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JPMorgan Overseas Investment Trust plc

Annual Report & Accounts for the year ended 30th June 2010

Annual Report2010

Features

Contents

About the Company

1 Financial Results2 Chairman’s Statement

Investment Review

5 Investment Manager’s Report7 Summary of Results8 Performance9 Ten Year Financial Record10 Ten Largest Equity Investments11 Portfolio Analyses 12 List of Investments

Directors’ Report

14 Board of Directors16 Directors’ Report16 Business Review22 Corporate Governance27 Directors’ Remuneration Report

Accounts

28 Directors’ Responsibilities in Respectof the Accounts

29 Independent Auditors’ Report30 Income Statement31 Reconciliation of Movements in

Shareholders’ Funds32 Balance Sheet33 Cash Flow Statement34 Notes to the Accounts

Shareholder Information

54 Shareholder Analysis 55 Notice of Meeting59 Glossary of Terms and Definitions61 Information about the Company

Objective

Capital growth from world stockmarkets.

Investment Policy

– To provide a diversified portfolio of approximately 70-90 stocks in which theinvestment manager has a high degree of conviction.

A significant, global commitment to proprietary research is essential in generatinginvestment ideas. A strong partnership between the investment manager andanalysts is key to understanding valuations and developing conviction.

Investment Strategy

To provide superior long-term capital growth by investing in a high convictionportfolio of companies with strong valuation signals, significant profit growthpotential and an identifiable catalyst to unlock that potential, regardless of industry,region or size.

Gearing

A flexible, £20 million borrowing facility is in place and available for the investmentmanager to utilise at times of low absolute valuation or for short term borrowing tofinance investment decisions.

Benchmark

The MSCI AC World Index expressed in sterling terms is used as a performancecomparator.

Capital Structure

At 30th June 2010, the Company had 26,174,698 ordinary shares of 25p each in issue,including 447,966 shares held in Treasury.

Share Repurchase Policy

In order for the Company’s shares to trade at a relatively narrow discount, theCompany will repurchase its shares with the aim of maintaining an average discountof around five per cent. calculated with debt at par value. Any shares repurchasedunder this policy may be held in Treasury or cancelled. Shares held in Treasury willonly be reissued at a premium to net asset value.

Management Company

The Company employs JPMorgan Asset Management (UK) Limited (‘JPMAM’) tomanage its assets.

–10

0

10

20

30

40

50

60

70

80

10 Year Performance5 Year Performance3 Year Performance

26.3

11.9

–5.4

77.7

46.6

22.1

41.1

12.6

–6.2

%

JPMorgan Overseas Investment Trust plc. Annual Report & Accounts 2010 1

Financial Results

Total Returns (includes dividends reinvested)

Long Term Performancefor periods ended 30th June 2010

+49.0%Return to shareholders1

(2009: –6.6%)

13.0pDividend

(2009: 11.5p)

+33.3%Return on net assets2

(2009: –7.6%)

+23.0%Benchmark return3

(2009: –14.6%)

A glossary of terms and definitions is provided on page 59.

1Source: Morningstar.2Source: J.P. Morgan.3Source: MSCI. The Company’s benchmark is the MSCI AC World Index expressed in sterling terms. Prior to 1st July 2008, the benchmark wasthe MSCI World Index expressed in sterling terms.

JPMorgan Overseas – Return to shareholders1

JPMorgan Overseas – Return on net assets1

Benchmark3

JPMorgan Overseas Investment Trust plc. Annual Report & Accounts 20102

Chairman’s Statement

During the year ended 30th June 2010 global equity market conditions improvedsteadily following the severe declines experienced in the previous two years. TheCompany produced an impressive return of 49.0% for shareholders and a portfolioreturn on net assets of 33.3%. In comparison the Company’s benchmark, the MSCI ACWorld Index (expressed in sterling terms) recorded a total return of 23.0% over thereporting period. This exceptional performance relative to the benchmark was mainlyattributable to stock selection.

The Investment Manager’s report provides a detailed commentary on the Company’sinvestment strategy. The Board is pleased with the Investment Manager’sperformance over the past twelve months and continues to support his highconviction approach of selecting stocks based on their strong financial position,quality of management and growth potential as identified by the JPMorganworldwide research organisation.

Dividends

The Directors are proposing, subject to shareholders’ approval at the Annual GeneralMeeting (‘AGM’), to pay an increased final dividend of 13.0 pence per share (2009:11.5 pence) on 26th November 2010 to shareholders on the register at the close ofbusiness on 5th November 2010. The Company’s principal aim is to maximise capitalgrowth so as to give shareholders the advantage of the more benign tax rate on capitalgains. The Board does however appreciate that many shareholders do like to receive adividend rather than have to sell shares to obtain income.

Share Buybacks

During the year, the Company repurchased 421,966 shares for holding in Treasury,representing 1.6% of the shares outstanding at the beginning of the year. The totalcost of these repurchases was £2.6 million. It is encouraging to note that due toimproved performance the share price discount to net asset value narrowedsignificantly over the reporting period moving from a discount of 5.0% at 30th June2009 to a premium of 5.9% at 30th June 2010. A resolution to renew the authority topermit the Company to continue to repurchase shares will be submitted to the AGM.Any shares held in Treasury will only be re-issued at a premium to net asset value.

The Board will continue to manage the discount at which the share price tradesrelative to its net asset value at around 5% if it should become necessary by means ofrepurchases of the Company’s shares in the market.

Total Expense Ratio

The Board maintains a close watch on the costs of operating your Company to ensurethat they are kept to a minimum. The Company’s total expense ratio (managementexpenses expressed as percentage of the average of the month and net assets duringthe year) was 0.65% for the year ended 30th June 2010. While some of the Company’s


expenses will vary with its size there are, nevertheless, other expenses that are fixed.High levels of share buybacks could, over time, have a detrimental effect on the totalexpense ratio and your Board will continue to monitor this figure to ensure that itremains within acceptable parameters.

Gearing

Gearing is regularly discussed between the Board and the Investment Manager. Anew increased borrowing facility of £20 million was negotiated with ING Bank in Julythis year upon expiry of the previous £10 million facility with Lloyds TSB. This facilityis highly flexible and can be used tactically as investment opportunities presentthemselves, with the aim of enhancing returns. As sufficient investment opportunitiesarose in rising markets during the year, £10 million had been drawn throughout theyear to enhance the potential gains. This represented a gearing level of 6.1% of netassets at 30th June 2010.

Currency Hedging

The Company continues its passive currency hedging strategy (implemented in late2008) that aims to make stock selection the predominant driver of overall portfolioperformance relative to the benchmark, the MSCI Word AC Index. This is a riskreduction measure, designed to eliminate most of the differences between theportfolio’s currency exposure and that of the Company’s benchmark. As a result thereturns derived from, and the portfolio’s exposure to currencies may differ materiallyfrom that of the Company’s competitors in the AIC Global Growth sector, whogenerally do not undertake such a strategy.

The Board

As previously reported, I plan to retire from the Board immediately after theforthcoming AGM and so too does Dick Barfield. Accordingly, neither of us will standfor re-election at that meeting. Dick has served the Company since 2001, and I shouldlike to thank him for his invaluable contribution to the Board over that period. SimonDavies will succeed Dick in his role as Chairman of the Nomination Committee andwill also succeed me as Chairman of the Board. I am confident that Simon will servethe Company and its shareholders very well.

The Nomination Committee has carried out a recruitment process which has lead tothe appointment of Nigel Wightman as a further non-executive director since theappointment of Jonathan Carey last year. Nigel brings with him over 30 yearsexperience of the international asset management industry, having held seniorpositions at a number of major firms in London and Hong Kong including State Streetand NM Rothschild. Most recently he was the Chairman and Chief Executive ofTitanium Asset Management. Shareholders will be asked to elect him at theforthcoming AGM.


Annual General Meeting

My fellow Directors and I invite you to attend the Company’s AGM which will beheld at Trinity House, Tower Hill, London EC3N 4DH on Tuesday, 26th October 2010at 12 noon. An investment presentation will be made at the meeting by JeroenHuysinga. If you have any detailed or technical questions, please raise these inadvance with the Secretary whose contact details are shown on page 61.Shareholders who are unable to attend the AGM in person are encouraged to usetheir proxy votes.

The AGM will be followed by refreshments and there will be an opportunity forshareholders to meet the Directors and the Investment Manager. I hope to have thepleasure of meeting you then.

Outlook

Despite the recovery this year, the investment climate remains volatile. Given thecontinuing global concerns and fragile markets, the short term outlook continues toremain uncertain. Nevertheless, the Board is confident that the Company’s InvestmentManager is well positioned to identify appropriate investment opportunities in thisdifficult environment.

It has been a great pleasure and a privilege to have been a Director of the Companysince 1998 and Chairman since 2001. I would like to thank my Board colleagues for alltheir help and support over these years. Good investment performance is the vitalingredient to ensure the success of the Company and I am delighted that JeroenHuysinga has proved to be such an able stock picker. JPMorgan Asset Managementcontinues to manage the Company most efficiently and I have enjoyed working withthe managers concerned.

I should like to thank all shareholders for supporting the Board over the periodduring which I have been involved. The Board’s top priority is to deliver the bestpossible returns for shareholders. I wish my colleagues every success in the future.

George PaulChairman 16th September 2010

Chairman’s Statement continued


Investment Manager’s Report

After two years of sharp decline, the year under review saw recovery in globalequities. The MSCI AC World Index rose 23%, measured in sterling terms. As discussedin previous reports, fiscal and monetary stimulus of enormous magnitude provided afoundation for economic stabilisation. This, coupled with increased leanness in thecorporate sector, drove a significant re-rating of risk assets.

The recovery in equities during the first part of the review period was dominated bysectors which are largely cyclical in character. Subsequently a more questioning andless unconditional environment resulted in significant shifts in leadership. Over the12 month period we therefore observed a mixture of different sectors leading andlagging overall markets. In the former category we saw Consumer Staples, IndustrialCyclicals and Media. In the latter: Capital Market Banks, Utilities and Energy. If everthere was a year to focus on stock selection within sectors as opposed to pickingsectors themselves then this was it.

Although the Chairman has already referred to performance in his report we wouldemphasise that the portfolio continued to outperform across a wide range of sectors.Within cyclicals, stocks such as Rhodia, Lanxess and Dow Chemical were strong on acombination of demand recovery, industry restocking, corporate cost reduction andexceptionally strong cashflow. In commodities, Petropavlosk (gold in Russia) andInterOil (energy in Papua New Guinea) rose significantly as increased economicstability and company specific developments facilitated a new and more positiveassessment of normalised value.

Despite our objective of building superior long term capital appreciation throughstock selection across global sectors and irrespective of domicile, it is pleasing to notethat performance was well balanced across regions. Five out of six regions showedpositive returns from stock selection. In North America, Johnson Controls andMcDonald’s contributed to strong returns. In Japan we would highlight MitsubishiElectric and Nidec. In the UK and Europe performance was driven by stocks such asInterContinental Hotels, Cairn Energy, Lloyds Banking Group, Nokian Renkaat, BancoSantander and Schoeller-Bleckmann Oilfield Services.

Earlier this year we mentioned that recovering equity markets had led to a narrowingof valuation spreads within large areas of our research coverage. This instigated anumber of important changes in the portfolio. For example, the average marketcapitalisation of stocks held has risen relative to that of the broader benchmark.Some very large companies with excellent management, balance sheets and globalfranchises became exceptionally cheap. A number of our Emerging Market holdingsappreciated to levels which we considered high enough to switch into cheaper stockswithin similar sectors and frequently with similar economic exposure but domiciled inNorth America and Europe. Exposure in a number of sectors has changedsignificantly during the review period. Banks, Health Care and Technology havedeclined whereas Telecoms, Retail and Energy have increased in response to somevery compelling stock specific insight.


Although we are reporting on a buoyant financial year, an array of global concernsincluding sovereign debt in Europe, bank regulation, fiscal austerity and slowdownconcerns in the US and China have resulted in sluggish markets in recent months.Global risk appetite has fallen sharply and the correlations between equity returnshave been among the highest ever as macro concerns predominate. After a verysharp recovery from the crisis of 2008/09, rates of change across a number ofdifferent macroeconomic and corporate indicators are clearly flattening. For manyinvestors this has acted as a negative development. For others, the system appearsmore robust than what is being discounted in equity markets. We would highlight twofactors in particular. First, whereas the most recent economic collapse was triggeredby the inability of banks to fund economic activity, the propensity for banks to lend iscurrently very high. Moreover, central banks, led by the US Federal Reserve, are inproactive mode. Second, the profitability of the corporate sector is unprecedented fora post-crisis period such as this. In the US, corporate profits as a share of GDP are inexcess of 10% which is significantly higher than a frequently discussed parallel whichis Japan in the 1990s. Corporate balance sheets are strong with the highest cash toassets ratio, again in the US, on record. With bid activity accelerating there is growingevidence that corporates are willing to take advantage of valuation levels which thepublic markets are currently unwilling to recognise. These issues highlight thepossibility that economies have recovered sufficiently and have developed moreresilience to shocks such as the European sovereign debt crisis than many believe.

Normally we would avoid broad and general comments about markets andeconomies because we are bottom up and stock specific. But in many instanceswhere our valuation signals (based on normalised earnings potential) are currentlystrongest, we need a firm macro view. Where valuation signals have become morecompressed we are spending more time than ever on quality of management, qualityof franchise and reinvestment potential. Given the impressive research team whichwe have at our disposal we are very confident in our continued ability to locateappropriate investments in this environment.

Jeroen HuysingaInvestment Manager 16th September 2010

Performance attribution for theyear ended 30th June 2010

% %

Contributions to total returns

Benchmark return 23.0

Asset allocation 1.6Stock selection 10.3Gearing/cash effect 0.9Currency –0.4

Investment managercontribution 12.4

Portfolio total return 35.4

Management fees/other expenses –0.6

Performance fees –1.5

Other effects –2.1

Return on net assets 33.3

Return to shareholders 49.0

Source: Xamin/JPMAM and Morningstar.

All figures are on a total return basis.

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

A glossary of terms and definitions isprovided on page 59.

Investment Manager’s Reportcontinued


2010 2009

Total Returns for the year ended 30th JuneReturn to shareholders1 +49.0% –6.6%Return on net assets2 +33.3% –7.6%Benchmark return3 +23.0% –14.6%

% change

Net asset value, share price, discount and market data at 30th JuneShareholders’ funds (£’000) 186,913 145,470 +28.5Net asset value per share 726.5p 556.3p +30.6Net asset value per share with debt at fair value4 726.7p 556.7p +30.5Share price 754.0p 515.5p +46.3Share price premium/(discount) to net asset value5 5.9% (5.0)%

Revenue for the year ended 30th JuneNet revenue attributable to shareholders (£’000) 2,751 3,241 –15.1Revenue return per share 10.7p 12.3p –13.0Dividend per share 13.0p 11.5p +13.0

Actual Gearing Factor at 30th June6 106.1% 107.8%

Total Expense Ratio7 0.65% 0.70%Total Expense Ratio including performance fee payments8 1.41% 1.28%


1Source: Morningstar.2Source: J.P. Morgan.3Source: MSCI. The Company’s benchmark is the MSCI AC World Index expressed in sterling terms.4The fair value of the £200,000 debenture issued by the Company has been calculated by reference to a similarly dated gilt yield plus a margin based on the AA Barclays SterlingCorporate Bond spread.

5Ex-income. Source: Bloomberg.6Actual gearing represents investments excluding holdings in liquidity funds, expressed as a percentage of total net assets.7Management fees and all other operating expenses excluding interest, VAT recoverable and performance fee payments, expressed as a percentage of the average of the month endnet assets during the year.

8Management fees, performance fee payments and all other operating expenses excluding interest and VAT recoverable, expressed as a percentage of the average of the opening andclosing net assets.

Summary of Results


Performance

Performance Relative to BenchmarkFigures have been rebased to 100 at 30th June 2000

Source: Morningstar/MSCI.

JPMorgan Overseas – share price total return.

JPMorgan Overseas – net asset value total return.

The benchmark index is represented by the grey horizontal line.

Ten Year PerformanceFigures have been rebased to 100 at 30th June 2000




Benchmark.

40

60

80

100

120

140

160

20102009200820072006200520042003200220012000

90

100

110

120

130

140

150

160

20102009200820072006200520042003200220012000


At 30th June 2000 2001 2002 2003 20041 20051 2006 2007 2008 2009 2010

Shareholders’ Funds (£m) 690.3 501.7 349.7 305.9 342.7 375.9 227.6 207.7 165.8 145.5 186.9

Net asset value per share (p) 725.8 645.2 493.1 431.3 488.4 538.9 627.7 681.4 615.4 556.3 726.5

Share price (p) 622.5 572.0 428.0 352.0 394.0 467.0 575.0 634.0 566.0 515.5 754.0

(Discount)/premium (%)2 (14.2 ) (11.9) (12.7) (18.3) (17.7) (12.0) (5.3) (5.7) (5.0) (5.0) 5.9

Actual gearing factor (%)3 111.9 115.8 117.1 106.9 107.8 98.6 99.5 100.2 101.1 107.8 106.1

Year ended 30th June

Revenue attributable to shareholders (£’000) 4,783 4,490 3,304 3,847 5,122 5,776 5,457 3,221 3,599 3,241 2,751

Revenue return per share (p) 4.50 5.03 4.50 5.42 7.24 8.27 8.88 9.69 12.62 12.26 10.65

Dividends per share (p) 3.60 4.20 4.20 5.00 7.00 8.00 12.504 10.00 11.50 11.50 13.00

Total expense ratio (%)5 0.62 0.63 0.64 0.60 0.61 0.56 0.67 0.62 0.61 0.70 0.65

Rebased to 100 at 30th June 2000

Return to shareholders6 100.0 92.4 69.8 58.1 65.9 79.4 99.3 111.7 101.3 94.7 141.1

Return on net assets6 100.0 89.4 68.8 60.8 68.6 76.8 91.0 100.6 91.8 84.5 112.6

Benchmark7 100.0 86.6 67.8 61.1 69.0 76.8 87.0 99.2 89.3 76.3 93.8


1Figures have been restated to reflect a change in accounting policy regarding dividends payable. Such dividends are now included in the accounts in the year in which they are paid.2Ex-income. Source: Bloomberg.3Actual gearing represents investments excluding holdings in liquidity funds, expressed as a percentage of total net assets.4Includes a special dividend of 4.0p.5Management fees and all other operating expenses excluding interest, VAT recoverable and performance fee payments, expressed as a percentage of the average of the month endnet assets during the year (2008 and prior years: the average of the opening and closing net assets).

6Source: Morningstar.7Source: MSCI. The Company’s benchmark is the MSCI AC World Index expressed in sterling terms. Prior to 1st July 2008, the benchmark was the MSCI World Index expressed insterling terms.

Ten Year Financial Record


2010 2009Valuation Valuation

Company Country £’000 %1 £’000 %1

Rhodia2 France 5,754 3.0 2,649 1.8

Lanxess Germany 5,711 3.0 3,524 2.4

InterContinental Hotels2 UK 4,766 2.5 2,252 1.5

McDonald’s3 USA 4,280 2.3 — —

Telefonica3 Spain 4,183 2.2 — —

Hewlett-Packard USA 4,003 2.1 3,160 2.1

Abbott Laboratories2 USA 3,843 2.0 2,182 1.5

Huabao International2 China 3,792 2.0 2,061 1.4

Telekomunikasi Indonesia2 Indonesia 3,726 2.0 1,139 0.8

Kubota2 Japan 3,710 2.0 1,650 1.1

Total 43,768 23.1

1Based on total assets less current liabilities of £190.0m (2009: £147.1m).2Not included in the ten largest investments at 30th June 2009.3Not held in the portfolio at 30th June 2009.

At 30th June 2009, the value of the ten largest equity investments amounted to £35.1m representing 23.8% of total assets less current liabilities.

Ten Largest Equity Investmentsat 30th June 2010


Portfolio Analyses

Geographic Analysis30th June 2010 30th June 2009

Portfolio Benchmark Portfolio Benchmark%1 % %1 %

North America 31.4 47.4 30.4 46.8 Continental Europe 29.6 17.1 30.5 18.2 United Kingdom 18.2 8.3 17.3 8.7 Developed Asia 9.1 5.2 3.9 6.4 Japan 9.0 9.1 12.6 9.9 Emerging Markets 7.1 12.9 11.8 10.0

Total equities 104.4 100.0 106.5 100.0

Liquidity Fund 0.6 — 0.7 —Net current liabilities (5.0) — (7.2) —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £190.0m (2009: £147.1m).

Sector Analysis30th June 2010 30th June 2009

Portfolio Benchmark Portfolio Benchmark%1 % %1 %

Consumer Discretionary 15.8 9.5 14.8 8.8 Financials 15.3 21.1 18.0 20.2 Industrials 12.5 10.4 8.7 9.9 Materials 12.1 8.2 9.7 7.6 Energy 9.2 10.6 6.6 12.0 Information Technology 8.9 12.1 13.7 11.8 Consumer Staples 8.4 10.0 12.5 9.8 Telecommunication Services 8.0 4.8 3.7 5.3 Health Care 7.1 9.0 11.8 9.7 Utilities 3.6 4.3 2.9 4.9Investment Companies 3.5 — 4.1 —Liquidity Fund 0.6 — 0.7 —Net current liabilities (5.0) — (7.2) —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £190.0m (2009: £147.1m).


List of Investmentsat 30th June 2010

ValuationCompany £’000

North AmericaMcDonald’s 4,280Hewlett-Packard 4,003Abbott Laboratories 3,843General Mills 3,440Cisco Systems 3,354Walt Disney 3,337Microsoft 3,200ACE 3,171InterOil 3,115Kroger 3,100Schering-Plough 2,820Aflac 2,811Union Pacific 2,684Staples 2,506IBM 2,389Bank of America 1,962Lowes 1,820Sysco 1,799Celgene 1,739Capital One Financial 1,491First Quantum Minerals 1,468Cameron International 1,287Fleming US Discovery Fund III1,2 —

59,619


Continental EuropeRhodia (France) 5,754Lanxess (Germany) 5,711Telefonica (Spain) 4,183Sodexo (France) 3,502Nokian Renkaat (Finland) 3,202Royal Dutch Shell (Netherlands)) 2,780Snam Rete Gas (Italy) 2,395Banco Bilbao Vizcaya Argentaria (Spain) 2,323Société Générale (France) 2,116KBC (Belgium) 2,062Teva Pharmaceutical Industries ADR 2,060Pernod Ricard (France) 2,018Volkswagen (Germany) 1,866Bayer (Germany) 1,812Lafarge (France) 1,762KPN (Netherlands) 1,661Schoeller-Bleckmann Oilfield Services (Austria) 1,593Continental (Germany) 1,593Atos Origin (France) 1,558Intercell (Austria) 1,280Orkla (Norway) 1,055D/S Norden (Denmark) 1,027Sevan Marine (Norway) 1,006Hamburger Hafen und Logistik (Germany) 977AerCap (Netherlands) 865

56,161



United KingdomInterContinental Hotels 4,766BP 3,632Vodafone 3,059Petropavlosk 3,001Cookson 2,699Man 2,486Centrica 2,479Capita 2,062Experian 1,970GKN 1,591Cable & Wireless Worldwide 1,534Taylor Wimpey 1,512Lamprell 1,288Cable & Wireless Communications 1,024Resolution 974Afren 510

34,587Developed AsiaHuabao International (Hong Kong) 3,792China Overseas Land & Investments (Hong Kong) 2,853Hutchison Whampoa (Hong Kong) 2,589Hon Hai Precision Industry (Taiwan) 2,344MacQuarie (Australia) 2,144Perusahaan Gas Negara (Indonesia) 2,049Angang Steel (China) 1,525

17,296


JapanKubota 3,710Mitsubishi Electric 2,961JX Holdings 2,357Nippon Sheet Glass 1,914Shiseido 1,776Yakult Honsha 1,681Orix 1,675JPMorgan Japan Smaller Companies Trust3 1,008

17,082Emerging MarketsTelekomunikasi Indonesia 3,726JPMorgan Emerging Markets Investment Trust3 3,703Cosan (Brazil) 2,143African Bank Investments 2,106JPMorgan Indian Investment Trust3 1,865

13,543Liquidity FundJPMorgan Sterling Liquidity Fund4 1,100

1,100

Total Portfolio 199,388

1Unlisted.2Managed by JPMorgan Asset Management (USA) Limited.3Managed by JPMorgan Asset Management (UK) Limited.4Managed by JPMorgan Asset Management (Lux) Limited.


Board of Directors

George Paul (Chairman)†§

A Director since January 1998.

Chairman of Agricola Group Limited and of Notcutts Limited. He was formerly Chairmanof Norwich Union plc and latterly Deputy Chairman of Aviva plc.

Richard Barfield*†§(Senior Independent Director and Chairman of the Nomination Committee)

A Director since November 2001.

Chairman of Baillie Gifford Japan Trust plc, and a Director of The Edinburgh InvestmentTrust plc, and The Merchants Trust plc, Coal Staff Superannuation Scheme Trustees Ltd,and the Pension Protection Fund. He was formerly Chief Investment Manager ofStandard Life, Director of Equitas and Chairman of its investment committee.

Simon Davies*†§(Chairman of the Remuneration Committee)


Chairman of Threadneedle Asset Management. He began his investment career in 1981with Rothschild Asset Management, before moving to Gartmore where he became Headof International Equities. He joined Threadneedle as Chief Investment Officer beforebecoming Chief Executive. He moved to the position of Chairman in 2007. He isChairman of Thames Water Pension Trustees.

John Rennocks*†§(Chairman of the Audit and Management Engagement Committee)


Chairman of Nestor plc, Diploma plc and Intelligent Energy plc, Deputy Chairman ofInmarsat plc and a Non-Executive Director of Babcock International Group plc. He waspreviously Finance Director of Corus Group plc (formerly British Steel plc), Powergen plcand Smith & Nephew plc.


Jonathan Carey*†§

A Director since September 2009.

Chairman of Jupiter Investment Management Group Limited (previously JupiterInternational Group Plc), a position he has held since June 2007. Prior to this he wasthe Joint Group Chief Executive of Jupiter Investment Management Group Limited, aposition he held from May 2000. He has been Chairman of Jupiter Asset Management(Bermuda) Limited since May 2000. He is also a Director of several other investmentcompanies and funds.

Nigel Wightman*†§

A Director since September 2010.

Over 30 years experience in the international asset management industry. Chairmanand Chief Executive of Titanium Asset Management until February 2010. Prior to this,he served as managing partner of Parkfield Capital LLP, a UK investment advisoryfirm for two years and was managing director of State Street Global Advisors Limited,an international fund management business for eight years. His other previous rolesinclude various senior positions with State Street Bank. He also worked forNM Rothschild Group for 11 years in senior roles. He currently serves on theinvestment committees of the Royal Institute for International Affairs and BrasenoseCollege Oxford.

* Member of the Audit and Management Engagement Committee.† Member of the Nomination Committee.§ Member of the Remuneration Committee.


The Directors present their report for the year ended 30th June2010.

Business ReviewBusiness of the CompanyThe Company carries on business as an investment trust andwas approved by HM Revenue and Customs as an investmenttrust in accordance with Section 842 of the Income andCorporation Taxes Act 1988 (replaced on 1st April 2010 bySection 1158 of the Corporation Taxes Act 2010) for the yearended 30th June 2009. In the opinion of the Directors, theCompany has subsequently conducted its affairs so that itshould continue to qualify. The Company will continue to seekapproval under Section 1158 of the Corporation Taxes Act 2010each year.

Approval for the year ended 30th June 2009 is subject toreview should there be any subsequent enquiry underCorporation Tax Self Assessment.

The Company is an investment company within the meaning ofSection 833 of the Companies Act 2006. The Company is not aclose company for taxation purposes.

A review of the Company’s activities and prospects is given inthe Chairman’s Statement on pages 2 to 4, and in theInvestment Manager’s Report on pages 5 and 6.

ObjectiveThe Company’s objective is to achieve capital growth fromworld stockmarkets. The concentration is on capital growthwith income a secondary consideration.

Investment Policies and Risk ManagementIn order to achieve the investment objective and to seek tomanage risk, the Company invests in a diversified portfolio ofcompanies.

The Company manages liquidity and borrowings to increasepotential sterling returns to shareholders; the Board has set anormal range of 95%-120% invested.

The Board sets a minimum limit on the number of investmentsin the portfolio and the Company’s aim is to provide adiversified portfolio in which the investment manager has ahigh degree of conviction. At the year end, the number ofinvestments held was 84. To gain the appropriate exposure, theInvestment Managers are permitted to invest in pooled funds.

JPMAM is responsible for management of the Company’sassets. On a day-to-day basis the assets are managed by aninvestment manager based in London, supported by a strongequity research team.

The Company has implemented a passive currency hedgingstrategy that aims to make stock selection the predominantdriver of overall portfolio performance relative to thebenchmark, the MSCI AC World Index. This is a risk reductionmeasure, designed to eliminate most of the differencesbetween the portfolio’s currency exposure and that of theCompany’s benchmark. As a result, the returns derived fromand the portfolio’s exposure to currencies may materially differfrom that of the Company’s competitors in the AIC GlobalGrowth sector who generally do not undertake such a strategy.

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

• Under the rules applying to investment trusts, the Companycannot invest more than 15% of its assets in any oneinvestment, at the time of acquisition. The Company will notinvest more than 5% of its total assets in any one individualstock at the time of acquisition. The aggregate of theCompany’s top 10 holdings and top 20 holdings will notexceed 30% and 50% respectively.

• The Company does not normally invest in unquotedinvestments and to do so requires prior Board approval.

• No more than 25% of the Company’s assets may beinvested in non-OECD countries.

• No more than 75% of the Company’s assets in aggregate,may be invested in the US, Japan and the UK.

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

• The Company does not normally enter into derivativetransactions, other than foreign currency transactions andto do so requires prior Board approval.

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

Directors’ Report


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 2010, the Company produced a totalreturn to shareholders of +49.0% (2009: –6.6%) and a totalreturn on net assets of +33.3% (2009: –7.6%). This compareswith the return on the Company’s benchmark index of+23.0% (2009: –14.6%). As at 30th June 2010, the value of theCompany’s investment portfolio was £199.4 million (2009:£157.8 million). The Investment Manager’s Report on pages 5and 6 includes a review of developments during the year aswell as information on investment activity within theCompany’s portfolio.

Total Return, Revenue and Dividends Gross total return for the year amounted to £51.2 million (2009:£10.4 million loss) and net total return after deductingmanagement fees, performance fees, other administrativeexpenses, finance costs and taxation, amounted to £47.0 million(2009: £13.4 million loss). Distributable income for the yearamounted to £2.8 million (2009: £3.2 million).

The Directors recommend a final dividend of 13.0p (2009: 11.5p)per Ordinary share payable on 26th November 2010 to holderson the register at the close of business on 5th November 2010.This distribution will amount to £3,344,000 (2009: £3,007,000).No other dividends were paid in respect of the year. Therevenue reserve after this transfer will amount to £14,241,000(2009: £14,797,000).

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

• Performance against the benchmark index (the MSCI AC WorldIndex expressed in Sterling terms) This is the most important KPI by which performance isjudged. Information on the Company’s performance isgiven in the Chairman’s Statement and the InvestmentManager’s Report.

Performance Relative to Benchmark IndexFigures have been rebased to 100 at 30th June 2000




The benchmark is represented by the grey horizontal line.

Ten Year PerformanceFigures have been rebased to 100 at 30th June 2000




Benchmark.

• Performance against the Company’s peers The principal objective is to achieve capital growth andout-performance relative to the benchmark. However, theBoard also monitors the performance relative to a range ofcompetitor funds.

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Directors’ Report continued


• Performance attributionThe purpose of performance attribution analysis is toassess how the Company achieved its performance relativeto its benchmark index, i.e. to understand the impact on theCompany’s relative performance of the variouscomponents such as asset allocation and stock selection.Details of the attribution analysis for the year ended30th June 2010 are given in the Investment Manager’sReport on page 6.

• Discount/premium to net asset value (‘NAV’) The Board has continued to operate a share repurchaseprogramme which seeks to address imbalances in supplyof and demand for the Company’s shares within the marketand thereby minimise the volatility and absolute level ofthe discount to NAV at which the Company’s shares trade.Under this policy, the Company repurchases its shares withthe aim of maintaining an average discount of around 5%with any borrowings valued at book value. In the year to30th June 2010, the discount/premium (with debt at parvalue) ranged between a discount of 8.5% and a premiumof 5.9%.

Discount Performance

Source: Datastream (month end data).

JPMorgan Overseas – Discount.

• Total expense ratio (‘TER’)The TER is an expression of the Company’s managementfees and all other operating expenses excluding interest,VAT recoverable and performance fee payments, expressedas a percentage of the average of the month end net assetsduring the year. The TER for the year ended 30th June 2010was 0.65% (2009: 0.70%). The Board reviews each year ananalysis which shows a comparison of the Company’s TERand its main expenses with those of its peers.

Share CapitalThe Directors have authority to issue new shares and torepurchase shares on behalf of the Company.

No shares were repurchased for cancellation during the year.

During the year, the Company bought 421,966 (2009: 26,000)Ordinary shares of 25p each into Treasury, representing 1.7% ofcalled-up capital at the year end, for a total consideration of£2,599,000.

The Company did not issue any new shares during the year. TheCompany does not currently have authority to re-issue sharesfrom Treasury at a discount to NAV. Accordingly any Shares re-issued from Treasury will be done so at a premium to NAV.

Resolutions to renew the authority to issue new shares andrepurchase shares will be put to shareholders at theforthcoming Annual General Meeting. The full text of theseresolutions are set out in the Notice of Meeting on pages 55and 56.

Principal RisksWith the assistance of the Manager, the Board has drawn up arisk matrix, which identifies the key risks to the Company.

These key risks fall broadly under the following categories:

• Investment and Strategy: An inappropriate investmentstrategy, for example asset allocation or the level ofgearing, may lead to under-performance against theCompany’s benchmark index and peer companies,resulting in the Company’s shares trading on a widerdiscount. The Board manages these risks by diversificationof investments through its investment restrictions andguidelines which are monitored and reported by theManager. JPMAM provides the Directors with timely andaccurate management information, including performancedata and attribution analyses, revenue estimates, liquidityreports and shareholder analyses. The Board monitors theimplementation and results of the investment process withthe Investment Manager, who attends all Board meetings,and reviews data which show statistical measures of theCompany’s risk profile. The Investment Manager employsthe Company’s gearing within a strategic range set by theBoard. The Board holds a separate meeting devoted tostrategy each year.

• Market: Market risk arises from uncertainty about thefuture prices of the Company’s investments. It represents

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20102009200820072006200520042003200220012000


the potential loss that the Company might suffer throughholding investments in the face of negative marketmovements. The Board considers asset allocation, stockselection and levels of gearing on a regular basis and hasset investment restrictions and guidelines, which aremonitored and reported on by JPMAM. The Board monitorsthe implementation and results of the investment processwith the Manager.

• Accounting, Legal and Regulatory: In order to qualify asan investment trust, the Company must comply withSection 1158 of the Income and Corporation Taxes Act2010 (‘Section 1158’). Details of the Company’s approvalare given under “Business of the Company” above. Werethe Company to breach Section 1158, it might loseinvestment trust status and, as a consequence, gainswithin the Company’s portfolio could be subject to CapitalGains Tax. The Section 1158 qualification criteria arecontinually monitored by JPMAM and the results reportedto the Board each month. The Company must also complywith the provisions of The Companies Act 2006 and, sinceits shares are listed on the London Stock Exchange, theUKLA Listing Rules. A breach of the Companies Act 2006could result in the Company and/or the Directors beingfined or the subject of criminal proceedings. Breach of theUKLA Listing Rules could result in the Company’s sharesbeing suspended from listing, which in turn would breachSection 1158. The Board relies on the services of itsCompany Secretary, JPMAM to ensure compliance with theCompanies Acts and The UKLA Listing Rules.

• Corporate Governance and Shareholder Relations: Detailsof the Company’s compliance with Corporate Governancebest practice, including information on relations withshareholders, are set out in the Corporate Governancereport on pages 22 to 26.

• Operational: Loss of key staff by JPMAM, such as theInvestment Manager, could affect the performance of theCompany. Disruption to, or failure of, JPMAM’s accounting,dealing or payments systems or the custodian’s recordscould prevent accurate reporting and monitoring of theCompany’s financial position. Details of how the Boardmonitors the services provided by JPMAM and itsassociates and the key elements designed to provideeffective internal control are included with the Internal

Control section of the Corporate Governance report onpage 25.

• Financial: The financial risks faced by the Company includemarket price risk, interest rate risk, liability risk and creditrisk. Further details are disclosed in note 26 on pages 46to 52.

Future Developments Clearly, the future development of the Company is muchdependent upon the success of the Company’s investmentstrategy in the light of economic and equity marketdevelopments. The Investment Manager discusses the outlookin his report on pages 5 and 6.

Management of the Company

The Manager and Secretary is JPMorgan Asset Management(UK) Limited (‘JPMAM’). JPMAM is employed under a contractwhich can be terminated on six months’ notice, withoutpenalty. If the Company wishes to terminate the contract onshorter notice, the balance of remuneration is payable by wayof compensation.

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

The Board has evaluated the performance of the Manager andconfirms that it is satisfied that the continuing appointment ofthe Manager is in the interests of shareholders as a whole. Inarriving at this view, the Board considered the investmentstrategy and process of the Manager, noting performanceagainst the benchmark over the long term and the quality ofthe support that the Company receives from JPMAM.

Management and Performance Fees

The management fee is charged at the rate of 0.4% per annumof the Company’s assets less current liabilities. The terms of themanagement contract make allowance for the exclusion ofmanagement charges on investments held in funds on whichJPMAM earns a separate management fee.

A performance fee is payable if the total return attributable toshareholders (change in net asset value plus dividend) exceedsthe total return of the Company’s benchmark by more than0.5%. The performance fee payable is 15% of any excess of the



total return (excluding the effect of share repurchases) over thebenchmark total return. Payment of any amount earned underthe performance fee in any relevant period is spread equallyover four years. Performance is measured on a cumulativebasis. Any performance fee accrued but not paid is reduced byany underperformance in subsequent years. Any adjustment inrespect of underperformance is deducted at the firstopportunity from any amount accrued in respect of previousyears’ outperformance. The amount of any performance feepaid in any one year is capped at 0.8% of the published netassets of the Company at the end of the relevant period. Anyexcess is carried forward until paid in full (or offset againstsubsequent underperformance).

The results for the year ended 30th June 2010 give rise to aperformance fee provision of £2,540,000 (2009: £1,668,000).A performance fee of 1,160,000 (2009: £1,018,000) will bepayable this year. A balance of £2,847,000 (2009: £1,467,000)remains payable in future years but will first be reduced by anyfuture underperformance.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 16), risk management policies(see page 46), liquidity risk (see note 26(b) on page 51), capitalmanagement policies and procedures (see page 53), the natureof the portfolio and expenditure projections that the Companyhas adequate resources, an appropriate financial structure andsuitable management arrangements in place to continue inoperational existence for the foreseeable future. For thesereasons, they consider that there is reasonable evidence tocontinue to adopt the going concern basis in preparing theaccounts.

Payment Policy

It is the Company’s policy to obtain the best terms for allbusiness and therefore there are no standard payment terms.In general, the Company agrees with its suppliers the terms onwhich business will take place and it is the Company’s policy toabide by these terms. As at 30th June 2010, the Company hadno outstanding trade creditors (2009: none).

Directors

The Directors of the Company who held office during the yearand up to the date of signing the accounts, together with theirbeneficial interests in the Company’s shares, are shown below:

30th June 1st July2010 2009

Richard Barfield 4,922 4,922Simon Davies 500 500George Paul 10,000 10,000John Rennocks 1,000 1,000Jonathan Carey1 750 —Nigel Wightman2 — —

1Appointed as Director 17th September 2009.2Appointed as Director 8th September 2010.

No changes in the above holdings have been recorded as at thedate of this report.

In accordance with the Company’s Articles of Association,the Directors retiring by rotation at the forthcoming AnnualGeneral Meeting will be Simon Davies and John Rennocks.Having been appointed since the last AGM, Nigel Wightmanmust stand for election. All three Directors being eligible, offerthemselves for re-election/election. As Simon Davies and JohnRennocks have been Directors for more than nine years, theystand for re-election annually. During the year, the NominationCommittee considered Simon Davies’s and John Rennocks’sposition in the light of this and of the evaluation exercise(referred to on page 24), and concluded that their continuingappointment as Directors is in the interests of the shareholders.George Paul and Richard Barfield will retire from the Boardwith effect from the conclusion of the AGM. Simon Davies willsucceed the Chairman and will become Chairman of theNomination Committee. Jonathan Carey will become Chairmanof the Remuneration Committee. John Rennocks will becomeSenior Independent Director.

Director Indemnification and Insurance

As permitted by the Company’s Articles of Association, theDirectors have the benefit of a deed of indemnity which is aqualifying third party indemnity, as defined by Section 234 ofthe Companies Act 2006. The deeds of indemnity wereexecuted on 20th July 2010 and are currently in force.

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


Disclosure of information to Auditors

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

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

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

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

Section 992 Companies Act 2006

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

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

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares as at thedate of this report are given in note 16 to the Notice of AGM onpage 58.

Notifiable Interests in the Company’s Voting RightsAt the date of this report, the following declared a notifiableinterest in the Company’s voting rights:

Number of Shareholders shares held %

Chase Nominees Limited1,2 3,130,568 11.96Brewin Dolphin Limited 1,165,248 4.45Rathbone Investment Management Ltd 1,083,102 4.14Scottish Widows Investment

Partnership Ltd 987,234 3.77Legal & General Investment

Management Ltd (UK) 986,030 3.77

1Held on behalf of JPMAM Investment Account, ISA and SIPP participants.2Non-beneficial.

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

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

Environmental Matters, Social and Community Issues

Information on environmental matters, social and communityissues is set out on page 26. The Company has no employees.

Independent Auditors

PricewaterhouseCoopers LLP have expressed their willingnessto continue in office as Auditors, and a resolution to re-appointthem and authorise the Directors to determine theirremuneration for the ensuing year will be proposed at theAnnual 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 advisor authorised under the Financial Services andMarkets Act 2000.

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

(i) Authority to issue new shares for cash and disapply pre-emptionrights (Resolutions 8 and 9)

The Directors will seek renewal of the authority at the AGM toissue up to 1,308,734 new shares for cash up to an aggregatenominal amount of £327,183, such amount being equivalent toapproximately 5% of the present issued share capital. The fulltext of the resolutions is set out in the Notice of Meeting onpages 55 and 56.



It is advantageous for the Company to be able to issue newshares to participants purchasing shares through the JPMAMsavings products and also to other investors when theDirectors consider that it is in the best interests of shareholdersto do so. Any such issues would only be made at prices greaterthan the NAV, thereby increasing the assets underlying eachshare and spreading the Company’s administrative expenses,other than the management fee which is charged on the valueof the Company’s market capitalisation, over a greater numberof shares. The issue proceeds would be available forinvestment in line with the Company’s investment policies.

(ii) Authority to repurchase the Company’s shares (Resolution 10) The authority to repurchase up to 14.99% of the Company’sissued share capital, granted by shareholders at the 2009Annual General Meeting, will expire on 25th April 2011 unlessrenewed at the forthcoming Annual General Meeting TheDirectors consider that the renewal of the authority is in theinterests of shareholders as a whole, as the repurchase ofshares at a discount to NAV enhances the NAV of the remainingshares. The Board will therefore seek shareholder approval atthe Annual General Meeting to renew this authority, which willlast until 25th April 2012 or until the whole of the 14.99% hasbeen acquired, whichever is the earlier. The full text of theresolution is set out in the Notice of Meeting on pages 55and 56. Repurchases will be made at the discretion of theBoard and will only be made in the market at prices below theprevailing NAV per share, thereby enhancing the NAV of theremaining shares, as and when market conditions areappropriate.

(iii) Treasury shares/disapplication of pre-emption rights(Resolutions 11 and 12)

Under the Companies Act 2006, the Company is permitted torepurchase up to 10% of its own shares into Treasury forreissue or cancellation at a future date, as an alternative torepurchasing for immediate cancellation. The Board considersthat circumstances could arise in which it would be inshareholders’ interests for such powers to be exercised. TheBoard believes that the effective use of Treasury shares assiststhe Company in improving liquidity in the Company’s shares,helps the management of any imbalances between supply anddemand and to minimise the volatility and absolute level of thediscount at which the Company’s shares trade to their net assetvalue, for the benefit of shareholders.

Accordingly, shareholders will also be asked at the Annual

General Meeting to approve resolutions 11 and 12 which allowthe Company to reissue shares from treasury at a premium toNAV and disapply statutory pre-emption rights respectively.This will enable the Company to reissue shares held in treasurywithout having to make a pro rata offer to existingshareholders. Shares may only be reissued at a price that isabove the then current net asset value. The Board does not atpresent propose to set a time limit for cancellation of treasuryshares.

Recommendation

The Board considers that resolutions 8 to 12 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 in favourof the resolutions as they intend to do in respect of their ownbeneficial holdings which amount in aggregate to 17,172 sharesrepresenting approximately 0.1% of the voting rights of theCompany.

Corporate GovernanceCompliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 28, indicates how theCompany has applied the principles of good governance of theFinancial Reporting Council Combined Code 2008 (the‘Combined Code’) and the AIC’s Code of Corporate Governance2009, (the ‘AIC Code’), which complements the Combined Codeand provides a framework of best practice for investmenttrusts.

The Board is responsible for ensuring the appropriate level ofcorporate governance and considers that the Company hascomplied with the best practice provisions of the CombinedCode and the AIC Code throughout the year under review andup to the date of approval of the annual report and accounts.

Role of the Board

A management agreement between the Company and JPMAMsets out the matters over which the Manager has authority.This includes management of the Company’s assets and theprovision of accounting, company secretarial, administration,and some marketing services. All other matters are reserved


for the approval of the Board. A formal schedule of mattersreserved for Board decision has been approved. This includesdetermination and monitoring of the Company’s investmentobjectives and policy and its future strategic direction, gearingpolicy, management of the capital structure, appointment andremoval of third party service providers, review of keyinvestment and financial data and the Company’s corporategovernance and risk control arrangements.

The Board meets at least quarterly during the year andadditional meetings are arranged as necessary. Full and timelyinformation is provided to the Board to enable it to functioneffectively and to allow Directors to discharge theirresponsibilities.

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

Board Composition

The Board, chaired by George Paul, consists of between fourand six non-executive Directors, all of whom are regarded bythe Board as independent, including the Chairman. TheDirectors have a breadth of investment knowledge, businessand financial skills and experience relevant to the Company’sbusiness and brief biographical details of each Director are setout on pages 14 and 15.

A review of Board composition and balance is included as partof the annual performance evaluation of the Board, details ofwhich may be found below. The Senior Independent Directorleads the evaluation of the performance of the Chairman andhe is available to shareholders if they have concerns thatcannot be resolved through discussion with the Chairman.

Tenure

Directors are initially appointed until the following AnnualGeneral Meeting when, under the Company’s Articles ofAssociation, it is required that they be elected by shareholders.Thereafter, a Director’s appointment will run for a term of threeyears. Subject to the performance evaluation carried out eachyear, the Board will agree whether it is appropriate for theDirector to seek an additional term. The Board does not believethat length of service in itself necessarily disqualifies a Director

from seeking re-election but, when making a recommendation,the Board will take into account the requirements of theCombined Code, including the need to refresh the Board and itsCommittees. The Company’s Articles of Association require thatDirectors stand for re-election at least every three years. AnyDirector who has served for a period of more than nine yearswill stand for annual re-election thereafter.

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

The Board confirms that Simon Davies, John Rennocks andNigel Wightman, who stand for re-election/election at thisyear’s Annual General Meeting, continue to be effectiveDirectors and demonstrate commitment to their roles, andtherefore recommends their re-election/election.

Meetings and Committees

The Board delegates certain responsibilities and functions tocommittees. Details of membership of Committees are shownwith the Directors’ profiles on pages 14 and 15. Directors whoare not members of Committees may attend at the invitation ofthe Chairman.

The table below details the number of Board and Committeemeetings attended by each Director. During the year, therewere five full Board meetings, two Audit and ManagementEngagement Committee meetings, two Nomination Committeemeetings and one Remuneration Committee meeting.

Audit and ManagementEngagement Nomination Remuneration

Board Committee Committee Committee Meetings Meetings Meetings Meetings

Director Attended Attended Attended Attended

Richard Barfield 5 2 2 1Simon Davies 5 2 2 1George Paul1 5 2 2 1John Rennocks 4 2 2 1Jonathan Carey2 3 1 2 1Nigel Wightman3 — — — —

1Ceased to be a member of the Audit and Management Engagement Committee on25th September 2007. Mr Paul now attends by invitation.

2Appointed as a Director on 17th September 2009.3Appointed as a Director on 8th September 2010.



Training and Appraisal

On appointment, the Manager and Company Secretary provideall Directors with induction training. Thereafter, regularbriefings are provided on changes in regulatory requirementsthat affect the Company and the Directors. Directors areencouraged to attend industry and other seminars coveringissues and developments relevant to investment trusts.

The Board conducts a formal evaluation of the Manager, itsown performance and of that of its committees and individualDirectors. Questionnaires, drawn up by the Board, arecompleted by each Director. The responses are collated andthen discussed at a private meeting. The evaluation ofindividual Directors is led by the Chairman, and the SeniorIndependent Director leads the evaluation of the Chairman’sperformance. The Board as a whole evaluates the Manager, itsown performance and that of its committees.

Board Committees

Nomination Committee The Nomination Committee, chaired by Richard Barfield,consists of all of the Directors and meets at least annually toensure that the Board has an appropriate balance of skills andexperience to carry out its fiduciary duties and to select andpropose suitable candidates for appointment when necessary.A variety of sources, including the use of external searchconsultants, may be used to ensure that a wide range ofcandidates is considered.

Remuneration Committee The Remuneration Committee, chaired by Simon Davies,consists of all of the Directors and meets at least annually toreview Directors’ fees and to make recommendations to theBoard as and when required.

Audit and Management Engagement Committee The Audit and Management Engagement Committee, chairedby John Rennocks and whose membership is set out onpages 14 and 15, meets at least twice each year. The membersof the Audit and Management Engagement Committeeconsider that they have the requisite skills and experience tofulfil the responsibilities 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 Combined Code. It reviewsthe terms of the management agreement and examines the

effectiveness of the Company’s internal control systems,receives information from the Manager’s Compliancedepartment and reviews the scope and results of the externalaudit, its cost effectiveness and the independence andobjectivity of the external auditors; in the Directors’ opinion theauditors are considered independent. Representatives of theCompany’s auditors attend the Audit and ManagementEngagement Committee meeting at which the draft AnnualReport and Accounts are considered. Having reviewed theperformance of the external auditors, the Committeeconsidered it appropriate to recommend their re-appointmentand the Board supported this recommendation which will beput to the Shareholders at this year’s Annual General Meeting.

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

Terms of Reference The Audit and Management Engagement Committee, theNomination Committee and the Remuneration Committee allhave written terms of reference which define clearly theirrespective responsibilities, copies of which are available on theCompany’s website, on request at the Company’s registeredoffice and at the Company’s Annual General Meeting.

Relations with Shareholders

The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a fullunderstanding of the Company’s activities and performanceand reports formally to shareholders quarterly each year byway of the annual report and accounts, the half year financialreport and two interim management statements. This issupplemented by the daily publication, through the LondonStock Exchange, of the net asset value of the Company’s shares.

All shareholders are encouraged to attend the Company’sAnnual General Meeting at which the Directors andrepresentatives of the Manager are available in person to meetshareholders and answer their questions. In addition, apresentation is given by the Investment Manager who reviewsthe Company’s performance. During the year the Company’sbrokers, the Investment Manager and JPMAM hold regulardiscussions with larger shareholders. The Directors are madefully aware of their views. The Chairman and Directors makethemselves available as and when required to addressshareholder queries. The Directors may be contacted throughthe Company Secretary whose details are shown on page 61.


The Company’s Annual Report and Accounts is published intime to give shareholders at least 20 working days’ notice ofthe Annual General Meeting. Shareholders wishing to raisequestions in advance of the meeting are encouraged to writeto the Company Secretary at the address shown on page 61.

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

Internal Control

The Combined Code requires the Directors, at least annually,to review the effectiveness of the Company’s system of internalcontrol and to report to shareholders that they have done so.This encompasses a review of all controls, which the Board hasidentified as including business, financial, operational,compliance and risk management.

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

Since investment management, custody of assets and alladministrative services are provided to the Company by JPMAMand its associates, the Company’s system of internal controlmainly comprises monitoring the services provided by JPMAMand its associates, including the operating controls establishedby them, to ensure that they meet the Company’s businessobjectives. There is an ongoing process for identifying,evaluating and managing the significant risks faced by theCompany. This process has been in place for the year underreview and up to the date of approval of the annual report andaccounts, and it accords with the Turnbull guidance. TheCompany does not have an internal audit function of its own,but relies on the internal audit department of JPMAM whichreports any material failings or weakness. The key elementsdesigned to provide effective internal control are as follows:

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

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

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 JPMAM’sCompliance department which regularly monitors compliancewith FSA rules.

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

The Board either directly or through the Audit andManagement Engagement Committee, keeps under review theeffectiveness of the Company’s system of 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 JPMAM’s Compliancedepartment;

• reviews the reports 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 JPMAM.

By the means of the procedures set out above, the Boardconfirms that it has reviewed the effectiveness of theCompany’s system of internal control for the year ended30th June 2010, and to the date of approval of this AnnualReport and Accounts.

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

Corporate Governance and Voting Policy

The Company delegates responsibility for voting to JPMAM.The following is a summary of JPMAM’s policy statement oncorporate governance and voting policy which has been notedby the Board. The full policy is available from JPMAM onrequest, or can be downloaded from the internet as follows:go to www.jpmorganassetmanagement.co.uk/institutional andwithin the “Commentary & Analysis” tab you will find a sectionon Corporate Governance.


“JPMAM is committed to delivering superior investmentperformance to its clients worldwide. We believe that one ofthe drivers of investment performance is an assessment of thecorporate governance principles and practices of thecompanies in which we invest our clients’ assets and we expectthose companies to demonstrate high standards of governancein the management of their business.

Proxy voting is an important part of the corporate governanceprocess, and we view seriously our obligation to manage thevoting rights of the shares entrusted to us as we would manageany other asset. It is the policy of JPMAM to vote in a prudentand diligent manner, based exclusively on our reasonablejudgement of what will best serve the financial interests of ourclients. So far as is practicable we will vote at all of themeetings called by companies in which we are invested.

In order to do this we have formulated detailed guidelines foreach region, which set out our stance on a variety of keycorporate governance issues, including disclosure andtransparency, board composition and independence, controlstructures, remuneration, as well as social and environmentalissues (see below). These guidelines form the basis of our proxyvoting decisions, although it should be noted that JPMAMmakes all of its voting decisions on a case by case basis, takinginto account the individual circumstances of each vote.”

Corporate Social Responsibility

The following is a summary of JPMAM’s policy statement oncorporate social responsibility which has been noted by theBoard:

“We believe it is our primary duty to act in the best financialinterests of our clients and to achieve good financial returnsconsistent with an acceptable level of risk. We recognise thatnon-financial issues, such as social and environmental issues,can have an economic impact and that any company run in thelong-term interests of its shareholders will need to manageeffectively relationships with its employees, suppliers andcustomers, to behave ethically and to have regard to theenvironment and society as a whole. Our investment managerstake these factors into account as part of any investmentdecision.”

By order of the Board Divya Amin, for and on behalf ofJPMorgan Asset Management (UK) Limited, Secretary16th September 2010



The Board has prepared this report in accordance with therequirements of Section 421 of the Companies Act 2006.An ordinary resolution to approve this Report will be put toshareholders 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 includedin their report on page 29.

Directors’ Remuneration1

2010 2009Director’s Name £ £

George Paul (Chairman) 32,000 32,000Richard Barfield 19,000 19,000Jonathan Carey2 14,981 —Simon Davies 19,000 19,000John Rennocks 22,000 22,000Nigel Wightman3 — —

Total 106,981 92,000

1The above table contains audited information.2 Appointed as Director on 17th September 2009.3 Appointed as Director on 8th September 2010.

The total Directors’ fees of £106,981 (2009: £92,000) were allpaid to Directors and £nil (2009: £nil) paid to third parties formaking available the services of Directors.

With effect from 1st July 2010, annual fees have been increasedto the following rates: Audit and Management EngagementCommittee Chairman, £25,000 and other Directors, £21,000.Annual fee payable to the Board Chairman remained at£32,000.

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

The Remuneration Committee reviews fees on a regular basisand makes recommendations to the Board as and whenappropriate. Reviews are based on information provided by theManager, JPMorgan Asset Management (UK) Limited and

industry research on the level of fees paid to the directors ofthe Company’s peers and within the investment trust industrygenerally. The Directors’ fees are not performance-related.The Directors do not have service contracts with the Company.The articles stipulate that aggregate fees must not exceed£150,000 per annum. Any increase in this amount requiresboth Board and shareholder approval.

The terms and conditions of Directors’ appointments are setout in formal letters of appointment. Details of the Board’spolicy on tenure are set out on page 23.

The Company does not operate any type of incentive orpension scheme and therefore no Directors receive bonuspayments or pension contributions from the Company. TheDirectors do not have service contracts and are not paidcompensation for loss of office. No other payments are madeto Directors, other than the reimbursement of reasonableout-of-pocket expenses incurred in connection with attendingthe Company’s business.

A graph showing the Company’s share price total returncompared with its benchmark, the MSCI AC World Indexexpressed in sterling terms, is shown below.

Five Year Share Price and Benchmark TotalReturn Performance to 30th June 2010


Share Price total return.

Benchmark total return.

By order of the Board Divya Amin, for and on behalf of JPMorgan Asset Management (UK) Limited, Secretary 16th September 2010

80

100

120

140

160

180

201020092008200720062005

Directors’ Remuneration Report


The Directors are responsible for preparing the Directors’Report and the accounts in accordance with applicable law andregulations.

Company law requires the Directors to prepare accounts foreach financial year. Under that law, the Directors have electedto prepare the accounts in accordance with United KingdomGenerally Accepted Accounting Practice (United KingdomAccounting Standards and applicable law). Under company lawthe Directors must not approve the accounts unless they aresatisfied that they give a true and fair view of the state of affairsof the Company and of the profit or loss of the Company forthat period. In preparing these accounts, the Directors arerequired to:

• select suitable accounting policies and then apply themconsistently;

• make judgements and estimates that are reasonable andprudent;

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

• prepare the accounts on the going concern basis unless it isinappropriate to presume that the Company will continuein business.

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 accounts and the Directors’ RemunerationReport comply with the Companies Act 2006. They are alsoresponsible for safeguarding the assets of the Company andhence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.

The accounts are published on the www.jpmoverseas.co.ukwebsite, which is maintained by the Company’s Manager,JPMorgan Asset Management (UK) Limited (‘JPMAM’). Themaintenance and integrity of the website maintained byJPMAM is, so far as it relates to the Company, theresponsibility of JPMAM. The work carried out by the auditorsdoes not involve consideration of the maintenance andintegrity of this website and, accordingly, the auditors acceptno responsibility for any changes that have occurred to theaccounts since they were initially presented on the website.The accounts are prepared in accordance with UK legislation,which may differ from legislation in other jurisdictions.

Statement under the Disclosure & Transparency Rules 4.1.12

The Directors each confirm to the best of their knowledge that:

(a) the accounts, prepared in accordance with United KingdomGenerally Accepted Accounting Practice (United KingdomAccounting Standards and Applicable Law), give a true andfair view of the assets, liabilities, financial position andprofit or loss of the Company; and

(b) this Annual Report includes a fair review of thedevelopment and performance of the business and theposition of the Company, together with a description of theprincipal risks and uncertainties that it faces.

For and on behalf of the Board Simon Davies Director 16th September 2010

Directors’ Responsibilities inRespect of the Accounts


To the Members of JPMorgan Overseas Investment Trust plc

We have audited the accounts of JPMorgan OverseasInvestment Trust plc for the year ended 30th June 2010 whichcomprise the Income Statement, Reconciliation of Movementsin Shareholders’ Funds, Balance Sheet, Cash Flow Statement,and the related notes to the accounts. The financial reportingframework that has been applied in their preparation isapplicable law and United Kingdom Accounting Standards(United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of Directors and Auditors

As explained more fully in the Directors’ ResponsibilitiesStatement set out on page 28, the Directors are responsible forthe preparation of the accounts and for being satisfied thatthey give a true and fair view. Our responsibility is to audit theaccounts in accordance with applicable law and InternationalStandards on Auditing (UK and Ireland). Those standardsrequire us to comply with the Auditing Practices Board’s EthicalStandards for Auditors.

This report, including the opinion, has been prepared for andonly for the company’s members as a body in accordance withChapter 3 of Part 16 of the Companies Act 2006 and for noother purpose. We do not, in giving this opinion, accept orassume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands itmay come save where expressly agreed by our prior consentin writing.

Scope of the audit of the accounts

An audit involves obtaining evidence about the amounts anddisclosures in the accounts sufficient to give reasonableassurance that the accounts are free from materialmisstatement, whether caused by fraud or error. This includesan assessment of: whether the accounting policies areappropriate to the Company’s circumstances and have beenconsistently applied and adequately disclosed; whether thesignificant accounting estimates made by the Directors arereasonable; the overall presentation of the accounts.

Opinion on accounts

In our opinion the accounts:

• give a true and fair view of the state of the Company’saffairs as at 30th June 2010 and of its net return and cashflows for the year then ended;

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

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

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

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

• the information given in the Directors’ Report for thefinancial year for which the accounts are prepared isconsistent with the accounts.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report toyou if, in our opinion:

• adequate accounting records have not been kept, orreturns adequate for our audit have not been received frombranches not visited by us; or

• the accounts and the part of the Directors’ RemunerationReport to be audited are not in agreement with theaccounting records and returns; or

• certain disclosures of Directors’ remuneration specified bylaw are not made; or

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

Under the Listing Rules we are required to review:

• the Directors’ statement, set out on page 20, in relation togoing concern; and

• the parts of the Corporate Governance Statement relatingto the Company’s compliance with the nine provisions ofthe 2008 Combined Code specified for our review.

Jeremy Jensen (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory AuditorsLondon

16th September 2010

Notes:(a) The maintenance and integrity of the JPMorgan Overseas Investment Trust

plc website (www.jpmoverseas.co.uk) is the responsibility of the Manager:the work carried out by the Auditors does not involve consideration of thesematters and, accordingly, the Auditors accept no responsibility for anychanges that may have occurred to the accounts since they were initiallypresented on the website.

(b) Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation in otherjurisdictions.

Independent Auditors’ Report


Income Statementfor the year ended 30th June 2010

2010 2009Revenue Capital Total Revenue Capital Total

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

Gains/(losses) on investments held at fair value through profit or loss 2 — 41,974 41,974 — (14,936) (14,936)

Net foreign currency gains/(losses) — 5,282 5,282 — (257) (257)Income from investments 3 3,927 — 3,927 4,153 — 4,153Other interest receivable and similar income 3 35 — 35 687 — 687

Gross return/(loss) 3,962 47,256 51,218 4,840 (15,193) (10,353)Management fee 4 (362) (362) (724) (271) (271) (542)Performance fee 4 — (2,540) (2,540) — (1,668) (1,668)VAT recoverable 4 — — — 126 141 267Other administrative expenses 5 (458) — (458) (439) — (439)

Net return/(loss) on ordinary activities before finance costs and taxation 3,142 44,354 47,496 4,256 (16,991) (12,735)

Finance costs 6 (93) (93) (186) (155) (155) (310)

Net return/(loss) on ordinary activities before taxation 3,049 44,261 47,310 4,101 (17,146) (13,045)

Taxation 7 (298) — (298) (860) 520 (340)

Net return/(loss) on ordinary activities after taxation 2,751 44,261 47,012 3,241 (16,626) (13,385)

Return/(loss) per share 9 10.65p 171.28p 181.93p 12.26p (62.88)p (50.62)p

Details of the proposed dividend are given in note 8 on page 39.

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 34 to 53 form an integral part of these accounts.


Called up Capitalshare redemption Capital Revenue

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

At 30th June 2008 6,735 27,210 114,251 17,610 165,806Repurchase and cancellation of the Company’s own shares (191) 191 (3,772) — (3,772)Repurchase of shares into Treasury — — (132) — (132)Net (loss)/return on ordinary activities — — (16,626) 3,241 (13,385)Dividends appropriated in the year — — — (3,047) (3,047)

At 30th June 2009 6,544 27,401 93,721 17,804 145,470Repurchase of shares into Treasury — — (2,599) — (2,599)Net return on ordinary activities — — 44,261 2,751 47,012 Dividends appropriated in the year — — — (2,970) (2,970)

At 30th June 2010 6,544 27,401 135,383 17,585 186,913


Reconciliation of Movements inShareholders’ Funds


2010 2009Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 198,288 156,739Investment in liquidity fund held at fair value through profit or loss 1,100 1,027

Total investments 10 199,388 157,766

Current assetsFinancial assets: Derivative financial instruments 11 4,126 2,238Debtors 12 1,204 1,375Cash and short term deposits 13 637 708

5,967 4,321

Creditors: amounts falling due within one year 14 (12,824) (11,811)Financial liabilities: Derivative financial instruments 15 (2,571) (3,139)

Net current liabilities (9,428) (10,629)

Total assets less current liabilities 189,960 147,137

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

Provisions for liabilities and charges

Performance fees 17 (2,847) (1,467)

Total net assets 186,913 145,470

Capital and reserves Called up share capital 18 6,544 6,544Capital redemption reserve 19 27,401 27,401Capital reserves 19 135,383 93,721Revenue reserve 19 17,585 17,804

Shareholders’ funds 186,913 145,470

Net asset value per share 20 726.5p 556.3p

The accounts on pages 30 to 53 were approved and authorised for issue by the Directors on 16th September 2010 and weresigned on their behalf by:

Simon DaviesDirector


Company registration number: 24299.

Balance Sheetat 30th June 2010


2010 2009Notes £’000 £’000

Net cash inflow from operating activities 21 1,215 5,190

Returns on investments and servicing of finance Interest paid (113) (328)

Net cash outflow from returns on investments and servicing of finance (113) (328)

Taxation Taxation recovered 83 147

Capital expenditure and financial investment Purchases of investments (302,085) (304,622)Sales of investments 303,595 302,603Other capital charges (23) (19)

Net cash inflow/(outflow) from capital expenditure and financial investment 1,487 (2,038)

Dividend paid (2,970) (3,047)

Net cash outflow before financing (298) (76)

FinancingRepurchase of shares into Treasury (2,599) (132)Repurchase and cancellation of the Company’s own shares — (4,032)Net drawdown of loans — 4,000

Net cash outflow from financing (2,599) (164)

Decrease in cash for the year 22 (2,897) (240)


Cash Flow Statementfor the year ended 30th June 2010


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 AIC 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 and derivative financial instruments held at fair value.

The policies applied in these accounts are consistent with those applied in the preceding year. There has been an amendmentto FRS 29 in respect of fair value disclosures and the details of this are given in note 25 on page 45.

(b) Valuation of investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of incomeand capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, inaccordance with a documented investment strategy and information is provided internally on that basis to the Company’sBoard of Directors. Accordingly, upon initial recognition the investments are designated by the Company ‘as held at fair valuethrough profit or loss’. They are included initially at fair value which is taken to be their cost. Subsequently the investments arevalued at fair value which are quoted bid market prices for investments traded in active markets. For investments which arenot traded in active markets, unlisted and restricted investments, the Board takes into account the latest traded prices, otherobservable market data and asset values based on the latest management accounts.

Gains and losses on sales of investments and derivatives including the related foreign exchange gains and losses of a capitalnature, foreign exchange gains and losses on cash and deposit balances and other capital receipts and payments are dealtwith in capital reserves within ‘Gains and losses on sales of investments and derivatives’. Increases and decreases in thevaluation of investments held at the year end, including the related gains and losses arising from changes in foreign currencyexchange rates, are dealt with in capital reserves within ‘Holding gains and losses on investments’. Provisions for performancefees payable and unrealised losses on forward foreign currency contracts are dealt with in ‘Capital reserve – unrealised’.

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

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

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

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

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

Interest receivable is taken to revenue on an accruals basis.

Stock lending income is taken to revenue on a receipts basis.

Notes to the Accountsfor the year ended 30th June 2010


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

– performance related fees are allocated 100% to capital;

– management fees are allocated 50% to revenue and 50% to capital in line with the Board’s expected long term split ofrevenue and capital return from the Company’s investment portfolio;

– expenses incidental to the purchase of an investment are included within the cost of the investment and those incidentalto the sale are deducted from the sales proceeds. These expenses are commonly referred to as transaction costs andinclude items such as stamp duty and brokerage commissions. Details of transaction costs are given in note 10 on page 40.

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

Finance costs are allocated 50% to revenue and 50% to capital in line with the Board’s expected long term split of revenueand capital return from the Company’s investment portfolio.

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

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

Interest bearing bank loans, overdrafts and debenture issues are recorded at the proceeds received net of direct issue costs.Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on anaccruals basis in profit or loss using the effective interest rate method.

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

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

Transactions denominated in foreign currencies are converted at actual exchange rates at the date of the transaction. Assetsand liabilities denominated in foreign currencies at the year end are translated at the rates of exchange prevailing at the yearend.

Any gain or loss on monetary assets arising from a change in exchange rates subsequent to the date of the transaction isincluded as an exchange gain or loss in revenue or capital, depending on whether the gain or loss is of a revenue or capitalnature. Gains and losses on investments arising from a change in exchange rates are included in gains or losses oninvestments held at fair value through profit or loss.

(h) TaxationDeferred 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.

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


Notes to the Accounts continued

1. Accounting policies continued

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

(j) VATIrrecoverable VAT is included in the expense on which it has been suffered. VAT recoverable is calculated using the partialexemption method based on the proportion of zero rated supplies to total supplies.

(k) Performance feeAny performance fee falling due for payment immediately is included in ‘Creditors: amounts falling due within one year’.Amounts which are carried forward for payment in future years but are subject to reduction by any future under performanceare included in ‘Provisions for liabilities and charges’.

2010 2009£’000 £’000

2. Gains/(losses) on investments held at fair value through profit or loss Gains/(losses) on sales of investments held at fair value through profit or loss

based on historical cost 38,186 (17,604)Amounts recognised in investment holding gains and losses in the previous year

in respect of investments sold during the year (10,423) (6,976)

Gains/(losses) on sales of investments based on the carrying value at the previous balance sheet date 27,763 (24,580)

Net movement in investment holding gains and losses 14,234 9,663Other capital charges (23) (19)

Total capital gains/(losses) on investments held at fair value through profit or loss 41,974 (14,936)

2010 2009£’000 £’000

3. Income UK dividend income 1,245 777Overseas dividends 2,669 3,279Dividends from liquidity fund 11 63Scrip dividends 2 34

3,927 4,153

Other interest receivable and similar incomeStock lending fees 32 32Deposit interest 3 28Interest on VAT recoverable1 — 627

35 687

Total income 3,962 4,840

1This represents interest on VAT recovered relating to management fees paid in the past. Further details are given in note 4 on page 37.



£’000 £’000 £’000 £’000 £’000 £’000

4. Management and performance fee Management fee1 362 362 724 271 271 542Performance fee — 2,540 2,540 — 1,668 1,668

362 2,902 3,264 271 1,939 2,210VAT recoverable2 — — — (126) (141) (267)

362 2,902 3,264 145 1,798 1,943

1Details of the management fee are given in the Directors’ Report on page 27.2This represents VAT relating to management fees paid in the past, following HM Revenue & Customs’ acceptance in 2007 that VAT was not chargeable on investment trusts’management fees.

2010 2009£’000 £’000

5. Other administrative expensesOther administration expenses 243 242Directors’ fees1 107 92Savings scheme expenses2 80 79Auditors’ remuneration for audit services3 28 26

458 439

1Full disclosure is given in the Directors’ Remuneration Report on page 27.2Paid to JPMAM for the administration and marketing of ‘wrapper’ products.3Includes £3,000 (2009: £2,000) irrecoverable VAT.


£’000 £’000 £’000 £’000 £’000 £’000

6. Finance costs Interest on bank loans and overdrafts 89 89 178 151 151 302Debenture interest 4 4 8 4 4 8

93 93 186 155 155 310



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


£’000 £’000 £’000 £’000 £’000 £’000

UK corporation tax at 28% (2009: 28%) — — — 240 — 240Double taxation relief — — — (240) — (240)Overseas withholding tax 298 — 298 340 — 340Tax attributable to expenses and finance costs

charged to capital — — — 520 (520) —

Current tax charge for the year 298 — 298 860 (520) 340

(b) Factors affecting current tax charge for the yearThe tax assessed for the year is lower (2009: higher) than the standard rate of corporation tax in the UK of 28%. The factorsaffecting the current tax charge for the year are as follows:


£’000 £’000 £’000 £’000 £’000 £’000

Net return/(loss) on ordinary activities before taxation 3,049 44,261 47,310 4,101 (17,146) (13,045)

Net return/(loss) on ordinary activities before taxation multiplied by the applicable rate of corporation tax at 28% (2009: 28%) 854 12,393 13,247 1,148 (4,801) (3,653)

Effects of:Non taxable capital (gains)/losses — (13,232) (13,232) — 4,254 4,254Non taxable UK dividends (348) — (348) (218) — (218)Non taxable overseas dividends (706) — (706) (54) — (54)Non taxable scrip dividends (1) — (1) (10) — (10)Income taxed in different periods — — — 37 — 37Tax relief on capitalised expenses — — — (547) 547 —Overseas withholding tax 298 — 298 340 — 340Double taxation relief — — — (240) — (240)Brought forward excess expenses utilised — — — (116) — (116)Tax attributable to expenses and finance costs

charged to capital (839) 839 — 520 (520) —Unutilised expenses carried forward to future periods 1,040 — 1,040 — — —

Current tax charge for the year 298 — 298 860 (520) 340

The Company has an unrecognised deferred taxation asset of £2,842,000 (2009: £2,276,000) based on a prospective longterm corporation tax rate of 24% (2009: 28%). This asset has accumulated because deductible expenses have exceededtaxable income in past years. No asset has been recognised in the accounts because, given the composition of the Company’sportfolio, it is not likely that this asset will be utilised in the foreseeable future.

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


8. Dividends(a) Dividends paid and proposed

2010 2009£’000 £’000

Dividend paidUnclaimed dividends refunded to the Company (9) —2009 final dividend of 11.5p (2008: 11.5p)1 2,979 3,047

Total dividends paid in the year 2,970 3,047

Dividend proposed2010 final dividend proposed of 13.0p (2009: 11.5p) 3,344 3,007

1The final dividend declared in respect of the year ended 30th June 2009 amounted to £3,007,000. However, the actual amount paid was £2,979,000 due to share repurchasesafter the balance sheet date but prior to the share register record date.

The final dividend proposed in respect of the year ended 30th June 2010 is subject to approval at the forthcoming AnnualGeneral Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts forthe year ending 30th June 2011.

(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010The requirements of Section 1158 of the Corporation Tax Act 2010 are considered on the basis of dividends declared in respectof the financial year, as follows:

2010 2009£’000 £’000

Final dividend payable of 13.0p (2009: 11.5p) 3,344 3,007

Total dividends for Section 1158 purposes 3,344 3,007

The revenue available for distribution by way of dividend for the year is £2,751,000 (2009: £3,241,000).

9. Return/(loss) per share

The revenue return per share is based on the earnings attributable to the ordinary shares of £2,751,000 (2009: £3,241,000)and on the weighted average number of shares in issue during the year of 25,840,791 (2009: 26,441,114).

The capital return per share is based on the capital return attributable to the ordinary shares of £44,261,000 (2009:£16,626,000 loss) and on the weighted average number of shares in issue during the year of 25,840,791 (2009: 26,441,114).

The total return per share is based on the total return attributable to the ordinary shares of £47,012,000 (2009: £13,385,000loss) and on the weighted average number of shares in issue during the year of 25,840,791 (2009: 26,441,114).



10. Investments 2010 2009

£’000 £’000

Investments listed on a recognised investment exchange1 199,388 157,689Unlisted investments — 77

199,388 157,766

Listed Unlisted Total£’000 £’000 £’000

Opening book cost 146,227 402 146,629Opening investment holding gains/(losses) 11,462 (325) 11,137

Opening valuation 157,689 77 157,766

Movements in the year:Purchases at cost 302,873 — 302,873Sales – proceeds (303,165) (83) (303,248)Gains on sales based on the carrying value at the previous balance sheet date 27,763 — 27,763Net movement in investment holding gains and losses 14,228 6 14,234

199,388 — 199,388

Closing book cost 184,116 324 184,440Closing investment holding gains/(losses) 15,272 (324) 14,948

Total investments held at fair value 199,388 — 199,388

1Includes the investment in the JPM Sterling Liquidity Fund.

Transaction costs on purchases during the year amounted to £478,000 (2009: £622,000) and on sales during the yearamounted to £276,000 (2009: £448,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £10,423,000 have been transferred to gains on sales ofinvestments, as disclosed in note 19.

Subsidiary companyThe Company owns the whole of the issued share capital of Foss Securities Limited, which is registered in England and has nottraded. Consolidated accounts have not been prepared since the Directors are of the opinion that the value of the subsidiary isnot material.

11. Financial assets: Derivative financial instruments2010 2009

£’000 £’000

Forward foreign currency contracts 4,126 2,238


2010 2009£’000 £’000

12. DebtorsSecurities sold awaiting settlement 413 760Overseas with holding tax recoverable 106 136Dividends and interest receivable 653 444Other debtors 32 35

1,204 1,375

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

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

2010 2009£’000 £’000

14. Creditors: amounts falling due within one year Securities purchased awaiting settlement 1,463 677Short term loan1 10,000 10,000Performance fee payable 1,160 1,018Other creditors and accruals 201 116

12,824 11,811

1Further details of the loan facility are given in note 26 on page 49.

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

2010 2009£’000 £’000

15. Financial liabilities: Derivative financial instrumentsForward foreign currency contracts 2,571 3,139



2010 2009£’000 £’000

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

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

2010 2009£’000 £’000

17. Provisions for liabilities and charges Performance fee payable1

Opening balance 1,467 817Performance fee for the year 2,540 1,668Amount realised during the year (1,160) (1,018)

2,847 1,467

1Further details of the performance fee are given in the Director’s Report on page 19.

2010 2009£’000 £’000

18. Called up share capital Allotted and fully paidOpening balance of 26,148,698 (2009: 26,940,948) shares, excluding shares held in Treasury 6,537 6,735Repurchase of nil (2009: 766,250) shares — (191)Repurchase of 421,966 (2009: 26,000) shares into Treasury (105) (7)

Sub total 6,432 6,537447,966 (2009: 26,000) shares held in Treasury 112 7

Closing balance1 6,544 6,544

1Represented by 26,174,698 (2009: 26,174,698) shares including 447,966 (2009: 26,000) shares held in Treasury.

During the year, the Company made market purchases of 421,966 ordinary shares, nominal value £105,000, into Treasury,representing 1.6% of the shares outstanding at the beginning of the year. The aggregate consideration paid for these shareswas £2,599,000 and the reason for the purchases was to seek to reduce the volatility and absolute level of the share pricediscount to net asset value per share.

More details of the share repurchases are given in the Directors’ Report on page 18.


Capital reservesGains and

Capital losses on sales Holding gains Capitalredemption of investments and losses on reserve – Revenue

reserve and derivatives investments unrealised reserve£’000 £’000 £’000 £’000 £’000

19. Reserves Opening balance 27,401 84,952 11,137 (2,368) 17,804Net gains on foreign currency transactions — 3,727 — — —Unrealised gains on foreign currency contracts — — — 1,555 —Unrealised losses on forward foreign currency contracts from

prior period now realised — (901) — 901 —Repurchase of shares into Treasury — (2,599) — — —Management fee charged to capital — (362) — — —Finance costs charged to capital — (93) — — —Gains on sales of investments based on the carrying value

at the previous balance sheet date — 27,763 — — —Net movement in investment holding gains and losses — — 14,234 — —Transfer on disposal of investments — 10,423 (10,423) — —Other capital charges — (23) — — —Performance fee for the year — — — (2,540) —Performance fee realised during the year — (1,160) — 1,160 —Dividends appropriated in the year — — — — (2,970)Retained revenue for the year — — — — 2,751

Closing balance 27,401 121,727 14,948 (1,292) 17,585

20. Net asset value per share

The net asset value per share is based on funds attributable to ordinary shareholders and on 25,726,732 (2009: 26,148,698)shares in issue at the year end, excluding shares held in Treasury.

2010 2009£’000 £’000

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

Net return/(loss) on ordinary activities before finance costs and taxation 47,496 (12,735)Add back capital (return)/loss before finance costs and taxation (44,354) 16,991Scrip dividends received as income (2) (34)(Increase)/decrease in accrued income (209) 24Decrease in other debtors 3 41Increase/(decrease) in accrued expenses 11 (24)Decrease in VAT recoverable — 1,507Overseas withholding tax (350) (450)Expenses charged to capital (362) (130)Performance fee paid (1,018) —

Net cash inflow from operating activities 1,215 5,190



At At30th June Exchange 30th June

2009 Cash flow movements 2010£’000 £’000 £’000 £’000

22. Analysis of changes in net debtCash and short term deposits 708 (2,897) 2,826 637Debt due within one year (10,000) — — (10,000)Debt due after more than five years (200) — — (200)

Net debt (9,492) (2,897) 2,826 (9,563)

23. Contingent liabilities and capital commitments

There were no (2009: nil) contingent liabilities or capital commitments at the balance sheet date.

24. Transactions with JPMorgan

Details of the management contract are set out in the Directors’ Report on page 18. The terms make allowance for theexclusion of management charges on investments held in funds on which JPMorgan Asset Management (‘JPMAM’) earns aseparate management fee. The fee payable to JPMAM for the year was £724,000 (2009: £542,000) of which £nil (2009: £nil)was outstanding at the year end.

A performance fee of £2,540,000 (2009: £1,668,000) is chargeable for the year and £1,160,000 (2009: £1,018,000) isimmediately payable. An amount of £2,847,000 (2009: £1,467,000) is carried forward and will either be paid or absorbed byunderperformance in subsequent years.

Expenses amounting to £73,000 (2009: £73,000) excluding VAT were payable to JPMAM for the marketing of its savingsscheme of which £nil (2009: £nil) was outstanding at the year end.

Included in other administration expenses in note 5 on page 37 are safe custody fees payable to JPMorgan Chase amountingto £32,000 (2009: £9,000) of which £8,000 (2009: £3,000) was outstanding at the year end.

JPMAM carries out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’slength. The commission payable to JPMorgan Securities for the year was £16,000 (2009: £5,000) of which £nil (2009: £nil) wasoutstanding at the year end.

Handling charges incurred on dealing transactions amounting to £23,000 (2009: £19,000) were payable to JPMorgan Chase ofwhich £5,000 (2009: £5,000) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 30th June 2010 these were valued at £6.6 million(2009: £6.1 million) and represented 3.3% (2009: 3.9%) of the Company’s investment portfolio. During the year, the Companymade no (2009: £nil) purchases of these investments and sales amounting to £1.0 million (2009: £0.7 million). Incomeamounting to £23,000 (2009: £nil) was receivable from these investments during the year of which £nil (2009 : £nil) wasoutstanding at the year end.

During the year, the Company made purchases and sales of units in the JPM Sterling Liquidity Fund, which is managed byJPMAM. At the year end, the Company’s investment in this fund amounted to £1.1 million (2009: £1.0 million) and represented0.6% (2009: 0.7%) of the Company’s investment portfolio. Income amounting to £11,000 (2009: £63,000) was receivable fromthis investment during the year of which £1,000 (2009: £nil) was outstanding at the year end.

Fees amounting to £32,000 (2009: £32,000) were receivable from stock lending transactions during the year. JPMAMcommissions in respect of such transactions amounted to £7,000 (2009: £7,000).

At the year end, a bank balance of £637,000 (2009: £708,000) was held with JPMorgan Chase. A net amount of interest of£2,000 (2009: £8,000) was receivable by the Company from JPMorgan Chase for the year of which £nil (2009: £nil) wasoutstanding at the year end.


25. Disclosures regarding financial instruments measured at fair value

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

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

Level 1 – valued using quoted prices in active markets for identical assets.

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

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

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

Details of the valuation techniques used by the Company are given in note 1(b) on page 34.

The following table sets out the fair value measurements using the FRS 29 hierarchy:

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

Financial assets held at fair value through profit or loss at 30th June 2010

Equity investments 198,288 — — 198,288Liquidity funds 1,100 — — 1,100Financial assets: Derivative financial instruments — 4,126 — 4,126Financial liabilities: Derivative financial instruments — (2,571) — (2,571)

Total 199,388 1,555 — 200,943

There have been no transfers between Levels 1, 2 or 3 during the year. A reconciliation of the fair value measurements inLevel 3 is set out below.

Equityinvestments

£’000

Level 3 financial assets held at fair value through profit or loss at 30th June 2010Opening balance 77Sales proceeds (83)Gain on sale based on the carrying value at the previous balance sheet date 6

Closing balance —



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

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

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

The Company’s financial instruments may comprise the following:

– investments in equity shares of overseas companies and a sterling liquidity fund which are held in accordance with theCompany’s investment objective;

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

– forward currency contracts in pursuit of the Company’s passive currency hedging strategy;

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

– a floating rate loan facility with Lloyds TSB.

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

(i) Currency risk Certain of the Company’s assets, liabilities and income are denominated in currencies other than sterling, which is theCompany’s functional currency and the currency in which it reports. As a result, movements in exchange rates may affectthe sterling value of those items.

Management of currency risk Since November 2009, the Company has engaged in a passive currency hedging strategy, the aim of which is to eliminatecurrency risk arising from active stock positions in the portfolio relative to the Benchmark. The Company may also useshort term forward currency contracts to manage working capital requirements. Income receivable denominated inforeign currency is converted into sterling on receipt.


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

2010Canadian

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

Investments held at fair value through profit or loss that are monetary items — — — — — —

Current assets 82,571 36,658 6,908 16,781 40,829 183,747Creditors (52,914) (66,887) (5,403) (9,344) (37,008) (171,556)

Foreign currency exposure on net monetary items 29,657 (30,229) 1,505 7,437 3,821 12,191Investments held at fair value through profit or loss

that are equities 63,219 50,148 16,074 1,468 26,216 157,125

Total net foreign currency exposure 92,876 19,919 17,579 8,905 30,037 169,316

2009Canadian

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

Investments held at fair value through profit or loss that are monetary items — — — — — —

Current assets 43,189 19,019 6,614 12,469 29,854 111,145Creditors (25,310) (32,541) (11,005) (6,233) (31,161) (106,250)

Foreign currency exposure on net monetary items 17,879 (13,522) (4,391) 6,236 (1,307) 4,895Investments held at fair value through profit or loss

that are equities 47,916 32,972 17,780 — 26,577 125,245

Total net foreign currency exposure 65,795 19,450 13,389 6,236 25,270 130,140

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

Foreign currency sensitivityThe following tables illustrate the sensitivity of the return after taxation for the year and net assets with regard to theCompany’s monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on theCompany’s monetary currency financial instruments held at each balance sheet date and the income receivable in foreigncurrency and assumes a 10% (2009: 10%) appreciation or depreciation in sterling against the US$, Euro, Yen, CanadianDollars and other currencies to which the Company is exposed, which is considered to be a reasonable illustration basedon the volatility of exchange rates during the year.



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

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

Foreign currency sensitivity continuedIf sterling had weakened by 10% this would have had the following effect:

2010 2009£’000 £’000

Income statement return after taxationRevenue return 267 328Capital return 1,219 490

Total return after taxation for the year 1,486 818

Net assets 1,486 818

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

2010 2009£’000 £’000

Income statement return after taxationRevenue return (267) (328)Capital return (1,219) (490)

Total return after taxation for the year (1,486) (818)

Net assets (1,486) (818)

In the opinion of the Directors, the above sensitivity analysis is broadly representative of the whole year.

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

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

The Company may finance part of its activities through borrowings at levels approved and monitored by the Board.

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

Interest rate exposure The exposure of financial assets and liabilities to floating interest rates, giving cash flow interest rate risk when rates arereset, is shown below. The £200,000 debenture in issue carries a fixed rate of interest and therefore has no exposure tointerest rate movements.


2010 2009£’000 £’000

Exposure to floating interest rates:JPMorgan Sterling Liquidity Fund 1,100 1,027Cash and short term deposits 637 708Creditors: amounts falling due within one year – short term loan (10,000) (10,000)

Total exposure (8,263) (8,265)

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.

The Company has a £10 million revolving loan facility with Lloyds TSB which expires in July 2010. Under the terms of thisagreement the Company may draw down up to £10 million at an interest rate of LIBOR as offered in the market for sterlingdeposits in the amount and term of the relevant period, plus a margin of 0.3% per annum plus the associated costs, whichare the costs of complying with the lender’s regulatory requirements. The Company had drawn down the whole £10 million(2009: £10 million) on this facility at the year end.

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

2010 2009£’000 £’000

Maximum debit interest rate exposure to floating rates – net loan balances (9,773) (11,087)Minimum debit interest rate exposure to floating rates – net loan balances (5,515) (3,430)

Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2009: 1%)increase or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This levelof change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivityanalysis is based on the Company’s monetary currency financial instruments held at the balance sheet date, with all othervariables held constant.

2010 20091% 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 (33) 33 (33) 33Capital return (50) 50 (50) 50

Total return after taxation for the year (83) 83 (83) 83

Net assets (83) 83 (83) 83

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 the loan facility.



(a) Market risk continued(iii) Other price risk

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

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

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

2010 2009£’000 £’000

Equity investments held at fair value through profit or loss 198,288 156,739

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

Concentration of exposure to other price risk An analysis of the Company’s investments is given on pages 12 and 13. This shows that the investments’ value is in a broadspread of countries with the highest proportion in Continental Europe. Accordingly there is a concentration of exposure tothese countries. However, it should also be noted that an investment may not be wholly exposed to the economicconditions in its country of domicile or of listing.

Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase ordecrease of 10% (2009: 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.

2010 200910% increase 10% decrease 10% increase 10% decrease

in fair value in fair value in fair value in fair value £’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (40) 40 (31) 31Capital return 19,789 (19,789) 15,643 (15,643)

Total return after taxation for the year and net assets 19,749 (19,749) 15,612 (15,612)



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

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

The Board’s policy is for the Company to remain fully invested in normal market conditions and that short term borrowings beused to manage short term liabilities, working capital requirements and to gear the Company as appropriate. Details of thecurrent loan facility are given in part (a)(ii) to this note on page 48.

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

2010 2009Three More Three More

months than months thanor less one year Total or less one year Total£’000 £’000 £’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 1,463 — 1,463 677 — 677Short term loan 10,000 — 10,000 10,000 — 10,000Performance fee payable 1,160 — 1,160 1,018 — 1,018Other creditors and accruals 201 — 201 116 — 116Derivative financial instruments 2,571 — 2,571 3,139 — 3,139

Creditors: amounts falling due after more than one year:Perpetual debenture stock — 200 200 — 200 200Performance fee payable — 2,847 2,847 — 1,467 1,467

15,395 3,047 18,442 14,950 1,667 16,617

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

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



(c) Credit risk continuedManagement of credit risk continuedCashCounterparties are subject to daily credit analysis by the Manager and trades can only be placed with counterparties that havea minimum rating of A1/P1 from Standard & Poor’s and Moody’s respectively.

Exposure to JPMorgan ChaseThe Company’s assets are ring-fenced in client designated accounts. Therefore, these assets are designed to be 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.

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

The liquidity fund has a AAA (2009: AAA) credit rating.

Cash and short term deposits comprises balances held at banks that have a minimum rating of A1/P1 (2009: A1/P1) fromStandard & Poor’s and Moody’s respectively.

The value of securities on loan at 30th June 2010 amounted to £3,698,000 (2009: £nil). The highest value of securities on loanduring the year ended 30th June 2010 amounted to £6,913,000 (2009: £6,445,000). Collateral is obtained by JPMorgan AssetManagement and is called in on a daily basis to a value of 102% of the value of the securities on loan if that collateral isdenominated in the same currency as the securities on loan and 105% if it is denominated in a different currency. Collateralacceptable under the Stock Lending Agreement may comprise: cash in sterling, Euros or US$, Eurozone governmentsecurities, UK government securities or US government securities.

(d) Fair values of financial assets and financial liabilitiesAll financial assets and liabilities are either included in the balance sheet at fair value or the carrying amount in the balancesheet is a reasonable approximation of fair value except for the debenture disclosed below. The fair value of the £200,000debenture issued by the Company has been calculated by reference to a long dated gilt yield plus a margin based on the AABarclays Sterling Corporate Bond spread.

Accounts value Fair value2010 2009 2010 2009

£’000 £’000 £’000 £’000

Debenture 200 200 150 151



27. Capital management policies and procedures

The Company’s capital comprises the following:

2010 2009£’000 £’000

DebtShort term loan 10,000 10,000

EquityShare capital 6,544 6,544Reserves 180,369 138,926

186,913 145,470

Total capital 196,913 155,470

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

The Board’s policy is to limit gearing within the range 95% to 120%. Gearing for this purpose is defined as investments,excluding liquidity fund holdings, expressed as a percentage of total net assets.

A loan covenant in respect of the £10 million facility with Lloyds TSB, requires the Company to ensure that total borrowings donot exceed 35% of the net asset value at any time. No breaches to this covenant occurred during the current or comparativeyear.

2010 2009£’000 £’000

Investments excluding liquidity fund holding 198,288 156,739Net assets 186,913 145,470

Gearing 106.1% 107.8%

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.


Shareholder Analysisat 30th June 2010

Number of shares % Holding

Unit Trusts 2,191,654 8.4Investment Trusts1 1,026,800 3.9Pension Funds 614,098 2.4Insurance Companies 732,100 2.8Other Institutions 1,156,657 4.4Charities 24,370 0.1

Total Institutions 5,745,679 22.0

Retail Investors holding shares directly or through nominee accounts1 8,188,517 31.3Private Client Brokers 7,962,199 30.4Individuals in the Investment Trust Share Plan2 3,170,550 12.1Individuals in the Investment Trust Pension Accounts2 103,287 0.4Individuals in the Investment Trust Individual Savings Account2 556,500 2.1

Total Retail Holdings 19,981,053 76.3

Treasury Shares3 447,966 1.7

Total Shares in issue 26,174,698 100.0

1Includes shares below threshold of 10,000 shares. 2Savings products managed by JPMorgan. 3Shares held in Treasury do not carry voting rights.

Source: Thomson Financial.

Notice is hereby given that the one hundred and twenty-thirdAnnual General Meeting of JPMorgan Overseas InvestmentTrust plc will be held at Trinity House, Tower Hill, LondonEC3N 4DH on 26th October 2010 at 12.00 noon for thefollowing purposes:

1. To receive the Directors’ Report, the Annual Accounts andthe Auditors’ Report for the year ended 30th June 2010.

2. To approve the Directors’ Remuneration Report for theyear ended 30th June 2010.

3. To approve a final dividend of 13p per ordinary share.

4. To re-elect Mr Simon Davies as a Director of the Company.

5. To re-elect Mr John Rennocks as a Director of the Company.

6. To elect Mr Nigel Wightman as a Director of the Company

7. To re-appoint 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 Resolution8. 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 £327,183,representing approximately 5% of the Company’s issuedordinary share capital as at the date of the passing of thisresolution and shall expire at the conclusion of the AnnualGeneral Meeting of the Company to be held in 2011 unlessrenewed at a general meeting prior to such time, save thatthe Company may before such expiry make offers,agreements or arrangements which would or might requirerelevant securities to be allotted after such expiry and sothat the Directors of the Company may allot relevantsecurities in pursuance of such offers, agreements orarrangements as if the authority conferred hereby had notexpired.

Authority to disapply pre-emption rights on allotment of newordinary shares – Special Resolution 9. THAT subject to the passing of Resolution 8 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Sections 570, 571 and 572 of theCompanies Act 2006 (the ‘Act’) to allot equity securities(within the meaning of Section 560 of the Act) pursuant tothe authority conferred by Resolution 8 as if Section 561(1)of the Act did not apply to any such allotment, providedthat this power shall be limited to the allotment of equitysecurities for cash up to an aggregate nominal amount of£327,183, representing approximately 5% of the totalordinary share capital as at the date of the passing of thisresolution at a price of not less than the net asset value pershare and shall expire at the conclusion of the AnnualGeneral Meeting of the Company to be held in 2011 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 requireequity securities to be allotted after such expiry and so thatthe Directors of the Company may allot equity securities inpursuant of such offers, agreements or arrangements as ifthe power conferred hereby had not expired.

Authority to repurchase shares – Special Resolution 10. 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 25 pence each in the capital ofthe Company

PROVIDED ALWAYS THAT

(i) the maximum number of ordinary shares herebyauthorised to be purchased shall be 3,923,587 or if less,that number of ordinary shares which is equal to14.99% of the Company’s issued share capital as at thedate of the passing of this resolution;

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

(iii) the maximum price which may be paid for an ordinaryshare shall be an amount equal to: (a) 105% of theaverage of the middle market quotations for a share

Notice of Meeting



Notice of Meeting continued

taken 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 ordinary shares will be made in themarket for cash at prices below the prevailing NAV pershare (as determined by the Directors);

(v) the authority hereby conferred shall expire on25th April 2012 unless the authority is renewed at theCompany’s Annual General Meeting in 2011 or at anyother general meeting prior to such time; and

(vi) the Company may make a contract to purchaseordinary shares under the authority hereby conferredprior to the expiry of such authority and may make apurchase of shares pursuant to any such contractnotwithstanding such expiry.

Authority to sell shares from Treasury – Special Resolution 11. THAT the Directors of the Company be authorised, for the

purposes of paragraph 12.6 of the Listing Rules of theUnited Kingdom Listing Authority, to sell ordinary shares of25 pence each in the capital of the Company at a priceabove the net asset value per share of the existing ordinaryshares in issue, provided always that such issue will belimited to:

(i) up to an aggregate nominal amount of £654,367,representing approximately 10% of the total ordinaryshare capital in issue as at the date of the passing of thisresolution; and

(ii) the sale of shares which, immediately before such sale,were held by the Company as Treasury shares.

Authority to disapply pre-emption rights on sale of shares fromTreasury – Special Resolution 12. THAT subject to the passing of Resolution 11 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Section 573 of the CompaniesAct 2006 (the ‘Act’) to allot (within the meaning ofSection 560(2)(b) of the Act) equity securities (within themeaning of Section 560(1) of the Act) wholly for cash as ifSection 561(1) of the Act did not apply to any such sale,provided that this power shall be limited to the allotment(within the meaning of Section 560(2)(b) of the Act) ofequity securities for cash out of Treasury up to anaggregate nominal amount of £654,367, representingapproximately 10% of the Company’s total ordinary sharecapital in issue as at the date of the passing of thisresolution and shall expire at the conclusion of the AnnualGeneral Meeting of the Company to be held in 2011, 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 requireequity securities to be allotted after such expiry and so thatthe Directors of the Company may allot equity securities inpursuance of such offers, agreements or arrangements as ifthe power conferred hereby had not expired.

By order of the BoardDivya Amin, for and on behalf of JPMorgan Asset Management (UK) Limited, Secretary 16th September 2010


Notes

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

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

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

3. 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.

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

5. You may change your proxy instructions by returning a new proxyappointment. The deadline for receipt of proxy appointments (seeabove) also applies in relation to amended instructions. Anyattempt to terminate or amend a proxy appointment received afterthe relevant deadline will be disregarded.Where two or more validseparate appointments of proxy are received in respect of thesame share in respect of the same Meeting, the one which is lastsent shall be treated as replacing and revoking the other or others.

6. 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 days prior to the Meeting(the ‘specified time’). If the Meeting is adjourned to a time not morethan 48 hours after the specified time applicable to the originalMeeting, that time will also apply for the purpose of determiningthe entitlement of members to attend and vote (and for thepurpose of determining the number of votes they may cast) at theadjourned Meeting. If however the Meeting is adjourned for alonger period then, to be so entitled, members must be entered on

the Company’s register of members as at 6.00 p.m. two days priorto the adjourned Meeting or, if the Company gives notice of theadjourned Meeting, at the time specified in that notice.

7. Entry to the Meeting will be restricted to shareholders, with guestsadmitted only by prior arrangement.

8. A corporation, which is a shareholder, may appoint an individual(s)to act as its representative(s) and to vote in person at the Meeting(see instructions given on the proxy form). In accordance with theprovisions of the Companies Act 2006 (as amended by theShareholder Rights Directive 2009, each such representative(s)may exercise the same powers as the corporation could exercise ifit were an individual member of the Company, provided that theydo not do so in relation to the same shares. It is therefore no longernecessary to nominate a designated corporate representative.

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

9. Members that satisfy the thresholds in section 527 of theCompanies Act 2006 can require the Company to publish astatement on its website setting out any matter relating to: (a) theaudit of the company’s accounts (including the auditor’s report andthe conduct of the audit) that are to be laid before the AGM; or(b) any circumstances connected with an auditor of the companyceasing to hold office since the previous AGM; which the memberspropose to raise at the meeting. The Company cannot require themembers requesting the publication to pay its expenses. Anystatement placed on the website must also be sent to theCompany’s Auditors no later than the time it makes its statementavailable on the website.

10. Pursuant to section 319A of the Companies Act 2006, the Companymust cause to be answered at the AGM any question relating to thebusiness being dealt with at the AGM which is put by a memberattending the meeting; no answer need be given if it is undesirablein the interests of the Company or the good order of the meeting.

11. Members that satisfy the thresholds in section 338 of theCompanies Act 2006 may require the Company to give, tomembers of the Company entitled to receive notice of the nextannual general meeting, notice of a resolution which mayproperly be moved and is intended to be moved at the meeting.A resolution may properly be moved at an annual general meetingunless (a) it would, if passed, be ineffective (whether by reason ofinconsistency with any enactment or the company’s constitution orotherwise); (b) it is defamatory of any person; or (c) it is frivolous orvexatious. Such a request may be in hard copy or electronic form,must identify the resolution of which notice is to be given, must beauthenticated by the person(s) making it, and must be received bythe company not later than 6 weeks before the date of the AGM.

12. Members satisfying the thresholds of section 338A of theCompanies Act 2006 may request the Company to include anymatter (other than a proposed resolution) in the business to bedealt with at the AGM which may properly be included in thebusiness at the AGM. A matter may properly be included in thebusiness at the AGM unless: (a) it is defamatory of any person; or(b) it is frivolous or vexatious. Such a request may be in hard copyor electronic form, must identify the resolution of which notice isto be given, must be authenticated by the person(s) making it, and


Notice of Meeting continued

must be received by the company not later than 6 weeks beforethe date of the AGM.

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

14. The register of interests of the Directors and connected persons inthe share capital of the Company is available for inspection at theCompany’s registered office during usual business hours on anyweekday (Saturdays, Sundays and public holidays excepted). It willalso be available for inspection at the Annual General Meeting.

15. No Director has any contract of service with the Company.

16. You may not use any electronic address provided either in thisNotice of Meeting or any related documents (including the Form ofProxy) to communicate with the Company for any purposes otherthan those expressly stated.

17. As at 15th September 2010 (being the latest business day prior tothe publication of this Notice), the Company’s issued share capitalconsists of 26,174,698 ordinary shares, carrying one vote for everyfour shares held. Therefore the total voting rights in the Companyare 6,431,682. (The shares held in Treasury, totalling 447,966, donot carry voting rights.)

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.


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.

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

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

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

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

Actual Gearing Factor Investments excluding the holding in the liquidity fund,expressed as a percentage of shareholders’ funds. This showsthe effect of gearing on the NAV if the market value of theportfolio were to increase by 100%.

Total Expense RatioManagement fees and all other operating expenses, excludinginterest, VAT recoverable and performance fee payments,expressed as a percentage of the average of the average of themonth end net assets during the year (2008 and prior years:the average of the opening and closing net assets).

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

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

Performance Attribution Definitions:

Asset Allocation Measures the impact of allocating assets differently from thosein the benchmark, via the portfolio’s weighting in differentcountries, sectors or asset types.

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

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

Currency Measures the impact of investing in different currencies on theperformance which is measured in sterling terms.

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

Performance Fees Measures the effect of a performance fee charge or writeback.

Glossary of Terms and Definitions

HistoryThe Company was formed in 1887. The Company was a generalinvestment trust until 1982, when it adopted its current objective.The current name was adopted in 2006.

The Company is managed by JPMorgan Asset Management (UK) Limited,and the named investment manager, Jeroen Huysinga, is responsible forthe portfolio.

Directors George Paul (Chairman)Richard BarfieldSimon DaviesJohn RennocksJonathan Carey Nigel Wightman

Company Numbers Company registration number: 24299Stock Exchange SEDOL Number: 0914327Bloomberg Code: JMO LNReuters Code: JMO.L

Market Information The Company’s net asset value (‘NAV’) is published daily, via the LondonStock Exchange. The Company’s shares are listed on the London StockExchange and the New Zealand Stock Exchange. The market price isshown daily in the Financial Times, The Times, The Daily Telegraph, TheNew Zealand Herald, The Scotsman, The Independent and on theJPMorgan website at www.jpmoverseas.co.uk, where the share price isupdated every 15 minutes during trading hours.

Website www.jpmoverseas.co.uk

Share Transactions The Company’s shares may be dealt in directly through a stockbroker orprofessional adviser acting on an investor’s behalf. They may also bepurchased and held through the J.P. Morgan Investment Account, J.P.Morgan ISA and J.P. Morgan SIPP. These products are all available on theonline wealth manager service, J.P. Morgan WealthManager+ available atwww.jpmorganwealthmanagerplus.co.uk

Manager and Secretary JPMorgan Asset Management (UK) Limited

Company’s Registered Office Finsbury Dials20 Finsbury StreetLondon EC2Y 9AQTelephone: 020 7742 6000

For company secretarial and administrative matters please contact DivyaAmin.

UK Registrars EquinitiReference 1103Aspect HouseSpencer RoadLancing West Sussex BN99 6DA

Telephone: 0871 384 2330 (calls to this number cost 8p per minute froma BT landline, other providers’ costs may vary. Lines open 8.30 am to5.30 pm Monday to Friday.)

Overseas helpline: +44 121 415 7047.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 1103. Registered shareholders can obtainfurther details on individual holdings on the internet by visitingwww.shareview.co.uk.

New Zealand RegistrarsComputershare Investor Services LimitedPrivate Bag 92119Auckland 1020Level 2159 Hurstmere RoadTakapuna North Shore CityNew ZealandTelephone 09 522 0022

Notifications of changes of address and enquiries regarding certificates ordividend cheques should be made in writing to the Registrars.

Independent Auditors PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsHay’s Galleria1 Hay’s LaneLondon SE1 2RD

UK BrokersWinterflood SecuritiesThe Atrium BuildingCannon Bridge25 Dowgate HillLondon EC4R 2GATelephone: 020 3100 0000

New Zealand Brokers First NZ Capital SecuritiesP.O. Box 396WellingtonNew ZealandTelephone: 0800 800 968 (NZ Toll Free)Please contact Peter Irwin

Savings Products Administrators For queries on the J.P. Morgan Investment Account, J.P. Morgan ISA andJ.P. Morgan SIPP, see contact details on the back cover of this report.

Information about the Company

Financial CalendarFinancial year end 30th JuneHalf year results announced FebruaryFinal results announced SeptemberFinal dividend on shares NovemberInterest payment on 4.5% perpetual debenture stock 1st January, 1st JulyAnnual General Meeting OctoberInterim Management Statements May and November

A member of the AIC


JPMorgan HelplineFreephone 0800 20 40 20 or +44 (0)20 7742 9995

Your telephone call may be recorded for your security

www.jpmoverseas.co.uk

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