AnnualReport JPMorgan Brazil Investment Trust plc Repor… · 1 Financial Results ... unduly...

JPMorgan Brazil Investment Trust plc

Annual Report & Accounts for the year ended 30th April 2015

Annual Report2015

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Features

Contents

1 Financial Results

Strategic Report

2 Chairman’s Statement5 Investment Managers’ Report8 Summary of Results9 Ten Largest Equity Investments10 Sector Analysis 11 List of Investments12 Business Review

Governance

16 Board of Directors17 Directors’ Report19 Corporate Governance25 Directors’ Remuneration Report28 Statement of Directors’

Responsibilities

29 Independent Auditor’s Report

Financial Statements

33 Income Statement34 Reconciliation of Movements in

Shareholders’ Funds35 Balance Sheet36 Cash Flow Statement37 Notes to the Financial Statements

Shareholder Information

54 Notice of Annual General Meeting57 Glossary of Terms and Definitions58 Where to buy J.P. Morgan Investment

Trusts61 Information about the Company

ObjectiveTo provide shareholders with long term total returns, predominantly comprisingcapital growth but with the potential for income, by investing primarily in Brazilianfocused companies.

Investment Policies– To invest primarily in Brazilian companies and those incorporated or listed outsideBrazil whose Brazilian operations constitute a material part of their business. Up to10% of assets may be invested in companies focused on other Latin Americancountries.

– There will be no limit placed on the market capitalisation or sector of any investeecompanies. However, the Company may reduce its equity holdings to a minimum of60% of its gross assets if it is considered to be beneficial to performance.

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

– To use gearing when appropriate to increase potential returns to shareholders.

Benchmark The Company’s benchmark is the MSCI Brazil 10/40 Index (in sterling terms), with netdividends reinvested. This index limits the maximum weight of an individual stockconstituent to 10% and limits the sum of the weights of all stocks representing morethan 5% individually to 40%.

Capital Structure At 30th April 2015, the Company’s share capital comprised 61,728,898 Ordinaryshares of 1p each including 13,936,536 shares held in Treasury.

Continuation VoteIn accordance with the Company’s Articles of Association, the Directors are requiredto propose a resolution that the Company continue as an investment trust at theAnnual General Meeting in 2016 and every third year thereafter.

Management Company and Company SecretaryPrior to 1st July 2014, the Company employed JPMorgan Asset Management (UK)Limited (‘JPMAM’ or the ‘Manager’) to manage its assets. With effect from 1st July 2014,JPMorgan Funds Limited (‘JPMF’) or the ‘Manager’), an affiliate of JPMAM, wasappointed as the Company’s Alternative Investment Fund Manager (‘AIFM’) and theCompany Secretary.

FCA regulation of ‘non-mainstream pooled investments’The Company currently conducts its affairs so that the shares issued by JPMorgan BrazilInvestment Trust plc can be recommended by Independent Financial Advisers toordinary retail investors in accordance with the FCA’s rules in relation to non-mainstreaminvestment products and intends to continue to do so for the foreseeable future.

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

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

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


JPMorgan Brazil Investment Trust plc. Annual Report & Accounts 2015 1

Financial Resultsfor the year ended 30th April 2015

Total returns (includes dividends reinvested)

–11.9%Return to Ordinaryshareholders1

(2014: –26.0%)

–14.6%Return on net assets2

(2014: –24.4%)

–9.5%Benchmark3

(2014: –17.1%)

A glossary of terms and definitions is provided on page 57.

1Source: Morningstar.2Source: J.P. Morgan.3Source: Datastream. The Company’s benchmark is the MSCI Brazil 10/40 Index, with net dividends reinvested in sterling terms.

0.40pDividend(2014: 0.85p)

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JPMorgan Brazil Investment Trust plc. Annual Report & Accounts 20152

Performance, Investment Management Arrangements and Outlook

During the year to 30th April 2015, the Company’s return on net assets was –14.6%and the return to Ordinary shareholders was –11.9%, reflecting a narrowing ofthe Company’s discount from 9.1% to 6.4%. The Company underperformed itsbenchmark, the MSCI Brazil 10/40 Index (in sterling terms), which returned –9.5%.

Following the launch of the trust in April 2010, we saw a period of good performancewith the managers outperforming a rising market, but conditions changed in thefollowing year.

Over the period since launch up to 30th April 2015, the NAV increased 12.87% inBrazilian Real terms, while the index rose by 18.17%, and as a result of a fallingexchange rate this translated into a decline of 34.3% and 31.2% respectively in£ sterling terms.

The Board is very conscious of the fact that most investors have seen a substantial fallin the value of their shares, which is mainly because of the decline in the value of theBrazilian currency. However the NAV per share has also underperformed the index asa result of a number of stock selection decisions in markets which have been highlyvolatile because of political and economic factors.

The Board has responded to this in two principal ways:

(i) we have reviewed with the Investment Managers their investment process andstrategy and agreed that they will focus investment on companies which willbenefit over the long term from the growing middle class and the rise inconsumer expenditure and avoid the largest Brazilian companies which areunduly subject to political influences.

(ii) in the light of the reduced size of the Company, we have agreed with JPMorganthat with effect from 1st May 2015, they will reduce their management fee to theextent necessary to ensure that the Company’s ongoing charges ratio does notexceed 2%.

With the continuation vote scheduled for 2016, the Directors have been consideringwhether the economic potential of Brazil justifies continued investment despite thedownturn experienced in the last four years. We recently visited Brazil and met anumber of senior political and economic analysts as well as representatives ofnumerous listed companies including several in which we are invested. Theconclusions we reached are:

(a) Brazil needs to address its fiscal imbalance as a matter of urgency as its ability totackle other problems – poor infrastructure and lack of investment – depends on astronger fiscal position.

(b) The ministerial team now in place is competent and realistic and understandswhat needs to be done. In particular, they have set a challenging target for fiscaladjustment that they expect to achieve by the end of this year.

Strategic ReportChairman’s Statement



(c) In the short term there is likely to be a period of continued poor economicperformance before the measures now being adopted bear fruit, but the mediumterm outlook is more favourable given the country’s long term economicpotential.

(d) The Board is satisfied with the Investment Managers’ current stock selection.

We will continue to monitor the situation closely but at present we expect to be ableto recommend to shareholders in July 2016 that the continuation vote at the AnnualGeneral Meeting (‘AGM’) be approved.

Revenue and Dividends

Gross revenue for the year amounted to £952,000 (2014: £1,412,000) and net totalrevenue after administrative expenses and taxation amounted to £203,000 (2014:£487,000).

The Company’s dividend policy has been to distribute all, or substantially all, ofthe available income each year. The Board recommends a dividend of 0.40p perOrdinary share. Subject to shareholders’ approval at the forthcoming AGM on11th September 2015, the dividend will be payable on 18th September 2015 toshareholders on the register at 21st August 2015. Whilst this is a reduction on the0.85p per Ordinary share paid last year, shareholders are reminded that theCompany’s investment objective, and thus the basis of the Investment Managers’decisions, is to provide shareholders over the longer term with returnspredominantly in the form of capital growth.

Asset Allocation

In accordance with the Company’s investment policy, the Investment Managershave continued to be substantially invested in equities. As at 30th April 2015, theCompany’s portfolio had 2.3% in cash.

Share Repurchases and Issuance

At last year’s AGM, shareholders granted Directors authority to repurchase theCompany’s shares. During the financial year, the Company repurchased a total of5,358,957 Ordinary shares into Treasury at a discount, thereby marginallyenhancing NAV per share.

The Board’s objective remains to use the share repurchase authority to manageimbalances between the supply of and demand for the Company’s shares, therebyreducing the volatility of the discount. The Board believes this mechanism has beenhelpful and therefore proposes and recommends that powers to repurchase up to14.99% of the Company’s issued share capital be renewed for a further period.

Challenging market conditions have made it impossible to continue the shareissuance at a premium, which the Company achieved in the period following flotation,



and which benefited shareholders because it enhances NAV per share and improvesliquidity in the market for the Company’s shares. The Board intends to resume suchissuance when market conditions permit, and therefore resolutions renewing theauthorities to issue shares from Treasury and to issue new shares at a premium toNAV, and to disapply pre-emption rights over such issues, will be submitted forapproval at the forthcoming AGM.

Annual General Meeting

The AGM will be held at 60 Victoria Embankment, London EC4Y 0JP on 11th September2015 at 2.00 p.m. The meeting will include a presentation from the InvestmentManagers on investment policy and performance. There will also be an opportunityfor shareholders to meet the Board and representatives of JPMorgan after themeeting.

If you wish to raise any detailed or technical questions at the Meeting, it would behelpful if you could mention them in advance by writing to the Company Secretary at60 Victoria Embankment, London EC4Y 0JP. Shareholders who are unable to attendthe Meeting in person are encouraged to use their proxy votes.

Howard Myles Chairman 14th July 2015

Strategic Report continuedChairman’s Statement continued



Market review

The year to April 2015 was a challenging period for Brazilian equities, with sentimentdriven more by political developments than by corporate fundamentals. In anenvironment of volatility for both the stock market and the currency, the MSCI Brazil10/40 Index delivered a negative return.

The dominant event of the period was October’s presidential election. Ahead of theelection, investors hoped for a change in leadership, with incumbent Dilma Rousseffviewed as having run an anti-business administration that introduced distortions intothe economy. State-owned companies were particularly sensitive to shifts in investorsentiment, given concerns over government interference if Rousseff was re-elected.

To the market’s surprise, the outcome of the closely fought contest was a preservationof the status quo, with Rousseff re-elected for another four years despite a late surgein support for the opposition candidate. However, some comfort came from theappointment of Joaquim Levy, the Chicago-educated former treasury secretary, asfinance minister. Levy immediately pledged to restore balance to Brazil’s strugglingpublic finances, beginning by restricting unemployment and pension benefits andraising taxes on imported goods.

Although a return to more orthodox economic policy is expected to put Brazil on apath to more sustainable growth, data continues to disappoint as the policies of theprevious administration are worked through the system. Household consumptionfell year on year for the first time since 2003 in the first quarter of 2015, whileunemployment hit a four-year high in April. Meanwhile, inflation has climbed above8% – well in excess of the central bank’s 2.5%–6.5% target band – following thescrapping of state subsidies for petrol and electricity at the beginning of the year. Inresponse, the central bank has raised its benchmark interest rate to 13.75%, thehighest level in six years.

The steep decline in natural resource prices in the second half of 2014 was a furtherheadwind for Brazil’s commodity-heavy market over the review period, as was acorruption scandal at index heavyweight Petrobras, the state-owned oil producer.The currency has also deteriorated sharply against the US dollar over the year,although it recovered some of its losses at the end of the period.

Portfolio review

Against this turbulent backdrop, the Company’s net asset value and share priceunderperformed the benchmark. Stock selection detracted from relativeperformance, while asset allocation provided a moderate positive contribution.

It is important to underscore that the Company seeks to invest in small to mid capnames with the potential to compound their book value over time and therefore ourexposure to volatile sectors like commodities and energy that do not meet ourinvestment criteria will tend to be low and hence, the fund will tend to have lowervolatility than the market. There is some volatility that we can not eliminate thatcomes from currency moves that can be meaningful in periods of higher risk

Luis Carrillo

Sophie Bosch De Hood

Investment Managers’ Report


perception but in the long run currency should not have a significant impact in ourreturns.

An underweight allocation to consumer staples detracted at the sector level, withan underweight position in beverage producer Ambev hurting performance. Arebalancing of the index in the period increased the weight of Ambev in the index andfollowing a meeting with management we have decided not to add to our position asthe company faces headwinds from tax liabilities and lower disposable income in theshort term.

Our mid and small cap industrials exposure was also detrimental for relativeperformance. While the currency weakness added to their exports the domesticeconomy was significantly weaker than we expected and that outweighed the exportimprovement. In particular, an overweight position in Mills weighed on relativereturns as the construction and industrial maintenance company was hurt bydownward earnings revisions and the exposure of its clients to the Petrobras scandal.

In the information technology sector, our preference for small and mid cap stockswas a further headwind to performance as these companies were more vulnerable toa government’s proposal to raise labor taxes that hurts disproportionally labourintensive companies. However, our underweight position in materials, reflecting ournegative view of commodity cyclical stocks, was positive for relative returns.

Strategic Report continuedInvestment Managers’ Report continued

Performance attributionYear to Year to

30th April 2015 30th April 2014Contributions to total return % % % %

Benchmark return –9.5 –17.1

Asset allocation 0.2 0.5Stock selection –4.0 –6.4Gearing/cash 0.1 –0.2

Investment Manager’s contribution –3.7 –6.1

Portfolio return –13.2 –23.2

Management fee/other expenses –1.9 –1.7Share buybacks 0.5 0.5

Other effects –1.4 –1.2

Return on net assets –14.6 –24.4

Impact of change in discount 2.7 –1.6

Return to Ordinary shareholders –11.9 –26.0

Source: Factset/Datastream/Morningstar. All figures are on a total return basis.

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





Outlook

Brazil is going through a period of pain as the distortions introduced by the firstRousseff administration are unwound. However, as long as Levy’s current trajectory ismaintained, we expect the economy to return to healthy growth. We believe we arenearing rock bottom, and that confidence could pick up later in the year. In the shortterm, we expect unemployment to continue to rise, with a knock-on effect onconsumption. Importantly, though, rising unemployment is in part driven by risingparticipation in the workforce – a sign of improving sentiment.

Looking ahead, we view the currency as a neutral factor for sterling investors. TheReal had looked expensive against the US dollar, so the depreciation, though painful,was necessary. We believe the Real at R$3.2/USD is fairly valued but we couldcontinue to see short term volatility.

Brazil is home to many well-run companies with valuation no longer being a concernfor the medium term. Following the weakness in the currency over the last couple ofyears, we believe it is now fair value and we do not see significant downside risk. Theyield of the market is around 4% compared to the usual 2.5% and we believe themarket expectations of earnings are much more reasonable now. We are much closerto the moment where the companies begin to see the virtuous cycle of increase ofcapacity utilisation and improved operating leverage translating to earnings growththat should translate into investment returns but the economic environmentcontinues to be difficult. Investing in this challenging environment requires fundmanagers to be selective and more demanding on valuations, particularly in sectorsthat are facing currency or policy headwinds. We believe the clear tilt in our strategytowards quality companies with strong cash flows helps to mitigate the risks.

Luis CarrilloSophie Bosch De HoodInvestment Managers 14th July 2015



2015 2014

Total returns for the year ended 30th AprilReturn to Ordinary shareholders1 –11.9% –26.0%Return on net assets2 –14.6% –24.4%Benchmark3 –9.5% –17.1%

% change

Net asset value, share price and discountNet assets (£’000) 29,267 38,478 –23.9Ordinary shares in issue (excluding shares held in Treasury) 47,792,362 53,121,319 –10.0Net asset value per Ordinary share 61.2p 72.4p –15.5Ordinary share price 57.3p 65.8p –12.9Ordinary share price discount to net asset value per Ordinary share 6.4% 9.1%

Revenue for the year ended 30th AprilGross revenue attributable to Ordinary shareholders (£’000) 952 1,412 –32.6Net revenue attributable to Ordinary shareholders (£’000) 203 487 –58.3Revenue return per Ordinary share 0.40p 0.88p –54.5Dividend per Ordinary share 0.40p 0.85p –52.9

Gearing/(net cash) at 30th April4 (2.2)% (0.5)%

Ongoing charges5 1.90% 1.90%


1Source: Morningstar2Source: J.P. Morgan.3Source: Datastream. The Company’s benchmark is the MSCI Brazil 10/40 Index, with net dividends reinvested, in sterling terms.4Gearing represents the excess amount above shareholders’ funds of total assets expressed as a percentage of the shareholders’ funds. Total assets include total investments and netcurrent assets/liabilities less cash/cash equivalents. If the amount calculated is negative, this is shown as a ‘net cash’ position.

5Ongoing charges represent the management fee and all other operating expenses excluding any performance fee payable, expressed as a percentage of the average daily net assetsduring the year and are calculated in accordance with guidance issued by the AIC in May 2012.

Strategic Report continuedSummary of Results



2015 2014Valuation Valuation

Company Sector £’000 %1 £’000 %1

Banco Bradesco ADR Financials 2,594 8.9 2,003 5.2Attracts deposits and offers commercial banking services.

Itaú Unibanco ADR Financials 2,569 8.8 4,134 10.7Attracts deposits and offers retail, commercial, corporate, and private banking services.

Ambev ADR Consumer Staples 2,039 7.0 1,878 4.9The primary business is the production and distribution of beer. The company alsooperates in the soft drinks and non-alcoholic and non-carbonated businesses withproprietary brands. The company has exclusive bottler and distributor rights for Pepsiproducts in Brazil.

Valid Soluções e Serviços de Segurança em Meios de Pagamento Industrials 1,218 4.2 1,552 4.0e IdentificaçãoProvides security printing and payment services to financial institutions, telecomcompanies, governments and public agencies.

BM&F Bovespa Sa Bolsa de Valores3 Financials 1,083 3.7 879 2.3Combines activities of BOVESPA, the Brazilian Stock Exchange, and BM&F, the futuresand commodities exchange. The company operates as a regional exchange and providesan integrated business model, including clearing and settlement activities, financialproducts for trading in equity and commodity derivatives as well as full service CentralSecurity Depository.

Brasil Insurance Participações Financials 1,063 3.6 1,275 3.3Acts as a holding company investing in Insurance companies and as an Insurance broker.The company offers insurance products, pension plans, and special savings bonds.

Lojas Renner3 Consumer 1,060 3.6 817 2.1Designs, develops and sells women’s, men’s, teen and children’s quality and fashionable Discretionaryapparel, footwear and intimate apparel under the eleven private brands of its Lifestyleconcept. The company also sells accessories and cosmetics through two private brandsand offers third-party branded merchandise in certain of its product categories.

Ultrapar Participações2 Energy 964 3.3 — —The company’s holdings include a gas distribution company, a petrochemical company, anda petrochemical and gas storage and transportation company.

Embraer ADR Industrials 950 3.2 1,561 4.1Manufactures and markets commercial, corporate, and defense aircraft. The companyalso provides maintenance and repair services and markets spare parts for its jets. Thecompany markets its aircraft to commercial airlines mainly in the United States andEurope and to governments in Europe and Latin America.

Itaúsa Investimentos Itaú3 Financials 896 3.0 931 2.4A holding company. The company operates in the finance, insurance, constructionmaterials, electronics, chemicals, real estate, and telecommunications industries. Itausahas operations in Portugal, the United States, Luxembourg, Argentina, Germany andBelgium.

Total 14,436 49.3

1Based on total assets less current liabilities of £29.3m (2014: £38.5m). 2Not held in the portfolio at 30th April 2014.3Not within ten largest equity investments at 30th April 2014.4At 30th April 2014, the value of the ten largest equity investments amounted to £21.7m representing 56.4% of total assets less current liabilities.

Year-on-year movements in valuation reflect the effect of sales and purchases as well as changes in share prices.

Ten Largest Equity Investmentsat 30th April 2015



30th April 2015 30th April 2014Portfolio Benchmark Portfolio Benchmark

%1 % %1 %

Financials 33.8 29.1 30.7 32.2

Industrials 19.8 5.9 19.7 6.1

Consumer Staples 15.8 20.2 10.4 14.6

Consumer Discretionary 11.4 6.8 8.0 6.2

Materials 4.4 10.5 13.6 13.5

Utilities 3.9 5.8 — 6.6

Information Technology 3.5 5.1 6.0 4.2

Energy 3.3 12.6 9.3 12.4

Health Care 1.8 0.9 1.5 0.8

Telecommunication Services — 3.1 — 3.4

Net current assets 2.3 — 0.8 —

Total 100.0 100.0 100.0 100.0

1Based on total assets less current liabilities of £29.3m (2014: £38.5m).

Strategic Report continuedSector Analysisat 30th April 2015



ValuationCompany £’000

FinancialsBanco Bradesco ADR 2,594Itaú Unibanco ADR 2,569BM&F Bovespa Sa Bolsa de Valores 1,083Brasil Insurance Participações 1,063Itaúsa Investimentos Itaú1 896Iguatemi Empresa de Shopping Centers 726Credicorp2 (Peru) 576Corporacion Inmobiliaria Vesta2 (Mexico) 244Qualitas Controladora Sab De CV2 (Mexico) 151

Total Financials 9,902

IndustrialsValid Soluções e Serviços de Segurança em Meios de Pagamento e Identificação 1,218

Embraer ADR 950WEG 862CCR 776Localiza Rent a Car 753Copa Holdings2 (Panama) 481Marcopolo1 460Wilson Sons 293

Total Industrials 5,793

Consumer StaplesAmbev ADR 2,039Drogasil 890Companhia Brasileira de Distribuição1 745Souza Cruz 567M Dias Branco 368

Total Consumer Staples 4,609

Consumer DiscretionaryLojas Renner 1,060Kroton Educacional 686S.A.C.I. Falabella2 (Chile) 374Estacio Participações 361Arezzo Indústria E Comércio 318Fras-Le 218Guararapes Confecções1 177EZ Tec Empreendimentos 144

Total Consumer Discretionary 3,338

ValuationCompany £’000

MaterialsEternit 535Gerdau ADR 460Mexichem2 (Mexico) 303

Total Materials 1,298

UtilitiesCompanhia Energetica de Minas Gerais1 524CPFL Energia 325Tractebel Energia 289

Total Utilities 1,138

Information TechnologyLinx 554Totvs 461

Total Information Technology 1,015

EnergyUltrapar Participações 964

Total Energy 964

Health CareOdontoprev 535

Total Health Care 535

Total Investment Portfolio 28,592

1Preference shares.2Non-Brazilian holdings.

The portfolio comprises investments in equity shares and ADRs

List of Investmentsat 30th April 2015



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

Structure and Objective of the CompanyJPMorgan Brazil Investment Trust plc is an investment trustcompany that has a premium listing on the London StockExchange. Its objective is to provide shareholders with longterm total returns, predominantly comprising capital growthbut with the potential for income, by investing primarily inBrazilian focused companies. In seeking to achieve thisobjective, JPMorgan Funds Limited (‘JPMF’ or the ‘Manager’),an affiliate of JPMAM, has been appointed as the Company’sAlternative Investment Fund Manager (‘AIFM’) to manage itsassets and also to act as the Company Secretary. The Board hasdetermined an investment policy and related guidelines andlimits as described below.

The Company is an investment company within the meaningof Section 833 of the Companies Act 2006 and has beenapproved by HM Revenue & Customs as an investment trust(for the purposes of Sections 1158 and 1159 of the CorporationTax Act 2010). As a result, the Company is not liable for taxationarising on capital gains. The Company is not a close companyfor taxation purposes.

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

Investment Policies and Risk ManagementIn order to achieve the Company’s investment objective and toseek to manage risk, the Board imposes various investmentlimits and restrictions.

• The Company invests primarily in Brazilian companies andthose incorporated or listed outside Brazil whose Brazilianoperations constitute a material part of their business.Up to 10% of assets may be invested in companies focusedon other Latin American countries.

• There is no limit placed on the market capitalisation orsector of any investee companies.

• The Company may reduce its equity holdings to a minimumof 60% of its gross assets if it is considered to be beneficialto performance.

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

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

• The Company may invest no more than 10% of gross assetsin other UK listed investment companies (includinginvestment trusts) at the time of investment.

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

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

PerformanceIn the year to 30th April 2015, the Company produced aportfolio return of –13.2% pre-expenses and share buy backs,compared with the return on the Company’s benchmark indexof –9.5%. The return on net assets was –14.6%. At 30th April2015, the value of the Company’s investment portfolio was£28.6 million (2014: £38.1 million). The Investment Managers’Report on pages 5 to 7 includes a review of developmentsduring the period as well as information on investment activitywithin the Company’s portfolio.

Total Return, Revenue and Dividends Gross total loss amounted to £4.5 million (2014: £12.8 millionloss) and net total loss after deducting administrativeexpenses and taxation, amounted to £5.3 million (2014:£13.7 million loss). Distributable income for the yearamounted to £0.2 million (2014: £0.5 million).

The Directors recommend a final dividend of 0.40p (2014:0.85p) per Ordinary share payable on 18th September 2015to holders on the register at the close of business on21st August 2015. This dividend will cost £191,000 (2014:£452,000) and the revenue reserve after allowing for thedividend will amount to £530,000 (2014: £496,000).

Strategic Report continuedBusiness Review



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

• Performance against the benchmark This is the most important KPI by which performance isjudged and it is discussed in the Investment Managers’report in more detail on pages 5 to 7.

Performance Relative to BenchmarkFigures have been rebased to 100 at 25th April 2010

Source: Morningstar/MSCI.

JPMorgan Brazil – Ordinary share price.

JPMorgan Brazil – net asset value per Ordinary share.

The Company’s benchmark (represented by the grey dotted line) is the MSCI Brazil10/40 Index, with net dividends reinvested, in sterling terms.

Performance since InceptionFigures have been rebased to 100 at 25th April 2010


JPMorgan Brazil – Ordinary share price.

JPMorgan Brazil – net asset value per Ordinary share.

Benchmark.

• Performance against the Company’s peers The principal objective is to achieve capital growth. TheBoard also monitors performance compared with a broadrange of competitor funds, however, there is a limited

degree of comparability with the Company’s uniqueinvestment objective and policies. Performance is discussedin the Chairman’s Statement in detail on pages 2 to 4.

• Share price premium/(discount) to net asset value (‘NAV’)per shareThe Board has adopted a share repurchase policy thatseeks to address imbalances in supply of and demand forthe Company’s shares in the market and thereby seeks tomanage the volatility and absolute level of the premium ordiscount to NAV per share at which the Company’s sharestrade. The Board’s intention is to use its share repurchaseand issuance powers with the aim of establishing areasonably stable long term level of premium or discount.In the year to 30th April 2015, the shares traded at adiscount varying between 3.8% and 12.5%.

In addition, a tender offer may be triggered if the Ordinaryshares have traded on average at a discount of more than5% to the Net Asset Value per Ordinary share in the30 calendar days ending on 31st July and 31st January ineach year. If such a discount arises in any calculationperiod, the Board, subject to its overriding discretion notto proceed with a tender offer at any time and to thesatisfaction of any relevant conditions, will seek to procurethat there will be a tender offer for 15% of the thenoutstanding issued ordinary share capital on each suchoccasion. The price at which the Ordinary shares will beacquired will be determined by the Board at the time butit is currently intended to reflect the costs of realising theCompany’s investments in order to generate cash proceedsfor exiting investors less an additional exit charge of 2% ofthis price. No tender offer was triggered during the financialyear.

Premium (+)/Discount (–)

Source: Morningstar.

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

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• Ongoing ChargesThe Ongoing Charges represents the Company’smanagement fee and all other operating expenses excludingperformance fee, expressed as a percentage of the averagedaily net assets during the year. The Ongoing Charges for theyear were 1.90% (2014: 1.90%). The Board pays closeattention to the level of expenses. The charges for the yearunder review were considered reasonable, particularly giventhe smaller size of the Company. In light of the reduced sizeof the Company, it has been agreed that the management feewill be reduced to the extent necessary to ensure that theCompany’s Ongoing Charges ratio does not exceed 2% witheffect from 1st May 2015.

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

During the year, the Company repurchased a total of 5,328,957(2014: 5,154,624) Ordinary shares into Treasury, thisrepresented 8.6% (2014: 8.8%) of the issued share capital. As at30th April 2015, 13,936,536 (2014: 8,607,579) shares were heldin Treasury. The Company will reissue shares held in Treasuryonly at a premium to NAV. There were no shares repurchasedfor cancellation nor any shares issued.

Resolutions to renew the authority to repurchase shares andissue new shares will be put to shareholders at the forthcomingAnnual General Meeting. More details are given on page 19 andthe full text of the resolutions is set out in the Notice of Meetingon pages 54 and 55.

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

• Investment and Strategy: An inappropriate investmentstrategy, for example asset allocation or the level ofgearing, may lead to underperformance against theCompany’s benchmark index and peer companies,resulting in the Company’s shares trading on a widerdiscount. The Board manages these risks by diversificationof investments through its investment restrictions andguidelines, which are monitored and reported on. TheManager provides the Directors with timely and accuratemanagement information, including performance data andattribution analysis, revenue estimates, liquidity reports

and shareholder analyses. The Board monitors theimplementation and results of the investment process withthe investment managers who attend all Board meetings,and reviews data which show statistical measures of theCompany’s risk profile. The investment managers would befree to employ the Company’s gearing tactically, within astrategic range set by the Board. The Board holds aseparate meeting devoted to strategy each year. In additionto the regular Board meetings, the Board visits Brazil fromtime to time to discuss strategy and consider all relevantaspects of investment in Brazil.

• Financial: The financial risks faced by the Company includeforeign currency risk, interest rate risk, other price risk,liquidity risk and credit risk. Further details are disclosed innote 20 on pages 47 to 52.

• Accounting, Legal and Regulatory: In order to qualify as aninvestment trust, the Company must comply withSection 1158. Details of the Company’s approval are givenunder ‘Business of the Company’ above. Were the Companyto breach Section 1158, it might lose investment trust statusand, as a consequence, gains within the Company’sportfolio could be subject to Capital Gains Tax. TheSection 1158 qualification criteria are continually monitoredby the Manager and the results reviewed by the Board eachmonth. The Company must also comply with the provisionsof the Companies Act 2006 and, since its shares are listedon the London Stock Exchange, the UKLA Listing Rules,Disclosure and Transparency Rules (‘DTRs’) and, as aninvestment trust, the Alternative Investment FundManagers Directive (‘AIFMD’). A breach of the CompaniesAct could result in the Company and/or the Directors beingfined or the subject of criminal proceedings. Breach of theUKLA Listing Rules or DTRs could result in the Company’sshares being suspended from listing which in turn wouldbreach Section 1158. The Board relies on the services of itsCompany Secretary, the Manager and its professionaladvisers to ensure compliance with the Companies Act2006 and the UKLA Listing Rules, DTRs and AIFMD.

• Corporate Governance and Shareholder Relations: Detailsof the Company’s compliance with Corporate Governancebest practice, including information on relations withshareholders, are set out on pages 19 to 24.

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

Strategic Report continuedBusiness Review continued



records could prevent accurate reporting and monitoringof the Company’s financial position. Details of how theBoard monitors the services provided by the Manager andits associates and the key elements designed to provideeffective risk management and internal control areincluded on page 23.

• Political and Economic: Changes in financial or taxlegislation, including in Brazil, may adversely affect theCompany. The Manager makes recommendations to theBoard on accounting, dividend and tax policies and theBoard seeks external advice where appropriate. In addition,the Company is subject to administrative risks, such as theimposition of restrictions on the free movement of capital.The Board monitors the impact of any changes in suchrestrictions on the Company.

Board Diversity

The Board has no current intention of making any changes tothe Board composition. When recruiting a new Director infuture, the Board’s policy is to introduce diversity subject toidentifying candidates with optimum skill, knowledge andexperience relevant to the Company’s requirements.

Employees, Social, Community and Human Rights Issues

The Company has a management contract with the Manager.It has no employees and all of its Directors are non-executive.The day to day activities are carried out by third parties. Thereare therefore no disclosures to be made in respect ofemployees. The Board notes the Manager’s policy statementsin respect of Social, Community and Environmental and HumanRights issues, as highlighted in italics:

Social, Community, Environmental and Human Rights

The Manager believes that companies should act in a socially responsiblemanner. Although our priority at all times is the best economic interestsof our clients, we recognise that, increasingly, non-financial issues suchas social and environmental factors have the potential to impact the

share price, as well as the reputation of companies. Specialists within theManager’s environmental, social and governance (‘ESG’) team are taskedwith assessing how companies deal with and report on social andenvironmental risks and issues specific to their industry.

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

Greenhouse Gas Emissions

The Company is managed by the Manager. It has noemployees and all of its Directors are non-executive, the dayto day activities being carried out by third parties. There aretherefore no disclosures to be made in respect of employees.The Company itself has no premises, consumes no electricity,gas or diesel fuel and consequently does not have ameasurable carbon footprint. The Company’s manager is asignatory to the Carbon Disclosure Project and JPMorganChase is a signatory to the Equator Principles on managingsocial and environmental risk in project finance.

Future Developments

Clearly, the future development of the Company is muchdependent upon the success of the Company’s investmentstrategy in the light of economic and equity marketdevelopments and the continued support of its shareholders.The Investment Managers discuss the outlook in their reporton page 7.

For and on behalf of the Board Howard Myles, Chairman

14th July 2015



All Directors are members of the Audit Committee and are considered independent of theManager.

Howard Myles

Chairman since 24th February 2010.

Remuneration: £30,000.Qualifications for Board Membership: He was a partner in Ernst & Young from 2001 untilJune 2007 and was responsible for the investment funds corporate advisory team. He waspreviously with UBS Warburg from 1987 to 2001. Mr. Myles began his career in stockbrokingin 1971 as an equity salesman and joined Touche Ross in 1975 where he qualified as achartered accountant. In 1978 he joined W. Greenwell & Co. in the corporate broking teamand in 1987 moved to SG Warburg Securities where he was involved in a wide range ofcommercial and industrial transactions in addition to leading Warburg’s corporate financefunction for investment funds. He is a fellow of the Institute of Chartered Accountantsin England and Wales and of The Chartered Securities Institute. He is currently anon-executive director of Aberdeen Private Equity Fund Limited, Baker Steel ResourcesTrust Limited, The World Trust Fund SICAF, Small Companies Dividend Trust PLC andBBGI SICAV S.A.

Connections with Manager: None.

Shared directorships with other Directors: None.

Shareholding in Company: Nil.

Mark Bridgeman

Chairman of the Audit Committee.

A Director since 24th February 2010.

Remuneration: £27,000.Qualifications for Board Membership: He was Global Head of Research at Schroders PLC untillate 2008, when he left to manage his own family farming business. Over the course of19 years spent at Schroders he worked both as an investment analyst and fund manager inthe UK and around the world, where his roles included being an Emerging Markets fundmanager and Head of Emerging Markets research. Since leaving Schroders he has taken on anumber of non-executive and advisory roles within the investment trust, private equity, landmanagement and charity sectors. He is currently a non-executive director of The EasternEuropean Trust plc and The Law Debenture Trust Corporation plc.



Shareholding in Company: 21,007 Ordinary Shares.

Victor Bulmer-Thomas

A Director since 24th February 2010.

Remuneration: £24,000.

Qualifications for Board Membership: He is currently a non executive director of New IndiaInvestment Trust PLC. From 2001 to 2006 he was the Director of Chatham House. From 1992to 1998 he was the Director of the Institute of Latin American studies at the University ofLondon. He was made a Commander of the Order of the Southern Cross by the Braziliangovernment in 1998.



Shareholding in Company: 159,850 Ordinary Shares (8,650 further shares were purchasedsince 30th April 2015, resulting in current shareholding of 168,500 Ordinary Shares).

GovernanceBoard of Directors

Brazil AR_pp16_28 dnc_Brazil AR_pp16_28 14/07/2015 12:32 Page 16


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

Management of the Company

The Manager and Company Secretary is JPMorgan Funds Limited(‘JPMF’), a company authorised and regulated by the FCA. Priorto 1st July 2014, these roles were undertaken by JPMorganAsset Management (UK) Limited (‘JPMAM’). JPMF is an affiliateof JPMAM and was appointed as the Company’s AlternativeInvestment Fund Manager (‘AIFM’) from 1st July 2014. JPMF isa wholly-owned subsidiary of JPMorgan Chase Bank which,through other subsidiaries, also provides marketing, banking,dealing and custodian services to the Company.

The Board conducts a formal evaluation of the Manager onan annual basis. The evaluation includes consideration of theinvestment strategy and process of the Manager, performanceagainst the benchmark over the long term and the supportthat the Company receives from the Manager. As a result of theevaluation process, the Board is of the opinion that thecontinuing appointment of the Manager is in the interestsof the shareholders.

The Alternative Investment Fund Managers Directive (‘AIFMD’)

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

The Company entered into a new investment managementagreement with JPMF on 1st July 2014. JPMF has delegatedresponsibility for the day to day management of the Company’sportfolio to JPMAM. JPMF is required to ensure that a depositaryis appointed to the Company. The Company therefore hasappointed BNY Mellon Trust and Depositary (UK) Limited (‘BNY’)as its depositary. BNY has delegated its safekeeping function tothe custodian, JPMorgan Chase Bank, N.A. BNY remainsresponsible for the oversight of the custody of the Company’sassets and for monitoring its cash flows. The AIFMD requirescertain information to be made available to investors in AIFsbefore they invest and requires that material changes to thisinformation be disclosed in the annual report of each AIF. AnInvestor Disclosure Document, which sets out information onthe Company’s investment strategy and policies, leverage, risk,liquidity, administration, management, fees, conflicts ofinterest and other shareholder information is available on theCompany’s website at www.jpmbrazil.co.uk

There have been no material changes (other than thosereflected in these financial statements) to this informationrequiring disclosure. Any information requiring immediatedisclosure pursuant to the AIFMD will be disclosed to theLondon Stock Exchange through a primary informationprovider. As an authorised AIFM, JPMF will make the requisitedisclosures on remuneration levels and polices to the FCA atthe appropriate time.

Management Fee

The Manager is employed under a contract which is subject tosix months’ notice of termination. If the Company wishes toterminate the contract on less than six months’ notice, thebalance of the six months’ remuneration is payable by wayof compensation.

Under the terms of the Management Agreement, themanagement fee is charged at the rate of 1.0% per annum ofthe Company’s total assets less current liabilities. The fee iscalculated and paid monthly in arrears. Investments made bythe Company in investment funds on which the Manager or amember of its group earns a fee are excluded from thecalculation and therefore attract no management fee.

In addition, the Manager is entitled to receive a performancefee equivalent to 10% of any outperformance of theCompany’s Net Asset Value per Ordinary share (on a totalreturn basis) over the Company’s benchmark index, the MSCIBrazil 10/40 Index (in sterling terms) with net dividendsreinvested, over a performance fee measurement period.A performance fee measurement period ends, and restarts, ata financial year end when outperformance of the Company’sbenchmark has been achieved and a performance feeearned. That is, the period may be more than one year. Themaximum performance fee that can be paid to the Managerin any one year is capped at 1.0% of the Company’s averagemonthly total assets less current liabilities, and in a yearwhen the Company produces a negative absolute net assetvalue total return per share yet outperformed the benchmarkin relative terms, this amount will be accrued but not paid.Any amount earned in excess of this cap will be carriedforward and will be offset against any underperformance infuture years. During the year ended 30th April 2015, theCompany produced a negative net asset value total returnper share, and underperformed its benchmark index. As aresult, a negative performance fee amounting to £392,000(2014: £300,000) will be offset against any overperformancein future years.

Directors’ Report



Governance continuedDirectors’ Report continued

Going Concern

The Directors believe that, having considered the Company’sinvestment objective (see page 12), risk management policies(see pages 47 to 52), capital management policies andprocedures (see pages 52 and 53), the nature of the portfolioand expenditure projections, that the Company has adequateresources, an appropriate financial structure and suitablemanagement arrangements in place to continue in operationalexistence for the foreseeable future. For these reasons, theyconsider that there is reasonable evidence to continue to adoptthe going concern basis in preparing the accounts.A continuation vote was passed by the Company’s shareholdersin 2013. This will be put to shareholders again at the 2016 AGM.

Directors

All Directors served throughout the year and their details areincluded on page 16. Details of their beneficial shareholdingsmay be found in the Directors’ Remuneration Report onpage 26.

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

Director Indemnification and Insurance

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

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

Disclosure of information to the Auditor

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

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

(b) each of the Directors has taken all the steps that he oughtto have taken as a Director in order to make himself awareof any relevant audit information (as defined) and toestablish that the Company’s auditor is aware of thatinformation.

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

Independent Auditor

Ernst & Young LLP have expressed their willingness tocontinue in office as auditor to the Company and a resolutionproposing their reappointment and to authorise the Directorsto agree their remuneration for the ensuing year will be put toshareholders at the forthcoming Annual General Meeting.

Section 992 Companies Act 2006

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

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

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

Notifiable Share InterestsAt the financial year-end, the following had declared anotifiable interest in the Company’s voting rights:

Ordinary shares Number of Shareholders shares held %

JPMorgan Chase & Co 6,034,455 12.63Rathbone Investment Management Ltd 3,534,190 6.09

The Company is also aware that approximately 16.72% of theCompany’s total voting rights are held by individuals throughsavings products managed by the Manager and registered inthe name of Chase Nominees Limited. If those voting rights arenot exercised by the beneficial holders, in accordance with theterms and conditions of the savings products, under mostcircumstances the Manager has the right to exercise thosevoting rights. That right is subject to certain limits andrestrictions and falls away at the conclusion of the relevantgeneral meeting.

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



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

Annual General Meeting

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

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

(i) Authority to allot relevant Securities (resolution 7) The Directors will seek authority at the Annual GeneralMeeting to issue new shares equivalent to 10% of the presentissued share capital. This authority will remain in effect untilthe Annual General Meeting in 2016 unless renewed at anearlier general meeting. The full text of the resolution is set outin the Notice of Meeting on page 54.

The Directors intend to use this authority when they considerthat it is in the best interests of shareholders to do so and tosatisfy continuing demand for the Company’s Ordinary shares.It is also advantageous for the Company to be able to issuenew shares (or to sell Treasury shares) to participantspurchasing shares through the JPMorgan savings products.As such issues are only made at prices greater than the NAV,they are not dilutive. They increase the assets underlying eachshare and spread the Company’s administrative expenses,other than the management fee which is charged on the valueof the Company’s assets, over a greater number of shares.

(ii) Disapplication of pre-emption rights (resolution 8) Resolution 7 seeks authority to disapply statutory pre-emptionrights on any issues of new shares. This avoids the legalrequirement to offer them pro rata to all shareholders. Thefull text of the resolution is set out in the Notice of Meeting onpage 54.

(iii) Authority to repurchase the Company’s shares (resolution 9) A resolution will be proposed at the Annual General Meetingthat the Company be authorised to purchase in the market upto 14.99% of the Company’s issued share capital as at the dateof the passing of this resolution using its distributable reserves.

The decision as to whether the Company repurchases anyshares will be at the discretion of the Board and purchases willbe made in the market and at prices below the prevailing netasset value per share. Under the rules of the London StockExchange, the maximum price that may be paid on a purchaseby a company of its shares under a general authority is 105% ofthe average of the middle market quotations of the shares forthe five business days immediately before the day on which thepurchase is made. The minimum price that the Company willpay for a share will be one pence (the nominal value of eachshare). The Company will utilise the authority to purchaseshares on an ad hoc basis by either a single purchase or a seriesof purchases as and when market conditions are appropriate.

The authority to purchase shares will last until 10th March 2017or until the whole of the 14.99% has been acquired, whicheveris the earlier. The authority may be renewed by shareholders atany time at a general meeting.

Recommendation The Board considers that resolutions 7 to 9 are likely topromote the success of the Company and are in the bestinterests of the Company and its shareholders as a whole.The Directors unanimously recommended that you vote infavour of the resolutions as they intend to do in respect of theirown beneficial holdings.

Corporate Governance Compliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities on page 28, indicates how theCompany has applied the principles of good governance of theFinancial Reporting Council’s UK Corporate Governance Code(the ‘UK Corporate Governance’) and the AIC’s Code ofCorporate Governance (the ‘AIC Code’), which complementsthe UK Corporate Governance Code and provides a frameworkof best practice for investment trusts.




The Board is responsible for corporate governance andconsiders that the Company has complied with the bestpractice provisions of the UK Corporate Governance Code,insofar as they are relevant to the Company’s business, and theAIC Code throughout the period under review and up to thedate of approval of the annual report and accounts.

Role of the Board

A management agreement between the Company and theManager sets out the matters which have been delegated tothe Manager. This includes management of the Company’sassets and the provision of accounting, company secretarial,administration, and some marketing services. All othermatters are reserved for the approval of the Board. A formalschedule of matters reserved to the Board for decision hasbeen approved. This includes determination and monitoringof the Company’s investment objectives and policy and itsfuture strategic direction, gearing policy, management of thecapital structure, appointment and removal of third partyservice providers, review of key investment and financial dataand the Company’s corporate governance and risk controlarrangements.

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

The Board meets on at least four occasions during the yearand additional meetings are arranged as necessary. Full andtimely information is provided to the Board to enable it tofunction effectively and to allow Directors to discharge theirresponsibilities.

There is an agreed procedure for Directors to takeindependent professional advice if necessary and at theCompany’s expense. This is in addition to the access thatevery Director has to the advice and services of the CompanySecretary, which is responsible to the Board for ensuring thatBoard procedures are followed and for compliance withapplicable rules and regulations.

Board Composition

The Board consists of three non-executive Directors, all ofwhom are regarded by the Board as independent of theCompany’s Manager and Secretary. The Directors have abreadth of investment, business and financial skills and

experience relevant to the Company’s business. Briefbiographical details of each Director are set out on page 16.

A review of Board composition and balance is included as partof the annual performance evaluation of the Board, details ofwhich may be found below. The Board has considered whethera senior independent director should be appointed and hasconcluded that, as the Board is composed entirely ofnon-executive directors, this is unnecessary at present.However, the Chairman of the Audit Committee leads theevaluation of the performance of the Chairman and is availableto shareholders if they have concerns that cannot be resolvedthrough discussion with the Chairman.

Tenure

Directors are initially appointed until the following AnnualGeneral Meeting when, under the Company’s Articles ofAssociation, it is required that they be reappointed byshareholders. Thereafter, a Director’s appointment runs for aterm of three years. In the light of the performance evaluationcarried out each year, the Board will decide whether it isappropriate for the Director to seek an additional term.A Director’s continuing appointment is subject to re-electionby shareholders on retirement by rotation in accordance withthe Company’s Articles of Association. The Company’s Articlesof Association require that Directors stand for re-election atleast every three years.

The Board recommends the reappointment of HowardMyles following a performance review conducted by theAudit Committee which concluded that he continues to addvalue to the Board.

The Board does not believe that length of service in itselfnecessarily disqualifies a Director from seeking reappointmentbut, when making a recommendation, the Board will takeinto account the ongoing requirements of the UK CorporateGovernance Code, including the need to refresh the Board andits Committees.

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

Meetings and Committees

The Board delegates certain responsibilities and functions tothe Audit Committee. Details of membership of the AuditCommittee are shown with the Directors’ profiles on page 16.



The table below details the number of Board and AuditCommittee meetings attended by each Director. During theperiod under review there were four Board meetings, as wellas a private meeting of the Directors to evaluate the Managerand three Audit Committee meetings.

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

Mark Bridgeman 4(4) 3(3)Victor Bulmer-Thomas 4(4) 3(3)Howard Myles 4(4) 3(3)

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

Training and Appraisal

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

The Board has agreed procedures for the formal evaluation ofthe Manager, its own performance and that of the AuditCommittee and individual Directors. Questionnaires, drawn upby the Board, are completed by each Director. The responsesare collated and then discussed at a private meeting of theAudit Committee. The evaluation of individual Directors is ledby the Chairman, on the basis of the questionnaires, and theAudit Committee Chairman leads the evaluation of theChairman’s performance.

Board Committee

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

The Committee reviews the actions and judgements of theManager in relation to the half year and annual accounts and

the Company’s compliance with the UK CorporateGovernance Code.

During its review of the Company’s financial statements forthe year ended 30th April 2015, the Audit Committeeconsidered the following significant issues, including thosecommunicated by the Auditors during their reporting:

Significant issue How the issue was addressed

The valuation of investments isundertaken in accordance with theaccounting policies, disclosed in note 1to the accounts on page 37. Controls arein place to ensure that valuations areappropriate and existence is verifiedthrough Custodian reconciliations.

Consideration is given to themethodology used to calculate fees,matched against the criteria set out inthe Investment ManagementAgreement. The Board considerscontrols reports, expense schedulesand management information to sensecheck the fees charged. The Auditorindependently recalculates the feecalculations and has not reported anyexceptions as part of its work on thisarea.

The recognition of investment incomeis undertaken in accordance withaccounting policy note 1(d) to theaccounts on page 37. The Boardreviews subjective elements of incomesuch as special dividends and agreestheir treatment is relevant.

Approval for the Company as aninvestment trust under Sections 1158and 1159 has been obtained andongoing compliance with the eligibilitycriteria is monitored by the Board on aregular basis.

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

Valuation, existenceand ownership ofinvestments

Calculation ofmanagement andperformance fees

Compliance withSections 1158 and 1159

Recognition ofinvestment income




As a result of the work performed above, the Committee hasconcluded that the Annual Report for the year ended30th April 2015, taken as a whole, is fair, balanced andunderstandable and provides the information necessary forshareholders to assess the Company’s performance, businessmodel and strategy, and has reported on these findings to theBoard. The Board’s conclusions in this respect are set out inthe Statement of Directors’ Responsibilities on page 28.

The Committee reviews the terms of the managementagreement and examines the effectiveness of the Company’srisk management and internal control systems, receivesinformation from the Manager’s Compliance department andreviews the scope and results of the external audit, itseffectiveness and cost effectiveness, the balance of audit andnon-audit services, and the independence and objectivity ofthe external Auditor. In the Directors’ opinion the Auditors areindependent. The Committee also has a primary responsibilityfor making recommendations to the Board on thereappointment and removal of external Auditors.Representatives of the Company’s Auditor attend theCommittee meeting at which the draft annual report andaccounts are considered.

Having reviewed the performance of the external Auditors,including assessing the quality of work, timing ofcommunications and work with the Manager, the Committeeconsidered it appropriate to recommend their reappointment.The Board supported this recommendation which will be putto shareholders at the forthcoming Annual General Meeting.The current audit firm has audited the company’s financialstatements since its launch in 2010. The Company’s year ended30th April 2015 is the current Audit Partner’s third of a fiveyear maximum term. The performance of the Auditors willcontinue to be reviewed annually by the Committee, takinginto account all relevant guidance and best practice.

The Directors’ statement on the Company’s system of riskmanagement and internal control is set out on page 23.

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

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

The Committee undertakes an annual performance evaluationto ensure that all its members have devoted sufficient time andcontributed adequately to the work of the Board. In the light ofthese evaluations, the Committee makes recommendations tothe Board concerning the reappointment by shareholders ofany Director under the ‘retirement by rotation’ provisions inthe Company’s Articles of Association. The Committee alsoreviews Directors’ fees and makes recommendations to theBoard as and when required in relation to remuneration policy.

On an annual basis each Director submits a list of potentialconflicts of interest for approval. These are consideredcarefully, taking into account the circumstances surroundingthem and, if considered appropriate, are approved for a periodof one year.

Terms of ReferenceThe Audit Committee has written terms of reference whichdefine clearly its responsibilities. Copies are available forinspection on request at the Company’s registered office and atthe Annual General Meeting.

Relations with Shareholders

The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a fullunderstanding of the Company’s activities and performanceand reports formally to shareholders twice a year by way of theAnnual Report and Accounts and the Half Year Report. This issupplemented by daily publication, through the London StockExchange, of the net asset value of the Company’s shares.Shareholders may also visit the Company’s website atwww.jpmbrazil.co.uk, where the share price is updated every15 minutes during trading hours.

All shareholders have the opportunity, and are encouraged, toattend the Company’s Annual General Meeting, at which theDirectors and representatives of the Manager are available inperson to meet shareholders and answer their questions, anda presentation is given by the investment managers, whoreview the Company’s performance. During the year theCompany’s brokers, the investment managers, and theManager hold regular discussions with larger shareholders and



make the Board fully aware of their views. The Chairman andDirectors make themselves available as and when required tosupport these meetings and to address shareholder queries.The Directors may be contacted through the CompanySecretary whose details are shown on page 61 or via the ‘Ask aQuestion’ link on the Company’s website.

The Company’s Annual Report and Accounts is published intime to give shareholders at least 21 days’ notice of the AnnualGeneral Meeting. Shareholders who cannot attend the meetingbut wish to raise questions in advance of the meeting areencouraged to write to the Company Secretary at the addressshown on page 61 or via the ‘Ask a Question’ link on theComany’s website.

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

Risk Management and Internal Control

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

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

Since investment management, custody of assets and alladministrative services are provided to the Company by theManager and its associates, the Company’s system of riskmanagement and internal control mainly comprisesmonitoring the services provided by the Manager and itsassociates, including the operating controls established bythem, to ensure they meet the Company’s business objectives.The Company does not have an internal audit function of itsown, but relies on the internal audit department of theManager, and the Board keeps this arrangement under review.

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

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

Management and Depositary Agreements – Appointment of amanager and depositary regulated by the Financial ConductAuthority (FCA), whose responsibilities are clearly defined in awritten agreement.

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

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

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

• the Board, through the Audit Committee, reviews the termsof the management agreement and regular reports fromthe Manager’s Compliance department;

• the Board reviews the report on the risk management andinternal controls and operations of its custodian, JPMorganChase Bank, which is itself independently reviewed; and

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

By means of the procedures set out above, the Board confirmsthat it has reviewed the effectiveness of the Company’s systemof risk management and internal control for the year ended30th April 2015, and to the date of approval of this AnnualReport and Accounts.

The Board confirms that any failings or weaknesses identifiedduring the course of its review of the system of riskmanagement and internal control were not significant anddid not impact the Company.




Corporate Governance and Voting Policy

The Company delegates responsibility for voting to theManager. The following is a summary of the Manager’s policystatements on corporate governance, voting policy and socialand environmental issues, which has been reviewed and notedby the Board. Details on social and environmental issues areincluded in the Strategic Report on page 15.

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

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

Stewardship/EngagementThe Manager recognises its wider stewardship responsibilities to itsclients as a major asset owner. To this end, we support the introduction ofthe FRC 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.

The Manager 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.

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

The Manager is also a signatory to the United Nations Principles ofResponsible Investment, which commits participants to six principles,with the aim of incorporating ESG criteria into their processes whenmaking stock selection decisions and promoting ESG disclosure. Ourdetailed approach to how we implement the principles is available onrequest. The Manager is also a signatory to Carbon Disclosure Project.JPMorgan Chase is a signatory to the Equator Principles on managingsocial and environmental risk in project finance.

The Manager’s Voting Policy and Corporate GovernanceGuidelines are available on request from the CompanySecretary or can be downloaded from the Manager’s website:http://www.jpmorganinvestmenttrusts.co.uk/governance,which also sets out its approach to the seven principles of theFRC Stewardship Code, its policy relating to conflicts of interestand its detailed voting record.

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

14th July 2015



The Board presents the Directors’ Remuneration Report for theyear ended 30th April 2015, which has been prepared inaccordance with Schedule 8 of the Large and Medium-sizedCompanies and Groups (Accounts and Reports) (Amendment)Regulation 2013 which came into force on 1st October 2013.This regulation requires that the remuneration policy besubject to a triennial binding shareholder vote. The Directors’Remuneration Report will continue to be subject to an annualadvisory vote.

The law requires the Company’s auditor to audit certain of thedisclosures provided in this report. Where disclosures havebeen audited they are indicated as such. The auditor’s opinionis included in their report on page 29.

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

Directors’ Remuneration Policy

The Directors’ Remuneration Policy is subject to a triennialbinding vote, However, for good governance purposes, adecision has been taken to seek approval annually andtherefore an ordinary resolution to approve this policy will beput to shareholders at the forthcoming Annual GeneralMeeting. The policy subject to the vote is set out in full belowand is currently in force.

The Board’s policy for this and subsequent years is thatDirectors’ fees should properly reflect the time spent by theDirectors on the Company’s business and should be at a levelto ensure that candidates of a high calibre are recruited to theBoard and retained. The Chairman of the Board and theChairman of the Audit Committee are paid higher fees than theother Director, reflecting the greater time commitmentinvolved in fulfilling those roles.

Reviews are based on information provided by the Manager,and industry research carried out by third parties on the levelof fees paid to the directors of the Company’s peers and withinthe investment trust industry generally. The involvement ofremuneration consultants has not been deemed necessary aspart of this review. The Company has no Chief Executive Officerand no employees and therefore no consultation of employeesis required and there is no employee comparative data toprovide, in relation to the setting of the remuneration policyfor Directors.

All of the Directors are non-executive. There are noperformance-related elements to their fees and the Companydoes not operate any type of incentive, share scheme, awardor pension scheme and therefore no Directors receive bonuspayments or pension contributions from the Company or holdoptions to acquire shares in the Company. Directors are notgranted exit payments and are not provided withcompensation for loss of office. No other payments are madeto Directors, other than the reimbursement of reasonableout-of-pocket expenses incurred in attending the Company’sbusiness.

In the year under review, Directors’ fees were paid at thefollowing annual rates: Chairman £30,000; Chairman of theAudit Committee £27,000; and other Director £24,000.

The fees for the Chairman and all other Directors will remainthe same for the year ending 30th April 2016.

The Company’s Articles of Association provide that anyincrease in the maximum aggregate annual limit on Directors’fees, currently £175,000, requires both Board and shareholderapproval.

The Company has not sought shareholder views on itsremuneration policy. The Nomination and RemunerationCommittee considers any comments received fromshareholders on remuneration policy on an ongoing basis andtakes account of those views.

The terms and conditions of Directors’ appointments are setout in formal letters of appointment which are available forreview at the Company’s Annual General Meeting and theCompany’s registered office. Details of the Board’s policy ontenure are set out on page 20.

Directors’ Remuneration Policy Implementation

The Directors’ Remuneration Report, which includes detailsof the Directors’ remuneration policy and its implementation,is subject to an annual advisory vote and therefore an ordinaryresolution to approve this report will be put to shareholdersat the forthcoming Annual General Meeting. There have beenno changes to the policy compared with the year ended30th April 2014 and no changes are proposed for the yearending 30th April 2016.

At the Annual General Meeting held on 12th September 2014,of votes cast, 98% of votes cast were in favour of (or granteddiscretion to the Chairman who voted in favour of) theremuneration policy and remuneration report and 2% voted

Directors’ Remuneration Report



Governance continuedDirectors’ Remuneration Report continued

against. Abstentions were received from less than 0.5% of thevotes cast.

Details of voting on both the Remuneration Policy and theDirectors’ Remuneration Report from the 2015 Annual GeneralMeeting will be given in the annual report for the year ending30th April 2016. Thereafter, the reporting will be annually forthe advisory vote on the Directors’ Remuneration Report andtriennially for the Remuneration Policy.

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

Single total figure of remuneration

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

Single total figure table1

Total fees

2015 2014

Howard Myles £30,000 £30,000Mark Bridgeman £27,000 £27,000Victor Bulmer-Thomas £24,000 £24,000

Total £81,000 £81,000

1Audited information. Other subject headings for the single figure table as prescribedby regulation are not included because there is nothing to disclose in relation thereto.

A table showing the total remuneration for the Chairman sincelaunch to 30th April 2015 is below:

Remuneration for the Chairman over the period from the date ofappointment on 24th February 2010 to 30th April 2015

Year ended 30th April Fees

2015 £30,0002014 £30,0002013 £25,0002012 £25,00020111 £29,455

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

Directors’ Shareholdings1

There are no requirements pursuant to the Company’s Articlesof Association for the Directors to own shares in the Company.The Directors’ shareholdings are detailed below. All shares areheld beneficially.

30th April 30th AprilDirectors 2015 2014

Howard Myles — —Mark Bridgeman 21,007 21,007Victor Bulmer-Thomas 159,850 108,300

180,857 129,307

1Audited information.

Since the year end date, Victor Bulmer-Thomas has purchased8,650 shares in the Company.

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

A graph showing the Company’s Ordinary share price returncompared with its benchmark index since the date theCompany began investing is shown below.

Ordinary share price and benchmarkperformance for the period from launch on26th April 2010 to 30th April 2015


Ordinary share price.

Benchmark total return.

50

60

70

80

90

100

110

201520142013201220112010



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

Expenditure by the Company on remuneration and distributions toshareholders

Year ended 30th April 2015 2014

Remuneration paid to all Directors £81,000 £81,000Distribution to shareholders

— by way of dividend £191,000 £452,000— by way of share repurchases £3,521,000 £3,752,000

For and on behalf of the Board Howard MylesChairman

14th July 2015



The Directors are responsible for preparing the Directors’Report and the financial statements in accordance withapplicable law and regulations.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law the Directorshave elected to prepare the financial statements in accordancewith United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards) and applicable law.Under company law the Directors must not approve thefinancial statements unless they are satisfied that they givea true and fair view of the state of affairs of the Company andof the total return or loss of the Company for that period.In preparing these financial statements, the Directors arerequired to:

• select suitable accounting policies and then apply themconsistently;

• make judgments and accounting estimates that arereasonable and prudent;

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

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

and the Directors confirm that they have done so.

The Directors are responsible for keeping adequate accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any timethe financial position of the Company and enable them toensure that the financial statements comply with theCompanies Act 2006. They are also responsible forsafeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of fraud andother irregularities.

The accounts are published on the www.jpmbrazil.co.ukwebsite, which is maintained by the Company’s Manager.The maintenance and integrity of the website maintained bythe Manager is, so far as it relates to the Company, theresponsibility of the Manager. The work carried out by theauditor does not involve consideration of the maintenance andintegrity of this website and, accordingly, the auditor acceptsno responsibility for any changes that have occurred to theaccounts since they were initially presented on the website.The accounts are prepared in accordance with UK legislation,which may differ from legislation in other jurisdictions.

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

Each of the Directors, whose names and functions are listed onpage 16 confirms that, to the best of their knowledge thefinancial statements, which have been prepared in accordancewith United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards and applicable law),give a true and fair view of the assets, liabilities, financialposition and return or loss of the Company. The Boardconfirms that it is satisfied that the annual report and accountstaken as a whole are fair, balanced and understandable andprovide the information necessary for shareholders to assessthe strategy and business model of the Company.

For and on behalf of the Board Howard MylesChairman

14th July 2015

Governance continuedStatement of Directors’ Responsibilities



Our audit 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 30th April 2015 and of its net returnfor the year then ended;

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

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

Our audit opinion on matters prescribed by the Companies Act 2006

In our opinion:

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

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statementsare prepared is consistent with the financial statements.

What we have audited

We have audited the financial statements of JPMorgan Brazil Investment Trust plc for the year ended 30th April 2015 whichcomprise the Income Statement, the Reconciliation of Movements in Shareholders’ Funds, the Balance Sheet, the Cash FlowStatement and the related notes 1 to 23. The financial reporting framework that has been applied in the preparation of thefinancial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally AcceptedAccounting Practice).

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required tostate to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or forthe opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors’ Responsibilities set out on page 28, the Directors are responsible for thepreparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit andexpress an opinion on the financial statements in accordance with applicable law, International Standards on Auditing (UK andIreland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

The scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonableassurance that the financial statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of:

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

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

• the overall presentation of the financial statements.

Independent Auditor’s ReportTo the Members of JPMorgan Brazil Investment Trust plc

Brazil AR_pp29_36 14/07/2015 12:31 Page 29


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

Our assessment of the risk of material misstatement and our audit response

The risks included in the table below represent those material risks of misstatement that have had the greatest impact on ouraudit strategy and approach for the year ended 30th April 2015 (including the allocation of resources and the directing of effortsof the engagement team). The table also includes our audit response to each of these risks:

Risk identified Our response

The investment income receivable by the Company during theperiod directly drives the Company’s ability to make a dividendpayment to shareholders. The investment income receivablefor the year to 30th April 2015 was £952,000 (as disclosed innote 3 to the financial statements).

If the Company is not entitled to receive the dividend incomerecognised in the financial statements or the income recogniseddoes not relate to the current financial year, this will impact theextent of the profits available to fund dividend distributions toshareholders.

• We agreed a sample of dividends to the correspondingannouncement made by the investee company and agreedcash received to bank statements.

• For all dividends accrued at year end, we reviewed theinvestee company announcements to assess whether thedividend obligation arose prior to 30th April 2015

• We agreed a sample of accrued dividends to post year endbank statements to assess the recoverability of theseamounts.

The fees payable by the Company for investment managementservices are a significant component of the Company’s costbase and, therefore, impact the company’s total return. For theyear to 30th April 2015, the management fee was £350,000 (asdisclosed in note 4 to the financial statements). There was noperformance fee payable in the current year.

If the management and performance fees are not calculated inaccordance with the methodology prescribed in the investmentmanagement agreement this could have a significant impacton both costs and overall performance.

• We used the terms contained in the investment managementagreement to recalculate the management and performancefees for the year.

• We agreed the inputs for the calculations to source dataand agreed the payments to bank statements.

The valuation of the assets held in the investment portfolio isthe key driver of the Company’s investment return. The valueof the Company’s investment portfolio at 30th April 2015 was£28.6million (movements in the investment portfolio areshown in note 9 to the financial statements).

Incorrect asset pricing or a failure to maintain proper legal titleof the assets held by the Company could have a significantimpact on portfolio valuation and, therefore, the returngenerated for shareholders.

• We agreed the year end prices of the investments to anindependent source. We did not identify any materialdifferences.

• We agreed the number of shares held in each security to aconfirmation of legal title received from both theCompany’s custodian and its depositary.

Independent Auditor’s Reportcontinued

Brazil AR_pp29_36 14/07/2015 12:32 Page 30


Our application of materiality

We have defined the concept of materiality and planning materiality below.

We determined materiality for the company to be £293,000, which is 1% of total equity (2014: £385,000 based on 1% of totalequity). We have derived our materiality calculation based on a proportion of total equity as we consider it to be the mostimportant financial metric on which shareholders would judge the performance of the Company.

We determined performance materiality for the Company to be 75% of materiality, or £220,000 (2014: £289,000).

In addition, we agreed with the Audit Committee that we would report any audit differences in excess of £15,000 (2014: £19,000),as well as any differences below that threshold that, in our view, warranted reporting on qualitative grounds.

In accordance with the scope of our audit, we define materiality as the magnitude of an omission or misstatement that,individually or in the aggregate, in light of the surrounding circumstances, could reasonably be expected to influence theeconomic decisions of the users of the financial statements.

We apply the concept of materiality for the purposes of obtaining sufficient evidence to give reasonable assurance that thefinancial statements are free from material misstatement. For this reason, we also define a separate performance materialitythreshold which reflects our tolerance for misstatement in an individual account balance and is set as a proportion of our overallmateriality.

Our objective in setting the performance materiality threshold is to identify the amount of testing required in respect of eachbalance to reduce to an appropriately low level the probability that the aggregate of any uncorrected and undetectedmisstatements in the financial statements as a whole exceeds our materiality level.

We evaluate any uncorrected misstatements and potential audit differences against both the quantitative measures of materialitydiscussed above and in the light of other relevant qualitative considerations.

We applied the concept of materiality in planning and performing our audit, in evaluating the effect of identified misstatementson our audit and of uncorrected misstatements on the financial statements, and in forming our audit opinion. When establishingour overall audit strategy, we determined the magnitude of omissions or uncorrected misstatements that we judged would bematerial to the financial statements as a whole. This provided a basis for determining the nature of our risk assessmentprocedures, identifying and assessing the risks of material misstatement and determining the nature, timing and extent offurther audit procedures.

Matters on which we are required to report by exception

We are required by the International Standards on Auditing (UK and Ireland), the Companies Act 2006 and the Listing Rules toreport to you by exception if certain matters are identified during the course of our audit. These matters are listed below and wehave nothing to report in respect of any of these matters.

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:

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

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

• otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired duringthe audit and the Directors’ statement that they consider the annual report is fair, balanced and understandable and whether theannual report appropriately discloses those matters that we communicated to the Audit Committee which we consider shouldhave been disclosed.

Brazil AR_pp29_36 14/07/2015 12:32 Page 31


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

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

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

• 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.

Under the Listing Rules we are required to review:

• the Directors’ statement, set out on page 18, in relation to going concern; and

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

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

14th July 2015

Independent Auditor’s Reportcontinued

Brazil AR_pp29_36 14/07/2015 12:32 Page 32


2015 2014Revenue Capital Total Revenue Capital Total

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

Losses on investments held at fairvalue through profit or loss 2 — (5,437) (5,437) — (14,224) (14,224)

Net foreign currency (losses)/gains — (26) (26) — 18 18Income from investments 3 952 — 952 1,412 — 1,412

Gross return/(loss) 952 (5,463) (4,511) 1,412 (14,206) (12,794)Management fee 4 (350) — (350) (433) — (433)Other administrative expenses 5 (310) — (310) (373) — (373)

Net return/(loss) on ordinary activities before taxation 292 (5,463) (5,171) 606 (14,206) (13,600)

Taxation 6 (89) — (89) (119) — (119)

Net return/(loss) on ordinary activities after taxation 203 (5,463) (5,260) 487 (14,206) (13,719)

Return/(loss) per share 8 0.40p (10.86)p (10.46)p 0.88p (25.67)p (24.79)p

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

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

The notes on pages 37 to 53 form an integral part of these accounts.

Financial StatementsIncome Statementfor the year ended 30th April 2015

Brazil AR_pp29_36 14/07/2015 12:32 Page 33


Called up Capitalshare redemption Share Other Capital Revenue

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

At 30th April 2013 699 13 16,064 42,243 (3,534) 1,021 56,506Repurchase of shares into Treasury — — — (3,752) — — (3,752)Issue of Ordinary shares on exercise

of Subscription shares — — 3 — — — 3Cancellation of Subscription shares (82) — 82 — — — —Net (loss)/return from ordinary activities — — — — (14,206) 487 (13,719)Dividends appropriated in the year — — — — — (560) (560)

At 30th April 2014 617 13 16,149 38,491 (17,740) 948 38,478Repurchase of shares into Treasury — — — (3,521) — — (3,521)Net (loss)/return from ordinary activities — — — — (5,463) 203 (5,260)Dividends appropriated in the year — — — — — (430) (430)

At 30th April 2015 617 13 16,149 34,970 (23,203) 721 29,267


Financial Statements continuedReconciliation of Movements in Shareholders’ Funds

Brazil AR_pp29_36 14/07/2015 12:32 Page 34


2015 2014Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 9 28,592 38,151

Current assets 10Debtors 124 212Cash and short term deposits 652 194

776 406

Creditors: amounts falling due within one year 11 (101) (79)

Net current assets 675 327

Total assets less current liabilities 29,267 38,478

Net assets 29,267 38,478

Capital and reservesCalled up share capital 12 617 617Capital redemption reserve 13 13 13Share premium 13 16,149 16,149Other reserve 13 34,970 38,491Capital reserves 13 (23,203) (17,740)Revenue reserve 13 721 948

Shareholders’ funds 29,267 38,478

Net asset value per share 14 61.2p 72.4p

The accounts on pages 33 to 53 were approved by the Directors and authorised for issue on 14th July 2015 and are signed on theirbehalf by:

Victor Bulmer-ThomasDirector


Company registration number: 7141630

Balance Sheetat 30th April 2015

Brazil AR_pp29_36 14/07/2015 12:32 Page 35

2015 2014Notes £’000 £’000

Net cash inflow from operating activities 15 288 398

Capital expenditure and financial investmentPurchases of investments (17,511) (27,705)Sales of investments 21,671 30,393Other capital charges (13) (10)

Net cash inflow from capital expenditure and financial investment 4,147 2,678

Dividend paid (430) (560)

Net cash inflowbefore financing 4,005 2,516

Financing Shares issued — 3Repurchase of shares into Treasury (3,521) (3,752)

Net cash outflow from financing (3,521) (3,749)

Increase/(decrease) in cash for the year 16 484 (1,233)


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

36 JPMorgan Brazil Investment Trust plc. Annual Report & Accounts 2015

Brazil AR_pp29_36 14/07/2015 12:32 Page 36


1. Accounting policies

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

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

The financial statements have been prepared on a going concern basis.

(b) Valuation of investmentsThe Company’s business is investing in financial assets with a view to profiting from their total return in the form of incomeand capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis inaccordance with a documented investment strategy and information is provided internally on that basis to the Company’sBoard of Directors. Accordingly, upon initial recognition the investments are designated by the Company as ‘held at fair valuethrough profit or loss’. They are included initially at fair value which is taken to be their cost, after deducting expensesincidental to purchase which are written off to capital in the income statement at the time of acquisition. Subsequently theinvestments are valued at fair value which are quoted bid market prices for investments traded in active markets.

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

(c) Accounting for reservesGains and losses on sales of investments, including any related foreign exchange gains and losses, other foreign currencygains and losses, any performance fee realised and any other capital charges are included in the Income Statement and dealtwith in capital reserves. Increases and decreases in the valuation of investments held at the year end, including the relatedforeign exchange gains and losses, are included in the Income Statement and dealt with in capital reserves within ‘Investmentholding gains’.

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

Overseas dividends are included gross of any withholding tax.

Interest receivable on deposits and debt instruments is taken to revenue on an accruals basis using the effective interest ratemethod.

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

– Performance fees are allocated 100% to capital. The maximum performance fee that can be paid to the Manager in anyone year is capped at 1.0% of the Company’s average monthly total assets less current liabilities, and in a year when theCompany produces a negative net asset value total return per share, the performance fee will be accrued but not paid. Anyamount earned in excess of this cap will be carried forward and will be offset against any underperformance in futureyears.

– Expenses incidental to the purchase of an investment are written off to capital at the time of acquisition and thoseincidental to the sale are deducted from the sales proceeds. These expenses are commonly referred to as transaction costsand mainly comprise brokerage commissions. Details of transaction costs are given in note 9 on page 42.

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

Other debtors and creditors do not carry any interest, are short term in nature and are accordingly stated at cost as reducedby appropriate allowances for estimated irrecoverable debtor amounts. The carrying value of all debtors and creditorsapproximates to their fair value.

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

Brazil AR_pp37_53 14/07/2015 12:31 Page 37

Financial Statements continuedNotes to the Financial Statements continued


1. Accounting policies continued

(g) Foreign currencyThe Company is required to nominate a functional currency, being the currency in which the Company predominantlyoperates. The Board, having regard to the currency of the Company’s share capital and the predominant currency in whichits shareholders operate, has determined the functional currency to be sterling. Sterling is also the currency in which thefinancial statements are presented.

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

Anygainor lossarisingonmonetaryassetsand liabilities fromachange inexchangerates subsequent to thedateof thetransaction is includedasanexchangegainor loss in revenueorcapital, dependingonwhether thegainor loss isof a revenueorcapitalnature.Gainsand losseson investmentsarising fromachange inexchangeratesare included in the IncomeStatementwithin ‘Gainsor losseson investmentsheldat fair value throughprofit or loss’ andchargedorcredited tocapital reserves.

(h) TaxationTax expense represents the sum of tax currently payable and deferred tax. Any tax payable is based on taxable profit for theperiod. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of incomeor expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by thebalance sheet date.

For the Company, any allocation of tax relief to capital is based on the marginal basis, such that tax allowable capital expensesare offset against taxable income.

As an investment trust which has received approval under the appropriate tax regulations, the Company is not liable fortaxation on capital gains.

Deferred taxation is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferredtaxation liabilities are recognised for all taxable timing differences but deferred taxation assets are only recognised to the extentthat it is more likely than not that taxable profits will be available against which those timing differences can be utilised.

Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expectedto reverse, based on tax rates which have been enacted or substantively enacted at the balance sheet date and is measured onan undiscounted basis.

(i) Dividends payableFinal dividends are included in the accounts in the year in which they are approved by shareholders.

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

(k) Share issue costsThe costs of issuing shares are charged against any premium received on those shares. If no premium is receivable, the costsare included in the Income Statement and charged to capital reserves.

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

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

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2015 2014£’000 £’000

2. Losses on investments held at fair value through profit or loss Losses on sales of investments held at fair value through profit or loss

based on historical cost (5,047) (4,687)Amounts recognised in investment holding gains and losses in the

previous year in respect of investments sold during the year 2,413 (1,658)

Realised losses on sales of investment based on carrying value at the previous balance sheet date (2,634) (6,345)

Net movement in investment holding losses (2,786) (7,868)Other capital charges (17) (11)

Total losses on investments held at fair value through profit or loss (5,437) (14,224)

2015 2014£’000 £’000

3. Income Income from investmentsOverseas dividends 952 1,409Dividends from liquidity fund — 3

Total income 952 1,412

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

4. Management and performance fees Management fee 350 — 350 433 — 433

Details of the management fee are given in the Directors’ Report on page 17. There were no performance fees paid duringthe year (2014: nil).

2015 2014£’000 £’000

5. Other administrative expensesAdministration expenses 157 215Directors’ fees1 81 81Savings scheme costs2 42 49Auditor’s remuneration for audit services3 30 28

310 373

1Full disclosure is given in the Directors’ Remuneration Report on pages 25 to 27.2These amounts were payable to the Manager for the marketing of savings scheme products. 3Fees payable to the Company’s auditor for the audit of the Company’s annual accounts. Includes £5,000 (2014: £5,000) irrecoverable VAT. No non-audit services were providedduring the year (2014: nil).

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


Overseas withholding tax 89 — 89 119 — 119

Current tax charge for the year 89 — 89 119 — 119

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

(b) Factors affecting current tax charge for the yearThe tax charge for the year is lower (2014: lower) than the Company’s applicable rate of corporation tax of 20.92% (2014:22.84%). The difference is explained below:


Net return/(loss) on ordinary activities before taxation 292 (5,463) (5,171) 606 (14,206) (13,600)

Net return/(loss) on ordinary activities before taxation multiplied by the applicable rate of corporation tax of 20.92% (2014: 22.84%) 61 (1,143) (1,082) 138 (3,245) (3.107)

Effects of:Non taxable overseas dividends (134) — (134) (128) — (128)Non taxable capital gains — 1,143 1,143 — 3,245 3,245Unutilised capital expenses — — — (10) — (10)Overseas withholding tax 89 — 89 119 — 119Unutilised expenses carried forward to future periods 73 — 73 — — —

Current tax charge for the year 89 — 89 119 — 119

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £466,000 which comprises unutilised expenses of £2,329,000(20141: deferred tax asset £396,000, unutilised expenses £1,982,000) based on a prospective corporation tax rate of 20%(2014: 21%). The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income.Given the composition of the Company’s portfolio, it is not likely that the Company will be able to utilise this asset in theforeseeable future and therefore no asset has been recognised in the accounts.

Given the Company’s intention to meet the conditions required to obtain approval as an investment trust company, noprovision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal ofinvestments.

1Prior year figures for the unrecognised deferred tax asset and unutilised expenses have been amended due to a correction for unutilised capital expenses.

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7. Dividends(a) Dividends paid and proposed

2015 2014£’000 £’000

2014 Final dividend of 0.85p (2013: 1.00p) 430 560

Total dividend paid in the year 430 560

Final dividend proposed of 0.40p (2014: 0.85p) 191 452

The final dividend proposed in respect of the year ended 30th April 2014 amounted to £452,000. However, the actualpayment amounted to £430,000 due to shares repurchased and held in Treasury, between the date at which the financialstatements were issued and the date on which the dividend was paid.

The final dividend proposed in respect of the year ended 30th April 2015 is subject to shareholder approval at the forthcomingAnnual General Meeting. This dividend will be reflected in the accounts for the year ending 30th April 2016.

(b) Dividend for the purposes of Section 1158 of the Income and Corporation Tax Act 2010 (‘Section 1158’)The requirement of Section 1158 of the Income and Corporation Tax Act 2010 are considered on the basis of dividendsproposed in respect of the financial year, as follows:

2015 2014£’000 £’000

Final dividend proposed of 0.40p (2014: 0.85p) 191 452

Total dividend for s1158 purposes 191 452

The revenue available for distribution by way of dividend for the year is £203,000 (2014: £487,000).

8. Return/(loss) per Ordinary share

The revenue return per share is based on the revenue return attributable to the Ordinary shares of £203,000 (2014: £487,000)and on the weighted average number of shares in issue during the year of 50,296,818 (2014: 55,333,798) excluding shares heldin Treasury.

The capital loss per share is based on the capital loss attributable to the Ordinary shares of £5,463,000 (2014: £14,206,000loss) and on the weighted average number of shares in issue during the year of 50,296,818 (2014: 55,333,798) excludingshares held in Treasury.

The total loss per share is based on the total loss attributable to the Ordinary shares of £5,260,000 (2014: £13,719,000 loss) andon the weighted average number of shares in issue during the year of 50,296,818 (2014: 55,333,798) excluding shares held inTreasury.

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2015 2014£’000 £’000

9. Investments held at fair value through profit or lossInvestments listed on a recognised stock exchange 28,592 38,151

Opening book cost 41,206 48,681Opening investment holding (losses)/gains (3,055) 6,471

Opening valuation 38,151 55,152

Movements in the period:Purchases at cost 17,511 26,508Sales – proceeds (21,650) (29,296)Realised losses on sales of investment based on the carrying value at the previous

balance sheet date (2,634) (6,345)Net movement in investment holding losses (2,786) (7,868)

28,592 38,151

Closing book cost 32,020 41,206Closing investment holding losses (3,428) (3,055)

Total investments held at fair value 28,592 38,151

During the year, prior year investment holding losses amounting to £2,413,000 were transferred to losses on sales ofinvestments as disclosed in notes 2 and 13.

Transaction costs on purchases during the year amounted to £49,000 (2014: £47,000) and on sales during the year amountedto £37,000 (2014: £39,000). These costs comprise mainly brokerage commission.

2015 2014£’000 £’000

10. DebtorsSecurities sold awaiting settlement — 21Dividends and interest receivable 98 166Other debtors 26 25

124 212

The Directors consider that the carrying amount of debtors approximates to their fair value. No balances are considered to bepast due or impaired as at 30th April 2015 (2014: none).

Cash and short term depositsCash and short term deposits comprises bank balances and cash held by the Company, including short term bank deposits.The carrying amount of these balances approximates to their fair value. Cash balances in excess of a predetermined amountare placed on short term deposit at market rates of interest.

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2015 2014£’000 £’000

11. Creditors: amounts falling due within one year Other creditors and accruals 101 79

101 79

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

2015 2014£’000 £’000

12. Called up share capital Ordinary shares – allotted and fully paidOpening balance of 53,121,319 (2014: 58,272,943) shares excluding shares held in Treasury 531 582Issue of nil (2014: 3,000) Ordinary shares of 1p each on conversion of Subscription shares — —Repurchase of 5,328,957 (2014: 5,154,624) Ordinary shares into Treasury (53) (51)

Subtotal of 47,792,362 (2014: 53,121,319) Ordinary shares of 1p each 478 53113,936,536 (2014: 8,607,579) Ordinary shares held in Treasury 139 86

Closing balance 61,728,898 (2014: 61,728,898) Ordinary shares of 1p each 617 617

Subscription shares – allotted and fully paidOpening balance nil (2014: 8,213,724) Subscription shares — 82Conversion of nil (2014: 3,000) Subscription shares into Ordinary shares — —Cancellation of nil (2014: 8,210,724) Subscription shares — (82)

Closing balance nil (2014: nil) Subscription shares of 1p each1 — —

1On 30th June 2013, the Subscription share rights lapsed and the listing of these shares was subsequently cancelled on 30th September 2013.

Share capital transactions During the year, the Company repurchased 5,328,957 (2014: 5,154,624) shares into Treasury for a total consideration of£3,521,000 (2014: £3,752,000). The reason for the purchases was to seek to manage the volatility and absolute level of theshare price discount to net asset value per share.

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Capital reservesCalled up Capital Gains/(losses) Investment

share redemption Share Other on sales of holding Revenuecapital reserve premium reserve1 investments gains/(losses) reserve£’000 £’000 £’000 £’000 £’000 £’000 £’000

13. Reserves Opening balance 617 13 16,149 38,491 (14,685) (3,055) 948Net foreign currency losses on cash and short term deposits — — — — (26) — — Losses on sales of investments based on the carrying

value at the previous balance sheet date — — — — (2,634) — —Net movement in investment holding losses — — — — — (2,786) —Transfer on disposal of investments — — — — (2,413) 2,413 — Repurchase of shares into Treasury — — — (3,521) — — — Other capital charges — — — — (17) — —Dividend appropriated in the year — — — — — — (430)Retained revenue for the year — — — — — — 203

Closing balance 617 13 16,149 34,970 (19,775) (3,428) 721

1The share premium account was cancelled in July 2010 and the ‘Other reserve’ created for the purposes of financing share buybacks.

14. Net asset value per Ordinary share The net asset value per share is based on the net assets attributable to the Ordinary shareholders of £29,267,000 (2014:£38,478,000) and on the 47,792,362 (2014: 53,121,319) Ordinary shares in issue at the year end excluding 13,936,536 (2014:8,607,579) shares held in Treasury.

2015 2014£’000 £’000

15. Reconciliation of total loss on ordinary activities before taxation to net cash inflow from operating activities

Net loss on ordinary activities before taxation (5,171) (13,600)Add: capital loss on ordinary activities before taxation 5,463 14,206Decrease in accrued income 68 136(Increase)/decrease in other debtors (1) 7Increase/(decrease) in accrued expenses 18 (17)Overseas withholding tax (89) (119)Performance fee paid — (215)

Net cash inflow from operating activities 288 398

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At At30th April Exchange 30th April

2014 Cash flow movement 2015£’000 £’000 £’000 £’000

16. Analysis of changes in net fundsCash and short term deposits 194 484 (26) 652

Net funds 194 484 (26) 652

17. Capital commitments and contingent liabilities

At the balance sheet date there were no capital commitments or contingent liabilities (2014: nil).

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

The management fee payable to the Manager for the period was £350,000 (2014: £433,000) of which £nil (2014: £nil) wasoutstanding at the year end.

Based on the negative performance of the Company over the year, a negative performance fee of £392,000 (2014: £300,000loss) will be carried forward and offset against future over performance under the terms of the Management Agreement and£nil (2014: £nil) was payable at the year end.

Expenses amounting to £42,000 (2014: £49,000) were payable to the Manager for the marketing of savings scheme productsduring the year, of which £nil (2014: £nil) was outstanding at the year end.

Included in administration expenses in note 5 are safe custody fees amounting to £21,000 (2014: £25,000) payable toJPMorgan Investor Services Limited of which £5,000 (2014: £4,000) was outstanding at the year end.

Other capital charges amounting to £17,000 (2014: £11,000) were payable to JPMorgan Chase during the year for handling feeson dealing charges of which £5,000 (2014: £1,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out atarm’s length. The commission payable in the year in respect of these transactions was £nil (2014: £500) of which £nil(2014; £nil) was outstanding at the year end.

At the year end, a bank balance of £652,000 (2014: £194,000) was held with JPMorgan Chase. A net amount of interest of £nil(2014: £nil) was receivable by the Company during the year from JPMorgan Chase, of which £nil (2014: £nil) was outstanding atthe year end.

Details of Directors’ transactions in the Company’s shares and Directors’ fees are included in the Directors’ RemunerationReport on pages 25 to 27.

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19. Disclosures regarding financial instruments measured at fair value

The Company’s financial instruments that are held at fair value comprise its investment portfolio.

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

Level 1 – valued using quoted prices in active markets;

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

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

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

Details of the valuation techniques used by the Company are given in note 1(b) on page 37.

The following table sets out the fair value measurements using the hierarchy above at 30th April:

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

Financial instruments held at fair value through profit or loss Equity investments 28,592 — — 28,592

Total 28,592 — — 28,592

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

Financial instruments held at fair value through profit or loss Equity investments 38,151 — — 38,151

Total 38,151 — — 38,151

There have been no transfers between Levels 1, 2 or 3 during the year (2014: nil).

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

As an investment trust, the Company invests in equities and other securities for the long term so as to secure its investmentobjective stated on the ‘Features’ page. In pursuing this objective, the Company is exposed to a variety of financial risks thatcould result in a reduction in the Company’s net assets or a reduction in the profits available for dividends. These risks includemarket risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Directors’ policyfor managing these risks is set out below. The Company Secretary, in close co-operation with the Board and the Manager,co-ordinates the Company’s risk management strategy.

The objectives, policies and processes for managing these risks and the methods used to measure these risks are set outbelow.

The Company’s financial instruments may comprise the following:

– investments in equity shares and ADRs or ADS’s of Brazilian focused companies which are held in accordance with theCompany’s investment objective; and

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

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

(i) Currency risk Most of the Company’s assets, liabilities and accrued income entitlements are denominated in currencies other thansterling (the Company’s functional currency and the currency in which it reports). As a result, movements in exchangerates may affect the sterling value of those items.

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

Foreign currency exposureThe fair values of the Company’s monetary items that have foreign currency exposure at 30th April 2015 are shown below.Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency, they have beenincluded separately in the analysis so as to show the overall level of exposure.

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

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

Foreign currency exposure continued2015

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

Current assets 575 94 6 — 675

Foreign currency exposure on netmonetary items 575 94 6 — 675 Investments held at fair value through profit or loss that

are equities 9,195 18,325 698 374 28,592

Total net foreign currency exposure 9,770 18,419 704 374 29,267

2014US Brazilian Mexican Chilean

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

Current assets 151 180 — — 331

Foreign currency exposure on net monetary items 151 180 — — 331Investments held at fair value through profit or loss that

are equities 13,166 24,415 570 — 38,151

Total net foreign currency exposure 13,317 24,595 570 — 38,482

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

Foreign currency sensitivity The following tables illustrate the sensitivity of the return after taxation for the year and net assets with regard to theCompany’s monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on theCompany’s monetary currency financial instruments held at the balance sheet date and assumes a 10% (2014: 10%)appreciation or depreciation in sterling against the US dollar, Brazilian Real, Mexican Peso and Chilean Peso, which isconsidered to be a reasonable illustration based on the volatility of exchange rates during the year.

If sterling had weakened by 10%, this would have had the following effect:

2015 2014£’000 £’000

Income statement return after taxationRevenue return 95 141Capital return 68 33

Total return after taxation for the year 163 174

Net assets 163 174

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

2015 2014£’000 £’000

Income statement return after taxationRevenue return (95) (141)Capital return (68) (33)

Total return after taxation for the year (163) (174)

Net assets (163) (174)

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

(ii) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits, the interest payable on variable ratecash borrowings and the fair value of fixed interest rate financial instruments during the year and at year end.

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

Interest rate exposure The Company had no exposure to fixed interest rate financial instruments at the year end (2014: none).

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

2015 2014£’000 £’000

Amounts exposed to floating interest rates:Cash and short term deposits 652 194

Total exposure 652 194

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

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

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

Interest rate sensitivity continued2015 2014

1% increase 1% decrease 1% increase 1% decreasein rate in rate in rate in rate£’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return 7 (7) 2 (2)Capital return — — — —

Total return after taxation for the year 7 (7) 2 (2)

Net assets 7 (7) 2 (2)

In the opinion of the Directors, the above sensitivity analysis may not be representative of the Company’s future exposureto interest rate changes due to fluctuations in the level of cash balances. The maximum and minimum balance of cash andshort term deposits held during the year amounted to £888,000 and £55,000 respectively.

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

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

The Company’s total exposure to changes in market prices at 30th April 2015 comprises its holdings in equity investmentsand related securities as follows:

2015 2014£’000 £’000

Equity investments held at fair value through profit or loss 28,592 38,151

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

Concentration of exposure to other price risk The Company’s investments are listed on page 11. This shows that substantially all of the investments’ value is in Brazil.Accordingly there is a concentration of exposure to that country. However, it should be noted that an investment may notbe wholly exposed to the economic conditions in its country of domicile or of listing.

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Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase ordecrease of 10% (2014: 10%) in the fair value of the Company’s equities and other related securities. This level of change isconsidered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis isbased on the Company’s equities and adjusting for change in the management fee, but with all other variables heldconstant.

2015 201410% increase 10% decrease 10% increase 10% decrease

£’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return (29) 29 (38) 38Capital return 2,859 (2,859) 3,815 (3,815)

Total return after taxation for the year and net assets 2,830 (2,830) 3,777 (3,777)

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

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

Short term flexibility is achieved through the use of overdraft facilities.

Liquidity risk exposure All financial liabilities stated in note 11 are repayable on demand to the value they are stated in note 11.

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

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

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

Exposure to JPMorgan ChaseJPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The custody agreement grants a general lien over thesecurities credited to the securities account. The Company’s assets are segregated from JPMorgan Chase’s own trading assetsand are therefore protected from creditors in the event that JPMorgan Chase were to cease trading.

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(c) Credit risk continuedCredit risk exposureThe following table shows amounts extracted from the balance sheet and the related maximum exposure to credit risk at thecurrent and comparative year end.

2015 2014Balance Maximum Balance Maximumsheet exposure sheet exposure£’000 £’000 £’000 £’000

Fixed assets – investments held at fair value through profit or loss 28,592 — 38,151 —Current assetsDebtors 124 124 212 212Cash and short term deposits 652 652 194 194

29,368 776 38,557 406

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

21. Capital management policies and procedures

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

The Company’s capital comprises the following:

2015 2014£’000 £’000

EquityEquity share capital 617 617Reserves 28,650 37,861

Total capital 29,267 38,478

The Board’s policy is to utilise gearing when the Manager believes it appropriate to do so, up to a maximum of 20% geared atthe time of drawdown. Gearing for this purpose is defined as the excess amount above shareholders’ funds of total assets(including net current assets/liabilities) less cash/cash equivalents, expressed as a percentage of the shareholders’ funds. Ifthe amount so calculated is negative, this is shown as a ‘net cash’ position.


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2015 2014£’000 £’000

Investments held at fair value 28,592 38,151Current assets excluding cash 124 212Current liabilities (101) (79)

Total assets 28,615 38,284Net assets 29,267 38,478

Gearing (2.2)% (0.5)%

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

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

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

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

22. Alternative Investment Fund Managers Directive (‘AIFMD’)

The Company’s maximum and actual leverage (see Glossary of Terms and Definitions on page 57) levels at 30th April 2015 areshown below:

Gross CommitmentMethod Method

Maximum limit 200.00% 200.00%Actual 99.56% 99.78%

23. Subsequent Events

The Directors have considered the period since the year end and have not noted any subsequent events that warrantadjustments in the accounts.

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Notice is hereby given that the fifth Annual General Meetingof JPMorgan Brazil Investment Trust plc will be held at60 Victoria Embankment, London EC4Y 0JP on Friday,11th September 2015 at 2.00 p.m. for the following purposes:

1. To receive the Directors’ Report & Accounts and theAuditor’s Report for the year ended 30th April 2015.

2. To approve the Directors’ Remuneration Policy.

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

4. To approve a final dividend of 0.40p per Ordinary share.

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

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

Special Business

To consider the following resolutions:

Authority to allot new ordinary shares – Ordinary Resolution 7. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitutionof any authorities previously granted to the Directors),pursuant to and in accordance with Section 551 of theCompanies Act 2006 (the ‘Act’) to exercise all the powersfor the Company to allot relevant securities (in theCompany and to grant rights to subscribe for, or to convertany security into shares in the Company (‘Rights’)) up to anaggregate nominal amount of £47,017, representingapproximately 10% of the Company’s issued Ordinary sharecapital (excluding treasury shares) at the date of thepassing of this resolution provided that this authority shallexpire at the Company’s Annual General Meeting in 2015,save that the Company may before such expiry make offers,agreements or arrangements which would or might requirerelevant securities to be allotted after such expiry and sothat the Directors of the Company may allot relevantsecurities in pursuance of such offers, agreements orarrangements as if the authority conferred hereby hadnot expired.

Authority to disapply pre-emption rights on allotment of shares –Special Resolution 8. THAT subject to the passing of Resolution 7 set out above,

the Directors of the Company be and they are herebyempowered pursuant to Section 570 and 573 of the Act toallot equity securities (within the meaning of Section 560 ofthe Act) for cash pursuant to the authority conferred byResolution 7 or by way of sale of Treasury shares as ifSection 561(1) of the Act did not apply to any such allotment,provided that this power shall be limited to the allotment ofequity securities for cash up to an aggregate nominalamount of £47,017, representing approximately 10% of theOrdinary issued share capital (excluding treasury shares) asat the date of the passing of this resolution at a price of notless than the Net Asset Value per share and shall expire atthe Company’s Annual General Meeting in 2016, save thatthe Company may before such expiry make offers,agreements or arrangements which would or might requireequity securities in pursuance of such offers, agreements orarrangements as if the power conferred hereby had notexpired.

Authority to repurchase the Company’s shares – Special Resolution 9. THAT the Company be generally and subject as hereinafter

appears unconditionally authorised in accordance withSection 701 of the Companies Act 2006 (the ‘Act’) to makemarket purchases (within the meaning of Section 693 of theAct) of its issued Ordinary shares, on such terms and in suchmanner as the Directors may from time to time determine.

PROVIDED ALWAYS THAT

(i) the maximum number of Ordinary shares herebyauthorised to be purchased shall be 7,047,900, or if less,that number of Ordinary shares which is equal to14.99% of the issued share capital as at the date of thepassing of this Resolution or such number as is equal to14.99% of the issued Ordinary shares as at the date ofthe passing of its Resolution;

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

(iii) the maximum price which may be paid for a share shallbe an amount equal to the highest of: (a) 105% of the

Shareholder InformationNotice of Annual General Meeting

Brazil_AR_pp54_60 14/07/2015 12:31 Page 54


average of the middle market quotations for a anOrdinary share, taken from and calculated by referenceto the London Stock Exchange Daily Official List for thefive business days immediately preceding the day onwhich the share is contracted to be purchased; or(b) the price of the last independent trade; or (c) thehighest current independent bid;

(iv) any purchase of shares will be made in the market forcash at prices below the prevailing net asset value pershare (as determined by the Directors);

(v) the authority hereby conferred shall expire on10th March 2017 unless the authority is renewed atany other general meeting prior to such time; and

(vi) the Company may make a contract to purchaseOrdinary shares under the authority and may makea purchase of ordinary shares pursuant to any suchcontract notwithstanding such expiry.

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

20th July 2015

Notes

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

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

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

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

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

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

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

7. A corporation, which is a shareholder, may appoint an individual(s)to act as its representative(s) and to vote in person at the Meeting(see instructions given on the proxy form). In accordance with theprovisions of the Companies Act 2006, each such representativemay exercise (on behalf of the corporation) the same powers as thecorporation could exercise if it were an individual member of theCompany, provided that they do not do so in relation to the sameshares. It is therefore no longer necessary to nominate adesignated corporate representative. Representatives should bringto the Meeting evidence of their appointment, including anyauthority under which it is signed.

8. Members that satisfy the thresholds in Section 527 of theCompanies Act 2006 can require the Company to publish astatement on its website setting out any matter relating to: (a) theaudit of the Company’s accounts (including the Auditors’ reportand the conduct of the audit) that are to be laid before the AGM;or (b) any circumstances connected with Auditors of the Companyceasing to hold office since the previous AGM, which the memberspropose to raise at the Meeting. The Company cannot require themembers requesting the publication to pay its expenses. Anystatement placed on the website must also be sent to theCompany’s Auditors no later than the time it makes its statementavailable on the website. The business which may be dealt with atthe 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 ifit is undesirable in the interests of the Company or the good orderof the Meeting or if it would involve the disclosure of confidentialinformation.

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

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

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

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

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

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

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

16. As at 13th July 2015 (being the latest business day prior to thepublication of this Notice), the Company’s issued share capitalconsists of 47,017,362 Ordinary shares (excluding treasury shares)carrying one vote each. Therefore the total voting rights in theCompany are 47,017,362.

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

Shareholder Information continuedNotice of Annual General Meeting continued

Brazil_AR_pp54_60 14/07/2015 12:31 Page 56


Return to Ordinary shareholdersTotal return to the investor, on a mid-market price tomid-market price basis, assuming that all dividends receivedwere reinvested, without transaction costs, into the shares ofthe Company at the time the shares were quoted ex-dividend.

Return on net assetsTotal return on net asset value (‘NAV’) per share, on a bid valueto bid value basis, assuming that all dividends paid out by theCompany were reinvested into the shares of the Company atthe NAV per share at the time the shares were quotedex-dividend.

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

Benchmark total returnTotal return on the benchmark, on a mid market value tomid-market value basis, assuming that all dividends receivedwere reinvested, without transaction costs, in the shares ofthe underlying companies at the time the share were quotedex-dividend.

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

Ordinary share price discount/premium to net asset value (‘NAV’)per Ordinary shareIf the share price of an investment trust is lower than the NAVper share, the shares are said to be trading at a discount. Thediscount is shown as a percentage of the NAV. The opposite ofa discount is a premium. It is more common for an investmenttrust’s shares to trade at a discount than at premium.

Gearing/(net cash)Gearing represents the excess amount above shareholders’funds of total assets expressed as a percentage of theshareholders’ funds. Total assets include total investments andnet current assets/liabilities less cash/cash equivalents. If theamount calculated is negative, this is shown as a ‘net cash’position.

Ongoing ChargesManagement fees and all other operating expenses excludingperformance fee, expressed as a percentage of the averagedaily net assets during the year.

LeverageFor the purposes of the Alternative Investment Fund ManagersDirective (‘AIFMD’), leverage is any method which increases theCompany’s exposure, including the borrowing of cash and theuse of derivatives. It is expressed as a ratio between theCompany’s exposure and its net asset value and is calculatedon a gross and a commitment method, in accordance withAIFMD. Under the gross method, exposure represents the sumof the Company’s positions without taking into account anyhedging and netting arrangements. Under the commitmentmethod, exposure is calculated after certain hedging andnetting positions are offset against each other.

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

Performance Attribution Definitions:

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

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

Gearing/CashGearing represents the excess amount above shareholders’funds of total assets (including net current assets/liabilities)less cash/cash equivalents, expressed as a percentage of theshareholders’ funds. If the amount so calculated is negative,this is shown as a ‘net cash’ position.

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

Share RepurchasesMeasures the positive effect on relative performance ofrepurchasing the Company’s shares for cancellation, orrepurchases into Treasury, at a discount to their net assetvalue (‘NAV’) per share.

Glossary of Terms and Definitions

Brazil_AR_pp54_60 14/07/2015 12:31 Page 57

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

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

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

Check the Financial Services Register fromwww.fca.org.uk to see if the person and firmcontacting you is authorised by the FCA.

Beware of fraudsters claiming to be from anauthorised firm, copying its website or givingyou false contact details.

Use the firm’s contact details listed on theRegister if you want to call it back.

Call the FCA on 0800 111 6768 if the firm doesnot have contact details on the Register or youare told they are out of date.

Search the list of unauthorised firms to avoid atwww.fca.org.uk/scams.

Consider that if you buy or sell shares from anunauthorised firm you will not have access to theFinancial Ombudsman Service or FinancialServices Compensation Scheme.

Think about getting independent financial andprofessional advice before you hand over anymoney.

Remember: if it sounds too good to be true, itprobably is!

If you are approached by fraudsters please tell theFCA using the share fraud reporting form atwww.fca.org.uk/scams, where you can find outmore about investment scams.

You can also call the FCA Consumer Helpline on0800 111 6768.

If you have already paid money to share fraudstersyou should contact Action Fraud on 0300 123 2040.

5,000 people contact the Financial ConductAuthority about share fraud each year,with victims losing an average of £20,000

1 6

7

8

9

10

2

3

4

5

Beware of share fraud

How to avoid share fraud

Report a scam

In association with:

Financial Conduct Authority


Savings Plan

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

Stocks & Shares Individual Savings Accounts (ISA)

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

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

Fund supermarkets:

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

Ascentric Nucleus Avalon Praemium Axa Elevate TransactNovia

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

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

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

AJ BellAlliance TrustBarclays StockbrokersBestinvestCharles Stanley DirectHalifax Share Dealing ServiceHargreaves Lansdown

Interactive InvestorJames Brearley James HaySelftradeTD DirectThe Share Centre Transact

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

Brazil_AR_pp54_60 14/07/2015 12:31 Page 58

History

JPMorgan Brazil Investment Trust plc is an investment trust whichwas launched in April 2010 to provide investors with exposure toBrazilian invested equities through a closed-ended structure.

Company Numbers

Company registration number: 7141630

Ordinary Shares

London Stock Exchange ISIN code: GB00B602HS43 Bloomberg code: JPBSEDOL B602HS4

Market Information

The Company’s unaudited net asset value (‘NAV’) is published daily,via the London Stock Exchange.

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

Website

www.jpmbrazil.co.uk

Share Transactions

The Company’s shares may be dealt in directly through a stockbrokeror professional adviser acting on an investor’s behalf. They may alsobe purchased and held through the J.P. Morgan Investment Account,J.P. Morgan ISA and J.P. Morgan SIPP. These products are all availableon the online wealth manager service, J.P. Morgan WealthManager+available at www.jpmorganwealthmanagerplus.co.uk

Manager and Company SecretaryJPMorgan Funds Limited

Company’s Registered Office

60 Victoria EmbankmentLondon EC4Y 0JPTelephone number: 020 7742 4000

For company secretarial and administrative matters please contactDivya Amin at the above address.

Depositary

BNY 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.

Registrars

Equiniti LimitedReference 3533Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0871 384 2814

Calls to this number cost 8p per minute plus network extras. Linesopen 8.30 a.m. to 5.30 p.m., Monday to Friday. The overseas helplineis +44 (0) 121 415 0225

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrar quoting reference 3533. Registered shareholders can obtainfurther details on their holdings on the internet by visitingwww.shareview.co.uk.

Independent Auditor

Ernst & Young LLPStatutory Auditor1 More London PlaceLondon SE1 2AF

Brokers

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

Savings Product Administrators

For queries on the J.P. Morgan Investment Account, J.P. MorganISA and J.P. Morgan SIPP, call the JPMorgan Helpline onFreephone 0800 20 40 20 or +44 (0)20 7742 9995.

Information about the Company

Financial CalendarFinancial year end 30th AprilFinal results announced JulyHalf year end 31st OctoberHalf year results announced DecemberAnnual General Meeting September

A member of the AIC



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

Your telephone call may be recorded for your security

www.jpmbrazil.co.uk


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