JPMorgan Brazil Investment Trust plc · 2018-08-08 · The Company’s sixth AGM will be held on 11th September 2018 at 2.00 p.m. at 60 Victoria Embankment, London EC4Y 0JP. The meeting

JPMorgan Brazil Investment Trust plcAnnual Report & Financial Statements for the year ended 30th April 2018

Brazil AR cover A4 07/08/2018 10:45 Page 1

K E Y F E A T U R E S

J P M O R G A N B R A Z I L I N V E S T M E N T T R U S T P L C . A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 8

Your Company

Objective

To provide shareholders with long term total returns, predominantly comprising capital growth but with the potential for income, byinvesting primarily in Brazilian focused companies.

Investment Policy

• To invest primarily in Brazilian companies and those incorporated or listed outside Brazil whose Brazilian operations constitutea material part of their business. Up to 10% of assets may be invested in companies focused on other Latin American countries.

• There will be no limit placed on the market capitalisation or sector of any investee companies. However, the Company may reduceits equity holdings to a minimum of 60% of its gross assets if it is considered to be beneficial to performance.

• The Company may invest in listed or unlisted securities or equity-linked securities, in addition to fixed income bonds. Unlistedsecurities will not exceed 10% of gross assets at the time of investment.

Benchmark

The Company’s benchmark is the MSCI Brazil 10/40 Index (in sterling terms), with net dividends reinvested. This index limits themaximum weight of an individual stock constituent to 10% and limits the sum of the weights of all stocks representing more than5% individually to 40%.

Capital Structure

At 30th April 2018, the Company’s share capital comprised 61,728,898 ordinary shares of 1p each including 28,204,044 shares held inTreasury.

Continuation Vote

In accordance with the Company’s Articles of Association, the Directors are required to propose a resolution that the Company continueas an investment trust at the Annual General Meeting in 2019 and every third year thereafter.

Management Company

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

FCA Regulation of ‘Non-Mainstream Pooled Investments’

The Company currently conducts its affairs so that the shares issued by JPMorgan Brazil Investment Trust plc can be recommended byIndependent Financial Advisers to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investmentproducts and intends to continue to do so for the foreseeable future.

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

The Company’s ordinary shares are not considered to be ‘complex instruments’ under the FCA’s ‘Appropriateness’ rules and guidancein the Conduct of Business sourcebook.

Association of Investment Companies

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

Website

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


C O N T E N T S

C O N T E N T S | 1

Strategic Report 3 Financial Highlights

5 Chairman’s Statement

7 Investment Managers’ Report

10 Portfolio Information

12 Investment Objective, Policies and Guidelines

14 Principal Risks

15 Long Term Viability

Directors’ Report 17 Board of Directors

18 Directors’ Report

20 Corporate Governance Statement

24 Audit Committee Report

Directors’ Remuneration 27 Report

Statement of Directors’ 30 Responsibilities

Independent Auditor’s 32 Report

Financial Statements 40 Statement of Comprehensive Income

41 Statement of Changes in Equity

42 Statement of Financial Position

43 Statement of Cash Flows

44 Notes to the Financial Statements

Regulatory Disclosures 60 Alternative Investment Fund Managers

Directive Disclosure

61 Securities Financing TransactionsRegulation Disclosures

Shareholder Information 63 Notice of Annual General Meeting

66 Glossary of Terms and AlternativePerformance Measures (‘APMs’)

68 Where to buy J.P. Morgan Investment Trusts

69 Information about the Company

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Strategic Report

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S T R A T E G I C R E P O R T | 3

F I N A N C I A L H I G H L I G H T S

TOTAL RETURNS (INCLUDING DIVIDENDS REINVESTED) TO 30TH APRIL

1 Source: Morningstar.2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share.3 Source: Morningstar. The Company’s benchmark is the MSCI Brazil 10/40 Index, with net dividends reinvested in sterling terms.

A glossary of terms and alternative performance measures is provided on page 60.

80p. 80p.

%17.%95%4.41%.1

.3%42%714.%.5%07.

.2%7.2%1–.2%820%.44%.1

.8%22.3%18%6.8.3%4+ +3 + –Return to shareholders

1

+4 + + 7Return on net assets

2

– –0 – –

Net asset return underperformanceagainst benchmark return

3

+1 + +42. +Benchmark return

3

0Dividend

2018 2017 3 Year 5 Year

0


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F I N A N C I A L H I G H L I G H T S

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1 Source: Morningstar.2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share.3 Source: Morningstar. The Company’s benchmark is the MSCI Brazil 10/40 Index, with net dividends reinvested in sterling terms.4 In light of the reduced size of the Company, it was agreed with the Manager that the management fee would be reduced to the extent necessary to ensure that theCompany’s, Ongoing Charges do not exceed 2% with effect from 1st May 2015. Any such reduction is non-cumulative and therefore will not be clawed back in future years.

A glossary of terms and alternative performance measures is provided on page 60.

SUMMARY OF RESULTS

Net cash at 30th April

Dividend per share

2018 2017 % change

Net asset value, share price and discount

Net asset value per share 76.5p

919

0.95p

0.80p

1.4%

2.00%

3.1%

2.00%

983

0.96p

0.80p

14.0% 14.0%

74.2p

Share price

Share price discount to net asset value per share

Ongoing charges4

Revenue for the year ended 30th April

Gross revenue return (£’000)

Revenue return per share

34,124,854

65.8p 63.8p

3.1

–6.5

–1.0

3.1

Shares in issue (excluding shares held in Treasury) 33,524,854 –1.8

Net assets (£’000) 25,650 25,329 1.3

Total returns for the year ended 30th April

Return on net assets2 +4.1% +44.0%

Benchmark return3 +11.1% +44.5%

Return to shareholders1 +4.3% +38.6%

321 380Net revenue return on ordinary activities after taxation (£’000) –15.5



C H A I R M A N ’ S S T A T E M E N T

Introduction and Performance

During the financial year to 30th April 2018, Brazil’s equity market experienced a highly volatile periodmainly driven by political concerns. Following the previous financial year’s strong performance, theCompany recorded more modest sterling returns this year as the Brazilian Real significantly weakenedagainst Sterling by some 17%. For the year to 30th April 2018, the Company’s total return on net assets was+4.1%, compared with +11.1% returned by the benchmark, the MSCI Brazil 10/40 Index. The share pricereturn to shareholders was +4.3% while the share price discount remained steady at 14.0%, both at thestart and at the end of the financial year.

The investment managers provide a detailed commentary on the markets and portfolio activity in theirreport.

Revenue and Dividends

Gross revenue for the year amounted to £919,000 (2017: £983,000) and net total revenue afteradministrative expenses and taxation amounted to £321,000 (2017: £380,000).

The Company’s dividend policy has been to distribute all, or substantially all, of the available income eachyear. The Board recommends a dividend of 0.80p per Ordinary share. Subject to shareholders’ approval atthe forthcoming Annual General Meeting (‘AGM’) on 11th September 2018, the dividend will be payable on21st September 2018 to shareholders on the register at 24th August 2018.

Asset Allocation

In accordance with the Company’s investment policy, the investment managers have continued to besubstantially fully invested in equities. As at 30th April 2018, the Company had 1.4% net cash.

Share Repurchases

At last year’s AGM, shareholders granted Directors authority to repurchase the Company’s shares. Duringthe financial year, the Company repurchased a total of 600,000 Ordinary shares into Treasury ata discount, thereby marginally enhancing NAV per share. The Board’s objective remains to use the sharerepurchase authority to manage imbalances between the supply and demand of the Company’s shares,thereby reducing the volatility of the discount. The Board believes this mechanism has been helpful andtherefore proposes and recommends that powers to repurchase up to 14.99% of the Company’s issuedshare capital be renewed for a further period.

The Board

As part of the Board’s succession planning, it will be considering the appointment of new directors over thenext twelve months with a view to refreshing the entire Board over the next two to three years.

Annual General Meeting

The Company’s sixth AGM will be held on 11th September 2018 at 2.00 p.m. at 60 Victoria Embankment,London EC4Y 0JP. The meeting will include a presentation from the investment managers on investmentpolicy and performance. There will also be an opportunity for shareholders to meet the Board andrepresentatives of JPMorgan after the meeting.

If you wish to raise any detailed or technical questions at the Meeting, it would be helpful if you couldmention them in advance by writing to the Company Secretary. Shareholders who are unable to attend theMeeting in person are encouraged to use their proxy votes.

Howard MylesChairman


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C H A I R M A N ’ S S T A T E M E N T

Outlook

Whilst economic activity in Brazil is improving slowly, the increased volatility seen in recent months isexpected to continue in the near term, as markets react to economic and political developments.Nevertheless, the Board is confident that the Investment Managers are well positioned and resourced toidentify high quality companies at attractive prices with significant earnings growth potential and financialcharacteristics with a view to achieving good long-term performance for shareholders in this challengingenvironment.

Howard MylesChairman 7th August 2018



I N V E S T M E N T M A N A G E R S ’ R E P O R T

Market review

Brazilian equities have been volatile in the twelve months to 30th April 2018, with the MSCI Brazil10/40 Index (the ‘Index’) return of 11.1% GBP disguising larger intra-period swings.

Allegations of corruption against President Michel Temer early in the reporting period eroded investorconfidence from May onwards, sparking a significant correction in the country’s equity market. While theLower House later rejected the charges levelled against Temer, the political scandal has undermined hissupport in Congress, leaving him in a substantially weaker position. However, the market subsequentlyrecovered some of its previous strength as macro data, including inflation rates and industrial andconsumer confidence, improved on the back of the tangible progress being made with the reform agenda.In addition, the period saw improving government finances and improvements in companies’ earnings.

The end of 2017 saw uncertainty amongst investors as to the direction of much needed pension reform,notwithstanding earlier progress. This led to a decline in the market, despite a further interest rate cut bythe Brazilian Central Bank in December, down to a record low of 7%. Moving into 2018, the market ralliedsharply in January, driven higher by the hopes of a faster than expected economic recovery, theexpectation that ex-President Lula’s conviction would be upheld, reducing the likelihood of himparticipating in the October 2018 Presidential elections, and a further reduction in interest rates by theCentral Bank to 6.5%.

Following the end of the reporting period, a much publicised strike by truck drivers in May 2018,accompanied by road blocks, led to shortages of supplies and froze production in all areas of the economy.This event cost Brazil in the region of 0.8% of GDP for the full year and contributed to the already revisedlower GDP forecasts. There may also be some knock-on effects with a negative impact anticipated onbusiness and consumer confidence.

Portfolio review

Against this backdrop, the Company’s net asset value and share price rose (4.1% and 4.3% respectively)during the review period, but lagged the benchmark Index, MSCI Brazil 10/40.

While stock selection contributed positively to performance, sector allocation detracted, primarily incommodities, and our overweight exposure to the consumer discretionary sector detracted from relativeperformance against the Index.

Stock selection in the consumer staples sector was a positive contributor to performance, in particular ourlack of exposure to BRF, a food processor. The stock suffered a heavy decline as the company continues todeal with the fallout from its involvement in a federal bribery scandal, lack of leadership and a weakness intheir operations.

We used the sharp fall in the market early in the reporting period in May 2017, when the Index declined14% in one day, to add to high quality holdings including Lojas Renner, Iguatemi, and Itaú. We funded thetrades by taking profits and reducing our exposure to Fleury, a Health Care name which operates in theclinical laboratory business, and Vale, the Brazilian iron ore producer, because of their outperformance inthe first half of the period.

Luis CarrilloInvestment Manager

Sophie Bosch De HoodInvestment Manager


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In December we participated in the initial public offering (IPO) of Burger King Brazil (BKB), the masterfranchisee of Burger King Corporation in the country, and second largest burger chain in the market. Thecompany’s business model is sustainable and, given the current low penetration levels of the fast foodindustry in Brazil and the changes in the country’s workforce, with increasing numbers of working mothersand increases in the number of single households, both of which are resulting in increases in theconsumption of prepared meals, we believe it has the opportunity to grow for a significant period of time.

We also bought IRB, the recently listed reinsurance business. Further detailed analysis of the reinsurancebusiness in Brazil demonstrated to us that the company’s dominant position in the market is partiallystructural, and more resilient than we initially thought. In addition, the stock had underperformed due topremium rate compression in Brazil, which gave us an attractive investment point.

The portfolio’s holding in Kroton, a leading educational services company, detracted on renewed concernsabout lower growth in 2018 with the adjustment of the government subsidised FIES programme whichprovides student loans at below market interest rates. However, we believe this was well telegraphed anddespite the challenges to the company’s revenues resulting from a reduction in student numbers, marginsshould remain stable. Given our optimistic outlook on the long-term opportunity for the company, we willremain invested.

Also detracting from results was our position in Fleury. During the period, Advent, the private equity firm,sold its stake; the sale of this significant position negatively impacted the share price. The company alsoreported weaker than anticipated growth in the third quarter; however, the growth remained in doubledigits and, having reduced our exposure, our positive longer-term outlook for the company remains.

Looking at other investments, more recently we reduced our position in Cielo, Brazil’s largest credit anddebit card operator. Our short to mid-term outlook for the company has become more cautious given thechanging regulatory environment and increasing levels of competition. During the period, PagSeguro,a provider of financial technology solutions in the payments area, filed for its IPO. This increasedcompetition raised further doubts on Cielo’s ability to benefit from the anticipated recovered in consumerspending, and added risk to the company’s future growth prospects and performance. However, theseuncertainties and risks are reflected in the valuation and therefore we continue to hold this stock.

The portfolio’s underweight exposure to Vale, an iron ore company, was a detractor from performance. Thestock performed well as commodities, and more specifically iron ore prices, rebounded from their summerlows.

Our exposure remains tilted in favour of domestic themes, especially domestic cyclicals, in anticipation ofstronger growth. Consumers are anticipated to increase their levels of spending albeit at a lower pace afterthe shock in confidence during the reporting period and having reduced their levels of debt during thethree year recession which ended in 2017. There are already signs of improving levels of employment in theinformal economy, which have historically been an initial sign of recovery in the wider economy, and lowinflation and lower interest rates have increased real wages.




PERFORMANCE ATTRIBUTION Year to Year to 30th April 30th April 2018 2017

Contributions to total returns % % % %

Benchmark return +11.1 +44.5

Asset allocation –5.2 –1.4

Stock selection +0.4 +0.7

Gearing/cash –0.5 –0.3

Investment Manager’s contribution –5.3 –1.0

Portfolio return +5.8 +43.5

Management fee/other expenses –2.0 –2.0

Share buybacks +0.3 +2.5

Other effects –1.7 +0.5

Return on net assets +4.1 +44.0

Impact of change in discount +0.2 –5.4

Return to shareholders +4.3 +38.6

Source: FactSet, JPMAM and Morningstar.

All figures are on a total return basis.

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

A glossary of terms and alternative performance is provided on page 66.

Outlook

Although disappointing recent macro trends have been of some concern, we continue to believe that theprimary drivers of the market this year will be the gradual recovery of the Brazilian economy, withincreased levels of consumer consumption and corporate investment, as well as the presidential elections.In these circumstance, market volatility may offer opportunities to add to quality names at attractivevaluations. Expectations for a strong reform program seem to be low at the current time; however, webelieve the next administration will be forced by circumstances, at a minimum, to enact social security andtax reform in 2019. Rising commodity prices have been supportive of commodity exporting markets andcompanies, and we continue to monitor our exposure to these sectors from a risk perspective.

Finally, our portfolio includes long-standing investments in high-quality companies, as well as cyclicalstocks positioned for strength in the commodities sector and a recovery in the local economy.

Luis CarrilloSophie Bosch De HoodInvestment Managers 7th August 2018


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P O R T F O L I O I N F O R M A T I O N

TEN LARGEST EQUITY INVESTMENTS

AT 30TH APRIL 2018

2018 2017 Valuation ValuationCompany Sector £’000 %1 £’000 %1

Itaú Unibanco2 Financials 2,673 10.6 1,951 7.9

Banco Bradesco2 Financials 2,249 8.9 1,372 5.6

Vale Materials 2,005 7.9 1,831 7.5

B3 SA – Brasil Bolsa Balção3 Financials 1,368 5.4 — —

Lojas Renner Consumer Discretionary 1,199 4.7 1,003 4.1

Ambev2,4 Consumer Staples 1,184 4.7 894 3.6

Raia Drogasil4 Consumer Staples 943 3.7 928 3.8

Kroton Educacional Consumer Discretionary 876 3.5 1,061 4.3

Fleury Health Care 823 3.3 977 4.0

Localiza Rent a Car4 Industrials 810 3.2 496 2.0

Total5 14,130 55.9

1 Based on total investments of £25.3m (2017: £24.6m).2 American Depositary Receipts (ADR).3 Not within the investments portfolio at 30th April 2017.4 Not within the ten largest equity investments at 30th April 2017.5 At 30th April 2017, the value of the ten largest equity investments amounted to £12.3m representing 50.3% of total investments.

SECTOR ANALYSIS

30th April 2018 30th April 2017 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

Financials 34.7 28.2 28.0 29.7

Consumer Discretionary 19.8 6.1 14.7 6.8

Materials 11.5 18.3 10.1 12.7

Consumer Staples 10.1 10.9 10.1 14.6

Industrials 8.8 7.7 14.6 7.0

Health Care 3.6 2.0 4.4 0.8

Information Technology 3.3 2.5 5.9 3.7

Utilities 2.8 6.1 6.8 7.2

Energy 2.6 12.8 3.5 12.1

Real Estate 1.8 1.6 1.9 1.7

Telecommunication Services 1.0 3.8 — 3.7

Total 100.0 100.0 100.0 100.0

1 Based on total investments of £25.3m (2017: £24.6m).


S T R A T E G I C R E P O R T | 1 1

P O R T F O L I O I N F O R M A T I O N

ValuationCompany £’000



FINANCIALS

Itaú Unibanco1 2,673

Banco Bradesco1 2,249

B3 SA – Brasil Bolsa Balção 1,368

Banco do Brasil 761

Itaúsa – Investimentos Itaú

Preference 690

IRB Brasil Resseguros 572

BB Seguridade Participações 260

Banco Bradesco 118

Hapvida Participacões e

Investimentos 91

8,782

CONSUMER DISCRETIONARY

Lojas Renner 1,199

Kroton Educacional 876

Smiles Fidelidade 651

Petrobras Distribuidora 428

Tupy 408

Via Varejo 312

BK Brasil Operação e

Assessoria a Restaurantes 268

CVC Brasil Operadora e

Agência de Viagens 256

Fras-Le 256

Arezzo Indústria e Comércio 206

Ser Educacional 150

5,010

MATERIALS

Vale 2,005

Gerdau1 570

Suzano Papel e Celulose 345

2,920

CONSUMER STAPLES

Ambev1 1,184

Raia Drogasil 943

M Dias Branco 208

São Martinho 207

2,542

INDUSTRIALS

Localiza Rent a Car 810

Iochpe Maxion 559

WEG 538

Wilson Sons, BDR 325

2,232

HEALTH CARE

Fleury 823

Ouro Fino Saúde Animal Participações 89

912

INFORMATION TECHNOLOGY

MercadoLibre2 564

Linx 269

833

UTILITIES

Transmissora Aliança de

Energia Elétrica 361

Engie Brasil Energia 347

708

ENERGY

Ultrapar Participações 657

657

REAL ESTATE

Corp. Inmobiliaria Vesta2 237

Iguatemi Empresa de Shopping Centers 219

456

TELECOMMUNICATION SERVICES

Telefônica Brasil Preference 243

243

TOTAL INVESTMENTS 25,295

1 American Depositary Receipts (‘ADRs’).2 Non-Brazilian holdings.

The portfolio comprises investments inequity shares and American DepositaryReceipts (‘ADR’s).

LIST OF INVESTMENTS AT 30TH APRIL 2018


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I N V E S T M E N T O B J E C T I V E , P O L I C I E S A N D G U I D E L I N E S

The aim of the Strategic Report is to provide shareholders with theability to assess how the Directors have performed their duty topromote the success of the Company during the year under review.To assist shareholders with this assessment, the Strategic Reportsets out the structure and objective of the Company, its investmentpolicies and risk management, performance and key performanceindicators, share capital, principal risks and how the Company seeksto manage those risks, the Company’s environmental, social andethical policy and its long term viability.

Structure and Objective of the Company

JPMorgan Brazil Investment Trust plc is an investment trustcompany that has a premium listing on the London Stock Exchange.Its objective is to provide shareholders with long term total returns,predominantly comprising capital growth but with the potential forincome, by investing primarily in Brazilian focused companies. Inseeking to achieve this objective, JPMorgan Funds Limited (‘JPMF’or the ‘Manager’), an affiliate of JPMorgan Asset Management (UK)Limited (‘JPMAM’ or the ‘Manager’), has been appointed as theCompany’s Alternative Investment Fund Manager (‘AIFM’) tomanage its assets and also to act as the Company Secretary. TheBoard has determined an investment policy and related guidelinesand limits as described below.

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

The Company is an investment company within the meaning ofSection 833 of the Companies Act 2006 and has been approved byHM Revenue & Customs as an investment trust (for the purposes ofSections 1158 and 1159 of the Corporation Tax Act 2010). As aresult, the Company is not liable for taxation arising on capitalgains. The Directors have no reason to believe that approval willnot continue to be retained. The Company is not a close companyfor taxation purposes.

Investment Policies and Risk Management

In order to achieve the Company’s investment objective and to seekto manage risk, the Board imposes various investment limits andrestrictions.

• The Company invests primarily in Brazilian companies andthose incorporated or listed outside Brazil whose Brazilianoperations constitute a material part of their business. Up to10% of assets may be invested in companies focused on otherLatin American countries.

• There is no limit placed on the market capitalisation or sectorof any investee companies.

• The Company may reduce its equity holdings to a minimum of60% of its gross assets if it is considered to be beneficial toperformance.

• The Company may invest in listed or unlisted securities orequity-linked securities, in addition to fixed income bonds.Unlisted securities will not exceed 10% of gross assets at thetime of investment.

• The Company may invest no more than 15% of gross assets inany one company or group at the time of investment.

• The Company may invest no more than 10% of gross assets inother UK listed investment companies (including investmenttrusts) at the time of investment.

• The Company may use gearing when appropriate to increasepotential returns to shareholders.

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

Performance

In the year to 30th April 2018, the Company produced a return onnet assets of +4.1%, compared with the return on the Company’sbenchmark index of +11.1%. At 30th April 2018, the value of theCompany’s investment portfolio was £25.3 million (2017:£24.6 million). The Investment Managers’ Report on pages 7 to 9includes a review of developments during the period as well asinformation on investment activity within the Company’s portfolio.

Total Return, Revenue and Dividends

Gross total return amounted to £1.6 million (2017: £9.6 million) andnet total return after deducting administrative expenses andtaxation, amounted to £1.1 million (2017: £9.0 million). Distributableincome for the year amounted to £0.3 million (2017: £0.4 million).

The Directors recommend a final dividend of 0.80p (2017: 0.80p)per share payable on 21st September 2018 to holders on theregister at the close of business on 24th August 2018. This dividendwill cost £268,000 (2017: £273,000) and the revenue reserve afterallowing for the dividend will amount to £707,000 (2017: £651,000).

Key Performance Indicators (‘KPIs’)

The Board uses a number of financial KPIs to monitor and assessthe performance of the Company. The principal KPIs are:

• Performance against the benchmark indexThis is the most important KPI by which performance is judgedand it is explained in the Investment Managers’ report in moredetail on pages 7 to 9.



I N V E S T M E N T O B J E C T I V E , P O L I C I E S A N D G U I D E L I N E S

Performance Relative to Benchmark IndexFIGURES HAVE BEEN REBASED TO 100 AT 25TH APRIL 2010

Source: Morningstar/J.P. Morgan.

JPMorgan Brazil – share price total return.

JPMorgan Brazil – net asset value per share total return.

Benchmark total return. The Company’s benchmark (represented by the greydotted line) is the MSCI Brazil 10/40 Index, with net dividends reinvested, insterling terms.

Performance since InceptionFIGURES HAVE BEEN REBASED TO 100 AT 25TH APRIL 2010

Source: Morningstar/J.P. Morgan.

JPMorgan Brazil – share price total return.

JPMorgan Brazil – net asset value per share total return.

Benchmark total return.

• Performance against the Company’s peersThe principal objective is to achieve capital growth. The Boardalso monitors performance compared with a broad range ofcompetitor funds, however, there is a limited degree ofcomparability with the Company’s unique investment objectiveand policies. Performance is discussed in the Chairman’sStatement in detail on pages 5 and 6.

• Share price premium/(discount) to net asset value (‘NAV’)per shareThe Board has adopted a share repurchase policy that seeks toaddress imbalances in supply of and demand for the Company’sshares in the market and thereby seeks to manage the volatilityand absolute level of the premium or discount to NAV pershare at which the Company’s shares trade. The Board’sintention is to use its share repurchase and issuance powerswith the aim of establishing a reasonably stable long term levelof premium or discount. In the year to 30th April 2018, the

shares traded at a discount varying between 9.9% and 18.1%,with a five year average discount of 10.1%.

As announced in January 2017, the Board has adopted a flexiblebuyback strategy that takes into account the sentiment toemerging market funds as well as the absolute level of theCompany’s own discount and prevailing general marketconditions. However, over the longer term, the Board will seekto ensure that the Company’s shares should not trade ata discount in excess of approximately 10% to ex-income netasset value. This long term discount target will be reviewedperiodically in the light of prevailing market conditions. Thediscount triggered tender mechanism will no longer beproposed because the Board believes that it is no longer in thebest interests of shareholders as a whole to adopt a rigiddiscount control mechanism that seeks to target a definedmaximum discount level regardless of general marketconditions, the size of the Company and in particular, sentimentto emerging markets.

Premium/(Discount)

Source: Morningstar.

JPMorgan Brazil – share price premium/(discount) to net asset value pershare.

• Ongoing ChargesThe Ongoing Charges represents the Company’s managementfee and all other operating expenses, expressed as apercentage of the average daily net assets during the year. TheOngoing Charges for the year were 2.0% (2017: 2.0%). TheBoard pays close attention to the level of expenses. Thecharges for the year under review were considered reasonable,particularly given the smaller size of the Company. In light ofthe reduced size of the Company, it was agreed with theManager that the management fee would be reduced to theextent necessary to ensure that the Company’s OngoingCharges do not exceed 2% with effect from 1st May 2015. Anysuch reduction is non-cumulative and therefore will not beclawed back in future years. The management fee charged was£226,000 after being reduced by £36,220 for the year ended30th April 2018.

Share Capital

The Company has authority to issue new shares, to repurchaseshares into Treasury and to repurchase shares for cancellation.

60

70

80

90

100

110

120

30/04/1830/04/1730/04/1630/04/1530/04/1430/04/1330/04/1230/04/1125/04/10

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60

80

100

120

30/04/1830/04/1730/04/1630/04/1530/04/1430/04/1330/04/1230/04/1125/04/10

–20

–15

–10

–5

0

5

10

30/04/1830/04/1730/04/1630/04/1530/04/1430/04/1330/04/1230/04/1125/04/10


S


P R I N C I P A L R I S K S

During the year, the Company repurchased a total of 600,000(2017: 11,650,000) ordinary shares into Treasury, this represented1% (2017: 18.9%) of the issued share capital. As at 30th April 2018,28,204,044 (2017: 27,604,044) shares were held in Treasury. TheCompany will reissue shares held in Treasury only at a premium toNAV. During the year, no shares were repurchased for cancellationnor were any shares issued.

Resolutions to renew the authority to repurchase shares and issuenew shares will be put to shareholders at the forthcoming AnnualGeneral Meeting. More details are given on pages 19 and 20 andthe full text of the resolutions is set out in the Notice of Meeting onpage 63.

Details of the voting rights in the Company’s shares as at the dateof this report are given in note 16 to the Notice of Meeting onpage 65.

In addition to the votes available as referred to above, the ordinaryshares also have rights in respect of dividends and return of assetsas detailed in the Company’s Articles of Association.

Board Diversity

The Board has no current intention of making any changes to theBoard composition. When recruiting a new Director in future, theBoard’s policy is to introduce diversity subject to identifyingcandidates with optimum skill, knowledge and experience relevantto the Company’s requirements. At 30th April 2018, there werethree male Directors and no female Directors on the Board.

Employees, Social, Community and Human RightsIssues

The Company has a management contract with the Manager. It hasno employees and all of its Directors are non-executive. The day today activities are carried out by third parties. There are thereforeno disclosures to be made in respect of employees. The Boardnotes the Manager’s policy statements in respect of Social,Community, Environmental and Human Rights issues, ashighlighted in italics:

Social, Community, Environmental and Human Rights

The Manager believes that companies should act in a sociallyresponsible manner. Although our priority at all times is the besteconomic interests of our clients, we recognise that, increasingly,non-financial issues such as social and environmental factors havethe potential to impact the share price, as well as the reputation ofcompanies. Specialists within the Manager’s environmental, socialand governance (‘ESG’) team are tasked with assessing howcompanies deal with and report on social and environmental risksand issues specific to their industry.

The Manager is also a signatory to the United Nations Principles ofResponsible Investment, which commits participants to six principles,with the aim of incorporating ESG criteria into their processes whenmaking stock selection decisions and promoting ESG disclosure.

Our detailed approach to how we implement the principles isavailable on request.

The Manager has implemented a policy which seeks to restrictinvestments in securities issued by companies that have beenidentified by an independent third party provider as being involvedin the manufacture, production or supply of cluster munitions,depleted uranium ammunition and armour and/or anti-personnelmines. Shareholders can obtain further details on the policy bycontacting the Manager.

Greenhouse Gas Emissions

The Company is managed by JPMF with delegation of the activemanagement of the Company’s assets to JPMAM. JPMF acts asCompany Secretary and provides administrative support. TheCompany has no employees, all its Directors being non-executive,the day to day activities being carried out by third parties. Thereare therefore no disclosures to be made in respect of employees.The Company itself has no premises, consumes no electricity, gasor diesel fuel and consequently does not have a measurable carbonfootprint. The Company’s manager is a signatory to the CarbonDisclosure Project and JPMorgan Chase is a signatory to theEquator Principles on managing social and environmental risk inproject finance.

The Modern Slavery Act 2015 (the ‘MSA’)

The MSA requires companies to prepare a slavery and humantrafficking statement for each financial year of the organisation.As the Company has no employees and does not supply goodsand services, the MSA does not apply directly to it. The MSArequirements more appropriately relate to JPMF and JPMAM.JPMorgan’s statement on the MSA can be found on the followingwebsite: https://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/modern-slavery-act.pdf

Criminal Corporate Offence

The Company has zero tolerance for tax evasion. Shares in theCompany are purchased through intermediaries or brokers,therefore no funds flow directly into the Company. As the Companyhas no employees, the Board’s focus is to ensure that the risk of theCompany’s service providers facilitating tax evasion is also low. Tothis end it seeks assurance from its service providers that effectivepolicies and procedures are in place to prevent this.

Principal Risks

The Directors confirm that they have carried out a robustassessment of the principal risks facing the Company, includingthose that would threaten its business model, future performance,solvency or liquidity.

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



L O N G T E R M V I A B I L I T Y

• Investment and Strategy: An inappropriate investment strategy,for example asset allocation or the level of gearing, may lead tounderperformance against the Company’s benchmark indexand peer companies, resulting in the Company’s shares tradingon a wider discount. The Board manages these risks bydiversification of investments through its investmentrestrictions and guidelines, which are monitored and reportedon. The Manager provides the Directors with timely andaccurate management information, including performance dataand attribution analysis, revenue estimates, liquidity reportsand shareholder analyses. The Board monitors theimplementation and results of the investment process with theinvestment managers who attend all Board meetings, andreviews data which show statistical measures of the Company’srisk profile. The investment managers are free to employ theCompany’s gearing tactically, within a strategic range set by theBoard. The Board holds a separate meeting devoted to strategyeach year. In addition to the regular Board meetings, the Boardvisits Brazil from time to time to discuss strategy and considerall relevant aspects of investment in Brazil.

• Financial: The financial risks faced by the Company includeforeign currency risk, interest rate risk, other price risk,liquidity risk and credit risk. Further details are disclosed innote 21 on pages 53 to 57.

• Accounting, Legal and Regulatory: In order to qualify as aninvestment trust, the Company must comply with Section 1158.Details of the Company’s approval are given under ‘Business ofthe Company’ above. Were the Company to breach Section1158, it might lose investment trust status and, as aconsequence, gains within the Company’s portfolio could besubject to Capital Gains Tax. The Section 1158 qualificationcriteria are continually monitored by the Manager and theresults reviewed by the Board each month. The Company mustalso comply with the provisions of the Companies Act 2006and, since its shares are listed on the London Stock Exchange,the UKLA Listing Rules, Disclosure and Transparency Rules(‘DTRs’) and, as an investment trust, the Alternative InvestmentFund Managers Directive (‘AIFMD’). A breach of the CompaniesAct could result in the Company and/or the Directors beingfined or the subject of criminal proceedings. Breach of theUKLA Listing Rules or DTRs could result in the Company’sshares being suspended from listing which in turn wouldbreach Section 1158. The Board relies on the services of itsCompany Secretary, the Manager and its professional advisersto ensure compliance with the Companies Act 2006 and theUKLA Listing Rules, DTRs and AIFMD.

• Corporate Governance and Shareholder Relations: Details ofthe Company’s compliance with Corporate Governance bestpractice, including information on relations with shareholders,are set out on pages 20 to 23.

• Operational: Disruption to, or failure of the Manager’saccounting, dealing or payments systems or the depositary’s or

the custodian’s records may prevent accurate reporting andmonitoring of the Company’s financial position. On 1st July2014, the Company appointed BNY Mellon & Depositary (UK)Limited to act as its depositary, responsible for overseeing theoperation of the custodian, JPMorgan Chase Bank, N.A., and theCompany’s cash flow. Details of how the Board monitors theservices provided by the Manager and its associates and thekey elements designed to provide effective internal control areincluded within the Risk Management and Internal Controlsection of the Corporate Governance report on pages 21 and 22.

• Political and Economic: Changes in financial or tax legislation,including in Brazil, may adversely affect the Company. TheManager makes recommendations to the Board on accounting,dividend and tax policies and the Board seeks external advicewhere appropriate. In addition, the Company is subject toadministrative risks, such as the imposition of restrictions onthe free movement of capital. The Board monitors the impactof any changes in such restrictions on the Company.

Long Term Viability

Taking account of the Company’s current position, the principalrisks that it faces and their potential impact on its futuredevelopment and prospects, the Directors have assessed theprospects of the Company, to the extent that they are able to do so,over the next three years. They have made that assessment byconsidering those principal risks, the Company’s investmentobjective and strategy, the investment capabilities of the Managerand the current outlook for the Brazil economy and equity markets.In the light of the reduced size of the Company, JPMorgan hasagreed to reduce the management fee to the extent necessary toensure that the Company’s ongoing charges ratio does not exceed2%. Furthermore, JPMorgan agreed to terminate the performancefee with effect from 1st May 2016. The Manager continues toremain supportive of the Company.

In determining the appropriate period of assessment the Directorshad regard to their view that, given the Company’s objective ofachieving long term capital growth, shareholders should considerthe Company as a long term investment proposition. This is in linewith the Company’s continuation vote every three years. Thus theDirectors consider three years to be an appropriate time horizon toassess the Company’s viability.

The Directors confirm that they have a reasonable expectation thatthe Company will be able to continue in operation and meet itsliabilities as they fall due over the three year period of assessment.

For and on behalf of the Board Howard MylesChairman

7th August 2018


Directors’ Report

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D I R E C T O R S ’ R E P O R T

Howard Myles (Chairman since 24th February 2010)Remuneration: £30,000.Qualifications for Board Membership: He was a partner in Ernst &Young from 2001 until June 2007 and was responsible for theinvestment funds corporate advisory team. He was previouslywith UBS Warburg from 1987 to 2001. Mr. Myles began his careerin stockbroking in 1971 as an equity salesman and joined ToucheRoss in 1975 where he qualified as a chartered accountant. In1978 he joined W. Greenwell & Co. in the corporate broking teamand in 1987 moved to SG Warburg Securities where he wasinvolved in a wide range of commercial and industrialtransactions in addition to leading Warburg’s corporate financefunction for investment funds. He is a fellow of the Institute ofChartered Accountants in England and Wales and of TheChartered Securities Institute. He is currently a non-executivedirector of Baker Steel Resources Trust Limited, Lazard WorldTrust Fund SICAF, Small Companies Dividend Trust PLC, BBGISICAV S.A. and The Forest Company Limited.Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: Nil.

Mark Bridgeman (Chairman of the Audit Committee)Remuneration: £27,000.Qualifications for Board Membership: He was Global Head ofResearch at Schroders PLC until late 2008, when he left tomanage his own family farming business. Over the course of19 years spent at Schroders he worked both as an investmentanalyst and fund manager in the UK and around the world, wherehis roles included being an Emerging Markets fund manager andHead of Emerging Markets research. Since leaving Schroders hehas taken on a number of non-executive and advisory roles withinthe investment trust, private equity, land management andcharity sectors. He is currently a non-executive director ofBlackRock Emerging Europe plc and The Law Debenture TrustCorporation plc.Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 21,007 Ordinary Shares.

Victor Bulmer-Thomas A Director since 24th February 2010Remuneration: £24,000.Qualifications for Board Membership: From 2001 to 2006 he wasthe Director of Chatham House. From 1992 to 1998 he was theDirector of the Institute of Latin American studies at theUniversity of London. He was made a Commander of the Order ofthe Southern Cross by the Brazilian government in 1998. He waspreviously a non-executive director of New India InvestmentTrust PLC.Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 179,350 Ordinary Shares.

All Directors are members of the Audit Committee and areconsidered independent of the Manager.

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The Directors present their report and audited financialstatements for the year ended 30th April 2018.

Management of the Company

The Manager and Company Secretary is JPMorgan Funds Limited(‘JPMF’), a company authorised and regulated by the FCA. JPMF,an affiliate of JPMAM is employed under a contract which issubject to six months’ notice of termination. If the Companywishes to terminate the contract on less than six months’ notice,the balance of the six months’ remuneration is payable by way ofcompensation.

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

The Board conducts a formal evaluation of the Manager on anannual basis. The evaluation includes consideration of theinvestment strategy and process of the Manager, performanceagainst the benchmark over the long term and the support thatthe Company receives from the Manager. As a result of theevaluation process, the Board is of the opinion that the continuingappointment of the Manager is in the interests of theshareholders.

The Alternative Investment Fund ManagersDirective (‘AIFMD’)

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

JPMF has delegated responsibility for the day to day managementof the Company’s portfolio to JPMAM. The Company hasappointed The Bank of New York Mellon (International) Limited(‘BNY’) as its depositary. BNY has appointed JPMorgan ChaseBank, N.A. as the Company’s custodian. BNY is responsible for theoversight of the custody assets and for monitoring its cash flows.

The AIFMD requires certain information to be made available toinvestors in AIFs before they invest and requires that materialchanges to this information be disclosed in the annual report ofeach AIF. An Investor Disclosure Document, which sets outinformation on the Company’s investment strategy and policies,leverage, risk, liquidity, administration, management, fees,conflicts of interest and other shareholder information is availableon the Company’s website at www.jpmbrazil.co.uk There havebeen no material changes (other than those reflected in thesefinancial statements) to this information requiring disclosure.

Any information requiring immediate disclosure pursuant to theAIFMD will be disclosed to the London Stock Exchange througha primary information provider.

JPMF’s remuneration disclosures are set out on pages 60 and 61.

Management Fee

Under the terms of the Management Agreement, themanagement fee is charged at the rate of 1.0% per annum of theCompany’s total assets less current liabilities. The fee is calculatedand paid monthly in arrears. Investments made by the Companyin investment funds on which the Manager or a member of itsgroup earns a fee are excluded from the calculation and thereforeattract no management fee.

Up to 30th April 2016, the Manager was also entitled to receivea performance fee, but with effect from 1st May 2016 this wasterminated.

The Manager has agreed to reduce management fees to cap theCompany’s Ongoing Charges ratio to 2% per annum up to the2019 Continuation Vote. Further details are given under OngoingCharges on page 13.

Directors

All Directors served throughout the year and their details areincluded on page 17. Details of their beneficial shareholdings maybe found in the Directors’ Remuneration Report on page 28.

Howard Myles will stand for reappointment at the forthcomingAnnual General Meeting.

Director Indemnification and Insurance

As permitted by the Company’s Articles of Association, theDirectors have the benefit of an indemnity which is a qualifyingthird party indemnity, as defined by Section 234 of the CompaniesAct 2006. The indemnities were in place during the period and asat the date of this report.

An insurance policy is maintained by the Company whichindemnifies the Directors of the Company against potentialliabilities arising in the conduct of their duties. There is no coveragainst fraudulent or dishonest actions.

Disclosure of information to the Auditor

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 auditor is unaware, and

(b) each of the Directors has taken all the steps that he ought tohave taken as a Director in order to make himself aware ofany relevant audit information (as defined) and to establishthat the Company’s auditor is aware of that information.

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

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Independent Auditor

Ernst & Young LLP have expressed their willingness to continue inoffice as auditor to the Company and a resolution proposing theirreappointment and to authorise the Directors to agree theirremuneration for the ensuing year will be put to shareholders atthe forthcoming Annual General Meeting. The Audit Committeehas considered the possibility of tendering the role of auditor andwill review the timing of a tender in accordance with the requiredtime limits.

Capital Structure and Voting Rights

Capital StructureThe Company’s capital structure is summarised on the ‘Features’page.

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares as at the dateof this report are given in note 16 to the Notice of Meeting onpage 56.

Notifiable Interests in the Company’s Voting Rights

At the financial year end the following had declared a notifiableinterest in the Company’s voting rights:

Ordinary shares Number of Shareholders shares held %

Rathbone Investment Management Ltd 3,534,190 10.54Brewin Dolphin 2,628,523 7.841607 Capital Partners 1,704,803 5.08City of London 1,364,455 4.07

Since the year end no further notifiable interests have beendeclared and no changes to the above holdings had been notifiedas at the date of this report.

The Company is also aware that approximately 24% of theCompany’s total voting rights are held by individuals throughsavings products managed by the Manager and registered in thename of Chase Nominees Limited. If those voting rights are notexercised by the beneficial holders, in accordance with the termsand conditions of the savings products, under most circumstancesthe Manager has the right to exercise those voting rights. Thatright is subject to certain limits and restrictions and falls away atthe conclusion of the relevant general meeting.

The rules concerning the appointment and replacement ofDirectors, amendment of the Articles of Association and powersto issue or buy back the Company’s shares are contained in theArticles of Association of the Company and the CompaniesAct 2006.

There are no restrictions concerning the transfer of securities inthe Company; no special rights with regard to control attached tosecurities; no agreements known to the Company between

holders of securities regarding their transfer; no agreementswhich the Company is party to that affect its control followinga takeover bid; and no agreements between the Company and itsdirectors concerning compensation for loss of office.

Listing Rule 9.8.4R

Listing Rule 9.8.4R requires the Company to include certaininformation in a single identifiable section of the Annual Report ora cross reference table indicating where the information is setout. The Directors confirm that there are no disclosures to bemade in this regard.

Annual General Meeting

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

Resolutions relating to the following items of special business willbe proposed at the forthcoming Annual General Meeting:

(i) Authority to allot relevant Securities (resolution 7)

The Directors will seek authority at the Annual General Meeting toissue new shares equivalent to 10% of the present issued sharecapital (excluding shares held in Treasury). This authority willremain in effect until the conclusion of the Annual GeneralMeeting in 2019 unless renewed at an earlier general meeting.The full text of the resolution is set out in the Notice of Meetingon page 63.

The Directors intend to use this authority when they consider thatit is in the best interests of shareholders to do so and to satisfycontinuing demand for the Company’s Ordinary shares. It is alsoadvantageous for the Company to be able to issue new shares(or to sell Treasury shares) to participants purchasing sharesthrough the JPMorgan savings products. As such issues are onlymade at prices greater than the NAV, they are not dilutive. Theyincrease the assets underlying each share and spread theCompany’s administrative expenses, other than the managementfee which is charged on the value of the Company’s assets, overa greater number of shares.

(ii) Disapplication of pre-emption rights (resolution 8)

Resolution 8 seeks authority to disapply statutory pre-emptionrights on any issues of new shares (subject to the passing ofresolution 7) or by way of sale of Treasury shares. This avoids thelegal requirement to offer them pro rata to all shareholders. Thefull text of the resolution is set out in the Notice of Meeting onpage 63.

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(iii) Authority to repurchase the Company’s shares(resolution 9)

The authority to repurchase up to 14.99% of the Company’s issuedshare capital, granted by shareholders at the Annual GeneralMeeting on 14th September 2017, will expire on 13th March 2019unless renewed at the forthcoming AGM. The Directors considerthat the renewal of the authority is in the interests of shareholdersas a whole. A resolution will therefore be proposed at the AnnualGeneral Meeting that the Company be authorised to purchase inthe market up to 14.99% of the Company’s issued share capital(excluding shares held in Treasury) as at the date of the passing ofthis resolution using its distributable reserves.

The decision as to whether the Company repurchases any shareswill be at the discretion of the Board and purchases will be madein the market and at prices below the prevailing net asset valueper share. Under the rules of the London Stock Exchange, themaximum price that may be paid on a purchase by a company ofits shares under a general authority is 105% of the average of themiddle market quotations of the shares for the five business daysimmediately before the day on which the purchase is made. Theminimum price that the Company will pay for a share will be onepence (the nominal value of each share). The Company will utilisethe authority to purchase shares on an ad hoc basis by eithera single purchase or a series of purchases as and when marketconditions are appropriate.

The authority to purchase shares will expire on 10th March 2020unless renewed at the forthcoming Annual General Meeting oruntil the whole of the 14.99% has been acquired, whichever is theearlier. The authority may be renewed by shareholders at any timeat a general meeting.

Recommendation

The Board considers that resolutions 7 to 9 are likely to promotethe success of the Company and are in the best interests of theCompany and its shareholders as a whole. The Directorsunanimously recommended that you vote in favour of theresolutions as they intend to do in respect of their own beneficialholdings.

Corporate Governance Statement

Compliance

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

Copies of the UK Corporate Governance Code and the AIC Codemay be found on the respective organisations’ websites atwww.frc.org.uk and www.theaic.co.uk.

The Board is responsible for corporate governance and considersthat the Company has complied with the best practice provisionsof the UK Corporate Governance Code, insofar as they arerelevant to the Company’s business, and the AIC Code throughoutthe period under review and up to the date of approval of theannual report and accounts.

Role of the Board

A management agreement between the Company and theManager sets out the matters which have been delegated to theManager. This includes management of the Company’s assets andthe provision of accounting, company secretarial, administration,and some marketing services. All other matters are reserved forthe approval of the Board. A formal schedule of matters reservedto the Board for 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 key investmentand financial data and the Company’s corporate governance andrisk control arrangements.

The Board has procedures in place to deal with potential conflictsof interest and, in accordance with the requirements of theBribery Act 2010, has adopted appropriate procedures designedto prevent bribery. It confirms that the procedures have operatedeffectively during the period under review.

The Board meets on at least four occasions during the year andadditional meetings are arranged as necessary. Full and timelyinformation is provided by the Manager to the Board to enable itto function effectively 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, which isresponsible to the Board for ensuring that Board procedures arefollowed and for compliance with applicable rules andregulations.

Board Composition

The Board consists of three non-executive Directors, all of whomare regarded by the Board as independent of the Company’sManager and Secretary. The Directors have a breadth ofinvestment, business and financial skills and experience relevantto the Company’s business. Brief biographical details of eachDirector are set out on page 17.

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

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may be found below. The Board has considered whether a seniorindependent director should be appointed and has concludedthat, as the Board is composed entirely of non-executivedirectors, this is unnecessary at present. However, the Chairmanof the Audit Committee leads the evaluation of the performanceof the Chairman and is available to shareholders if they haveconcerns that cannot be resolved through discussion with theChairman.

Tenure

Directors are initially appointed until the following Annual GeneralMeeting when, under the Company’s Articles of Association, it isrequired that they be reappointed by shareholders. Thereafter,a Director’s appointment runs for a term of three years. In thelight of the performance evaluation carried out each year, theBoard will decide whether it is appropriate for the Director toseek an additional term. A Director’s continuing appointment issubject to re-election by shareholders on retirement by rotationin accordance with the Company’s Articles of Association. TheCompany’s Articles of Association require that Directors stand forre-election at least every three years.

The Board recommends the reappointment of Howard Mylesfollowing a performance review conducted by the AuditCommittee which concluded that he continues to add value to theBoard.

The Board does not believe that length of service in itselfnecessarily disqualifies a Director from seeking reappointmentbut, when making a recommendation, the Board will take intoaccount the ongoing requirements of the UK CorporateGovernance Code, including the need to refresh the Board and itsCommittees. As part of the Board’s succession planning, it will beconsidering the appointment of new directors over the nexttwelve months with a view to refreshing the entire Board over thenext two years.

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

Meetings and Committees

The Board delegates certain responsibilities and functions to theAudit Committee. Details of membership of the Audit Committeeare shown with the Directors’ profiles on page 17.

The table below details the number of Board and Committeemeetings attended by each Director. During the year there werefour Board meetings, including a separate meeting devoted tostrategy, two private meetings of the Directors, one of which wasto evaluate the Manager, three Audit Committee meetings, one toconsider nomination matters.

Audit Committee Board Meetings MeetingsDirector Held (Attended) Held (Attended)

Mark Bridgeman 4 (4) 3 (3)

Victor Bulmer-Thomas 4 (4) 3 (3)

Howard Myles 4 (4) 3 (3)

In addition, there were a number of other ad hoc meetings foradministrative purposes.

Training and Appraisal

On appointment, the Manager and Company Secretary provide allDirectors with induction training. Thereafter regular briefings areprovided on changes in regulatory requirements that affect theCompany and Directors. Directors are encouraged to attendindustry and other seminars covering issues and developmentsrelevant to investment trusts.

The Board has agreed procedures for the formal evaluation of theManager, its own performance and that of the Audit Committeeand individual Directors. Questionnaires, drawn up by the Board,are completed by each Director. The responses are collated andthen discussed at a private meeting of the Audit Committee. Theevaluation of individual Directors is led by the Chairman, on thebasis of the questionnaires, and the Audit Committee Chairmanleads the evaluation of the Chairman’s performance.

Board Committee

Audit Committee The report of the Audit Committee is set out on pages 24 and 25.

Terms of Reference

The Audit Committee has written terms of reference which defineclearly its responsibilities. Copies are available for inspection onrequest at the Company’s registered office and at the AnnualGeneral Meeting.

Risk Management and Internal Control

The UK Corporate Governance Code requires the Directors, atleast annually, to review the effectiveness of the Company’ssystem of risk management and internal control and to report toshareholders that they have done so. This encompasses a reviewof all controls, which the Board has identified as includingbusiness, financial, operational, compliance and risk managementcontrols.

The Directors are responsible for the Company’s system of riskmanagement and internal control, which is designed to safeguardthe Company’s assets, maintain proper accounting records andensure that financial information used within the business, orpublished, is reliable. However, such a system can only bedesigned to manage rather than eliminate the risk of failure toachieve business objectives and therefore can only provide

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reasonable, but not absolute, assurance against fraud, materialmis-statement or loss.

Since investment management, custody of assets and alladministrative services are provided to the Company by theManager and its associates, the Company’s system of riskmanagement and internal control mainly comprises monitoringthe services provided by the Manager and its associates, includingthe operating controls established by them, to ensure they meetthe Company’s business objectives. There is an ongoing processfor identifying, evaluating and managing the significant risksfaced by the Company (see Principal Risks on pages 14 and 15).This process has been in place for the year under review and upto the date of the approval of the annual report and accounts, andit accords with the Turnbull guidance. Whilst the Company doesnot have an internal audit function of its own, the Board considersthat it is sufficient to rely on the internal audit department of theManager. This arrangement is kept under review.

The key elements designed to provide effective risk managementand internal control are as follows:

• Financial Reporting

Regular and comprehensive review by the Board of keyinvestment and financial data, including managementaccounts, revenue projections, analysis of transactions andperformance comparisons.

• Management and Depositary Agreements

Appointment of a manager and depositary regulated by theFinancial Conduct Authority (FCA), whose responsibilities areclearly defined in a written agreement.

• Management Systems

The Manager’s system of risk management and internalcontrol includes organisational agreements which clearlydefine the lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by theManager’s Compliance Department which regularly monitorscompliance with FCA rules.

• Investment Strategy

Authorisation and monitoring of the Company’s investmentstrategy and exposure limits by the Board.

The Board, either directly or through the Audit Committee,keeps under review the effectiveness of the Company’ssystem of risk management and internal control bymonitoring the operation of the key operating controls of theManager and its associates as follows:

• the Board, through the Audit Committee, reviews theterms of the management agreement and regular reportsfrom the Manager’s Compliance department;

• the Board reviews the report on the risk management andinternal controls and operations of the Manager as well asits custodian, JPMorgan Chase Bank, which is itselfindependently reviewed; and

• the Directors review every six months an independentreport on the risk management and internal controls andthe operations of the Manager.

By means of the procedures set out above, the Board confirmsthat it has reviewed the effectiveness of the Company’s system ofrisk management and internal control for the year ended30th April 2018, and that the systems have been in place duringthe year under review and up to the date of approval of thisAnnual Report and Accounts. Moreover, the controls accord withthe Financial Reporting Council, Guidance on Risk Management,internal control and related Financial and Business Reporting,September 2014.

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

Going Concern

The Directors believe that, having considered the Company’sinvestment objective (see page 12), risk management policies(see pages 53 to 57), capital management policies and procedures(see pages 57 and 58), the nature of the portfolio and expenditureprojections, that the Company has adequate resources, anappropriate financial structure and suitable managementarrangements in place to continue in operational existence for atleast 12 months from approving this report. For these reasons,the Directors consider it appropriate to adopt the going concernbasis of accounting in preparing the accounts. A continuation votewas passed by the Company’s shareholders in 2016. This will beput to shareholders again at the 2019 AGM.

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 performance andreports formally to shareholders twice a year by way of theAnnual Report and Accounts and the Half Year Report. This issupplemented by daily publication, through the London StockExchange, of the net asset value of the Company’s shares.Shareholders may also visit the Company’s website atwww.jpmbrazil.co.uk, where the share price is updated every15 minutes during trading hours.

All shareholders have the opportunity, and are encouraged, toattend the Company’s Annual General Meeting, at which theDirectors and representatives of the Manager are available in

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person to meet shareholders and answer their questions, anda presentation is given by the investment managers, who reviewthe Company’s performance. During the year the Company’sbrokers, the investment managers, and the Manager hold regulardiscussions with larger shareholders and make the Board fullyaware of their views. The Chairman and Directors makethemselves available as and when required to support thesemeetings and to address shareholder queries. The Directors maybe contacted through the Company Secretary whose details areshown on page 69 or via the ‘Ask a Question’ link on theCompany’s website.

The Company’s Annual Report and Accounts is published in timeto give shareholders at least 21 days’ notice of the Annual GeneralMeeting. Shareholders who cannot attend the meeting but wish toraise questions in advance of the meeting are encouraged towrite to the Company Secretary at the address shown on page 69or via the ‘Ask a Question’ link on the Company’s website.

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

Corporate Governance and Voting Policy

The Company delegates responsibility for voting to JPMAMthrough the Manager. The following is a summary of JPMAM’spolicy statements on corporate governance, voting policy andsocial and environmental issues, which has been reviewed andnoted by the Board. Details on social and environmental issuesare included in the Strategic Report on page 14.

Corporate Governance

JPMAM believes that corporate governance is integral to ourinvestment process. As part of our commitment to deliveringsuperior investment performance to our clients, we expect andencourage the companies in which we invest to demonstrate thehighest standards of corporate governance and best businesspractice. We examine the share structure and voting structure of thecompanies in which we invest, as well as the board balance,oversight functions and remuneration policy. These analyses thenform the basis of our proxy voting and engagement activity.

Proxy Voting

The Manager manages the voting rights of the shares entrusted to itas it would manage any other asset. It is the policy of JPMAM to votein a prudent and diligent manner, based exclusively on ourreasonable judgement of what will best serve the financial interests

of our clients. So far as is practicable, we will vote at all of themeetings called by companies in which we are invested.

Stewardship/Engagement

JPMAM recognises its wider stewardship responsibilities to itsclients as a major asset owner. To this end, we support theintroduction of the FRC Stewardship Code, which sets out theresponsibilities of institutional shareholders in respect of investeecompanies. Under the Code, managers should:

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

– disclose their policy on managing conflicts of interest;

– monitor their investee companies;

– establish clear guidelines on how they escalate engagement;

– be willing to act collectively with other investors whereappropriate;

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

– report to clients.

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

JPMAM’s Voting Policy and Corporate Governance Guidelines areavailable on request from the Company Secretary or can bedownloaded from JPMAM’s website:http://www.jpmorganinvestmenttrusts.co.uk/governance,which also sets out its approach to the seven principles of theFRC Stewardship Code, its policy relating to conflicts of interestand its detailed voting record.

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D



The Audit Committee, chaired by Mark Bridgeman, andcomprising all the independent Directors, meets at least twiceeach year to consider audit matters. The members of the AuditCommittee consider that they have the requisite skills andexperience to fulfil the responsibilities of the Committee.

Financial Statements and Significant AccountingMatters

The Committee reviews the actions and judgements of theManager in relation to the half year and annual accounts and theCompany’s compliance with the UK Corporate Governance Code.

During its review of the Company’s financial statements for theyear ended 30th April 2018, the Audit Committee considered thefollowing significant issues, including those communicated by theAuditors during their reporting:

Significant issue How the issue was addressed

The valuation of investments is undertaken inaccordance with the accounting policies, disclosedin note 1(b) to the accounts on page 44. Controlsare in place to ensure valuations are appropriateand existence is verified through custodianreconciliations. The Board monitors significantmovements in the underlying portfolio.

The recognition of investment income isundertaken in accordance with accounting policynote 1(d) to the accounts on page 44. The Boardreviews subjective elements of income such asspecial dividends and agrees their treatment isrelevant.

Approval for the Company as an investment trustunder Sections 1158 and 1159 has been obtainedand ongoing compliance with the eligibility criteriais monitored by the Board on a regular basis.

The Board has negotiated a cap on the Company’sOngoing Charges ratio to 2% by reducing themanagement fees with the Manager and thetermination of performance fees. The Board hasreviewed the Company’s revenue forecast for thenext 12 months and is comfortable with the goingconcern assessment.

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

As a result of the work performed above, the Committee hasconcluded that the Annual Report for the year ended 30th April2018, taken as a whole, is fair, balanced and understandable andprovides the information necessary for shareholders to assess the

Company’s performance, business model and strategy, and hasreported on these findings to the Board. The Board’s conclusionsin this respect are set out in the Statement of Directors’Responsibilities on page 30.

The Committee assesses the Company’s ability to continue asa going concern and makes recommendations to the Board. TheAudit Committee recommends the Board to approve the goingconcern concept for preparation of the accounts. The Directors’statement on Going Concern is set out on page 22.

The Committee reviews the terms of the management agreementand examines the effectiveness of the Company’s riskmanagement and internal control systems, receives informationfrom the Manager’s Compliance department and reviews thescope and results of the external audit, its effectiveness and costeffectiveness, the balance of audit and non-audit services, and theindependence and objectivity of the external Auditor. In theDirectors’ opinion the Auditors are independent. The Committeealso has a primary responsibility for making recommendations tothe Board on the reappointment and removal of externalAuditors. Representatives of the Company’s Auditors attend theCommittee meeting at which the draft annual report and accountsare considered. The Committee is satisfied that no prohibitednon-audit services are provided by the external auditors.

The Directors’ statement on the Company’s system of riskmanagement and internal control is set out on pages 21 and 22.

Having reviewed the performance of the external Auditors,including assessing the quality of work, timing of communicationsand work with the Manager, the Committee considered itappropriate to recommend their reappointment. The Boardsupported this recommendation which will be put to shareholdersat the forthcoming Annual General Meeting. The current auditfirm has audited the company’s financial statements since itslaunch in 2010. The Company’s year ended 30th April 2018 is thecurrent Audit Partner’s first of a five year maximum term. Afterreaching the ten year mark in 2020, the Company will be requiredto hold a tender where the incumbent auditor may bere-appointed for a further ten year term. The performance of theAuditors will continue to be reviewed annually by the Committee,taking into account all relevant guidance and best practice.

The Committee fulfils the role of a Nomination Committee andmeets at least once a year to ensure that the Board has anappropriate balance of skills to carry out its fiduciary duties andto select and propose suitable candidates when necessary forappointment. A variety of sources, including external searchconsultants, may be used to ensure that a wide range ofcandidates is considered. The Board’s policy on diversity,including gender, is to take account of the benefits of these

Valuation, existenceand ownership ofinvestments

Recognition ofinvestment income

Compliance withSections 1158 and1159

Going Concernassessment

Audit Committee Report

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during the appointment process. However, the Board remainscommitted to appointing the most appropriate candidate,regardless of gender or other forms of diversity. Therefore, notargets have been set against which to report.

The Committee undertakes an annual performance evaluation toensure that all its members have devoted sufficient time andcontributed adequately to the work of the Board. In the light ofthese evaluations, the Committee makes recommendations to theBoard concerning the reappointment by shareholders of anyDirector under the ‘retirement by rotation’ provisions in theCompany’s Articles of Association. The Committee also reviewsDirectors’ fees and makes recommendations to the Board as andwhen required in relation to remuneration policy.

On an annual basis each Director submits a list of potentialconflicts of interest for approval. These are considered carefully,taking into account the circumstances surrounding them and, ifconsidered appropriate, are approved for a period of one year.

By order of the Board Divya Aminfor and on behalf ofJPMorgan Funds LimitedSecretary

7th August 2018

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Directors’ Remuneration Report

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D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T | 2 7

D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T

The Board presents the Directors’ Remuneration Report for theyear ended 30th April 2018, which has been prepared inaccordance with the requirements of Section 421 of theCompanies Act 2006.

The law requires the Company’s auditor to audit certain of thedisclosures provided in this report. Where disclosures have beenaudited they are indicated as such. The auditor’s opinion isincluded in their report on page 32.

As all of the Directors are non-executive, the Board has notestablished a Remuneration Committee. Instead, the AuditCommittee reviews Directors’ fees on a regular basis and makesrecommendations to the Board as and when appropriate.

Directors’ Remuneration Policy

The Directors’ Remuneration Policy is subject to a triennialbinding vote, however, a decision has been taken to seekapproval annually and therefore an ordinary resolution toapprove this policy will be put to shareholders at the forthcomingAnnual General Meeting. The policy subject to the vote is set outin full below and is currently in force.

The Board’s policy for this and subsequent years is that Directors’fees should properly reflect the time spent by the Directors on theCompany’s business and should be at a level to ensure thatcandidates of a high calibre are recruited to the Board andretained. The Chairman of the Board and the Chairman of theAudit Committee are paid higher fees than the other Director,reflecting the greater time commitment involved in fulfilling thoseroles.

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

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

Directors’ fees were previously increased with effect from 1st May2014. In the year under review, Directors’ fees were paid at thefollowing annual rates: Chairman £30,000; Chairman of the AuditCommittee £27,000; and other Director £24,000.

With effect from 1st May 2018, Directors’ fees were increased tothe following levels: Chairman £34,000 per annum; Chairman ofthe Audit Committee £28,000 per annum; and, the otherDirectors £25,000 per annum.

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

The Company has not sought shareholder views on itsremuneration policy. The Audit Committee in its role ofconsidering remuneration matters, considers any commentsreceived from shareholders on remuneration policy on anongoing basis and takes account of those views.

The terms and conditions of Directors’ appointments are set outin formal letters of appointment which are available for review atthe Company’s Annual General Meeting and the Company’sregistered office. Details of the Board’s policy on tenure are setout on page 21.

Directors’ Remuneration Policy Implementation

The Directors’ Remuneration Report, which includes details of theDirectors’ remuneration policy and its implementation, is subjectto an annual advisory vote and therefore an ordinary resolutionto approve this report will be put to shareholders at theforthcoming Annual General Meeting. There have been nochanges to the policy compared with the year ended 30th April2017 and no changes are proposed for the year ending 30th April2018.

At the Annual General Meeting held on 14th September 2017, ofvotes cast, 99.1% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theremuneration policy and 0.9% voted against. Abstentions werereceived from 0.0% of the votes cast. In respect of theRemuneration Report, 99.1% of the votes cast were in favour (orgranted discretion to the Chairman who voted in favour) and0.9% voted against. Abstentions were received from 0.0% of thevotes cast.

Details of voting on both the Remuneration Policy and theDirectors’ Remuneration Report from the 2018 Annual GeneralMeeting will be given in the annual report for the year ending30th April 2019.

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

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D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T

Single total figure of remuneration

The single total figure of remuneration for each Director isdetailed below together with the prior year comparative.

Single total figure table1

2018 2017

Taxable TaxableFees expenses2 Total Fees expenses2 Total

Directors’ Name £ £ £ £ £ £

Howard Myles 30,000 1,507 31,507 30,000 — 30,000Mark Bridgeman 27,000 683 27,683 27,000 1,306 28,306Victor

Bulmer-Thomas 24,000 — 24,000 24,000 — 24,000

Total 81,000 2,190 83,190 81,000 1,306 82,306

1 Audited information. Other subject headings for the single figure table asprescribed by regulation are not included because there is nothing to disclose inrelation thereto.

2 Taxable travel and subsistence expenses incurred in attending Board andCommittee meetings.

A table showing the total remuneration for the Chairman sincelaunch to 30th April 2018 is below:

Remuneration for the Chairman over the periodfrom the date of appointment on 24th February2010 to 30th April 2018Year ended30th April Fees

2018 £30,000

2017 £30,000

2016 £30,000

2015 £30,000

2014 £30,000

2013 £25,000

2012 £25,000

20111 £29,455

1 The Company’s first remuneration reporting period was from the date ofappointment on 24th February 2010 to 30th April 2011.

Directors’ Shareholdings1

There are no requirements pursuant to the Company’s Articles ofAssociation for the Directors to own shares in the Company. TheDirectors’ shareholdings are detailed below. All shares are heldbeneficially.

30th April 30th AprilDirectors’ Name 2018 2017

Howard Myles — —

Mark Bridgeman 21,007 21,007

Victor Bulmer-Thomas 179,350 179,350

Total 200,357 200,357

1 Audited information.

As at the latest practicable date before the publication of thisdocument, there have been no changes to the Directors’shareholdings.

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

A graph showing the Company’s share price return comparedwith its benchmark index since the date the Company beganinvesting is shown below.

Share price and benchmark performance for theperiod from launch on 26th April 2010 to30th April 2018

Source: Morningstar/J.P. Morgan.Share price total return.Benchmark total return.

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

Expenditure by the Company on remuneration anddistributions to shareholders

Year ended 30th April

2018 2017Remuneration paid to all Directors 83,190 82,306Distribution to shareholders

– by way of dividends paid 270,000 202,000– by way of share repurchase 397,000 7,218,000

For and on behalf of the Board Howard MylesChairman

7th August 2018

40

60

80

100

120

201820172016201520142013201220112010

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Statement of Directors’ Responsibilities

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3 0 | J P M O R G A N B R A Z I L I N V E S TM E N T T R U S T P L C . A N N U A L R E P O R T & F I N A N C I A L S T A T EM E N T S 2 0 1 8

S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S

The Directors are responsible for preparing the Annual Reportand Accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law the Directorshave elected to prepare the financial statements in accordancewith United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards) including FRS 102 ‘TheFinancial Reporting Standard applicable in the UK and Republic ofIreland’ and applicable law). Under company law the Directorsmust not approve the financial statements unless they are satisfiedthat, taken as a whole, the annual report and accounts are fairbalanced and understandable, provide the information necessary,for shareholders to assess the Company’s performance, businessmodel and strategy, and that they give a true and fair view of thestate of affairs of the Company and of the total return or loss ofthe Company for that period. In preparing these financialstatements, the Directors are required to:

• select suitable accounting policies and then apply themconsistently;

• make judgments and accounting estimates that arereasonable and prudent;

• state whether applicable UK Accounting Standards have beenfollowed, subject to any material departures disclosed andexplained in the financial statements; and

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

and the Directors confirm that they have done so.

The Directors are responsible for keeping adequate 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 to ensurethat the financial statements comply with the CompaniesAct 2006. They are also responsible for safeguarding the assets ofthe Company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

The accounts are published on the www.jpmbrazil.co.uk website,which is maintained by the Company’s Manager. The maintenanceand integrity of the website maintained by the Manager is, so faras it relates to the Company, the responsibility of the Manager.The work carried out by the auditor does not involveconsideration of the maintenance and integrity of this websiteand, accordingly, the auditor accepts no responsibility for anychanges that have occurred to the accounts since they wereinitially presented on the website. The accounts are prepared inaccordance with UK legislation, which may differ from legislationin other jurisdictions.

Under applicable law and regulations the Directors are alsoresponsible for preparing a Strategic Report, a Directors’ Reportand a Directors’ Remuneration Report that comply with that law.The Strategic Report and the Directors’ report include a fairreview of the development and performance of the business andthe position of the issuer, together with a description of theprincipal risks and uncertainties that they face.

Each of the Directors, whose names and functions are listed onpage 17 confirms that, to the best of their knowledge the financialstatements, which have been prepared in accordance with UnitedKingdom Generally Accepted Accounting Practice (UnitedKingdom Accounting Standards and applicable law), give a trueand fair view of the assets, liabilities, financial position and returnor loss of the Company. The Board confirms that it is satisfied thatthe annual report and accounts taken as a whole are fair,balanced and understandable and provide the informationnecessary for shareholders to assess the strategy and businessmodel of the Company.

For and on behalf of the BoardHoward MylesChairman

7th August 2018

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Independent Auditor’s Report

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I N D E P E N D E N T A U D I T O R ’ S R E P O R T | 3 2

INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF JPMORGAN BRAZIL INVESTMENT TRUST PLC

Opinion

We have audited the financial statements of JPMorgan Brazil Investment Trust plc (the ‘Company’) for the year ended 30th April 2018which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity, the Statement of Financial Position, theStatement of Cash Flows and the related notes 1 to 23, including a summary of significant accounting policies. The financial reportingframework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted AccountingPractice).

In our opinion the financial statements:

• give a true and fair view of the Company’s affairs as at 30th April 2018 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilitiesunder those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of ourreport below. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of thefinancial statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our otherethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to principal risks, going concern and viability statement

We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us toreport to you whether we have anything material to add or draw attention to:

• the disclosures in the annual report set out on pages 14 and 15 that describe the principal risks and explain how they are beingmanaged or mitigated;

• the Directors’ confirmation set out on page 14 in the annual report that they have carried out a robust assessment of the principalrisks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;

• the Directors’ statement set out on page 22 in the financial statements about whether they considered it appropriate to adopt thegoing concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability tocontinue to do so over a period of at least twelve months from the date of approval of the financial statements

• whether the Directors’ statement in relation to going concern required under the Listing Rules in accordance with ListingRule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or

• the Directors’ explanation set out on page 15 in the annual report as to how they have assessed the prospects of the entity, overwhat period they have done so and why they consider that period to be appropriate, and their statement as to whether they havea reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the periodof their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Overview of our audit approach

Key audit matters• Incomplete or inaccurate revenue recognition, including classification as revenue or capital items in the Income Statement.

• Incorrect valuation and defective title of the investment portfolio.

Materiality• Overall materiality of £0.26 million which represents 1% of shareholders’ funds (2017: £0.25 million).

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Key observations communicated to the Risk Our response to the risk Audit Committee

The results of our procedures are:

We have no issues to communicate withrespect to our assessment of theManager’s and Administrator’s processesand controls surrounding revenuerecognition and allocation of specialdividends.

We agreed the sample of dividend receiptsto an independent source, recalculatingthese amounts and agreeing them to thebank statements and noted no issues.

We agreed the sample of investeecompany announcements to the incomeentitlements recorded by the Companyand noted no issues.

We recalculated the accrued dividends,agreeing, where possible, to post year endbank statements, and confirming that theincome obligation arose prior to 30th April2018 and noted no issues.

We have performed the followingprocedures:

We obtained an understanding of theManager’s and Administrator’s processesand controls surrounding revenuerecognition and allocation of specialdividends by performing a walkthroughin which we evaluated the design andoperating effectiveness of controls.

Agreed a sample of dividend receipts tothe corresponding announcement made bythe investee company, recalculated thedividend amount receivable and confirmedthat the cash received as shown on bankstatements was consistent with therecalculated amount.

We agreed a sample of investee companydividend announcements from anindependent data vendor to the incomerecorded by the Company to testcompleteness of the income recorded.

We obtained an understanding of theManager’s and Administrator’s processesand controls surrounding revenuerecognition and allocation of specialdividends by performing a walkthrough inwhich we evaluated the design andoperating effectiveness of controls.

Agreed a sample of dividend receipts tothe corresponding announcement made bythe investee company, recalculated thedividend amount receivable and confirmedthat the cash received as shown on bankstatements was consistent with therecalculated amount.

We agreed a sample of investee companydividend announcements from anindependent data vendor to the incomerecorded by the Company to testcompleteness of the income recorded.

Incomplete or inaccurate revenuerecognition, including classification asrevenue or capital items in the IncomeStatement (as described on page 24 in theReport of the Audit Committee and as perthe accounting policy set out on page 44).

The investment income receivable by theCompany during the year directly affectsthe Company’s ability to make a dividendpayment to shareholders. The total incomereceived for the year to 30th April 2018was £0.92 million (2017: £0.98 million),with the majority being dividend paymentsfrom listed investments, 2018:£0.91 million (2017: £0.98 million).

The Directors are required to exercisejudgment in determining whether incomereceivable in the form of special dividendsshould be classified as ‘revenue’ or‘capital’.

During the year, the Company receivedtwo special dividends, with an aggregatevalue of £0.05 million (2017: £nil).

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period and include the most significant assessed risks of material misstatement (whether or not due tofraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation ofresources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit ofthe financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

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For all dividends accrued at the year end,we reviewed the investee companyannouncements to assess whether thedividend obligation arose prior to30th April 2018. We agreed the dividendrate to corresponding announcementsmade by the investee company,recalculated the dividend amountreceivable and confirmed this wasconsistent with cash received as shown onpost year end bank statements.

We reviewed the income report and theacquisition and disposal report producedby the Administrator to identify specialdividends recorded in the year in excess ofour testing threshold. There was one suchspecial dividend , for which we confirmedthat the classification as revenue/capitalwas consistent with the underlying motivesand circumstances for the payment.

We reviewed the Company’s accountingpolicies with respect to revenuerecognition including special dividends tocheck that these have been applied asstated throughout the year and are in linewith FRS 102 and the AIC SORP.

We performed the following procedures:

We obtained an understanding of theManager’s and Administrator’s processesand controls surrounding investmentpricing and trade processing byperforming a walkthrough in which weevaluated the design and operatingeffectiveness of controls.

For all listed investments in the portfolio,we compared the market values andexchange rates applied to an independentsource.

We reviewed the portfolios liquidity andreviewed the portfolio for stale pricingwith reference to market values.

Incorrect valuation and defective title ofthe investment portfolio (as described onpage 24 in the Report of the AuditCommittee and as per the accountingpolicy set out on page 44).

The valuation of the assets held in theinvestment portfolio is the key driver ofthe Company’s net asset value and totalreturn. Incorrect asset pricing or a failureto maintain proper legal title of the assetsheld by the Company could have asignificant impact on the portfoliovaluation and the return generated forshareholders.

The results of our procedures are:

We have no issues to communicate withrespect to our assessment of theprocesses and controls surroundinginvestment pricing and trading.

For all listed investments, we noted nomaterial differences in market value orexchange rates when compared to anindependent source.

We did not identify any exceptions in ourassessment of the portfolios liquidity anddid not identify any stale prices.

We noted no differences between thecustodian and depositary confirmation andthe Company’s underlying financialrecords

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In the prior year, our auditor’s report included a key audit matter in relation to the Company’s going concern assessment. In thecurrent year we have removed this as a key audit matter as the ‘Conclusions relating to principal risks, going concern and viabilitystatement’ section of this audit report addresses our consideration of the Company’s use of the going concern basis of accounting.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope forthe Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation ofthe Company and effectiveness of controls, including controls and changes in the business environment when assessing the level ofwork to be performed.

Our application of materiality

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

Materiality

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

We determined materiality for the Company to be £0.26 million (2017: £0.25 million) which is 1% of shareholders’ funds. We believethat shareholders’ funds provides us with materiality aligned to the key measurement of the Company’s performance.

Performance materiality

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

On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our judgement wasthat performance materiality was 75% (2017: 75%) of our planning materiality, namely £0.19 million (2017: £0.19 million). We have setperformance materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, bothcorrected and uncorrected.

Given the importance of the distinction between revenue and capital for the Company we also applied a separate revenue testingthreshold of £0.02 million (2017: £0.02 million) for the revenue column of the Statement of Comprehensive Income, being 5% of therevenue profit before taxation.

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.01 million(2017: £0.01 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warrantedreporting on qualitative grounds.

We agreed the Company’s investments tothe independent confirmation receivedfrom the Company’s custodian anddepositary as at 30th April 2018. Weagreed a sample of key transaction detailsof purchases and sales recorded by theAdministrator to bank statements.

The valuation of the portfolio at30th April 2018 was £25.29 million(2017 £24.55 million) consisting oflisted equities.

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

Other information

The other information comprises the information included in the annual report and financial statements, other than the financialstatements and our auditor’s report thereon. The Directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated inthis report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we arerequired to determine whether there is a material misstatement in the financial statements or a material misstatement of the otherinformation. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, weare required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the otherinformation and to report as uncorrected material misstatements of the other information where we conclude that those items meetthe following conditions:

• Fair, balanced and understandable set out on page 30: the statement given by the Directors that they consider the annual reportand financial statements taken as a whole is fair, balanced and understandable and provides the information necessary forshareholders to assess the Company’s performance, business model and strategy, is materially inconsistent with our knowledgeobtained in the audit; or

• Audit committee reporting set out on page 24: the section describing the work of the audit committee does not appropriatelyaddress matters communicated by us to the audit committee; or

• Directors’ statement of compliance with the UK Corporate Governance Code set out on page 20: the parts of the Directors’statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance Codecontaining provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclosea departure from a relevant provision of the UK Corporate Governance Code.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with theCompanies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the Directors’ report for the financial year for which the financial statements areprepared is consistent with the financial statements; and

• the strategic report and Directors’ reports have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have notidentified material misstatements in the strategic report or Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to youif, in our opinion:

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

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

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

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

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement set out on page 30, the Directors are responsible for thepreparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as theDirectors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors eitherintend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance isa high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.

Explanation as to what extent the audit was considered capable of detecting irregularities, includingfraud

The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statementsdue to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud,through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified duringthe audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governanceof the entity and management.

Our approach was as follows:

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that themost significant are FRS 102, the Companies Act 2006, the Listing Rules, the UK Corporate Governance Code and Section 1158 ofthe Corporation Tax Act 2010.

• We understood how the Company is complying with those frameworks through discussions with the Audit Committee and CompanySecretary and review of the Company’s documented policies and procedures.

• We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur byconsidering the key risks impacting the financial statements. We identified a fraud risk with respect to the incomplete or inaccuraterevenue recognition through incorrect classification of special dividends. Further discussion of our approach is set out in thesection on key audit matters above.

• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Ourprocedures involved review of the reporting to the Directors with respect to the application of the documented policies andprocedures and review of the financial statements to ensure compliance with the reporting requirements of the Company.

A further description of our responsibilities for the audit of the financial statements is located on the FinancialReporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of ourauditor’s report.

Other matters we are required to address

• We were appointed as auditors by the Board of Directors to audit the financial statements of the Company for the period ending30th April 2011 and subsequent financial periods. Our appointment was ratified at the AGM on 2nd August 2011. Our total uninterruptedperiod of engagement is eight years, covering periods from our appointment through to the period ending 30th April 2018.

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• The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent ofthe Company in conducting the audit.

• The audit opinion is consistent with the additional report to the audit committee.

Use of our report

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

Caroline Mercer (Senior Statutory Auditor)for and on behalf of Ernst & Young LLP, Statutory AuditorEdinburgh

7th August 2018

Notes:

1. The maintenance and integrity of the JPMorgan Brazil Investment Trust plc web site is the responsibility of the Directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since theywere initially presented on the web site.

2.Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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Financial Statements

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4 0 | J P M O R G A N B R A Z I L I N V E S T M E N T T R U S T P L C . A N N U A L R E P O R T & F I N A N C I A L S TAT E M E N T S 2 0 1 8

S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E

FOR THE YEAR ENDED 30TH APRIL 2018

2018 2017Revenue Capital Total Revenue Capital Total

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

Gains on investments held at fairvalue through profit or loss 3 — 718 718 — 8,587 8,587

Net foreign currency (losses)/gains — (51) (51) — 2 2Income from investments 4 914 — 914 981 — 981Interest receivable and similar income 4 5 — 5 2 — 2

Gross return 919 667 1,586 983 8,589 9,572Management fee 5 (226) — (226) (226) — (226)Other administrative expenses 6 (304) — (304) (294) — (294)

Net return on ordinary activitiesbefore finance costs and taxation 389 667 1,056 463 8,589 9,052

Finance costs 7 — — — (2) — (2)

Net return on ordinary activitiesbefore taxation 389 667 1,056 461 8,589 9,050

Taxation 8 (68) — (68) (81) — (81)

Net return on ordinary activitiesafter taxation 321 667 988 380 8,589 8,969

Return per share 9 0.95p 1.99p 2.94p 0.96p 21.79p 22.75p

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

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columnsrepresentsupplementary information prepared under guidance issued by the Association of Investment Companies. Net return onordinary activities after taxation represents the profit for the year and also Total Comprehensive Income.

The notes on pages 44 to 58 form an integral part of these financial statements.


F I N A N C I A L S TA T E M E N T S | 4 1

S TAT E M E N T O F C H A N G E S I N E Q U I T Y


Called up Capitalshare Share redemption Other Capital Revenuecapital premium reserve reserve reserves reserve1 Total£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 30th April 2016 617 16,149 13 34,097 (27,842) 746 23,780 Repurchase of shares into Treasury — — — (7,218) — — (7,218)Net return from ordinary activities — — — — 8,589 380 8,969 Dividend paid in the year (note 10) — — — — — (202) (202)

At 30th April 2017 617 16,149 13 26,879 (19,253) 924 25,329 Repurchase of shares into Treasury — — — (397) — — (397)Net return from ordinary activities — — — — 667 321 988Dividend paid in the year (note 10) — — — — — (270) (270)At 30th April 2018 617 16,149 13 26,482 (18,586) 975 25,650

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



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S TAT E M E N T O F F I N A N C I A L P O S I T I O N

AT 30TH APRIL 2018

2018 2017Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 11 25,295 24,550

Current assets 12Debtors 134 163Cash and cash equivalents 316 705

450 868Creditors: amounts falling due within one yearCreditors 13 (95) (89)

Net current assets 355 779

Total assets less current liabilities 25,650 25,329

Net assets 25,650 25,329

Capital and reserves Called up share capital 14 617 617Share premium 15 16,149 16,149Capital redemption reserve 15 13 13Other reserve 15 26,482 26,879Capital reserves 15 (18,586) (19,253)Revenue reserve 15 975 924

Shareholders’ funds 25,650 25,329

Net asset value per share 16 76.5p 74.2p

The financial statements on pages 40 to 58 were approved by the Directors and authorised for issue on 7th August 2018 and are signedon their behalf by:

Victor Bulmer-ThomasDirector


Company registration number: 7141630.



S TAT E M E N T O F C A S H F L OW S


2018 2017Notes £’000 £’000

Net cash outflow from operations before dividends and interest 17 (539) (537)Dividends received 816 915 Interest received 6 1 Interest paid — (2)

Net cash inflow from operating activities 283 377

Purchases of investments (10,829) (13,259)Sales of investments 10,852 20,283Settlement of foreign currency contracts (28) 27

Net cash (outflow)/inflow from investing activities (5) 7,051

Dividend paid (270) (202)Repurchase of shares into Treasury (397) (7,218)

Net cash outflow from financing activities (667) (7,420)

(Decrease)/increase in cash and cash equivalents (389) 8

Cash and cash equivalents at start of year 705 697Cash and cash equivalents at end of year 316 705

(Decrease)/increase in cash and cash equivalents (389) 8

Cash and cash equivalents consist of:Cash and short term deposits 75 596Cash held in JPMorgan US Dollar Liquidity Fund 241 109

Total 316 705



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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S


1. Accounting policies

(a) Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fairvalue, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice (‘UK GAAP’),including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and with the Statement ofRecommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the ‘SORP’) issued bythe Association of Investment Companies in November 2014, and updated in February 2018.

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

The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 22 of theDirectors’ Report form part of these financial statements.

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

(b) Valuation of investments

The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income andcapital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordancewith a documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors.Accordingly, upon initial recognition the investments are designated by the Company as ‘held at fair value through profit or loss’.They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which arewritten off to capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bidprices for investments traded in active markets. For investments which are not traded in active markets, unlisted and restrictedinvestments, the Board takes into account the latest traded prices, other observable market data and asset values based on thelatest management accounts.

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

(c) Accounting for reserves

Gains and losses on sales of investments including the related foreign exchange gains and losses, realised gains and losses onforeign currency cash balances and loans, realised gains and losses on foreign currency contracts, and any other capital charges,are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Gains and losses on sales ofinvestments’.

Increases and decreases in the valuation of investments held at the year end including the related foreign exchange gains andlosses, plus unrealised gains and losses on foreign currency contracts or foreign currency loans are included in the Statement ofComprehensive Income and dealt with in capital reserves within ‘Investment holding gains and losses’.

(d) Income

Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend iscapital in nature, in which case it is included in capital.

Overseas dividends are included gross of any withholding tax.

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

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

Deposit and liquidity fund interest receivable is taken to revenue on an accruals basis.




(e) Expenses

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

Expenses incidental to the purchase of an investment are charged to capital and those incidental to the sale are deducted fromthe sale proceeds and then recognised in capital alongside the realised gain or loss on the investment. These expenses arecommonly referred to as transaction costs and comprise brokerage commission and stamp duty. Details of transaction costs aregiven in note 11 on page 50.

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

(f) Financial instruments

Cash and cash equivalents may comprise cash including demand deposits which are readily convertible to a known amount ofcash and are subject to an insignificant risk of change in value.

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

(g) Taxation

Current tax is provided at the amounts expected to be paid or received.

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

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

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

(h) Value Added Tax (‘VAT’)

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

(i) Foreign currency

The Company is required to identify its functional currency, being the currency of the primary economic environment in whichthe Company operates.

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

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

Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included in the Statementof Comprehensive Income as an exchange gain or loss in revenue or capital, depending on whether the gain or loss is ofa revenue or capital nature.

(j) Dividends payable

Dividends are included in the financial statements in the year in which they are approved by shareholders.

(k) Share issue costs

The costs of issuing shares are charged against any premium received on those shares.


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1. Accounting policies continued

(l) Repurchase of shares to hold in Treasury

The cost of repurchasing shares into Treasury, including the related stamp duty and transaction costs, is charged to the ‘Otherreserve’ and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade datebasis. Where shares held in Treasury are subsequently cancelled, the nominal value of those shares is transferred out of called upshare capital and into the capital redemption reserve.

Should shares held in Treasury be reissued, the sales proceeds up to the amount of the purchase price of those shares will betransferred to capital reserves. The excess of the sales proceeds over the purchase price will be transferred to share premium.

2. Significant accounting judgements, estimates and assumptions

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

The Directors do not believe that any significant accounting judgements or estimates have been applied to this set of financialstatements, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within thenext financial year.

3. Gains on investments held at fair value through profit or loss

2018 2017£’000 £’000

Gains on investments held at fair value through profit or loss based on historic cost 414 1,502Amounts recognised in investment holding gains and losses in the previous year in

respect of investments sold during the year (694) 2,213

Realised (losses)/gains on sales of investment based on carrying value at the previous balance sheet date (280) 3,715

Net movement in investment holding gains 1,009 4,892Other capital charges (11) (20)

Total capital gains on investments held at fair value through profit or loss 718 8,587

4. Income

2018 2017£’000 £’000

Income from investmentsOverseas dividends 914 981

914 981

Interest receivable and similar incomeDeposit interest 4 —Interest from liquidity fund 1 2

5 2

Total income 919 983




5. Management fee2018 2017

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

Management fee 226 — 226 226 — 226

Details of the management fee are given in the Directors’ Report on page 18.

As discussed in the Business review on page 18, the management fee charged has been reduced to the extent necessary toensure the Company’s Ongoing Charges ratio does not exceed 2%. The management fee was reduced by £36,220 (2017: £34,000).

6. Other administrative expenses

2018 2017£’000 £’000

Administration expenses 147 155Directors’ remuneration1 83 82Savings scheme costs2 39 21Auditors’ remuneration for audit services3 27 26Depositary fees 8 10

304 294

1 Full disclosure is given in the Directors’ Remuneration Report on pages 27 and 28.2 These amounts were payable to the Manager for the administration of savings scheme products.3 Fees payable to the Company’s auditor for the audit of the Company’s annual accounts. No non-audit services were provided during the year (2017: nil).

7. Finance Costs2018 2017

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

Interest payable on overdrafts — — — 2 — 2

8. Taxation

(a) Analysis of tax charge in the year 2018 2017Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Overseas withholding tax 68 — 68 81 — 81

Current tax charge for the year 68 — 68 81 — 81

Certain components of dividend distributions paid by Brazilian companies are subject to withholding tax.


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8. Taxation continued

(b) Factors affecting total tax charge for the year

The tax charge for the year is lower (2017: lower) than the Company’s applicable rate of corporation tax of 19.00% (2017: 19.92%)The factors affecting the total tax charge for the year are as follows:

2018 2017Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000

Net return on ordinary activitiesbefore taxation 389 667 1,056 461 8,589 9,050

Net return on ordinary activities before taxation multiplied by theapplicable rate of corporation tax of19.00% (2017: 19.92%) 74 127 201 92 1,711 1,803

Effects of:Non taxable capital gains — (127) (127) — (1,711) (1,711)Non taxable overseas dividends (80) — (80) (95) — (95)Unutilised expenses carried forward to

future periods 20 — 20 3 — 3 Overseas withholding tax 68 — 68 81 — 81Double taxation relief expensed (14) — (14) — — —

Total tax charge for the year 68 — 68 81 — 81

(c) Deferred taxation

The Company has an unrecognised deferred tax asset of £452,000 (2017: £426,000) based on unutilised expenses of £2,659,000(2017: £2,534,000) and on a prospective corporation tax rate of 17% (2017: 17%). The UK corporation tax rate is enacted to fall to17% which is effective from 1st April 2020. The deferred tax asset has arisen due to the cumulative excess of deductible expensesover taxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in theforeseeable future and therefore no asset has been recognised in the financial statements.

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 for deferred tax on any capital gains or losses arising on the revaluation ordisposal of investments.

9. Return per share

2018 2017£’000 £’000

Revenue return 321 380Capital return 667 8,589

Total return 988 8,969

Weighted average number of shares in issue during the period 33,601,224 39,423,033

Revenue return per share 0.95p 0.96pCapital return per share 1.99p 21.79p

Total return per share 2.94p 22.75p




10. Dividends

(a) Dividends paid and proposed

2018 2017£’000 £’000

2017 dividend paid of 0.80p (2016: 0.50p) per share 270 202

Dividend proposed of 0.80p (2017: 0.80p) per share 268 273

All dividends paid and declared in the period have been funded from the Revenue Reserve.

The final dividend proposed in respect of the year ended 30th April 2017 amounted to £273,000. However the actual paymentamounted to £270,000 due to shares repurchased and held in Treasury, between the date at which financial statements wereissued and the date on which the dividend was paid.

The final dividend proposed in respect of the year ended 30th April 2018 is subject to shareholder approval at the forthcomingAnnual General Meeting.

This dividend will be reflected in the financial statements for the year ending 30th April 2019.

(b) Dividend for the purposes of Section 1158 of the Income and Corporation Tax Act 2010 (‘Section 1158’)

The requirement of Section 1158 of the Income and Corporation Tax Act 2010 are considered on the basis of dividends proposedin respect of the financial year, shown below. The revenue available for distribution by way of dividend for the year is £321,000(2017: £380,000). The revenue reserve after payment of the final dividend will amount to £707,000 (2017: £654,000).

2018 2017£’000 £’000

Final dividend of 0.80p (2017: 0.80p) per share 268 273

Minimum dividend required for s1158 purposes 171 233

11. Investments

2018 2017£’000 £’000

Investments listed on a recognised stock exchange 25,295 24,550

Opening book cost 20,670 26,229Opening investment holding gains/(losses) 3,880 (3,225)

Opening valuation 24,550 23,004

Movements in the year:Purchases at cost 10,829 13,259Sales proceeds (10,813) (20,320)Realised (losses)/gains on sales of investments based on the carrying value at the

previous balance sheet date (280) 3,715Net movement in investment holding gains 1,009 4,892

Closing valuation 25,295 24,550

Closing book cost 21,100 20,670Closing investment holding gains 4,195 3,880

Total investments held at fair value through profit or loss 25,295 24,550


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11. Investments continued

During the year, prior year investment holding gains amounting to £694,000 have been transferred to gains on sales ofinvestments as disclosed in note 3 and 15.

Transaction costs on purchases during the year amounted to £26,000 (2017: £39,000) and on sales during the year amounted to£13,000 (2017: £30,000). These costs comprise mainly brokerage commission.

12. Current assets

Debtors

2018 2017£’000 £’000

Securities sold awaiting settlement — 50Dividends and interest receivable 87 58Other debtors 47 55

134 163

The Directors consider that the carrying amount of debtors approximates to their fair value. No balances are considered to bepast due or impaired as at 30th April 2018 (2017: none).

Cash and cash equivalents

Cash and cash equivalents comprise bank balances, short term deposits and liquidity funds.

The carrying amount of these represents their fair value. Cash balances in excess of a predetermined amount are placed on shortterm deposit at market rates of interest.

13. Creditors: amounts falling due within one year

2018 2017£’000 £’000

Other creditors 95 89

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

14. Called up share capital

2018 2017£’000 £’000

Ordinary shares – allotted and fully paidOpening balance of 34,124,854 (2017: 45,774,854) shares excluding shares held

in Treasury 341 458Repurchase of 600,000 (2017: 11,650,000) shares into Treasury (6) (117)

Subtotal of 33,524,854 (2017: 34,124,854) shares of 1p each excluding shares held in Treasury 335 341

28,204,044 (2017: 27,604,044) shares held in Treasury 282 276

Closing balance of 61,728,898 (2017: 61,728,898) shares of 1p each including shares held in Treasury 617 617

Further details of transactions in the Company’s shares are given in the Business Review on page 14.




Share capital transactions

During the year, the Company repurchased 600,000 (2017: 11,650,000) shares into Treasury for a total consideration of £397,000(2017: £7,218,000). The reason for the purchases was to seek to manage the volatility and absolute level of the share pricediscount to net asset value per share.

15. Capital and reserves Capital reserves

Capital Gains/(losses) Investment Called up Share redemption Other on sales of holding Revenue share capital premium reserve reserve1 investments gains/(losses) reserve2 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Opening balance 617 16,149 13 26,879 (23,133) 3,880 924 25,329 Net foreign currency losses — — — — (51) — — (51)Realised losses on sales of investments

based on the carrying value atthe previous year-end date — — — — (280) — — (280)

Net movement in investment holding gains — — — — — 1,009 — 1,009 Transfer on disposal of investments — — — — 694 (694) — —Repurchase of shares into Treasury — — — (397) — — — (397)Other capital charges — — — — (11) — — (11)Revenue return for the year — — — — — — 321 321Dividend paid in the year — — — — — — (270) (270)

Closing balance 617 16,149 13 26,482 (22,781) 4,195 975 25,650

1 The share premium account was cancelled in July 2010 and the ‘Other reserve’ created for the purposes of financing share buybacks.2 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.

16. Net asset value per share

2018 2017

Net assets (£’000) 25,650 25,329Number of shares in issue 33,524,854 34,124,854

Net asset value per share 76.5p 74.2p

17. Reconciliation of total return on ordinary activities before finance costs and taxation to net cashoutflow from operations before dividends and interest

2018 2017£’000 £’000

Net return on ordinary activities before finance costs and taxation 1,056 9,052 Less capital return on ordinary activities before finance costs and taxation (667) (8,589)(Increase)/decrease in accrued income and other debtors (21) 23 Increase/(decrease) in accrued expenses 6 (1)Overseas withholding tax (68) (81)Dividends received (816) (915)Interest received (6) (1)Realised loss on foreign currency transactions (16) (12)Realised loss on liquidity fund (7) (13)

Net cash outflow from operations before dividends and interest (539) (537)


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18. Contingent liabilities and capital commitments

At the year end date there were no contingent liabilities or capital commitments (2017: nil).

19. Transactions with the Manager and related parties

Details of the management contract are set out in the Directors’ Report on page 18. The management fee payable to theManager for the year was £226,000 (2017: £226,000) and a re-imbursement by the manager to the Company of £11,000 (2017:£nil) was outstanding at the year end.

During the year £39,000 (2017: £21,000) was payable to the Manager for the administration of savings scheme products, of which£7,000 (2017: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 47 are safe custody fees amounting to £18,000 (2017: £15,000) payable toJPMorgan Chase of which £6,000 (2017: £3,000) was outstanding at the year end.

The Company also holds cash in JPMorgan US Dollar Liquidity Fund, managed by JPMF. At the year end this was valued at£0.24 million (2017: £0.11 million). Income amounting to £1,000 (2017: £1,000) was receivable during the year of which £nil(2017: nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £11,000 (2017: £20,000) were payable to JPMorgan Chase during the yearof which £4,000 (2017: £4,000) was outstanding at the year end.

At the year end, total bank balance of £75,000 (2017: £596,000) was held with JPMorgan Chase Bank N.A. A net amount ofinterest of £4,000 (2017: £nil) was receivable by the Company during the year from JPMorgan Chase Bank N.A. of which £nil(2017: £nil) was outstanding at the year end.

Full details of Directors’ remuneration and shareholdings can be found on page 28 and in note 6 on page 47.

20. Disclosures regarding financial instruments measured at fair value

The fair value hierarchy disclosures required by FRS 102 are given below.

The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio andderivative financial instruments.

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

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

(2) Inputs other than quoted prices included within Level 1 that are observable (i.e.: developed using market data) for theasset or liability, either directly or indirectly

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

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

Details of the valuation techniques used by the Company are given in note 1(b) on page 44.

The following table sets out the fair value measurements using the FRS 102 hierarchy at 30th April.

2018 2017Assets Liabilities Assets Liabilities £’000 £’000 £’000 £’000

Level 1 25,295 — 24,550 —

Total 25,295 — 24,550 —

There were no transfers between Levels 1, 2 or 3 during the year (2017: nil).




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

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

These financial risks include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and creditrisk. The Directors’ policy for managing these risks is set out below. The Company Secretary, in close cooperation with the Boardand 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 out below,have not changed from those applying in the comparative year.

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

– investments in equity shares and ADRs of Brazilian focused companies which are held in accordance with the Company’sinvestment objective; and

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

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in marketprices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. Information to enable anevaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together withsensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies haveremained unchanged from those applying in the comparative year. The Manager assesses the exposure to market risk whenmaking each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on anongoing basis.

(i) Currency risk

Most 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

The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board, whichmeets on at least four occasions each year. The Manager measures the risk to the Company of the foreign currencyexposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchangeto which the Company’s assets, liabilities, income and expenses are exposed. Foreign currency borrowing may be used tolimit the Company’s exposure to anticipated changes in exchange rates which might otherwise adversely affect the sterlingvalue of the portfolio of investments. This borrowing is limited to currencies and amounts commensurate with the assetexposure to those currencies. Income denominated in foreign currencies is converted to sterling on receipt. The Companymay use short term forward currency contracts to manage working capital requirements. It is currently not the Company’spolicy to hedge against foreign currency risk.

Foreign currency exposure

The fair value of the Company’s monetary items that have foreign currency exposure at 30th April 2018 are shown below.Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency, they have beenincluded separately in the analysis so as to show the overall level of exposure.


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

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

Foreign currency exposure continued2018

US Brazilian Mexican ChileanDollar Real Peso Peso Total £’000 £’000 £’000 £’000 £’000

Current assets 297 78 — 1 376

Foreign currency exposure on net monetaryitems 297 78 — 1 376

Investments held at fair value through profitor loss 7,239 17,819 237 — 25,295

Total net foreign currency exposure 7,536 17,897 237 1 25,671

2017US Brazilian Mexican Chilean

Dollar Real Peso Peso Total £’000 £’000 £’000 £’000 £’000

Current assets 699 53 8 — 760

Foreign currency exposure on net monetaryitems 699 53 8 — 760

Investments held at fair value through profitor loss 4,823 19,304 423 — 24,550

Total net foreign currency exposure 5,522 19,357 431 — 25,310

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

Foreign currency sensitivity

The following table illustrates the sensitivity of return after taxation for the year and net assets with regard to the Company’smonetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’smonetary currency financial instruments held at each balance sheet date and the income receivable in foreign currency andassumes a 10% (2017: 10%) appreciation or depreciation in sterling against the US dollar, Brazilian Real, Mexican Peso andChilean Peso to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility ofexchange rates during the year. Please refer to the other price risk sensitivity for the sensitivity of investments.

2018 2017If sterling If sterling If sterling If sterling

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

Statement of Comprehensive Income – return aftertaxation

Revenue return (91) 91 (98) 98Capital return (38) 38 (76) 76

Total return after taxation for the year (129) 129 (174) 174

Net assets (129) 129 (174) 174

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, the interest payable on variable ratecash borrowings and the fair value of fixed interest rate financial instruments during the year and at year end.

Management of interest rate risk

The Company aims to be fully invested in normal market conditions, so exposure to interest rate risk will be limited. Shortterm borrowings may be used if required.

Interest rate exposure

The Company had no exposure to fixed interest rate financial instruments at the year end (2017: none).

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

2018 2017£’000 £’000

Exposed to floating interest rates:Cash and short term deposits 75 596JPMorgan US Dollar Liquidity Fund 241 109

Total exposure 316 705

Interest receivable on cash balances is at a margin below LIBOR respectively (2017: same).

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2017: 1%)increase or decrease in interest rates with regard to the Company’s monetary financial assets and financial liabilities. Thislevel of change is considered to be a reasonable illustration based on observation of current market conditions. Thesensitivity analysis is based on the Company’s monetary financial instruments held at the balance sheet date, with all othervariables held constant.

2018 20171% increase 1% decrease 1% increase 1% decrease

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


Revenue return 3 (3) 7 (7)

Total return after taxation for the year 3 (3) 7 (7)

Net assets 3 (3) 7 (7)

In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure tointerest rate changes due to fluctuations in the level of cash balances.

(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 equity investments or related securities.

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.


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

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

Other price risk exposure

The Company’s total exposure to changes in market prices at 30th April comprises its holdings in equity investments asfollows:

2018 2017£’000 £’000

Investments held at fair value through profit or loss 25,295 24,550

In the opinion of the Directors, the above data is broadly representative of the exposure to other price risk during thecurrent and comparative year.

Concentration of exposure to other price risk

An analysis of the Company’s investments is given on page 11. This shows that substantially all of the investments’ value isin Brazil. Accordingly there is a concentration of exposure to that country. However, it should be noted that an investmentmay not be entirely exposed to the economic conditions in its country of domicile or of listing.

Other price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase ordecrease of 10% (2017: 10%) in the market value of equity investments. 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, adjusting for changes in the management fee but with all other variables held constant.

2018 201710% increase 10% decrease 10% increase 10% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000


Revenue return (25) 25 (25) 25Capital return 2,530 (2,530) 2,455 (2,455)

Total return after taxation for the year 2,505 (2,505) 2,430 (2,430)

Net assets 2,505 (2,505) 2,430 (2,430)

(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 during the year and at the year end.

Management of the risk

Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, the liquidity of which innormal markets is frequently tested by the investment managers and which can be sold to meet funding requirements ifnecessary. Short term flexibility is achieved through the use of overdraft facilities.

Liquidity risk exposure

All financial liabilities stated in note 13 are repayable on demand to the value they are stated.




(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 dealing

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

Cash and cash equivalents

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

Exposure to JPMorgan Chase

JPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The Company’s assets are segregated from JPMorganChase’s own trading assets. Therefore these assets are designed to be protected from creditors in the event that JPMorgan Chasewere to cease trading. The Depositary, The Bank of New York Mellon (International) Limited, is responsible for the safekeeping ofall custodial assets of the Company and for verifying and maintaining a record of all other assets of the Company. However, noabsolute guarantee can be given on the protection of all the assets of the Company.

Credit risk exposure

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

(d) Fair values of financial assets and financial liabilities

All financial assets and liabilities are either included in the Statement of Financial Position at fair value or the carrying amount isa reasonable approximation of fair value.

22. Capital management policies and procedures

The Company’s capital structure comprises the following:

2018 2017£’000 £’000

Equity:Called up share capital 617 617Reserves 25,033 24,712

Total capital 25,650 25,329

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

The Company is not subject to my externally imposed capital requirements.

The Board’s policy is to utilise gearing when the Manager believes it appropriate to do so, up to a maximum of 20% geared at thetime of drawdown.




22. Capital management policies and procedures continued

2018 2017£’000 £’000

Investments held at fair value through profit or loss 25,295 24,550

Net assets 25,650 25,329

Gearing/(net cash) (1.4)% (3.1)%

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

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

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

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

– the level of dividend distributions in excess of that which is required to be distributed.

23. Subsequent events

The Directors have evaluated the period since the year end and have not identified any subsequent events that requiredisclosure.


Regulatory Disclosures

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R E G U L A T O R Y D I S C L O S U R E S

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

Leverage

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

The Company’s maximum and actual leverage levels at 30th April 2018 are shown below:

Gross Method Commitment Method

Leverage ExposureMaximum limit 200% 200%Actual 100% 100%

JPMorgan Funds Limited (the ‘Management Company’) is the authorised manager of JPMorgan Brazil Investment Trust plc (the‘Company’) and is part of the J.P. Morgan Chase & Co. group of companies. In this section, the terms ‘J.P. Morgan’ or ‘Firm’ refer to thatgroup, and each of the entities in that group globally, unless otherwise specified.

This section of the annual report has been prepared in accordance with the Alternative Investment Fund Managers’ Directive (the‘AIFMD’), the European Commission Delegated Regulation supplementing the AIFMD, and the ‘Guidelines on sound remunerationpolicies’ issued by the European Securities and Markets Authority under the AIFMD.

This section has also been prepared in accordance with the relevant provisions of the Financial Conduct Authority Handbook(FUND 3.3.5).

Remuneration Policy

A summary of the Remuneration Policy currently applying to the Management Company (the ‘Remuneration Policy Statement’) canbe found at https://am.jpmorgan.com/gb/en/asset-management/gim/per/legal/emea-remuneration-policy. This Remuneration PolicyStatement includes details of how remuneration and benefits are calculated, including the financial and non-financial criteria used toevaluate performance, the responsibilities and composition of the Firm’s Compensation and Management Development Committee, andthe measures adopted to avoid or manage conflicts of interest. A copy of this policy can be requested free of charge from theManagement Company.

The Remuneration Policy applies to all employees of the Management Company, including individuals whose professional activities mayhave a material impact on the risk profile of the Management Company or the Alternative Investment Funds it manages (‘AIFMDIdentified Staff’). The AIFMD Identified Staff include members of the Board of the Management Company (the ‘Board’), seniormanagement, the heads of relevant Control Functions, and holders of other key functions. Individuals are notified of their identificationand the implications of this status on at least an annual basis.

The Board reviews and adopts the Remuneration Policy on an annual basis, and oversees its implementation, including theclassification of AIFMD Identified Staff. As at 31st December 2017, the Board last reviewed and adopted the Remuneration Policy inJune 2017 with no material changes and was satisfied with its implementation.

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Quantitative Disclosures

The table below provides an overview of the aggregate 2017 total remuneration paid to staff of the Management Company and thenumber of beneficiaries. These figures include the remuneration of all staff of JP Morgan Asset Management (UK) Ltd (the relevantemploying entity) and the number of beneficiaries, both apportioned to the Management Company on an AUM weighted basis.

Due to the Firm’s operational structure, the information needed to provide a further breakdown of remuneration attributable to theCompany is not readily available and would not be relevant or reliable. However, for context, the Management Company manages32 Alternative Investment Funds and 2 UCITS (with 38 sub-funds), with a combined AUM as at 31st December 2017 of £13,204 millionand £15,004 million respectively.

Fixed Variable Total Number of remuneration remuneration remuneration beneficiaries

All staff ($’000s) 14,845 9,801 24,646 117

The aggregate 2017 total remuneration paid to AIFMD Identified Staff was USD 65,309,308, of which USD 7,505,126 relates to SeniorManagement and USD 57,804,181 relates to other Identified Staff.

SECURITIES FINANCING TRANSACTIONS REGULATION (‘SFTR’) DISCLOSURES (UNAUDITED)

The Company does not engage in Securities Financing Transactions (as defined in Article 3 of Regulation (EU) 2015/2365, securitiesfinancing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing,buy-selling back transactions or sell-buy back transactions and margin lending transactions) or Total Return Swaps. Accordingly,disclosures required by Article 13 of the Regulation are not applicable for the year ended 30th April 2018.

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Shareholder Information

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N O T I C E O F A N N U A L G E N E R A L M E E T I N G

Notice is hereby given that the eighth Annual General Meeting ofJPMorgan Brazil Investment Trust plc will be held at 60 VictoriaEmbankment, London EC4Y 0JP on Tuesday, 11th September 2018at 2.00 p.m. for the following purposes:

1. To receive the Directors’ Report & Accounts and theAuditor’s Report for the year ended 30th April 2018.

2. To approve the Directors’ Remuneration Policy.

3. To approve the Directors’ Remuneration Report for theyear ended 30th April 2018.

4. To approve a final dividend of 0.80p per Ordinary share.

5. To reappoint Howard Myles as a Director of the Company.

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

Special Business

To consider the following resolutions:

Authority to allot new shares – Ordinary Resolution

7. THAT the Directors of the Company be and they are herebygenerally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors),pursuant to and in accordance with Section 551 of theCompanies Act 2006 (the ‘Act’) to exercise all the powersfor the Company to allot relevant securities (within themeaning of Section 551 of the Act) up to an aggregatenominal amount of £33,524, representing approximately10% of the Company’s issued Ordinary share capital(excluding treasury shares) as at the date of this notice andshall expire at the conclusion of the Annual GeneralMeeting of the Company to be held in 2019, save that theCompany may before such expiry make offers, agreementsor arrangements which would or might require relevantsecurities to be allotted after such expiry and so that theDirectors of the Company may allot relevant securities inpursuance of such offers, agreements or arrangements asif the authority conferred hereby had not expired.

Authority to disapply pre-emption rights on allotment ofshares – Special Resolution

8. THAT subject to the passing of Resolution 7 set out above, theDirectors of the Company be and they are hereby empoweredpursuant to Section 570 and 573 of the Act to allot equitysecurities (within the meaning of Section 560 of the Act) forcash pursuant to the authority conferred by Resolution 7 orby way of sale of Treasury shares as if Section 561(1) of theAct did not apply to any such allotment or sale, provided thatthis power shall be limited to the allotment of equitysecurities for cash up to an aggregate nominal amount of£33,524, representing approximately 10% of the Ordinaryissued share capital (excluding treasury shares) as at the date

of this notice at a price of not less than the Net Asset Valueper share and shall expire at the Company’s Annual GeneralMeeting in 2019, save that the Company may before suchexpiry make offers, agreements or arrangements whichwould or might require equity securities in pursuance of suchoffers, agreements or arrangements as if the powerconferred hereby had not expired.

Authority to repurchase the Company’s shares – SpecialResolution

9. THAT the Company be generally and subject as hereinafterappears unconditionally authorised in accordance withSection 701 of the Companies Act 2006 (the ‘Act’) to makemarket purchases (within the meaning of Section 693 ofthe Act) of its issued Ordinary shares, on such terms and insuch manner as the Directors may from time to timedetermine.

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 5,025,375, or if less,that number of Ordinary shares which is equal to 14.99% ofthe issued share capital (excluding shares held in Treasury)as at the date of the passing of this Resolution;

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

(iii) the maximum price which may be paid for a share shall bean amount equal to the highest of: (a) 105% of the averageof the middle market quotations for a an Ordinary share,taken from and calculated by reference to the LondonStock Exchange Daily Official List for the five business daysimmediately preceding the day on which the share iscontracted to be purchased; or (b) the price of the lastindependent trade; or (c) the highest current independentbid;

(iv) any purchase of shares will be made in the market for cashat prices below the prevailing net asset value per share (asdetermined by the Directors);

(v) the authority hereby conferred shall expire on 10th March2020 unless the authority is renewed at any other generalmeeting prior to such time; and

(vi) the Company may make a contract to purchase Ordinaryshares under the authority and may make a purchase ofordinary shares pursuant to any such contractnotwithstanding such expiry.

By order of the BoardDivya Amin, for and on behalf of JPMorgan Funds Limited, Secretary

10th August 2018

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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 appoint theChairman or another person(s) as your proxy or proxies using theproxy form are set out in the notes to the proxy form. If a voting boxon the proxy form is left blank, the proxy or proxies will exercisehis/their discretion both as to how to vote and whether he/theyabstain(s) from voting. Your proxy must attend the Meeting for yourvote to count. Appointing a proxy or proxies does not preclude youfrom attending the Meeting and voting in person.

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

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

5. To be entitled to attend and vote at the Meeting (and for the purposeof the determination by the Company of the number of votes they maycast), members must be entered on the Company’s register ofmembers as at 6.30 p.m. two business days prior to the Meeting (the‘specified time’). If the Meeting is adjourned to a time not more than48 hours after the specified time applicable to the original Meeting,that time will also apply for the purpose of determining theentitlement of members to attend and vote (and for the purpose ofdetermining the number of votes they may cast) at the adjournedMeeting. If, however, the Meeting is adjourned for a longer periodthen, to be so entitled, members must be entered on the Company’sregister of members as at 6.30 p.m. two business days prior to theadjourned Meeting or, if the Company gives notice of the adjournedMeeting, at the time specified in that notice. Changes to entries on theregister after this time shall be disregarded in determining the rightsof persons to attend or vote at the Meeting or adjourned Meeting.

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

7. A corporation, which is a shareholder, may appoint an individual(s) toact as its representative(s) and to vote in person at the Meeting (seeinstructions given on the proxy form). In accordance with the

provisions of the Companies Act 2006, each such representative mayexercise (on behalf of the corporation) the same powers as thecorporation could exercise if it were an individual member of theCompany, provided that they do not do so in relation to the sameshares. It is therefore no longer necessary to nominate a designatedcorporate representative. Representatives should bring to the Meetingevidence of their appointment, including any authority under which itis signed.

8. Members that satisfy the thresholds in Section 527 of the CompaniesAct 2006 can require the Company to publish a statement on itswebsite setting out any matter relating to: (a) the audit of theCompany’s accounts (including the Auditors’ report and the conduct ofthe audit) that are to be laid before the AGM; or (b) any circumstancesconnected with Auditors of the Company ceasing to hold office sincethe previous AGM, which the members propose to raise at theMeeting. The Company cannot require the members requesting thepublication to pay its expenses. Any statement placed on the websitemust also be sent to the Company’s Auditors no later than the time itmakes its statement available on the website. The business which maybe dealt with at the AGM includes any statement that the Company hasbeen required to publish on its website pursuant to this right.

9. Pursuant to Section 319A of the Companies Act 2006, the Companymust cause to be answered at the AGM any question relating to thebusiness being dealt with at the AGM which is put by a memberattending the Meeting except in certain circumstances, including if it isundesirable in the interests of the Company or the good order of theMeeting or if it would involve the disclosure of confidentialinformation.

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

11. A copy of this notice has been sent for information only to personswho have been nominated by a member to enjoy information rightsunder Section 146 of the Companies Act 2006 (a ‘Nominated Person’).The rights to appoint a proxy can not be exercised by a NominatedPerson: they can only be exercised by the member. However,a Nominated Person may have a right under an agreement betweenhim and the member by whom he was nominated to be appointed as

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a proxy for the Meeting or to have someone else so appointed. Ifa Nominated Person does not have such a right or does not wish toexercise it, he may have a right under such an agreement to giveinstructions to the member as to the exercise of voting rights.

12. In accordance with Section 311A of the Companies Act 2006, thecontents of this notice of meeting, details of the total number 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 received bythe Company after the date of this notice will be available on theCompany’s website www.jpmbrazil.co.uk.

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

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

15. As an alternative to completing a hard copy Form of Proxy/VotingInstruction Form, you can appoint a proxy or proxies electronically byvisiting www.sharevote.co.uk. You will need your Voting ID, Task IDand Shareholder Reference Number (this is the series of numbersprinted under your name on the Form of Proxy/Voting InstructionForm). Alternatively, if you have already registered with EquinitiLimited’s online portfolio service, Shareview, you can submit yourForm of Proxy at www.shareview.co.uk. Full instructions are given onboth websites.

16. As at 6th August 2018 (being the latest business day prior to thepublication of this Notice), the Company’s issued share capital consistsof 33,524,854 Ordinary shares (excluding treasury shares) carryingone vote each. Therefore the total voting rights in the Companyare 33,524,854.

Electronic appointment – CREST members

CREST 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 in theCREST Manual. See further instructions on the proxy form.

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S 6 6 | J P M O R G A N B R A Z I L I N V E S T M E N T T R U S T P L C . A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 8

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES ( ‘APMs’ )

Return to Shareholders (APM)Total return to the shareholder, on a last traded price to last traded price basis, assuming that all dividends received were reinvested,without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.

30th April 30th AprilTotal return calculation Page 2018 2017

Opening share price as at 30th April 4 63.8p 46.4p

Closing share price as at 30th April 4 65.8p 63.8p (a)

Total dividend adjustment factor1 1.011636 1.007968 (b)

Adjusted closing share price (c = a x b) 66.6p 64.3p (c)

Total return to shareholder 4.3% 38.6%

1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the last traded price quotedat the ex-dividend date.

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

30th April 30th AprilTotal return calculation Page 2018 2017

Opening cum-income NAV per share as at 30th April 4 74.2p 51.9p

Closing cum-income NAV per share as at 30th April 4 76.5p 74.2p (a)

Total dividend adjustment factor2 1.009732 1.00741 (b)

Adjusted closing cum-income NAV per share (c = a x b) 77.2p 74.7p (c)

Total return on net assets 4.1% 44.0%

2 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum-income NAV at theex-dividend date.

Benchmark returnTotal return on the benchmark, on a closing-market value to closing-market value basis, assuming that all dividends received werereinvested in the shares of the underlying companies at the time the shares were quoted ex-dividend.

The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company’s investmentuniverse. The Company’s investment strategy does not follow or ‘track’ this index and consequently, there may be some divergencebetween the Company’s performance and that of the benchmark.

Share Price Discount/Premium to Net Asset Value (‘NAV’) per Share (APM)If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount, meaning thereare more sellers than buyers.

The discount is shown as a percentage of the NAV per share. The opposite of a discount is a premium. It is more common for aninvestment trusts’ shares to trade at a discount than at a premium (see page 4).

The Board has adopted a share repurchase policy that seeks to address imbalances in supply of and demand for the Company’s sharesin the market and thereby seeks to manage to volatility and absolute level of the premium or discount to NAV per share at which theCompany’s shares trade. The Board’s intention is to use its share repurchase and issuance powers with the aim of establishinga reasonably stable long term level of premium or discount (see page 20 for further details).

Gearing/Net Cash (APM)Gearing represents the excess amount above shareholder’s funds of total investments, expressed as a percentage of the shareholders’funds. If the amount calculated is negative, this is shown as a ‘net cash’ position.

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Gearing calculation 2018 2017 Page £’000 £’000

Investments held at fair value through profit or loss 49 25,295 24,550 (a)

Net assets � 25,650 25,329 (b)

Gearing/(net cash) (c = (a / b) - 1) (1.4)% (3.1)% (c)

Ongoing Charges (APM)The ongoing charges represent the Company’s management fee and all other operating expenses excluding finance costs payable,expressed as a percentage of the average of the daily cum-income net assets during the year and is calculated in accordance withguidance issued by the Association of Investment Companies.

Ongoing charges calculation 2018 2017 Page £’000 £’000

Management fee 47 226 226

Other administrative expenses 47 304 294

Total management fee and other administrative expenses 541 520 (a)

Average daily cum-income net assets 26,443 26,092 (b)

Ongoing Charges (c = a / b) 2.00% 2.00% (c)

Performance attributionAnalysis of how the Company achieved its recorded performance relative to its benchmark (see page 9).

Performance Attribution Definitions:

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

Stock/Sector selectionMeasures the effect of investing in securities/sectors to a greater or lesser extent than their weighting in the benchmark, or ofinvesting in securities which are not included in the benchmark.

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

Management fee/Other expensesThe payment of fees and expenses reduces the level of total assets, and therefore has a negative effect on relative performance.

Share repurchasesMeasures the positive effect on relative performance of repurchase the Company’s shares for cancellation, or repurchases intoTreasury, at a discount to their net asset value (‘NAV’) per share.

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES ( ‘APMs’ )

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W H E R E T O B U Y J . P . M O R G A N I N V E S T M E N T T R U S T S

Avoid investment fraud1 Reject cold calls

If you’ve received unsolicited contact about an investment opportunity, chances are it’s a high risk investment or a scam. You should treat the call with extreme caution. The safest thing to do is to hang up.

2 Check the FCA Warning List The FCA Warning List is a list of �rms and individuals we know are operating without our authorisation.

3 Get impartial advice Think about getting impartial �nancial advice before you hand over any money. Seek advice from someone unconnected to the �rm that has approached you.

Report a ScamIf you suspect that you have been approached by fraudsters please tell the FCA using the reporting form at www.fca.org.uk/consumers/report-scam-unauthorised-�rm. You can also call the FCA Consumer Helpline on 0800 111 6768

If you have lost money to investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk

Find out more at www.fca.org.uk/scamsmart

Investment scams are designed to look like genuine investmentsSpot the warning signs

Have you been:

• contacted out of the blue• promised tempting returns

and told the investment is safe• called repeatedly, or• told the offer is only available

for a limited time?

If so, you might have been contacted by fraudsters. Remember: if it sounds too good to be true,

it probably is!

Be ScamSmart

You can invest in a J.P. Morgan investment trust through thefollowing:

1. Directly from J.P. Morgan

Investment Account

The Company’s shares are available in the J.P. Morgan InvestmentAccount, which facilitates both regular monthly investments andoccasional lump sum investments in the Company’s ordinaryshares. Shareholders who would like information on theInvestment Account should call J.P. Morgan Asset Managementfree on 0800 20 40 20 or visit its website atam.jpmorgan.co.uk/investor

Stocks & Shares Individual Savings Accounts (ISA)

The Company’s shares are eligible investments within aJ.P. Morgan ISA. For the 2018/19 tax year, from 6th April 2018and ending 5th April 2019, the total ISA allowance is £20,000.The shares are also available in a J.P. Morgan Junior ISA. Detailsare available from J.P. Morgan Asset Management free on0800 20 40 20 or via its website at am.jpmorgan.co.uk/investor

2. Via a third party provider

Third party providers include:

Please note this list is not exhaustive and the availability ofindividual trusts may vary depending on the provider. Thesewebsites are third party sites and J.P. Morgan Asset Managementdoes not endorse or recommend any. Please observe each site’sprivacy and cookie policies as well as their platform chargesstructure.

3. Through a professional adviser

Professional advisers are usually able to access the products of allthe companies in the market and can help you find an investmentthat suits your individual circumstances. An adviser will let youknow the fee for their service before you go ahead. You can findan adviser at unbiased.co.uk

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

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

AJ BellAlliance Trust SavingsBarclays StockbrokersBestinvestCharles Stanley DirectFundsNetwork

Hargreaves LansdownInteractive InvestorJames BrearleyJames HaySelftradeThe Share Centre

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I N F O R M A T I O N A B O U T T H E C O M P A N Y

HistoryJPMorgan Brazil Investment Trust plc is an investment trust which was launched inApril 2010 to provide investors with exposure to Brazilian invested equitiesthrough a closed-ended structure.

Company NumbersCompany registration number: 7141630

Ordinary SharesLondon Stock Exchange ISIN code: GB00B602HS43 Bloomberg code: JPBSEDOL B602HS4LEI: 5493002T5BE3YCTKTE20

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

The Company’s shares are listed on the London Stock Exchange. The market priceis shown daily in the Financial Times, The Times, The Daily Telegraph, TheScotsman and on the JPMorgan website at www.jpmbrazil.co.uk, where the shareprice is updated every fifteen minutes during trading hours.

Websitewww.jpmbrazil.co.uk

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

Manager and Company SecretaryJPMorgan Funds LimitedCompany’s Registered Office60 Victoria EmbankmentLondon EC4Y 0JPTelephone: 020 7742 4000

For company secretarial and administrative matters, please contact Divya Amin atthe above address.

DepositaryThe Bank of New York Mellon (International) Limited1 Canada SquareLondon E14 5AL

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

RegistrarsEquiniti LimitedReference 3533Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0371 384 2814

Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to the helpline will costno more than a national rate call to a 01 or 02 number. Callers from overseasshould dial +44 121 415 0225.

Notifications of changes of address and enquiries regarding share certificates ordividend cheques should be made in writing to the Registrar quoting reference1090. Registered shareholders can obtain further details on their holdings onthe internet by visiting www.shareview.co.uk.

Independent AuditorErnst & Young LLPStatutory AuditorAtria One144, Morrison StreetEdinburgh EH3 8EX

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

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

FINANCIAL CALENDAR

Financial year end 30th April

Final results announced July

Half year end 31st October

Half year results announced December

Annual General Meeting September

A member of the AIC



www.jpmbrazil.co.uk

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

GB A103 | 08/18

J.P. MORGAN HELPLINE

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


Documents

JPMorgan Brazil Investment Trust plc · 2018-08-08 · The Company’s sixth AGM will be held on 11th September 2018 at 2.00 p.m. at 60 Victoria Embankment, London EC4Y 0JP. The meeting