JPMorgan European Investment Trust plc...Growth and Income share classes varied between 3.4% and 11.2% for the Growth shares and0.7% and 7.4% on the Income shares. At the 31st March

JPMorgan European Investment Trust plcAnnual Report & Accounts for the year ended 31st March 2016

The Company has two share classes, each with distinctinvestment policies, objectives and underlying asset pools.Shareholders in either of the Company’s two share classes areable to convert some or all of their shares into shares of theother class without such conversion being treated, undercurrent law, as a disposal for UK capital gains tax purposes. Seepage 84 for further details of the Company’s capital structureand conversion between share classes.

Objectives Growth PortfolioThe investment objective of the Growth portfolio is to providecapital growth and a rising share price over the longer termfrom Continental European investments by consistentout-performance of the benchmark and taking carefullycontrolled risks through an investment method that is clearlycommunicated to shareholders.

Income PortfolioThe investment objective of the Income portfolio is to providea growing income together with the potential for long termcapital growth by investing in a portfolio of investments thatis diversified amongst countries, sectors and marketcapitalisations within the universe of Continental Europeancompanies.

Investment Policies – To invest in a diversified portfolio of investments in thestockmarkets of Continental Europe.

– To manage liquidity and borrowings to increase returns toshareholders.

Growth Portfolio– To emphasise capital growth rather than income, with thelikely result that the level of dividends will fluctuate.

Income Portfolio– To provide a growing income together with the potential forlong-term capital growth.

See page 33 for details of the Company’s InvestmentRestrictions and Guidelines

Benchmarks Growth and IncomeThe MSCI Europe ex UK Index (total return) in sterling terms.

Capital Structure At 31st March 2016, the Company’s share capital comprised77,833,926 Growth shares and 93,884,791 Income shares.

A share voting number is attributed to each of the Growth andIncome shares so that the votes available to each of the twoclasses of shares equates to the proportion of the net assetvalue of the Company that the Growth and Income poolsrepresent. See page 41 for details of the share voting number.

Management CompanyThe Company employs JPMorgan Funds Limited (‘JPMF’) as itsAlternative Investment Fund Manager. JPMF delegates themanagement of the Company’s portfolio to JPMorgan AssetManagement (UK) Limited (‘JPMAM’).

FCA regulation of ‘non-mainstream pooledinvestments’The Company currently conducts its affairs so that the sharesissued by JPMorgan European Investment Trust plc can berecommended by Independent Financial Advisers to ordinaryretail investors in accordance with the FCA’s rules in relation tonon-mainstream investment products and intends to continueto do so for the foreseeable future.

The shares are excluded from the FCA’s restrictions which applyto non-mainstream investment products because they areshares in an investment trust.

AICThe Company is a member of the Association of InvestmentCompanies.

WebsiteThe Company’s website, which can be found atwww.jpmeuropean.co.uk, includes useful information on theCompany, such as daily prices, factsheets and current andhistoric half year and annual reports.

Features

1

Contents

FINANCIAL RESULTS

2 Total Returns (includes Dividends Reinvested)

STRATEGIC REPORT

4 Chairman’s Statement

7 Investment Managers’ Report

GROWTH SHARES

12 Summary of Results

13 Ten Year Financial Record

14 Ten Largest Equity Investments

15 Portfolio Analyses

17 List of Investments

20 Statement of Comprehensive Income

21 Statement of Financial Position

INCOME SHARES

22 Summary of Results

23 Financial Record Since Inception

24 Ten Largest Equity Investments

25 Portfolio Analyses

27 List of Investments



33 Business Review

GOVERNANCE

38 Board of Directors

40 Directors’ Report

42 Corporate Governance

47 Directors’ Remuneration Report

50 Statement of Directors’ Responsibilities

51 INDEPENDENT AUDITOR’S REPORT

FINANCIAL STATEMENTS


58 Statement of Changes in Equity


60 Statement of Cash Flows

61 Notes to the Financial Statements

REGULATORY DISCLOSURES

83 Alternative Investment Fund Managers Directive Disclosures

SHAREHOLDER INFORMATION

84 Capital Structure and Conversion between Share Classes

85 Notice of Annual General Meeting

88 Glossary of Terms and Definitions

89 Where to buy J.P. Morgan Investment Trusts

91 Information about the Company

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2 JPMORGAN EUROPEAN INVESTMENT TRUST PLC. ANNUAL REPORT & ACCOUNTS 2016

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Financial Results

TOTAL RETURNS (INCLUDES DIVIDENDS REINVESTED)

GROWTH SHARE CLASS

–5.3%Benchmark return3

(2015: +7.0%)

–8.8%Return to shareholders1

(2015: +14.5%)

5.85pOrdinary Dividend(2015: 6.70p)

–1.6%Return on net assets2,4

(2015: +7.9%)

Long Term Performance (total returns)FOR PERIODS ENDED 31ST MARCH 2016

1 Source: Morningstar.2 Source: J.P. Morgan, using net asset value per share, cum income, with debt at par value.3 Source: MSCI. The Growth portfolio’s benchmark is the MSCI Europe ex UK Index (total return) in sterling terms. Prior to 26th March 2013 the Growth portfolio’s benchmark was

the FTSE All World Developed Europe (ex UK) Index in sterling terms. The benchmark index returns quoted above for periods of greater than one year are a composite of the twoindices, designed to provide an appropriate comparator to the return on net assets.

4 The net asset value above is calculated on the basis that the Company’s private placement debt is valued at par. The net assets value identified in the Company’s monthly factsheet is calculated on the basis that the Company’s private placement debt is valued at fair value.

A glossary of terms and definitions is provided on page 88.

JPMorgan European Growth – return to shareholders1

JPMorgan European Growth – return on net assets2

Benchmark total return3

–8.8–1.6 –5.3

64.0 59.851.4

41.435.4

21.529.6 30.7

18.6

%

-20

0

20

40

60

80

100

120

10 Year Performance5 Year Performance3 Year Performance1 Year Performance


3

TOTAL RETURNS (INCLUDES DIVIDENDS REINVESTED)

INCOME SHARE CLASS

INCOM

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–5.3%Benchmark return3

(2015: +7.0%)

–3.5%Return to shareholders1

(2015: +15.4%)

4.75pOrdinary Dividend(2015: 4.75p)

–1.1%Return on net assets2,4

(2015: +10.7%)

Long Term Performance (total returns)FOR PERIODS ENDED 31ST MARCH 2016

1 Source: Morningstar.2 Source: J.P. Morgan, using net asset value per share, cum income, with debt at par value.3 Source: MSCI. The Income portfolio’s benchmark is the MSCI Europe ex UK Index (total return) in sterling terms. Prior to 26th March 2013 the Income portfolio’s benchmark was

the MSCI Europe Index (total return) in sterling terms. The benchmark index returns quoted above for periods of greater than one year are a composite of the two indices,designed to provide an appropriate comparator to the return on net assets.

4 The net asset value above is calculated on the basis that the Company’s private placement debt is valued at par. The net assets value identified in the Company’s monthly factsheet is calculated on the basis that the Company’s private placement debt is valued at fair value.


JPMorgan European Income – return to shareholders1

JPMorgan European Income – return on net assets2

Benchmark total return3

–3.5 –1.1 –5.3

100.193.0

56.062.853.1

27.7

43.3 38.8

18.6

%

-20

0

20

40

60

80

100

120

Since inception2nd August 2006

5 Year3 Year1 Year



Strategic Report

CHAIRMAN’S STATEMENT

PerformanceConsidering the challenging markets experienced in the year to 31st March 2016, theCompany’s returns on net assets performed relatively well against the benchmark (the MSCIEurope ex UK Index in sterling) with both portfolios outperforming. The financial year closedwith the levels of discount on both portfolios reaching their widest levels for the year and sothe returns to shareholders at that point in time were less impressive. Details of the figuresfor the benchmark, return on net assets and return to shareholders can be seen on pages 2and 3 and are referred to in the opening paragraphs of the Investor Managers Report onpage 7. As clearly illustrated in the long term performance bar charts on pages 2 and 3, overthe three, five and ten year periods (Growth) and almost ten years since inception (Income),the Company has comfortably outperformed its benchmarks.

GearingAs referred to in the Company’s Half Year Report and Accounts, on the 26th August 2015the Company issued €50 million of fixed rate 20-year unsecured private placementnotes (the Notes) at an annualised coupon of 2.69%. This provides fixed rate long-datedEuro-denominated financing at a price that the Company considers attractive and whichis expected to enhance its long term investment performance. The issuance allowed theCompany to repay part of its €60 million short term facility which expired on 27th August2015. The Notes are due to be repaid on 26th August 2035. The interest payment dates areon 26th February and 26th August, annually. There has been no change in the InvestmentManager’s permitted gearing range. The Company’s gearing at 31st March 2016 was 11.5%for the Growth portfolio and 9.0% for the Income portfolio.

ConversionsThe Company’s annual share conversion on the 15th March 2016 resulted in a net decreasein the Growth issued share capital of 7,410,920 and an increase in the Income share issuedshare capital of 14,030,687.

DiscountAt the forthcoming Annual General Meeting on the 19th July 2016 as referred to below, theCompany will seek to renew its permission to allot new equity in order to manage thebalance between the supply and demand for its shares, subject to the requirements andconditions as detailed in the Notice to the Annual General Meeting on page 85. Suchallotments benefit all shareholders not least by increasing the liquidity of the Company’sshares.

The Board’s buy back policy is to consider buying back shares when the discount on itsshares widen to greater than 10%. Throughout the year, the month end discounts on theGrowth and Income share classes varied between 3.4% and 11.2% for the Growth sharesand 0.7% and 7.4% on the Income shares. At the 31st March 2016, the discount on theGrowth shares was 11.2% and on the Income shares 7.4%. Since the year end, on the8th and 15th April 2016, the Board implemented its buyback policy and purchased a totalof 114,803 Growth shares which resulted in a reduction of the discount. On the 13th June2016 the discount on the Growth and Income shares was 10.49% and 9.65% respectively.Increases in the discount from the lower levels experienced in the previous year are in partrelated to the relative deterioration in investors’ sentiment towards Europe and a generalwidening of discounts throughout the investment company universe.

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On the 11th January 2016, the Company announced that it had obtained approval from theUK Listing Authority for a block listing of 7,500,000 Income shares. The block listing willstreamline the Company’s issue of Income shares when the Board considers this to beappropriate to satisfy demand for the Income shares and manage a premium.

DividendsIn the growth portfolio the dividends on the Growth shares are paid bi-annually in Apriland October. Rather than having a particular dividend target, the policy in this portfolio isto distribute all the residual income from dividend receipts in the Growth portfolio. Asdividend receipts into the Growth portfolio decreased significantly from the previous year,the dividend was reduced to 5.85p (2015: 6.70p). On the year-end share price of 230.5p, thisrepresents a yield of 2.5% (2015: 2.6%).

On the Income shares, the dividends are paid quarterly. Although dividends received fromunderlying investments increased in the year, the Board maintained the Income sharedividend of 4.75p per share (2015: 4.75p) in order that income could be retained for futuredistributions. On the year-end share price of 127.0p the dividend yield increased to 3.7%(2015: 3.5%).

Board of DirectorsAs planned and previously detailed in the Company’s Half Year Report & Accounts, both mypredecessor Andrew Murison and Ferdinand Verdonck retired as Chairman and Directorrespectively at the Company’s AGM on 21st July 2015. The Board now consists of fiveDirectors and there are currently no plans to change the composition of the Board.

During the year, the Board carried out its customary evaluation of the Directors, theChairman, the Committees and the working of the Board as a whole. It was concluded thatall aspects of the Board and its procedures were operating effectively.

In accordance with corporate governance best practice, all of the Directors retire by rotationat this year’s AGM and offer themselves for re-election.

In order to reflect the additional burden placed upon the Directors by new regulation andmaintain the level of fees in line with the investment trust industry as a whole, theCompany’s Directors’ fees were increased effective from 1st April 2016. The previousincrease was on 1st April 2014. Further detail is provided on page 47. In order toaccommodate future increases in directors fees, the Directors recommend that, inaccordance with Article 103(1) of the Company’s Articles of Association, the permittedmaximum aggregate of Directors’ fees payable be increased from £175,000 to £225,000per annum at the forthcoming AGM on the 19th July 2016 as referred to below seeResolution 10 on page 85.

Annual General MeetingThe Company’s eighty seventh AGM will take place at J.P. Morgan’s offices at 60 VictoriaEmbankment, London EC4Y 0JP on Tuesday, 19th July 2016 at 2.30 p.m. In addition to theformal proceedings there will, as usual, be a presentation by the Investment Managers,followed by tea when shareholders, who are always most welcome, can meet the Directorsand the Investment Managers for more informal discussions.

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Strategic Report continued

CHAIRMAN’S STATEMENT CONTINUED

It would be helpful if shareholders seeking answers to detailed questions put them inwriting beforehand, addressed to the Company Secretary at 60 Victoria Embankment,London EC4Y 0JP. Alternatively, questions may be submitted via the Company’s website(www.jpmeuropean.co.uk).

OutlookThe UK European Union membership referendum scheduled to be held on the 23rd June2016 has led to some uncertainty and weakening of Sterling. The outcome of thereferendum is uncertain, as is its impact on Europe and the UK. The Board are keeping aclose eye on developments.

The economic outlook consists of a series of low numbers in growth, inflation and interestrates. Central banks continue to support the current fragile economies with quantitativeeasing and low interest rates. Our Investment Managers will continue to pursue their currentstrategy and use their stock selection skills and management of gearing to best manage theportfolio. While remaining aware of the ever-present uncertainties, your Board is confidentthat the portfolio is well positioned to negotiate the current variable market conditions.

For and on behalf of the BoardAndrew AdcockChairman 15th June 2016


7

INVESTMENT MANAGERS’ REPORT

Stephen Macklow-Smith

Alexander Fitzalan Howard

Michael Barakos

The year under review was disappointing from the point of view of absolute return with themarket in Europe excluding the UK falling by around 5.3% on a total return basis. Both shareclasses of the investment trust, however, performed relatively well in this difficultenvironment. The Growth share class, for instance, returned –1.6% on a net asset valuebasis, thus outperforming the market. The return to shareholders was negatively affected bya slight widening of the discount, with the share price falling by around 8.8% on a totalreturn basis. Over longer periods returns are positive: over two years the net asset value hasrisen by 6.2% and the share price by 4.5% versus a benchmark which has risen by 1.4%.Over three years the net asset value has read risen by 30.7% and the share price by 29.6%versus the benchmark which rose by 18.6%. Over five years the net asset value has risen by35.4% and the share price by 41.4% against the benchmark which rose by 21.5%. Over tenyears the net asset value has risen by 59.8% and the share price by 64% against thebenchmark which has risen by 51.4%. All of these returns are stated net of all costs involvedin running the portfolio.

In the income share class the net asset value over 12 months fell by 1.1%, similarlyoutperforming the wider market. Like the Growth share class the share price was negativelyaffected by a widening of the discount and fell by 3.5% on a total return basis. Over longerperiods, however, the returns are positive. Over two years the net asset value has risen by9.6% and the share price by 11.3% against the benchmark which rose by 1.4%. Over threeyears the net asset value has risen by 38.8% and the share price by 43.3% against thebenchmark which has risen by 18.6%. Over five years the net asset value has risen by 53.1%and the share price by 62.8% against the benchmark which has risen by 27.7%. The Incomeshare class was launched in 2006, and therefore it will acquire a ten year track record inAugust of this year. Returns over that ten-year period as of the time of writing have beenpositive and comfortably ahead of the benchmark on the basis of both the net asset valueand the share price. The income share class was also able to maintain its dividend this yeardespite the pressure that we have seen on profitability within European companies, and asthe European recovery continues we anticipate that the flow of dividends from ourunderlying investments can improve.

In the summer of last year the Company was also able to change its gearing structure byreplacing short-term bank facilities with a long-term loan note at a very attractive rate ofinterest. The yield on the European stock market is higher than the coupon on our loan notewhich looks like a very attractive price for a long-term gearing instrument.

As we entered the financial year the background for Europe looked positive. The ECB hadjust launched its program of quantitative easing (QE) and in late 2014 and early 2015 theeuro had depreciated against the dollar which boosted the profitability of Europeanexporters. We were also seeing a healthy recovery in credit after the successful conclusionof the ECB’s stress test of European banks, and a fall in the price of oil was a net benefit tothe vast majority of European countries, which are large energy importers. During the yearthe European domestic economy continued its recovery. The ingredients of the recovery,however, were strongest in the domestic elements of economic growth. Unemployment fellthroughout the period under review, and consumer confidence rose. Governmentexpenditure was fairly flat but the headwinds from fiscal contraction that we saw during theyears of the Eurozone crisis completely dissipated. The main problem during the year turned

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INVESTMENT MANAGERS’ REPORT CONTINUED

out to be growth outside Europe and especially in emerging markets. The oil price continuedto fall during the year touching a low of $27 in February 2016. The price of other industrialcommodities, particularly metals, also fell, and these two factors affected confidence aboutglobal growth. After peaking in April, European markets experienced a series of declines,bottoming in February 2016. The slowdown in growth worldwide also negatively affectedEuropean profitability overall. Earnings expectations for 2015 had been for growth of highsingle digit percentage points, but analysts downgraded their expectations during the yearand the outturn for Europe ex UK was a very small increase in profits. This, however, wasespecially negatively affected by profits from the energy sector which fell by around thethird, and the closer we got to domestic European growth the better the profit picture. Oneof the best things about being an active manager in Europe is that the European stockmarket is very heterogeneous. This means that wherever economies are prospering, with aconsequent beneficial impact on companies profits, we can find an area of the Europeanstock market in which to invest in order to benefit from this. During the Eurozone crisis ourinvestment orientation was broadly speaking towards more internationally focusedcompanies. In the last year and a half this has switched around. We think that conditions for

GROWTH PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 31ST MARCH 2016

% %

Contributions to total returns

Benchmark total return –5.3

Asset allocation 0.5

Stock selection 5.6

Gearing/cash –1.0

Currency –0.3

Investment manager contribution 4.8

Portfolio total return –0.5

Management fee/other expenses –1.1

Other effects –1.1

Net asset value total return –1.6

Share price total return –8.8

Source: B-One/JPMAM/AIC/Morningstar.

All figures are on a total return basis. Performance attribution analyses how theGrowth portfolio achieved its recorded performance relative to its benchmark.



9

the European recovery remain conducive. The ECB is set to continue its QE programme into2017, and it has expanded the scope of its purchases to include investment-grade corporatedebt. This means the cost of borrowing for governments and also for high-grade corporatesshould be contained. This will assist government finances on one hand, and should alsoboost corporate confidence to the extent that the long overdue investment cycle can restartwithin Europe. The last seven years has seen some very adroit cost management byEuropean companies. The overall earnings picture has been unexciting, with Europeanearnings hardly moving at all since 2010. This drab general picture, though, has maskedgood performances in certain sectors, such as car manufacturers and parts suppliers, orinsurers. It has also masked significant divergences within sectors, for instance in bankingwhere earnings for peripheral banks and for large investment banks such as Deutsche Bankand Credit Suisse have been under significant pressure while earnings at Scandinavian bankshave held up and even exhibited growth. We believe that this divergence will continue.Earnings for energy and commodities companies remain under pressure as can be seenfrom the fact that they were among the most downgraded in the first three months of thisyear. Earnings from the domestic economy on the other hand can continue to improve, andit is this that is likely to drive our stock selection.

INCOME PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 31ST MARCH 2016

% %

Contributions to total returns

Benchmark total return –5.3

Asset allocation –0.2

Stock selection 6.9

Gearing/cash –1.6

Currency 0.2

Investment manager contribution 5.3

Portfolio total return 0.0

Management fee/other expenses –1.1

Other effects –1.1

Net asset value total return –1.1

Share price total return –3.5

Source: B-One/JPMAM/AIC/Morningstar.

All figures are on a total return basis. Performance attribution analyses how theIncome portfolio achieved its recorded performance relative to its benchmark.


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INVESTMENT MANAGERS’ REPORT CONTINUED

The list of successful investments within the growth portfolio exemplifies the heterogeneityalluded to above. It includes positions in the French construction and concessions companyVinci, a Danish jewellery retailer Pandora, Ahold the Dutch food retailer which is mergingwith Delhaize, and Hannover Re, a German reinsurance company, all of which enjoyedsubstantial upward revisions to earnings expectations during the year. Relative to theCompany’s benchmark it was also important to avoid the laggards which, as alreadymentioned included the investment banks and large peripheral banks such as BancoSantander, BBVA and Unicredit.

Turning to the income portfolio, particular holdings that did well included Washtec, whichmanufactures washing systems for cars and trucks, and Elisa, a Finnish telecoms company.Two subsectors that the Company benefited from being exposed to were betting, withholdings in Paddy Power Betfair and Unibet, and salmon farming where rising prices helpedcompanies such as Austevoll, Bakkafrost and Salmar to perform strongly. As in the growthportfolio avoiding the financial sector laggards, specifically Deutsche Bank, BBVA andSantander contributed to relative performance, as did not having any exposure toVolkswagen which fell sharply after the so called ‘dieselgate’ scandal.

Turning to the political picture the first half of this financial year will be dominated by thelead up to, and aftermath of, the U.K.’s referendum on EU membership. Neither share classinvests directly in United Kingdom stocks, however, the Company is a sterling-based entityand therefore the movement in the exchange rate between sterling and the euro will havean impact on the returns that are generated for sterling investors. Since November of lastyear sterling has depreciated against the euro as foreign exchange markets started todiscount the extra risk factor of a potential UK exit from the European Union. It is not only incurrency markets that the referendum poses a risk: were the UK to decide to leave it wouldbe the first nation to exit the European Union since Greenland in the early 1980s. The storyof the EU since then has been more or less one of the continual expansion, with theaccession of Eastern European countries an illustration of the attractions of belonging to theworld’s largest single market. We all know, however, that there has been growing oppositionto the aims and intentions of European Union and this is evident in the popularity of politicalentities such as the National Front in France or populist parties which are opposed toimmigration in the Netherlands, Denmark, Sweden and Austria. A decision by the UK to exitthe European Union would stir the pot in the rest of the continent and it is not impossiblethat it could lead to referenda in other European countries. This has the potential to createvolatility in bond equity markets but the story of the last seven years has been that bouts ofweakness in equity markets are opportunities to buy, and as long as the economic storyremains intact and the recovery continues we believe that we will remain in an environmentwhere it is appropriate to buy the dips. The wild card in the prospects of 2016 is thepossibility of a reacceleration in growth elsewhere. In emerging markets for instance wehave seen countries going through a painful adjustment process particularly as many ofthem are exporters of those commodities where prices have been under the most pressure.


11

While expecting some further volatility, we still feel that the years to come will bring furtheropportunities. Our investment process in both legs has produced good results over manyyears and we see no reason why this should not continue. For the Income share class, thefact that the ECB‘s QE program is keeping sovereign and corporate yields very low opens thepossibility that people will look to the income stream from equities and find it attractive. Forthe Growth share class, our focus on finding companies that are attractively valued andexhibiting strong business momentum relative to the rest of the market should benefit ourshareholders.

Stephen Macklow-SmithAlexander Fitzalan HowardMichael BarakosInvestment Managers 15th June 2016

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SUMMARY OF RESULTS

2016 2015

Total returns for the year ended 31st March

Return to shareholders1 –8.8% +14.5%Return on net assets2 –1.6% +7.9%Benchmark return3 –5.3% +7.0%

Net asset value, share price and discount at 31st March % change

Total net assets (£’000) 202,165 230,314 –12.2Net asset value per share with debt at par value 259.7p 270.2p –3.9Net asset value per share with debt at fair value4 253.3p n/aShare price 230.5p 259.0p –11.0Share price discount to net asset value per share with debt at par value5 11.2% 4.1%Share price discount to net asset value per share with debt at fair value 9.0% n/aShares in issue 77,833,926 85,244,846

Revenue for the year ended 31st March

Gross revenue return (£’000) 6,484 8,597 –24.6Net revenue attributable to shareholders (£’000) 4,561 7,174 –36.4Return per share 5.37p 7.90p –32.0Dividend per Growth share:Ordinary dividends 5.85p 6.70p

Gearing at 31st March 11.5% 7.7%

Ongoing Charges 1.06% 1.04%

1 Source: Morningstar.2 Source: J.P. Morgan.3 Source: MSCI. The Growth portfolio’s benchmark is the MSCI Europe ex UK Index (total return) in sterling terms.4 The fair value of the Euro 50.0m Private Placement issued by the Company has been calculated using discounted cash flow techniques, using the yield from a similar dated

German government bond plus a margin based on the five year average for the AA Barclays Euro Corporate Bond spread. As at 31st March 2016, €33.3m of the €50.0m wasallotted to the Growth pool.

5 The share price discount on capital-only net asset value was 11.1% (2015: 3.3%). Source: Bloomberg.



13

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TEN YEAR FINANCIAL RECORD1

At 31st March 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total assets less current liabilities (£m) 633.3 454.1 420.0 272.3 315.7 249.9 187.7 206.3 241.2 230.3 228.5

Net asset value per share (p) 219.7 248.8 238.8 142.1 207.2 222.9 186.3 215.3 257.3 270.2 259.7

Share price (p) 203.2 233.8 219.0 116.5 183.8 193.0 164.0 194.0 233.0 259.0 230.5

Discount (%) 7.5 6.0 8.3 18.0 11.3 13.4 12.0 9.9 9.4 4.1 11.2

Gearing (%) 0.5 5.1 17.0 5.7 3.6 8.1 3.1 5.4 8.1 7.7 11.5

Year ended 31st March

Gross revenue return (£’000) 15,004 15,111 13,799 17,858 9,146 8,083 9,634 7,452 8,018 8,597 6,484

Revenue per share (p) 3.98 5.71 5.07 9.54 4.79 4.93 7.28 6.00 6.64 7.90 5.37

Dividend per share (p) 3.50 5.80 6.33 9.502 4.85 4.90 6.75 5.95 6.70 6.70 5.85

Ongoing Charges (%)3 0.92 0.69 1.05 0.81 1.05 0.98 0.74 0.87 0.86 1.04 1.06

Ongoing Charges (%)4 1.46 1.24 1.05 0.81 1.05 1.38 0.75 1.54 1.95 N/A N/A

Rebased to 100 at 31st March 2006

Return to shareholders5 100.0 120.3 115.9 66.0 107.3 116.0 103.1 126.5 157.0 179.8 164.0

Return on net assets5 100.0 115.6 113.9 69.6 106.9 118.0 101.0 122.3 150.5 162.4 159.8

Benchmark6 100.0 112.0 114.7 79.0 116.5 124.6 109.5 127.7 149.4 159.8 151.4

1 The Growth shares were created following a capital reorganisation on 2nd August 2006 when ordinary shareholders elected to reclassify their shares into either Growth shares orIncome shares. The financial record above for periods prior to that date is that of the ordinary shares because the Growth pool maintained materially the same economicexposure as if the reorganisation had not been implemented. The investment objective, investment policy and management fee arrangements have remained the same as for theordinary shares prior to the reorganisation.

2 Includes a special dividend of 2.5p.3 Management fee and all other operating expenses, excluding finance costs and any performance fee payable (performance fee terminated with effect from 1st April 2014),

expressed as a percentage of the average of the daily net assets during the year (2010 to 2012: Total Expense Ratio (‘TER’): the average of the month end net assets; 2009 andprior years: the average of the opening and closing net assets).

4 Ongoing charges including performance fee during the periods in which the management fee was applicable. The above figures include management fee, any performance feepayable and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year (2010 to 2012: Total ExpenseRatio (‘TER’): the average of the month end net assets; 2009 and prior years: the average of the opening and closing net assets).

5 Source: Morningstar.6 Source: MSCI. The Growth portfolio’s benchmark is the MSCI Europe ex UK Index (total return) in sterling terms. Prior to 26th March 2013 the Growth portfolio’s benchmark was

the FTSE All World Developed Europe (ex UK) Index in sterling terms.




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TEN LARGEST EQUITY INVESTMENTS AT 31ST MARCH

2016 2015 Valuation ValuationCompany Country Sector £’000 %1 £’000 %1

JPMorgan European Smaller Companies Trust European Funds Financials 7,664 3.4 6,432 2.6

Nestle Switzerland Consumer Staples 7,633 3.4 9,041 3.7 Novartis Switzerland Health Care 7,496 3.3 12,241 5.0 Roche Switzerland Health Care 7,202 3.2 7,673 3.1 JPMorgan Europe Dynamic

Small Cap Fund European Funds Financials 6,224 2.8 5,535 2.2 Sanofi France Health Care 5,879 2.6 6,957 2.8 Vinci2 France Industrials 4,846 2.2 1,475 0.6 Iberdrola2 Spain Utilities 4,506 2.0 2,277 0.9 ING Bank Netherlands Financials 4,383 2.0 5,732 2.4 BNP Paribas France Financials 4,352 1.9 4,739 1.9

Total3 60,185 26.8

1 Based on total investments of £224.4m (2015: £246.4m).2 Not included in ten largest equity investments at 31st March 2015.3 At 31st March 2015, the value of the ten largest equity investments amounted to £70.2m, representing 28.5% of total investments of £246.4m.



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PORTFOLIO ANALYSES

Geographical 31st March 2016 31st March 2015 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

France 20.6 21.9 19.0 21.5Germany 18.1 20.1 23.4 21.0Switzerland 14.5 20.0 16.8 20.4Netherlands 9.8 6.8 7.9 6.0Sweden 8.8 6.5 6.1 6.8Italy 6.5 4.8 4.9 5.2Denmark 5.5 4.4 5.2 3.6Spain 5.1 6.9 5.4 7.8Belgium 3.9 3.2 4.0 2.9Finland 3.0 2.2 2.1 1.9Ireland 1.3 1.1 1.5 0.8Norway 1.1 1.3 0.8 1.4United Kingdom 0.7 — 1.7 —Portugal 0.6 0.4 — 0.3Russia 0.3 — 0.3 —Poland 0.1 — 0.1 —Turkey 0.1 — 0.1 —Austria — 0.4 0.7 0.4

Total Portfolio2 100.0 100.0 100.0 100.0

1 Based on total investments of £224.4m (2015: £246.4m).2 Includes investments in European funds which are reclassified in accordance with the domicile of the underlying asset in the fund.



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PORTFOLIO ANALYSES CONTINUED

Sector

31st March 2016 31st March 2015 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

Financials 21.8 20.2 24.3 22.8 Industrials 19.3 14.0 12.9 13.0 Consumer Discretionary 13.8 12.4 15.0 12.3 Health Care 12.9 14.9 15.1 15.6 Consumer Staples 11.4 13.6 10.1 12.2 Utilities 5.4 3.7 4.0 3.7 Materials 4.5 7.4 7.9 7.5 Information Technology 4.3 5.4 2.6 4.5 Telecommunications Services 3.8 4.6 5.8 4.4 Energy 2.8 3.8 2.3 4.0

Total Portfolio2 100.0 100.0 100.0 100.0

1 Based on total investments of £224.4m (2015: £246.4m).2 Includes investments on European funds which are reclassified in accordance with the industry of the underlying asset in the fund.


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LIST OF INVESTMENTS AT 31ST MARCH 2016

FranceSanofi 5,879Vinci 4,846BNP Paribas 4,352Capgemini 3,346Airbus 3,017Lvmh Moet Hennessy 2,621AXA 2,358Société Genéralé 2,130Renault 2,115Peugeot 2,040Thales 1,784Total 1,719Technicolor 1,657Orange 1,397Safran 1,232Euronext 784Natixis 762Eurazeo 677Aperam 676Cie Generale des Etablissements Michelin 415Trigano 278Eiffage 209Total France 44,294

GermanyContinental 4,039Hannover Rueckversicherung 3,762Daimler 3,619Deutsche Telekom 3,488Münchener Rückversicherungs 3,479Deutsche Boerse 2,894ProSiebenSat.1 Media 2,775Merck KGAA 1,797Allianz 1,674HOCHTIEF 1,410Bayer 1,261Scout24 1,259Deutsche Lufthansa 1,259Schaeffler 1,044Freenet 1,014VERBIO Vereinigte BioEnergie 744

Software 711Washtec 436Siemens 379AURELIUS SE & Co 357EDAG Engineering 349BASF 331Takkt 330Covestro 222CTS Eventim 113Total Germany 38,746

SwitzerlandNestle 7,633Novartis 7,496Roche 7,202Adecco 2,353Swiss Re 1,804Schindler 1,323ABB 832Temenos 604Bobst 470Forbo 398Kardex 352Bell 297BKW 291Metall Zug 217Orior 134Kudelski 96Total Switzerland 31,502

NetherlandsING Bank 4,383Koninklijke Ahold 3,256NN 3,210Unilever 3,048Royal Dutch Shell 2,026Wolters-Kluwer 1,443RELX 1,346AMG Advanced Metallurgical 612NXP Semiconductors 395BE Semiconductor Industries 387Total Netherlands 20,106

ValuationCompany £’000




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SwedenNordea Bank 2,580Swedbank 2,156Swedish Match 1,845Skandinaviska Enskilda Banken ‘A’ 1,770Peab 1,674Skanska 1,511Boliden 1,076Intrum Justitia 1,021Securitas ‘B’ 906Oriflame 877BillerudKorsnas 803Bilia 638Granges 580Total Sweden 17,437

European FundsJPMorgan European Smaller Companies Trust 7,664JPMorgan Europe Dynamic Small Cap Fund 6,224JPM Eastern European Fund 1,160Total European Funds 15,048

ItalyENEL 2,529Prysmian SpA 2,264Telecom Italia 1,984Mediobanca 1,643Azimut 929Finmeccanica 754ACEA 727Intesa Sanpaolo 646Buzzi Unicem 581Eni 441ASTM 270Atlantia 185Total Italy 12,953

DenmarkNovo Nordisk 4,139Vestas Wind Systems 3,201Danske Bank 2,756Pandora 1,261PER Aarsleff 440Dfds 146Total Denmark 11,943

SpainIberdrola 4,506International Consolidated Airlines 2,439Endesa 2,345Acciona 1,196Repsol 436ACS Actividades de Construccion y Servicios 407Bolsas Y Mercados Espanoles 219Total Spain 11,548

BelgiumAnheuser-Busch Inbev 4,106Delhaize 2,549Ageas 614KBC Group 603Agfa-Gevaert 431Bpost 342Total Belgium 8,645

FinlandUPM-Kymmene 3,791Kone 1,100Stora Enso 668Neste Oil 518Nokia 180Sponda 120Total Finland 6,377

IrelandRyanair 2,728Total Ireland 2,728


LIST OF INVESTMENTS CONTINUED




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NorwayTelenor 642P/F Bakkafrost 481Austevoll Seafood 224Veidekke 187Orkla 165Norsk Hydro 134Total Norway 1,833

PortugalAltri SGPS 880Semapa-Sociedade de Investimento e Gestao 409Total Portugal 1,289

Total Investments 224,449




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STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)FOR THE YEAR ENDED 31ST MARCH 2016

2016 2015Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

(Losses)/gains on investments and derivatives held at fair value through profit or loss — (5,728) (5,728) — 9,956 9,956

Net foreign currency (losses)/gains — (1,810) (1,810) — 899 899Income from investments 6,407 — 6,407 8,277 — 8,277Interest receivable and similar income 77 — 77 320 — 320

Gross return/(loss) 6,484 (7,538) (1,054) 8,597 10,855 19,452Management fee (530) (1,237) (1,767) (545) (1,272) (1,817)Other administrative expenses (547) — (547) (517) — (517)

Net return/(loss) on ordinary activities before finance costs and taxation 5,407 (8,775) (3,368) 7,535 9,583 17,118

Finance costs (157) (366) (523) (74) (173) (247)

Net return/(loss) on ordinary activities before taxation 5,250 (9,141) (3,891) 7,461 9,410 16,871

Taxation (689) — (689) (287) — (287)

Net return/(loss) on ordinary activities after taxation 4,561 (9,141) (4,580) 7,174 9,410 16,584

Return/(loss) per Growth share 5.37p (10.77)p (5.40)p 7.90p 10.36p 18.26p

All revenue and capital items in the above statement derive from continuing operations.



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STATEMENT OF FINANCIAL POSITION (UNAUDITED) AT 31ST MARCH 2016

2016 2015 £’000 £’000

Fixed assets Investments held at fair value through profit or loss 224,449 246,352Current assets Derivative financial assets 487 194Debtors 863 1,638Cash and cash equivalents1 11,038 6,936

12,388 8,768Creditors: amounts falling due within one year (8,082) (24,697)Derivative financial liabilities (298) (109)

Net current assets/(liabilities) 4,008 (16,038)

Total assets less current liabilities 228,457 230,314

Creditors: amounts falling due after more than one year (26,292) —

Net assets 202,165 230,314

Net asset value per Growth share 259.7p 270.2p

1 This line item combines the two lines of ‘Investments in liquidity funds held at fair value through profit or loss’ and ‘Cash and short term deposits’ in the financial statements forthe year ended 31st March 2015 into one.



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SUMMARY OF RESULTS

2016 2015

Total returns for the year ended 31st March

Return to shareholders1 –3.5% +15.4%Return on net assets2 –1.1% +10.7%Benchmark return3 –5.3% +7.0%

Net asset value, share price and discount at 31st March % change

Total net assets (£’000) 128,702 114,692 +12.2Net asset value per share with debt at par value 137.1p 143.6p –4.5Net asset value per share with debt at fair value4 134.4p n/aShare price 127.0p 136.5p –7.0Share price discount to net asset value per share with debt at par value5 7.4% 4.9%Share price discount to net asset value per share with debt at fair value 5.5% n/aShares in issue 93,884,791 79,854,104

Revenue for the year ended 31st March

Gross revenue return (£’000) 4,882 4,127 +18.3Net revenue attributable to shareholders (£’000) 3,757 3,201 +17.4Return per share 4.67p 4.60p +1.5Dividend per Income share:Ordinary dividends 4.75p 4.75p

Gearing at 31st March 9.0% 7.5%

Ongoing Charges 1.08% 1.08%

1 Source: Morningstar.2 Source: J.P. Morgan.3 Source: MSCI. The Income portfolio’s benchmark is the MSCI Europe ex UK Index (total return) in sterling terms.4 The fair value of the Euro 50.0m Private Placement issued by the Company has been calculated using discounted cash flow techniques, using the yield from a similar dated

German government bond plus a margin based on the five year average for the AA Barclays Euro Corporate Bond spread. As at 31st March 2016, €16.7m of the €50.0m wasallocated to the Income pool.

5 The share price discount on capital-only net asset value was 6.5% (2015: 4.1%). Source: Bloomberg.



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FINANCIAL RECORDS SINCE INCEPTION1

At 31st March 20061 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total assets less current liabilities (£m) 94.2 90.8 87.3 41.0 76.9 63.5 61.9 68.3 86.3 114.7 141.8

Net asset value per share (p) 102.6 120.4 108.4 70.2 106.3 109.6 96.9 110.4 134.6 143.6 137.1

Share price (p) 99.3 112.5 98.0 60.3 94.5 97.3 86.5 99.8 123.0 136.5 127.0

Discount (%) 3.2 6.6 9.6 14.1 8.8 11.3 10.7 9.6 8.6 4.9 7.4

Gearing (%) N/A 2.7 6.1 4.3 5.3 10.0 7.1 14.4 5.4 7.5 9.0

Year ended 31st March

Gross revenue return (£’000) N/A 1,447 3,552 4,382 2,986 2,827 3,375 3,255 3,818 4,127 4,882

Revenue per share (p) N/A 1.32 3.67 5.48 3.92 3.87 4.56 4.29 4.82 4.60 4.67

Dividend per share (p) N/A 2.90 3.90 5.152 4.00 4.00 4.20 4.25 4.75 4.75 4.75

Ongoing Charges (%)3 N/A 0.79 1.23 1.19 1.21 1.18 1.12 1.06 1.06 1.08 1.08

Ongoing Charges (%)4 N/A 0.81 1.23 1.19 1.48 1.59 1.18 1.26 1.93 N/A N/A

Rebased to 100 at 2nd August 2006

Return to shareholders5 100.0 116.1 105.2 69.5 114.1 122.9 115.2 139.6 179.8 207.4 200.1

Return on net assets5 100.0 116.5 108.0 73.2 117.1 126.1 116.7 139.0 176.3 195.2 193.0

Benchmark6 100.0 113.2 111.9 77.8 114.7 122.2 113.4 131.5 153.9 164.7 156.0

1 The Income shares were created following a capital reorganisation on 2nd August 2006.2 Includes a special dividend of 1.15p.3 Management fee and all other operating expenses, excluding finance costs and any performance fee payable (performance fee terminated with effect from 1st April 2014),

expressed as a percentage of the average of the daily net assets during the year (2010 to 2012: Total Expense Ratio (‘TER’): the average of the month end net assets; 2009 andprior years: the average of the opening and closing net assets).

4 Ongoing charges including performance fee during the periods in which the management fee was applicable. The above figures include management fee, performance feepayable, and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year (2010 to 2012: Total ExpenseRatio (‘TER’): the average of the month end net assets; 2009 and prior years: the average of the opening and closing net assets).

5 Source: Morningstar.6 Source: MSCI. The Income portfolio’s benchmark is the MSCI Europe ex UK Index (total return) in sterling terms. Prior to 26th March 2013 the Income portfolio’s benchmark was

the MSCI Europe Index (total return) in sterling terms.




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TEN LARGEST EQUITY INVESTMENTS AT 31ST MARCH

2016 2015 Valuation ValuationCompany Country Sector £’000 %1 £’000 %1

Sanofi France Health Care 2,734 2.0 2,672 2.2 Roche Switzerland Health Care 2,667 1.9 4,111 3.4 Daimler Germany Consumer Discretionary 2,492 1.8 2,150 1.8 Siemens Germany Industrials 2,484 1.8 1,941 1.6 Allianz Germany Financials 2,477 1.8 2,004 1.6 Unilever Netherlands Consumer Staples 2,108 1.5 1,641 1.3 Deutsche Telekom2 Germany Telecommunication Services 1,810 1.3 1,461 1.2 BNP Paribas France Financials 1,741 1.2 1,674 1.4 AXA2 France Financials 1,710 1.2 1,275 1.0 ING Bank2 Netherlands Financials 1,645 1.2 1,615 1.3

Total3 21,868 15.7

1 Based on total investments of £139.2m (2015: £122.5m).2 Not included in ten largest equity investments at 31st March 2015.3 At 31st March 2015, the value of the ten largest equity investments amounted to £23.0m, representing 18.8% of total investments of £122.5m.



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PORTFOLIO ANALYSES

Geographical 31st March 2016 31st March 2015 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

France 15.6 21.9 17.2 21.5 Germany 15.1 20.1 12.3 21.0 Switzerland 9.8 20.0 16.1 20.4 Norway 9.7 1.3 7.6 1.4 Italy 9.2 4.8 7.3 5.2 Finland 8.9 2.2 7.5 1.9 Netherlands 8.8 6.8 5.8 6.0 Sweden 7.6 6.5 9.8 6.8 Spain 7.0 6.9 8.3 7.8 Belgium 4.1 3.2 3.6 2.9 Denmark 1.6 4.4 1.6 3.6 Portugal 1.5 0.4 1.3 0.3 Austria 0.7 0.4 1.0 0.4 Ireland 0.4 1.1 0.6 0.8

Total Portfolio 100.0 100.0 100.0 100.0

1 Based on total investments of £139.2m (2015: £122.5m).



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PORTFOLIO ANALYSES CONTINUED

Sector

31st March 2016 31st March 2015 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

Financials 33.8 20.2 38.9 22.7 Industrials2,3 16.5 14.0 13.5 13.0 Consumer Discretionary 11.4 12.4 9.2 12.4 Utilities 9.8 3.7 8.2 3.7 Consumer Staples 8.0 13.6 7.8 12.2 Telecommunications Services 7.0 4.6 7.0 4.4 Health Care 4.2 14.9 7.5 15.6 Information Technology 3.4 5.4 3.6 4.5 Energy2 3.1 3.8 2.0 4.0 Materials3 2.8 7.4 2.3 7.5

Total Portfolio 100.0 100.0 100.0 100.0

1 Based on total investments of £139.2m (2015: £122.5m).2 Bonheur was reclassified from Industrials in the prior period to Energy in the current period.3 Tikkurila was reclassified from Materials in the prior period to Industrials in the current period.


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LIST OF INVESTMENTS AT 31ST MARCH 2016

FranceSanofi 2,734BNP Paribas 1,741AXA 1,710Orange 1,410Vinci 1,287Unibail-Rodamco 1,235Société Genéralé 1,207Michelin 796Veolia Environnement 764Bouygues 745SCOR 685Technip 649Credit Agricole 636CNP Assurances 599Klépierre 580Gecina 563Nexity 562Altarea 541Lagardere 534Suez Environnement 515Eutelsat Communications 442Rubis 439Natixis 402Sword 324Societe Fonciere Lyonnaise 254Assystem 217Union Financière de France 186Total France 21,757

GermanyDaimler 2,492Siemens 2,484Allianz 2,477Deutsche Telekom 1,810Munich Re 1,446BMW 1,217Deutsche Post 1,053Hannover Rueckversicherung 853ProSiebenSat.1 Media 753Talanx 628Aareal Bank 616Teléfonica Deutschland 522Freenet 509Washtec 495TLG Immobilien 475CHORUS Clean Energy 446Leifheit 436RTL 428Deutsche Pfandbriefbank 409Drillisch 377Deutsche Beteiligungs 355Comdirect Bank 279EDAG Engineering 230mutares 141Amadeus Fire 31Total Germany 20,962





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SwitzerlandRoche 2,667Swiss Re 1,389Swiss Prime Site 725Baloise 724Burkhalter 687Valora 624Banque Cantonale Vaudoise 614Cembra Money Bank 613Kuhne & Nagel International 612Schweiter Technologies 570APG SGA 552Intershop 465Forbo 433Helvetia 417Logitech International 408Vontobel 385Sunrise Communications 371Mobimo 365BKW 357St Galler Kantonalbank 348dorma+kaba 346Total Switzerland 13,672

NorwayTelenor 708Norway Royal Salmon 686Gjensidige Forsikring 683Leroy Seafood 669Austevoll Seafood 664Salmar 664Orkla 663P/F Bakkafrost 598Marine Harvest 595Yara International 539Wilh Wilhelmsen 531Veidekke 515Protector Forsikring 504SpareBank 1 Nord-Norge 477Selvaag Bolig 463

Borregaard 444ABG Sundal Collier 428BW LPG 428Atea 421AF Gruppen 413Ocean Yield 410RenoNorden 359SpareBank 1 SR-Bank 286Avance Gas 269Entra 244Eko-mes 244Havfisk 199SpareBank 150Sparebanken More 116Bonheur 109Total Norway 13,479

ItalyIntesa Sanpaolo 1,366Enel 1,157Assicurazioni Generali 967Snam Rete Gas 933TEMA 792Atlantia 783UniCredit 737Marr 564Acea 548Unipol Gruppo Finanziario 516Iren 506Societa Cattolica di Assicurazioni 495Hera 470A2A 448Mediobanca 436Ascopiave 423Imm Grande 413ASTM 408FinecoBank 375Poste Italiane 329SIAS 100Total Italy 12,766






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FinlandNokia 1,279Sampo 1,082UPM-Kymmene 808Kone 794Elisa 707Nokian Renkaat 580Kesko 576Neste Oil 576Stora Enso 557Asiakastieto 530Tikkurila 515Tieto 512Sponda 485Orion 484Lassila & Tikan 482Cramo 449Caverion 446HKScan 437Fiskars 399ASPO 370Uponor 250Total Finland 12,318

NetherlandsUnilever 2,108ING Bank 1,645Koninklijke Philips 1,044Ahold 872Koninklijke 865Aegon 775NN 609Royal Dutch Shell 539Eurocommercial 523ABN AMRO 443Brunel International 436BinckBank 429Amsterdam Commodities 424BE Semiconductor 408Intertrust 406Flow Traders 398Accell 365Total Netherlands 12,289

SwedenSkandinaviska Enskilda Banken 743Bravida 668Nobina 614Coor Service Management 612Bilia 554Dometic 532Modern Times 524Granges 519Axfood 505Peab 474Scandi Standard 473Duni 466Byggmax 453Nolato 443HIQ International 404Mycronic 394ICA Gruppen 385NCC 365Clas Ohlson 352Com Hem 315Dustin 278Swedbank 275Wihlborgs Fastigheter 230Klovern 56Total Sweden 10,634

SpainTelefonica 1,612Iberdrola 1,331ACS 777Red Electrica 752Gas Natural 737Endesa 690Ferrovial 674Enagás 669Logista 622Saeta Yield 536Banco de Sabadell 461Banco Popular Espanol 452Bolsas y Mercados 432Total Spain 9,745






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BelgiumKBC Groep 826Ageas 645Warehousing & Distribution 607Solvay 585Belgacom 539Van de Velde 522EVS Broadcast Equipment 514Euronav 478Bpost 429Elia System Operator 331Atenor 299Total Belgium 5,775

DenmarkPandora 926Danske Bank 845Alm Brand 418Total Denmark 2,189

PortugalEnergias De Portugal 732Ren-Redes Energeticas 520Portucel-Empresa Produtora de Pasta 438CTT-Correios De Portugal 366Total Portugal 2,056

AustriaOMV 444Uniqa Insurance 396Polytec 113Total Austria 953

IrelandPaddy Power Betfair 587Total Ireland 587

Total Investments 139,182





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STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)FOR THE YEAR ENDED 31ST MARCH 2016

2016 2015Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

(Losses)/gains on investments and derivatives held at fair value through profit or loss — (3,049) (3,049) — 6,044 6,044

Net foreign currency (losses)/gains — (609) (609) — 1,578 1,578Income from investments 4,812 — 4,812 4,025 — 4,025Interest receivable and similar income 70 — 70 102 — 102

Gross return/(loss) 4,882 (3,658) 1,224 4,127 7,622 11,749Management fee (367) (550) (917) (301) (452) (753)Other administrative expenses (261) — (261) (239) — (239)

Net return/(loss) on ordinary activities before finance costs and taxation 4,254 (4,208) 46 3,587 7,170 10,757

Finance costs (102) (153) (255) (33) (49) (82)

Net return/(loss) on ordinary activities before taxation 4,152 (4,361) (209) 3,554 7,121 10,675

Taxation (395) — (395) (353) — (353)

Net return/(loss) on ordinary activities after taxation 3,757 (4,361) (604) 3,201 7,121 10,322

Return/(loss) per Income share 4.67p (5.42)p (0.75)p 4.60p 10.25p 14.85p

All revenue and capital items in the above statement derive from continuing operations.


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JPMORGAN EUROPEAN INVESTMENT TRUST PLC. ANNUAL REPORT & ACCOUNTS 2016

STATEMENT OF FINANCIAL POSITION (UNAUDITED) AT 31ST MARCH 2016

2016 2015 £’000 £’000

Fixed assets Investments held at fair value through profit or loss 139,182 122,492Current assets Derivative financial assets 256 289Debtors 1,223 674Cash and cash equivalents1 5,545 3

7,024 966Creditors: amounts falling due within one year (4,101) (8,686)Derivative financial liabilities (271) (80)

Net current assets/(liabilities) 2,652 (7,800)

Total assets less current liabilities 141,834 114,692

Creditors: amounts falling due after more than one year (13,132) —

Net assets 128,702 114,692

Net asset value per Income share 137.1p 143.6p




33

THE COM

PANY

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.The following Business Review aims to assist shareholders with thisassessment.

Structure and Objective of the CompanyJPMorgan European Investment Trust plc is an investment trustcompany that has a premium listing on the London Stock Exchange.It has two share classes whose objectives are set out below. Inseeking to achieve those objectives the Company employs JPMorganFunds Limited (‘JPMF’ or the ‘Manager’) which in turn delegatesportfolio management to JPMorgan Asset Management (UK) Limited(‘JPMAM’) to actively manage the Company’s assets. The Board hasdetermined investment policies and related guidelines and limits, asdescribed below.

The Company is subject to UK and European legislation andregulations including UK company law, UK Financial ReportingStandards, the UKLA Listing, Prospectus, Disclosure andTransparency Rules, taxation law and the Company’s own Articles ofAssociation. The Company is an investment company within themeaning of Section 833 of the Companies Act 2006 and has beenapproved by HM Revenue & Customs as an investment trust (for thepurposes of Sections 1158 and 1159 of the Corporation Tax Act2010). The Directors have no reason to believe that approval willnot continue to be retained. The Company is not a close companyfor taxation purposes.

Investment Objectives, Policies and Risk Management JPMF is responsible for management of the Company’s assets. On aday-to-day basis the assets are managed by three investmentmanagers based in London, supported by a 40 strong Europeanequity team. The Board seeks to manage the Company’s risk byimposing various investment restrictions and guidelines.

Growth Portfolio Investment Objective The investment objective of the Growth portfolio is to providecapital growth and a rising share price over the longer term fromContinental European investments by consistent out-performance ofthe benchmark and taking carefully controlled risks through aninvestment method that is clearly communicated to shareholders.

Income Portfolio Investment Objective The investment objective of the Income portfolio is to provide agrowing income together with the potential for long term capital

growth by investing in a portfolio of investments that is diversifiedamongst countries, sectors and market capitalisations within theuniverse of Continental European companies.

Growth and Income Portfolio Investment Policies - To invest in a diversified portfolio of investments in thestockmarkets of Continental Europe.

- To manage liquidity and borrowings to increase returns toshareholders.

Growth- To emphasise capital growth rather than income, with the likelyresult that the level of dividends will fluctuate.

Income- To provide a growing income together with the potential for long-term capital growth.

Investment Restrictions and Guidelines - The portfolio will not invest more than 15% (Growth) 6% (income)of the assets in any one individual stock at the time of acquisition.

- The portfolio will be no more than 20% geared in normal marketconditions.

- The portfolio does not normally invest in unquoted investmentsand to do so requires prior Board approval.

- The portfolio does not normally enter into derivative transactionsand to do so requires prior Board approval. However, theInvestment Manager has authority to carry out currency hedgingtransactions in order to mitigate currency risk relative to thebenchmark index.

- Index Futures to ensure market exposure is maintained wherethere are significant cash in/out flows and Covered Call Optionsare permitted, subject to restrictions included in the Company’sInvestment Restrictions and Guidelines. All other derivativetransactions are subject to approval by the Board.

- In accordance with the Listing Rules of the UK Listing Authority,the portfolio will not invest more than 15% of its gross assets inother listed closed-ended investment funds and will not investmore than 10% of its gross assets in companies that themselvesmay invest more than 15% of gross assets in listed closed-endedinvestment funds.

The Board has set no minimum or maximum limits on the numberof investments in the Company’s portfolios. To gain the appropriateexposure, the Investment Managers are permitted to invest inpooled funds.

BUSINESS REVIEW


THE COM

PANY


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

Performance Growth: In the year to 31st March 2016, the Growth portfolio produced areturn to shareholders of –8.8% and a return on net assets of –1.6%.This compares with the return on the benchmark index of –5.3%. Asat 31st March 2016, the value of the Company’s Growth portfoliowas £224.4 million.

Income:In the year to 31st March 2016, the Income portfolio produced areturn to shareholders of -3.5% and a return on net assets of –1.1%.This compares with the return on the benchmark index of –5.3%. Asat 31st March 2016, the value of the Company’s Income portfoliowas £139.2 million.

The Investment Managers’ Report on pages 7 to 11 includes a reviewof developments during the year as well as information oninvestment activity within the Company’s portfolios, together withan explanation of the performance relative to the benchmark.

Total Return, Revenue and Dividends Company:Gross total return for the year amounted to £0.2 million (2015:£31.2 million) and net total loss or return after deducting financecosts, management expenses, other administrative expenses andtaxation amounted to a loss of £5.2 million (2015: £26.9 millionreturn). Distributable income for the year amounted to £8.3 million(2015: £10.4 million).

Growth: Gross total loss for the year amounted to £1.1 million (2015:£19.5 million return) and net total loss, after deducting financecosts, management expenses, other administrative expenses andtaxation, amounted to £4.6 million (2015: £16.6 million return).Distributable income for the year totalled £4.6 million (2015: £7.2million). Dividends totalling 5.85 pence (2015: 6.70 pence) perGrowth share were declared in respect of the year under review.Those distributions cost £5.0 million and the revenue reserve afterallowing for those dividends amounts to £1.4 million.

Income: Gross total return for the year amounted to £1.2 million (2015:£11.7 million) and net total return, after deducting finance costs,management expenses, other administrative expenses and taxation,amounted to a loss of £0.6 million (2015: £10.3 million return).Distributable income for the year totalled £3.8 million (2015:£3.2 million). Dividends totalling 4.75 pence (2015: 4.75 pence) perIncome share were paid in respect of the year under review. Thosedistributions cost £3.8 million and the revenue reserve afterallowing for those dividends amounts to £0.5 million.

Key Performance Indicators (‘KPIs’) The Board uses a number of financial KPIs to monitor and assessthe performance of the Company. The Board is provided withperformance indicators monthly and in addition, during quarterlyBoard Meetings, more detailed reviews are undertaken. Theprincipal KPIs are:

• Performance against the benchmark index: This is the most important KPI by which performance is judged.The following graphs illustrate performance against benchmarkindicators and these are further discussed in the Chairman’sStatement on page 4 and can be read together with the financialrecords for 10 years (Growth) and inception (Income) on pages 13and 23.

Growth:Performance Relative to Benchmark IndexFIGURES HAVE BEEN REBASED TO 100 AT 31ST MARCH 2006

Source: Morningstar.

JPMorgan European Growth – share price total return.

JPMorgan European Growth – net asset value per share total return (based oncum income NAV; prior to 30th June 2008 Capital only NAV).

The benchmark is represented by the grey horizontal line (see page 2 note 3).

Ten Year PerformanceFIGURES HAVE BEEN REBASED TO 100 AT 31ST MARCH 2006

Source: Morningstar/MSCI.



Benchmark, (see page 2 note 3).

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Income:Performance Relative to Benchmark Index Since InceptionFIGURES HAVE BEEN REBASED TO 100 AT INCEPTION

Source: Morningstar.



The benchmark is represented by the grey horizontal line (see page 3 note 3).

Performance Since InceptionFIGURES HAVE BEEN REBASED TO 100 AT INCEPTION

Source: Morningstar/MSCI.



Benchmark, (see page 3 note 3).

• Performance against the Company’s peersThe principal objective of the Growth portfolio is to achievecapital growth by consistent outperformance of the benchmark.The principal objective of the Income portfolio is to provide agrowing income together with the potential for long-term capitalgrowth. However, the Board also monitors the performance ofboth portfolios relative to a broad range of competitor funds. TheCompany’s performance for the current period is comparativewith its peers.

• Performance attributionThe purpose of performance attribution analysis is to assess howeach portfolio achieved its performance relative to its benchmarkindex, i.e. to understand the impact on each portfolio’s relativeperformance of the various components such as asset allocation

and stock selection. Details of the attribution analyses for theyear ended 31st March 2016 are given in the InvestmentManagers’ Report on pages 7 to 11.

• Discount to net asset value (‘NAV’)The Board has for several years operated a share repurchaseprogramme that seeks to address imbalances in supply anddemand for the Company’s shares within the market andthereby seek to manage the volatility and absolute level of thediscount to NAV at which the Company’s shares trade. In theyear to 31st March 2016, the discount on the Growth shares(using cum-income month end data, with debt valued at par)ranged between 3.4% and 11.2% and the discount on theIncome shares (using cum-income month end data, with debtvalued at par) ranged between 0.7% and 7.4%.

Growth: Discount History

Source: Datastream.

JPMorgan European Growth – share price discount on Capital-only net assetvalue.

Income: Discount History

Source: Datastream.

JPMorgan European Growth – share price discount on Capital-only net assetvalue.

• Ongoing ChargesThe Ongoing charges represent the Company’s management feeand all other operating expenses, excluding finance costs andperformance fee payable, expressed as a percentage of theaverage of the daily net assets during the year. The Growth

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portfolio’s Ongoing charges for the year ended 31st March 2016were 1.06% (2015: 1.04%). The Income portfolio’s Ongoing chargesfor the year ended 31st March 2016 were 1.08% (2015: 1.08%).

Share CapitalThe Company has authority both to repurchase shares in the market(for cancellation or to be held in Treasury) and to issue new sharesfor cash at a premium to net asset value.

During the year no shares were repurchased for cancellation or intoTreasury (2015: Growth nil, Income nil). No Growth shares or Incomeshares were held in, or cancelled from, Treasury during the year.

Since the year end, on the 8th and 15th April 2016, the Boardimplemented its buyback policy and purchased a total of 114,803Growth shares. No Income shares were bought back.

No new shares of either share class were issued during the year, orsince the year end (2015: nil).

Resolutions to renew the authorities to allot new shares and torepurchase shares for cancellation will be put to shareholders at theforthcoming AGM. The full text of the resolutions is set out in theNotice of Meeting on pages 85 and 87.

As refered to in the Chairman’s statement on page 4, the Companyhas a block listing.

Conversions During the year, the Company’s annual share conversions took placeon 15th March 2016. The net result of those conversions was adecrease in the Growth issued share capital of 7,410,920 shares, andan increase in the Income issued share capital of 14,030.687 shares.

Board DiversityWhen recruiting a new Director, the Board’s policy is to appointindividuals on merit. Diversity is important in bringing anappropriate range of skills and experience to the Board. As regardsthe gender diversity of the Board as at 31st March 2016, there werethree male Directors and two female Directors on the Board.

Employees, Social, Community, Environmental,Human Rights Issues and Greenhouse Gas EmissionsThe Company has a management contract with JPMF. It has noemployees and all of its Directors are non-executive. The day to dayactivities are carried out by third parties. There are therefore nodisclosures to be made in respect of employees. The Company itselfhas no premises, consumes no electricity, gas or diesel fuel andconsequently does not have a measurable carbon footprint. The Boardnotes the JPMAM policy statements in respect of Social, Communityand Environmental and Human Rights issues and Greenhouse Gas

Emissions and that JPMAM, is a signatory to the Carbon DisclosureProject and JPMorgan Chase is a signatory to the Equator Principles onmanaging social and environmental risk in project finance. Seewww.jpmorganinvestmenttrusts.co.uk/governance for further details.

Modern Slavery ActThe Modern Slavery Act 2015 requires companies to prepare aslavery and human trafficking statement for each financial year ofthe organisation. The Boards statement is set out in the Company’swebsite at jpmeuropean.co.uk

Principal RisksWith the assistance of the Manager, the Board has drawn up a riskmatrix, which identifies the key risks to the Company. The Directorshave carried out a robust assessment of the principal risks facingthe Company. These key risks fall broadly under the followingcategories:

• Investment and Strategy: An inappropriate investment strategy,for example asset allocation or the level of gearing, may lead tounder-performance against the Company’s benchmark index andpeer companies, resulting in the Company’s shares trading on awider discount. The Board manages these risks by an investmentprocess designed to identify stocks with the best prospects andby diversification of investments through its investmentrestrictions and guidelines which are monitored and reported tothe Board. JPMF provides the Directors with timely and accuratemanagement information, including performance data andattribution analyses, revenue estimates, liquidity reports andshareholder analyses. The Board monitors the implementationand results of the investment process with the InvestmentManagers, who attend all Board meetings, and reviews datawhich show statistical measures of the Company’s risk profile. TheInvestment Manager employs the Company’s gearing within astrategic range set by the Board. The Board holds a separatemeeting devoted to strategy each year.

• Market: Market risk arises from uncertainty about the futureprices of the Company’s investments. It represents the potentialloss the Company might suffer through holding investments inthe face of negative market movements. The Board considersasset allocation, stock selection and levels of gearing on a regularbasis and has set investment restrictions and guidelines whichare monitored and reported on by JPMF. The Board monitors theimplementation and results of the investment process with theManager.

• Accounting, Legal and Regulatory: In order to continue to qualifyas an investment trust, the Company must comply with Section1158 (‘Section 1158’) of the Corporation Tax Act 2010. Details ofthe Company’s approval are given under ‘Business of the



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Company’ above. Were the Company to breach Section 1158, itmight lose investment trust status and, as a consequence, gainswithin the Company’s portfolio could be subject to Capital GainsTax. The Section 1158 qualification criteria are continuallymonitored by JPMF and the results reported to the Board eachmonth. The Company must also comply with the provisions of TheCompanies Act and, since its shares are listed on the LondonStock Exchange, the UKLA Listing Rules and Disclosure andTransparency Rules (‘DTRs’). A breach of the Companies Act couldresult in the Company and/or the Directors being fined or thesubject of criminal proceedings. Breach of the UKLA Listing Rulesor DTRs could result in the Company’s shares being suspendedfrom listing which in turn would breach Section 1158. The Boardrelies on the services of its Company Secretary, JPMF, and itsprofessional advisers to ensure compliance with the CompaniesAct and The UKLA Listing Rules and DTRs.

• Corporate Governance and Shareholder Relations: Details of theCompany’s compliance with Corporate Governance best practice,including information on relations with shareholders, are set outin the Corporate Governance report on pages 42 to 46.

• Operational: Disruption to, or failure of, JPMF’s accounting,dealing or payments systems or the Depositary or Custodian’srecords could prevent accurate reporting and monitoring of theCompany’s financial position. Details of how the Board monitorsthe services provided by JPMF and its associates and theDepositary and Custodian and the key elements designed toprovide effective internal control are included within the InternalControl section of the Corporate Governance report on page 45.

• Financial: The financial risks faced by the Company includemarket risk (which comprises currency risk, interest rate risk andother price risk), liquidity risk and credit risk. Further details aredisclosed in note 22 on pages 76 to 81.

Long Term ViabilityThe Company was established in 1929 and has now been inexistence for 87 years. This year it will be hosting its 87th AGM.

The Company is an investment trust and has the objective ofachieving long term capital growth and income investing incontinental European equities. The Company has been investingover many economic cycles and some difficult market conditions.

Although past performance and a long historic track record is noguide to the future, the Directors believe that the Company has anattractive future for investors as a long term investmentproposition. Unfortunately, it is impossible to look predict too farinto the future, so the Directors have adopted a somewhat shortertime horizon to assess the Company’s viability, which is five years.

Five years is considered to be a suitable time horizon as it isregarded by many as a reasonable time for investing in equities.The Directors have considered the Company’s prospects over thenext five years, its principal risks and the outlook for the Europeaneconomy, its equity market and the market for investment trusts.Moreover, the Company’s ability to obtain a 20 year privateplacement illustrates the confidence that lenders have placed in thelong term viability of the Company.

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 next five years until 31st March2021.

By order of the Board Paul Winship, for and on behalf of JPMorgan Funds Limited, Company Secretary

15th June 2016


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Josephine Dixon

A Director since 1st October 2013.

Last reappointed to the Board: 2015.

Remuneration: £27,000.

Chartered accountant and a non-executive director of Standard Life Equity Income Trust plc andWorldwide Healthcare Trust plc. On 14th July 2014 she was appointed a non-executive directorof Strategic Capital Trust plc, and on 11th February 2015 of F&C Global Smaller Companies plc.Previously held a number of senior positions within the Nat West Group and was FinanceDirector of Newcastle United plc. She was Commercial Director, UK, Europe and the Middle Eastat Serco Group and sat on various advisory boards in the education and charity sector. Herqualifications for Board membership are as a qualified accountant and her previous boardexperience.

Connections with Manager: None.

Shared directorships with other Directors: F&C Global Smaller Companies plc.

Shareholding in Company: 7,000 Growth Shares.

Andrew Adcock (Chairman of the Board and Nomination Committee)

A Director since 1st October 2013.



Chairman of Majedie Investments Plc, VPC Speciality Lending Investment Plc and since 19th May2016 Panmure Gordon & Co. plc and a non executive director of the F&C Global SmallerCompanies plc, Kleinwort Benson Bank Limited and Foxton’s plc. Also a director of theCourtauld Institute of Art and chairman of the Samuel Courtauld Trust. Previous roles includenon-executive director of Kleinwort Benson Group Limited, until July 2011, managing partner ofBrompton Asset Management and vice chairman of Citigroup Corporate Finance. He waspreviously a partner at Lazard LLC. His qualification for Board membership is more than 30years experience in the City of London.


Shared directorships with other Directors: F&C Global Smaller Companies plc.


Stephen Goldman

A Director since September 2008.



Other directorships: Has a wide experience of investing in European equities, having spent 12 yearsat NM Rothschild Asset Management, where he led the UK Equity Research team. Formerly Headof the UK Portfolio Management and the European Client Portfolio Management teams atJPMorgan and Head of Equities for the European Region at Credit Suisse Asset Management. He isa director of Cavendish Asset Management Limited.


Shared directorships with other Directors: None.


Governance

BOARD OF DIRECTORS


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Jutta af Rosenborg

A Director since 2015.



Jutta is currently a Non-Executive Director of Aberdeen Asset Management plc and a Director ofDet Danske Klasselotteri A/S and NKT Holdings A/S. She has held a number of senior auditingand consulting roles with firms including Deloitte in addition to directorships of listed DanishCompanies. She is a qualified Accountant with a Masters in Business from the CopenhagenBusiness School and has considerable business experience gained as a financial director ofseveral large industrial enterprises and their subsidiaries operating in Continental Europe.



Shareholding in Company: nil.

Stephen Russell A Director since 2005.



Other directorships: Spent eleven years at SLC Asset Management (now CSAM), most notably asFund Manager of £5 billion of equities, before joining HSBC Investment Bank as Head of Europe& UK Equity Strategy. He is currently Investment Director at Ruffer LLP. His qualifications forBoard membership are practical experience of investment in Europe and knowledge of both theinstitutional and private client markets.




All Directors are members of the Audit and Nomination Committees and are consideredindependent of the Manager.


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The Directors present their report and the audited financialstatements for the year ended 31st March 2016.

Management of the CompanyThe Manager and Secretary is JPMorgan Funds Limited (JPMF).Portfolio management is delegated to JPMorgan Asset Management(UK) Limited (JPMAM). JPMF is employed under a contractterminable on one year’s notice, without penalty. If the Companywishes to terminate the contract on shorter notice, the balance ofremuneration is payable by way of compensation.

JPMF and JPMAM are wholly owned subsidiaries of JPMorgan ChaseBank which, through other subsidiaries, also provides banking,dealing, marketing and custodian services to the Company.

The Board conducts a formal evaluation of the performance of, andcontractual relationship with, the Manager on an annual basis. Partof this evaluation includes a consideration of the management feesand whether the service received is value for money forshareholders. No separate management engagement committeehas been established because all Directors are considered to beindependent of the Manager and, given the nature of the Company’sbusiness, it is felt that all Directors should take part in the reviewprocess.

The Board has thoroughly reviewed the performance of theManager in the course of the year. The review covered theperformance of the Manager, its management processes,investment style, resources and risk controls and the quality ofsupport that the Company receives from the Manager including themarketing support provided. The Board is of the opinion that thecontinuing appointment of the Manager is in the best interests ofshareholders as a whole. Such a review is carried out on an annualbasis.

Management FeeGrowth Share Class The annual management fee is charged at 0.75% per annum ontotal assets less current liabilities and is calculated and paidmonthly in arrears. If the Company invests in funds managed oradvised by JPMAM or any of its associated companies, thoseinvestments are excluded from the calculation and therefore attractno fee.

Income Share Class The annual management fee is charged at 0.75% per annum ontotal assets less current liabilities is calculated and paid monthly inarrears. If the Company invests in funds managed or advised byJPMAM or any of its associated companies, those investments areexcluded from the calculation and therefore attract no fee.

Going Concern The Directors believe that, having considered the Company’sinvestment objectives (see page 33), future cash flow projections,risk management policies (see page 45), liquidity risk (see note22(b) on page 80), capital management policies and procedures(see page 82), nature of the portfolios and expenditure projections,the Company has adequate resources, an appropriate financialstructure and suitable management arrangements in place tocontinue in operational existence for the foreseeable future, whichis at least 12 months from approving this annual report andaccounts. For these reasons, they consider that there is reasonableevidence to continue to adopt the going concern basis in preparingthe accounts.

Directors In accordance with corporate governance best practice, all Directorswill retire by rotation at the forthcoming Annual General Meetingand, being eligible, all will offer themselves for reappointment. TheNomination Committee, having considered their qualifications,performance and contribution to the Board and its committees,confirms that each Director continues to be effective anddemonstrates commitment to the role and the Board recommendsto shareholders that they be reappointed.

Director Indemnification and InsuranceAs permitted by the Company’s Articles of Association, the Directorshave the benefit of an indemnity which is a qualifying third partyindemnity, as defined by Section 234 of the Companies Act 2006.The indemnities were in place during the year and as at the date ofthis report.

An insurance policy is maintained by the Company whichindemnifies the Directors of the Company against certain liabilitiesarising in the conduct of their duties. There is no cover againstfraudulent or dishonest actions.

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

(a) so far as each of the Directors is aware, there is no relevantaudit information (as defined in the Companies Act) of whichthe Company’s auditors are 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 Auditors are aware of that information.

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

Governance continued

DIRECTORS’ REPORT


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

Capital StructureThe Company’s capital structure is summarised on page 84 of thisreport.

Voting Rights in the Company’s sharesDetails of the voting rights in the Company’s shares as at the date ofthis report are given in note 16 to the Notice of AGM on page 87.

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

% of TotalShareholders Voting Rights

1607 Capital Partners LLC 9.9Wells Capital Management 5.0

The Company is also aware that approximately 12.6% of theCompany’s total voting rights are held by individuals throughsavings products managed by JPMAM and registered in the name ofChase Nominees Limited. If those voting rights are not exercised bythe beneficial holders, in accordance with the terms and conditionsof the savings products, under certain circumstances JPMAM hasthe right to exercise those voting rights. That right is subject tocertain limits and restrictions and falls away at the conclusion of therelevant general meeting.

The percentage of total voting rights is calculated by reference tothe share voting numbers which as at 31st March 2016 were asfollows:

Growth shares: 2.601Income shares: 1.371

The rules concerning the appointment and replacement ofDirectors, amendment of the Articles of Association and powers toissue or buy back the Company’s shares are contained in theArticles of Association of the Company and the Companies Act2006.

There are no restrictions concerning the transfer of securities in theCompany; no special rights with regard to control attached tosecurities; no agreements between holders of securities regardingtheir transfer known to the Company; no agreements which theCompany is party to that affects its control following a takeover bid;and no agreements between the Company and its Directorsconcerning compensation for loss of office.

There were no changes after the year end to report.

Independent AuditorErnst & Young LLP have expressed their willingness to continue inoffice as auditor and a resolution to reappoint them and authorisethe Directors to determine their remuneration for the ensuing yearwill be put to shareholders at the AGM.

Annual General MeetingNOTE: 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 increase the maximum aggregate Directors’fees (resolution 10)

In order to accommodate future increases in directors fees, theDirectors recommend that, in accordance with Article 103(1) of theCompany’s Articles of Association, the permitted maximumaggregate of Directors’ fees payable be increased from £175,000 to£225,000 per annum.

(ii) Authority to allot new shares and to disapply statutorypre-emption rights (resolutions 11 and 12)

The Directors will seek renewal of the authority at the AGM to issueup to 7,771,912 new Growth shares and 9,388,479 new Incomeshares for cash up to an aggregate nominal amount of £388,596and £234,712 respectively such amount being equivalent to 10% ofthe present issued share capital of each share class as at the lastpracticable date before the publication of this document. The fulltext of the resolutions is set out in the Notice of Meeting onpage 85. This authority will expire at the conclusion of the AGM ofthe Company in 2017 unless renewed at a prior general meeting.

It is advantageous for the Company to be able to issue new sharesto participants purchasing shares through the JPMorgan savingsproducts and also to other investors when the Directors considerthat it is in the best interests of shareholders to do so. As suchissues are only made at prices greater than the net asset value (the‘NAV’), they increase the NAV per share and spread the Company’sadministrative expenses, other than the management fee, over agreater number of shares. The issue proceeds are available forinvestment in line with the Company’s investment policies.

(iii) Authority to repurchase the Company’s Shares (resolution 13) The authority to repurchase up to 14.99% of the Company’s issuedshare capital, granted by shareholders at the 2015 AGM, will expireon 18th January 2017 unless renewed at the forthcoming AGM. The


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Directors consider that the renewal of the authority is in theinterests of shareholders as a whole as the repurchase of shares ata discount to NAV enhances the NAV of the remaining shares. TheBoard will therefore seek shareholder approval at the AGM to renewthis authority, which will last until 18th January 2018 or until thewhole of the 14.99% has been acquired, whichever is the earlier.The full text of the resolution is set out in the Notice of Meeting onpages 85 and 87. Repurchases will be made at the discretion of theBoard, and will only be made in the market at prices below theprevailing NAV per share, thereby enhancing the NAV of theremaining shares, as and when market conditions are appropriate.

(iv) Authority to make off-market purchases (resolution 14) This resolution gives the Company authority to buy its deferredshares arising on conversion of any of the Growth or Income sharesinto the other class of shares. This resolution follows therequirements of Section 694 of the Companies Act 2006. TheDeferred shares are repurchased for nominal consideration (as theyhave no economic value) in order to keep the balance sheetmanageable. By law the Company can only purchase these sharesoff-market if such purchase is pursuant to a contract in the formapproved at a general meeting of the Company.

RecommendationThe Board considers that resolutions 10 to 14 are likely to promotethe success of the Company and are in the best interests of theCompany and its shareholders as a whole. The Directorsunanimously recommend that you vote in favour of the resolutionsas they intend to do in respect of their own beneficial holdingswhich amount in aggregate to approximately 0.01% of the votingrights of the Company.

Corporate Governance

Compliance The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 50, indicates how the Companyhas applied the principles of good governance of the FinancialReporting Council UK 2014 Corporate Governance Code (the ‘UKCorporate Governance Code’) and the AIC’s Code of CorporateGovernance 2013, (the ‘AIC Code’), which complements the UKCorporate Governance Code and provides a framework of bestpractice for investment trusts1.

The Board is responsible for ensuring the appropriate level ofcorporate governance and considers that the Company hascomplied with the best practice provisions of the UK Corporate

Governance Code, insofar as they are relevant to the Company’sbusiness, and the AIC Code throughout the year under review.

Role of the Board A management agreement between the Company and JPMF sets outthe matters over which the Manager has authority. This includesmanagement of the Company’s assets and the provision ofaccounting, company secretarial, administrative, and somemarketing services. All other matters are reserved for the approvalof the Board. A formal schedule of matters reserved to the Boardfor decision has been approved. This includes determination andmonitoring of the Company’s investment objectives and policy andits future strategic direction, gearing policy, management of thecapital structure, appointment and removal of third party serviceproviders, review of key investment and financial data and theCompany’s corporate governance and risk control arrangements.

At each Board meeting, Directors’ interests are considered. Theseare reviewed carefully, taking into account the circumstancessurrounding them, and, if considered appropriate, are approved.It was resolved that there were no actual or indirect interests of aDirector which conflicted with the interests of the Company, whicharose during the year.

Following the introduction of the Bribery Act 2010 the Board hasadopted appropriate procedures designed to prevent bribery. Itconfirms that the procedures have operated effectively during theyear under review.

The Board meets on at least five occasions during the year andadditional meetings are arranged as necessary. Full and timelyinformation is provided in Board Papers and correspondence to theBoard by JPMF to enable it to function effectively and to allowDirectors to discharge their responsibilities.

There is an agreed procedure for Directors to take independentprofessional advice if necessary and at the Company’s expense. Thisis in addition to the access that every Director has to the advice andservices of the Company Secretary, JPMF, which is responsible tothe Board for ensuring that Board procedures are followed and thatapplicable rules and regulations are complied with.

Board Composition The Board, chaired by Andrew Adcock, consists of fivenon-executive Directors, all of whom are regarded by the Board asindependent of the Company’s Manager, including the Chairman.The Directors have a breadth of investment knowledge, businessand financial skills and experience relevant to the Company’sbusiness. Brief biographical details of each Director are set out onpages 38 and 39.

DIRECTORS’ REPORT CONTINUED


1 Copies of the UK Corporate Code and the AIC Code may be found on the respective organisations’ websites: www.frc.org.uk and www.theaic.co.uk


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A review of Board composition and balance is included as part ofthe annual performance evaluation of the Board, details of whichmay be found below. The Board has considered whether a seniorindependent director should be appointed and has concluded that,as the Board comprises entirely of non-executive directors, this isunnecessary at present. However, the Chairman of the AuditCommittee leads the evaluation of the performance of the Chairmanand is available to shareholders if they have concerns that cannotbe resolved through discussion with the Chairman.

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,Directors are subject to annual reappointment by shareholders, inline with corporate governance best practice. The Board does notbelieve that length of service in itself necessarily disqualifies aDirector from seeking reappointment but, when making arecommendation, the Board will take into account the ongoingrequirements of the UK Corporate Governance Code, including theneed to refresh the Board and its Committees.

The terms and conditions of Directors’ appointments are set out informal letters of appointment, copies of which are available forinspection on request at the Company’s registered office and at theAGM.

Induction and TrainingOn appointment, the Manager and Company Secretary provide allDirectors with induction training. Thereafter, regular briefings areprovided on changes in law and regulatory requirements that affectthe Company and the Directors. Directors are encouraged to attendindustry and other seminars covering issues and developmentsrelevant to investment trust companies. Regular reviews of theDirectors’ training needs are carried out by the Chairman by meansof the evaluation process described below.

Meetings and Committees The Board delegates certain responsibilities and functions tocommittees. Details of membership of committees are shown withthe Directors’ profiles on pages 38 and 39.

The table below details the number of Board and Committeemeetings attended by each Director. During the year there were fivefull Board meetings, including a private meeting of the Directors toevaluate the Manager and a separate meeting devoted to strategy.There were also two Audit Committee meetings and one meeting ofthe Nomination Committee during the year.

Audit NominationBoard Committee Committee

Meetings Meetings MeetingsDirector Attended Attended Attended

Andrew Murison1 2 1 n/aAndrew Adcock 5 2 1Josephine Dixon 5 2 1Stephen Goldman 5 2 1Jutta af Rosenborg 5 2 1Stephen Russell 5 2 1Ferdinand Verdonk1 2 1 n/a

1 Retired 21st July 2015.

Board Committees Nomination Committee The Nomination Committee, chaired by Andrew Adcock, consists ofall of the Directors and meets at least annually to ensure that theBoard has an appropriate balance of skills and experience to carryout its fiduciary duties and to select and propose suitablecandidates for appointment when necessary. The appointmentprocess takes account of the benefits of diversity, including gender.A variety of sources, including the use of external searchconsultants, may be used to ensure that a wide range of candidatesis considered.

The Committee conducts an annual performance evaluation of theBoard, its committees and individual Directors to ensure that allDirectors have devoted sufficient time and contributed adequatelyto the work of the Board and its Committees. The evaluation of theBoard considers the balance of experience, skills, independence,corporate knowledge, its diversity, including gender, and how itworks together. Questionnaires, drawn up by the Board, with theassistance of JPMF and Lintstock Ltd, a firm of independentconsultants, that have no other relationships with the Company, arecompleted by each Director. The responses are collated and thendiscussed by the Committee. The evaluation of individual Directorsis led by the Chairman. The Audit Committee Chairman leads theevaluation of the Chairman’s performance.

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

Audit Committee The Audit Committee, chaired by Josephine Dixon, meets at leasttwice each year. The members of the Audit Committee consider thatthey have the requisite skills and experience to fulfil theresponsibilities of the Committee.


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The Committee reviews the actions and judgements of the Managerin relation to the half year and annual accounts and the Company’scompliance with the UK Corporate Governance Code.

During its review of the Company’s financial statements for the yearended 31st March 2016, the Audit Committee considered thefollowing significant issues, in particular those communicated bythe Auditors during their reporting:

Significant issue How the issue was addressed

The valuation of investments is undertaken inaccordance with the accounting policies, disclosedin note 1 to the accounts on page 61. 100% of theportfolio can be verified against daily publishedprices. Controls are in place to ensure valuations areappropriate and existence is verified throughcustodian reconciliations. The Board monitorssignificant movements in the underlying portfolio.

The recognition of investment income is undertakenin accordance with accounting policy note 1(e) to theaccounts on page 62. The Board regularly reviewssubjective elements of income and agree theiraccounting treatment.

Approval for the Company as an investment trustunder Sections 1158 and 1159 has been obtained andongoing compliance with the eligibility criteria ismonitored on a regular basis by the Manager onbehalf of the Board.

The Board was made fully aware of any significant financial reportingissues and judgements made in connection with the preparation ofthe financial statements. This financial year the Company’s Reportand Accounts have been prepared under FRS 102.

Having discussed the content of the annual report and accountswith the Alternative Investment Fund Manager (JPMF), InvestmentManagers, Company Secretary and other third party serviceproviders, the Audit Committee has concluded that the AnnualReport for the year ended 31st March 2016, taken as a whole, is fair,balanced and understandable and provides the information bothpositive and negative necessary for shareholders to assess theCompany’s performance, business model and strategy, and hasreported on these findings to the Board. The Board’s conclusions inthis respect are set out in the Statement of Directors’Responsibilities on page 50.

The Audit Committee also examines the effectiveness of theCompany’s internal control systems, receives information from theManager’s Compliance department, see page 45 Risk Managementand Internal Controls, and also reviews the scope and results of theexternal audit, its cost effectiveness and the independence and

objectivity of the external auditors. In the Directors’ opinion theAuditors are independent. The Company also engages the Auditorsto undertake a review of the annual share conversion that itprocesses for a fee of £3,750 per annum. The total fee for thisservice was £3,570 in the year ended 31st March 2016. The Board donot consider that the fee for this non-audit service undermines theauditor’s independence as it is regarded as an immaterial sum.

The Audit Committee also has a primary responsibility for makingrecommendations to the Board on the reappointment and removalof external Auditors. Representatives of the Company’s Auditorsattended the Audit Committee meeting at which the draft AnnualReport & Accounts including the Auditor’s Audit Planning Reportwere considered and also engage with Directors as and whenrequired. Having reviewed the performance of the externalAuditors, including assessing the quality of work, timing ofcommunications and work with JPMF, the Committee considered itappropriate to recommend their reappointment. The Boardsupported this recommendation which will be put to shareholdersat the forthcoming Annual General Meeting. The current audit firmhas audited the company’s financial statements for more than20 years. The Company’s year ended 31st March 2016 is the currentAudit Partner’s fifth year of a five year maximum term. The processfor the replacement of the current audit partner is ongoing and isexpected to be implemented during the year. The Committee hasconsidered the possibility of tendering for the role of auditor andwill review the timing of a tender in accordance with the permittedtime limits.

Both the Nomination Committee and the Audit Committee havewritten terms of reference which define clearly their respectiveresponsibilities, copies of which are available for inspection at theCompany’s website, on request at the Company’s registered officeand at the Company’s Annual General Meeting.

Relations with Shareholders The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a full understandingof the Company’s activities and performance and reports formally toshareholders quarterly each year by way of the annual report andaccounts, the half year financial report and two interimmanagement statements. This is supplemented by the dailypublication, through the London Stock Exchange, of the net assetvalue of the Company’s shares.

All shareholders are encouraged to attend the Company’s AnnualGeneral Meeting at which the Directors and representatives of theManagers are available in person to meet with shareholders andanswer their questions. In addition, a presentation is given by theInvestment Managers who review the Company’s performance.

Valuation, existenceand ownership ofinvestments

Recognition ofinvestment income

Compliance withSections 1158 and1159




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During the year the Company’s brokers, the Investment Managersand JPMF hold regular discussions with larger shareholders. TheDirectors are made fully aware of their views. The Chairman andDirectors make themselves available as and when required toaddress shareholder queries. The Directors may be contactedthrough the Company Secretary whose details are shown onpage 91. Questions can also be raised through the link on theCompany’s website www.jpmeuropean.co.uk.

The Company’s Annual Report and Accounts is published in time togive shareholders at least 20 working days’ notice of the AnnualGeneral Meeting. Shareholders wishing to raise questions inadvance of the meeting are encouraged to submit questions via theCompany’s website or write to the Company Secretary at theaddress shown on page 91. Details of the proxy voting position oneach resolution will be published on the Company’s website shortlyafter the Annual General Meeting.

Risk Management and Internal Control The UK Corporate Governance Code requires the Directors, at leastannually, to review the effectiveness of the Company’s system ofrisk management and internal control and to report to shareholdersthat they have done so. This encompasses a review of all controls;business, financial, operational, compliance and risk management.

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 be designedto manage rather than eliminate the risk of failure to achievebusiness objectives and therefore can only provide reasonable, butnot absolute, assurance against fraud, material mis-statement or loss.

Since investment management, custody of assets and alladministrative services are provided to the Company by JPMF andits associates, the Company’s system of risk management andinternal control mainly comprises monitoring the servicesprovided by JPMF and its associates, including the operatingcontrols established by them, to ensure they meet the Company’sbusiness objectives. The Company does not have an internal auditfunction of its own, but relies on the internal audit department ofthe Manager. The key elements designed to provide effective riskmanagement and internal control are as follows:

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

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

Management Systems – The Manager’s system of risk managementand internal control includes organisational agreements whichclearly define the lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by JPMF’sCompliance department which regularly monitors compliance withFCA rules.

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

The Board, either directly or through the Audit Committee, keepsunder review the effectiveness of the Company’s system of riskmanagement and internal control by monitoring the operation ofthe key operating controls of the Managers and its associates asfollows:

• the Board, through the Audit Committee, reviews the terms of themanagement agreement and receives regular reports fromJPMF’s Compliance department;

• the Board reviews reports on the risk management and internalcontrols and the operations of its Depositary, BNY Mellon Trust &Depositary UK Limited and Custodian, JPMorgan Chase Bank,which are themselves independently reviewed; and

• every six months the Directors review an independent report onthe risk management and internal controls and the operations ofJPMF.

By the 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 ended 31st March2016 and that systems have been in place during the year underreview and up to the date of approval of this Annual Report andAccounts. Moreover, the controls accord with the FinancialReporting Council, Guidance on Risk Management, internal controland related Financial and Business Reporting, September 2014.

Corporate Governance and Voting Policy The Company delegates responsibility for voting to the Manager.The following is a summary of JPMAM’s policy statements oncorporate governance, voting policy and social and environmentalissues, which has been reviewed and noted by the Board.

Corporate Governance JPMAM believes that corporate governance is integral to ourinvestment process. As part of our commitment to delivering superiorinvestment performance to our clients, we expect and encourage the


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companies in which we invest to demonstrate the highest standards ofcorporate governance and best business practice. We examine theshare structure and voting structure of the companies in which weinvest, as well as the board balance, oversight functions andremuneration policy. These analyses then form the basis of our proxyvoting and engagement activity.

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

Stewardship/EngagementJPMAM recognises its wider stewardship responsibilities to its clientsas a major asset owner. To this end, we support the introduction of theFRC Stewardship Code, which sets out the responsibilities ofinstitutional shareholders in respect of investee companies. Under theCode, managers should:

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

– disclose their policy on managing conflicts of interest;

– monitor their investee companies;

– establish clear guidelines on how they escalate engagement;

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

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

– report to clients.

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

JPMAM’s Voting Policy and Corporate Governance Guidelines areavailable on request from the Company Secretary or can bedownloaded from JPMAM’s website:http://www.jpmorganassetmanagement.co.uk/Institutional/CommentaryAndAnalysis/CorporateGovernance, which also sets out itsapproach to the seven principles of the FRC Stewardship Code, itspolicy relating to conflicts of interest and its detailed voting record.

By order of the Board Paul Winship, for and on behalf of JPMorgan Funds Limited, Company Secretary

15th June 2016




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The Board presents the Directors’ Remuneration Report for the yearended 31st March 2016, which has been prepared in accordancewith the requirements of Section 421 of the Companies Act 2006.

The law requires the Company’s Auditor to audit certain of thedisclosures provided. Where disclosures have been audited, they areindicated as such. The Auditor’s opinion is included in their reporton pages 51 to 56.

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

Directors’ Remuneration PolicyThe Directors’ Remuneration Policy is subject to a triennial bindingvote, however, a decision has been taken to seek approval annuallyand therefore an ordinary resolution to approve this policy will beput to shareholders at the forthcoming Annual General Meeting.The policy subject to the vote, is set out in full below and iscurrently in force.

At the AGM on 21st July 2015 99.57% votes cast were in favour of (orgranted discretion to the Chairman who voted in favour of) theRemuneration Policy and 0.43% voted against. Abstentions werereceived from less 0.04% of votes cast.

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 and retained.The Chairman of the Board and the Chairman of the AuditCommittee are paid higher fees than the other Directors, reflectingthe greater time commitment involved in fulfilling those roles.

Reviews are based on information provided by the Manager, JPMF,and industry research carried out by third parties on the level offees paid 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 is requiredand there is no employee comparative data to provide, in relation tothe setting of the remuneration policy for Directors.

All of the Directors are non-executive. There are no performance-related elements to their fees and the Company does not operateany type of incentive, share scheme, award or pension scheme andtherefore no Directors receive bonus payments or pensioncontributions from the Company or hold options to acquire sharesin the Company. Directors are not granted exit payments and arenot provided with compensation for loss of office. No otherpayments are made to Directors, other than the reimbursement of

reasonable out-of-pocket expenses incurred in attending theCompany’s business.

In the year under review, Directors’ fees were paid at the followingrates: Chairman £34,000; Chairman of the Audit Committee£27,000; and other Directors £23,000.

The last increase to Directors’ fees was made on 1st April 2014. Asreferred to in the Chairman’s Statement, effective from 1st April2016 the Directors fees have been increased as follows: Chairman£4,000 increase from £34,000 to £38,000, Audit CommitteeChairman £3,000 increase from £27,000 to £30,000, Directors£3,000 increase from £23,000 to £26,000.

In order to accommodate future increases in directors fees, theDirectors recommend that the maximum aggregate Directors’ feespayable in the Company’s Articles of Association be increased from£175,000 to £225,000 per annum. See Resolution 10 in the Notice tothe AGM on page 85.

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’s Articles of Association provide for additionalremuneration to be paid to the Company’s Directors for duties orservices performed outside their ordinary duties, not limited by the£175,000, refered to above.

The Company has not sought shareholder views on its remunerationpolicy. The Nomination Committee considers any commentsreceived from shareholders on remuneration policy on an ongoingbasis and takes account of those views.

The terms and conditions of Directors’ appointments are set out informal letters of appointment which are available for review at theCompany’s Annual General Meeting and the Company’s registeredoffice. Details of the Board’s policy on tenure are set out on page 43.

Directors’ Remuneration Policy ImplementationThe Directors’ Remuneration Report, which includes details of theDirectors’ remuneration policy and its implementation, is subject toan annual advisory vote and therefore an ordinary resolution toapprove this report will be put to shareholders at the forthcomingAnnual General Meeting. There have been no changes to the policycompared with the year ended 31st March 2015. For the year ending31st March 2017 the directors fees will be increased as referred toabove.

At the Annual General Meeting held on 21st July 2015, of votes cast,99.6% of votes cast were in favour of (or granted discretion to theChairman who voted in favour of) the remuneration report and0.40% voted against. Abstentions were received from less than0.36% of the votes cast.

DIRECTORS’ REMUNERATION REPORT


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Details of voting on both the Remuneration Policy and the Directors’Remuneration Report from the 2016 Annual General Meeting will begiven in the annual report for the year ending 31st March 2017.

Details of the implementation of the Company’s remuneration policyare given below.

Single total figure of remunerationThe single total figure of remuneration for each Director is detailedbelow together with the prior year comparative.

Single total figure table1

2016 2015£ £

Andrew Adcock2 30,714 23,000Josephine Dixon 27,000 25,774Robin Faber3 — 8,412Stephen Goldman 23,000 23,000Andrew Murison4 10,462 34,000Jutta Af Rosenborg 23,000 3,833Stephen Russell 23,000 23,000Ferdinand Verdonck4 7,069 23,000

Total 144,245 164,019

1 Audited information.2 Became Chairman on 21st July 2015.3 Retired 22nd July 2014.4 Retired 21st July 2015.

Effective from 1st April 2016:

2017£

Andrew Adcock 38,000Josephine Dixon 30,000Stephen Goldman 26,000Jutta Af Rosenborg 26,000Stephen Russell 26,000

Total 146,000

A table showing the total remuneration for the role of Chairmanover the five years ended 31st March 2016 is below:

Remuneration for the role of Chairman over thesix years ended 31st March 2016 Year ended31st March Fees

2016 £34,0002015 £34,0002014 £30,0002013 £30,0002012 £30,0002011 £30,000

Directors’ ShareholdingsThere are no requirements pursuant to the Company’s Articles ofAssociation for the Directors to own shares in the Company. TheDirectors beneficial shareholdings in the Company’s Growth shares,are detailed below:

1st April2015

31st March or date ofDirectors 2016 appointment

Andrew Adcock 25,000 25,000Josephine Dixon 7,000 7,000Stephen Goldman 10,000 10,000Andrew Murison — 5,050Jutta af Rosenborg — —Stephen Russell 2,642 2,309Ferdinand Verdonck — 3,612

There have been no changes to the above details since the year endand the date of signing these report and accounts.

DIRECTORS’ REMUNERATION REPORT CONTINUED



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Graphs showing each portfolio’s share price total return comparedwith the relevant benchmark are shown below.

Growth: Seven Year Share Price and Benchmark Total Return to31st March 2016

Source: Morningstar/FTSE.

Share price total return.

Benchmark total return.

Income: Seven Year Share Price and Benchmark Total Return to31st March 2016

Source: Morningstar/FTSE.

Share price total return.

Benchmark total return.

Year ended31st March

2016 2015£ £

Remuneration paid to all Directors 144,245 164,019

Distribution to shareholders— by way of dividend 8,778,000 9,504,000— by way of share repurchases nil nil

By order of the Board Paul Winship, for and on behalf of JPMorgan Funds Limited, Secretary

15th June 2016

100

150

200

250

300

20162015201420132012201120102009

100

150

200

250

300

20162015201420132012201120102009


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The Directors are responsible for preparing the annual report andaccounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statementsfor each financial year. Under that law, the Directors have elected toprepare the financial statements in accordance with UnitedKingdom Generally Accepted Accounting Practice (United KingdomAccounting Standards) including FRS 102 ‘The Financial ReportingStandard applicable in the UK and Republic of Ireland’ andapplicable law. Under Company law the Directors must not approvethe financial statements unless they are satisfied that they give atrue and fair view of the state of affairs of the Company and of theprofit or loss of the Company for that period. In preparing thesefinancial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable andprudent;

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

• prepare the financial statements on a going concern basis unlessit is inappropriate to presume that the Company will continue inbusiness;

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any time thefinancial position of the Company and to enable them to ensure thatthe financial statements comply with the Companies Act 2006. Theyare also responsible for safeguarding the assets of the Companyand hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.

The accounts are published on the www.jpmeuropean.co.uk website,which is maintained by the Company’s Manager, JPMorgan Funds

Limited. The maintenance and integrity of the website maintainedby the Manager is, so far as it relates to the Company, theresponsibility of the Manager. The work carried out by the auditorsdoes not involve consideration of the maintenance and integrity ofthis website and, accordingly, the auditors accept no responsibilityfor any changes 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 legislation inother 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 fair reviewof the development and performance of the business and theposition of the issuer, together with a description of the principalrisks and uncertainties that they face.

Each of the Directors, whose names and functions are listed onpages 38 and 39 confirm that, to the best of their knowledge thefinancial statements, which have been prepared in accordance withUnited Kingdom Generally Accepted Accounting Practice (UnitedKingdom Accounting Standards and applicable law), give a true andfair view of the assets, liabilities, financial position and return orloss of the Company.

The Board confirms that it is satisfied that the annual report andaccounts taken as a whole are fair, balanced and understandableand provide the information necessary for shareholders to assessthe strategy and business model of the Company.

For and on behalf of the BoardAndrew AdcockChairman

15th June 2016

STATEMENT OF DIRECTORS’ RESPONSIBILITIES



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TO THE MEMBERS OF JPMORGAN EUROPEAN INVESTMENT TRUST PLC

Our opinion on the financial statements In our opinion:

• the financial statements give a true and fair view of the state of the Company’s affairs as at 31st March 2016 and of the Company’s net lossfor the year then ended;

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

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

What we have auditedJPMorgan European Investment Trust plc’s financial statements comprise:

Statement of Comprehensive Income for the year ended 31st March 2016.

Statement of Changes in Equity for the year ended 31st March 2016.

Statement of Financial Position as at 31st March 2016.

Statement of Cash Flows for the year ended 31st March 2016.

Related notes 1 to 62 to the financial statements.

The financial reporting framework that has been applied in the preparation of the Company financial statements is applicable law andUnited Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 ‘The Financial ReportingStandard applicable in the UK and Republic of Ireland’.

Overview of our audit approachRisks of material misstatement• Incomplete or inaccurate income recognition through failure to recognise proper income entitlements or apply appropriate accountingtreatment.

• Management fees are not calculated correctly.

• Incorrect valuation and existence of the investment portfolio.

Audit scope• We performed an audit of JPMorgan European Investment Trust plc.

Materiality• Materiality of £3.3 million which represents 1% of equity shareholder’s funds (2015: £3.5 million)

Our assessment of risk of material misstatement We identified the risks of material misstatement described below as those with the greatest effect on our overall audit strategy, theallocation of resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed theprocedures below which were designed in the context of the financial statements as a whole and, consequently, we do not express anyopinion on these individual areas.

Independent Auditor’s Report


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What we concluded to the Risk Our response to the risk Audit Committee

Incomplete or inaccurate incomerecognition through failure torecognise proper income entitlementsor apply appropriate accountingtreatment (as described on page 44 in theReport of the Audit Committee).

The investment income receivable by theCompany during the period directly drivesthe Company’s ability to make a dividendpayment to shareholders. The investmentincome receivable for the year to31st March 2016 was £11.2 million(as disclosed in note 64 to the financialstatements).

If the Company is not entitled to receive thedividend income recognised in the financialstatements or the income recognised doesnot relate to the current financial year, thiswill impact the extent of the profitsavailable to fund dividend distributions toshareholders.

The accounting treatment adopted has adirect impact on the profits available fordistribution to shareholders of theCompany by way of dividends.

Given the judgmental aspect of allocatingspecial dividends between revenue andcapital and the risk of managementoverride from processing of topsidejournals, we consider this an areawarranting specific audit focus.

From our review, the Company received68 special dividends during the year,amounting to £897,000, of which 31 weretreated as revenue (£320,000) and 37 ascapital (£577,000).

We have performed the followingprocedures:

We agreed a sample of dividends to thecorresponding announcement made by theinvestee company and agreed cashreceived to bank statements.

We agreed, for a sample of investeecompanies, the dividend declarations madeby the investee company from an externalthird party source to the incomeentitlements recorded by the Company.

We agreed all accrued dividends to thirdparty source and to post year end bankstatements to assess the recoverability ofthese amounts.

We independently reviewed the recognitioncriteria applied to a sample of specialdividends received during the year andassessed the appropriateness of theconclusion on the relevant treatment asdocumented by the administrator andapproved by the Board.

The results of our procedures are:

We noted no issues in agreeing the sampleof dividend receipts to and from anindependent source and to the bankstatements.

We noted no issues in agreeing the sampleof dividend declarations to the incomeentitlements recorded by the Company.

We noted no issues in agreeing the sampleof accrued dividend receipts to anindependent source and to the bankstatements.

We ensured that the accounting treatmentadopted for the special dividends wasconsistent with the evidence provided andour understanding of the underlyingcircumstances giving rise to the relateddividends.

Independent Auditors’ Report continued

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What we concluded to the Risk Our response to the risk Audit Committee

The management fees payable by theCompany for investment managementservices are not calculated inaccordance with the methodologyprescribed in the investmentmanagement agreement (as describedon page 43 in the Report in the AuditCommittee).

The fees payable by the Company forinvestment management services are asignificant component of the Company’scost base and, therefore, impact thecompany’s total return. For the year to31st March 2016, the management fee was£2.7 million (as disclosed in note 5 to thefinancial statements).

As described on page 40 the calculationmethodology for the management fee isrelatively complex with a number of inputsrequired from both external sources andthe Company’s own financial records.

If the management fee is not calculated inaccordance with the methodology describedin the investment management agreementthis could have a significant impact on bothcosts and overall performance.

We performed the following procedures:

We used the terms contained in theinvestment management agreement toperform a recalculation of the managementfee.

We agreed the inputs used in thecalculation of the management fee tosource data.

We agreed the monthly cash paymentsmade to Company bank statements.


We are satisfied that the terms of theinvestment management agreement havebeen materially applied within themanagement fee calculations.

For all inputs and payments, we noted noissues in agreeing the amounts to sourcedata.

We noted no issues agreeing themanagement fee payments to Companybank statements.

Incorrect valuation and existence ofthe investment portfolio (as describedon page 43 in the Report of the AuditCommittee).

The valuation of the assets held in theinvestment portfolio is the key driver of theCompany’s investment return. The value ofthe Company’s investment portfolio at31st March 2016 was £363.6 million,consists entirely of listed equities(movements in the investment portfolio areshown in note 11 to the financialstatements).

Incorrect asset pricing or a failure tomaintain proper legal title of the assetsheld by the Company could have asignificant impact on portfolio valuationand, therefore, the return generated forshareholders.

We performed the following procedures:

We have used our bespoke asset pricingtool to value 100% of the investmentportfolio.

We agreed the number of shares held ineach security to a confirmation of legal titlereceived from both the Company’scustodian and depositary as at 31st March2016.


For all investments, we noted no materialdifferences in market value between theprices used by management and the pricesindependently obtained by our asset pricingtool.

As in the prior year, we have identified fourinvestment holdings in Spectagraphicspreference and common stocks confirmedby the Custodian and Depositary which arenot on the Company’s underlying financialrecords. We note from the prior year thatthese investments have been written off bythe Company. The difference is due to thischange not yet being reflected in thecustody records.

We have not identified any otherdifferences between the custodian anddepositary confirmations and theCompany’s underlying financial records.


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The scope of our audit Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for theCompany. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of theCompany and effectiveness of controls and changes in the business environment when assessing the level of work to be performed. TheCompany is a single component and we perform a full audit on this Company.

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

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

We determined planning materiality for the Company to be £3.3 million (2015: £3.5 million), which is 1% of equity shareholders’ funds.We derived our materiality calculation from a proportion of total equity as we consider that to be the most important financial metric onwhich shareholders judge the performance of the Company.

Performance materialityThe 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 judgment was thatoverall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Company should be 75% ofplanning materiality, being £2.5 million (2015: £2.6 million). We have set performance materiality at this percentage due to our pastexperience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected.

Given the importance of the distinction between revenue and capital for the Company we also applied a separate testing threshold of£470,000 (2015: £551,000) for the revenue column of the Statement of Comprehensive Income, being 5% of the revenue return on ordinaryactivities before taxation.

Reporting thresholdAn amount below which identified misstatements are considered to be clearly trivial.

We agreed with the audit committee that we would report all audit differences in excess of £165,000 (2015: £173,000) as well as differencesbelow that threshold that, in our view, warranted reporting on qualitative grounds.

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

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurancethat the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequatelydisclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financialstatements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies withthe audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistentwith, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements orinconsistencies we consider the implications for our report.


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Respective responsibilities of directors and auditorAs explained more fully in the Statement of Directors’ Responsibilities set out on page 50 the directors are responsible for the preparationof the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion onthe financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standardsrequire us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

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. Ouraudit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in anauditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone otherthan the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Opinion on other matters prescribed by the Companies Act 2006In our opinion:

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

• 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.

Matters on which we are required to report by exception

ISAs (UK and Ireland) reportingWe are required to report to you if, in our opinion, financial and non-financial information in the annual report is:

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

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

• otherwise misleading.

In particular, we are required to report whether we have identified any inconsistencies between our knowledge acquired in the course of performing the audit and the Directors’ statement that they consider the annual report and accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the entity’s performance, business model and strategy; and whether the annual report appropriately addresses those matters that we communicated to the audit committee that we consider should have been disclosed.

Companies Act 2006 reportingWe are required to report to you if, in our opinion:

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

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

• 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.

Listing Rules review requirementsWe are required to review:

• the Directors’ statement in relation to going concern set out on page 40, and longer-term viability, set out onpage 37; and

• the part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review

We have noexceptions toreport.




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Statement on the Directors’ Assessment of the Principal Risks that Would Threaten the Solvency or Liquidityof the Entity

ISAs (UK and Ireland) reportingWe are required to give a statement as to whether we have anything material to add or to draw attention to in relation to:

• the Directors’ confirmation 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 disclosures in the annual report that describe those risks and explain how they are being managed or mitigated;

• the Directors’ statement in the financial statements about whether they considered it appropriate to adoptthe going concern basis of accounting in preparing them, and their identification of any material uncertaintiesto the entity’s ability to continue to do so over a period of at least 12 months from the date of approval of thefinancial statements; and

• the Directors’ explanation 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 towhether they have a reasonable expectation that the entity will be able to continue in operation and meet itsliabilities as they fall due over the period of their assessment, including any related disclosures drawingattention to any necessary qualifications or assumptions.

Michael-John Albert (Senior Statutory Auditor)for and on behalf ofErnst & Young LLP, Statutory AuditorLondon

15th June 2016

We havenothingmaterial toadd or todrawattention to.


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Financial Statements

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST MARCH 2016

2016 2015Revenue Capital Total Revenue Capital Total

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

(Losses)/gains on investments and derivatives held at fair value through profit or loss 3 — (8,777) (8,777) — 16,000 16,000

Net foreign currency (losses)/gains — (2,419) (2,419) — 2,477 2,477Income from investments 4 11,219 — 11,219 12,302 — 12,302Interest receivable and similar income 4 147 — 147 422 — 422

Gross return/(loss) 11,366 (11,196) 170 12,724 18,477 31,201Management fee 5 (897) (1,787) (2,684) (846) (1,724) (2,570)Other administrative expenses 6 (808) — (808) (756) — (756)

Net return/(loss) on ordinary activitiesbefore finance costs and taxation 9,661 (12,983) (3,322) 11,122 16,753 27,875

Finance costs 7 (259) (519) (778) (107) (222) (329)

Net return/(loss) on ordinary activitiesbefore taxation 9,402 (13,502) (4,100) 11,015 16,531 27,546

Taxation 8 (1,084) — (1,084) (640) — (640)

Net return/(loss) on ordinary activitiesafter taxation 8,318 (13,502) (5,184) 10,375 16,531 26,906

Return/(loss) per share:Growth share 10 5.37p (10.77)p (5.40)p 7.90p 10.36p 18.26pIncome share 10 4.67p (5.42)p (0.75)p 4.60p 10.25p 14.85p

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

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns representsupplementary information prepared under guidance issued by the Association of Investment Companies. Net return/(loss) on ordinaryactivities after taxation represents the (loss)/profit for the year and also Total Comprehensive Income.

The notes on pages 61 to 82 form an integral part of these accounts.


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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2016

Called up Capital share Share redemption Capital Revenue capital premium reserve reserves reserve1 Total £’000 £’000 £’000 £’000 £’000 £’000

At 31st March 2014 6,298 41,815 12,916 262,891 3,622 327,542Share conversions during the year (13) 21,871 358 (22,216) — —Transfer between reserves for prior period rounding errors (5) — 5 — — —

Net return on ordinary activities — — — 16,531 10,375 26,906Dividends paid in the year — — — — (9,442) (9,442)

At 31st March 2015 6,280 63,686 13,279 257,206 4,555 345,006Share conversions during the year (1) 19,087 312 (19,398) — —Expense in relation to new shares — (12) — — — (12)Net (loss)/return on ordinary activities — — — (13,502) 8,318 (5,184)Dividends paid in the year — — — — (8,943) (8,943)

At 31st March 2016 6,279 82,761 13,591 224,306 3,930 330,867

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


Financial Statements continued

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STATEMENT OF FINANCIAL POSITION AT 31ST MARCH 2016

2016 Growth Income 2015 (unaudited) (unaudited) Total Total Notes £’000 £’000 £’000 £’000

Fixed assets Investments held at fair value through profit or loss 11 224,449 139,182 363,631 368,844Current assets 12Derivative financial assets 487 256 743 483Debtors 863 1,223 2,086 2,312Cash and cash equivalents1 11,038 5,545 16,583 6,939

12,388 7,024 19,412 9,734

Creditors: amounts falling due within one year 13 (8,082) (4,101) (12,183) (33,383)Derivative financial liabilities (298) (271) (569) (189)

Net current assets/(liabilities) 4,008 2,652 6,660 (23,838)

Total assets less current liabilities 228,457 141,834 370,291 345,006Creditors: amounts falling due after more than one year 14 (26,292) (13,132) (39,424) —

Net assets 202,165 128,702 330,867 345,006

Capital and reserves Called up share capital 15 4,089 2,190 6,279 6,280Share premium 16 10,830 71,931 82,761 63,686Capital redemption reserve 16 12,468 1,123 13,591 13,279Capital reserves 16 172,478 51,828 224,306 257,206Revenue reserve 16 2,300 1,630 3,930 4,555

Total equity shareholders’ funds 202,165 128,702 330,867 345,006

Net asset valuesNet asset value per Growth share 17 259.7p 270.2pNet asset value per Income share 17 137.1p 143.6p


The accounts on pages 57 to 82 were approved and authorised for issue by the Directors on 15th June 2016 and were signed on their behalfby:

Josephine DixonDirector


JPMorgan European Investment Trust plcCompany registration number: 237958.


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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH 2016

2016 2015 Notes £’000 £’000

Net cash outflow from operations before dividends and interest 18 (1,608) (12,283)Dividends received 9,827 10,374Interest received 104 22Overseas tax recovered 818 351Interest paid (681) (346)

Net cash inflow/(outflow) from operating activities 8,460 (1,882)

Purchases of investments (212,728) (280,544)Sales of investments 209,341 285,067Settlement of future contracts (822) (117)Settlement of foreign currency contracts 645 118

Net cash (outflow)/inflow from investing activities (3,564) 4,524

Dividends paid (8,943) (9,442)Net repayment of Scotiabank loans (22,145) —Net drawdown of Metlife private placement 36,505 Expenses in relation to new shares (12) —

Net cash inflow/(outflow) from financing activities 5,405 (9,442)

Increase/(decrease) in cash and cash equivalents 10,301 (6,800)

Cash and cash equivalents at the start of the year 6,265 13,065Exchange movements 17 — Cash and cash equivalents at the end of the year 16,583 6,265

Increase/(decrease) in cash and cash equivalents 10,301 (6,800)

Cash and cash equivalents consist of:Cash and short term deposits 4,247 775Bank overdraft — (674)JPMorgan Euro Liquidity Fund 12,336 6,164

Total 16,583 6,265



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1. Accounting policies(a) Basis of accounting

The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted AccountingPractice (‘UK GAAP’), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with theStatement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the ‘SORP’)issued by the Association of Investment Companies in November 2014.

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 40 of the Directors’Report form part of these financial statements.

Early adoption

In March 2016, the FRC published amendments to FRS 102 concerning the fair value hierarchy disclosures. These amendments areeffective for accounting periods beginning on or after 1st January 2017. The Company has elected to early adopt these amendmentsin this set of financial statements. Full disclosure is given in note 21 on page 75.

(b) Transition to FRS 102

This set of financial statements, in accordance with the SORP includes changes arising from the adoption of FRS 102 which theCompany is required to comply with for the first time for the year ended 31st March 2016.

Aside from presentational aspects relating to the Statement of Cash Flows, no significant changes have arisen from the adoption ofthe new standards. Where changes have arisen, they are substantially in relation to presentation and disclosure – there has been noimpact to financial position or financial performance and no comparative figures require restating.

(c) 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 accordance witha 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 are written offto capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bid prices forinvestments traded in active markets. For investments which are not traded in active markets, unlisted and restricted investments,the Board takes into account the latest traded prices, other observable market data and asset values based on the latest managementaccounts.

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

(d) Accounting for reserves

Gains and losses on sales of investments including the related foreign exchange gains and losses, realised gains and losses on foreigncurrency contracts, management fee and finance costs allocated to capital and any other capital charges, are included in theStatement of Comprehensive Income and dealt with in capital reserves within ‘Gains and losses on sales of investments’.

Increases and decreases in the valuation of investments held at the year end including the related foreign exchange gains and losses,are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Investment holding gains andlosses’. Unrealised gains and losses on foreign currency contracts (including futures and forwards) or foreign currency loans andprivate placements are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Unrealisedreserve’.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2016



NOTES TO THE FINANCIAL STATEMENTS CONTINUED


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1. Accounting policies continued

(e) Income

Dividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of the Board,the dividend is capital in nature, in which case it is included in capital. UK dividends are included net of tax credits. Overseas dividendsare included gross of any withholding tax.

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

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

Stock lending income and deposit interest receivable is taken to revenue on an accruals basis.

(f) Expenses

All expenses are accounted for on an accruals basis.

Expenses charged to the Company that are common to both share classes are allocated between those classes in the same proportionas the net assets of each share class on a half yearly basis.

Expenses charged to the Company in relation to a specific share class are charged directly to that share class, with the other shareclass incurring no charge. Losses of one share class are not borne by the other.

Shareholders converting some or all of their shares into shares of the other class will bear the costs of the conversion up to amaximum of 2% of the value of the shares being converted. Any costs in excess of this cap will be borne by all the shareholders of theCompany and will be accounted for under capital reserves.

Expenses are allocated wholly to revenue with the following exceptions:

– the management fee of the Growth pool of assets is allocated 30% to revenue and 70% to capital in line with the Board’s expectedsplit of revenue and capital return from the Growth investment portfolio.

– the management fee of the Income pool of assets is allocated 40% to revenue and 60% to capital in line with the Board’sexpected split of revenue and capital return from the Income investment portfolio.

– expenses incidental to the purchase of an investment are charged to capital. These expenses are commonly referred to astransaction costs and comprise mainly brokerage commission.

(g) Finance costs

Finance costs, including any premium payable on settlement or redemption and direct issue costs, are accounted for on an accrualsbasis using the effective interest rate method.

– Finance costs on the Growth pool of assets are allocated 30% to revenue and 70% to capital in line with the Board’s expected splitof revenue and capital return from the Growth investment portfolio.

– Finance costs on the Income pool of assets are allocated 40% to revenue and 60% to capital in line with the Board’s expected splitof revenue and capital return from the Income investment portfolio.

(h) Financial instruments

Cash and cash equivalents may comprise cash including demand deposits which are readily convertible to a known amount of cashand are subject to an insignificant risk of change in value. For the purpose of the Statement of Cash Flows, cash and cash equivalentsconsist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Liquidity funds are considered cashequivalents as they are held for cash management purposes as an alternative to cash.


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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.

Bank loans are classified as financial liabilities measured at amortised cost. They are initially measured as proceeds and subsequentlymeasured at amortised cost. Interest payable on the bank loan is accounted for on an accruals basis in the Statement ofComprehensive Income.

The private placement in issue is classified as financial liabilities at amortised cost. It was initially measured at the proceeds net ofdirect issue costs and subsequently measured at amortised cost. The amortisation of direct issue costs are accounted for on anaccruals basis in the Statement of Comprehensive Income using the effective interest rate method.

Derivative financial instruments, including short term forward currency contracts and futures contracts are valued at fair value, whichis the net unrealised gain or loss, and are included in current assets or current liabilities in the Statement of Financial Position.Changes in the fair value of derivative financial instruments are recognised in the Statement of Comprehensive Income as capital.

(i) Taxation

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

Tax is computed for each pool separately. A pool which generates taxable revenues in excess of tax deductible expenses may benefitfrom the excess of tax deductible expenses in the other pool. In this instance compensation amounting to half the tax savings in thetaxable pool will be transferred to the non taxable pool.

Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet 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 toexpenses charged to capital on the ‘marginal basis’. On this basis, if taxable income is capable of being entirely offset by revenueexpenses, then no tax relief is transferred to the capital column. Deferred tax is measured at the tax rate which is expected to apply inthe periods in which the timing differences are expected to reverse, based on tax rates that have been enacted or substantivelyenacted at the balance sheet date and is measured on an undiscounted basis.

(j) Value Added Tax (‘VAT’)

Expenses are disclosed inclusive of the related irrecoverable VAT. Recoverable VAT is calculated using the partial exemption methodbased on the proportion of zero rated supplies to total supplies.

(k) Foreign currency

The Company is required to identify its functional currency, being the currency of the primary economic environment in which theCompany operates. The Board, having regard to the currency of the Company’s share capital and the predominant currency in whichits shareholders operate, has determined that sterling is the functional currency. Sterling is also the currency in which the financialstatements are presented. Transactions denominated in foreign currencies are converted at actual exchange rates at the date of thetransaction. Monetary assets, liabilities and equity investments held at fair value, denominated in foreign currencies at the year endare translated at the rates of exchange prevailing at the year end.

(l) Dividends payable

Dividends are included in the financial statements in the year in which they are paid.

(m) Share capital transactions

The cost of repurchasing Growth and Income shares for cancellation, including the related stamp duty and transaction costs, ischarged to capital reserves and dealt with in the Statement of Changes in Equity. Share transactions are accounted for on a tradedate basis. The nominal value of share capital repurchased and cancelled is transferred out of ‘Called up share capital’ and into‘Capital redemption reserve’.





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2. Significant accounting judgements, estimates and assumptionsThe 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 or liabilitiesaffected in the current and future periods, depending on circumstance. Management do not believe that any accounting judgementsor estimates have been applied to this set of financial statements, that have a significant risk of causing a material adjustment to thecarrying amount of assets and liabilities within the next financial year.

3. (Losses)/gains on investments held at fair value through profit or loss2016 2015£’000 £’000

Gains on sales of investments held at fair value through profit or loss based onhistorical cost 4,513 22,802

Amounts recognised in investment holding gains and losses in the previous year inrespect of investments sold during the year (25,510) (39,030)

Losses on sales of investments based on the carrying value at the previous balance sheet date (20,997) (16,228)Realised losses on close out of futures contracts (822) (117)Net movement in investment holding gains and losses 12,797 32,388Unrealised gains on futures contracts 297 —Other capital charges (52) (43)

Total capital (losses)/gains on investments and derivatives held at fair value through profit or loss (8,777) 16,000

4. Income 2016 2015£’000 £’000

Income from investmentsOverseas dividends 11,050 12,067UK dividends 89 193Scrip dividends 80 42

11,219 12,302

Other interest receivable and similar incomeStock lending fees 146 297Deposit interest 1 111Interest from liquidity fund — 14

147 422

Total income 11,366 12,724


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5. Management fee2016 2015

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

Management fee 897 1,787 2,684 846 1,724 2,570

Details of the management fee are given in the Directors’ Report on page 40.

6. Other administrative expenses2016 2015£’000 £’000

Administration expenses 378 325Depositary fee1 73 53Directors’ fees2 144 164Savings scheme costs3 174 172Auditors’ remuneration for audit services4 34 32Auditors’ remuneration for all other services5 5 10

808 756

1 Includes £10,000 (2015: £8,000) irrecoverable VAT.2 Full disclosure is given in the Directors’ Remuneration Report on pages 47 and 49.3 Paid to the Manager for marketing and administration of saving scheme products. Includes £25,000 (2015: £25,000) irrecoverable VAT.4 Includes £5,000 (2015: £5,000) irrecoverable VAT.5 Review of half yearly conversion calculations, includes £2,000 (2015: £2,000) irrecoverable VAT.

7. Finance Costs2016 2015

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

Interest on bank loans and overdrafts 50 102 152 107 222 329Interest on private placement 209 417 626 — — —

259 519 778 107 222 329





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

2016 2015Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Overseas withholding tax 1,084 — 1,084 640 — 640

Total tax charge for the year 1,084 — 1,084 640 — 640

(b) Factors affecting total tax charge for the year

The tax charge for the year is higher (2015: lower) than the Company’s applicable rate of corporation tax for the year of 20%(2015: 21%). The factors affecting the total tax charge for the year are as follows:

2016 2015Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Net return/(loss) on ordinary activities before taxation 9,402 (13,502) (4,100) 11,015 16,531 27,546

Net return/(loss) on ordinary activities before taxation multiplied by the Company’s applicable rate of corporation tax of 20% (2015: 21%) 1,881 (2,701) (820) 2,313 3,472 5,785

Effects of:Non taxable capital losses/(gains) — 2,239 2,239 — (3,881) (3,881)Non taxable scrip dividends (16) — (16) (9) — (9)Non taxable UK dividend income (18) — (18) (41) — (41)Non taxable overseas dividends (2,176) — (2,176) (2,501) — (2,501)Excess expenses over taxable income 791 — 791 647 — 647Overseas withholding tax 1,084 — 1,084 640 — 640Tax attributable to expenses and finance costs

charged to capital (462) 462 — (409) 409 —

Total tax charge for the year 1,084 — 1,084 640 — 640

(c) Deferred taxation

The Company has an unrecognised deferred tax asset of £6,085,000 (2015: £5,971,000) based on a prospective corporation tax rateof 18% (2015: 20%). The UK Government announced in July 2015 that the corporation tax rate is set to be cut to 19% in 2017 and 18%in 2020. These reductions in the standard rate of corporation tax were substantively enacted on 26th October 2015 and becameeffective from 18th November 2015. The deferred tax asset has arisen due to the cumulative excess of deductible expenses overtaxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeablefuture 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 to obtainapproval, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal ofinvestments.


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9. Dividends(a) Dividend paid and declared1

2016 2015£’000 £’000

Dividends paidUnclaimed Growth dividends refunded to the Company (1) —Growth 2015 second interim dividend of 1.25p (2014: 1.25p) per share 1,108 1,187Growth first interim dividend of 4.85p (2015: 5.45p) per share 4,134 5,110Income 2015 fourth quarterly dividend of 1.45p (2014: 1.50p second interim) per share 1,068 926Income first quarterly dividend of 1.10p (2015: 1.10p) per share 878 705Income second quarterly dividend of 1.10p (2015: 1.10p) per share 878 705Income third quarterly dividend of 1.10p (2015: 1.10p) per share 878 809

Total dividends paid in the year 8,943 9,442

Dividends declaredGrowth second interim dividend of 1.00p (2015: 1.25p) per share 852 1,108Income fourth quarterly dividend of 1.45p (2015: 1.45p) per share 1,158 1,067

Total dividends payable2 2,010 2,175

1 All dividends paid and declared in the period have been funded from the Revenue Reserve.2 In accordance with the accounting policy of the Company, these dividends will be reflected in the financial statements of the following year.

(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’)

The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, as follows:

The revenue available for distribution by way of dividend for the year is £8,318,000 (2015: £10,375,000).

2016 2015£’000 £’000

Growth first interim dividend of 4.85p (2015: 5.45p) per share 4,134 5,110Growth second interim dividend of 1.00p (2015: 1.25p) per share 852 1,108Income first quarterly dividend of 1.10p (2015: 1.10p) per share 878 705Income second quarterly dividend of 1.10p (2015: 1.10p) per share 878 705Income third quarterly dividend of 1.10p (2015: 1.10p) per share 878 809Income fourth quarterly dividend of 1.45p (2015: 1.45p) per share 1,158 1,067

Total 8,778 9,504





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10. (Loss)/return per share2016 2015£’000 £’000

Growth shareReturn per share is based on the following:Revenue return 4,561 7,174Capital (loss)/return (9,141) 9,410

Total (loss)/return (4,580) 16,584

Weighted average number of shares in issue 84,900,623 90,815,383

Revenue return per share 5.37p 7.90pCapital (loss)/return per share (10.77)p 10.36p

Total (loss)/return per share (5.40)p 18.26p

Income shareReturn per share is based on the following:Revenue return 3,757 3,201Capital (loss)/return (4,361) 7,121

Total (loss)/return (604) 10,322

Weighted average number of shares in issue 80,505,803 69,514,226

Revenue return per share 4.67p 4.60pCapital (loss)/return per share (5.42)p 10.25p

Total (loss)/return per share (0.75)p 14.85p


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11. Investments 2016 2015£’000 £’000

Investments listed on a recognised stock exchange 363,361 368,844

Listed Listedin UK overseas Total£’000 £’000 £’000

Opening book cost 556 291,630 292,186Opening investment holding gains 5,876 70,782 76,658

Opening valuation 6,432 362,412 368,844

Movements in the year:Purchases at cost — 212,856 212,856Sales – proceeds — (209,869) (209,869)Losses on sales of investments based on the carrying value at the previous balance

sheet date — (20,997) (20,997)Net movement in investment holding gains and losses 1,232 11,565 12,797

Closing valuation 7,664 355,967 363,631

Closing book cost 556 299,130 299,686Closing investment holding gains 7,108 56,837 63,945

Total investments held at fair value through profit or loss 7,664 355,967 363,631

Transaction costs on purchases during the year amounted to £536,000 (2015: £692,000) and on sales during the year amounted to£354,000 (2015: £510,000). These costs comprise mainly brokerage commission.

During the year, prior year investment holding gains amounting to £25,510,000 were transferred to ‘Gains and losses on sales ofinvestments’, as disclosed in note 16.





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12. Current assets2016 2015£’000 £’000

Derivative financial assetsFutures contracts1 297 —Forward foreign currency contracts 446 483

743 483

1 At the Company’s year end the Company held a short position of Euro Stoxx Index Futures at a contract cost of £18,518,000 and a market value of £18,221,000 giving an unrealisedasset of £297,000.

Debtors 2016 2015£’000 £’000

Securities sold awaiting settlement 741 267Dividends and interest receivable 220 657Overseas tax recoverable 1,089 1,345Other debtors 36 43

2,086 2,312

The Directors consider that the carrying amount of debtors approximates to their fair value. No debtors are past due or impaired.

Cash and cash equivalents

Cash and cash equivalents comprise bank balances, short term deposits and liquidity funds. The carrying amount of these representstheir fair value.

13. Current liabilities: amounts falling due within one year2016 2015£’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 55 7Bank loan 11,892 32,556Bank overdraft — 674Other creditors and accruals 236 146

12,183 33,383

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

The Company has a Euro 15 million 364 day committed revolving credit facility with Scotiabank, which expires on 25th August 2016(prior year the Company had a £60 million facility with Scotiabank, which expired 27th August 2015). As is typical across the industrywith such loans, the Company is required to comply with certain restrictions required by the lender regarding the amount of debt asa ratio of net assets and minimum requirements regarding the net asset value of the Company. The Company comfortably complieswith all these requirements.

2016 2015£’000 £’000

Derivative financial liabilitiesForward foreign currency contracts 569 189


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14. Creditors: amounts falling due after more than one year2016 2015£’000 £’000

Metlife Private Placement 39,424 —

The Company has issued a Euro 50 million Private Placement Note with Metlife which has a capital repayment date of 26th August2035, and an annualised fixed coupon rate of 2.69%. As is typical across the industry with such loans, the Company is required tocomply with certain restrictions required by the lender regarding the amount of debt as a ratio of net assets and minimumrequirements regarding the net asset value of the Company. The Company comfortably complies with all these requirements.

15. Called up share capital Issued and fully paid share capital: 2016 2015

Shares Sharesin issue £’000 in issue £’000

Growth sharesOpening balance of shares 85,244,846 4,383 93,752,402 4,730Net conversion decrease of shares (7,410,920) (294) (8,507,556) (342)Transfer between reserves for prior period rounding errors — — — (5)

Closing balance 77,833,926 4,089 85,244,846 4,383

Income sharesOpening balance of shares 79,854,104 1,897 64,100,264 1,568Net conversion increase of shares 14,030,687 293 15,753,840 329

Closing balance 93,884,791 2,190 79,854,104 1,897

Further details of transactions in the Company’s shares are given on page 36.





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15. Called up share capital continued

Deferred Shares

The Company’s Articles allow for Deferred shares to be allotted as part of the share conversion to ensure that the conversion does notresult in a reduction of the aggregate par value of the Company’s issued share capital (in contravention of the Companies Act). TheDeferred shares do not confer any rights to the shareholder to receive capital or dividends and will be repurchased by the Companyfrom time to time for a nominal sum. The issue and repurchase of these Deferred shares has no effect on the net asset valueattributable to the holders of Growth or Income shares. The shares have no voting rights and no rights on a winding up of theCompany or entitlement to dividends.

2016 2015£’000 £’000

Deferred Growth shares2015 Opening balance of 318,263 shares of 0.007711p each

(2014: 93,647,747 shares of 0.081675p) — 762014 Repurchase of 93,647,747 shares of 0.081675p each for cancellation — —2014 Repurchase of 93,647,747 shares of 0.081675p each for cancellation — —2014 Issue of 88,584,347 shares of 0.085005p each — —2015 Repurchase of 88,584,347 shares of 0.085005p each for cancellation — (76)2015 Issue of 318,263, shares of 0.007711p each — 752015 Repurchase of 318,263 shares of 0.007711p each for cancellation — (75)2016 Issue of 413,787 shares of 0.034842p each — —

2016 Closing balance of 413,787 shares of 0.034842p each — —

Deferred Income shares2015 Opening balance of 3,532,228 shares of 0.065180p each

(2014: 1,354,439 shares of 0.160988p) 2 22014 Repurchase of 1,354,439 shares of 0.160988p each for cancellation — —2014 Issue of 5,168,055 shares of 0.204346p each — —2015 Repurchase of 5,168,055 shares of 0.204346p each for cancellation — (2)2015 Issue of 3,532,228 shares of 0.065180p each — 112015 Repurchase of 3,532,228 shares of 0.065180p each for cancellation (2) (11)2016 Issue of 7,625,126 shares of 0.010859p each 1 2

2016 Closing balance of 7,625,126 shares of 0.010859p each 1 2


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16. Capital and reserves Capital reserves

Gains and HoldingCalled up Capital losses on gains and

share Share redemption sales of losses on Unrealised Revenuecapital premium reserve investments investments reserve reserve1 Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Opening balance 6,280 63,686 13,279 174,264 76,192 6,750 4,555 345,006 Transfer of prior period unrealised loss on liquidity2 — — — (464) 464 — — —Net foreign currency gains on cash and cash

equivalents held during the year — — — 2,098 — — — 2,098 Unrealised foreign currency gains on loan and

private placement — — — — — (4,001) — (4,001)Losses on sales of investments based on the

carrying value at the previous balance sheet date — — — (20,997) — — — (20,997)Net movement in investment holding gains

and losses — — — — 12,797 — — 12,797 Unrealised losses on foreign currency contracts — — — — — (124) — (124)Transfer on disposal of investments — — — 25,510 (25,510) — — —Realised losses on foreign currency contracts — — — 294 — (294) — —Realised losses on close out of futures contracts — — — (822) — — — (822)Unrealised gains on futures contracts — — — — — 297 — 297 Realised losses on repayment of loans — — — (392) — — — (392)Transfer re loans repaid in period — — — 4,986 — (4,986) — —Share conversions during the year (1) 19,087 312 (19,398) — — — —Expense in relation to new shares — (12) — — — — — (12)Management fee and finance costscharged to capital — — — (2,306) — — — (2,306)Other capital charges — — — (52) — — — (52)Dividends paid in the year — — — — — — (8,943) (8,943)Retained revenue for the year — — — — — — 8,318 8,318

Closing balance 6,279 82,761 13,591 162,721 63,943 (2,358) 3,930 330,867

1 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.2 Transfer of opening liquidity fund unrealised loss between reserves as a result of the reclassification of liquidity holdings from Investments to cash equivalent.

17. Net asset value per share

2016 2015

Growth shareOrdinary shareholders’ funds (£’000) 202,165 230,314Number of shares in issue 77,833,926 85,244,846Net asset value per share 259.7p 270.2p

Income shareOrdinary shareholders’ funds (£’000) 128,702 114,692Number of shares in issue 93,884,791 79,854,104Net asset value per share 137.1p 143.6p





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18. Reconciliation of net (loss)/return on ordinary activities before finance costs and taxation to net cashoutflow from operations before dividends and interest

2016 2015£’000 £’000

Net (loss)/return on ordinary activities before finance costs and taxation (3,322) 27,875Add capital loss/(less capital return) before finance costs and taxation 12,983 (16,753)Scrip dividends included in income (80) (42)Decrease/(increase) in accrued income and other debtors 445 (70)Increase/(decrease) in accrued expenses 1 (106)Management fee charged to capital (1,787) (1,969)Overseas withholding tax (1,646) (1,922)Performance fee paid - (6,372)Dividends received (9,827) (10,374)Interest received (104) (22)Realised gain/loss on foreign currency transactions 225 (921)Realised gain/loss on liquidity and time deposits 1,504 (1,607)

Net cash outflow from operations before dividends and interest (1,608) (12,283)

19. Contingent liabilities and capital commitmentsAt the balance sheet date there were no contingent liabilities or capital commitments (2015: none).

20. Related party transactionsDetails of the management contract are set out in the Directors’ Report on page 40. The management fee payable to the Manager forthe year was £2,684,000 (2015: £2,570,000), of which £nil (2015: £nil) was outstanding at the year end.

During the year £174,000 (2015: £172,000) was payable to the Manager for the marketing and administration of savings schemeproducts, of which £nil (2015: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 65 are safe custody fees amounting to £46,000 (2015: £47,000) payable toJPMorgan Chase of which £8,000 (2015: £11,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’slength. Commission amounting to £62,000 (2015: £10,000) was payable to JPMorgan Securities Limited for the year of which £nil(2015: £nil) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 31st March 2016 these were valued at £15.0 million (2015:£13.1 million) and represented 4.1% (2015: 3.6%) of the Company’s investment portfolio. During the year the Company made £nilpurchases of such investments (2015: £nil) and sales with a total value of £nil (2015: £nil). Income amounting to £178,000 (2015:£157,000) was receivable from these investments during the year of which £nil (2015: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Euro Liquidity Fund, managed by JPMAM. At the year end this was valued at£12.3 million (2015: £6.2 million). Income amounting to £nil (2015: £14,000) was receivable during the year of which £nil (2015: £nil)was outstanding at the year end.

Stock lending income amounting to £146,000 (2015: £297,000) was receivable by the Company during the year. JPMAM commissionsin respect of such transactions amounted to £26,000 (2015: £52,000).

Handling charges on dealing transactions amounting to £52,000 (2015: £43,000) were payable to JPMorgan Chase during the year ofwhich £6,000 (2015: £6,000) was outstanding at the year end.

At the year end, total cash of £4.2 million (2015: £0.1 million) was held with JPMorgan Chase. A net amount of interest of £1,000 (2015:£111,000) was receivable by the Company during the year from JPMorgan Chase of which £nil (2015: £104,000) was outstanding at theyear end.

Full details of Directors’ remuneration and shareholdings can be found on page 47 and in note 6 on page 65.


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21. Disclosures regarding financial instruments measured at fair valueThe 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 dateThe best evidence of fair value is a quoted price for an identical asset in an active market. Quoted in an active market in thiscontext means quoted prices are readily and regularly available and those prices represent actual and regularly occurringmarket transactions on an arm’s length basis. The quoted price is usually the current bid price.

(2) Inputs other than quoted prices included within Level 1 that are observable (ie: developed using market data) for theasset or liability, either directly or indirectlyWhen quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value aslong as there has not been a significant change in economic circumstances or a significant lapse of time since the transactiontook place. If the entity can demonstrate that the last transaction price is not a good estimate of fair value (e.g. because itreflects the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), thatprice is adjusted.

(3) Inputs are unobservable (ie: for which market data is unavailable) for the asset or liabilityIf the market for the asset is not active and recent transactions of an identical asset on their own are not a good estimate of fairvalue, an entity estimates the fair value by using a valuation technique. The objective of using a valuation technique is toestimate what the transaction price would have been on the measurement date in an arm’s length exchange motivated bynormal business considerations.

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(c) on page 61.

The following table sets out the fair value measurements using the FRS 102 hierarchy at 31st March.

2016 2015Assets Liabilities Assets Liabilities £’000 £’000 £’000 £’000

Level 1 – Listed equities 363,631 — 368,844 —Level 1 – Derivatives (futures contracts) 297 — — —Level 2 – Derivatives (forward contracts) 446 (569) 483 (189)

Total 364,374 (569) 369,327 (189)

There were no transfers between Levels 1, 2 or 3 during the year (2015: nil).





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22. Financial instruments’ exposure to risk and risk management policiesAs an investment trust, the Company invests in equities for the long term so as to secure its investment objective stated on the‘Features’ page for each share class. In pursuing this objective, the Company is exposed to a variety of financial risks that could resultin a reduction in 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 credit risk.The Directors’ policy for managing these risks is set out below. The Company Secretary, in close cooperation with the Board and theManager, 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, havenot changed from those applying in the comparative year.

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

– investments in Continental European equity shares and collective investment funds which are held in accordance with theCompany’s investment objective;

– cash held within a liquidity fund;

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

– futures contracts, the purpose of which is to effect changes in the level of the Company’s gearing;

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

– a Euro denominated bank loan and private placement, the purpose of which are to finance the Company’s operations.

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices.This market risk comprises three elements – currency risk, interest rate risk and other price risk. Information to enable an evaluationof the nature and extent of these three elements of market risk is given in parts (i) and (ii) of this note, together with sensitivityanalyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remainedunchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making eachinvestment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(i) Currency risk

Certain of the Company’s assets, liabilities and income are denominated in currencies other than sterling which is theCompany’s functional currency and the currency in which it reports. As a result, movements in exchange rates may affect thesterling 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, which meets onat least four occasions each year. The Manager measures the risk to the Company of the foreign currency exposure byconsidering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which theCompany’s assets, liabilities, income and expenses are exposed. Foreign currency borrowing may be used to limit theCompany’s exposure to anticipated changes in exchange rates which might otherwise adversely affect the sterling value of theportfolio of investments. This borrowing is limited to currencies and amounts commensurate with the asset exposure to thosecurrencies. Income denominated in foreign currencies is converted to sterling on receipt. The Company may use short termforward currency contracts to manage working capital requirements.


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Foreign currency exposure

The fair value of the Company’s monetary items that have foreign currency exposure at 31st March are shown below. Where theCompany’s equity investments (which are not monetary items) are priced in a foreign currency, they have been includedseparately in the analysis so as to show the overall level of exposure.

2016 2015Euro Other Total Euro Other Total £’m £’m £’m £’m £’m £m

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

Current assets less current liabilities excluding the foreign currency bank loan private placement 16.5 1.2 17.7 10.7 (3.1) 7.6

Foreign currency bank loan and private placement (51.3) — (51.3) (32.6) — (32.6)

Foreign currency exposure on net monetary items (34.8) 1.2 (33.6) (21.9) (3.1) (25.0)Investments held at fair value through profit or

loss that are equities 252.9 103.1 356.0 249.6 112.8 362.4

Total net foreign currency exposure 218.1 104.3 322.4 227.7 109.7 337.4

In the opinion of the Directors, the above year end amounts are broadly representative of the exposure to foreign currency riskduring the year. This analysis is presented on an un-hedged basis.

Foreign currency sensitivity

The following table illustrate 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% (2015: 10%) appreciation or depreciation in sterling against the Euro, and the other currencies to which theCompany is exposed, which is considered to be a reasonable illustration based on the volatility of exchange rates during theyear.

2016 2015If 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 after taxationRevenue return (1,113) 1,113 (1,200) 1,200Capital return 3,359 (3,359) 2,500 (2,500)

Total return after taxation for the year 2,246 (2,246) 1,300 (1,300)

Net assets 2,246 (2,246) 1,300 (1,300)

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





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22. Financial instruments’ exposure to risk and risk management policies continued(a) Market risk continued

(ii) Interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits, the liquidity fund and the interest payableon variable rate borrowings when interest rates are reset.

Management of interest rate risk

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

Interest rate exposure

The Company has a private placement carrying a fixed rate of interest and the exposure is therefore already quantifiable. Theexposure of financial assets and liabilities to floating interest rates using the year end figures, giving cash flow interest rate riskwhen rates are reset, is shown below.

2016 2015£’000 £’000

Exposure to floating interest rates:Cash and short term deposits 4,247 775Bank overdraft — (674)JPMorgan Euro Liquidity Fund 12,336 6,164Bank loan (11,892) (32,556)

Total exposure 4,691 (26,291)

Interest receivable on cash balances, or paid on overdrafts, is at a margin below or above LIBOR respectively (2015: same).

The target interest earned on the JPMorgan Euro Liquidity Fund is the 7 day Euro London Interbank Bid Rate.

Details of the bank loan and private placement are given in note 13 and 14 on pages 70 and 71.

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2015: 1%) increaseor decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of changeis considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is basedon the Company’s monetary financial instruments held at the balance sheet date with all other variables held constant.

2016 20151% increase 1% decrease 1% increase 1% decrease

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

Statement of Comprehensive Income – return after taxationRevenue return 127 (127) (43) 43Capital return (80) 80 (220) 220

Total return after taxation for the year 47 (47) (263) 263

Net assets 47 (47) (263) 263

In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interestrate changes due to fluctuations in the level of cash balances, cash held in the liquidity fund and amounts drawn down on theCompany’s loan facility.


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(iii) Other price risk

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

Management of other price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associatedwith particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which isselected in accordance with the Company’s investment objectives and seeks to ensure that individual stocks meet an acceptablerisk/reward profile.

Other price risk exposure

The Company’s total exposure to changes in market prices at 31st March comprises its holdings in equity investments asfollows:

2016 2015£’000 £’000

Equity investments held at fair value through profit or loss 363,631 368,844

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

Concentration of exposure to market price risk

An analysis of the Company’s investments is given on pages 14 to 16 and 24 to 30. This shows that the majority of theinvestment portfolio's value is in European equities but there is no concentration of exposure to any one European country. Itshould also be noted that an investment may not be entirely exposed to the economic conditions in its country of domicile or oflisting.

Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decreaseof 10% (2015: 10%) in the market value of equity investments. This level of change is considered to be a reasonable illustrationbased on observation of current market conditions. The sensitivity analysis is based on the Company’s equities, adjusting forchanges in the management fee but with all other variables held constant.

2016 201510% increase 10% decrease 10% increase 10% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Statement of Comprehensive Income – return after taxationRevenue return (92) 92 (89) 89Capital return 36,182 (36,182) 36,707 (36,707)

Total return after taxation 36,090 (36,090) 36,618 (36,618)

Net assets 36,090 (36,090) 36,618 (36,618)





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22. Financial instruments’ exposure to risk and risk management policies continued(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settledby delivering cash or another financial asset.

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

The Board’s policy is for the Company to remain fully invested in normal market conditions and that short term borrowings be used tomanage short term liabilities and working capital requirements and to gear the Company as appropriate.

Liquidity risk exposureContractual maturities of the financial liabilities, based on the earliest date on which payment can be required are as follows:

2016More than

Three three monthsmonths but not more More thanor less than one year one year Total£’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 55 — — 55Bank loan, including interest 18 11,903 — 11,921Other creditors and accruals 236 — — 236Derivative financial instruments 569 — — 569

Creditors: amounts falling due after more than one yearMetlife Private Placement, including interest 263 815 59,488 60,566

1,141 12,718 59,488 73,347

2015More than

Three three monthsmonths but not more More thanor less than one year one year Total£’000 £’000 £’000 £’000

Creditors: amounts falling due within one yearSecurities purchased awaiting settlement 7 — — 7Bank loan, including interest 127 37,274 — 37,401Bank overdraft 674 — — 674Other creditors and accruals 146 — — 146Derivative financial instruments 189 — — 189

1,143 37,274 — 38,417

The liabilities shown above represent future contractual payments and therefore may differ from the amounts shown in theStatement of Financial Position.


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(c) Credit risk

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction 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 that havebeen approved by JPMAM’s Counterparty Risk Group. The Board regularly reviews the counterparties used by the Manager. At theyear end the cash balance of £4.2 million was placed across a range of suitably approved counterparties in line with the Board’sconcentration guidelines. The JPMorgan Euro Liquidity Fund has a AAA rating.

Exposure to JPMorgan Chase

JPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The Company’s assets are segregated from JPMorgan Chase’sown trading assets. Therefore these assets are designed to be protected from creditors in the event that JPMorgan Chase were tocease trading.

The Depositary, BNY Mellon Trust and Depositary (UK) Limited, is responsible for the safekeeping of all custodial assets of theCompany and for verifying and maintaining a record of all other assets of the Company. However, no absolute guarantee can be givenon the protection of all the assets of the Company.

Credit risk exposure

The amounts shown in the Statement of Financial Position under current assets represent the maximum exposure to credit risk at thecurrent and comparative year ends.

The aggregate value of securities on loan at 31st March 2016 amounted to £12.8 million and the maximum value of stock on loanduring the year amounted to £20.1 million. Collateral is obtained by JPMorgan Asset Management and is called in on a daily basis to avalue of 102% of the value of the securities on loan if that collateral is denominated in the same currency as the securities on loanand 105% if it is denominated in a different currency.

(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 is areasonable approximation of fair value except for the Metlife Private Placement which the Company has in issue. The fair value of thePrivate Placement has been calculated using discounted cash flow techniques, using the yield from a similarly dated Germangovernment bond plus a margin based on the five year average for the AA Barclays Euro Corporate Bond spread.

Carrying value Fair value

2016 2015 2016 2015£’m £’m £’m £’m

Euro 50 million 2.69% Metlife Private Placement 25th August 2035 39.4 — 47.0 —





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23. Capital management policies and proceduresThe Company’s debt and capital structure comprises the following:

2016 2015£’000 £’000

DebtBank loan 11,892 32,556Private Placement 39,424 —

Total debt 51,316 32,556

EquityCalled up share capital 6,279 6,280Reserves 324,588 338,726

Total equity 330,867 345,006

Total debt and equity 382,183 377,562

The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the income andcapital return to its Income and Growth shareholders through an appropriate level of gearing.

The Board’s policy is to limit gearing within the range of 10% net cash to 20% geared.

2016 2015£’000 £’000

Investments held at fair value through profit or loss 363,631 368,844Current assets excluding cash 2,829 2,795Current liabilities excluding bank loans (860) (342)

Total assets 365,600 371,297

Net assets 330,867 345,006

Gearing 10.5% 7.6%

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;

– the need to buy back equity shares, either for cancellation or to hold in Treasury, which takes into account the share price discountor 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.

24. Subsequent eventsThe Directors have evaluated the period since the year end and have not rated any subsequent events.


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Regulatory Disclosures

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

The Company’s maximum and actual leverage (see Glossary of Terms and Definitions on page 88) levels at 31st March 2016 are shownbelow:

Gross CommitmentMethod Method

GrowthMaximum limit 350% 350%Actual 165% 139%

IncomeMaximum limit 350% 350%Actual 202% 152%

JPMorgan Funds Limited (‘JPMF’) Remuneration JPMF is the authorised manager of the Company and is part of the J.P. Morgan Chase & Co. group of companies. In this disclosure, the terms‘J.P. Morgan’ or ‘Firm’ refer to that group, and each of the entities in that group globally, unless otherwise specified. This disclosure hasbeen prepared in accordance with the AIFMD, the European Commission Delegated Regulation supplementing the AIFMD, the ‘Guidelines onSound Remuneration Policies’ under the AIFMD issued by the European Securities and Markets Authority and the Financial ConductAuthority Handbook (SYSC 19B: The AIFM Remuneration Code and FUND 3.3).

JPMF Remuneration PolicyThe current remuneration policy for the EMEA Global Investment business of J.P. Morgan can be found athttps://am.jpmorgan.com/gb/en/asset-management/gim/adv/legal/emea-remuneration-policy. This policy includes details of the alignmentwith risk management, the financial and non-financial criteria used to evaluate performance and the measures adopted to avoid or manageconflicts of interest.

JPMF Quantitative DisclosuresDisclosures in accordance with FUND 3.3.5, Article 22(2)e and 22(2)f of the AIFMD and Article 107 of the Delegated Regulation are disclosedon the Company’s website at www.jpmeuropean.co.uk

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



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Capital Structure The Company has two share classes, each with distinct investmentpolicies, objectives and underlying asset pools. Each share class islisted separately and traded on the London Stock Exchange. Thiscapital structure means that shareholders may benefit from greaterinvestment flexibility in a tax-efficient manner.

• Growth Shares Capital growth from Continental European investments, byconsistent out-performance of the benchmark and a rising shareprice over the longer term by taking carefully controlled risksthrough an investment method that is clearly communicated toshareholders.

• Income Shares To provide a growing income together with the potential forlong-term capital growth by investing in a portfolio ofinvestments that is diversified amongst countries, sectors andmarket capitalisations within the universe of ContinentalEuropean companies.

Conversion Opportunities Shareholders in either of the two share classes are able to convertsome or all of their shares into shares of the other class without

such conversion being treated, under current law, as a disposal forUK capital gains tax purposes. The conversion is annual taking placeon the 15th March.

The Company, or its Manager, makes no administrative charge forany of the above conversions.

Conversion between the share classes Those who hold shares through the JPM Investment Trust SavingsPlans must submit a conversion instruction form which can befound at www.jpmeuropean.co.uk Instructions for CREST holderscan also be found at this address. Those who hold shares incertificated form on the main register must complete theconversion notice printed on the reverse of their certificate.

Instructions must be received in the month of February for theMarch conversion.

The number of shares that will arise upon conversion will bedetermined on the basis of the relative net asset values of eachshare class.

More details concerning conversion instruction forms can be foundon the Company’s web site: www.jpmeuropean.co.uk

CAPITAL STRUCTURE AND CONVERSION BETWEEN SHARE CLASSES

Shareholder Information


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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the eighty seventh Annual GeneralMeeting of JPMorgan European Investment Trust plc will be held at60 Victoria Embankment, London EC4Y 0JP on Tuesday, 19th July2016 at 2.30 p.m. for the following purposes:

1. To receive the Directors’ Report, the Annual Accounts and theAuditors’ Report for the year ended 31st March 2016.

2. To approve the Directors’ Remuneration Policy.

3. To approve the Directors’ Remuneration Report for the yearended 31st March 2016.

4. To reappoint Andrew Adcock a Director of the Company.

5. To reappoint Josephine Dixon a Director of the Company.

6. To reappoint Stephen Goldman a Director of the Company.

7. To reappoint Stephen Russell a Director of the Company.

8. To reappoint Jutta af Rosenborg a Director of the Company.

9. To reappoint Ernst & Young LLP as auditor to the Companyand to authorise the Directors to determine theirremuneration for the ensuing year.

Special Business To consider the following resolutions:

Authority to increase the maximum aggregate Directors’ fees –Ordinary Resolution10. THAT in accordance with Article 103(1) of the Company’s

Articles of Association, the maximum aggregate Directors’fees payable be increased from £175,000 to £225,000 perannum with immediate effect.

Authority to allot new shares – Ordinary Resolution11. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors), pursuantto and in accordance with Section 551 of the Companies Act2006 (the ‘Act’) to exercise all the powers of the Company toallot shares in the Company and to grant rights to subscribefor, or to convert any security into, shares in the Company(‘Rights’) up to an aggregate nominal amount of £623,308,representing approximately 10% of the issued share capitalof the Growth and Income share classes of the Company as atthe date of the passing of this resolution, provided that thisauthority shall expire at the conclusion of the Annual GeneralMeeting of the Company to be held in 2017 unless renewed ata general meeting prior to such time, save that the Companymay before such expiry make offers or agreements whichwould or might require shares to be allotted or Rights to begranted after such expiry and so that the Directors of theCompany may allot shares and grant Rights in pursuance ofsuch offers or agreements as if the authority conferredhereby had not expired.

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

Directors of the Company be and they are hereby empoweredpursuant to Sections 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 10 as ifSection 561(1) of the Act did not apply to any such allotment,provided that this power shall be limited to:

(a) the allotment of equity securities in the Company byway of rights issue, open offer or otherwise to holdersof Growth shares and Income shares where the equitysecurities respectively attributable to the interests ofall Growth shares and Income shares are proportionateto the respective numbers of Growth shares andIncome shares held by them subject to such exclusionsor other arrangements as the Board may deemnecessary or expedient in relation to fractionalentitlements or local or practical problems under thelaws of, or the requirements of, any regulatory body orany stock exchange or any territory or otherwisehowsoever; and/or

(b) the allotment (otherwise than pursuant to sub paragraph(a) above) of equity securities up to an aggregatenominal value of approximately £623,308 (beingapproximately 10% of the total issued share capital as at13th June 2016) at a price not less than the net assetvalue per share; and shall expire upon the expiry of thegeneral authority conferred by Resolution 11 above, savethat the Company may before such expiry make offers oragreements which would or might require equitysecurities to be allotted after such expiry and the Boardmay allot equity securities in pursuance of such offers oragreements as if the power conferred hereby had notexpired.

Authority to Repurchase the Company’s Shares – SpecialResolution 13. THAT the Company be generally and, subject as hereinafter

appears, unconditionally authorised in accordance withSection 701 of the Act to make market purchases (within themeaning of Section 693 of the Act) of its issued Growthshares and Income shares (both being classes of ordinaryshares in the capital of the Company)

PROVIDED ALWAYS THAT

(i) the maximum number of Growth and Income shareshereby authorised to be purchased shall be 11,650,097or 14,073,330 respectively, or, if different, that numberof Growth and Income shares which is equal to 14.99%of the issued share capital of the relevant share classas at the date of the passing of this Resolution;


Shareholder Information continued

NOTICE OF ANNUAL GENERAL MEETING CONTINUED


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(ii) the minimum price which may be paid for any Growthor Income share shall be 5p or 2.5p respectively;

(iii) the maximum price which may be paid for any ordinaryshare shall be an amount equal to: (a) 105% of theaverage of the middle market quotations for a Growthor Income share taken from and calculated byreference to the London Stock Exchange Daily OfficialList for the five business days immediately precedingthe day on which the ordinary share is purchased; or(b) the price of the last independent trade; or (c) thehighest current independent bid;

(iv) any purchase of Growth or Income shares will be madein the market for cash at prices below the prevailingnet asset value per Growth or Income share (asdetermined by the Directors) at the date following notmore than seven days before the date of purchase:

(v) the authority hereby conferred shall expire on21st January 2017 unless the authority is renewed atthe Company’s Annual General Meeting in 2016 or atany other general meeting prior to such time; and

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

Authority to make off-market purchases – Special Resolution 14. THAT the proposed Contingent Purchase contract between

Winterflood Securities Limited and JPMorgan EuropeanInvestment Trust plc to enable the Company to make off-market purchases of its own securities pursuant toSection 694 of the Act in the form produced at the meetingand initialled by the Chairman, be and is hereby approvedand the Company be and is hereby authorised to enter intoand perform such contract, but so that the approval andauthority conferred by this resolution shall expire on the dayimmediately preceding the date which is 18 months after thepassing of this resolution or, if earlier, the next AnnualGeneral Meeting of the Company.

By order of the BoardPaul Winship, for and on behalf of JPMorgan Funds Limited, Secretary

15th June 2016

Notes These notes should be read in conjunction with the notes on the reverse ofthe 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 to theMeeting, provided that each proxy is appointed to exercise the rightsattaching 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 who hasagreed 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 box onthe proxy form is left blank, the proxy or proxies will exercise his/theirdiscretion both as to how to vote and whether he/they abstain(s) fromvoting. Your proxy must attend the Meeting for your vote to count.Appointing a proxy or proxies does not preclude you from attendingthe 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 deadline willbe disregarded. Where two or more valid separate appointments ofproxy are received in respect of the same share in respect of the sameMeeting, the one which is last received (regardless of its date or thedate of its signature) shall be treated as replacing and revoking theother 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 purpose ofthe 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 the entitlementof members to attend and vote (and for the purpose of determining thenumber of votes they may cast) at the adjourned Meeting. If, however,the Meeting is adjourned for a longer period then, to be so entitled,members must be entered on the Company’s register of members as at6.30 p.m. two business days prior to the adjourned Meeting or, if theCompany gives notice of the adjourned Meeting, at the time specifiedin that notice. Changes to entries on the register after this time shall bedisregarded in determining the rights of persons to attend or vote atthe 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.


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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 theprovisions 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 Meeting evidence of theirappointment, including any authority under which it is signed.

8. Members that satisfy the thresholds in Section 527 of the CompaniesAct 2006 can require the Company to publish a statement on itswebsite setting out any matter relating to: (a) the audit of theCompany’s accounts (including the 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 the Meeting.The Company cannot require the members requesting the publicationto pay its expenses. Any statement placed on the website must also besent to the Company’s Auditors no later than the time it makes itsstatement available on the website. The business which may be dealtwith at the AGM includes any statement that the Company has beenrequired 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 confidential information.

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 Meeting anymatter (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 (whether byreason 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 must bereceived by the Company not later than the date that is six clear weeksbefore the Meeting, and (in the case of a matter to be included in thebusiness only) must be accompanied by a statement setting out thegrounds for the request.

11. A copy of this notice has been sent for information only to persons whohave been nominated by a member to enjoy information rights underSection 146 of the Companies Act 2006 (a ‘Nominated Person’). Therights to appoint a proxy can not be exercised by a Nominated Person:they can only be exercised by the member. However, a NominatedPerson may have a right under an agreement between him and themember by whom he was nominated to be appointed as a proxy for theMeeting or to have someone else so appointed. If a Nominated Persondoes not have such a right or does not wish to exercise it, he may havea right under such an agreement to give instructions to the member asto 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 of sharesin respect of which members are entitled to exercise voting rights atthe AGM, the total voting rights members are entitled to exercise at theAGM and, if applicable, any members’ statements, members’resolutions or members’ matters of business received by the Companyafter the date of this notice will be available on the Company’s websitewww.jpmeuropean.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/VotingDirection Form, you can appoint a proxy or proxies electronically byvisiting www.sharevote.co.uk. You will need your Voting ID, Task ID andShareholder Reference Number (this is the series of numbers printedunder your name on the Form of Proxy/Voting Direction Form).Alternatively, if you have already registered with Equiniti Limited’sonline portfolio service, Shareview, you can submit your Form of Proxyat www.shareview.co.uk. Full instructions are given on both websites.

16. As at 13th June 2016 (being the latest business day prior to thepublication of this Notice), the Company’s issued share capital consistsof 77,719,123 Growth shares and 93,884,791 Income shares. Votingrights are calculated by reference to the share voting numbers which,as at 31st March 2016, were 2.601 (Growth) and 1.371 (Income).Therefore the total voting rights in the Company are 330,863,487.

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



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GLOSSARY OF TERMS AND DEFINITIONS

Return to ShareholdersTotal return to the investor, on a mid-market price to mid-marketprice basis, assuming that all dividends received were reinvested,without transaction costs, into the shares of the Company at thetime the shares were quoted ex-dividend.

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

Benchmark ReturnTotal return on the benchmark, on a mid-market value to mid-market value basis, assuming that all dividends receivedwere reinvested, without transaction costs, into the shares of theunderlying companies at the time the shares were quoted ex-dividend.

The benchmark is a recognised index of stocks which should not betaken as wholly representative of the Company’s investmentuniverse. The Company’s investment strategy does not ‘track’ thisindex and consequently, there may be some divergence betweenthe Company’s performance and that of the benchmark.

Gearing/Net CashGearing represents the excess amount above shareholders’ funds oftotal assets expressed as a percentage of the shareholders’ funds.Total assets include total investments and net current assets/liabilities less cash/cash equivalents and excluding bank loans ofless than one year. If the amount calculated is negative, this isshown as a ‘net cash’ position.

Ongoing ChargesThe ongoing charges represent the Company’s management fee andall other operating expenses, excluding finance costs andperformance fee payable, expressed as a percentage of the averageof the daily net assets during the year.

Share Price Discount/Premium to Net Asset ValueIf the share price of an investment trust is lower than the NAV pershare, the Company’s shares are said to be trading at a discount.The discount is shown as a percentage of the NAV per share. Theopposite of a discount is a premium. It is more common for aninvestment trust’s shares to trade at a discount than at a premium.

Performance AttributionAnalysis of how the Company achieved its recorded performancerelative to its benchmark.

Performance Attribution Definitions:Asset Allocation Measures the impact of allocating assets differently to those inthe benchmark, via the portfolio’s weighting in differentcountries, sectors or asset types.

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

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

CurrencyMeasures the effect of currency exposure differences betweenthe Company’s portfolio and its benchmark.

Management Fee/Other ExpensesThe payment of management fees and other expenses reducesthe level of total assets, and therefore has a negative effect onrelative performance.

Shareholder Information continued


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YFraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to beworthless or non-existent, or to buy shares at an inflated price in return for an upfront payment. While high profits are promised, ifyou buy or sell shares in this way you will probably lose your money.

Keep in mind that firms authorised by the FCAare unlikely to contact you out of the blue withan offer to buy or sell shares.

Do not get into a conversation, note the nameof the person and firm contacting you and thenend the call.

Check the Financial Services Register fromwww.fca.org.uk to see if the person and firmcontacting you is authorised by the FCA.

Beware of fraudsters claiming to be from anauthorised firm, copying its website or givingyou false contact details.

Use the firm’s contact details listed on theRegister if you want to call it back.

Call the FCA on 0800 111 6768 if the firm doesnot have contact details on the Register or youare told they are out of date.

Search the list of unauthorised firms to avoid atwww.fca.org.uk/scams.

Consider that if you buy or sell shares from anunauthorised firm you will not have access to theFinancial Ombudsman Service or FinancialServices Compensation Scheme.

Think about getting independent financial andprofessional advice before you hand over anymoney.

Remember: if it sounds too good to be true, itprobably is!

If you are approached by fraudsters please tell theFCA using the share fraud reporting form atwww.fca.org.uk/scams, where you can find outmore about investment scams.

You can also call the FCA Consumer Helpline on0800 111 6768.

If you have already paid money to share fraudstersyou should contact Action Fraud on 0300 123 2040.

5,000 people contact the Financial ConductAuthority about share fraud each year,with victims losing an average of £20,000

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Beware of share fraud

How to avoid share fraud

Report a scam

In association with:

Financial Conduct Authority

WHERE TO BUY J.P. MORGAN INVESTMENT TRUSTS

Savings PlanThe Company participates in the J.P. Morgan Investment TrustsSavings Plan, which facilitates both regular monthly investments andoccasional lump sum investments in the Company’s ordinary shares.Shareholders who would like information on the Savings Plan shouldcall J.P. Morgan Asset Management free on 0800 20 40 20 or visitits website at am.jpmorgan.co.uk

Stocks & Shares Individual Savings Accounts (ISA)The Company’s shares are eligible investments within J.P. Morgan’sStocks & Shares ISA. For the 2016/17 tax year, from 6th April 2016and ending 5th April 2017, the total ISA allowance is £15,240.Details are available from J.P. Morgan Asset Management free on0800 20 40 20 or via its website at am.jpmorgan.co.uk

There are a number of ways that you can buy shares in investmenttrust companies; you can invest through J.P. Morgan Online or onthe following:

Fund supermarkets:

Alternatively you can invest through an Investment Professional(e.g. a Financial Adviser) on the following 3rd party platforms:

Ascentric Nucleus Avalon Praemium Axa Elevate TransactNovia

Please note that these websites are third party websites andJ.P. Morgan Asset Management does not endorse or recommendany of them. This list is not exhaustive and is subject to change.Please observe each site’s privacy and cookie policies as well astheir platform charges structure.

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

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

AJ BellAlliance Trust SavingsBarclays StockbrokersCharles Stanley DirectHalifax Share Dealing ServiceHargreaves Lansdown Interactive Investor

James Brearley James HayStocktradeTD DirectThe Share Centre Tilney BestinvestTransact


HistoryJPMorgan European Investment Trust plc was formed in 1929 as TheLondon and Holyrood Trust Limited and was a general investment trustuntil 1982 when the name was changed to The Fleming UniversalInvestment Trust. Under this name the portfolio became moreinternationally invested until November 1988, when the Board decidedto concentrate on Continental European investments. In 1992shareholders approved a formal adoption of this specialisation. TheCompany adopted its current structure and name in August 2006.

Company NumbersCompany registration number: 237958

London Stock Exchange Sedol numbers: Growth: B18JK16 Income: B17XWW4

ISIN numbers: Growth: GB00B18JK166 Income: GB00B17XWW44

Bloomberg Codes: Growth: JETG LN Income: JETI LN

Market InformationThe Company’s net asset value is published daily, via The London StockExchange. The Company’s shares are listed on the London StockExchange. The market prices are shown daily in the Financial Times,The Times, the Daily Telegraph, The Scotsman and on the Companywebsite at www.jpmeuropean.co.uk, where the share prices areupdated every fifteen minutes during trading hours.

Websitewww.jpmeuropean.co.uk

Share TransactionsThe Company’s shares may be dealt in directly through a stockbroker,intermediary or professional adviser acting on an investor’s behalf.They may also be purchased and held through the J.P. MorganInvestment Account and J.P. Morgan ISA. These products are allavailable on the online service, at www.jpmorgan.co.uk/online

Manager and Company SecretaryJPMorgan Funds Limited

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

Please contact Paul Winship for company secretarial and administrativematters.

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

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

RegistrarsEquiniti LimitedReference 1080Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0371 384 2319

Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to thehelpline will cost no more than a national rate call to a 01 or 02number. Callers from overseas should dial +44 121 415 0225.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 1080. Registered shareholders can obtainfurther details on their holdings on the internet by visitingwww.shareview.co.uk.

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.

Independent AuditorErnst & Young LLP Chartered Accountants and Statutory Auditor1 More London Place London SE1 2AF

BrokersWinterflood Securities LimitedThe Atrium Building Cannon Bridge25 Dowgate HillLondon EC4R 2GATelephone 020 7621 0004

Information about the Company

FINANCIAL CALENDAR

Financial year end 31st March

Final results announced June

Half year end September

Half year results announced November

Dividends payable – Growth April and October

Dividends payable – Income April, July, October and January

Annual General Meeting July

A member of the AIC

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www.jpmeuropean.co.uk

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

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.

GB A110 06/16 GB A111 06/16

Documents

JPMorgan European Investment Trust plc...Growth and Income share classes varied between 3.4% and 11.2% for the Growth shares and0.7% and 7.4% on the Income shares. At the 31st March