Annual Report JPMorgan Emerging Markets Investment Trust plc · 2017-02-03 · 0 50 100 150 200 250...

Annual Report2015JPMorgan Emerging Markets

Investment Trust plcAnnual Report & Accounts for the year ended 30th June 2015

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Features

Contents

1 Financial Results

Strategic Report

2 Chairman’s Statement5 Investment Manager’s Report9 Summary of Results10 Performance11 Ten Year Financial Record12 Ten Largest Equity Investments13 Portfolio Analyses14 Investment Activity15 List of Investments 17 Business Review

Governance

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

Responsibilities

37 Independent Auditors’ Report

Financial Statements

42 Income Statement43 Reconciliation of Movements in

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

Shareholder Information

67 Notice of Annual General Meeting70 Glossary of Terms and Definitions72 Where to buy J.P. Morgan Investment

Trusts73 Information about the Company

Objective

Capital growth from emerging markets worldwide.

Investment Policies

- To invest in a diversified portfolio, concentrating on countries and shares with themost attractive prospects. To have no more than 50% of the Company’s assetsinvested in any one region.

- To invest no more than 15% of gross assets in other UK listed investment companies(including investment trusts).

Further details on investment policies and risk management are given in theDirectors’ Report on page 17.

Benchmark

The MSCI Emerging Markets Index with net dividends reinvested, in sterling terms.

Capital Structure

At 30th June 2015 the Company’s issued share capital comprised 132,363,525Ordinary shares of 25p each, including 3,915,149 shares held in Treasury. TheCompany’s Subscription shares expired on 31st July 2014 and were all converted toOrdinary shares.

Continuation Vote

At the Annual General Meeting held on 14th November 2014 an ordinary resolution ofthe shareholders approved the continuation of the Company until the Annual GeneralMeeting in November 2017.

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.

AIC

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

Website

The Company’s website, which can be found at www.jpmemergingmarkets.co.uk,includes useful information on the Company, such as daily prices, factsheets andcurrent and historic half year and annual reports.

FCA regulation of ‘non-mainstream pooled investments’

The Company currently conducts its affairs so that the shares issued by the Companycan be recommended by independent financial advisers to ordinary retail investors inaccordance with the FCA’s rules in relation to non-mainstream investment productsand 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.

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%

0

50

100

150

200

250

10 Year Performance5 Year Performance3 Year Performance

13.5 16.511.2

22.1 26.314.0

194.0 192.4

148.6

JPMorgan Emerging Markets Investment Trust plc. Annual Report & Accounts 2015 1

Financial ResultsTotal returns (includes dividends reinvested)

Long Term PerformanceFor periods ended 30th June 2015

+6.6%Return to shareholders1

(2014: –1.0%)

+3.2%Benchmark4

(2014: +1.4%)

6.0pDividend

(2014: 5.5p)

+7.4%Return on net assets2,3

(2014: –3.2%)

A glossary of terms and definitions is provided on page 70.

1Change in share price with dividends reinvested. Source: Morningstar. 2Source: J.P. Morgan.3Return on net assets is calculated using the opening diluted net asset value.4Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index with net dividends reinvested, in sterlingterms.

JPMorgan Emerging Markets – return to shareholders1

JPMorgan Emerging Markets – return on net assets2

Benchmark4

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JPMorgan Emerging Markets Investment Trust plc. Annual Report & Accounts 20152

Performance

While emerging markets continue to struggle, I am pleased to report that yourCompany produced a strong relative performance against its benchmark. In theyear to 30th June 2015, the return on net assets was +7.4%. This compares withthe benchmark index, the MSCI Emerging Markets Index (in sterling terms), whichreturned +3.2%. The return to ordinary shareholders was +6.6%, reflecting amarginal widening of the discount over the year, from 10.1% to 10.7%.

The Company’s objective is to achieve capital growth from emerging marketsworldwide and its performance is measured against the MSCI Emerging MarketsIndex, in sterling terms, on a total return basis. It is very pleasing to report thisoutperformance of the benchmark index for the latest financial year, after adisappointing performance the year before. This serves to enhance the Company’slong term performance record. Indeed, as the graph on page 1 illustrates, theCompany is ahead of the benchmark over three, five and ten years. Our Manager’sinvestment process focuses on bottom-up stock selection rather than a top-downasset allocation across markets. This has served the Company well over the long termand added value during the year.

Fees

No performance fee was paid this year. The outperformance has reduced thenegative performance fee accrual from £3.6 million to £1.6 million. In prior years thiswould have been carried forward to be offset against any future outperformancebefore any performance fee became payable. However, I stated last year that theBoard was aware of pressure in the industry to lower fees and that it wished theCompany to remain competitive. As announced in June this year the performancefee arrangement has been removed.

The management fee basis remains unchanged and accordingly, with effect from1st July 2015 the Company’s fee arrangements comprise only a management fee,which continues to be charged at the rate of 1.0% per annum on the Company’s totalassets less current liabilities on assets of up to £800 million and at a rate of 0.75% onassets above that level. The Board believes that the Company’s fee arrangements arenow the most competitive in its immediate peer group of global emerging marketsequity investment trusts, but it will continue to monitor developments in theinvestment trust and open ended funds universe.

Discount Management

We continue to monitor closely the share price and therefore the discount of ourshare price to the net asset value. The Ordinary share price rose 5.6% over the year,from 556.0p to 587.0p at the year end. The discount ranged between 7.7% and 13.0%,averaging 10.3% through the year. During the year, a total of 10,155,432 new Ordinaryshares were issued, as a result of the conversion of the remaining subscriptionshares, for a total consideration of £55.1 million. A total of 799,027 shares wererepurchased into Treasury during the year. No further shares have been repurchasedsince the year end. The discount narrowed after the overhang of subscription shareswas removed at the beginning of the year but unfortunately concerns over emergingmarkets as an asset class have meant continuing pressure on the discount.

Strategic ReportChairman’s Statement

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The Board’s policy on discount management remains unchanged – it is prepared totake action to ensure that the fully diluted discount does not exceed 10% for anextended period, but only if the discount is out of line with our peer group andmarket conditions are orderly. As we have done in the past, we are prepared to buyshares in at discounts of between 8% and 10% in order to achieve this, subject tothose caveats. Over the year under review, whilst the average discount wasmarginally above 10%, we believe our actions continued to be effective in reducingthe volatility of the discount and it was in line with our immediate peers.

Revenue and Dividends

Income after expenses rose by some 40% this year and earnings per share from5.12p to 6.68p. We propose to increase the dividend from 5.5p to 6.0p, still coveredby earnings. Our investment policy is aimed at maximising capital growth and doesnot focus on income though we have embarked on a more progressive approach tothe dividend in recent years. However, given that the Company’s objective is toachieve capital growth, it remains the case that dividends may fluctuate from yearto year according to our income position.

The Board

Percy Mistry will retire from the Board on 31st December 2015. He joined the Boardin 2009 and, on behalf of the Board, I would like to thank him for his sterlingcontribution to the Board’s deliberations, in particular his insights into events inIndia. In order to ensure appropriate succession planning and continuity, RichardLaing and Andrew Page were appointed in January 2015. Nigel Kenny has indicatedhis intention to step down from the Board at the conclusion of the 2016 AGM.

The Board currently comprises seven Directors, though that will reduce to six at theend of the half year. Directors’ fees have not increased in three years and in order toallow for future fee increases and the temporary increase in board size, we arerequesting that shareholders approve at the forthcoming AGM an increase in themaximum aggregate that can be paid each year from £175,000 to £225,000.

The Manager

The Board monitors the performance of our Manager through the ManagementEngagement Committee. Last year was something of a return to form and continuesthe strong long term performance record. Thus we remain satisfied with theManager’s overall performance, not only in terms of investment performance butalso in terms of risk management, administration, controls and compliance, wherewe continue to be well served.

AGM

This year’s AGM will be held at Holborn Bars, 138-142 Holborn, London EC1N 2NQ onTuesday, 17th November 2015 at 3.00 p.m. Austin Forey will give a presentation toshareholders, reviewing the past year and giving his view on the outlook foremerging markets for the current year. The meeting will be followed by afternoon

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tea, which will provide shareholders with the opportunity to meet the Directors andthe Investment Managers. We look forward to seeing as many shareholders aspossible at the AGM.

Outlook

The last year or two have been a troubled time for investors in emerging markets.Markets have struggled to recapture the strong relative performance of the yearsleading up to the crash of 2008 and indeed the immediate recovery from that.Unquestionably risks have increased in many countries in recent years. There is astrong case for saying however that these risks have been priced into valuations thatare now on a significant discount to developed markets. Sentiment is still fragile buttaking a long term view, the Board feels that emerging markets should outperformdeveloped markets.

Alan SaundersChairman 28th September 2015

Strategic ReportChairman’s Statement continued

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Results

Over your Company’s financial year, emerging markets as a whole appreciatedmodestly: our benchmark index ended the year 3.2% higher than at the outset, insterling terms. But this subdued result masks a very eventful year, during which yourportfolio’s performance diverged sharply from the index, in both directions. It ispleasing therefore that by the end of the year to June 2015 we ended on the positiveside, with the return from net assets at 7.4% in sterling, and the return toshareholders, which represents the change in the share price with the dividendreinvested, at 6.6%, net of all costs. As you can see from the table on the next page,the difference between the index return and your portfolio’s return derived bothfrom asset allocation (being invested more in the right countries) and stock selection(being invested in the right stocks within countries); but I would remind readers thatwe base all our investment decisions on our views about individual companies andthis is really how all successes and failures are generated.

The year that passed

There has been no shortage of things to think about in the last year. Just over a yearago, investors were wondering how long it would be before the USA raised interestrates; that it still has not happened hints at some of the uncertainties that, if anything,have grown over the last twelve months. During the summer of 2014 we saw anescalation of the conflict in Ukraine and the consequent worsening of Russia’srelations with the West; in the autumn, the oil price dropped sharply, almost halvingbetween September and the year end; other commodities followed suit. The Chinesegovernment began to ease monetary policy, catching markets by surprise; thedomestic Chinese equity market surged in response, rising 60% between March andJune this year, stoked by a stampede of individual investors and a boom in marginlending; meanwhile, the Chinese economy seemed to be slowing noticeably andexperiencing real deflationary pressures. Eventually Chinese stocks succumbed,losing all their gains in a sharp fall that lasted through June and July this year in spiteof increasingly clumsy efforts by the authorities to support the stock market. To addfurther confusion to the mix, the Chinese government appeared, for two days inAugust this year, to allow the exchange rate to float more freely. This led to a modest4% change decline in the renminbi/dollar exchange rate, but created much greateruncertainty about policy priorities.

Throughout all this, the US economy looked relatively robust and the US dollarcontinued to strengthen against most other currencies: the Japanese yen slidsignificantly, as did the euro, in part because of Greece’s continued economicproblems; significant weakness was observed also in many emerging marketcurrencies, especially those, like the Brazilian real and the Russian rouble, that have alarge dependence on commodity exports. Both the strength of the dollar and the fallin commodity prices acted as deflationary influences on the American economy,which made it easier for the Federal Reserve to keep interest rates at historic lows.

But very low interest rates produce other, maybe unintended consequences; notsurprisingly, if you make debt very cheap, people use more of it; so a policy designedto deal with a build up of debt and avoid a depression produces… more debt. Lowinterest rates may well have been appropriate for the developed world, but that does

Investment Manager’s Report

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Strategic Report continuedInvestment Manager’s Report continued


not mean that they should apply everywhere and the last year has seen marketsforce policy choices on some emerging countries that, for a while, appeared to behaving their cake and eating it by experiencing historically low interest rates andrelatively stable currencies at the same time. The extent of recent volatility, especiallyin currencies, suggests to me that markets are now attempting to correct imbalancesand mispricing regardless of governments’ policy priorities. If emerging markets donot raise interest rates, their currencies will depreciate; even if the US does not raiseinterest rates, the relative strength of its economy will make its currency appreciate,a trend that will be extended if US rates ever do rise. All of this means that we reachthe end of your Company’s financial year with plenty of uncertainty and this has ledto declines in markets in the most recent weeks. It would be a mistake, though, tobecome more pessimistic at the same time; stocks are getting cheaper andopportunities are forming.

The portfolio

Throughout the last year your Company’s portfolio has performed in ways that havebeen quite different to the overall index. After a couple of negative months at thestart of the financial year, the portfolio recovered by over 10% relative to thebenchmark between September 2014 and March 2015; it then underperformedsharply in April before recovering in May and June to end the twelve months inpositive territory. Put like that, it sounds as if performance has been extremelyvolatile, though in fact the portfolio rose less than the benchmark in April and fellless thereafter. I would make two observations about this pattern of performance.First, we are active managers intent on pursuing returns as a primary objective,rather than worrying about replicating the index; therefore divergences inperformance are inevitable and will sometimes be on the negative side. This is neverwelcome, but it is unavoidable. Second, the degree to which performance willdiverge from the index is a function of how we do as investors, but is also dependenton the way that markets behave; in a year in which markets are more volatile, ourrelative performance is likely also to vary more widely. The biggest swings inperformance this year have been driven by China; the portfolio underperformedwhen Chinese stocks rose strongly, but benefitted from their reversal; over thecourse of the year as a whole, it was our investments in India which made the largestcontribution.

Although I began this commentary with observations on currencies and othermacroeconomic factors, this is not what I concentrate on most of the time. In fact,quite the opposite is true. I take decisions about the shares of individual companies.None of them exist in an economic vacuum, so of course I must be aware of thecontext within which they carry out their business, but my ideal investment is onewhose results in the long term are idiosyncratic; that is to say, driven much more bywhat the company does rather than by the environment around it. A look at theleading positive contributors to the portfolio’s results during the past year showssome good examples of this in practice.

We have several clusters of investments in the portfolio in industries where we hopeto have found the kind of company-specific trends referred to above. One of these isIT services; the portfolio has held investments in two large established Indian firms,

Performance attribution for the yearended 30th June 2015 % %

Contributions to total returns

Benchmark 3.2

Asset allocation 2.9Stock selection 1.9Gearing/cash 0.5

Investment Managercontribution 5.3

Portfolio return 8.5

Management fee/Other expenses –1.1

Return on net assets 7.4

Return to Ordinary shareholders 6.6

Source: Xamin/Datastream/Morningstar.

All figures are on a total return basis.

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

A glossary of terms and definitions isprovided on page 70.

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Tata Consultancy and Infosys, for some time. This year we complemented these withthree new holdings in more specialist firms, EPAM Systems, Luxoft and Globant, thefirst two based in Eastern Europe and the latter in Argentina, which carry out highend, sophisticated software development for leading Western clients, including verywell-known internet giants. As the ability to gather, analyse and understand databecomes ever more crucial to businesses, many are having to re-engineer theirwhole operation to cope with the change; this is not a matter of building an internalsystem in isolation, but of connecting it at the same time to the customers’ ownexperience via digital communication, as well as developing data analytics whichallow firms to understand better their customers’ behaviour and preferences. Firmsthat can build complex systems to do this have a very large potential market toaddress.

More prosaically, we own banks in India and South Africa which, even though they dowhat all banks do, taking deposits and making loans, have been gaining market sharerapidly; in part because they started small and in part because they are disruptingestablished incumbents by using technology to achieve lower costs and passingthose savings to the customer. These investments are not new to the portfolio thisyear, but like the IT developers mentioned above, these banks — Capitec andIndusind — were among the leading contributors to portfolio performance during thelast year.

And finally, we have seen several examples of firms whose superior skill in executionappears to be paying off even more as conditions become tougher. There is nothingto link Lojas Renner, a Brazilian fashion retailer, with AIA, a pan-Asian insurancecompany, except for the fact that in challenging markets, they are extending theirlead over competitors, growing market share at a time when others are struggling;Renner has seen its sales expand when others’ are contracting, while AIA has beenincreasing its market share strongly in China, a market that still represents a very bigopportunity for a business that already has a large regional presence across Asia.These are the kind of outcomes that we like to see in the portfolio’s investments.

The year ahead

It is never dull in emerging markets; everyday, there is something that one couldreact to as an investor. In spite of this, I try not to make too many decisions: I do notstart the day expecting to change the portfolio, but try instead to concentrate on thedecisions which the market forces on my attention by moving share prices in anextreme way. I suspect that over the next year, there will be more of these.

Much will depend on what happens in China, where the authorities are probablyfighting a secular transition to lower economic growth as if it were a cyclicalslowdown. Real, far-reaching reforms will have to involve a redrawing of the state’srole in the commercial sector and an acceptance of the primacy of market forces indetermining outcomes, rather than government policy. That remains a very largestep and not one that can be achieved without some disruption; perhaps because ofthat, the government seems to be moving tentatively and sometimes in contradictoryways, hoping perhaps that the cycle will recover and the difficult decisions will not benecessary; I suspect they will be disappointed. If I am right, however, China couldbecome a very interesting investment destination indeed and a place where we

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could have much more money invested on your behalf than we have today. This ismade all the more likely by the gradual opening of the ‘A’ share market, hithertoaccessible only to domestic investors, to foreign capital. The kinds of companies thatwe like to own – private enterprises motivated by the creation of value forshareholders – should be easier to find there than in the ‘H’ share market ofcompanies listed in Hong Kong, which is dominated by very large firms in industriesessentially owned by the state, like banking, energy and telecommunications. So weare devoting increased resources to researching Chinese companies in a variety ofindustries, from healthcare to manufacturing, hopeful that if the current sell-offcontinues, good Chinese companies will be available at bargain prices.

In general, prospects for emerging markets look quite challenging at the moment,though history teaches us that when pessimism abounds and valuations have fallen,one should in fact become more positive rather than the reverse. We know whatkinds of businesses we are looking for and we also know that share prices do notdecline without a reason; so the essential task is to identify those companies whoselong term opportunity and competitiveness is not really affected at all by short termdevelopments, even if the market thinks the opposite. Many of these are in theportfolio already and if their share prices decline, you should expect to see usincrease our investment in them; confidence and conviction should come first in thethings you know the best.

I might close this commentary by repeating something that remains right at thecentre of our approach to investment: more than anything, it is about businesses andtheir managers and our readiness to let companies generate returns for us throughtheir activities over the long term. This can lead us to destinations we had notnecessarily anticipated: I did not start this past year with any view about Belarus, orat least, certainly not with any view that would have enticed me to invest there; and Idid not form any such view as the year progressed either. That is even truer of theUkraine, a country that has been in the news for all the wrong reasons. Yet during theyear, I invested almost fifteen million pounds in two companies whose principaloperations are based in these two countries, so far with good results. That amount ismore than a tenth of all the purchases made for your portfolio during the year. Ofcourse, it helps that both these companies are export businesses, not tied to theirdomestic economies; but only by looking at the companies, their capabilities andtheir prospects, could I have made these decisions. With the support of a large teamof analysts and portfolio managers, I hope to find more of these kinds ofopportunities for your portfolio in the year ahead.

Austin ForeyInvestment Manager 28th September 2015

Strategic Report continuedInvestment Manager’s Report continued

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2015 2014

Total returns for the year ended 30th JuneReturn to shareholders1 +6.6% –1.0%Return on net assets2 +7.4% –3.2%Benchmark3 +3.2% +1.4%

% change

Net asset value, share price and discount at 30th JuneShareholders’ funds (£’000) 852,689 750,593 13.6Net asset value per Ordinary share 663.8p 630.3p 5.3Ordinary share price 587.0p 556.0p 5.6Ordinary share price discount to net asset value per Ordinary share4 10.7% 10.1%Ordinary shares in issue (excluding shares held in Treasury) 128,448,376 119,091,971

Revenue for the year ended 30th JuneGross revenue (£’000) 19,805 16,071 23.2Net revenue attributable to Ordinary shareholders (£’000) 8,527 6,105 39.7Revenue return per Ordinary share 6.68p 5.12p 30.5Dividend per Ordinary share 6.00p 5.50p 9.1

Gearing/(net cash) at 30th June5 (3.8)% (4.6)%

Ongoing charges6 1.14% 1.17%

Ongoing charges including performance fee payable 1.14% 1.17%


1Change in share price with dividends reinvested. Source: Morningstar.2Source: J.P. Morgan.3Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index with net dividends reinvested, in sterling terms.4Capital only. Source: Bloomberg.5Gearing represents the excess amount above shareholders’ funds of total assets (including net current assets/liabilities) less cash/cash equivalents expressed as a percentage ofshareholders’ funds. Total assets include total investments and net current assets/liabilities less cash/cash equivalents and excluding bank loans of less than one year. If the amountcalculated is negative, this is shown as a ‘net cash’ position. 6Ongoing charges represents the management fee and all other operating expenses, excluding interest and performance fee payable, expressed as a percentage of the average dailynet assets during the year and are calculated in accordance with guidance issued by the Association of Investment Companies.

Summary of Results

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90

100

110

120

130

20152014201320122011201020092008200720062005

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

Source: Morningstar.

JPMorgan Emerging Markets – share price total return.

JPMorgan Emerging Markets – net asset value total return.1

Benchmark.

100

150

200

250

300

350

20152014201320122011201020092008200720062005

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

Source: Morningstar.

JPMorgan Emerging Markets – share price total return.

JPMorgan Emerging Markets – net asset value total return.1

Benchmark.

Strategic Report continuedPerformance

1Based on cum income NAV; prior to 30th June 2008 capital only NAV.

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

Shareholders’ funds (£m) 222.2 360.9 508.0 518.4 448.2 631.9 785.1 691.9 785.8 750.6 852.7

Net asset value per Ordinaryshare (p)2 246.3 327.2 460.5 470.0 406.3 544.9 655.7 584.1 649.3 623.4 663.8

Ordinary share price (p) 216.0 299.0 416.5 433.5 374.0 500.0 597.5 531.5 567.0 556.0 587.0

Discount (%) 12.3 8.6 9.6 7.8 7.9 8.2 8.8 9.1 11.8 10.1 10.7

Gearing/(net cash) (%) (5.0) (0.2) 0.8 (4.7) (0.8) (1.7) (5.2) (3.7) (4.2) (4.6) (3.8)

Year ended 30th June

Gross revenue attributable to shareholders (£’000) 5,435 8,488 8,055 9,456 11,344 12,335 15,912 16,480 18,487 16,071 19,805

Revenue return per Ordinary share (p)3 2.87 4.30 1.96 2.59 4.43 4.47 5.26 6.22 6.73 5.12 6.68

Dividend per Ordinary share (p) 2.45 3.65 2.00 2.00 3.20 3.20 3.50 4.50 5.50 5.50 6.00

Ongoing charges (%)4 1.31 1.28 1.24 1.25 1.05 1.17 1.15 1.18 1.14 1.17 1.14

Ongoing charges including performance fee payable(%) 2.03 2.08 1.99 1.25 1.05 1.29 1.42 1.18 1.77 1.17 1.14

Rebased to 100 at 30th June 2005

Ordinary share price total return5 100.0 140.7 196.9 205.8 178.9 240.8 289.3 259.1 278.6 275.8 294.0

Net asset value total return6 100.0 136.2 192.5 197.3 172.7 231.6 280.1 251.0 281.1 272.2 292.4

Benchmark7 100.0 131.3 175.5 185.1 160.9 218.1 259.8 223.5 237.7 241.1 248.6


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.2The net asset value per Ordinary share calculated on 30th June 2010 to 30th June 2014 assumes that all outstanding Subscription shares were converted into Ordinary shares at theyear end. There were no dilutive potential Ordinary shares in issue at 30th June 2009 and prior years or as at 30th June 2015.3The returns per Ordinary share for the years ended 30th June 2010 to 30th June 2014 have been adjusted for the effect of the dilutive Subscription shares. There were no dilutivepotential Ordinary shares in issue at 30th June 2009 and prior years or as at 30th June 2015.4Ongoing charges represents the management fee and all other operating expenses, excluding interest and performance fee payable, expressed as a percentage of the average dailynet assets during the year (2009 and prior years: the average of the opening and closing net assets) and are calculated in accordance with guidance issued by the Association ofInvestment Companies.5Source: Morningstar.6Source: J.P.Morgan. Based on cum income NAV; prior to 30th June 2008 capital only NAV.7Source: MSCI. The Company’s benchmark is the MSCI Emerging Markets Index with net dividends reinvested, in sterling terms.

Ten Year Financial Record

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2015 2014 Valuation ValuationCompany Country £’000 %1 £’000 %1

Housing Development Finance India 42,233 4.9 29,917 4.0Housing Development Finance provides housing finance in India. The companyprovides long-term housing loans to low and middle income individuals andcorporations. The company also provides construction finance to real estatedevelopers, and lease financing facilities to companies and developmentauthorities for infrastructure and other assets.

Taiwan Semiconductor Manufacturing Taiwan 32,813 3.8 25,955 3.5Taiwan Semiconductor Manufacturing Company Ltd. manufactures integratedcircuits based on its proprietary designs. The company offers a comprehensiveset of integrated circuit fabrication processes to manufacture CMOS logic,mixed-mode, volatile and non-volatile memory and BiCMOS chips. TaiwanSemiconductor is an affiliate of Philips Electronics N.V.

AIA Hong Kong 28,626 3.4 18,554 2.5AIA Group Ltd. offers insurance and financial services. The company writes lifeinsurance for individuals and businesses, accident and health insurance,retirement planning, and wealth management services.

Tata Consultancy Services India 27,038 3.2 22,712 3.0Tata Consultancy Services, a division of Tata Sons Limited, is a global IT servicesorganisation that provides a comprehensive range of IT services to its clients indiverse industries. The company, caters to finance and banking, insurance,telecommunication, transportation, retail, manufacturing, pharmaceutical, andutility industries.

Indusind Bank2 India 25,269 3.0 16,476 2.2Indusind Bank is a national bank. The bank provides a range of banking andfinancial services including wholesale banking, credit monitoring, riskmanagement, tele-banking, investment banking and commercial lending.Indusind Bank operates branches throughout India as well as an office in Dubaiand London.

EPAM Systems3 Belarus 20,146 2.4 — —EPAM Systems provides software development, outsourcing services, e-business,enterprise relationship management, and content management solutions.

Magnit Russia 19,103 2.2 20,601 2.7Magnit retails food. The company operates a chain of discount supermarkets.

Tencent Holdings2 China 18,115 2.1 10,632 1.4Tencent Holdings, an investment holding company, provides internet and mobilevalue-added services (VAS), online advertising services, and e-commercetransactions services to users in the People’s Republic of China, the United States,Europe, and internationally.

WEG Brazil 17,876 2.1 18,590 2.5WEG S.A. manufactures and distributes industrial machinery. The company’sproducts include electric motors, power and distribution transformers, largemotors, DC motors, generators, drives, programmable controllers, electric panelsand electrical components. WEG also offers technical assistance and repairservices for its products.

Cielo Brazil 17,848 2.1 18,284 2.4Cielo SA is an electronic payment solutions company based in Brazil and LatinAmerica. The company is responsible for accreditation of commercialestablishments, capture, transmission, processing and settlement of transactionsmade with credit cards and debit cards as well as network management services.

Total 249,067 29.2

1Based on total assets less current liabilities of £852.7m (2014: £750.6m).2Not included in the ten largest equity investments at 30th June 2014.3Not held in the portfolio at 30th June 2014.

At 30th June 2014, the value of the ten largest equity investments amounted to £213.2m representing 28.4% of total assets less current liabilities.

Strategic Report continuedTen Largest Equity Investmentsat 30th June 2015

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30th June 2015 30th June 2014 Portfolio Benchmark Portfolio BenchmarkGeographic %1 % %1 %

South Asia 26.9 14.5 23.1 14.1East Asia 25.2 54.1 26.4 48.2Europe/Middle East/Africa 23.6 17.2 20.9 18.7Latin America 20.8 14.2 24.8 19.0

Total equities 96.5 100.0 95.2 100.0

Liquidity fund 3.5 — 4.2 —Net current assets — — 0.6 —

Total 100.0 100.0 100.0 100.0 1Based on total assets less current liabilities of £852.7m (2014: £750.6m).

30th June 2015 30th June 2014 Portfolio Benchmark Portfolio BenchmarkSector %1 % %1 %

Financials 29.4 29.7 30.2 26.9Information Technology 23.0 17.9 17.0 17.3Consumer Staples 17.6 8.1 18.8 8.2Industrials 9.0 6.9 10.7 6.5Consumer Discretionary 7.3 9.0 8.9 9.1Materials 3.3 6.9 4.4 8.8Telecommunication Services 2.4 7.3 2.4 7.0Health Care 2.4 2.5 0.6 1.8Energy 2.1 8.4 2.2 10.8Utilities — 3.3 — 3.6

Total equities 96.5 100.0 95.2 100.0

Liquidity fund 3.5 — 4.2 —Net current assets — — 0.6 —

Total 100.0 100.0 100.0 100.0 1Based on total assets less current liabilities of £852.7m (2014: £750.6m).

Portfolio Analyses

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Value at Value at 30th June 2014 Changes 30th June 2015 % of Purchases Sales in value % of £’000 portfolio £’000 £’000 £’000 £’000 portfolio

India 133,377 17.9 24,694 (8,764) 38,431 187,738 22.0

China and Hong Kong 105,115 14.1 20,832 (6,950) 11,026 130,023 15.3

South Africa 81,446 10.9 28,240 (22,895) 24,646 111,437 13.1

Brazil 119,168 16.0 12,628 (4,105) (18,114) 109,577 12.9

Taiwan 55,133 7.4 7,396 — 273 62,802 7.4

Mexico 52,096 7.0 4,073 (9,851) (1,683) 44,635 5.2

Indonesia 35,343 4.7 3,576 (1,896) 715 37,738 4.4

Russia 29,009 3.9 6,380 (723) (7,017) 27,649 3.2

Belarus — — 10,805 — 9,341 20,146 2.4

United Kingdom 22,351 3.0 1,974 (3,198) (5,196) 15,931 1.9

Turkey 19,279 2.6 1,990 (4,671) (820) 15,778 1.8

South Korea 30,551 4.1 3,096 (12,997) (8,127) 12,523 1.5

Thailand 7,204 1.0 689 — 1,061 8,954 1.0

Peru 7,963 1.0 745 — (232) 8,476 1.0

Argentina — — 5,167 — 3,202 8,369 1.0

Chile 6,810 0.9 638 — (1,246) 6,202 0.7

Ukraine — — 3,989 — 2,029 6,018 0.7

Poland 5,090 0.7 452 — (995) 4,547 0.5

Philippines — — 3,967 — (111) 3,856 0.5

Pakistan 70 — — — 26 96 —

Malaysia 4,273 0.6 436 (6,345) 1,636 — —

Total equity investments 714,278 95.8 141,767 (82,395) 48,845 822,495 96.5

Liquidity fund 31,596 4.2 82,904 (86,057) 1,571 30,014 3.5

Total investments 745,874 100.0 224,671 (168,452) 50,416 852,509 100.0

Strategic Report continuedInvestment Activityduring the year ended 30th June 2015

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ValuationCompany £’000

IndiaHousing Development Finance 42,233Tata Consultancy Services 27,038Indusind Bank 25,269Infosys Technologies1 16,586ITC 14,944United Breweries 14,470Lupin 12,355Supreme Industries 9,871Mahindra & Mahindra Financial Service 9,032Infosys Technologies 6,492ACC 5,575Ambuja Cements 3,873

187,738

China and Hong KongAIA 28,626Tencent Holdings 18,115Baidu1 16,340Jardine Matheson 16,046Cafe De Coral 12,238Tsingtao Brewery 10,346Sun Art Retail Group 9,143Tingyi 5,588Convenience Retail Asia 4,14151Job1 3,953Wumart Stores 2,748H.K. Aircraft Engineering 2,739

130,023

South AfricaDiscovery 14,558Clicks 13,587RMB 12,884Bidvest Group 12,196MTN 11,733Capitec Bank 10,981Mr Price 7,998Aspen Pharmacare 7,793Shoprite Holdings 7,042Sanlam 7,027Tiger Brands 5,638

111,437


BrazilWEG 17,876Cielo 17,848Ultrapar Participações 17,714Ambev1 13,764Itau Unibanco 11,639Lojas Renner 11,411Companhia de Concessões Rodoviárias 6,288Vale1 5,614TOTVS 5,265Marcopolo 2,158

109,577

TaiwanTaiwan Semiconductor Manufacturing1 32,813Delta Electronics 13,207President Chain Store 10,647Chailease 6,135

62,802

MexicoGrupo Financiero Banorte 11,068Grupo Aeroportuario del Sureste1 10,613Wal-Mart de Mexico 10,251Gentera 9,855Mexichem 2,848

44,635

IndonesiaBank Rakyat Indonesia 12,653Astra International 9,749Unilever Indonesia 8,515Bank Central Asia 6,821

37,738

RussiaMagnit 19,103Sberbank 4,676Mail.Ru Group1 3,870

27,649

List of Investmentsat 30th June 2015

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BelarusEPAM Systems 20,146

20,146

United KingdomInternational Personal Finance 15,931

15,931

TurkeyKOC 9,036Turkiye Garanti Bankasi 6,742

15,778

South KoreaHyundai Motor 12,523

12,523

ThailandAdvanced Info Service 8,954

8,954

PeruCredicorp 8,476

8,476

ArgentinaGlobant 8,369

8,369


Chile Banco Santander-Chile1 6,202

6,202

Ukraine Luxoft 6,018

6,018

Poland Eurocash 4,547

4,547

Philippines Jollibee Foods 3,856

3,856

Pakistan BRR Guardian Modaraba 96

96

Total equity investments 822,495

Liquidity fundJPMorgan US Dollar Liquidity Fund2 30,014

Total investments 852,509

1Includes ADRs/GDRs/ADSs/BDRs.2Managed by JPMorgan Asset Management.

Strategic Report continuedList of Investments continued

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The aim of the Strategic Report is to provide shareholders withthe ability to assess how the Company has performed. To assistshareholders with this assessment, the Strategic Report setsout the structure and objective of the Company, its investmentpolicies and risk management, investment limits andrestrictions, performance and key performance indicators,share capital, principal risks and how the Company seeks tomanage those risks, the Company’s environmental, social andethical policy and finally its future developments.

Structure and Objective of the CompanyJPMorgan Emerging Markets Investment Trust plc is aninvestment trust company that has a premium listing on theLondon Stock Exchange. Its objective is to achieve capitalgrowth from emerging markets worldwide. In seeking toachieve this objective the Company employs JPMF to activelymanage the Company’s assets. The Board has determined aninvestment policy and related guidelines and limits, asdescribed below. It aims to outperform the MSCI EmergingMarkets Index.

The Company is subject to UK and European legislation andregulations including UK company law, Financial ReportingStandards, the UKLA Listing, Prospectus, Disclosure andTransparency Rules, taxation law and the Company’s ownArticles of Association. The Company is an investmentcompany within the meaning of Section 833 of the CompaniesAct 2006 and has been approved by HM Revenue & Customsas an investment trust (for the purposes of Sections 1158 and1159 of the Corporation Tax Act 2010) for the year ended30th June 2013 and future years. The Directors have no reasonto believe that approval will not continue to be obtained. TheCompany is not a close company for taxation purposes.

Investment Policies and Risk ManagementIn order to achieve the investment objective and to seek tomanage risk, the Company invests in a well diversified spreadof countries, industries and companies. The Company investsprimarily in quoted securities in emerging stock markets but,where necessary or appropriate in the absence of suitablequoted securities, it may invest in unquoted securities. It mayinvest in other collective investment schemes, but usually onlywhere legal restrictions prevent direct investment byforeigners or prudent diversification can best be achieved inthis way. The Company conducts its affairs so as to achieve andmaintain approved investment trust status in the UK.

The Company is managed to produce capital growth and not toproduce any particular level of dividend and therefore thelevel of dividend will vary.

The Board’s policy is to employ gearing when the Managerbelieves it is appropriate to do so. The Board regularly reviewsthis policy. Should the Manager decide to employ gearing, theCompany will remain invested in the range of 90-120% undernormal market conditions.

The Board has set no minimum or maximum limits on thenumber of investments in the portfolio but it is a relativelyconcentrated portfolio consisting typically of between 60 and90 investments. The assets are managed by an investmentmanager based in London who is supported by a 50 strongemerging markets equity team.

It should be noted that historically, emerging marketcompanies (and investments in their shares) have showngreater volatility and may be subject to certain political andcorporate governance risks which are not typically associatedwith more developed markets and economies.

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

• The Company will not invest more than 10% of its totalassets in any one individual stock (excluding investmenttrusts) at the time of acquisition.

• No more than 50% of the Company’s assets may beinvested in any one region.

• No more than an aggregate of 25% of the Company’sassets (before deducting borrowings) may be investedin: (i) securities not listed on any recognised investmentexchange; and (ii) holdings in which the Company’s interestamounts to 20% or more of the aggregate of the equitycapital (including any capital having an element of equity)of any one listed company (other than an investment trustwhich has been approved by HM Revenue & Customs orwhich would qualify for such approval but for the fact thatit is not listed).

• In accordance with the Listing Rules of the UK ListingAuthority, the Company will not invest more than 15% ofits gross assets in other UK listed investment companiesand will not invest more than 10% of its gross assets incompanies that themselves may invest more than 15%of gross assets in UK listed investment companies.

• The Company does not normally enter into derivativetransactions, other than short term forward currencycontracts to manage working capital requirements and todo so requires prior Board approval.

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

Business Review

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

PerformanceIn the year to 30th June 2015, the Company produced a totalreturn to shareholders of 6.6% and a total return on net assetsof 7.4%. This compares with the return on the Company’sbenchmark index of 3.2%. At 30th June 2015, the value of theCompany’s investment portfolio (including liquidity fundholdings) was £852.5 million. The Investment Manager’sReport on pages 5 to 8 includes a review of developmentsduring the year as well as information on investment activitywithin the Company’s portfolio.

Total Return, Revenue and Dividends Gross total return for the year amounted to £70.1 million (2014:£17.2 million loss) and net total return after deductingmanagement fee, performance fee, other administrativeexpenses, finance costs and taxation amounted to£58.8 million (2014: £27.2 million loss). Distributable income forthe year amounted to £8.5 million (2014: £6.1 million).

The Directors recommend a final dividend of 6.0p per sharepayable on 24th November 2015 to holders on the register atthe close of business on 23rd October 2015. This distributionwill amount to £7.7 million. The revenue reserve after paymentof the final dividend will amount to £9.3 million (2014:£8.9 million).

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

• Performance against the benchmark index This is the most important KPI by which performance is

judged. Information on the Company’s performance isgiven in the Chairman’s Statement and the InvestmentManager’s Report. (Also, please refer to the graphs onpage 1).

• Performance against the Company’s peers The principal objective is to achieve capital growth relative

to the benchmark. However, the Board also monitors theperformance relative to a broad range of competitor funds.

• Performance attribution The purpose of performance attribution analysis is to

assess how the Company achieved its performance relativeto its benchmark index, i.e. to understand the impact on

the Company’s relative performance of the variouscomponents such as asset allocation and stock selection.Details of the attribution analysis for the year ended30th June 2015 are given in the Investment Manager’sReport on page 6.

• Share price discount to net asset value (‘NAV’) per share The Board has a share repurchase policy which seeks to

address imbalances in supply of and demand for theCompany’s shares within the market. This helps to reducethe volatility and absolute level of the discount to NAV pershare at which the Company’s shares trade in relation to itspeers in the sector. In the year to 30th June 2015, theCompany’s shares traded at a discount to the capital onlynet asset value per share between 8.6% and 11.9% basedon month end data.

Discount Performance

Source: Datastream (month end data).

JPMorgan Emerging Markets – share price discount to capital only net assetvalue per share.

• Ongoing charges The ongoing charges represent the Company’s management

fee and all other operating expenses excluding financecosts and performance fee payable, expressed as apercentage of the average of the daily net assets during theyear. The ongoing charges for the year ended 30th June2015 were 1.14% (2014: 1.17%). The Board reviews each yearan analysis which shows a comparison of the Company’songoing charges and its main expenses with those of itspeers.

Share CapitalThe Directors have, on behalf of the Company, the authorityboth to repurchase shares in the market for cancellation and toissue new shares for cash on behalf of the Company.

A total of 799,027 shares were repurchased into Treasuryduring the year under review, for a total consideration of

–14

–12

–10

–8

–6

–4

–2

0

20152014201320122011201020092008200720062005

Strategic Report continuedBusiness Review continued

16519 pp01_20 28/09/2015 16:58 Page 18


£4,691,000. The Company did not allot any new shares for cashother than on the conversion of Subscription shares. Since theyear end no shares have been repurchased into Treasury.

During the year the Company issued 10,155,432 Ordinaryshares for a total consideration of £55,144,000 on theconversion of Subscription shares.

Resolutions to renew the authorities to issue new shares and torepurchase shares for cancellation will be put to shareholdersfor approval at the Annual General Meeting.

The full text of these Resolutions is set out in the Notice ofMeeting on pages 67 and 68.

Principal RisksWith the assistance of the Manager, the Board has drawn upa risk matrix, which identifies the key risks to the Company.These key risks fall broadly under the following categories:

• Investment Underperformance:An inappropriate investmentstrategy, for example asset allocation, the level of gearing orthe degree of portfolio risk, could lead to underperformanceagainst the Company’s benchmark index and peercompanies, resulting in the Company’s shares trading on awider discount. The Board manages these risks bydiversification of investments and through a set ofinvestment restrictions and guidelines which aremonitored and reported on by the Manager. The Managerprovides the Directors with timely and accuratemanagement information, including performance data andattribution analyses, revenue estimates, liquidity reportsand shareholder analyses. The Board monitors theimplementation and results of the investment process withthe Investment Manager, who attends all Board meetings,and reviews data which show statistical measures of theCompany’s risk profile.

• Political, Economic and Governance: Administrative risks, suchas the imposition of restrictions on the free movement ofcapital. These risks are discussed by the Board on a regularbasis.

• Loss of Investment Team or Investment Manager: A suddendeparture of the investment manager or several membersof the investment management team could result in ashort-term deterioration in investment performance. TheManager takes steps to reduce the likelihood of such anevent by ensuring appropriate succession planning andthe adoption of a team based approach, as well as specialefforts to retain key personnel.

• Share Price Discount: A disproportionate widening of theshare price discount relative to the Company’s peers couldresult in loss of value for shareholders. The Board regularlydiscusses discount policy and has set parameters for theManager and the Company’s broker to follow.

• Change of Corporate Control of the Manager: The Board holdsregular meetings with senior representatives of JPMF inorder to obtain assurance that the Manager continues todemonstrate a high degree of commitment to itsinvestment trusts business through the provisionof significant resources.

• Legal and Regulatory: In order to qualify as an investmenttrust, the Company must comply with Section 1158. Detailsof the Company’s approval are given under ‘Structure andObjective of the Company’ on page 17. Should the Companybreach Section 1158, it might lose investment trust statusand, as a consequence, gains within the Company’sportfolio would be subject to Capital Gains Tax. The Section1158 qualification criteria are continually monitored by theManager and the results reported to the Board eachmonth. The Company must also comply with the provisionsof the Companies Act 2006 and, since its shares are listedon the London Stock Exchange, the UKLA Listing Rules andDisclosure and Transparency Rules (‘DTRs’). A breach of theCompanies Act could result in the Company and/or theDirectors being fined or the subject of criminalproceedings. Breach of the UKLA Listing Rules or DTRscould result in the Company’s shares being suspendedfrom listing which in turn would breach Section 1158. TheBoard relies on the services of its Company Secretary andits professional advisers to ensure compliance with theCompanies Act and the UKLA Listing Rules and DTRs.

• Corporate Governance and Shareholder Relations: Details ofthe Company’s compliance with Corporate Governancebest practice, including information on relations withshareholders, are set out in the Corporate Governancereport on pages 27 to 32.

• Operational: Disruption to, or failure of, the Manager’saccounting, dealing or payments systems or thecustodian’s records could prevent accurate reporting andmonitoring of the Company’s financial position. Details ofhow the Board monitors the services provided by theManager and its associates and the key elements designedto provide effective internal control are included within theRisk Management and Internal Control section of theCorporate Governance report on page 31.

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• Financial: The financial risks faced by the Company includemarket price risk, interest rate risk and credit risk. Furtherdetails are disclosed in note 21 on pages 60 to 65.

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. At30th June 2015, there were six male Directors and one femaleDirector on the Board.

Employees, Social, Community and Human Rights IssuesThe Company has a management contract with JPMF. It has noemployees and all of its Directors are non-executive. The dayto day activities are carried out by third parties. There aretherefore no disclosures to be made in respect of employees.The Board notes the JPMorgan Asset Management (‘JPMAM’)policy statements in respect of Social, Community andEnvironmental and Human Rights issues, as highlighted initalics:

Social, Environmental and Human RightsJPMAM believes that companies should act in a socially responsiblemanner. Although our priority at all times is the best economic interestsof our clients, we recognise that, increasingly, non-financial issues suchas social and environmental factors have the potential to impact theshare price, as well as the reputation of companies. Specialists withinJPMAM’s environmental, social and governance (‘ESG’) team are taskedwith assessing how companies deal with and report on social andenvironmental risks and issues specific to their industry.

JPMAM is also a signatory to the United Nations Principles of ResponsibleInvestment, which commits participants to six principles, with the aim ofincorporating ESG criteria into their processes when making stockselection decisions and promoting ESG disclosure. Our detailed approachto how we implement the principles is available on request.

Greenhouse Gas EmissionsThe Company is managed by JPMF, 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 Companyhas no premises, consumes no electricity, gas or diesel fuel andconsequently does not have a measurable carbon footprint.JPMAM is also a signatory to Carbon Disclosure Project. JPMorgan Chaseis a signatory to the Equator Principles on managing social andenvironmental risk in project finance.

Future Developments The future development of the Company is much dependentupon the success of the Company’s investment strategy in thelight of economic and equity market developments in thecountries in which it invests. The Investment Managerdiscusses the outlook in his report on pages 7 and 8.

By order of the Board Jonathan Latter, for and on behalf of JPMorgan Funds Limited, Company Secretary 28th September 2015

Strategic Report continuedBusiness Review continued

16519 pp01_20 28/09/2015 16:58 Page 20


Alan Saunders §†‡

(Chairman of the Board and of the Nomination Committee and Remuneration Committee)

A Director since May 2002.Last reappointed to the Board: 2013.

Remuneration: £35,000.

An Independent Investment Consultant with Allenbridge Epic Investment SolutionsLimited. Mr Saunders was formerly Chief Economist at Royal Dutch Shell and also heldsenior investment roles in both Lazards and the Private Banking Division of UBSA.G. Heis currently independent investment adviser to Dorset County Council Pension Scheme.He sits on the Insurance Investment Strategy Committee of Lloyds Bank Insurance andon the With Profits Committee of Scottish Widows and Clerical & Medical insurancecompanies. He also sits on the Performance Oversight Committee of CBRE GlobalInvestors, the UK property fund managers.

Connections with Manager: None.

Shared directorships with other Directors: None.

Shareholding in Company: 6,000 Ordinary shares.

Anatole Kaletsky *§†‡

A Director since September 2003.

Last reappointed to the Board: 2013.


Chief Economist of Gavekal Dragonomics, a Hong Kong based company whichprovides economic analysis and asset management services to financial institutionsaround the world. Formerly Editor at Large at The Times of London. Economiccommentator for Reuters and the New York Times.

Connections with Manager: Mr. Kaletsky is a founding partner and Chief Economist ofGavekal Dragonomics, whose clients include JPMorgan.



Nigel Kenny *§†‡

(Chairman of the Audit Committee, Senior Independent Director)




A founding partner of emerging markets private equity company Sabre Capital. He iscurrently an independent non-executive director of UC Rusal Ltd, the world’s largestproducer of aluminium and alumina products, and a non-executive director of FirstCity Monument Bank Plc, a bank listed on the Nigerian stock exchange. He waspreviously an independent non-executive director of PartyGaming Plc. Between 1992and 2002 Mr Kenny held a number of senior positions at Standard Chartered Bank,including Group Head of Operations, Corporate and Institutional Banking andFinance Director. Prior to that he spent 14 years with Chase Manhattan Bank. He is achartered accountant.




GovernanceBoard of Directors

16519 pp21_36 28/09/2015 16:57 Page 21


Governance continuedBoard of Directors continued

Percy Mistry *§†‡

A Director since January 2009.



Chairman of The Oxford International Group which comprises companies engaged ininvestment banking, asset management, private equity investment and strategicfinancial and economic services to governments and multinational companies inemerging market countries. He was previously CEO of Synergy Power Corporation, adirector of ICICI and non-executive chairman of D.C. Gardner. He was also an advisorymember of the Forum on Debt and Development and has held several seniorpositions with the World Bank.




Sarah Arkle *§†‡




Non-executive director of Foreign & Colonial Investment Trust plc, Henderson Groupplc and a member of the Newnham College Cambridge Investment Committee.She was previously an advisor to the South Yorkshire Pension Fund and was ChiefInvestment Officer of Threadneedle Asset Management where she held a number ofother senior positions.




Richard Laing *§†‡


Last reappointed to the Board: n/a.


Non-executive director of Perpetual Income and Growth Investment Trust plc, MiroForestry and Leeds Castle Foundation. He is also a trustee of The OverseasDevelopment Institute and Plan UK. Previously finance director of De La Rue plc andfrom 2002 until 2012 worked for CDC Group plc where he was finance director andlatterly chief executive officer. Formerly a non-executive director of London MetalExchange, Aureos Capital, Madagascar Oil Limited and Emerging Markets PrivateEquity Association, where he was chairman of the Advisory Council. He is a qualifiedaccountant.




16519 pp21_36 28/09/2015 16:57 Page 22


Andrew Page*§†‡


Last reappointed to the Board: n/a.


Chairman of Northgate plc, senior independent director of Carpetright plc and adirector of The Schroder UK Mid Cap Fund plc and RPS Group plc. He was seniorindependent director at Arena Leisure plc from 2008 until 2012. He retired as chiefexecutive of The Restaurant Group plc (‘TRG’) in September 2014 after thirteen yearswith TRG. Prior to joining TRG, he held a number of senior positions in the leisure andhospitality industry including senior vice president with InterContinental Hotels.Andrew trained and qualified as a chartered accountant with KPMG following whichhe was a corporate financier with Kleinwort Benson.




* Member of the Audit Committee§ Member of the Nomination Committee† Member of the Remuneration Committee‡ Considered by the Board to be independent

16519 pp21_36 28/09/2015 16:57 Page 23


Governance continuedDirectors’ Report

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

Management of the Company

The Manager and Company Secretary is JPMorgan FundsLimited (‘JPMF’), a company authorised and regulated by theFCA. Prior to 1st July 2014, these roles were undertaken byJPMorgan Asset Management (UK) Limited (‘JPMAM’). JPMF isan affiliate of JPMAM and was appointed as the Company’sAlternative Investment Fund Manager (‘AIFM’) from 1st July2014. JPMF is a wholly-owned subsidiary of JPMorgan ChaseBank which, through other subsidiaries, also providesmarketing, banking, dealing and custodian services to theCompany.

The Manager is employed under a contract which can beterminated on one year’s notice, without penalty, unless noticeis given as a result of poor investment performance, in whichcase the contract can be terminated on six months’ notice,without penalty. If the Company wishes to terminate thecontract on shorter notice, the balance of remuneration ispayable by way of compensation.

The Board conducts a formal evaluation of the Manager onan annual basis. The evaluation includes consideration of theinvestment strategy and the process of the Manager,performance against the benchmark and a relevant peer groupover the long term and the support the Company receives fromthe Manager. As a result of the evaluation process, the Boardconfirms that it is satisfied that the continuing appointment ofthe Manager is in the interest of shareholders as a whole.

The Alternative Investment Fund Managers Directive (‘AIFMD’)

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

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

JPMF is required to ensure that a depositary is appointed tothe Company. The Company therefore has appointed BNY

Mellon Trust and Depositary (UK) Limited (‘BNY’) as itsdepositary. BNY has delegated its safekeeping function to thecustodian, JPMorgan Chase Bank, N.A. BNY remainsresponsible for the oversight of the custody of the Company’sassets and for monitoring its cash flows.

The AIFMD requires certain information to be made availableto investors in AIFs before they invest and requires thatmaterial changes to this information be disclosed in the annualreport of each AIF. An Investor Disclosure Document, whichsets out information on the Company’s investment strategyand policies, leverage, risk, liquidity, administration,management, fees, conflicts of interest and other shareholderinformation is available on the Company’s website atwww.jpmemergingmarkets.co.uk There have been no materialchanges (other than those reflected in these financialstatements) to this information requiring disclosure. Anyinformation requiring immediate disclosure pursuant to theAIFMD will be disclosed to the London Stock Exchange througha primary information provider.

As an authorised AIFM, JPMF will make the requisitedisclosures on remuneration levels and polices to the FCA atthe appropriate time.

Management and Performance Fees

The management fee is charged at the rate of 1.0% per annumof the Company’s total assets less current liabilities up to£800 million and at the rate of 0.75% thereafter. The fee iscalculated and paid monthly in arrears. Investments on whichJPMAM earns a fee are excluded from the calculation andtherefore attract no management fee.

In addition, until 30th June 2015, the Manager was entitledto receive a performance fee equivalent to 10% of anyoutperformance of the Company’s net asset value (‘NAV’) pershare (on an undiluted total return basis) over the Company’sbenchmark index, the MSCI Emerging Markets Index with netdividends reinvested, in sterling terms, over the period sincethe last performance fee was earned. The performance fee wascalculated at the end of the Company’s financial year andcharged to its capital account in the annual financialstatements. However, an estimate was accrued on a monthlybasis and reflected in the Company’s published NAV per share.

The amount of performance fee earned and paid to theManager each year was subject to the following conditions:

16519 pp21_36 28/09/2015 16:57 Page 24


• Any performance fee earned in a given year was dividedinto two categories; that which could be offset (‘offsetable’)by underperformance in future years; and that whichcannot (‘non-offsetable’).

• The ‘non-offsetable’ fee that could be earned in any oneyear was capped at 0.75% of the Company’s averagemonthly total assets less current liabilities for the year. Ina year when the Company produced a negative NAV totalreturn per share, the ‘non-offsetable’ fee earned in thatyear was provided for but not paid. In a year when theCompany produced a positive NAV total return per share,the Company paid to the Manager all ‘non-offsetable’ feesearned in that year and those accrued from previous years,subject to the restriction below.

• The maximum fee that could be paid to the Manager in anyone year was capped at 0.75% of the Company’s averagemonthly total assets less current liabilities for the year.

• The ‘offsetable’ fee was uncapped and equal to any feesearned in excess of the 0.75% cap. Until paid (i.e. in a yearwhen the NAV total return per share is zero or positive),those fees were capable of being absorbed by anyunderperformance in a subsequent year.

• The performance fee outperformance calculation restartedat the end of a period when outperformance of thebenchmark had been achieved and a performance feeearned.

Since the last performance fee payment was made, theCompany’s net asset value per share has underperformed thebenchmark. This resulted in a negative non-offsetableperformance fee of £1,637,144. With effect from 1st July 2015the performance fee arrangement has been terminated.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 17), risk management policies(see pages 60 to 65), capital management policies andprocedures (see page 66), the nature of the portfolio andexpenditure projections, the Company has adequateresources, an appropriate financial structure and suitablemanagement arrangements in place to continue in operationalexistence for the foreseeable future. For these reasons, they

consider that there is reasonable evidence to continue toadopt the going concern basis in preparing the accounts.

Directors

The Directors of the Company who held office at the end of theyear are detailed on pages 21 to 23.

Details of Directors’ beneficial shareholdings may be found inthe Directors’ Remuneration Report on page 34. No changeshave been reported to the Directors’ shareholdings since theyear end.

In accordance with corporate governance best practice, allDirectors will retire at the forthcoming Annual General Meetingand, being eligible, will offer themselves for reappointment.The Nomination Committee, having considered theirqualifications, performance and contribution to the Board andits committees, confirms that each Director continues to beeffective and demonstrates commitment to the role and theBoard recommends to shareholders that they be reappointed.

Director Indemnification and Insurance

As permitted by the Company’s Articles of Association, theDirectors have the benefit of an indemnity which is a qualifyingthird party indemnity, as defined by Section 234 of theCompanies Act 2006. The indemnities were in place during theyear 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)of which the Company’s Auditors are unaware, and

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

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Governance continuedDirectors’ Report continued

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

Independent Auditors

PricewaterhouseCoopers LLP have expressed their willingnessto continue in office as Auditors to the Company and aresolution proposing their reappointment and authorising theDirectors to determine their remuneration for the ensuing yearwill be put to shareholders at the Annual General Meeting.

Companies Act 2006 Requirements

The following disclosures are made in accordance with theCompanies Act 2006.

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

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares as at thedate of this report are given in note 16 to the Notice of AnnualGeneral Meeting on page 69.

Environmental Matters, Social and Community IssuesInformation on environmental matters, social and communityissues is set out on page 20. The Company has no employees.

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

OrdinaryShareholders shares %

Lazard Asset Management LLC 29,719,640 23.1City of London Investment

Management Company 23,192,396 18.1Royal Skandia 6,089,708 5.0Sarasin & Partners LLP 5,232,073 4.3JPMorgan Asset Management

Holdings Inc. 4,697,689 3.9

On 9th July 2015, Lazard Asset Management LLC disclosedthat their holding was 30,838,703 shares (24.0%) and on11th August 2015, City of London Investment ManagementCompany disclosed that their holding was 23,114,924 shares

(18.0%). No further changes to these holdings had beennotified as at the date of this report.

The Company is also aware that approximately 6.5% of theCompany’s total voting rights are held by individuals throughsavings products managed by JPMorgan Asset Managementand registered in the name of Chase Nominees Limited. Ifthose voting rights are not exercised by the beneficial holders,in accordance with the terms and conditions of the savingsproducts, under certain circumstances JPMorgan AssetManagement has the right to exercise those voting rights. Thatright is subject to certain limits and restrictions and falls awayat the conclusion of the relevant general meeting.

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 andthe Companies Act 2006.

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

Annual General Meeting

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

Resolutions relating to the following items of special businesswill be proposed at the forthcoming Annual General Meeting(‘AGM’):

(i) 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 6,422,418 new Ordinary shares for cash up to anaggregate nominal amount of £1,605,604 such amount beingequivalent to 5% of the present issued ordinary share capital

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(excluding Treasury shares) as at the last practicable datebefore the publication of this document. This authority willexpire at the conclusion of the AGM of the Company in 2016unless renewed at a prior general meeting.

It is advantageous for the Company to be able to issue newshares (or to sell Treasury shares) to participants purchasingshares through the JPMorgan savings products and also toother investors when the Directors consider that it is in thebest interests of shareholders to do so. As such issues are onlymade at prices greater than the net asset value (the ‘NAV’),they increase the NAV per share and spread the Company’sadministrative expenses, other than the management feewhich is charged on the value of the Company’s assets, over agreater number of shares. The issue proceeds are available forinvestment in line with the Company’s investment policies.

The Company currently holds 3,915,149 shares in the capital ofthe Company in Treasury. The full text of the resolutions is setout in the Notice of Annual General Meeting on page 67.

(ii) Authority to repurchase the Company’s shares for cancellation(resolution 15)

The authority to repurchase up to 14.99% of the Company’sissued Ordinary share capital, granted by shareholders at the2014 AGM will expire on 18th May 2016, unless renewed priorto that time. The Directors consider that the renewing of theauthority is in the interests of shareholders as a whole, as therepurchase of shares at a discount to the underlying NAVenhances the NAV of the remaining shares.

Resolution 15 gives the Company authority to repurchase itsown issued 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 of:19,254,411 Ordinary shares, representing approximately 14.99%of the Company’s issued Ordinary shares as at 25th September2015 (being the latest practicable date prior to the publicationof this document). The authority also sets minimum andmaximum prices.

If resolution 15 is passed at the AGM it is the Company’s currentintention to hold in Treasury any shares it may repurchasepursuant to the authority granted to it for possible re-issue at apremium to NAV. This policy is kept under review by the Board.

The full text of the resolution is set out in the Notice of AnnualGeneral Meeting on pages 67 and 68. Repurchases of Ordinaryshares will be made at the discretion of the Board and will only

be made in the market at prices below the prevailing NAV pershare, thereby enhancing the NAV of the remaining shares asand when market conditions are appropriate.

(iii) Increase of the maximum aggregate of Directors’ fees payablefrom £175,000per annum to £225,000 (resolution 16)

To accommodate future increases in Directors’ fees andperiods during which there are more than five Directors on theBoard to assist with efficient succession planning, the Board isseeking an increase in the maximum aggregate amount of feespayable per annum. There has been no change in themaximum limit since 2007.

Recommendation

The Board considers that resolutions 13 to 16 are likely topromote the success of the Company and are in the bestinterests of the Company and its shareholders as a whole.The Directors unanimously recommend that you vote infavour of the resolutions as they intend to do in respect oftheir own beneficial holdings which amount in aggregate to41,543 Ordinary shares representing approximately 0.03%of the voting rights of the Company.

Corporate GovernanceCompliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 36, indicates how theCompany has applied the principles of good governance of theFinancial Reporting Council UK Corporate Governance Code2012 (the ‘UK Corporate Governance Code’) and the AIC’s Codeof Corporate Governance, (the ‘AIC Code’), which complementsthe UK Corporate Governance Code and provides a frameworkof best practice for investment trusts.

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

Role of the Board

A management agreement between the Company and theManager sets out the matters over which the Manager has

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authority. This includes management of the Company’s assetsand the provision of accounting, company secretarial,administrative and some marketing services. All other mattersare reserved for the approval of the Board. A formal scheduleof matters reserved to the Board for decision has beenapproved. This includes determination and monitoring of theCompany’s investment objectives and policy and its futurestrategic direction, gearing policy, management of the capitalstructure, appointment and removal of third party serviceproviders, review of key investment and financial data and theCompany’s corporate governance and risk controlarrangements.

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

Anatole Kaletsky is a founding partner and chief economist ofGavekal Dragonomics, whose clients include JPMorgan. TheBoard does not believe this connection influences MrKaletsky’s independence as a Director of the Company.

The Board meets at least quarterly 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 takeindependent professional advice if necessary and at theCompany’s expense. This is in addition to the access that everyDirector has to the advice and services of the CompanySecretary which is responsible to the Board for ensuring thatBoard procedures are followed and that applicable rules andregulations are complied with.

Board Composition

The Board, chaired by Alan Saunders, consists of sevennon-executive Directors, all of whom are regarded by theBoard as independent of the Company’s Manager, includingthe Chairman. The Directors have a breadth of investmentknowledge, business and financial skills and experiencerelevant to the Company’s business and brief biographicaldetails of each Director are set out on pages 21 to 23.

A review of Board composition and balance is included as partof the annual performance evaluation of the Board, details of

which may be found below. The Senior Independent Directorleads the evaluation of the performance of the Chairman and isavailable to shareholders if they have concerns that cannot beresolved through 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 appointed byshareholders. Thereafter, a Director’s appointment is subjectto the performance evaluation carried out each year and theapproval of shareholders at each annual general meeting, inaccordance with corporate governance best practice.The Board does not believe that length of service in itselfnecessarily disqualifies a Director from seeking reappointmentbut, when making a recommendation, the Board takes intoaccount the ongoing requirements of the UK CorporateGovernance Code, including the need to refresh the Board andits Committees.

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

Induction and Training

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

Meetings and Committees

The Board delegates certain responsibilities and functions tocommittees. All Directors are members of the committees,with the exception of the Chairman who attends the AuditCommittee by invitation.

The table below details the number of Board and Committeemeetings attended by each Director. During the year, therewere five Board meetings, two Audit Committee meetings, aManagement Engagement Committee meeting, a NominationCommittee meeting and a Remuneration Committee meeting.

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Management Audit Engagement Remuneration Nomination Board Committee Committee Committee Committee Meetings Meetings Meetings Meetings MeetingsDirector Attended Attended Attended Attended Attended

Sarah Arkle 5 2 1 1 1David Gamble1 3 1 1 1 1Anatole Kaletsky 5 1 — 1 1Nigel Kenny 5 2 1 1 1Richard Laing2 1 — — — —Percy Mistry 5 2 1 1 1Andrew Page2 1 1 — — —Alan Saunders3 5 2 1 1 1

1Retired 19th November 2014.2Appointed 15th January 2015.3Ceased to be a member of the Audit Committee on 30th October 2009. Mr Saundersnow attends by invitation.

Board Committees

Nomination Committee The Nomination Committee, chaired by Alan Saunders,consists of all of the Directors and meets at least annually toensure that the Board has an appropriate balance of skills andexperience to carry out its fiduciary duties and to select andpropose suitable candidates for appointment when necessary.The appointment process takes account of the benefits ofdiversity, including gender. An independent third party, TrustAssociates, were employed to conduct the search for a newDirector, which resulted in the appointments of Richard Laingand Andrew Page. Trust Associates have no connection withthe Board or the Manager.

The Committee conducts an annual performance evaluation ofthe Board, its committees and individual Directors to ensurethat all Directors have devoted sufficient time and contributedadequately to the work of the Board and its Committees. Theevaluation of the Board considers the balance of experience,skills, independence, corporate knowledge, its diversity,including gender, and how it works together. The evaluation ofindividual Directors is led by the Chairman. The SeniorIndependent Director leads the evaluation of the Chairman’sperformance.

Remuneration Committee The Remuneration Committee, chaired by Alan Saunders,consists of all of the Directors and meets annually to review thelevels of remuneration of the Chairman, the Chairman of theAudit Committee, the Senior Independent Director and other

Directors. This takes into account the level of fees paid to thedirectors of the Company’s peers and within the investmenttrust industry generally to ensure that high quality people areattracted and retained. Recommendations are made to theBoard as and when appropriate.

Audit Committee The Audit Committee, chaired by Nigel Kenny and whosemembership is set out on pages 21 to 23, 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. At least one member of theCommittee has recent and relevant financial experience.

The Committee reviews the actions and judgements of theManager in relation to the half year and annual accounts andthe Company’s compliance with the UK Corporate GovernanceCode. It examines the effectiveness of the Company’s internalcontrol systems, receives information from the Manager’sCompliance department and also reviews the scope andresults of the external audit, its cost effectiveness and theindependence and objectivity of the external auditors. TheAudit Committee has reviewed the independence andobjectivity of the auditors and is satisfied that the auditors areindependent. The Audit Committee also has the primaryresponsibility for making recommendations to the Board onthe reappointment and the removal of external auditors.

During its review of the Company’s financial statements for theyear ended 30th June 2015, the Audit Committee consideredthe following significant issues, including those communicatedby the Auditors during their reporting:

Significant issue How the issue was addressed

Going concern The Directors have considered the Company’sinvestment objective, risk management policies, capitalmanagement policies and procedures, the nature of theportfolio and expenditure and cash flow projections. Asa result, they have determined that the Company hasadequate resources, an appropriate financial structureand suitable management arrangements in place tocontinue in operational existence for the foreseeablefuture.

Valuation, existence The valuation of investments is undertaken in and ownership of accordance with the accounting policies, disclosed in investments note 1 to the accounts on pages 46 to 48. Controls are

in place to ensure that valuations are appropriate andexistence is verified through custodian reconciliations.

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Significant issue How the issue was addressed

Recognition of The recognition of investment income is undertaken investment income in accordance with accounting policy note 1(d) to the

accounts on page 46.

Compliance with Approval for the Company as an investment trust Sections 1158 and 1159 under Sections 1158 and 1159 for financial yearsCorporation commencing on or after 1st October 2012 has been Tax Act 2010 obtained and ongoing compliance with the eligibility(‘Section 1158 and 1159’) criteria is monitored on a regular basis.

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

As a result of theworkperformed, theCommitteehasconcluded that theAnnual Report for the year ended30th June2015, takenas awhole, is fair, balancedandunderstandable andprovides the informationnecessary for shareholders to assesstheCompany’s performance, businessmodel and strategy, andhas reportedon these findings to theBoard. TheBoard’sconclusions in this respect are set out in theStatement ofDirectors’ Responsibilities onpage36.

Representatives of the Company’s Auditors attended the AuditCommittee meeting at which the draft Annual Report &Accounts were considered and also engage with Directors asand when required. Having reviewed the performance of theexternal Auditors, including assessing the quality of work,timing of communications and work with the Manager, theCommittee considered it appropriate to recommend theirreappointment. The Board supported this recommendationwhich will be put to shareholders at the forthcoming AnnualGeneral Meeting. The Board reviews and approves anynon-audit services provided by the independent auditors andassesses the impact of any non audit work on the ability of theauditors to remain independent. The only non-audit workcarried out by the auditors this year was in relation to theirmember firm’s work on the Company’s tax return in Pakistan.The Board has resolved that such non-audit work does notimpact the independence of the auditors. Details of theauditors fees paid for audit and non audit services aredisclosed in note 5 on page 49. PricewaterhoueCoopers haveaudited the Company’s financial statements since its launch in1991 and were reappointed following an auditor review in2013. The Company’s year ended 30th June 2015 is the currentAudit Partner’s first of a five year maximum term. TheCompany will need to appoint a different audit firm to succeedPricewaterhouseCoopers in 2020.

Management Engagement CommitteeThe Management Engagement Committee, chaired by AlanSaunders, consists of all of the Directors and meets annually toreview the performance of the Manager.

The Committee conducts a formal evaluation of the Manageron an annual basis. The evaluation includes consideration ofthe investment strategy and process of the InvestmentManager, noting consistent outperformance of the benchmarkover the long term, and the quality of support that theCompany receives from the Manager. As a result of theevaluation process, the Board confirms that it is satisfied thatthe continuing appointment of the Manager is in the interestsof shareholders as a whole.

Terms of ReferenceThe Nomination, Remuneration, Audit and ManagementEngagement Committees all have written terms of referencewhich define clearly their respective responsibilities, copies ofwhich are available on the Company’s website and forinspection on request at the Company’s registered office and atthe Company’s Annual General Meeting.

Relations with Shareholders

The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a fullunderstanding of the Company’s activities and performanceand reports formally to shareholders quarterly each year byway of the annual report and accounts, the half year report andtwo interim management statements. This is supplemented bythe daily publication, through the London Stock Exchange, ofthe net asset value of the Company’s shares.

All shareholders have the opportunity, and are encouragedto attend the Company’s Annual General Meeting at which theDirectors and representatives of the Manager are available inperson to meet shareholders and answer their questions.In addition, a presentation is given by the Investment Managerwho reviews the Company’s performance. The Company’sbrokers, the Investment Manager and the Manager holdregular discussions with larger shareholders. The Directors aremade fully aware of their views. The Chairman and Directorsmake themselves available as and when required to addressshareholder queries. The Directors may be contacted throughthe Company Secretary whose details are shown on page 73.

The Company’s Annual Report and Accounts is published intime to give shareholders at least 20 working days’ notice ofthe Annual General Meeting. Shareholders wishing to raise

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questions 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 73.

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

Risk Management and Internal Control

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

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

Since investment management, custody of assets and alladministrative services are provided to the Company by JPMFand its associates, the Company’s system of risk managementand internal control mainly comprises monitoring the servicesprovided by the Manager and its associates, including theoperating controls established by them, to ensure that theymeet the Company’s business objectives. There is an ongoingprocess for identifying, evaluating and managing thesignificant risks faced by the Company (see Principal Risks onpages 19 and 20). This process has been in place for the yearunder review and up to the date of the approval of the annualreport and accounts, and it accords with the Turnbull guidance.The Company does not have an internal audit function of itsown, but relies on the internal audit department of theManager. This arrangement is kept under review.

The key elements designed to provide effective riskmanagement and internal control are as follows:

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

Management Agreement – Appointment of a manager andcustodian regulated by the Financial Conduct Authority (‘FCA’),whose responsibilities are clearly defined in a writtenagreement.

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

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

The Board, either directly or through the Audit Committee,keeps under review the effectiveness of the Company’s systemof risk management and internal control by monitoring theoperation of the key operating controls of the Manager and itsassociates as follows:

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

• reviews reports on the internal controls and the operationsof its custodian, JPMorgan Chase Bank, which is itselfindependently reviewed; and

• reviews every six months an independent report on therisk management and internal controls and the operationsof the Manager.

By the means of the procedures set out above, the Boardconfirms that it has reviewed the effectiveness of theCompany’s system of risk management and internal control forthe year ended 30th June 2015 and to the date of approval ofthis Annual Report and Accounts.

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

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Corporate Governance and Voting Policy

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

Corporate Governance JPMAM believes that corporate governance is integral to our investmentprocess. As part of our commitment to delivering superior investmentperformance to our clients, we expect and encourage the companies inwhich we invest to demonstrate the highest standards of corporategovernance and best business practice. We examine the share structureand voting structure of the companies in which we invest, as well as theboard balance, oversight functions and remuneration policy. Theseanalyses then form the basis of our 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 our reasonable judgement of whatwill best serve the financial interests of our clients. So far as is practicable,we will vote at all of the meetings called by companies in which we areinvested.

Stewardship/EngagementJPMAM recognises its wider stewardship responsibilities to its clients as amajor asset owner. To this end, we support 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 the Stewardship Code for its UK investments andsupports the principles as best practice elsewhere. We believe thatregular contact with the companies in which we invest is central to ourinvestment process and we also recognise the importance of being an‘active’ owner on behalf of our clients.

The Manager’s Voting Policy and Corporate GovernanceGuidelines are available on request from the CompanySecretary or can be downloaded from the Manager’swebsite: www.jpmorganassetmanagement.co.uk/institutional/CommentaryAndAnalysis/CorporateGovernance, which 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 Jonathan Latter, for and on behalf of JPMorgan Funds Limited, Company Secretary 28th September 2015

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The Board presents the Directors’ Remuneration Report for theyear ended 30th June 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 37 to 41.

Directors’ Remuneration Policy

The Directors’ Remuneration Policy Report is subject to atriennial binding vote and therefore an ordinary resolution toapprove this report will be put to shareholders at theforthcoming Annual General Meeting. The policy subject to thevote, is set out in full below and is currently in force.

The Board’s policy for this and subsequent years is thatDirectors’ fees should properly reflect the time spent by theDirectors on the Company’s business and should be at a levelto ensure that candidates of a high calibre are recruited to theBoard. The Chairman of the Board, the Chairman of the AuditCommittee and, if a different individual, the SeniorIndependent Director are paid higher fees than the otherDirectors, reflecting the greater time commitment involved infulfilling those roles.

The Remuneration Committee, comprising all Directors,reviews Directors’ fees on a regular basis and makesrecommendations to the Board as and when appropriate.Reviews are based on information provided by the Managerand industry research carried out by third parties on the levelof fees paid to the directors of the Company’s peers and withinthe investment trust industry generally. The involvement ofremuneration consultants has not been deemed necessary aspart of this review. The Company has no Chief Executive Officerand no employees and therefore there was no consultation ofemployees, and there is no employee comparative data toprovide, in relation to the setting of the remuneration policyfor Directors.

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

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

In the year under review, Directors’ fees were paid at thefollowing rates: Chairman £35,000; Audit CommitteeChairman £29,000; and other Directors £24,000. With effectfrom 1st July 2015, fees have been increased to £38,000,£32,000 and £27,000 respectively.

The Company’s articles of association provide that anyincrease in the maximum aggregate annual limit on Directors’fees, currently £175,000, requires both Board and shareholderapproval. At the forthcoming AGM, shareholders will be askedto approve an increase in the limit to £225,000 per annum.There has been no change in the maximum limit since 2007.

The Company has not sought shareholder views on itsremuneration policy. The Remuneration Committee considersany comments received from shareholders on remunerationpolicy on an ongoing basis and takes account of those views.

The terms and conditions of Directors’ appointments are setout in formal letters of appointment which are available forreview at the Company’s Annual General Meeting and theCompany’s registered office. Details of the Board’s policy ontenure are set out on page 28.

The Company’s Remuneration policy also applies to newDirectors.

Directors’ Remuneration Policy Implementation

The Directors’ Remuneration Report, which includes details ofthe Directors’ remuneration policy and its implementation, issubject to an annual advisory vote and therefore an ordinaryresolution to approve this report will be put to shareholders atthe forthcoming Annual General Meeting. There have been nochanges to the policy compared with the year ended 30th June2014 and no changes are proposed for the year ending30th June 2016.

Directors’ Remuneration Report

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Governance continuedDirectors’ Remuneration Report continued

At the Annual General Meeting held on 19th November 2014,of votes cast, 99.8% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theremuneration report and 0.2% voted against. Abstentionswere received from less than 1.6% of the votes cast.

Details of voting on both the Remuneration Policy and theDirectors’ Remuneration Report from the 2015 Annual GeneralMeeting will be given in the annual report for the year ending30th June 2016.

Details of the implementation of the Company’s remunerationpolicy are given below.

Single total figure of remuneration

The single total figure of remuneration for the Board as awhole for the year ended 30th June 2015 was £168,374. Thesingle total figure of remuneration for each Director is detailedbelow together with the prior year comparative.

Single total figure table1

Total fees2

2015 2014

Alan Saunders £35,000 £35,000David Gamble3 £10,158 £26,500Sarah Arkle £24,000 £20,000Anatole Kaletsky £24,000 £24,000Nigel Kenny £29,000 £29,000Percy Mistry £24,000 £24,000Richard Laing4 £11,108 —Andrew Page4 £11,108 —

Total £168,374 £158,500

1Audited information. Other columns have been omitted because no payments of anyother nature were made or are appropriate.2Directors’ remuneration comprises an annual fee only. Directors are also reimbursedfor out of pocket expenses incurred in attending the Company’s business.3Retired 19th November 2014.4Appointed 15th January 2015.

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

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

Year ended 30th June Fees

2015 £35,0002014 £35,0002013 £35,0002012 £32,0002011 £32,000

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.

1st July 2014 or as 30th June 2015 at date of appointment Ordinary Ordinary SubscriptionDirectors’ Name Shares Shares shares

Sarah Arkle 6,000 6,000 —Anatole Kaletsky 5,043 4,203 840Nigel Kenny 3,500 3,500 —Richard Laing2 6,000 — —Percy Mistry 10,000 10,000 —Andrew Page2 — — —Alan Saunders 6,000 6,000 —

Total 36,543 33,484 1,596

1Audited information.2Appointed 15th January 2015.

Subsequent to the year end Mr Page purchased 5,000Ordinary shares in the Company.

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

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A graph showing the Company’s share price total returncompared with the return on its benchmark index, the MSCIEmerging Markets Index (in sterling terms), over the last sixyears is shown below. The Board believes that this index is themost appropriate for performance comparison purposesbecause it reflects the Investment Manager’s investmentuniverse.

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

Source: Morningstar/Datastream.

Ordinary share price total return.

Benchmark.

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

Expenditure by the Company on remuneration and distributions toshareholders

Year ended 30th June

2015 2014

Remuneration paid to all Directors £168,374 £158,500

Distribution to shareholders— by way of dividend £7,707,000 £6,550,000— by way of share repurchases £4,691,000 £1,512,000

By order of the Board Jonathan Latter, for and on behalf of JPMorgan Funds Limited, Company Secretary

28th September 2015

100

110

120

130

140

150

160

170

2015201420132012201120102009

16519 pp21_36 28/09/2015 16:57 Page 35

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

Company law requires the Directors to prepare financialstatements for each financial year. Under that law, the Directorshave elected to prepare the financial statements in accordancewith United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards and applicable law).Under Company law the Directors must not approve thefinancial statements unless they are satisfied that they give atrue and fair view of the state of affairs of the Company and ofthe profit or loss of the Company for that period. In preparingthese financial statements, the Directors are required to:

• select suitable accounting policies and then apply themconsistently;

• make judgements and estimates that are reasonable andprudent;

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

• prepare the financial statements on the going concernbasis unless it is inappropriate to presume that theCompany will continue 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 thewww.jpmemergingmarkets.co.uk website, which is maintainedby the Company’s Manager. The maintenance and integrity ofthe website maintained by the Manager is, so far as it relatesto the Company, the responsibility of the Manager. The workcarried out by the auditors does not involve consideration ofthe maintenance and integrity of this website and,accordingly, the auditors accept no responsibility for anychanges that have occurred to the accounts since they wereinitially presented on the website. The accounts are preparedin accordance with UK legislation, which may differ fromlegislation in other jurisdictions.

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

Each of the Directors, whose names and functions are listed inthe Directors’ Report confirm that, to the best of theirknowledge the financial statements, which have beenprepared in accordance with United Kingdom GenerallyAccepted Accounting Practice (United Kingdom AccountingStandards and applicable law), give a true and fair view of theassets, liabilities, financial position and return or loss of theCompany.

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

For and on behalf of the Board Alan Saunders, Chairman

28th September 2015

Governance continuedStatement of Directors’ Responsibilities

36 JPMorgan Emerging Markets Investment Trust plc. Annual Report & Accounts 2015

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Report on the financial statements

Our opinion

In our opinion, JPMorgan Emerging Markets Investment Trust plc’s financial statements (the ‘financial statements’):

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

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

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

What we have audited

The JPMorgan Emerging Markets Investment Trust plc’s financial statements comprise:

• the Balance Sheet as at 30th June 2015;

• the Income Statement for the year then ended;

• the Cash Flow Statement for the year then ended;

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

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

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

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

Our audit approach

OverviewMateriality:

• Overall materiality: £4.3 million which represents 0.5% of net assets.

Audit scope:

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

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

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

Areas of focus:

• Income from investments

• Valuation and existence of investments

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.As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether therewas evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

Independent Auditors’ Reportto the members of JPMorgan Emerging Markets Investment Trust plc

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Independent Auditors’ ReportcontinuedThe 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 our testing whichrequired reporting to those charged with governance.

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

Our testing did not identify any unrecorded dividends.

We tested the allocation and presentation of dividend incomebetween the income and capital return columns of the IncomeStatement in line with the requirements set out in the AICSORP. We then tested the validity of income and capital specialdividends to independent third party sources.

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

We tested the valuation of the listed investment portfolio byagreeing the prices used in the valuation to independent thirdparty 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.

No differences were identified.

Income from investmentsRefer to page 30 (Directors’ Report), page 46 (Accounting Policies) andpage 49 (Notes to the accounts).

ISAs (UK & Ireland) presume there is a risk of fraud in incomerecognition because of the pressure management may feel toachieve capital growth in line with the objective of theCompany.

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

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

Valuation and existence of investmentsRefer to page 29 (Directors’ Report), page 46 (Accounting Policies) andpage 53 (Notes to the accounts).

The investment portfolio at the year-end comprised listedequity investments and a liquidity fund and totalled£853 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.

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How we tailored the audit scopeWe 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 3 months betweenthe period covered by the controls report and the year-end of the Company. Following this assessment, we applied professionaljudgement to determine the extent of testing required over each balance in the financial statements, including whether weneeded to perform additional testing in respect of those key controls to support our substantive work. For the purposes of ouraudit, we determined that additional testing of controls in place at the Administrator was not required because additionalsubstantive testing was performed.

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

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

Overall materiality £4.3 million (2014: £3,8 million).

How we determined it 0.5% of net assets.

Based on our professional judgement, we determined our materiality at 0.5% of net assets as we believethis is an appropriate and consistent year-on-year basis for our audit.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £215,000(2014: £187,000) 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 25, in relation to going concern.We have nothing to report having performed our review.

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

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

Rationale forbenchmark applied

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Independent Auditors’ ReportcontinuedOther required reporting

Consistency of other informationCompanies Act 2006 opinionIn 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) reportingUnder ISAs (UK & Ireland) we are required to report to you if, in our opinion:

• 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 36, in accordance with provision C.1.1 of the UK Corporate Governance Code (the ‘Code’), that they consider the Annual Report taken

as a whole to be fair, balanced and understandable and provides the 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 29 and 30, as required by provision C.3.8 of the Code, describing the work of the Audit Committee does not appropriately address

matters communicated by us to the Audit Committee.

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 branchesnot visited 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 ten provisions of the UK Corporate Governance Code. We have nothing to report having performed our review.

We have no exceptions to reportarising from this responsibility.



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Responsibilities for the financial statements and the audit

Our responsibilities and those of the DirectorsAs explained more fully in the Statement of Directors’ Responsibilities set out on page 36, the Directors are responsible for thepreparation of the financial statements and for being satisfied that they give a true and fair view.

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

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

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

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

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

• the overall presentation of the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to providea reasonable 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 Auditors,London

28th September 2015

16519 pp37_45 28/09/2015 16:57 Page 41


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

Gains/(losses) on investments held at fair value through profit or loss 2 — 50,378 50,378 — (32,118) (32,118)

Net foreign currency losses — (124) (124) — (1,179) (1,179) Income from investments 3 19,801 — 19,801 16,067 — 16,067 Other interest receivable and similar income 3 4 — 4 4 — 4

Gross return/(loss) 19,805 50,254 70,059 16,071 (33,297) (17,226)Management fee 4 (8,372) — (8,372) (7,449) — (7,449)Other administrative expenses 5 (1,368) — (1,368) (1,235) — (1,235)

Net return/(loss) on ordinary activities before taxation 10,065 50,254 60,319 7,387 (33,297) (25,910)

Taxation 6 (1,538) — (1,538) (1,282) — (1,282)

Net return/(loss) on ordinary activities after taxation 8,527 50,254 58,781 6,105 (33,297) (27,192)

Return/(loss) per Ordinary share – undiluted 8 6.68p 39.35p 46.03p 5.12p (27.93)p (22.81)p

Return/(loss) per Ordinary share – diluted 8 6.68p 39.35p 46.03p 5.12p (27.90)p (22.78)p

A dividend of 6.0p (2014: 5.5p) per Ordinary share has been proposed in respect of the year ended 30th June 2015, totalling£7,707,000 (2014: £6,550,000). Further details are given in note 7(a) on page 51.

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

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

The accompanying notes on pages 46 to 66 form an integral part of these accounts.

Financial StatementsIncome Statementfor the year ended 30th June 2015

16519 pp37_45 28/09/2015 16:57 Page 42


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

At 30th June 2013 30,650 120,933 1,665 69,939 546,591 16,000 785,778Repurchase of shares into Treasury — — — — (1,512) — (1,512)Issue of Ordinary shares on exercise of Subscription shares 4 77 — — — — 81

Net (loss)/return on ordinary activities — — — — (33,297) 6,105 (27,192)Dividend appropriated in the year — — — — — (6,562) (6,562)

At 30th June 2014 30,654 121,010 1,665 69,939 511,782 15,543 750,593Repurchase of shares into Treasury — — — — (4,691) — (4,691)Exercise of Subscription shares intoOrdinary shares (102) 102 — — — — —

Issue of Ordinary shares on exerciseof Subscription shares 2,539 52,605 — — — — 55,144

Costs in relation to issue of shares — (60) — — — — (60)Net return on ordinary activities — — — — 50,254 8,527 58,781Dividend appropriated in the year — — — — — (7,078) (7,078)

At 30th June 2015 33,091 173,657 1,665 69,939 557,345 16,992 852,689


Reconciliation of Movement in Shareholders’ Funds

16519 pp37_45 28/09/2015 16:57 Page 43


2015 2014 Notes £’000 £’000

Fixed assetsInvestments held at fair value through profit or loss 9 822,495 714,278Investment in liquidity fund held at fair value through profit or loss 9 30,014 31,596

852,509 745,874

Current assets Derivative financial assets 10 — 5Debtors 11 5,063 2,177Cash and short term deposits 11 2,205 2,792

7,268 4,974Creditors: amounts falling due within one year 12 (7,088) (255)

Net current assets 180 4,719

Total assets less current liabilities 852,689 750,593

Net assets 852,689 750,593

Capital and reserves Called up share capital 13 33,091 30,654Share premium 14 173,657 121,010Capital redemption reserve 14 1,665 1,665Other reserve 14 69,939 69,939Capital reserves 14 557,345 511,782Revenue reserve 14 16,992 15,543

Total shareholders’ funds 852,689 750,593

Net asset value per Ordinary share 15Undiluted 663.8p 630.3pDiluted 663.8p 623.4p

The accounts on pages 42 to 66 were approved and authorised for issue by the Directors on 28th September 2015 and weresigned on their behalf by:

Alan Saunders Director


Company registration number: 2618994.

Financial Statements continuedBalance Sheetat 30th June 2015

16519 pp37_45 28/09/2015 16:57 Page 44


2015 2014 Notes £’000 £’000

Net cash inflow from operating activities 16 6,435 2,001

TaxationTaxation recovered 154 149

Capital expenditure and financial investmentPurchases of investments (217,668) (177,973)Sales of investments 167,370 182,803Other capital charges (18) (16)

Net cash (outflow)/inflow from capital expenditure and financial investment (50,316) 4,814

Dividend paid (7,078) (6,562)

Net cash (outflow)/inflowbefore financing (50,805) 402

FinancingIssue of Ordinary shares on exercise of Subscription shares 55,144 81Repurchase of shares into Treasury (4,746) (1,457)Costs in relation to issue of shares (60) —

Net cash inflow/(outflow) from financing 50,338 (1,376)

Decrease in cash in the year 17 (467) (974)


Cash Flow Statementfor the year ended 30th June 2015

16519 pp37_45 28/09/2015 16:57 Page 45

JPMorgan Emerging Markets Investment Trust plc Annual Report & Accounts 201546

1. Accounting policies

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

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

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

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

(b) Valuation of investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of incomeand capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, inaccordance with a documented investment strategy and information is provided internally on that basis to the Company’sBoard of Directors. Accordingly, upon initial recognition the investments are designated by the Company as held at fair valuethrough profit or loss (‘FVTPL’). They are included initially at fair value which is taken to be their cost, excluding expensesincidental to purchase which are written off to capital at the time of acquisition. Subsequently the investments are valued atfair value which are quoted bid market prices for investments traded in active markets. For investments which are not tradedin active markets, unlisted and restricted investments, the Board takes into account the latest traded prices, other observablemarket data and asset values based on the latest available accounts.

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

(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 within capital reserves within ‘Gains and losses on sales of investments’. Increases and decreasesin the valuation of investments held at the year end including the related foreign exchange gains and losses, are included inthe Income Statement and dealt within capital reserves within ‘Holding gains and losses on investment’.

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

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

Interest receivable on deposits is taken to revenue on an accruals basis.

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.

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.

Financial Statements continuedNotes to the Financial Statementsfor the year ended 30th June 2015

16519 pp46_66 28/09/2015 16:55 Page 46

JPMorgan Emerging Markets Investment Trust plc Annual Report & Accounts 2015 47

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

– Performance related fees are allocated 100% to capital.

– Expenses incidental to the purchase of an investment are included within the cost of the investment and those incidentalto the sale are deducted from the sales proceeds. These expenses are commonly referred to as transaction costs andinclude items such as stamp duty and brokerage commissions. Details of transaction costs are given in note 9 on page 53.

– Subscription shares’ issue costs are charged to share premium.

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

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

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

Short term forward currency contracts are classified as derivative financial instruments and the net unrealised gain or loss isincluded in debtors or creditors respectively.

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

Transactions denominated in foreign currencies are converted at actual exchange rates at the date of the transaction.Monetary assets, liabilities and equity investments held at fair value, denominated in foreign currencies at the year end aretranslated 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 arising from a change in exchange rates are included in the Income Statement within‘Gains or losses on investments held at fair value through profit or loss’ and charged or credited to capital reserves.

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Financial Statements continuedNotes to the Financial Statements continued


1. Accounting policies continued(i) Taxation

Current tax is provided at the amount 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 areexpected to reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and ismeasured on an undiscounted basis.

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

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

(l) Repurchases of Ordinary shares for cancellationThe cost of repurchasing Ordinary shares including the related stamp duty and transactions 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 ‘Capital redemption reserve’.

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

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

2015 2014 £’000 £’000

2. Gains/(losses) on investments held at fair value through profit or loss Gains on sales of investments held at fair value through profit or loss based on historical cost 29,282 14,967

Amounts recognised in investment holding gains and losses in the previous year in respect of investments sold during the year (11,434) (37,913)

Gains/(losses) on sales of investments based on the carrying value at the previous balance sheet date 17,848 (22,946)

Net change in investment holding gains and losses 32,568 (9,151)Other capital charges (38) (21)

Total gains/(losses) on investments held at fair value through profit or loss 50,378 (32,118)

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2015 2014 £’000 £’000

3. Income Income from investmentsDividends from investments listed in the UK 447 378Dividends from liquidity fund 41 51Dividends from investments listed overseas 19,117 15,544Scrip dividends 196 94

19,801 16,067

Other interest receivable and similar incomeDeposit interest 4 4

Total income 19,805 16,071

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

4. Management feeManagement fee 8,372 — 8,372 7,449 — 7,449

8,372 — 8,372 7,449 — 7,449

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

2015 2014 £’000 £’000

5. Other administrative expensesOther administration expenses 359 380Depositary fees 145 —Safe Custody fees 480 496Directors’ fees1 168 159Savings scheme costs2 186 172Auditors’ remuneration – for audit services3 29 27Auditors’ remuneration – for non-audit services (taxation compliance) 1 1

1,368 1,235

1Full disclosure is given in the Directors’ Remuneration Report on page 34.2Paid to the Manager for the marketing and administration of savings scheme products. Includes £17,000 (2014: £12,000) irrecoverable VAT.3Includes £3,000 (2014: £2,000) irrecoverable VAT.

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


Overseas withholding tax 1,538 — 1,538 1,282 — 1,282

Current tax charge for the year 1,538 — 1,538 1,282 — 1,282

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


Net return/(loss) on ordinary activities before taxation 10,065 50,254 60,319 7,387 (33,297) (25,910)

Net return/(loss) on ordinary activities before taxation multiplied by the applicable rate of corporation tax of 20.75% (2014: 22.50%) 2,088 10,428 12,516 1,662 (7,492) (5,830)

Effects of:Non taxable capital (returns)/losses — (10,428) (10,428) — 7,492 7,492Non taxable UK dividends (93) — (93) (85) — (85)Non taxable scrip dividends (41) — (41) (21) — (21)Non taxable overseas dividends (3,487) — (3,487) (2,920) — (2,920)Timing differences relating to the receipt of dividends (47) — (47) 34 — 34Overseas withholding tax 1,538 — 1,538 1,282 — 1,282 Expenses not allowable for tax purposes (12) — (12) — — —Unrelieved expenses and charges 1,592 — 1,592 1,330 — 1,330

Current tax charge for the year 1,538 — 1,538 1,282 — 1,282

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £9,740,000 (2014: £8,206,000) based on a prospective corporationtax rate of 20% (2014: 20%). The deferred tax asset has arisen due to the cumulative excess of deductible expenses overtaxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in theforeseeable future and therefore no asset has been recognised in the accounts. The UK Government announced in July 2015that the corporation tax rate is set to be cut to 19% in 2017 and 18% in 2020. These rate reductions have not beensubstantively enacted, 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 requiredto obtain approval, the Company has not provided deferred tax on any capital gains or losses arising on the revaluation ordisposal of investments.

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7. Dividends(a) Dividends paid and proposed

2015 2014 £’000 £’000

Dividend paid2014 Final dividend of 5.5p (2013: 5.5p)1 7,078 6,562

Dividend proposed2015 Final dividend proposed of 6.0p (2014: 5.5p) 7,707 6,550

1The final dividend declared in respect of the year ended 30th June 2014 amounted to £6,550,000. However, the amount paid amounted to £7,078,000 due to shares issued afterthe balance sheet date but prior to the share register record date.

The final dividend proposed in respect of the year ended 30th June 2015 is subject to approval at the forthcoming AnnualGeneral Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts forthe year ending 30th June 2016.

(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’) The requirements of Section 1158 are considered on the basis of the dividend proposed in respect of the financial year, as

follows:

2015 2014 £’000 £’000

Final dividend proposed of 6.0p (2014: 5.5p) 7,707 6,550

The revenue available for distribution by way of dividend for the year is £8,527,000 (2014: £6,105,000).

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2015 2014 £’000 £’000

8. Return/(loss) per Ordinary shareRevenue return 8,527 6,105Capital return/(loss) 50,254 (33,297)

Total return/(loss) 58,781 (27,192)

Weighted average number of Ordinary shares in issue during the year used for the purpose of the undiluted calculation 127,724,204 119,235,135

Weighted average number of Ordinary shares in issue during the year used for the purpose of the diluted calculation 127,724,204 119,340,784

UndilutedRevenue return per share 6.68p 5.12pCapital return/(loss) per share 39.35p (27.93)p

Total return/(loss) per share 46.03p (22.81)p

Diluted1

Revenue return per share 6.68p 5.12pCapital return/(loss) per share 39.35p (27.90)p

Total return/(loss) per share 46.03p (22.78)p

1As at 30th June 2015 there was no dilution effect as the rights attached to the Subscription shares lapsed on 31st July 2014.

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

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2015 2014 £’000 £’000

9. Investments Investments listed on a recognised stock exchange 822,495 714,278Investment in liquidity fund 30,014 31,596

852,509 745,874

Opening book cost 494,930 485,867Opening investment holding gains 250,944 298,008

Opening valuation 745,874 783,875Movements in the year:Purchases at cost 224,671 178,067Sales – proceeds (168,452) (183,971)Gains/(losses) on sales of investments based on the carrying value at the previousbalance sheet date 17,848 (22,946)

Net change in investment holding gains and losses 32,568 (9,151)

852,509 745,874

Closing book cost 580,432 494,930Closing investment holding gains 272,077 250,944

Total investments held at fair value 852,509 745,874

Transaction costs on purchases during the year amounted to £306,000 (2014: £194,000) and on sales during the yearamounted to £184,000 (2014: £216,000). These costs comprise brokerage commission.

During the year, prior year investment holding gains of £11,423,000 (2014: £37,913,000) have been transferred to gains andlosses on sales of investment as disclosed in notes 2 and 14.

2015 2014 £’000 £’000

10. Derivative financial assetsForward foreign currency contracts — 5

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2015 2014 £’000 £’000

11. DebtorsSecurities sold awaiting settlement 2,250 1,168Overseas tax recoverable 31 57 Dividends and interest receivable 2,720 903Other debtors 62 49

5,063 2,177

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

2015 2014 £’000 £’000

12. Creditors: amounts falling due within one year Securities purchased awaiting settlement 6,807 —Repurchases of the Company’s own shares awaiting settlement — 55Other creditors and accruals 281 200

7,088 255

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

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2015 2014 £’000 £’000

13. Called up share capital Ordinary shares— allotted and fully paid of 25p eachOpening balance of 119,091,971 (2014: 119,353,816) shares 29,773 29,839Repurchase of 799,027 (2014: 276,705) shares into Treasury (200) (70)Issue of 10,155,432 (2014: 14,860) Ordinary shares on conversion of Subscription shares 2,539 4

Sub total 32,112 29,7733,915,149 (2014: 3,116,122) shares held in Treasury 979 779

Closing balance1 33,091 30,552

Subscription shares — allotted and fully paid of 1p each:Opening balance of 10,155,432 (2014: 10,170,292) shares 102 102Conversion of 10,155,432 (2014: 14,860) shares into Ordinary shares (102) —

Closing balance2 — 102

Total called up share capital 33,091 30,654

1Represented by 132,363,525 (2014: 122,208,093) Ordinary shares of 25p each, including 3,915,149 (2014: 3,116,122 ) shares held in Treasury.

2On 31st July 2014, the Subscription shares expired and were all converted to Ordinary shares.

Share capital transactions During the year, holders of 10,155,432 Subscription shares exercised their right to convert those shares into Ordinary shares at

a price of 543 pence respectively, paying a total consideration of £55,144,000.

During the year 799,027 shares were repurchased into Treasury for a total consideration of £4,691,000.

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Capital reserves Gains and Holding Called up Capital losses on gains and share Share redemption Other sales of losses on Revenue capital premium reserve reserve1 investments investments reserve £’000 £’000 £’000 £’000 £’000 £’000 £’000

14. Reserves Opening balance 30,654 121,010 1,665 69,939 260,837 250,945 15,543Realised foreign currency losses on cash and short term deposits — — — — (124) — —

Gains on sales of investments based on thecarrying value at the previous balancesheet date — — — — 17,848 — —

Net change in investment holding gainsand losses — — — — — 32,568 —

Transfer on disposal of investments — — — — 11,434 (11,434) —Repurchase of shares into Treasury — — — — (4,691) — —Exercise of Subscription shares intoOrdinary shares (102) 102 — — — — —

Issue of Ordinary shares on exercise ofSubscription shares 2,539 52,605 — — — — —

Costs in relation to issue of shares — (60) — — — — —Other capital charges — — — — (38) — —Dividend appropriated in the year — — — — — — (7,078)Retained revenue for the year — — — — — — 8,527

Closing balance 33,091 173,657 1,665 69,939 285,266 272,079 16,992

1Created during the year ended 30th June 1999, following a cancellation of the share premium account.

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15. Net asset value per Ordinary share

2015 2014

UndilutedOrdinary shareholders funds (£’000) 852,689 750,593Number of Ordinary shares in issue 128,448,376 119,091,971Net asset value per Ordinary share (pence) 663.8 630.3

Diluted1

Ordinary shareholders funds assuming exercise of Subscription shares (£’000) 852,689 805,737Number of potential Ordinary shares in issue 128,448,376 129,247,403Net asset value per Ordinary share (pence) 663.8 623.4

1As at 30th June 2015 there was no dilution effect as the rights attached to the Subscription shares lapsed on 31st July 2014.

2015 2014 £’000 £’000

16. Reconciliation of net return/(loss) on ordinary activities before finance costs and taxation to net cash inflow from operating activities

Net return/(loss) on ordinary activities before finance costs and taxation 60,319 (25,910)(Less capital return)/Add capital loss before finance costs and taxation (50,254) 33,297Scrip dividends received as income (196) (94)(Increase)/decrease in dividends and interest receivable (1,817) 1,153(Increase)/decrease in other debtors (13) 12Increase/(decrease) in accrued expenses 61 (36)Performance fee paid — (4,997)Overseas withholding tax (1,665) (1,424)

Net cash inflow from operating activities 6,435 2,001

At 30th June Exchange At 30th June 2014 Cash flow movements 2015 £’000 £’000 £’000 £’000

17. Analysis of changes in net fundsCash and short term deposits 2,792 (467) (120) 2,205

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18. Contingent liabilities and capital commitments

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

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

Details of the management contract are set out in the Directors’ Report on page 24. The terms make allowance for theexclusion of management charges on investments held in funds on which the Manager earns a management fee. The feepayable to the Manager for the year was £8,372,000 (2014: £7,449,000) of which £nil (2014: £nil) was outstanding at the yearend.

The Company’s net asset value per share underperformed the benchmark. This resulted in a cumulative negativenon-offsettable performance fee of £1,637,144 (2014: £3,574,731). With effect from 1st July 2015 the performance feearrangement has been cancelled.

Expenses amounting to £186,000 (2014: £172,000) including VAT were payable to the Manager for the marketing andadministration of savings scheme products of which £nil (2014: £15,000) was outstanding at the year end.

Included in other administration expenses in note 5 on page 49 are safe custody fees payable to JPMorgan Chase Bank N.A.amounting to £480,000 (2014: £496,000) of which £121,000 (2014: £85,000) was outstanding at the year end.

The Manager carries out some of its dealing transactions through group subsidiaries. These transactions are carried outat arm’s length. The commission payable to JPMorgan Securities for the year was £12,000 (2014: £31,000) of which £nil(2014: £nil) was outstanding at the year end.

Handling charges incurred on dealing transactions amounting to £38,000 (2014: £21,000) were payable to JPMorganChase Bank N.A., of which £26,000 (2014: £6,000) was outstanding at the year end.

The Company holds units in the JPMorgan US Dollar Liquidity Fund, which is managed by JPMAM. At the year end, theCompany’s investment in this fund amounted to £30,014,000 (2014: £31,596,000) and represented 3.5% (2014: 4.2%) ofthe Company’s investment portfolio. During the year, the Company made purchases of units amounting to £82.9 million(2014: £87.1 million) and sales amounting to £86.1 million (2014: £81.1 million). Income amounting to £41,000 (2014:£51,000) was receivable from this investment for the year.

At the year end, a bank balance of £2,205,000 (2014: £2,792,000) was held with JPMorgan Chase Bank N.A. Interestamounting to £4,000 (2014: £4,000) was receivable by the Company from JPMorgan Chase for the year of which £nil(2014: £1,000) was outstanding at the year end.

The Company has no related parties other than its Directors. Details of the Directors’ shareholdings and the remunerationpayable to Directors are given in the Directors’ Remuneration Report on page 34.

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20. Disclosures regarding financial instruments measured at fair value

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

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

Level 1 – valued using quoted prices in active markets.

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

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

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

Details of the valuation techniques used by the Company are given in note 1(b) on page 46.

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

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

Financial instruments held at fair value through profit or loss Equity investments 822,495 — — 822,495Liquidity fund 30,014 — — 30,014

Total 852,509 — — 852,509

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

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

Financial instruments held at fair value through profit or loss Equity investments 714,278 — — 714,278 Liquidity fund 31,596 — — 31,596

Total 745,874 — — 745,874

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

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

As an investment trust company, the Company invests in equities and other securities for the long term so as to achieve itsstated investment objective. In pursuing this objective, the Company is exposed to a variety of risks that could result in areduction in the Company’s net assets or a reduction in the profits available for dividends. These risks include market risk(comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Directors’ policy formanaging these risks is set out below. The Company Secretary, in close co-operation with the Board and the Manager,co-ordinates 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 of overseas companies and a US Dollar liquidity fund which are held in accordance with theCompany’s investment objective;

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

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

(a) Market risk The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in 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 presentation currency). As a result, movements in exchange rates may affect the sterling value ofthose 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 five 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. Income denominated in foreign currencies isconverted to sterling on receipt. The Company may use short term forward currency contracts to manage working capitalrequirements. It is currently not the Company’s policy to hedge against foreign currency risk.

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

2015 South Hong US Indian African Kong Brazilian Indonesian Dollars Rupees Rands Dollars Real Rupiah Other Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Investments held at fair value through profit orloss that are monetary items 30,014 — — — — — — 30,014

Net current (liabilities)/assets (2,214) 550 138 113 154 76 1,532 349

Foreign currency exposure on net monetary items 27,800 550 138 113 154 76 1,532 30,363Investments held at fair value through profit or loss that are equities 192,587 171,152 111,437 93,685 90,199 37,738 109,766 806,564

Total net foreign currency exposure 220,387 171,702 111,575 93,798 90,353 37,814 111,298 836,927

The above year end amounts are not representative of the exposure to foreign currency risk during the year. Investmentsheld at fair value through profit or loss that are monetary items comprise the holding in the JPMorgan US Dollar LiquidityFund which has fluctuated between £63,839,577 and £4,223,905 during the year.

2014 South Hong US Indian African Kong Brazilian Mexican Dollars Rupees Rands Dollars Real Pesos Other Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Investments held at fair value through profit orloss that are monetary items 31,596 — — — — — — 31,596

Net current assets 1,861 541 137 106 1,838 — 336 4,819

Foreign currency exposure on net monetary items 33,457 541 137 106 1,838 — 336 36,415 Investments held at fair value through profit or loss that are equities 138,093 123,237 81,446 79,339 94,710 44,115 130,987 691,927

Total net foreign currency exposure 171,550 123,778 81,583 79,445 96,548 44,115 131,323 728,342

The above year end amounts are not representative of the exposure to foreign currency risk during the year. Investmentsheld at fair value through profit or loss that are monetary items comprise the holding in the JPMorgan US Dollar LiquidityFund which fluctuated between £36,498,000 and £7,146,000 during the year.

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

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

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 monetary currency financial instruments held at each balance sheet date and the income receivable in foreigncurrency and assumes a 10% (2014: 10%) appreciation or depreciation in sterling against the US Dollar, Hong Kong Dollar,Indian Rupee, Brazilian Real, South African Rand, Indonesian Rupiah and other currencies to which the Company isexposed, which is considered 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 1,935 1,569Capital return 3,036 3,642

Total return after taxation for the year 4,971 5,211

Net assets 4,971 5,211

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

2015 2014 £’000 £’000

Income statement return after taxationRevenue return (1,935) (1,569)Capital return (3,036) (3,642)

Total return after taxation for the year (4,971) (5,211)

Net assets (4,971) (5,211)

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

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

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

Interest rate exposure The exposure of financial assets and liabilities to floating interest rates, 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 2,205 2,792JPMorgan US Dollar Liquidity Fund 30,014 31,596

Total exposure 32,219 34,388

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

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

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

2015 2014 £’000 £’000

Maximum credit exposure to floating rates – net cash and liquidity fund balances 37,749 35,518Minimum credit exposure to floating rates – net cash and liquidity fund balances 9,962 18,130

Interest rate sensitivity The following table illustrates the sensitivity of return after taxation for the year and net assets to a 1% (2014: 1%) increaseor decrease in interest rates in regards 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 sensitivityanalysis is based on the Company’s monetary currency financial instruments held at the balance sheet date and the incomereceivable in foreign currency, with all other variables held constant.

2015 2014 1% increase 1%decrease 1% increase 1% decrease in rate in rate in rate in rate £’000 £’000 £’000 £’000

Income statement return after taxationRevenue return 322 (322) 344 (344)Capital return — — — —

Total return after taxation for the year 322 (322) 344 (344)

Net assets 322 (322) 344 (344)

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 fluctuation in the level of cash balances and investment in the JPMorgan US DollarLiquidity Fund.

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

(a) Market risk continued(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.

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

2015 2014 £’000 £’000

Investments held at fair value through profit or loss 822,495 714,278

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 12 to 16. This shows that the investments’ value is in a broadspread of countries with no concentration of exposure to any one country. It should also be noted that an investment maynot be wholly exposed to the economic conditions in its country of domicile or of listing.

Other price risk sensitivity 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 2014 10% increase 10% decrease 10% increase 10% decrease in fair value in fair value in fair value in fair value £’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (617) 766 (714) 714Capital return 82,250 (82,250) 71,428 (71,428)

Total return after taxation for the year and net assets 81,633 (81,484) 70,714 (70,714)

(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.

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

2015 2014 Three Three months months or less Total or less Total £’000 £’000 £’000 £’000

Creditors: amounts falling due within one year Other creditors and accruals 281 281 200 200Securities purchased awaiting settlement 6,807 6,807 — —Repurchase of the Company’s own shares for future settlement — — 55 55

7,088 7,088 255 255

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

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

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

Exposure to JPMorgan ChaseJPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The custody agreement grants a general lien over thesecurities credited to the securities account. The Company’s assets are segregated from JPMorgan Chase’s own trading assetsand are therefore protected from creditors in the event that JPMorgan Chase were to cease trading. However, no absoluteguarantee can be given to investors on the protection of all assets of the Company.

Credit risk exposure The amounts shown in the balance sheet under investment in liquidity fund, debtors and cash and short term depositsrepresent the maximum exposure to credit risk at the current and comparative year end.

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

There have been no (2014: nil) securities on loan at any time during the year.

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

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22. Capital management policies and procedures

The Company’s capital comprises the following:

2015 2014 £’000 £’000

EquityShare capital 33,091 30,654Reserves 819,598 719,939

Total capital 852,689 750,593

The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise capitalreturn to shareholders.

The Board’s policy is to employ gearing when the Manager believes it to be appropriate to do so. Gearing will be in the rangeof 10% net cash to 20% geared in normal market conditions, at the discretion of the Manager. Gearing for this purpose isdefined as Total Assets (including net current assets/liabilities) less cash/cash equivalents and excluding bank loans,expressed as a percentage of net assets.

2015 2014 £’000 £’000

Investments excluding liquidity fund holdings 822,495 714,278Current assets excluding cash 5,063 2,182Current liabilities excluding bank loans (7,088) (255)

Total assets 820,470 716,205

Net assets 852,689 750,593

Gearing (3.8)% (4.6)%

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

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

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

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Notice is hereby given that the twenty fourth Annual GeneralMeeting of JPMorgan Emerging Markets Investment Trust plcwill be held at Holborn Bars, 138-142 Holborn, LondonEC1N 2NQ on Tuesday, 17th November 2015 at 3.00 p.m. for thefollowing purposes:

1. To receive the Directors’ Report, the Annual Accounts andthe Auditors’ Report for the year ended 30th June 2015.

2. To approve the Company’s remuneration policy.

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

4. To approve a final dividend of 6.0p per share.

5. To reappoint Sarah Arkle a Director of the Company.

6. To reappoint Anatole Kaletsky as a Director of theCompany.

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

8. To reappoint Richard Laing as a Director of the Company.

9. To reappoint Percy Mistry as a Director of the Company.

10. To reappoint Andrew Page as a Director of the Company.

11. To reappoint Alan Saunders as a Director of the Company.

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

Special Business

To consider the following resolutions:

Authority to allot new shares – Ordinary Resolution13. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitutionof any 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 £1,605,604, representingapproximately 5% of the Company’s issued Ordinary sharecapital as at the date of the passing of this resolution,provided that this authority shall expire at the conclusion ofthe Annual General Meeting of the Company to be held in

2016 unless renewed at a general meeting prior to suchtime, save that the Company may before such expiry makeoffers or agreements which would or might require sharesto be allotted or Rights to be granted after such expiry andso that the Directors of the Company may allot shares andgrant Rights in pursuance of such offers or agreements asif the 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 to 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 £1,605,604 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 issuedOrdinary shares on such terms and in such manner as theDirectors may from time to time determine.

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 19,254,411, or ifless, that number of Ordinary shares which is equal to14.99% 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;

Shareholder InformationNotice of Annual General Meeting

16519 pp67_72 28/09/2015 16:55 Page 67


(iii) the maximum price which may be paid for an Ordinaryshare shall be an amount equal to the highest of:(a) 105% of the average of the middle marketquotations for an Ordinary share taken from andcalculated by reference to the London Stock ExchangeDaily Official List for the five business days immediatelypreceding the day on which the Ordinary share iscontracted to be purchased; or (b) the price of the lastindependent trade; or (c) the highest currentindependent bid;

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

(v) the authority hereby conferred shall expire on 16th May2017 unless the authority is renewed at the Company’sAnnual General Meeting in 2016 or at any other generalmeeting prior to such time; and

(vi) the Company may make a contract to purchaseOrdinary shares under the authority hereby conferredprior to the expiry of such authority which contract willor may be executed wholly or partly after the expiry ofsuch authority and may make a purchase of Ordinaryshares pursuant to any such contract.

Authority to increase the maximum aggregate of Directors’ feespayable – Ordinary Resolution16. THAT the maximum aggregate fees payable to Directors be

increased to £225,000 per annum.

By order of the Board Jonathan Latter, for and on behalf of JPMorgan Funds Limited, Company Secretary

5th October 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 personwho has agreed to attend to represent you. Details of how toappoint the Chairman or another person(s) as your proxy orproxies using the proxy form are set out in the notes to the proxyform. If a voting box on the proxy form is left blank, the proxy orproxies will exercise his/their discretion both as to how to vote andwhether he/they abstain(s) from voting. Your proxy must attendthe Meeting for your vote to count. Appointing a proxy or proxiesdoes not preclude you from attending the Meeting and voting inperson.

3. Any instrument appointing a proxy, to be valid, must be lodged inaccordance with the instructions given on the proxy form no laterthan 3.00 p.m. two business days prior to the Meeting(i.e. excluding weekends and bank holidays).

4. You may change your proxy instructions by returning a new proxyappointment. The deadline for receipt of proxy appointments 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 the sameshare in respect of the same Meeting, the one which is last received(regardless of its date or the date of its signature) shall be treated asreplacing and revoking the other or others as regards that share; ifthe Company is unable to determine which was last received, noneof them shall be treated as valid in respect of that share.

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

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

Shareholder Information continuedNotice of Annual General Meeting continued

16519 pp67_72 28/09/2015 16:55 Page 68


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 representativemay exercise (on behalf of the corporation) the same powers asthe corporation could exercise if it were an individual member ofthe Company, provided that they do not do so in relation to thesame shares. It is therefore no longer necessary to nominate adesignated corporate representative.

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

8. Members that satisfy the thresholds in Section 527 of theCompanies Act 2006 can require the Company to publish astatement on its website setting out any matter relating to:(a) the audit of the Company’s accounts (including the Auditors’report and the conduct of the audit) that are to be laid beforethe AGM; or (b) any circumstances connected with Auditors ofthe Company ceasing to hold office since the previous AGM,which the members propose to raise at the Meeting. TheCompany cannot require the members requesting thepublication to pay its expenses. Any statement placed on thewebsite must also be sent to the Company’s Auditors no laterthan the time it makes its statement available on the website.The business which may be dealt with at the AGM includes anystatement that the Company has been required to publish on itswebsite pursuant to this right.

9. Pursuant to Section 319A of the Companies Act 2006, theCompany must cause to be answered at the AGM any questionrelating to the business being dealt with at the AGM which is put bya member attending the Meeting except in certain circumstances,including if it is undesirable in the interests of the Company or thegood order of the Meeting or if it would involve the disclosure ofconfidential information.

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

11. A copy of this notice has been sent for information only to personswho have been nominated by a member to enjoy informationrights under Section 146 of the Companies Act 2006 (a ‘NominatedPerson’). The rights to appoint a proxy can not be exercised by 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 onthe Company’s website www.jpmemergingmarkets.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 purposesother than those expressly stated.

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

16. As at 25th September 2015 (being the latest business day prior tothe publication of this Notice), the Company’s issued share capitalconsists of 132,363,525 Ordinary shares (of which 3,915,149 sharesare held in Treasury), carrying one vote each. Therefore the totalvoting rights in the Company are 128,448,376.

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.

16519 pp67_72 28/09/2015 16:55 Page 69


Return to Ordinary shareholders

Total return to the Ordinary shareholder on a mid-market priceto mid-market price basis, assuming that all dividends receivedwere reinvested, without transaction costs, in the Ordinaryshares of the Company at the time the shares were quotedex-dividend.

Return on net assets

Total return on net asset value (‘NAV’) per share, on a bid valueto bid value basis, assuming that all dividends paid out by theCompany were reinvested in the shares of the Company at theNAV per share at the time the shares were quoted ex-dividend.

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.

Benchmark return

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

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

Gearing/Net 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.

Ongoing charges

The ongoing charges represent the Company’s managementfee and all other operating expenses, excluding finance costs,expressed as a percentage of the average daily net assetsduring the year.

Share price discount/premium to net asset value (‘NAV’)

If the share price of an investment trust is lower than the NAVper share, the Company’s shares are said to be trading at adiscount. The discount is shown as a percentage of the NAVper share. The opposite of a discount is a premium. It is morecommon for an investment trust’s shares to trade at a discountthan at a premium.

Performance attribution

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

Performance attribution definitions:

Asset allocationMeasures the impact of allocating assets differently to those inthe benchmark, via the portfolio’s weighting in differentcountries, sectors or asset types.

Stock selectionMeasures 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/cashMeasures the impact on returns of borrowings or cashbalances on the Company’s relative performance.

CurrencyMeasures the impact of currency exposure differencesbetween the Company’s portfolio and its benchmark.

Management fee/other expensesThe payment of fees and expenses reduces the Company’s netassets and therefore has a negative effect on relativeperformance.

Shareholder Information continuedGlossary of Terms and Definitions

16519 pp67_72 28/09/2015 16:55 Page 70


Leverage

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

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

Gross Commitment Leverage Exposure Method Method

Maximum limit 175.00% 175.00%Actual* 101.02% 101.42%

*It should be noted that the Company does not have a borrowing facility and does notcurrently employ gearing. At the year end the Company’s position was 3.8% net cash.The above figures are theoretical and are calculated in accordance with themethodology prescribed by the AIFMD.

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

16519 pp67_72 28/09/2015 16:55 Page 71


Savings Plan

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

Stocks & Shares Individual Savings Accounts (ISA)

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

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

Fund supermarkets:

AJ Bell Interactive InvestorAlliance Trust James BrearleyBarclays Stockbrokers James HayBestinvest SelftradeCharles Stanley Direct TD DirectHalifax Share Dealing Service The Share CentreHargreaves Lansdown Transact

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.

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

16519 pp67_72 28/09/2015 16:55 Page 72


HistoryThe Company was launched in July 1991 with assets of £60 million. InMarch 1993 the Company raised a further £50 million by an issue ofconversion shares. On 13th April 2006, an additional £76 million wasraised by an issue of shares following the reconstruction of F&CEmerging Markets Investment Trust plc. The Company adopted itscurrent name in November 2005.

Company NumbersCompany registration number: 2618994

Ordinary SharesLondon Stock Exchange number: 0341895 ISIN: GB0003418950Bloomberg code: JMG LN

Market InformationThe Company’s net asset value (‘NAV’) is published daily via the LondonStock Exchange. The Company’s Ordinary shares are listed on theLondon Stock exchange and quoted daily in the Financial Times, TheTimes, the Daily Telegraph, The Scotsman and on the J.P. Morganwebsite at www.jpmemergingmarkets.co.uk, where the Ordinary shareprice is updated every fifteen minutes during trading hours.

Websitewww.jpmemergingmarkets.co.uk

Share TransactionsThe Company’s shares may be dealt in directly through a stockbroker,intermediary or professional adviser acting on an investor’s behalf.They may also be purchased and held through the J.P. MorganInvestment Account and J.P. Morgan ISA. These products areavailable on the online wealth manager service, J.P. MorganWealthManager+ available atwww.jpmorganwealthmanagerplus.co.uk

Manager and Company SecretaryJPMorgan Funds Limited

Company’s Registered Office60 Victoria EmbankmentLondon EC4Y 0JPTelephone: 020 7742 4000For company secretarial and administrative matters, please contactJonathan Latter.

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

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

RegistrarsEquiniti LimitedReference 1081Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone: 0871 384 2320

Calls to this number cost 10p per minute plus your telephonecompany’s access charge. Lines open 8.30 a.m. to 5.30 p.m., Mondayto Friday. The overseas helpline number is +44 (0)121 415 0225.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 1081.

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

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

BrokersWinterflood Securities LimitedThe Atrium Building Cannon Bridge25 Dowgate HillLondon EC4R 2GATelephone number: 020 3100 000

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 JuneFinal results announced SeptemberHalf year end DecemberHalf year results announced FebruaryFinal dividend on Ordinary shares paid NovemberAnnual General Meeting November

A member of the AIC

16519 4 page cover 29/09/2015 15:01 Page 4

J.P. Morgan HelplineFreephone 0800 20 40 20 or +44 (0)20 7742 9995

Your telephone call may be recorded for your security

www.jpmemergingmarkets.co.uk

16519 4 page cover 29/09/2015 15:01 Page 1

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