2015 annual report jpmorgan mid cap investment …jpmorgan mid cap investment trust plc. annual...

Annual Report2015JPMorgan Mid Cap

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

JPMorgan M

id Cap Investment Trust plc

2015

Features

Objective

JPMorgan Mid Cap Investment Trust plc (the ‘Company’) aims to achieve capital growthfrom investment in medium-sized UK listed companies. The Company specialises ininvestment in FTSE 250 companies, using long and short term borrowings to increasereturns to shareholders.

Investment Policies

- To focus on FTSE 250 stocks that deliver strong capital growth.

- To have significant exposure to the UK economy.

- To seek out both value stocks and growth stocks, including AIM stocks, to deliver strongperformance throughout the market cycle.

- To use gearing to increase potential returns to shareholders.

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

The Company’s shares are designed for private investors in the UK, including retailinvestors, professionally-advised private clients and institutional investors, who seek thepotential for capital growth from investment in the UK market and who understand andare willing to accept the risks of exposure to equities. Private investors should considerconsulting an independent financial adviser who specialises in advising on the acquisitionof shares and other securities before acquiring shares in the Company. Investors should becapable of evaluating the risks and merits of such an investment and should havesufficient resources to bear any loss that may result.

Benchmark

The FTSE 250 Index (excluding investment trusts).

Capital Structure

UK domiciled.

Premium Listing on the London Stock Exchange.

As at 30th June 2015, the Company’s issued share capital comprised 25,398,080 ordinaryshares of 25p each including 1,400,900 shares held in Treasury.

Management Company

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

FCA regulation of ‘non-mainstream pooled investments’

The Company currently conducts its affairs so that the shares issued by the Company can berecommended by independent financial advisers to ordinary retail investors in accordancewith the FCA’s rules in relation to non-mainstream investment products and intends tocontinue to do so for the foreseeable future.

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

AIC

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

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

Contents

1 Financial Results

Strategic Report

2 Chairman’s Statement6 Investment Managers’ Report8 Summary of Results9 Performance10 Ten Year Financial Record11 Ten Largest Equity Investments12 Portfolio Analyses12 Investment Activity13 List of Investments15 Business Review

Governance

19 Board of Directors21 Directors’ Report22 Corporate Governance Statement28 Directors’ Remuneration Report31 Statement of Directors’

Responsibilities

32 Independent Auditors’ Report

Financial Statements

37 Income Statement38 Reconciliation of Movements in

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

Shareholder Information

58 Notice of Annual General Meeting61 Glossary of Terms and Definitions62 Where to buy J.P. Morgan Investment

Trusts65 Information about the Company

JPMorgan Mid Cap Investment Trust plc. Annual Report & Accounts 2015 1

Financial ResultsTotal returns (includes dividends reinvested)

146.2

125.0

79.1

188.6

165.9

124.3

%

228.4

193.0

230.9

0

50

100

150

200

250

10 Year Performance5 Year Performance3 Year Performance

Benchmark return1,4

JPMorgan Mid Cap – return on net assets2,3

JPMorgan Mid Cap – return to shareholders1

Long Term Performancefor periods ended 30th June 2015

+24.0%Return to shareholders1

(2014: +23.2%)

+24.7%Return on net assets2,3

(2014: +18.3%)

24.5pOrdinary dividend includinga special dividend of 4.5p(2014: 18.0p)

+15.0%Benchmark return1,4

(2014: +17.8%)

For further details and analysis please refer to the performance attribution on page 7.

A glossary of terms and definitions is provided on page 61.

1Source: Morningstar.2Source: J.P. Morgan.3Total return on net assets, net of management fees and administration expenses, but prior to the use of revenue reserves to financethe dividend.4The Company’s benchmark is the FTSE 250 Index (excluding investment trusts).

JPMorgan Mid Cap Investment Trust plc. Annual Report & Accounts 20152

Investment Performance

I am delighted to report that the Company’s total return on net assets for the year to30th June 2015 was 24.7%, some 9.7 percentage points ahead of the Company’sbenchmark index, the FTSE 250 Index (excluding investment trusts), which returned15.0% on a total return basis. This outperformance was driven by strong stockselection and was also assisted by gearing. The discount at which the ordinary sharestrade to their net asset value per share widened marginally, giving a total return toshareholders of 24.0%. Despite this excellent performance the Company’s discounthas remained stubbornly wide. However, over the past year, the additionalpromotional activities for the Company driven by the Manager, together withcontinued good performance, has begun to bear fruit and the discount has narrowedsince the period end to 3.1% as at the close of business on 23rd September 2015.

Long term shareholders will be aware that the performance for this Company hasbeen through challenging periods, particularly from 2007 to 2011. It is thereforepleasing that following the changes to the management team and the appointmentof Georgina Brittain the Company can now report strong outperformance of thebenchmark over three and five years and is only marginally behind over ten years.It is worth noting the stark difference in the performance graphs from the Company’s2011 Annual Report and Accounts and the performance graphs from this report,which highlights the turnaround in the performance of the Company.

Strategic ReportChairman’s Statement

8.4 6.7

46.7

–0.6 –0.8

47.756.4

68.2

162.4

–10

30

60

90

120

150

180

Benchmark returnJPMorgan Mid Cap – return on net assetsJPMorgan Mid Cap – return to shareholders


%

146.2

125.0

79.1

188.6

165.9

124.3

%

228.4

193.0

230.9

0

50

100

150

200

250


Benchmark returnJPMorgan Mid Cap – return on net assetsJPMorgan Mid Cap – return to shareholders



Given the significant turnaround in performance and having taken all factors intoaccount, including the other services provided to the Company and its shareholders,the Board has no hesitation in confirming its conclusion that JPMorgan should remainas the Company’s Manager and that its ongoing appointment remains in the bestinterests of shareholders.


The investment managers’ report below gives more detail on the performance andinvestment activity within the portfolio over the year to 30th June 2015, togetherwith their views on the outlook for the mid cap sector.

As I mentioned in my statement last year, JPMorgan Mid Cap Investment Trust plccontinues to be one of the few closed ended companies which invests primarily inUK mid cap stocks. We would anticipate that more investors will allocate a greaterproportion of their portfolios to the FTSE 250 Index given its strong performancerelative to the FTSE 100 Index (both on an including and excluding investment trustsbasis). I included the table below in my statement last year, which details the returnsgenerated by the FTSE 250 indices compared to the FTSE 100 Index over one, three,five and 10 years to 30th June 2015. The updated table shows that 2015 was yet afurther year when it paid to have an allocation to the mid cap sector within yourinvestment portfolio.

One Year Three Year Five Year Ten Year Index Return % Return % Return % Return %

FTSE 2501 14.5 73.7 114.4 212.8

FTSE 2502 15.0 79.1 124.3 230.8

FTSE 100 0.2 30.4 58.5 83.5

1Including investment trusts.2Excluding investment trusts.

Revenue and Dividends

Earnings per share for the year to 30th June 2015 were 28.53 pence, an increase onlast year of 31.7%. The receipt of special dividends represented the majority of theincrease, with some growth in base dividend payments. This year just under 20.0%of the income received was from the payment of special dividends. Against thisbackground the Board has decided to propose a final dividend of 12.0 pence, whichwhen added to the interim dividend paid in April of 8.0 pence, equates to a basedividend payable of 20.0 pence for the full year (2014: 18.0 pence). Given the level ofspecial dividends paid by underlying companies the Board has further resolved topropose the payment of a special dividend of 4.5 pence. The final dividend andspecial dividend will be combined as one dividend and paid on 12th November 2015to shareholders on the register at the close of business on 2nd October 2015. Thisyear’s total dividend payment represents an increase of 36.1% on 2014.

It is expected that the underlying base dividend receipts on the Company’s portfolioin 2015/2016 will exceed those of 2014/2015. We are unable to forecast the paymentof special dividends but these are again expected to be a feature of the UK dividendmarket in 2015/2016. As always, I would like to add my usual caveat that we do notregard the receipt of substantial special dividends as a permanent feature of the UKmarket.


Gearing and Borrowing Facilities

The diligent use of gearing by the investment management team has again assistedperformance. The Board of Directors sets the overall gearing guidelines and reviewsthese at each meeting; changes in these guidelines between meetings may beundertaken after consultation with the Board. The Board has determined that innormal circumstances the Company’s gearing range is –5% to +25%. At the end ofthe Company’s financial year gearing stood at +9.0%.

At the end of the reporting year, the Company had two loan facilities in placetotalling £40 million. At present we believe that the funds available for gearing areappropriate, however, this is kept under review. Further details on these facilitiescan be found on pages 53 and 54.

Discount Management

During the year under review, the Company did not repurchase any shares. However,as in prior years, Directors will be seeking to renew powers to repurchase up to14.99% and issue up to 10% of the Company’s shares respectively, at the forthcomingAnnual General Meeting. Treasury shares and new Ordinary shares will only be issuedat a premium to net asset value.

Board of Directors

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

In accordance with the UK corporate governance best practice, all Directors willseek reappointment at the Annual General Meeting. Accordingly, I, along withMichael Hughes (Senior Independent Director), Richard Huntingford, MargaretLittlejohns and Gordon McQueen (Chairman of the Audit Committee) all beingeligible, offer ourselves for reappointment at this year’s Annual General Meeting.

The Board continues to manage succession so that it has an appropriate balance ofskills and diverse approaches to its tasks. Changes to the composition of the Boardwill be made over the next two years in an effort to balance the length of Directortenures whilst ensuring that the Board maintains the required balance of skillsand Company knowledge.

A review of our Directors’ fees completed by the Nomination and RemunerationCommittee at the beginning of 2015 concluded that such fees remained belowindustry average, despite an increase in July 2013. Accordingly the Board resolved toincrease the fees payable to £33,000 for the role of Chairman, £27,000 for the role ofthe Audit Committee Chairman and £23,000 for all other Directors, all increases witheffect from 1st January 2015. We believe that these levels are now sufficient to attractand retain suitability qualified board members.

Strategic Report continuedChairman’s Statement continued


Annual General Meeting

This year’s Annual General Meeting will be held on Monday, 2nd November 2015 at2.30 p.m. at 60 Victoria Embankment, London EC4Y 0JP. In addition to the formalpart of the meeting, there will be a presentation from our investment managers,Georgina Brittain and Katen Patel who will also answer questions on the portfolioand performance. There will be an opportunity to meet the Board, the investmentmanagers and representatives of JPMorgan after the meeting. I look forward towelcoming as many of you as possible to this meeting.

If you have any detailed or technical questions, it would be helpful if you could raisethese in advance of the meeting with the Company Secretary at 60 VictoriaEmbankment, London EC4Y 0JP. Shareholders who are unable to attend the AnnualGeneral Meeting are encouraged to use their proxy votes.

Prospects

It is pleasing to state that since the Company’s year end and despite the markedvolatility in the market over the summer, the Company has continued to outperformthe benchmark on both an NAV and share price total return basis. In the two monthsto the end of August 2015, the NAV has increased by 0.3% which, coupled with thewelcome reduction in discount, had delivered a 10.8% total return for shareholders.Over this two month period, the benchmark retreated by 1.8%.

We echo the sentiments of our investment manager that, notwithstanding themacro-economic concerns facing the UK and the rest of the world, we believe the UKmid cap universe of stocks in general and the Company’s portfolio in particularshould thrive and continue to deliver good performance relative to the UK’s large capstocks.

Andrew BarkerChairman 24th September 2015


Performance and Market Background

JPMorgan Mid Cap Investment Trust enjoyed very strong performance over theyear to 30th June 2015. The Company’s benchmark index, the FTSE 250 excludinginvestment trusts, produced a total return of 15.0% for the 12 months, but theCompany significantly outperformed this, providing a total return on net assetsof 24.7%.

While the year contained periods of significant volatility, stock markets continued torise, notably in the more domestically-focussed mid and smaller sized companies.This outperformance of mid and small companies was aided by the on-going mergersand acquisitions (or ‘M&A’) activity that we have been predicting for some time.The run up to the General Election in May 2015 caused some nervousness in markets,but the outcome was a very positive one for the Company as it provides the certaintyof five years of pro-business Government.

Portfolio

The key contributors to outperformance were support services (our positions inHowden Joinery and Ashtead in particular), general retailers (Card Factory, WH Smithand Dixons Carphone, among others) and household goods (the UK house builders).M&A was a further benefit, with bids for our holdings in CSR, Brit and Pace (andsubsequent to the year end, a bid for HellermannTyton).

As the global backdrop mutated over the year, we made a number of changes to theportfolio. We sold several of our holdings as they were promoted into the FTSE 100and with the proceeds we further increased our focus on the UK consumer, buyingcompanies such as JD Sports and Saga, and also increased our emphasis on owninggrowth companies, buying positions in Betfair, NMC and Playtech. We sold out of allof our oil producers, as the oil price declined. We further increased our position in thehouse builders as their share prices suffered a temporary setback, and added Barrattback into the portfolio as it was demoted from the FTSE 100.

Early in 2014 we avoided many of the new companies coming to the market, as wethought valuations were frequently too high. This year, we found many moreinteresting investment opportunities and participated in a number of IPOs. Theseincluded Wizz Air (ultra low cost airline), Auto Trader and Sophos (internet security).We have also built up a position in so-called ‘challenger banks’, buying Aldermoreand Shawbrook when they came to the stock market, and more recently addedOneSavings Bank when it was promoted into the FTSE 250.

Our current positioning reflects these changes. We remain overweight (orover-represented) in support services, the house builders, banks and generalretailers. We continue to be significantly underweight in oil producers and oil servicesand also in mining stocks. We are also mindful of the strength of Sterling, especiallyversus the Euro, so we continue to be very underweight in the industrials sectors.

Georgina Brittain

Katen Patel

Strategic Report continuedInvestment Managers’ Report


Outlook

The backdrop to our investments is generally positive. Both the US and the UKcontinue to grow, with the UK currently enjoying 2.6% GDP growth year-on-year.Inflation remains very low, benefiting from the on-going low oil price, the recent fallin commodity prices, and declining food prices. In addition, wage increases areoccurring well ahead of inflation; real wages are now rising by 3.3% p.a., and we havenow seen 20 consecutive months of year-on-year increases in consumer spendingpower. Unsurprisingly, this has led to UK consumer confidence being at a 15 yearhigh.

In Europe, a key trading partner for the UK, Greece has secured a bailout extensionwith its creditors, and new data points from the Eurozone on business and consumerconfidence demonstrate that the recent Greek crisis caused little damage to thebroader Eurozone countries. Stock market concerns have now focussed on China, butit is our view that the perceived risks from recent Chinese stock market turbulenceare being over-played.

The two relevant risks on the horizon are the EU Referendum and interest rate risesin the US and UK. On the former, current surveys show a balance of probability thatthe UK will stay in the EU although the outcome is by no means certain. On the latter,it remains our view that any rise in interest rates will be small and controlled, andreflects the improving health of both the US and UK economies.

We believe that the Company is set to benefit from this on-going economic recovery,and we will continue to make diligent use of gearing to enhance the Company’sperformance. Equities still remain an extremely attractive asset class for investors,and the Mid Cap arena continues to provide additional attractions, due to its domesticfocus, strong balance sheets and rising dividends. The ongoing benefit of M&A, plusthe incoming wave of exciting new growth companies, provides us with confidencefor the year ahead.

Georgina BrittainKaten PatelInvestment Managers 24th September 2015

Performance attribution for theyear ended 30th June 2015

% %

Contributions to total returns

Benchmark 15.0

Stock/sector selection 9.5Gearing/cash 1.2

Investment managercontribution 10.7

Portfolio total return 25.7

Fees/other expenses –1.0Other effects –1.0

Return on net assets 24.7

Return to shareholders 24.0

Source: JPMAM and Morningstar. All figures are on a

total return basis.

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


Strategic Report continuedSummary of Results

2015 2014

Total returns for the year ended 30th JuneReturn to shareholders1 +24.0% +23.2%Return on net assets2 +24.7% +18.3%Benchmark1,3 +15.0% +17.8%

% changeNet asset value, share price and discount at 30th JuneShareholders’ funds (£’000) 242,385 199,089 +21.7 Net asset value per share 1,010.1p 829.6p +21.8 Share price 886.0p 734.5p +20.6 Share price discount to net asset value 12.3% 11.5%Shares in issue (excluding shares held in Treasury) 23,997,180 23,997,180

Revenue for the year ended 30th JuneNet revenue attributable to shareholders (£’000) 6,847 5,200 +31.7 Return per share 28.53p 21.67p +31.7 Dividend per share4 24.5p 18.0p +36.1

Gearing at 30th June5 9.0% 8.1%

Ongoing ChargesRatio6 0.95% 0.97%


1Source: Morningstar. 2Source: J.P. Morgan.3The Company’s benchmark is the FTSE 250 Index (excluding investment trusts).42015 comprises ordinary dividends of 20.0p and a special dividend of 4.5p.5Gearing represents the excess amount above shareholders’ funds of total assets expressed as a percentage of the shareholders’ funds. Total assets include total investments and netcurrent assets/liabilities less cash/cash equivalents and excluding bank loans of less than one year. If the amount calculated is negative, this is shown as a ‘net cash’ position. 6Management fee and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year. The Ongoing ChargesRatio is calculated in accordance with guidance by the Association of Investment Companies in May 2012. With effect from 1st July 2013, the Company’s management fee wasincreased from 0.40% per annum to 0.65% per annum on assets up to £250 million and 0.60% per annum on assets over £250 million. The Company no longer has a performancefee following this change. For full details on the Company’s management fee please refer to page 21.


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

Source: Morningstar.

JPMorgan Mid Cap – share price total return.

JPMorgan Mid Cap – net asset value total return.

The benchmark is represented by the grey horizontal line.

70

80

90

100

110

120

20152014201320122011201020092008200720062005

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


JPMorgan Mid Cap – share price total return.

JPMorgan Mid Cap – net asset value total return.

Benchmark.

50

100

150

200

250

300

350

20152014201320122011201020092008200720062005

Performance


At 30th June 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Shareholders’ funds (£’m) 165.9 201.4 233.7 150.9 94.1 110.6 135.6 116.6 172.1 199.1 242.4

Net asset value per share (p) 473.5 647.4 799.3 582.2 371.9 441.0 543.2 483.9 717.3 829.6 1010.1

Share price (p) 384.5 558.0 695.5 488.0 321.5 364.5 455.0 393.0 611.5 734.5 886.0

Discount (%) 18.8 13.8 13.0 16.2 13.6 17.3 16.2 18.8 14.7 11.5 12.3

Gearing (%) 10.7 14.0 12.8 6.8 6.8 4.5 6.0 4.2 12.2 8.1 9.0

Year ended 30th June

Revenue attributable to shareholders (£’000) 4,383 4,380 4,689 4,785 4,758 3,018 2,961 3,938 5,030 5,200 6,847

Revenue return per share (p) 12.07 13.15 15.53 17.64 18.74 11.94 11.81 16.04 20.95 21.67 28.53

Dividend per share (p)1 11.30 12.50 14.50 16.50 21.90 17.00 17.00 17.00 18.00 18.00 24.50

Ongoing Charges Ratio (%)2 0.74 0.70 0.69 0.63 0.78 0.74 0.72 0.80 0.66 0.97 0.95

Rebased to 100 at 30th June 2005

Return to shareholders3 100.0 148.9 189.5 136.5 96.0 113.8 147.9 133.4 215.1 264.9 328.4

Return on net assets3 100.0 141.2 177.8 131.5 87.9 110.2 142.0 130.2 198.7 235.0 293.0

Benchmark3 100.0 131.8 165.9 132.8 113.1 147.5 194.8 184.8 244.2 287.8 330.9


12009 includes ordinary dividends of 17.0p and a special dividend of 4.9p. 2013 includes ordinary dividends of 17.0p and a special dividend of 1.0p. 2015 includes ordinary dividends of20.0p and a special dividend of 4.5p.2Management fee and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year. The Ongoing Charges iscalculated in accordance with guidance by the Association of Investment Companies in May 2012. (2009-2011: Total expense ratio: Management fee and all other operating expensesexcluding interest, expressed as a percentage of the average of the month end net assets during the year; 2008 and prior years: the average of the opening and closing net assets).3Source: Morningstar. Total returns with dividends reinvested.

Strategic Report continuedTen Year Financial Record


2015 2014Valuation Valuation

Company Sector £’000 %1 £’000 %1

Howden Joinery Industrials 13,119 4.9 6,422 2.9Howden Joinery Group designs, manufactures and sells ‘fitted’ kitchens. The company sells itsproducts to small local builders throughout the United Kingdom via its own network of ‘depots’.

Ashtead Industrials 12,243 4.6 9,620 4.3Ashtead Group hires out plant and machinery for the UK and the US construction and alliedindustries.

Micro Focus International Technology 9,920 3.7 6,589 3.0Micro Focus International provides enterprise application management solutions. The companyprovides software solutions for assessing, managing and updating existing applications.

Berkeley Consumer Goods 8,265 3.1 4,232 1.9The Berkeley Group is a residential and commercial property development company focusingon urban regeneration and mixed-use developments. The company purchases and developsland, in addition to constructing homes and apartment complexes throughout the South ofEngland, the Midlands and the North West.

Provident Financial Financials 7,898 3.0 4,338 1.9Provident Financial is a financial services group specialising in the provision of personal creditproducts for consumers in the United Kingdom non standard lending market. The company’sconsumer credit division provides small, unsecured loans, which they collect in weeklyinstallments. The company’s credit cards business is operated through Vanquis Bank.

Bellway2 Consumer Goods 7,821 2.9 3,222 1.4Bellway is a holding company whose subsidiaries build residential houses and conduct associatedtrading activities. The subsidiaries build starter or first time buyer homes, featuring two and threebedroom semi-detached houses, apartments and terraced houses. The Company operates inEngland, Wales and Scotland.

TalkTalk Telecom Telecommunications 6,101 2.3 6,051 2.7TalkTalk Telecom Group provides telecommunications services. The company provides fixed linecommunications services, serving residential and business-to-business customers in theUnited Kingdom.

Interserve Industrials 5,744 2.1 4,316 1.9Interserve is a services, maintenance and building group operating in the public and private sectorsin the UK and internationally. The company offers advice, design, construction and maintenanceservices for buildings and infrastructure, runs the operational systems and back-office services thatsupport them and provides a range of plant and equipment in specialist fields.

Intermediate Capital Group3 Financials 5,704 2.1 — — Intermediate Capital Group deploys capital on behalf of investors through private debt,mezzanine credit and minority equity funds specializing in mid-market transactions. Thecompany also invests capital alongside third party funds. Intermediate Capital covers Europe,Asia Pacific and North America.

Betfair Group3 Consumer Services 5,532 2.1 — — Betfair Group is an International Internet sports betting company. The Company’s website offersa wide range of sports betting and gambling related activities online.

Total 82,347 30.8

1Based on total portfolio of £267.3m (2014: 222.6m).2Not Included in the ten largest 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 £60,016,000 representing 27.0% of the totalportfolio.

Ten Largest Equity Investmentsat 30th June 2015


Portfolio Benchmark Active Portfolio Benchmark Active 2015 2015 position 2014 2014 position

Sector Analysis % % % % % %

Financials 28.5 24.8 3.7 24.1 24.9 (0.8)Consumer Services 23.3 22.8 0.5 21.5 19.6 1.9Industrials1 23.1 26.1 (3.0) 21.6 25.2 (3.6)Consumer Goods1 10.3 7.2 3.1 7.1 7.8 (0.7)Technology 5.6 3.4 2.2 5.3 3.5 1.8Telecommunications 3.8 1.7 2.1 6.4 2.8 3.6Basic Materials 2.2 4.3 (2.1) 1.2 5.0 (3.8)Health Care 1.8 3.4 (1.6) 1.4 2.8 (1.4)Oil & Gas 0.3 4.8 (4.5) 6.9 6.3 0.6Utilities — 1.5 (1.5) — 2.1 (2.1)Liquidity fund 1.1 — 1.1 4.5 — 4.5

Based on total portfolio of £267.3m (2014: £222.6m).1Galliford Try has been reclassified as Consumer Goods as at 30th June 2015 from Industrials.

Value at Benchmark Change in Value at30th June 2014 classification Purchases Sales valuation 30th June 2015

Investment Activity £’000 % £’000 £’000 £’000 £’000 £’000 %

FTSE 250 Index companies 193,262 86.8 (7,191) 96,125 (81,626) 38,570 239,140 89.5FTSE 100 Index companies 13,438 6.1 9,844 7,212 (13,916) 4,944 21,522 8.0AIM Listed companies 2,312 1.0 1,652 (879) (1,100) 1,985 0.7Other investments1 3,558 1.6 (2,653) 1,728 (1,148) 293 1,778 0.7Total portfolio excludingliquidity fund2 212,570 95.5 — 106,717 (97,569) 42,707 264,425 98.9

Liquidity fund 10,000 4.5 — 40,630 (47,761) — 2,869 1.1

Total portfolio 222,570 100.0 — 147,347 (145,330) 42,707 267,294 100.0

1Sophos Group is a recent IPO which is not included within an index as at 30th June 2015.2Liquidity fund trades should be excluded when calculating turnover of the portfolio.

Strategic Report continuedPortfolio Analyses and Investment Activity


ValuationCompany £’000

FinancialsProvident Financial 7,898Intermediate Capital Group 5,704Derwent London 4,590Investec 4,515Great Portland Estates 4,462Close Brothers 4,278Bank Of Georgia 4,260Capital & Counties Properties 3,916Segro 3,712Phoenix 3,524Shaftesbury 3,427Savills 3,358OneSavings Bank 3,143Aldermore Group 3,095Shawbrook Group 2,798Workspace Group 2,739Man Group 2,666Beazley 2,662Plus 5001 1,985John Laing Group 1,862Brewin Dolphin 1,459

Total Financials 76,053

Consumer ServicesBetfair Group 5,532WH Smith 5,119Greggs 4,791Dixons Carphone2 4,624Card Factory 4,303Rightmove 4,191Go-Ahead 3,819JD Sports Fashion 3,530Playtech 3,386Restaurant Group 3,167Auto Trader Group 2,697Thomas Cook 2,666Saga 2,199Marston’s 2,127Halfords 2,006


easyJet2 1,932SSP Group 1,766Dunelm 1,585Wizz Air 1,488Poundland Group 1,393

Total Consumer Services 62,321

IndustrialsHowden Joinery 13,119Ashtead2 12,243Interserve 5,744DCC 4,850DS Smith 4,533Hays 3,919HellermannTyton Group 3,223Essentra 3,064Regus 3,003Bodycote 2,236Northgate 1,732Renishaw 1,718Senior 1,501Rexam 966

Total Industrials 61,851

Consumer GoodsBerkeley 8,265Bellway 7,821Greencore Group 5,375Galliford Try 3,474Taylor Wimpey2 1,384Barratt Developments2 1,339

Total Consumer Goods 27,658

TechnologyMicro Focus International 9,920Pace 2,029Sophos Group3 1,778CSR 1,180

Total Technology 14,907

List of Investmentsat 30th June 2015



TelecommunicationsTalkTalk Telecom 6,101Cable & Wireless Communications 4,159

Total Telecommunications 10,260

Basic MaterialsCroda International 3,880Elementis 1,739Petra Diamonds 298

Total Basic Materials 5,917

Health CareBTG 2,763NMC Health 1,986

Total Health Care 4,749


Oil & GasWood Group (John) 709

Total Oil & Gas 709

Liquidity FundJPMorgan Sterling Liquidity Fund 2,869

Total Liquidity Fund 2,869

Total Portfolio 267,294

The portfolio comprises investments in equity shares and a liquidity fund.

1AIM listed companies.2FTSE 100 Index companies.3A recent IPO which is not included within an index as at 30th June 2015.

Strategic Report continuedList of Investments continued


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

Structure and Objective of the Company

JPMorgan Mid Cap Investment Trust plc is an investment trustand has a premium listing on the London Stock Exchange. Itsobjective is to provide shareholders with capital growth frominvestment in medium-sized UK companies. In seeking toachieve this objective the Company employs JPMorgan FundsLimited (‘JPMF’ or the ‘Manager’) to manage actively theCompany’s assets. The Board has determined an investmentpolicy and related guidelines and limits, as described below.It aims to outperform the FTSE 250 Index (excludinginvestment trusts), with net dividends reinvested.

The Company is subject to UK and European legislation andregulations including UK company law, Financial ReportingStandards, Listing, Prospectus and Disclosure TransparencyRules, taxation law and the Company’s own Articles ofAssociation. The Company is an investment company within themeaning of Section 833 of the Companies Act 2006 and hasbeen approved by HMRC as an investment trust (for thepurposes of Sections 1158 and 1159 of the Corporation Tax Act2010) for the year ended 30th June 2014. The Directors have noreason to believe that the Company will not continue to retainits investment trust status. The Company is not a close companyfor taxation purposes.

A review of the Company’s activities and prospects is given inthe Chairman’s Statement on pages 2 to 5, and in theInvestment Managers’ Report on pages 6 and 7.

Investment Policies and Risk ManagementIn order to achieve its objective, the Company invests in adiversified portfolio, concentrating on FTSE 250 companieswith the most attractive prospects. The Company makes use oflong and short-term borrowings to increase returns and doesnot invest more than 15% of its gross assets in other UK listedinvestment companies (including investment trusts).

Investment Limits and RestrictionsThe Board seeks to manage the Company’s risk by imposingvarious investment limits and restrictions.

• The Company will not invest more than 15% of its assets inother UK listed investment companies.

• No more than 15% of the portfolio at prevailing values maybe invested outside the FTSE 250 Index. Investmentsoutside the FTSE 250 Index can include AIM stocks.

• The Company will not invest more than 10% of assets incompanies that themselves may invest more than 15% ofgross assets in UK listed investment companies.

• The Company will not invest more than 10% of its assets inany one individual stock at the time of acquisition.

• The Company’s gearing policy is to operate within a rangeof –5% to +25% in normal market conditions.

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 on net assets of 24.7% to give a total return to shareholdersof 24.0%. This compares with the total return on the Company’sbenchmark index of 15.0%. As at 30th June 2015, the value ofthe Company’s investment portfolio was £267.3 million. TheInvestment Managers’ Report on pages 6 and 7 includes areview of developments during the year as well as informationon investment activity within the Company’s portfolio.

Total Return, Revenue and Dividends Gross total return for the year amounted to £50.8 million(2014: £33.8 million) and net total return after deductingfinance costs, management fees, administrative expensesand taxation amounted to £48.3 million (2014: £31.3 million).Distributable income for the year amounted to £6.8 million(2014: £5.2 million).

The Directors recommend a final dividend of 12.0p, plus aspecial dividend of 4.5p (2014: 12.5p) per share, payable on12th November 2015 to shareholders on the register at theclose of business on 2nd October 2015. This distribution, willamount to £3,960,000 (2014: £3,000,000). An interim dividendof 8.0p per share (2014: 5.5p per share) was paid on 9th April2015. Following the payment of these dividends, the revenuereserve will amount to £4,829,000 (2014: £3,862,000).

Business Review


Strategic Report continuedBusiness Review continued

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

• Performance against the benchmark index This is the most important KPI by which performance isjudged. Information on the Company’s performance isgiven in the Chairman’s Statement and the InvestmentManagers’ Report. (Also please refer to the graphs onpage 9).

• Performance against the Company’s peers The principal objective is to achieve capital growth relativeto 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 toassess how the Company achieved its performance relativeto its benchmark index, i.e. to understand the impact on theCompany’s relative performance of the variouscomponents such as stock and sector allocation andgearing. Details of the attribution analysis for the yearended 30th June 2015 are given in the InvestmentManagers’ Report on page 7.

• Share price relative to net asset value (‘NAV’) per shareThe Board has a share repurchase programme which seeksto address imbalances in supply of and demand for theCompany’s shares within the market and thereby reducethe volatility and absolute level of the discount to NAV atwhich the Company’s shares trade and in relation to itspeers in the sector. In the year to 30th June 2015, the sharestraded between a discount of 7.8% and 14.9% to the netasset value. More information on the Board’s share buyback policy is given in the Chairman’s Statement.

Discount Performance

Source: Datastream.

JPMorgan Mid Cap – share price discount.

• Ongoing ChargesRatioThe Ongoing Charges Ratio represents the Company’smanagement fee and all other operating expenses,excluding finance costs, expressed as a percentage of theaverage of the daily net assets during the year. The OngoingCharges Ratio for the year ended 30th June 2015 was 0.95%(2014: 0.97%). The Board reviews each year an analysiswhich shows a comparison of the Company’s OngoingCharges Ratio and its main expenses with those of its peers.

Share CapitalThe Directors have authority on behalf of the Company torepurchase shares in the market either for cancellation or intoTreasury and to issue Treasury shares or new Ordinary sharesfor cash. During the year no ordinary shares were repurchasedfor cancellation nor taken into Treasury (2014: none).

Special Resolutions to renew the Company’s authorities toissue and repurchase shares will be put to shareholders at theforthcoming Annual General Meeting.

The Company did not issue any Treasury or new shares duringthe year.

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

• Investment and Strategy: An inappropriate investmentstrategy, for example stock selection or the level of gearing,may lead to under-performance against the Company’sbenchmark index and peer companies, resulting in theCompany’s shares trading on a wider discount. The Boardmanages these risks through its investment restrictions andguidelines which are monitored and reported monthly.JPMF provides 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 Managers, who attend all Board meetings,and reviews data which shows statistical measures of theCompany’s risk profile. The Investment Managers employthe Company’s gearing tactically, within a strategic rangeset by the Board.

Investment performance could be adversely affected by theloss of one or more of the investment management team.To reduce the likelihood of such an event, the Managerensures appropriate succession planning and adopts a

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team based approach as well as special efforts to retain keypersonnel. A change of corporate control could alsonegatively impact the Company. The Board holds regularmeetings with senior representatives of JPMAM in order toobtain assurance that the Manager continues todemonstrate a high degree of commitment to itsinvestment trusts business through the provision ofsignificant resources.

Poor performance may lead to a widening of the discount.The Board monitors the Company’s premium/discountlevel and will seek, where deemed prudent, to addressimbalances in the supply and demand of the Company sshares through a programme of share buybacks.

The Board holds a separate meeting devoted to strategyeach year.

• Financial: The Company is exposed to market risk, liquidityrisk and credit risk. The principal financial risk facing theCompany is market risk arising from uncertainty about thefuture prices of the Company’s investments. It representsthe potential loss the Company might suffer throughholding investments that could fall in value either due togeneral market movements or stock specific events. Thelatter is mitigated through diversification of investments inthe portfolio. The Board reviews the portfolio and itsgearing on a regular basis and has set investmentrestrictions and guidelines for the Manager. JPMF reportsits adherence to these limits once a month to the Board.Financial risks faced by the Company are further disclosedin note 22 on pages 52 to 56.

• Accounting, Legal and Regulatory: In order to qualify asan investment trust, the Company must comply withSection 1158 of the Corporation Tax Act 2010 (‘Section 1158’).Details of the Company’s approval are given under ‘Businessof the Company’ above. Should the Company breachSection 1158, it may lose investment trust status and as aconsequence capital gains within the Company’s portfoliowould be subject to Capital Gains Tax. The Section 1158qualification criteria are continually monitored by JPMF andthe results reported to the Board each month. The Companymust also comply with the provisions of the Companies Act2006 and, as its shares are listed on the London StockExchange, the UKLA Listing Rules. A breach of theCompanies Act could result in the Company and/or theDirectors being fined or the subject of criminal proceedings.A breach of the UKLA Listing Rules may result in theCompany’s shares being suspended from listing which in

turn would breach Section 1158. The Board relies on theservices of its Company Secretary, JPMF, and its professionaladvisers to ensure compliance with the Companies Act 2006and the UKLA Listing Rules.

• Corporate Governance and Shareholder Relations: Detailsof the Company’s compliance with Corporate Governancebest practice, including information on relations withshareholders, are set out in the Corporate GovernanceStatement on pages 22 to 27.

• Operational and Cybercrime: Disruption to, or failure of,the Manager’s accounting, dealing or payments systemsor the custodian’s or depositary’s records could preventaccurate reporting and monitoring of the Company’sfinancial position. On 1st July 2014, the Companyappointed BNY Mellon Trust & Depositary (UK) Limitedto act as its depositary, responsible for overseeing theoperations of the custodian, JPMorgan Chase Bank N.A.,and the Company’s cash flows. Details of how the Boardmonitors the services provided by the Manager and itsassociates and the key elements designed to provideeffective internal control are included in the InternalControl section of the Corporate Governance report onpages 26 and 27. The threat of cyber attack, in all its guises,is regarded as at least as important as more traditionalphysical threats to business continuity and security. TheCompany benefits directly or indirectly from all elementsof JPMorgan’s Cyber Security programme. The informationtechnology controls around the physical security ofJPMorgan’s data centres, security of its networks andsecurity of its trading applications are tested by Deloitteand reported every six months against the AAF Standard.

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 four male Directors and onefemale Director on the Board. Please refer to page 24 formore information on the workings of the Nomination andRemuneration Committee.

Employees, Social, Community and Human Rights IssuesThe Company is managed by JPMF, has no employees and all ofits Directors are non-executive, the day to day activities beingcarried out by third parties. There are therefore no disclosuresto be made in respect of employees. The Board notes theJPMorgan policy statements in respect of Social, Community,Environmental and Human Rights issues, as outlined below.


JPMorgan believes that companies should act in a sociallyresponsible manner. Although JPMorgan’s priority at all times isthe best economic interests of its clients, it is recognised that,increasingly, non-financial issues such as social andenvironmental factors have the potential to impact the shareprice, as well as the reputation of companies. Specialists withinJPMAM’s environmental, social and governance (‘ESG’) team aretasked with assessing how investee companies deal with andreport on social and environmental risks and issues specific totheir industry. JPMorgan is also a signatory to the UnitedNations Principles of Responsible Investment, which commitsparticipants to six principles, with the aim of incorporating ESGcriteria into their processes when making stock selectiondecisions and promoting ESG disclosure. JPMorgan’s detailedapproach to how it implements the principles is available onrequest.

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. TheInvestment Managers discuss the outlook in their report onpage 7.

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

24th September 2015

Strategic Report continuedBusiness Review continued


Andrew Barker(Chairman of the Board, Nomination and Remuneration Committee and ManagementEngagement Committee)

A Director since October 2004. Appointed Chairman in 2005.

Last re-elected to the Board: 2014.

Other directorships/relevant experience: He has spent his career in investmentmanagement after joining Foreign and Colonial Management Ltd in 1970 from which heretired in 2000. His former directorships include The Bankers Investment Trust PLCwhere he was Chairman and Foreign & Colonial Investment Trust PLC. He is also aformer Chairman of the Association of Investment Companies.

Connections with Manager: None.

Shared directorships with other Directors: None.

Shareholding in Company: 30,000.

Michael Hughes CBE (Senior Independent Director)

A Director since May 2008.


Other directorships/relevant experience: Director of T. Bailey Asset Management Limitedand acting investment consultant to various family offices and charities. Formerly aDirector of Baring Asset Management Limited from 1998 and Chief Investment Officerfrom 2000 until his retirement in 2007. Prior to this, he was Managing Director ofBarclays Capital (previously BZW) and Chairman of the Board of pension trustees. Before‘Big Bang’ he was a Partner at stockbrokers de Zoete and Bevan.




Richard Huntingford

A Director since December 2013.


Other directorships/relevant experience: Non-Executive Chairman of UTV Media plc anda Non-Executive Director of Crown Place VCT plc and Creston plc. Prior to this he wasCEO of Chrysalis Group plc between 2000 and 2007 and Executive Chairman of VirginRadio between 2007 and 2008. He has also been Chairman of Boomerang Plus plc and aNon-Executive Director of Virgin Mobile Holdings (UK) plc. He is a chartered accountant.




GovernanceBoard of Directors


Gordon McQueen (Chairman of the Audit Committee)

A Director since December 2004.


Other directorships/relevant experience: Director of The Edinburgh Investment Trust plcand Scottish Mortgage Investment Trust plc. Served as the Finance Director of Bank ofScotland and, until the end of 2003, on the Board of HBOS plc and Halifax plc.




Margaret Littlejohns

A Director since July 2008.


Other directorships/relevant experience: Director of Henderson High Income Trust plcand trustee of the Lymphoma Research Trust. Founder and Finance Director of TheSpace Place, a self storage company in the Midlands. Prior to this, she was an employeeof Citigroup from 1982 to 2000 and Managing Director of Citifutures Ltd from 1990 to1992.




Governance continuedBoard of Directors continued


Directors’ Report

The Directors present their report and the audited financialstatements for the year ended 30th June 2015. A number ofdisclosures previously incorporated in the Directors’ Report arenow included in the Strategic Report. These include: Strategyand Objective of the Company; Investment Policies and RiskManagement; Performance; Total Return, Revenue andDividends; KPIs; Principal Risks; Diversity; Employee, Social,Community and Human Rights Issues; and FutureDevelopments.

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 to ensure the Company’s compliance with the AlternativeFund Manager Directive. JPMF is a wholly-owned subsidiary ofJPMorgan Chase Bank which, through other subsidiaries, alsoprovides marketing, banking, dealing and custodian services tothe Company.

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

The Board has evaluated the performance of the Manager andconfirms that it is satisfied that the continuing appointment ofthe Manager is in the best interests of shareholders as a whole.In arriving at this view, the Board also considered theinvestment strategy and process of the Investment Managersand the support that the Company receives from JPMF.

Management Fee

The management fee paid to the Manager is a tiered fee of0.65% per annum on total assets less current liabilities,excluding bank borrowings, up to £250 million and 0.60% perannum for assets in excess of £250 million. The calculationexcludes management charges on investments on which theManager already earns a management fee and principalamounts of more than £1 million drawn down under loanagreements which are either held in cash, on deposit orinvested in a liquidity fund.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 15), risk management policies

(see pages 52 to 56), liquidity risk (see note 22(b) on page 55),capital management policies and procedures (see page 57),the nature of the portfolio and expenditure projections, thatthe Company has adequate resources, an appropriatefinancial structure and suitable management arrangementsin place to continue in operational existence for theforeseeable future. For these reasons, they consider thatthere is reasonable evidence to continue to adopt the goingconcern basis in preparing the accounts.

Directors

The Directors of the Company who held office at the end of theyear and up to the date of signing the financial statements aredetailed on pages 19 and 20. Details of Directors’ beneficialshareholdings may be found in the Directors’ RemunerationReport on page 29.

In accordance with corporate governance best practice, allDirectors will retire by rotation at the forthcoming AnnualGeneral Meeting and, being eligible, will offer themselves forreappointment. The Nomination and Remuneration Committee,having considered their qualifications, performance andcontribution to the Board and its committees, confirms thateach Director continues to be effective and demonstratescommitment to the role and the Board recommends toshareholders that they be reappointed. For further details onthe experience and skills of each Director please refer topages 19 and 20.

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 indemnity was 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.

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) ofwhich the Company’s auditors are unaware, and

(b) each of the Directors has taken all the steps that he/sheought to have taken as a Director in order to make


Governance continuedDirectors’ Report continued

himself/herself aware of any relevant audit information (asdefined) and to establish that the Company’s auditors areaware of that information.

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

Independent Auditors

PricewaterhouseCoopers LLP has expressed its willingness tocontinue in office as auditors to the Company and a resolutionproposing its reappointment and authorising the Directors todetermine its remuneration for the ensuing year will be put toshareholders at the Annual General Meeting.

Annual General Meeting

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

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

(i) Authority to issue relevant securities and disapply pre-emptionrights (resolutions 11 & 12)

The Directors will seek renewal of the authority to issue up to2,399,718 new shares or shares held in Treasury other than by apro rata issue to existing shareholders up to an aggregatenominal amount of £599,929 such amount being equivalent toapproximately 10% of the current issued share capital(excluding Treasury shares). The full text of the resolutions isset out in the Notice of Annual General Meeting on pages 58to 60.

It is advantageous for the Company to be able to issue newshares to investors purchasing shares through the Manager’ssavings products and also to other investors when theDirectors consider that it is in the best interest of shareholdersto do so. Any such issues would only be made at prices greaterthan the NAV per share, thereby, increasing the assetsunderlying each share.

(ii) Authority to repurchase the Company’s shares (resolution 13)The authority to repurchase up to 14.99% of the Company’sissued share capital, granted by shareholders at the 2014 AGM,

will expire on 27th April 2016 unless renewed at theforthcoming Annual General Meeting. The Directors considerthat the renewal of the authority is in the interests ofshareholders as a whole as the repurchase of shares at adiscount to NAV enhances the NAV of the remaining shares.The Board will therefore seek shareholder approval at theAnnual General Meeting to renew this authority, which will lastuntil 1st May 2017 or until the whole of the 14.99% has beenacquired, whichever is the earlier. The full text of the resolutionis set out in the Notice of Annual General Meeting on pages 58to 60. Repurchases will be made at the discretion of the Board,and will only be made in the market at prices below theprevailing NAV per share as and when market conditions areappropriate, thereby enhancing the NAV of the remainingshares.

Recommendation

The Board considers that resolutions 11 to 13 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 to41,000 shares representing approximately 0.2% of the votingrights of the Company.

Corporate Governance StatementCompliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities in respect of the accounts onpage 31, indicates how the Company has applied the principlesof good governance of the Financial Reporting Council UKCorporate Governance Code and the AIC’s Code of CorporateGovernance (the ‘AIC Code’), which complements the UKCorporate Governance Code and provides a framework of bestpractice for investment trusts.

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


Role of the Board

A management agreement between the Company and JPMFsets out the matters over which the Manager has authority.This includes management of the Company’s assets and theprovision of accounting, company secretarial, administrationand some marketing services. All other matters are reservedfor the approval of the Board. A formal schedule of mattersreserved to the Board for decision has been approved. Thisincludes determination and monitoring of the Company’sinvestment objectives and policy and its future strategicdirection, gearing policy, management of the capital structure,appointment and removal of third party service providers,review of key investment and financial data and the Company’scorporate governance and risk control arrangements.

The Board has procedures in place to deal with potentialconflicts of interest and confirms that the procedures haveoperated effectively during the year under review.

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

There is an agreed procedure for Directors to take independentprofessional advice in the furtherance of their duties and at theCompany’s expense. This is in addition to the access that everyDirector has to the advice and services of the CompanySecretary, JPMF, which is responsible to the Board for ensuringthat Board procedures are followed and that applicable rulesand regulations are complied with.

Board Composition

The Board, chaired by Andrew Barker, consists of fivenon-executive Directors, all of whom are considered to beindependent of the Company’s Manager. The Board believesthat it is appropriate to have a Senior Independent Director andMichael Hughes fulfils this role. He is available to shareholdersif they have concerns that cannot be resolved throughdiscussion with the Chairman. The Directors have a breadth ofinvestment, business and financial skills and experiencerelevant to the Company’s business and brief biographicaldetails of each Director are set out on pages 19 and 20.

The Company has complied with the provisions of the UKCorporate Governance Code and the AIC Code in regard to the

re-election of Directors at least every three years. The Boarddoes not consider that Directors should serve for a fixed periodof time. However, in order to achieve a balance of skills,experience, ages and length of service, it is the Board’s policyto refresh itself in an orderly manner over time.

Tenure

Directors are initially appointed until the following AnnualGeneral Meeting when, under the Company’s Articles ofAssociation, it is required that they be reappointed byshareholders. Subject to the performance evaluation carriedout each year, the Board will agree whether it is appropriate forDirectors to seek annual reappointment in accordance withcorporate governance best practice. The Board does notbelieve that length of service in itself necessarily disqualifiesa Director from seeking reappointment but, when making arecommendation, the Board will take into account the ongoingrequirements of the UK Corporate Governance Code, includingthe need to refresh the Board and its Committees.Notwithstanding their tenures in excess of nine years, theBoard believes that Andrew Barker and Gordon McQueen, withtheir ongoing level of commitment and proven record ofindependence of character and judgment, continue to beeffective and continue to be viewed as independent Directors.

A list of potential conflicts of interest for each Director ismaintained by the Company. These are considered carefully,taking into account the circumstances surrounding them, and,if considered appropriate, are approved.

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 Directors. Directorsare encouraged to attend industry and other seminars coveringissues and developments relevant to investment trusts. Regularreviews of the Directors’ training needs are carried out by theBoard by means of the evaluation process described below.



Meetings and Committees

The Board delegates certain responsibilities and functions tocommittees. Directors who are not members of Committeesmay attend at the invitation of the Chairman.

The table below details the number of Board and Committeemeetings attended by each Director. During the year there werefive Board meetings, including a meeting devoted to strategy. Inaddition, a private meeting of the Directors to evaluate theManager, two Audit Committee meetings, a meeting of theNomination and Remuneration Committee and a ManagementEngagement Committee meeting were held.

AuditBoard Strategy Committee

Meetings Meetings MeetingsDirector Attended Attended Attended

Andrew Barker 5 1 2John Emly1 2 — 12

Michael Hughes 5 1 2Richard Huntingford3 4 1 1Margaret Littlejohns 5 1 2Gordon McQueen 5 1 2

1Retired from the Board on 28th October 2014.2Attended by invitation of the Committee.3Excused from one Board and Audit Committeemeeting owing to jury service.

Nomination & ManagementRemuneration Engagement

Committee CommitteeMeetings Meetings

Director Attended Attended

Andrew Barker 1 1John Emly1 — —Michael Hughes 1 1Richard Huntingford 1 1Margaret Littlejohns 1 1Gordon McQueen 1 1

1Retired from the Board on 28th October 2014.

Board Committees

Nomination and Remuneration Committee The Nomination and Remuneration Committee consists of allDirectors and is chaired by Andrew Barker. The Board believes

that this is appropriate as it is a combined committee. TheCommittee meets at least annually to ensure that the Board hasan appropriate balance of skills to carry out its fiduciary dutiesand to select and propose suitable candidates when necessaryfor appointment. A variety of sources, including the employmentof external search consultants is used to ensure that a wide rangeof candidates is considered. The appointment process takes intoaccount the benefits of diversity, including gender.

The Committee has a succession plan to refresh the Board in anorderly manner over time. For details of the plan please referto the Chairman’s Statement on page 4.

This year, the Directors commissioned Lintstock, a firm ofindependent consultants, to facilitate the evaluation of theBoard. The process involved the completion of questionnairesby the Board and a resulting written report was discussed byDirectors under the remit of the Nomination & RemunerationCommittee. The evaluation of individual Directors is led by theChairman and the evaluation of the Chairman led by the SeniorIndependent Director.

The Committee also reviews Directors’ fees and makesrecommendations to the Board as and when required.

Audit Committee The Audit Committee consists of all Directors and is chaired byGordon McQueen. The Committee meets at least twice eachyear. The members of the Committee consider that they havethe requisite skills and financial experience to fulfil theresponsibilities of the Committee.

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. At the request of the Board, the Audit Committeeprovides confirmation to the Board as to how it has dischargedits responsibilities so that the Board may ensure thatinformation presented to it is fair, balanced andunderstandable, together with details of how it has done so.

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

The valuation of investments is undertaken inaccordance with the accounting policies,disclosed in note 1 to the accounts on page 41.Controls are in place to ensure that valuationsare appropriate and existence is verified throughdepositary and custodian reconciliations.

The recognition of investment income isundertaken in accordance with accountingpolicy note 1(d) to the accounts on page 41.

The Board is required to be made fully aware of any significantfinancial reporting issues and judgements made in connectionwith the preparation of the financial statements.

As a result of the work performed, the Committee hasconcluded that the Annual Report for the year ended 30th June2015, taken as a whole, is fair, balanced and understandableand provides the information necessary for shareholders toassess the Company’s performance, business model andstrategy, and has reported on these findings to the Board. TheBoard’s conclusions in this respect are set out in the Statementof Directors’ Responsibilities on page 31.

The Audit Committee also examines the effectiveness of theCompany’s internal control systems, receives information fromthe Manager’s compliance department and also reviews thescope and results of the external audit, its effectiveness and theindependence and objectivity of the external auditors. In theDirectors’ opinion the Auditors are independent.

The Audit Committee also has a primary responsibility formaking recommendations to the Board on the reappointmentand removal of external auditors and their fee. Representativesof the Company’s Auditors attended the Audit Committeemeeting at which the draft Annual Report & Accounts wereconsidered and also engage with Directors as and whenrequired. Having reviewed the performance of the externalauditors, including assessing the quality of work, timing ofcommunications and work with JPMF, the Committeeconsidered it appropriate to recommend their reappointment.The Board supported this recommendation which will be put toshareholders at the forthcoming Annual General Meeting. Thesame audit partner has been responsible for the Company sincethe appointment of PricewaterhouseCoopers in 2010.Accordingly a new audit partner will be conducting theCompany’s 2016 audit. Any decision to open the external audit

to tender is taken on the recommendation of the AuditCommittee. New EU regulations in relation to the statutoryaudits of EU listed companies will likely require the Companyto tender its audit by 2020.

Management Engagement Committee The membership of the Management Engagement Committeeconsists of all Directors and is chaired by Andrew Barker. TheCommittee meets at least once a year to review the terms ofthe management agreement between the Company and theManager, to review the performance of the Manager, to reviewthe notice period that the Board has with the Manager and tomake recommendations to the Board. The Committee alsoreviews the Company’s agreements with other major serviceproviders.

Terms of Reference

Both the Nomination & Remuneration Committee, the AuditCommittee and the Management Engagement Committee havewritten terms of reference which define clearly their respectiveresponsibilities, copies of which are available on the Company’swebsite and for inspection on request at the Company’sregistered office and at the 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 to shareholders quarterly by way of the AnnualReport and Accounts and the Half Year Report. This issupplemented by the daily publication, through the LondonStock Exchange, of the net asset value and share price of theCompany’s shares.

All shareholders have the opportunity, and are encouraged,to attend the Company’s Annual General Meeting at which theDirectors and representatives of the Manager are available inperson to meet with and answer shareholders’ questions. Inaddition, a presentation is given by the Investment Managerswho review the Company’s performance. During the year theCompany’s brokers and the Investment Managers hold regulardiscussions with shareholders. The Directors are made fullyaware of their views. The Chairman and Directors makethemselves available as and when required to addressshareholder queries. The Directors may be contacted throughthe Company Secretary whose details are shown on page 65.

Recognition ofinvestment income

Valuation, existenceand ownership ofinvestments



The Company’s Annual Report and Accounts are published intime to give shareholders at least 20 working days’ notice ofthe Annual General Meeting. Shareholders wishing to raisequestions in advance of the meeting are encouraged to writeto the Company Secretary at the address shown on page 65.

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

Section 992 Companies Act 2006

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

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

Voting Rights in the Company’s sharesAs at 23rd September 2015 (being the latest business day priorto the publication of this report), the Company’s issued sharecapital consists of 23,997,180 Ordinary shares (excludingTreasury shares) carrying one vote each. Therefore the totalvoting rights in the Company are 23,997,180.

Notifiable Interests in the Company’s Voting RightsAt the year end and the date of this report, the following haddeclared a notifiable interest in the Company’s voting rights:

Number of Shareholders voting rights %

Brewin Dolphin Limited 1,093,859 4.6

The Company is also aware that approximately 25% of theCompany’s total voting rights are held by individuals throughsavings products managed by JPMAM, registered in the nameof Chase Nominees Limited. If those voting rights are notexercised by the beneficial holders, in accordance with theterms and conditions of the savings products, under certaincircumstances JPMAM has the right to exercise those votingrights. That right is subject to certain limits and restrictions andfalls away at the conclusion of the relevant general meeting.

Risk Management and Internal Control

The UK Corporate Governance Code requires the Directors, atleast annually, to review the effectiveness of the Company’s

system of internal control and to report to shareholders thatthey have done so. This encompasses a review of all controls,which the Board has identified including business, financial,operational (including cyber security), compliance and riskmanagement.

The Directors are responsible for the Company’s system ofinternal control which is designed to safeguard the Company’sassets, maintain proper accounting records and ensure thatfinancial information used within the business, or published,is reliable. However, such a system can only be designed tomanage rather than eliminate the risk of failure to achievebusiness objectives and therefore can only provide reasonable,but not absolute, assurance against fraud, materialmisstatement or loss.

Since investment management, custody of assets and alladministrative services are provided to the Company byJPMorgan and its associates, the Company’s system of internalcontrol mainly comprises monitoring the services providedby JPMorgan and its associates, including the operatingcontrols established by them, to ensure they meet theCompany’s business objectives. There is an ongoing process foridentifying, evaluating and managing the significant risks facedby the Company (see Principal Risks on pages 16 and 17). Thisprocess has been in place for the year under review and up tothe date of the approval of the Annual Report & Accounts andit accords with the Turnbull guidance. The Company does nothave an internal audit function of its own, but relies on theinternal audit department of JPMorgan. The key elementsdesigned to provide effective internal control are as follows:

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

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

Management Systems – The Manager’s system of internalcontrol includes organisational agreements which clearlydefine the lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by JPMorgan’scompliance department which regularly monitors compliancewith 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 orManagement Engagement Committee, keeps under review theeffectiveness of the Company’s system of internal control bymonitoring the operation of the key operating controls of theManager and its associates as follows:

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

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

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

By the means of the procedures set out above, which accordwith the Turnbull guidance on internal controls, the Boardconfirms that it has reviewed and is satisfied with theeffectiveness of the Company’s system of internal control forthe year ended 30th June 2015, and to the date of approval ofthis Annual Report and Accounts.

During the course of its review of the system of internal control,the Board has not identified or been advised of any failings orweaknesses which it has determined to be significant.

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 JPMorgan believes that corporate governance is integral to ourinvestment process. As part of our commitment to delivering superiorinvestment performance to our clients, we expect and encourage thecompanies in which we invest to demonstrate the highest standards ofcorporate governance and best business practice. We examine the sharestructure and voting structure of the companies in which we invest, as wellas the board balance, oversight functions and remuneration policy. Theseanalyses then form the basis of our proxy voting and engagement activity.

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

Stewardship/EngagementJPMorgan recognises its wider stewardship responsibilities to its clientsas a major asset owner. To this end, we support the introduction of theFRC Stewardship Code, which sets out the responsibilities 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.

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

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


24th September 2015


The Board has prepared this report in accordance with therequirements of Section 421 of the Companies Act 2006. Anordinary resolution to approve this report will be put to themembers at the forthcoming Annual General Meeting.

The law requires the Company’s auditors to audit certain of thedisclosures provided. Where disclosures have been audited,they are indicated as such. The auditors’ opinion is included intheir report on page 32.

Directors’ Remuneration Policy Report

The Directors’ Remuneration Policy is subject to a triennialbinding vote. However, the Board has resolved that for goodgovernance purposes, the policy vote will be put toshareholders every year. Accordingly a resolution to approvethe policy will be put to shareholders at the 2015 AnnualGeneral Meeting. The policy, subject to the vote, is set out infull below and is currently in force.

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

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 no consultation of employeesis required and there is no employee comparative data toprovide, in relation to the setting of the remuneration policy forDirectors.

All of the Directors are non-executive. There are noperformance-related elements to their fees and the Companydoes not operate any type of incentive, share scheme, award orpension scheme and therefore no Directors receive bonuspayments or pension contributions from the Company or holdoptions to acquire shares in the Company. Directors are notgranted exit payments and are not provided with compensationfor loss of office. No other payments are made to Directors,other than the reimbursement of reasonable out-of-pocketexpenses incurred in attending the Company’s business.

For the first six months of the year under review, Directors’ feeswere paid at the fixed rate of £31,000 for the Chairman,£25,000 for the Chairman of the Audit Committee and £21,000for the other Directors. Following a review and in light of feesfalling below industry average, Directors’ fees were increasedwith effect from 1st January 2015 and paid at the fixed rate of£33,000 for the Chairman, £27,000 for the Chairman of theAudit Committee and £23,000 for the other Directors.

The Company’s Articles of Association stipulate that aggregatefees must not exceed £200,000 per annum. Any increase in thisthe maximum aggregate amount requires both Board andshareholder approval.

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

The Directors do not have service contracts with the Company.The terms and conditions of Directors’ appointments are setout in formal letters of appointment which are available forreview at the Company’s Annual General Meeting and theCompany’s registered office. Details of the Board’s policy ontenure are set out on page 23.

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 shareholdersat the forthcoming Annual General Meeting. There have beenno changes to the policy compared with the year ended30th June 2015 and no changes are proposed for the yearending 30th June 2016.

At the Annual General Meeting held on 28th October 2014, ofvotes cast, 99.2% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theremuneration report and 0.8% voted against. Abstentionswere received from less than 1% of the votes cast.

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

Governance continuedDirectors’ Remuneration Report


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

Single total figure of remuneration

The total figure of remuneration for the Board for the yearended 30th June 2015 was £130,600. The total remunerationfor each Director is detailed below together with the prior yearcomparative.

Single total figure table1

Total amount ofsalary and fees4

2015 2014

Andrew Barker (Chairman) £32,000 £31,000John Emly2 £6,600 £21,000Michael Hughes £22,000 £21,000Richard Huntingford3 £22,000 £12,250Margaret Littlejohns £22,000 £21,000Gordon McQueen £26,000 £25,000

Total £130,600 £131,250

1Audited information.2Retired on 28th October 2014.3Appointed on 1st December 2013.4Directors’ remuneration comprises an annual fee only.

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

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

Performance related benefits received as a

Year ended percentage of 30th June Fees maximum payable1

2015 £32,000 n/a2014 £31,000 n/a2013 £28,000 n/a2012 £28,000 n/a2011 £28,000 n/a

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

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.

30th June 1st JulyOrdinary 2015 2014

Andrew Barker (Chairman) 30,000 28,000Michael Hughes 4,000 4,000Richard Huntingford 1,500 1,500Margaret Littlejohns 4,000 4,000Gordon McQueen 1,500 1,500

1Audited information.

In accordance with the Companies Act 2006, a graph showingthe Company’s share price total return compared with itsbenchmark, the FTSE 250 Index (excluding investment trusts),is shown below. The Board believes this Index is the mostrepresentative comparator for the Company, given theCompany’s investment objective.

Six Year Share Price and Index Total Returnto 30th June 2015


Share price total return.

Benchmark.

100

150

200

250

300

350

2015201420132012201120102009


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 to shareholders

Year ended 30th June

2015 2014

Remuneration paid to all Directors £130,600 £131,250

Distribution to shareholders— by way of dividend £4,920,000 £4,320,000

— by way of share repurchases £Nil £Nil

For and on behalf of the Board Andrew Barker Chairman

24th September 2015

Governance continuedDirectors’ Remuneration Report continued


Statement of Directors’ Responsibilities

The Directors are responsible for preparing the annual reportand financial statements, and the Directors’ RemunerationReport in accordance with applicable law and regulations.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law, the Directorshave prepared the financial statements in accordance withUnited Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards and applicable law).Under company law the Directors must not approve thefinancial statements unless they are satisfied that, taken as awhole, the annual report and accounts provide the informationnecessary for shareholders to assess the Company’sperformance, business model and strategy and that they give atrue and fair view of the state of affairs of the Company and ofthe total return or loss of the Company for that period. In orderto provide these confirmations, and in preparing these financialstatements, the Directors must be satisfied that, taken as awhole, the annual report and accounts are fair, balanced andunderstandable and provide the information necessary forshareholders to assess the performance, business model andstrategy of the Company; and the Directors are required to:

• select suitable accounting policies and then apply themconsistently;

• make judgements and accounting estimates that arereasonable and prudent;

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

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

and the Directors confirm they have done so. The Boardconfirms it is satisfied that the annual report and accountstaken as a whole are fair, balanced and understandable andprovide the information necessary for shareholders to assessthe performance, business model and strategy of theCompany.

The Directors are responsible for keeping proper accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any timethe financial position of the Company and enable them toensure that the financial statements comply with theCompanies Act 2006. They are also responsible for

safeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of fraud andother irregularities.

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

The accounts are published on the www.jpmmidcap.co.ukwebsite, which is maintained by the Company’s Manager,JPMorgan Funds Limited (‘JPMF’). The maintenance andintegrity of the website maintained by JPMF is, so far as itrelates to the Company, the responsibility of JPMF. 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 financial statements sincethey were initially presented on the website. The financialstatements are prepared in accordance with UK legislation,which may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed onpages 19 and 20 confirm that, to the best of their knowledge;

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

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

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

For and on behalf of the Board Andrew Barker Chairman

24th September 2015


Independent Auditors’ Reportto the members of JPMorgan Mid Cap Investment Trust plc

Report on the financial statements

Our opinion

In our opinion, JPMorgan Mid Cap 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 Mid Cap 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: £2,425,000 which represents 1% of net assets.

Audit scope:

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

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

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

Areas of focus:

• Income from investments.

• Valuation and existence of investments.

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

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


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

Area of focus How our audit addressed the area of focus

We assessed the accounting policy for income recognition for compliancewith accounting standards and the AIC SORP and performed testing tocheck that income had been accounted for in accordance with this statedaccounting policy.

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

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

In addition, we tested a sample of dividend receipts to independent thirdparty sources. We performed our testing by targeting the largesttransactions and testing a sample of the remaining transactions. The itemswe tested represented a minimum of 70% of the value of the total incomefrom investments balance.

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

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

Our testing did not identify any unrecorded dividends.

We tested the allocation and presentation of dividend income between therevenue and capital return columns of the Income Statement in line withthe requirements set out in the AIC SORP. We then tested the validity ofrevenue and capital special dividends to independent third party sources.

We did not find any special dividends that were not treated in accordancewith the AIC SORP.

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

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

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

No differences were identified.

Income from investmentsRefer to page 25 (Directors’ Report), page 41 (AccountingPolicies) and page 43 (Notes to the accounts).

ISAs (UK & Ireland) presume there is a risk of fraud inincome recognition because of the pressuremanagement may feel to achieve capital growth inline with the objective of the Company.

We focused on the accuracy and completeness ofdividend income recognition and its presentation inthe Income Statement as set out in the requirementsof The Association of Investment CompaniesStatement of Recommended Practice (the ‘AICSORP’).

This is because incomplete or inaccurate incomecould have a material impact on the company’s netasset value.

Valuation and existence of investments Refer to page 25 (Directors’ Report), page 41 (AccountingPolicies) and page 47 (Notes to the accounts).

The investment portfolio at the year-end principallycomprised listed equity investments.

We focused on the valuation and existence ofinvestments because investments represent theprincipal element of the net asset value as disclosedon the Balance Sheet in the financial statements.

Independent Auditors’ Reportcontinued


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 three monthsbetween the period covered by the controls report and the year-end of the Company. Following this assessment, we appliedprofessional judgement to determine the extent of testing required over each balance in the financial statements, includingwhether we needed to perform additional testing in respect of those key controls to support our substantive work. For thepurposes of our audit, we determined that additional testing of controls in place at the Administrator was not required becauseadditional substantive testing was performed.

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

Overall materiality £2,425,000 (2014: £1,990,000).

How we determined it 1% of net assets.

We have applied this benchmark, a generally accepted auditing practice for investment trust audits, in theabsence of indicators that an alternative benchmark would be appropriate and because we believe thisprovides 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 £121,000(2014: £100,000) 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 21, in relation to going concern. Wehave nothing to report having performed our review.

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

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

Other required reporting

Consistency of other informationCompanies Act 2006 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.

Rationale forbenchmark applied


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 31, in accordance with provision C.1.1 of the UK Corporate Governance Code (the ‘Code’), that they consider the Annual Report takenas a whole to be fair, balanced and understandable and provides the informationnecessary for members to assess the Company’s performance, business model andstrategy is materially inconsistent with our knowledge of the Company acquired in thecourse of performing our audit.

• the section of the Annual Report on pages 24 and 25, as required by provision C.3.8 of the Code, describing the work of the Audit Committee does not appropriately addressmatters 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 branches notvisited by us; or

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

We have no exceptions to report arising from this responsibility.

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

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

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

Responsibilities for the financial statements and the audit

Our responsibilities and those of the DirectorsAs explained more fully in the Statement of Directors’ Responsibilities set out on page 31, 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.

We have no exceptions to reportarising from this responsibility.




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

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

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

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

• the overall presentation of the financial statements.

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

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

Jeremy Jensen (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors, London

24th September 2015

Independent Auditors’ Reportcontinued


2015 2014Revenue Capital Total Revenue Capital Total

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

Gains on investments held atfair value through profit or loss 2 — 42,702 42,702 — 27,495 27,495

Net foreign currency gains — 1 1 — — —Income from investments 3 7,972 — 7,972 6,274 — 6,274Other interest receivable and similar

income 3 78 — 78 30 — 30

Gross return 8,050 42,703 50,753 6,304 27,495 33,799Management fee 4 (447) (1,044) (1,491) (432) (1,008) (1,440)Other administrative expenses 5 (556) — (556) (480) — (480)

Net return on ordinary activities before finance costs and taxation 7,047 41,659 48,706 5,392 26,487 31,879

Finance costs 6 (124) (290) (414) (180) (420) (600)

Net return on ordinary activities before taxation 6,923 41,369 48,292 5,212 26,067 31,279

Taxation 7 (76) — (76) (12) — (12)

Net return on ordinary activities after taxation 6,847 41,369 48,216 5,200 26,067 31,267

Return per share 9 28.53p 172.39p 200.92p 21.67p 108.62p 130.29p

Details of dividends are given in note 8 on page 46.

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

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

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

Financial StatementsIncome Statementfor the year ended 30th June 2015


Called up Capitalshare redemption Capital Revenue

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

At 30th June 2013 6,350 3,650 156,160 5,982 172,142Net return on ordinary activities — — 26,067 5,200 31,267Dividends paid in the year — — — (4,320) (4,320)

At 30th June 2014 6,350 3,650 182,227 6,862 199,089Net return on ordinary activities — — 41,369 6,847 48,216 Dividends paid in the year — — — (4,920) (4,920)

At 30th June 2015 6,350 3,650 223,596 8,789 242,385

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

Financial Statements continuedReconciliation of Movements in Shareholders’ Funds


2015 2014Notes £’000 £’000

Fixed assets Equity investments held at fair value through profit or loss 264,425 212,570Investment in liquidity fund held at fair value through profit or loss 2,869 10,000

Total investments 10 267,294 222,570

Current assets 11Debtors 1,495 4,992Cash and short term deposits 385 1,362

1,880 6,354Current liabilities Creditors: amounts falling due within one year 12 (26,789) (14,835)

Net current liabilities (24,909) (8,481)

Total assets less current liabilities 242,385 214,089Creditors: amounts falling due after more than one year 13 — (15,000)

Net assets 242,385 199,089

Capital and reserves Called up share capital 14 6,350 6,350Capital redemption reserve 15 3,650 3,650Capital reserves 15 223,596 182,227Revenue reserve 15 8,789 6,862

Total equity shareholders’ funds 242,385 199,089

Net asset value per share 16 1,010.1p 829.6p

The accounts on pages 37 to 57 were approved and authorised for issue by the Directors on 24th September 2015 and weresigned on their behalf by:

Andrew BarkerDirector

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

Company registration number: 1047690.

Balance Sheetat 30th June 2015


2015 2014Notes £’000 £’000

Net cash inflow from operating activities 17 5,401 4,387

Returns on investments and servicing of financeInterest paid (452) (575)

Net cash outflow from returns on investments and servicing of finance (452) (575)

TaxationOverseas tax recovered — 3

Capital expenditure and financial investmentPurchases of investments (147,608) (163,557)Sales of investments 149,106 161,358Other capital charges (5) (6)

Net cash inflow/(outflow) from capital expenditure and financialinvestment 1,493 (2,205)

Dividends paid (4,920) (4,320)

Net cash inflow/(outflow) before financing 1,522 (2,710)

Financing Loans drawn down 13,000 11,500Loans repaid (15,500) (8,000)

Net cash (outflow)/inflow from financing (2,500) 3,500

(Decrease)/increase in cash for the year 18 (978) 790

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

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


1. Accounting policies

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

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

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

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

(b) Valuation of investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of income andcapital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordancewith a documented investment strategy, and information is provided internally on that basis to the Company’s Board ofDirectors. Accordingly, upon initial recognition the investments are designated by the Company as ‘held at fair value throughprofit or loss’. They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchasewhich are written off to capital at the time of acquisition. Subsequently the investments are valued at fair value which arequoted bid prices for investments traded in active markets.

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

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

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

UK dividends are accounted for net of tax credits. Overseas dividends are shown gross of any withholding tax.

Deposit interest receivable 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.

Underwriting commission is recognised in revenue where it relates to shares that the Company is not required to take up.Where the Company is required to take up a proportion of the shares underwritten, the same proportion of commissionreceived is deducted from the cost of the shares taken up, with the balance taken to revenue.

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


Financial Statements continuedNotes to the Financial Statements continued

1. Accounting policies continued

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

– management fee is allocated 30% to revenue and 70% to capital in line with the Board’s expected long term split ofrevenue and capital return from the Company’s investment portfolio.

– expenses incidental to the purchase and sale of an investment are charged to capital. These expenses are commonlyreferred to as transaction costs and include items such as stamp duty and brokerage commission.

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

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

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

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

Bank loans and overdrafts are recorded at the proceeds received net of direct issue costs.

The Company has not utilised any derivative financial instruments in the current or comparative year.

(h) TaxationCurrent taxation 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 taxation 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.

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

(j) Value Added Tax (VAT)Irrecoverable VAT is included in the expense on which it has been suffered.

(k) 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 transferredout of ‘Called up share capital’ and into ‘Capital redemption reserve’.


(l) 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 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.

(m) Functional currencyThe Board, having regard to the currency of the economic environment in which the Company operates, has determined thatsterling is the functional currency and the currency in which the accounts are presented.

2015 2014£’000 £’000

2. Gains on investments held at fair value through profit or loss Gains on investments held at fair value through profit or loss based on historical cost 10,479 31,009

Amounts recognised in investment holding gains and losses in the previous year in respect of investments sold during the year (12,720) (24,451)

(Losses)/gains on sales of investments based on the carrying value atthe previous balance sheet date (2,241) 6,558

Net movement in investment holding gains and losses 44,948 20,943Other capital charges (5) (6)

Total capital gains on investments held at fair value through profit or loss 42,702 27,495

2015 2014£’000 £’000

3. Income Income from investmentsUK dividend income 6,619 4,834Overseas dividend income 861 1,220Scrip dividends 261 25Property income distribution 196 171Dividends from liquidity fund 35 24

7,972 6,274

Other interest receivable and similar incomeUnderwriting commission 78 29Deposit interest — 1

78 30

Total income 8,050 6,304



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

4. Management fee Management fee 447 1,044 1,491 432 1,008 1,440

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

2015 2014£’000 £’000

5. Other administrative expensesOther administration expenses 252 245Directors’ fees1 131 131Savings scheme costs2 147 79Auditors’ remuneration – for audit services3 26 25

556 480

1Full disclosure is given in the Directors’ Remuneration Report on page 29.2Paid to JPMAM for the marketing and administration of savings scheme products, includes £25,000 (2014: £13,000) of irrecoverable VAT.3Includes £4,400 (2014: £4,200) irrecoverable VAT.


6. Finance costs Interest on bank loans and overdrafts 124 290 414 180 420 600

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

2015 2014 £’000 £’000

Overseas withholding tax 76 12

Current tax charge for the year 76 12


(b) Factors affecting current tax charge for the year

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


Net return on ordinary activities before taxation 6,923 41,369 48,292 5,212 26,067 31,279

Net return on ordinary activities before taxation multiplied by the Company’s applicable rate of corporation tax of 20.75% (2014: 22.50%) 1,437 8,584 10,021 1,173 5,865 7,038

Effects of:Non taxable capital gains — (8,861) (8,861) — (6,186) (6,186)Non taxable UK dividends (1,374) — (1,374) (1,088) — (1,088)Non taxable overseas dividends (130) — (130) (265) — (265)Non taxable scrip dividends (54) — (54) (6) — (6)Tax attributable to expenses and finance costs charged to capital (277) 277 — (321) 321 —

Unrelieved expenses and charges 398 — 398 507 — 507Overseas withholding tax 76 — 76 12 — 12

Current tax charge for the year 76 — 76 12 — 12

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £10,090,000 (2014: £9,706,000) 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.



8. Dividends

(a) Dividends paid and proposed2015 2014 £’000 £’000

2014 Final dividend of 12.5p (2013: 11.5p) 3,000 2,7602014 Special dividend nil (2013: 1.0p) — 2402015 Interim dividend of 8.0p (2014: 5.5p) 1,920 1,320

Total dividends paid in the year 4,920 4,320

2015 Final dividend proposed of 12.0p (2014: 12.5p) 2,880 3,0002015 Special dividend proposed of 4.5p (2014: nil) 1,080 —

Total dividends proposed for year 3,960 3,000

The final dividend and special dividend have been proposed in respect of the year ended 30th June 2015 and are subject toapproval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, thesedividends will be reflected in the accounts for the year ending 30th June 2016.

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

2015 2014 £’000 £’000

Interim dividend of 8.0p (2014: 5.5p) 1,920 1,320Final dividend of 12.0p (2014: 12.5p) 2,880 3,0002015 Special dividend proposed of 4.5p (2014: nil) 1,080 —

Total dividends for Section 1158 purposes 5,880 4,320

The revenue available for distribution by way of dividend for the year is £6,847,000 (2014: £5,200,000).

9. Return per share

The revenue return per share is based on the earnings attributable to the ordinary shares of £6,847,000 (2014: £5,200,000)and on the weighted average number of shares in issue during the year of 23,997,180 (2014: 23,997,180).

The capital return per share is based on the capital return attributable to the ordinary shares of £41,369,000(2014: £26,067,000) and on the weighted average number of shares in issue during the year of 23,997,180 (2014: 23,997,180).

Total return per share is based on the total return attributable to the ordinary shares of £48,216,000 (2014: £31,267,000) andon the weighted average number of shares in issue during the year of 23,997,180 (2014: 23,997,180).


2015 2014£’000 £’000

10. Investments Investments listed on a recognised stock exchange1 267,294 222,570

Opening book cost 174,118 141,839Opening investment holding gains 48,452 51,960

Opening valuation 222,570 193,799

Movements in the year:Purchases at cost 147,347 164,830Sales – proceeds (145,330) (163,560)(Losses)/gains on sales of investments based on the carrying value atthe previous balance sheet date (2,241) 6,558

Net movement in investment holding gains and losses 44,948 20,943

267,294 222,570

Closing book cost 186,614 174,118Closing investment holding gains 80,680 48,452

Total investments held at fair value 267,294 222,570

1Includes the investment in the JPMorgan Sterling Liquidity Fund.

Transaction costs on purchases during the year amounted to £516,000 (2014: £594,000) and on sales during the yearamounted to £89,000 (2014: £125,000). These costs include stamp duty on purchases and brokerage commission.

During the year, prior year investment holding gains of £12,720,000 have been transferred to gains and losses on sales ofinvestments as disclosed in notes 2 and 15.

2015 2014£’000 £’000

11. Current assetsDebtors Securities sold awaiting settlement 624 4,400Taxation recoverable 100 80Dividends and interest receivable 748 483Other debtors 23 29

1,495 4,992

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 represents theirfair value. Cash balances in excess of a predetermined amount are placed on short term deposit at market rates of interest.



2015 2014£’000 £’000

12. Creditors: amounts falling due within one year Securities purchased awaiting settlement 1,682 2,204Bank loans 25,000 12,500Interest payable 34 73Other creditors and accruals 73 58

26,789 14,835

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

The bank loans are unsecured and are drawn down on the Company’s floating rate loan facilities with Scotiabank (Ireland)Limited (and in 2014 ING Bank). Details of the facilities are given in note 22(a)(ii) on pages 53 and 54.

2015 2014 £’000 £’000

13. Creditors: amounts falling due after more than one year:Bank loan — 15,000

The bank loan is unsecured and is drawn down on the Company’s floating rate loan facility with Scotiabank (Ireland) Limited.Details of the facility are given in note 22(a)(ii) on pages 53 and 54.

2015 2014£’000 £’000

14. Called up share capital Allotted and fully paid:Ordinary shares of 25p eachOpening balance of 23,997,180 (2014: 23,997,180) shares excluding shares held in Treasury 6,000 6,000

Subtotal 23,997,180 (2014: 23,997,180) shares 6,000 6,0001,400,900 (2014: 1,400,900) shares held in Treasury 350 350

Closing balance1 6,350 6,350

1Represented by 25,398,080 (2014: 25,398,080) shares including 1,400,900 (2014: 1,400,900) shares held in Treasury.

During the year no ordinary shares were repurchased for cancellation or into treasury.


2015Capital reserves

Gains and HoldingCalled up Capital losses on gains and

share redemption sales of losses on Revenuecapital reserve investments investments reserve Total£’000 £’000 £’000 £’000 £’000 £’000

15. Reserves Opening balance 6,350 3,650 133,775 48,452 6,862 199,089Net gains on foreign currency transactions — — 1 — — 1 Losses on sales of investments based on the carrying value at the previous balance sheet date — — (2,241) — — (2,241)

Net movement in investment holding gains and losses — — — 44,948 — 44,948 Transfer on disposal of investments — — 12,720 (12,720) — —Finance costs charged to capital — — (290) — — (290)Management fee charged to capital — — (1,044) — — (1,044)Other capital charges — — (5) — — (5)Dividends appropriated in the year — — — — (4,920) (4,920)Retained revenue for the year — — — — 6,847 6,847

Closing balance 6,350 3,650 142,916 80,680 8,789 242,385

16. Net asset value per share

Net asset value per share is based on total shareholders’ funds of £242,385,000 (2014: £199,089,000) and on the 23,997,180(2014: 23,997,180) shares in issue at the year end, excluding shares held in Treasury.

2015 2014 £’000 £’000

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

Net return on ordinary activities before finance costs and taxation 48,706 31,879Less capital return before finance costs and taxation (41,659) (26,487)Scrip dividends received as income (261) (25)(Increase)/decrease in dividends and interest receivable (265) 63Decrease in other debtors 6 22Increase/(decrease) in accrued expenses 15 (2)Tax on unfranked investment income (97) (55)Management fee charged to capital (1,044) (1,008)

Net cash inflow from operating activities 5,401 4,387



At 30th June Exchange At 30th June2014 Cash flow movement 2015£’000 £’000 £'000 £’000

18. Analysis of changes in net debtCash and short term deposits 1,362 (978) 1 385 Debt falling due within one year (12,500) (12,500) — (25,000)Debt falling due after more than one year (15,000) 15,000 — —

Net debt (26,138) 1,522 1 (24,615)

19. Capital commitments and contingent liabilities

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

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

Details of the management contract with JPMorgan Funds Limited (JPMF) and JPMorgan Asset Management Limited (JPMAM)are set out on page 21. The terms make allowance for the exclusion of management charges on investments held in funds onwhich JPMAM earns a separate management fee. Details of the management fee payable for the year can be found in note 4on page 44. No management fee (2014: £nil) was outstanding at 30th June 2015.

Expenses amounting to £147,000 (2014: £79,000) were payable to JPMAM for the marketing and administration of savingscheme products of which £nil (2014: £nil) was outstanding at the year end.

Safe custody fees and handling charges amounting to £9,000 (2014: £9,000) were payable to JPMorgan Chase Bank N.A, thecustodian, of which £2,000 (2014: £nil) was outstanding at the year end.

JPMAM carries out some of its investment activities through JPMAM subsidiaries. These transactions are carried out at arm’slength. The commission payable on transactions with JPMAM subsidiaries was £22,000 (2014: £24,000) of which £nil (2014:£nil) was outstanding at the year end.

The Company holds an investment in the JPMorgan Sterling Liquidity Fund. At 30th June 2015 this holding was valued at£2.9 million (2014: £10.0 million). During the year, the Company made purchases of this fund amounting to £40.6 million (2014:£48.7 million) and sales of £47.8 million (2014: £41.1 million). Income receivable from this fund amounted to £35,000 (2014:£24,000) of which £nil (2014: £nil) was outstanding at the year end. JPMAM earns no management fee on this fund.

At the year end a bank balance of £385,000 (2014: £1,362,000) was held with JPMorgan Chase Bank N.A. During the yearended 30th June 2015, a net amount of interest of £nil (2014: £1,000) was received from holding this bank account.

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 29.


21. 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 portfolio.

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 41.

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

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

Financial assets held at fair value through profit or loss Equity investments 264,425 — — 264,425 Liquidity fund 2,869 — — 2,869

Total 267,294 — — 267,294

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

Financial assets held at fair value through profit or lossEquity investments 212,570 — — 212,570Liquidity fund 10,000 — — 10,000

Total 222,570 — — 222,570

There have been no transfers between Levels 1, 2 or 3 during the year (2014: none).



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

As an investment trust, the Company invests in equities and other securities for the long term in order to secure its investmentobjective stated on the ‘Features’ page. In pursuing this objective, the Company is exposed to a variety of risks that couldresult in a reduction in the Company’s net assets or a reduction in the profits available for dividends. These risks includemarket risk (comprising market price risk and interest rate risk), liquidity risk and credit risk. The Directors’ policy formanaging these risks is set out below. The Manager, in close cooperation with the Board, coordinates the Company’s riskmanagement policy. The Company has no significant direct exposure to foreign currencies risk.

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 comprise the following:

– Investments in listed equity shares of UK companies and a sterling liquidity fund. These are held in accordance with theCompany’s investment objective;

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

– Sterling bank loans, the purpose of which is to raise finance for the Company’s operations.

(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 two elements – market price risk and interest rate risk. Information to enable an evaluationof the nature and extent of these two elements of market price risk is given in parts (i) and (ii) of this note, together withsensitivity analyses where appropriate.

The Board reviews and agrees policies for managing these risks. These policies have remained unchanged from thoseapplying in the comparative year. The Manager assesses the exposure to market risk when making each investment decisionand monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(i) Market price risk Market price risk arises from fluctuations in the market prices of equities which may affect the value of the Company’sinvestments.

Management ofmarket price risk The Board meets on at least four occasions each year to consider the stock selection 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.

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

2015 2014 £’000 £’000

Equity investments held at fair value through profit or loss 264,425 212,570

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

Concentration ofmarket price risk An analysis of the Company’s investments by industry sector is given on page 12. All of the investments are listed in the UK.Accordingly there is a concentration of exposure to the UK. However, it should be noted that an investment may not bewholly exposed to the economic conditions in its country of domicile or of listing.


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

2015 20141

10% Increase 10% Decrease 10% Increase 10% Decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (48) 49 (42) 42Capital return 26,331 (26,327) 21,459 (21,459)

Total return after taxation for the year 26,283 (26,278) 21,417 (21,417)

Net assets 26,283 (26,278) 21,417 (21,417)

12014 numbers have been amended due to the rate change in management fee.

(ii) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits and the liquidity fund, and the interestpayable on the Company’s variable rate cash borrowings when rates are reset.

Management of interest rate risk The Company does not normally hold significant cash balances. Short term borrowings are used when required. TheCompany may finance part of its activities through borrowings at levels approved and monitored by the Board. Thepossible effects on cash flows that could arise as a result of changes in interest rates are taken into account when theCompany borrows on the loan facility.

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:JPMorgan Sterling Liquidity Fund 2,869 10,000Bank loans (25,000) (27,500)Cash and short term deposits 385 1,362

Total exposure (21,746) (16,138)

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

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

As at 30th June 2015 the Company had two floating rate loan facilities in place. A £25 million two year loan facility withScotiabank (Ireland) Limited expiring on 2nd June 2016, and a £15 million three year loan facility with National AustraliaBank (NAB) expiring on 30th April 2017.



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

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

Interest rate exposure continuedUnder the terms of the two year £25 million Scotiabank (Ireland) Limited loan facility the Company may draw down up to£25 million at an interest rate of LIBOR as quoted in the market for the loan period, plus a margin of 0.80%, plusmandatory costs. At the year end, the Company had £25 million (2014: £15 million) drawn down on this facility withScotiabank.

Under the terms of the three year £15 million NAB loan facility the Company may draw down up to £15 million at aninterest rate of LIBOR as quoted in the market for the loan period, plus a margin of 1.10%, plus mandatory costs. At theyear end, the Company had not drawn down on this facility.

The exposure to floating interest rates has fluctuated during the year between net loan balances is as follows:

2015 2014£’000 £’000

Maximum debit interest rate exposure to floating rates – net loan balances (21,997) (30,228)Minimumdebit interest rate exposure to floating rates – net loan balances (9,476) (16,138)

Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2014: 1%) increaseor decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of changeis considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis isbased on the Company’s monetary financial instruments held at the balance sheet date, with all other variables held constant.

2015 20141% Increase 1% Decrease 1% Increase 1% Decrease

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

Income statement – return after taxationRevenue return (42) 42 31 (31)Capital return (175) 175 (193) 193

Total return after taxation for the year (217) 217 (162) 162

Net assets (217) 217 (162) 162

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, investment in the JPMorgan Sterling Liquidity Fundand drawings on loan facilities.


(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.

The Board’s policy is for the Company to remain fully invested in normal market conditions and that short term borrowings beused to manage short term liabilities, working capital requirements and to gear the Company as appropriate. Details of thecurrent loan facilities are given in part (a)(ii) to this note on pages 53 and 54.

Liquidity risk exposure Contractual maturities of the financial liabilities at the year end are as follows. The table includes the principal amountsrepayable and finance costs, from the balance sheet date to the earliest dates on which payment can be required by the lender.

2015Within One to Two to

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

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 1,682 — — 1,682 Interest payable 34 — — 34 Other creditors and accruals 73 — — 73 Bank loans 25,317 — — 25,317

27,106 — — 27,106

2014Within One to Two to

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

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 2,204 — — 2,204Interest payable 73 — — 73Other creditors and accruals 58 — — 58Bank loans 12,527 — — 12,527

Creditors: amounts falling due after more than one yearBank loan 199 15,185 — 15,384

15,061 15,185 — 30,246



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

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

Management of credit risk Portfolio dealing The Company invests in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates therisk of losing the principal of a trade during the settlement process. The Manager 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.

Cash Counterparties are subject to regular credit analysis by the Manager and deposits can only be placed with counterparties thathave been approved by JPMAM’s Counterparty Risk Group.

Exposure to JPMorgan Chase Bank N.A.JPMorgan Chase is the custodian of the Company’s assets. The custody agreement grants a general lien over securitiescredited to the securities account. The extent of this lien is limited to the amount of unpaid fees payable to JPMorgan Chase.The Company’s investment assets are segregated from JPMorgan Chase’s own trading assets and are therefore protected fromcreditors in the event that JPMorgan Chase were to cease trading. However, no absolute guarantee can be given to investorson the protection of all assets of the Company, albeit mitigated by the Depositary’s restitution liability.

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 ends.

The liquidity fund has a AAA (2014: AAA) credit rating from Standard & Poor’s.

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

(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.


23. Capital management policies and procedures

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

2015 2014£’000 £’000

DebtBank loan falling due within one year 25,000 12,500Bank loan falling due after more than one year — 15,000

25,000 27,500EquityShare capital 6,350 6,350Reserves 236,035 192,739

242,385 199,089

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

The Board’s current policy is to limit gearing within a range of 5% net cash to 25% geared in normal market conditions.Gearing for this purpose is defined as Total Assets (including net current assets/liabilities) less cash/cash equivalents andexcluding bank loans, expressed as a percentage of net assets.

2015 2014£’000 £’000

Investments held at fair value excluding liquidity fund holdings 264,425 212,570Current assets excluding cash 1,495 4,992Current liabilities excluding bank loans (1,789) (2,335)

Total assets 264,131 215,227

Net assets 242,385 199,089

Gearing 9.0% 8.1%

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

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

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

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


Notice is hereby given that the forty third Annual GeneralMeeting of JPMorgan Mid Cap Investment Trust plc will beheld at 60 Victoria Embankment, London EC4Y 0JP onMonday, 2nd November 2015 at 2.30 p.m. for the followingpurposes:

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

2. To approve the Directors’ Remuneration Policy.

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

4. To approve a final dividend.

5. To re-elect Andrew Barker as a Director of the Company.

6. To re-elect Michael Hughes as a Director of the Company.

7. To re-elect Margaret Littlejohns as a Director of theCompany.

8. To re-elect Gordon McQueen as a Director of the Company.

9. To re-elect Richard Huntingford as a Director of theCompany.

10. 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 Resolution11. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors),pursuant to Section 551 of the Companies Act 2006 (the‘Act’) to exercise all the powers for the Company to allotrelevant securities (within the meaning of Section 551 ofthe Act) up to an aggregate nominal amount of £599,929,representing approximately 10% of the Company’s issuedordinary share capital (excluding Treasury shares) as at thedate of the passing of this resolution, provided that thisauthority shall expire at the conclusion of the AnnualGeneral Meeting of the Company to be held in 2017 unlessrenewed at a general meeting prior to such time, save thatthe Company may before such expiry make offers,

agreements or arrangements which would or might requirerelevant securities to be allotted after such expiry and sothat the Directors of the Company may allot relevantsecurities in pursuance of such offers, agreements orarrangements as if the authority conferred hereby hadnot expired.

Authority to disapply pre-emption rights on allotment of relevantsecurities – Special Resolution12. THAT subject to the passing of Resolution 11 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Section 570 and 573 of the Act toallot equity securities (within the meaning of Section 560of the Act) for cash pursuant to the authority conferred byResolution 11 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 £599,929, representing approximately10% of the issued ordinary share capital (excludingTreasury shares) as at the date of the passing of thisresolution at a price of not less than the net asset value pershare and shall expire upon the expiry of the generalauthority conferred by Resolution 11 above, save that theCompany may before such expiry make offers, oragreements which would or might require equity securitiesto be allotted after such expiry and so that the Directors ofthe Company may allot equity securities in pursuant of suchoffers, or agreements as if the power conferred hereby hadnot expired.

Authority to repurchase the Company’s shares – Special Resolution13. THAT the Company be generally and, subject as hereinafter

appears, unconditionally authorised in accordance withSection 701 of the Companies Act 2006 (the ‘Act’) to makemarket purchases (within the meaning of Section 693 of theAct) of its issued shares of 25p each in the capital of theCompany

PROVIDED ALWAYS THAT

(i) the maximum number of shares hereby authorised tobe purchased shall be 3,597,177 or, if less, that numberof shares which is equal to 14.99% of the Company’sissued share capital as at the date of the passing of thisResolution;

Shareholder InformationNotice of Annual General Meeting


(ii) the minimum price which may be paid for a share shallbe 25 pence;

(iii) the maximum price which may be paid for a share shallbe an amount equal to the highest of: (a) 105% of theaverage of the middle market quotations for a sharetaken from and calculated by reference to the LondonStock Exchange Daily Official List for the five businessdays immediately preceding the day on which the shareis purchased; or (b) the price of the last independenttrade; or (c) the highest current independent bid;

(iv) any purchase of shares will be made in the market forcash at prices below the prevailing net asset value pershare (as determined by the Directors) at the datefollowing not more than seven days before the date ofpurchase;

(v) the authority hereby conferred shall expire on 1st 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 purchase sharesunder the authority hereby conferred prior to the expiryof such authority and may make a purchase of sharespursuant to any such contract notwithstanding suchexpiry.


30th September 2015

Notes

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

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

2. A proxy does not need to be a member of the Company but mustattend the Meeting to represent you. Your proxy could be theChairman, another Director of the Company or another 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.

4. You may change your proxy instructions by returning a new proxyappointment. The deadline for receipt of proxy appointments alsoapplies in relation to amended instructions. Any attempt toterminate or amend a proxy appointment received after therelevant deadline will be disregarded. Where two or more validseparate appointments of proxy are received in respect of thesame share in respect of the same Meeting, the one which is lastreceived (regardless of its date or the date of its signature) shall betreated as replacing and revoking the other or others as regardsthat share; if the Company is unable to determine which was lastreceived, none of them shall be treated as valid in respect of thatshare.

5. To be entitled to attend and vote at the Meeting (and for thepurpose of the determination by the Company of the number ofvotes they may cast), members must be entered on the Company’sregister of members as at 6.00 p.m. two 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.

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 as thecorporation could exercise if it were an individual member of theCompany, provided that they do not do so in relation to the sameshares. It is therefore no longer necessary to nominate adesignated corporate representative.

Representatives should 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, the Companymust cause to be answered at the AGM any question relating to thebusiness being dealt with at the AGM which is put by a memberattending the Meeting except in certain circumstances, including ifit is undesirable in the interests of the Company or the good orderof the Meeting or if it would involve the disclosure of confidentialinformation.

10. Under Sections 338 and 338A of the 2006 Act, members meetingthe threshold requirements in those sections have the right torequire the Company: (i) to give, to members of the Companyentitled to receive notice of the Meeting, notice of a resolutionwhich those members intend to move (and which may properly bemoved) at the Meeting; and/or (ii) to include in the business to bedealt with at the Meeting any matter (other than a proposedresolution) which may properly be included in the business at theMeeting. A resolution may properly be moved, or a matter properlyincluded in the business unless (a) (in the case of a resolution only)it would, if passed, be ineffective (whether by reason of anyinconsistency with any enactment or the Company’s constitution orotherwise); (b) it is defamatory of any person; or (c) it is frivolous orvexatious. A request made pursuant to this right may be in 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

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

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

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

13. The register of interests of the Directors and connected persons inthe share capital of the Company and the Directors’ letters ofappointment are available for inspection at the Company’sregistered office during usual business hours on any weekday(Saturdays, Sundays and public holidays excepted). It will also beavailable for inspection at the Annual General Meeting. No Directorhas any contract of service with the Company.

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

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

16. As at 23rd September 2015 (being the latest business day prior tothe publication of this Notice), the Company’s issued share capitalconsists of 23,997,180 Ordinary shares (excluding treasury shares)carrying one vote each. Therefore the total voting rights in theCompany are 23,997,180.

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

Shareholder Information continuedNotice of Annual General Meeting continued


Return to ShareholdersTotal return to the investor, on a mid-market price tomid-market price basis, assuming that all dividends receivedwere reinvested, without transaction costs, in the shares of theCompany at the time the shares were quoted ex-dividend.

Portfolio Return Net of Fees and ExpensesTotal return on net assets, net of management fees andadministration expenses but prior to the use of revenuereserves to finance the dividend.

Return on Net AssetsTotal 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 when calculating the totalreturn on net assets.

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

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

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

Ongoing ChargesRatioThe Ongoing Charges Ratio represents the Company’smanagement fee and all other operating expenses, excludingfinance costs, expressed as a percentage of the average of thedaily net assets during the year and is calculated in accordancewith guidance issued by the Association of InvestmentCompanies.

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

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

Performance Attribution Definitions:

Stock/Sector SelectionMeasures the effect of investing in securities/sectors to agreater or lesser extent than their weighting in the benchmark,or of investing in securities which are not included in thebenchmark.

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

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

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

Gross Commitment Leverage Exposure Method Method

Maximum limit 200.00% 200.00%Actual 110.27% 110.05%

Glossary of Terms and Definitions


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

Stocks & Shares Individual Savings Accounts (ISA)

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

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

Fund supermarkets:

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

Ascentric Nucleus Avalon Praemium Axa Elevate TransactNovia

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

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

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

AJ BellAlliance TrustBarclays StockbrokersBestinvestCharles Stanley DirectHalifax Share Dealing ServiceHargreaves Lansdown

Interactive InvestorJames Brearley James HaySelftradeTD DirectThe Share Centre Transact

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


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

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Beware of share fraud

How to avoid share fraud

Report a scam

In association with:

Financial Conduct Authority


Notes

HistoryJPMorgan Mid Cap Investment Trust plc was launched in 1972 asCrossfriars Trust Limited and raised £10 million by a public offer of shares.Its original policy was to invest up to 25% of its assets in UK unquotedshares. The Company changed its name to The Fleming EnterpriseInvestment Trust in 1982. It adopted its current investment policy ofconcentrating on FTSE 250 companies in 1993 and reaffirmed this policyin February 1997. The Company changed its name to The Fleming Mid CapInvestment Trust plc in October 1998, to JPMorgan Fleming Mid CapInvestment Trust plc in November 2001 and adopted its present name inNovember 2005.

DirectorsAndrew Barker (Chairman)Michael Hughes (Senior Independent Director)Richard HuntingfordMargaret LittlejohnsGordon McQueen (Chairman of the Audit Committee)

Company NumbersCompany registration number: 1047690London Stock Exchange number: 0235761 ISIN: GB0002357613Bloomberg code: JMF LN

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

Websitewww.jpmmidcap.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. Theymay also be purchased and held through the J.P. Morgan InvestmentAccount and J.P. Morgan ISA. These products are all available on theonline wealth manager service, J.P. Morgan WealthManager+ availableat www.jpmorganwealthmanagerplus.co.uk

Manager and Company SecretaryJPMorgan Funds Limited

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

Please contact Alison Vincent for company secretarial and administrativematters.

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

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

RegistrarsEquiniti LimitedReference 1082Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone: 0871 384 2321

Calls to this number cost 10p per minute plus network extras. Lines open8.30 a.m. to 5.30 p.m. Monday to 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 the Registrarquoting reference 1082.

Registered shareholders can obtain further details on individual holdings onthe internet by visiting www.shareview.co.uk.

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

BrokersNumis Securities LtdThe London Stock Exchange Building10 Paternoster SquareLondon EC4M 7LT

Savings Product AdministratorsFor queries on the J.P. Morgan Investment Account and J.P. Morgan ISA seecontact 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 FebruaryInterim Management Statements April and October Half yearly dividends on ordinary shares paid November, April Annual General Meeting October

A member of the AIC


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

Your telephone call may be recorded for your security

www.jpmmidcap.co.uk

2015 annual report jpmorgan mid cap investment …jpmorgan mid cap investment trust plc. annual...

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