Company’s equities. This level of change is considered to be a reasonableillustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s equitiesand adjusting for change in the management fee, but with all other variables held constant.

2015 201410% increase 10% decrease 10% increase 10% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (131) 131 (143) 143Capital return 21,874 (21,874) 23,806 (23,806)

Total return after taxation for the year and net assets 21,743 (21,743) 23,663 (23,663)

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

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

The Board’s policy is to use borrowings from time to time to gear the portfolio within a range of 10% net cash to 20% geared.Short term borrowings may be used to manage short term liabilities and working capital requirements. Bank loan facilities areused to gear the Company as appropriate. Details of the current facility are given on page 47.

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

2015Within One to Two to

one year two years five years Total£’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearOther creditors and accruals 197 — — 197Derivative financial instruments – forward currency contracts 1 — — 1Creditors: amounts falling due after more than one yearBank loan – including interest 182 10,032 — 10,214

380 10,032 — 10,412

2014Within One to Two to

one year two years five years Total£’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 1,180 — — 1,180Other creditors and accruals 254 — — 254Creditors: amounts falling due after more than one yearBank loan – including interest 257 257 15,046 15,560

1,691 257 15,046 16,994

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(c) Credit risk Credit risk is the risk that the counterparty to a transaction fails to discharge its obligations under that transaction which couldresult in a 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 therisk of losing the principal of a trade during the settlement process. The Manager regularly monitors dealing activity to ensurebest execution, a process that involves measuring various indicators including the quality of trade settlement and incidence offailed trades. Counterparty lists are maintained and adjusted accordingly.

CashCounterparties are subject to daily credit analysis by the Manager and trades can only be placed with counterparties that havebeen approved by both the JPMorgan Counterparty Risk Group and the Board.

Exposure to JPMorgan ChaseJPMorgan Chase is the custodian of the Company’s assets. The custody agreement grants a general lien over the securitiescredited to the securities account. The Company’s assets are segregated from JPMorgan Chase’s own trading assets. Thereforethese assets are designed to be protected from creditors in the event that JPMorgan Chase were to cease trading. However, noabsolute guarantee can be given to investors on the protection of all the assets of the Company.

Credit risk exposure The amounts shown in the balance sheet under debtors and cash and short term deposits represent the maximum exposureto credit risk at the current and comparative year end.

Cash and short term deposits comprises balances held at banks that have a minimum rating of A1/P1 (2014: A1/P1) fromStandard & Poor’s and Moody’s respectively.

In accordance with the Company’s current policy, there has been no stock lending during the year, or prior year.

(d) Fair values of financial assets and financial liabilities All financial assets and liabilities are either included in the balance sheet at fair value or the carrying amount in the balancesheet is a reasonable approximation of fair value.

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24. Capital management policies and procedures

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

2015 2014£’000 £’000

DebtBank loan 10,000 15,000

10,000 15,000EquityShare capital 23,762 23,887Reserves 194,694 204,158

218,456 228,045

Total debt and equity capital 228,456 243,045

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

The Board’s policy is to limit gearing within the range of 10% net cash to 20% geared in normal market conditions. Gearing forthis purpose is defined as Total Assets (including net current assets/(liabilities) less cash/cash equivalents and excluding bankloans of less than one year, expressed as a percentage of shareholders’ funds. If the amount calculated is negative, this isshown as a ‘net cash’ position. At 30th September 2015, gearing calculated on this basis was 0.5% (2014: 4.2%).

2015 2014£’000 £’000

Investments excluding liquidity fund holdings 218,740 238,059Current assets excluding cash 897 982Current liabilities excluding bank loans (198) (1,434)

Total assets 219,439 237,607

Net assets 218,456 228,045

Gearing 0.5% 4.2%

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

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

• the need to buy back equity shares for cancellation, which takes into account the share price discount or premium; and

• the need for issues of new shares.


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Notice is hereby given that the nineteenth Annual GeneralMeeting of JPMorgan Asian Investment Trust plc will be heldat 60 Victoria Embankment, London EC4Y 0JP on Friday,29th January 2016 at 10.30 a.m. for the following purposes:

1. To receive the Directors’ Report, the Annual Accounts andthe Auditors’ Report for the year ended 30th September2015.

2. To approve the Directors’ Remuneration Policy.

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

4. To declare a final dividend on the Ordinary shares.

5. To re-elect Mr James Long as a Director.

6. To re-elect Mr Dean Buckley as a Director.

7. To re-elect Mrs Bronwyn Curtis as a Director.

8. To re-elect Mr Ronald Gould as a Director.

9. To re-elect Mr James Strachan as a Director.

10. To reappoint PricewaterhouseCoopers LLP as Auditors tothe Company.

11. To authorise the Directors to determine the remunerationof the Auditors.

Special Business

To consider the following resolutions:

2016 Continuation resolution – Ordinary resolution12. THAT the Company continue in existence as an investment

trust for a period expiring at the conclusion of theCompany’s annual general meeting to be held in 2017.

Authority to allot new shares – Ordinary resolution13. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors),pursuant to and in accordance with Section 551 of theCompanies Act 2006 (the ‘Act’) to exercise all the powers ofthe Company to allot shares in the Company and to grantrights to subscribe for, or to convert any security into,shares in the Company (‘Rights’) up to an aggregatenominal amount of £1,188,087, representing approximately5% of the Company’s issued Ordinary share capital as at the

date of the passing of this resolution, provided that thisauthority shall expire at the conclusion of the AnnualGeneral Meeting of the Company to be held in 2017 unlessrenewed at a general meeting prior to such time, save thatthe Company may before such expiry make offers oragreements which would or might require shares to beallotted or Rights to be granted after such expiry and sothat the Directors of the Company may allot shares andgrant Rights in pursuance of such offers or agreements as ifthe authority conferred hereby had not expired.

Authority to disapply pre-emption rights on allotment of relevantsecurities – Special resolution14. THAT subject to the passing of Resolution 13 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Sections 570 and 573 of the Act toallot equity securities (within the meaning of Section 560 ofthe Act) for cash pursuant to the authority conferred byResolution 13 or by way of a sale of Treasury shares as ifSection 561(1) of the Act did not apply to any suchallotment, provided that this power shall be limited to theallotment of equity securities for cash up to an aggregatenominal amount of £1,188,087 representing approximately5% of the issued Ordinary share capital as at the date of thepassing of this resolution at a price of not less than the netasset value per share and shall expire upon the expiry ofthe general authority conferred by Resolution 13 above,save that the Company may before such expiry make offersor agreements which would or might require equitysecurities to be allotted after such expiry and so that theDirectors of the Company may allot equity securities inpursuant of such offers or agreements as if the powerconferred hereby had not expired.

Authority to repurchase the Company’s shares – Special resolution15. THAT the Company be generally and, subject as hereinafter

appears, unconditionally authorised in accordance withSection 701 of the Act to make market purchases (withinthe meaning of Section 693 of the Act) of its issued Ordinaryshares and Subscription shares on such terms and in suchmanner as the Directors may from time to time determine.

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 14,247,544, or ifless, that number of Ordinary shares which is equal to

Shareholder InformationNotice of Annual General Meeting

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Shareholder Information continuedNotice of Annual General Meeting continued

14.99% of the issued share capital as at the date of thepassing of this Resolution;

(ii) the minimum price which may be paid for an Ordinaryshare shall be 25 pence;

(iii) the maximum price which may be paid for a share shallbe an amount equal to the highest of: (a) 105% of theaverage of the middle market quotations for a share ofthat class of share taken from and calculated byreference to the London Stock Exchange Daily OfficialList for the five business days immediately precedingthe day on which the share is contracted to bepurchased; or (b) the price of the last independenttrade; or (c) the highest current independent bid;

(iv) any purchase of shares will be made in the market forcash at prices below the prevailing net asset value pershare (as determined by the Directors);

(v) the authority hereby conferred shall expire on 28th July2017 unless the authority is renewed at the Company’sAnnual General Meeting in 2017 or at any other generalmeeting prior to such time; and

(vi) the Company may make a contract to purchase sharesunder the authority hereby conferred prior to the expiryof such authority which contract will or may beexecuted wholly or partly after the expiry of suchauthority and may make a purchase of shares pursuantto any such contract.

Authority to increase the maximum aggregate Directors’ fees –Ordinary resolution16. THAT in accordance with Article 100(1) of the Company’s

Articles of Association, the maximum aggregate Directors’fees payable be increased from £150,000 to £200,000 perannum.

By order of the BoardAlison Vincent, for and on behalf of JPMorgan Funds Limited, Secretary

21st December 2015

Notes

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

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

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

3. Any instrument appointing a proxy, to be valid, must be lodged inaccordance with the instructions given on the proxy form.

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 toterminate or amend a proxy appointment received after therelevant deadline will be disregarded. Where two or more validseparate appointments of proxy are received in respect of thesame share in respect of the same Meeting, the one which is lastreceived (regardless of its date or the date of its signature) shall betreated as replacing and revoking the other or others as regardsthat share; if the Company is unable to determine which was lastreceived (regardless of its date or the date of its signature) shall betreated as replacing and revoking the other or others as regardsthat share; if the Company is unable to determine which was lastreceived, none of them shall be treated as valid in respect of thatshare.

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

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

7. A corporation, which is a shareholder, may appoint an individual(s)to act as its representative(s) and to vote in person at the Meeting(see instructions given on the proxy form). In accordance with theprovisions of the Companies Act 2006, each such representative(s)may exercise (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 adesignated corporate representative. Representatives should bringto the meeting evidence of their appointment, including anyauthority under which it is signed.

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 theconduct of the audit) that are to be laid before the AGM; or (b) anycircumstances connected with an Auditor of the Company ceasingto hold office since the previous AGM; which the members proposeto raise at the meeting. The Company cannot require the membersrequesting the publication to pay its expenses. Any statementplaced on the website must also be sent to the Company’s Auditorsno later than the time it makes its statement available on thewebsite. The business which may be dealt with at the AGM includesany statement 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 ifit is undesirable in the interests of the Company or the good orderof the meeting or if it would involve the disclosure of confidentialinformation.

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

six clear weeks before the Meeting, and (in the case of a matter tobe included in the business only) must be accompanies by astatement setting out the grounds for the request.

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

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

13. The register of interests of the Directors and connected persons inthe share capital of the Company and the Directors’ letters ofappointment are available for inspection at the Company’sregistered office during usual business hours on any weekday(Saturdays, Sundays and public holidays excepted). It will also beavailable for inspection at the Annual General Meeting. No Directorhas 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, you canappoint a proxy or proxies electronically by visitingwww.sharevote.co.uk. You will need your Voting ID, Task ID andShareholder Reference Number (this is the series of numbersprinted under your name on the Form of Proxy). Alternatively, ifyou have already registered with Equiniti Limited’s online portfolioservice, Shareview, you can submit your Form of Proxy atwww.shareview.co.uk. Full instructions are given on both websites.

16. As at 18th December 2015 (being the latest business day prior tothe publication of this Notice), the Company’s issued share capitalconsists of 95,046,993 Ordinary shares, carrying one vote each.Therefore the total voting rights in the Company are 95,046,993.

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

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Shareholder Information continuedGlossary of Terms and Definitions

Return to Ordinary Shareholders

Total return to the Ordinary shareholder on a mid-market priceto mid-market price basis, assuming that all dividends paid outby the Company were reinvested, without transaction costs,into the Ordinary shares of the Company at the time the shareswere quoted ex-dividend.

Return on Net Assets

Return on the net asset value (‘NAV’) per share, on a bid valueto bid value basis, assuming that all dividends paid out by theCompany were reinvested into the shares of the Companyat the NAV per share at the time the shares were quotedex-dividend.

Benchmark Return

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

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

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

Gearing/Net Cash

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

Leverage

For the purposes of the Alternative Investment Fund ManagersDirective (‘AIFMD’), leverage is any method which increases theCompany’s exposure, including the borrowing of cash and theuse of derivatives. It is expressed as a ratio between the

Company’s exposure and its net asset value and is calculatedon a gross and a commitment method, in accordance withAIFMD. Under the gross method, exposure represents the sumof the Company’s positions without taking into account anyhedging and netting arrangements. Under the commitmentmethod, exposure is calculated after certain hedging andnetting positions are offset against each other.

The Company’s maximum and actual leverage levels at30th September 2015 are shown below:

Leverage exposure Gross method Commitment method

Maximum limit 200% 200%Actual 104% 104%

Ongoing Charges

Management fees and all other operating expenses excludinginterest and performance fee payable, expressed as apercentage of the average of the daily net assets during theyear.

Share Price Discount to Net Asset Value (‘NAV’) per Ordinary Share

If the share price of an investment trust is lower than the NAVper share, the shares are said to be trading at a discount. Thediscount 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 apremium.

Active Position

The active position shows the difference between theCompany’s holding of an individual stock, sector or country,compared with that stock, sector or country’s weighting in theCompany’s benchmark. A positive number indicates an activedecision by the investment manager to own more of (i.e. beoverweight) that stock, sector or country versus the benchmarkand a negative number, a decision to hold less of (i.e. beunderweight) a particular stock, sector or country versus thebenchmark.

Performance Attribution

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

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For shareholders who rolled their investment in The Fleming Far Eastern Investment Trust plc into the Company, the Capital GainsTax apportionments are shown below. The apportionment of the original base cost will depend upon which option under theFleming Far Eastern reconstruction scheme was chosen.

Option 1 All share option JPMorgan Asian Ordinary shares 0.95853JPMorgan Asian Warrants 0.04147

Option 2 Share and Japanese unit option JPMorgan Asian Ordinary shares 0.64066JPMorgan Asian Warrants 0.02772S&P Japanese Units 0.33162

Option 3 Share and cash option JPMorgan Asian Ordinary shares 0.25082JPMorgan Asian Warrants 0.01085S&P Cash Units 0.73833

Rollover Apportionments

Performance Attribution Definitions:

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

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

Currency Effect Measures the impact of currency exposure differencesbetween the Company’s portfolio and its benchmark.

Dividends/Residual Represents timing differences in respect of cash flows anddividends.

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

Share BuybacksMeasures the enhancement to net asset value per share ofbuying back the Company’s shares for cancellation at a pricewhich is less than the Company's net asset value per share.

Shareholder Information continuedGlossary of Terms and Definitions continued

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

Savings Plan

The Company participates in the J.P. Morgan InvestmentTrusts Savings Plan, which facilitates both regular monthlyinvestments and occasional lump sum investments in theCompany’s ordinary shares. Shareholders who would likeinformation on the Savings Plan should call J.P. Morgan AssetManagement free on 0800 20 40 20 or visit its website atam.jpmorgan.co.uk

Stocks & Shares Individual Savings Accounts (ISA)

The Company’s shares are eligible investments withinJ.P. Morgan’s Stocks & Shares ISA. For the 2015/16 tax year,from 6th April 2015 and ending 5th April 2016, the total ISAallowance is £15,240. Details are available from J.P. MorganAsset Management free on 0800 20 40 20 or via its websiteat am.jpmorgan.co.uk

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

Fund supermarkets:

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

Ascentric Nucleus Avalon Praemium Axa Elevate TransactNovia

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

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

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

AJ BellAlliance TrustBarclays StockbrokersCharles Stanley DirectHalifax Share Dealing ServiceHargreaves Lansdown Interactive Investor

James Brearley James HaySelftradeTD DirectThe Share Centre Tilney BestinvestTransact

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

1 6

7

8

9

10

2

3

4

5

Beware of share fraud

How to avoid share fraud

Report a scam

In association with:

Financial Conduct Authority

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HistoryThe Company was launched in September 1997 as a rollover vehiclefor shareholders in The Fleming Far Eastern Investment Trust plc.The Company adopted its present name following approval fromshareholders at the Annual General Meeting in February 2006.

DirectorsJames M Long TD (Chairman)Dean BuckleyBronwyn Curtis OBERonald GouldJames Strachan

Company NumbersCompany’s registration number: 3374850

Ordinary shares London Stock Exchange Sedol number: 0132077 ISIN: GB0001320778 Bloomberg ticker: JAI LN

Market InformationThe Company’s Ordinary shares are listed on the London StockExchange. The market price of the Ordinary shares is shown daily in theFinancial Times, The Times, The Daily Telegraph and The Scotsman.The Share price of the Ordinary shares is on the JPMorgan internet siteat www.jpmasian.co.uk where the prices are updated every fifteenminutes during trading hours.

Websitewww.jpmasian.co.uk

Share TransactionsThe Company’s shares may be dealt in directly through a stockbrokeror professional adviser acting on an investor’s behalf. They may alsobe purchased and held through the J.P. Morgan Investment Accountand J.P. Morgan ISA. These products are all available on the onlineservice at www.jpmorgan.co.uk/online

Manager and Company SecretaryJPMorgan Funds Limited

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

For company secretarial and administrative matters, please contactAlison Vincent.

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

The Depositary has appointed JPMorgan Chase Bank, N.A. as theCompany’s custodian.

RegistrarsEquiniti LimitedReference 1357Aspect HouseSpencer RoadWest Sussex BN99 6DATelephone number: 0371 384 2373

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 1357.

Registered shareholders can obtain further details on individualholdings on the internet by visiting www.shareview.co.uk.

Independent AuditorsPricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors7 More London RiversideLondon SE1 2RT

BrokersCenkos Securities plc 6, 7, 8 Tokenhouse Yard London EC2R 7AS

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.

Information about the Company

Financial CalendarFinancial year end 30th SeptemberFinal results announced DecemberHalf year end 31st MarchHalf year results announced MayDividend on Ordinary shares paid (if any) FebruaryAnnual General Meeting January/February

A member of the AIC



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

Your telephone call may be recorded for your security and training purposes.

www.jpmasian.co.uk

GB A102 12/15


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