JPMorgan Mid Cap Investment Trust plc

JPMorgan Mid Cap Investment Trust plc Annual Report & Financial Statements for the year ended 30th June 2018

K E Y F E A T U R E S

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

Your Company

Objective

JPMorgan Mid Cap Investment Trust plc (the ‘Company’) aims to achieve capital growth from investment in medium-sized UK listedcompanies. The Company specialises in investment in FTSE 250 companies, using long and short term borrowings to increase returns toshareholders.

Investment Policies

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

• To have significant exposure to the UK economy, with selective exposure to overseas earnings.

• To seek out both value stocks and growth stocks, including AIM stocks, to deliver strong performance throughout the market cycle.

• To use gearing, as appropriate, to increase potential returns to shareholders.

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

The Company’s shares are designed for private investors in the UK, including retail investors, professionally-advised private clients andinstitutional investors, who seek the potential for capital growth from investment in the UK market and who understand and are willingto accept the risks of exposure to equities. Private investors should consider consulting an independent financial adviser whospecialises in advising on the acquisition of shares and other securities before acquiring shares in the Company. Investors should becapable of evaluating the risks and merits of such an investment and should have sufficient resources to bear any loss that may result.

Benchmark

The FTSE 250 Index (excluding investment trusts).

Capital Structure

• UK domiciled.

• Premium Listing on the London Stock Exchange.

• As at 30th June 2018, the Company’s called-up share capital comprised 25,398,080 ordinary shares of 25p each including 1,585,400shares held in Treasury.

Management Company

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

FCA Regulation of ‘Non-Mainstream Pooled Investments’

The Company currently conducts its affairs so that the shares issued by the Company can be recommended by independent financialadvisers to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intendsto continue to do so for the foreseeable future.

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

Association of Investment Companies

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

Website

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

K E Y F E A T U R E S

WH Y I N V E S T I N T H E J P M O R G A N M I D C A P I N V E S T M E N T T R U S T

The Manager’s Investment Approach

JPMAM believes that markets are not always efficient. As evidenced by comprehensive research, investors exhibit consistentbehavioural biases and irrational behaviours that often result in persistent market inefficiencies, and hence investment opportunities.Taking advantage of these patterns of behaviour, the Investment Managers aim to outperform over market cycles by creating aportfolio comprised of attractively valued and high quality companies which demonstrate positive momentum.

The Manager’s Heritage and Team

JPMAM’s well-resourced team of dedicated investment professionals follow a distinctive and disciplined methodology that seeks toexploit market inefficiencies caused by consistent and predictable human behaviours. The process is an active, bottom-up, team-basedinvestment approach, which focuses on the Value, Quality, and Momentum style characteristics of stocks. JPMAM’s Behavioural FinanceTeam has been managing European equity funds since 1949 and this current investment process was introduced in 1999.

Why invest in the JPMorgan Mid Cap Investment Trust

Mid Cap AR p01-02.qxp 28/09/2018 08:30 Page 1

C O N T E N T S

2 | J PMORGAN M ID CAP INVESTMENT TRUST PLC . ANNUAL REPORT & F INANC IAL STATEMENTS 2018

Strategic Report 4 Financial Highlights

6 Chairman’s Statement

11 Investment Managers’ Report

14 Ten Year Record

16 Portfolio Information

19 Business Review

Directors’ Report 24 Board of Directors

25 Directors’ Report

27 Corporate Governance Statement

31 Audit & Risk Committee Report

Directors’ Remuneration 33 Report

Statement of Directors’ 36 Responsibilities

Independent Auditor’s 38 Report

Financial Statements 45 Statement of Comprehensive Income and Statement of Changes in Equity

46 Statement of Financial Position

47 Statement of Cash Flows

48 Notes to the Financial Statements

Regulatory Disclosures 65 Alternative Investment Fund Managers’

Directive (‘AIFMD’) Disclosure

66 Securities Financing TransactionsRegulation (‘SFTR’) Disclosure

Shareholder Information 68 Notice of Annual General Meeting

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

73 Where to buy J.P. Morgan Investment Trusts

75 Information about the Company


Strategic Report


2018 2017 3 Year 5 Year

Return to shareholders1

Return on net assets2

Benchmark return3

Dividend per share4

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

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

TOTAL RETURNS (INCLUDING DIVIDENDS REINVESTED) TO 3OTH JUNE

LONG TERM PERFORMANCE (TOTAL RETURNS) FOR PERIODS ENDED 30TH JUNE 2018

JPMorgan Mid Cap – return to shareholders1

JPMorgan Mid Cap – return on net assets2

Benchmark return3

27.416.4

27.4

52.040.0

%

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5 Year Performance3 Year Performance1 Year Performance

72.6

132.1

106.4

11.2

+27.4% +23.4% +52.0% +132.1%

+16.4% +30.4% +40.0% +106.4%

+11.2% +21.5% +27.4% +72.6%

28.0p 26.0p

1 Source: Morningstar.2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share.3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts).4 Comprises ordinary dividends of 26.5p (2017: 23.0p) and a special dividend of 1.5p (2017: 3.0p).

A glossary of terms and alternative performance measures is provided on pages 71 and 72.


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

SUMMARY OF RESULTS

1 Source: Morningstar.2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share.3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts).4 Comprises ordinary dividends of 26.5p (2017: 23.0p) and a special dividend of 1.5p (2017: 3.0p).


2018 2017 % change

Total returns for the year ended 30th June

Return to shareholders1 +27.4% +23.4%

Return on net assets2 +16.4% +30.4%

Benchmark return3 +11.2% +21.5%

Net asset value, share price and discount at 30th June

Shareholders’ funds (£’000) 314,130 275,936 +13.8

Net asset value per share 1,319.2p 1,157.6p +14.0

Share price 1,250.0p 1,004.0p +24.5

Share price discount to net asset value 5.2% 13.3%

Shares in issue (excluding shares held in Treasury) 23,812,680 23,837,680

Revenue for the year ended 30th June

Net revenue return attributable to shareholders (£’000) 7,888 7,391 +6.7

Revenue return per share 33.12p 30.88p +7.3

Dividend per share4 28.0p 26.0p +7.7

Gearing at 30th June 4.6% 2.3%

Ongoing charges ratio 0.83% 0.86%


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C H A I R M A N ’ S S T A T E M E N T

Investment Performance

It is very pleasing to report that for the year ended 30th June 2018, the Company’s total return on netassets was +16.4%, compared with the benchmark total return of +11.2%. The discount at which theCompany’s shares trade to net asset value narrowed over the year and as a result the Company’s totalreturn to shareholders was a very healthy +27.4%.

This strong performance was generated by positive stock selection by the Investment Managers, despiteincreasingly volatile investment conditions as a result of the ongoing uncertainties surrounding the UK’sexit from the European Union. Gearing also contributed to this outperformance as can be seen from theperformance attribution detailed in the Investment Managers’ Report.

Despite the continued strong performance on both an absolute and relative basis, demand for theCompany’s shares remains disappointing. Many investors are continuing to steer clear of UK equities untilthere is clarity on the UK’s position in Europe from March 2019. This concern has resulted in the Company’sshares trading stubbornly at a discount to net asset value. The Investment Managers believe that suchworries, which have now been ongoing since June 2016, are overly pessimistic, particularly given that thereis a plethora of companies exposed to both international and domestic earnings within the FTSE 250 Index.As active managers, the team can be selective as to the exposure within the portfolio and, since the resultof the Brexit Referendum, have positioned the portfolio to be overweight international earners comparedto the benchmark. Most importantly for investors, the mid cap universe offers attractive investmentopportunities whatever the economic and market backdrop, despite increasing volatility.

In terms of longer term performance, the Investment Managers’ record is very impressive over one, threeand five years. Based upon this performance record and taking all factors into account, to include otherservices provided to the Company and its shareholders, the Board has no hesitation in confirming thatJPMF should continue as the Company’s Manager and that its ongoing appointment remains in the bestinterests of shareholders.

The Investment Managers’ report below gives more detail on the positioning of the portfolio, actions takenand performance attribution, together with their views on the outlook for the mid cap sector.

The Case for Investing in UK Mid Cap Companies

The table below shows the outperformance of the FTSE 250 Index relative to the FTSE 100 over the lastten years and it is pleasing to note that our Investment Managers, Georgina and Katen, have outperformedthe FTSE 250 Index benchmark during their tenure which now extends to more than five years.

To 30th June 2018 One Year Three Year Five Year Ten YearIndex Return % Return % Return % Return %

FTSE 250 (including investment trusts) 10.6 28.8 72.4 200.8FTSE 250 (excluding investment trusts) 11.2 27.4 72.6 217.3FTSE 100 8.7 32.0 48.6 98.2

At a recent presentation the Investment Managers presented the case for investing in UK Mid CapCompanies and I thought it was worth sharing some of the charts with shareholders, as I feel they madea compelling case for investing in the asset class. As you can see from the chart overleaf, over the last25 years, the FTSE 250 Index excluding Investment Trusts (your Company’s benchmark) has significantlyoutperformed every other major equity index, in sterling terms, including Emerging Markets and thetechnology heavy S&P 500 Index in the United States. Some of the possible reasons for this very impressivelong term performance are highlighted overleaf.

Michael HughesChairman




UK mid caps – long-term performance

Cumulative returns (£)

Source: J.P. Morgan Asset Management, Thomson Reuters Datastream. All series are rebased to 100 as at 31st December 1993 to31st August 2018. All indices in GBP and include reinvested dividends. Indices do not include fees or operating expenses and are notavailable for actual investment.

The reason many of these companies have better growth characteristics can often be found in theirownership structure, their ability to operate and compete in more niche areas and the fact that they areusually at a relatively early stage of their life cycle and hence have a stronger growth runway versusFTSE 100 companies.

The nature of the FTSE 250 also means that Investment Managers have a significantly more diverseuniverse from which to select companies. The 10 largest stocks in the FTSE 250 make up just 11% of theindex compared with four times that in the FTSE 100. This diversity is not only by number of companies butalso across industries and by income. By investing in the FTSE 250, investors can also receive a morediversified dividend payment stream. In the FTSE 100 the top five dividend payers represent 40% of thetotal income paid out whereas in the FTSE 250 they represent just 10%.

Breadth of opportunity and risk diversification

Stocks by index weight Comments

Source: Bloomberg.

GICS industry name, based on index weightings as at 31st August 2018.

Dividend yield on last twelve months basis.

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TOPIXMSCI AC Asia Pacific ex JapanMSCI Emerging MarketsFTSE All ShareMSCI Europe ex UKRussell 2000S&P 500EMIX Smaller Europe ex UKFTSE 250 ex ITs

2017201620152014201320122011201020092008200720062005200420032002200120001999199819971996199519941993

0%1%2%3%4%5%6%7% • Highly concentrated by stock/sector

• Highly concentrated dividend list

– 10 largest stocks = 44% of index


– Top payer = 11% of index yield

– Top five = 40% of total

0%1%2%3%4%5%6%7% • Diversified by stock/sector

• Diversified dividend list



– Top payer = 3% of index yield

– Top five = 10% of total

FTSE

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FTSE

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Mid Cap companies also tend to be target rich areas for mergers and acquisitions. Large companies oftentarget their smaller rivals, which have better growth trajectories, in order to increase their marketopportunity and augment growth. These acquisitions are often at a premium to the prevailing marketvaluations. The below chart highlights the significantly higher percentage of companies that are acquiredin the FTSE 250 compared with the FTSE 100. Companies held in the portfolio that have recently beenacquired include Fenner, Aldermore and Paysafe.

Value creation through Mergers & Acquisitions

Percentage of index constituents acquired

Source: Liberum, Bloomberg, as at 31st August 2018.

The final chart to draw your attention highlights the number of analysts covering each stock in the FTSE AllShare Index. The chart highlights that as the market capitalisation of companies decreases across theUK equity market so too does the average number of analysts covering those companies. This means thatInvestment Managers with a proven investment process are more able to find under researched, growthcompanies at attractive valuations.

Opportunities in under-researched companies

Rolling average analyst coverage by market cap

Source: Liberum. As at 31st July 2017.

Revenue and Dividends

Revenue earnings per share for the year to 30th June 2018 were 33.12 pence, a 7.3% increase on last year.The receipt of special dividends remained a notable factor in the strength of the Company’s earnings, withjust over 20% of the income received arising from the receipt of special dividends. The Board has decidedto increase the dividend this year by 7.7%, by proposing a final dividend of 18.5 pence and a special

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FTSE 250 Small Cap£’m

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112,957 26,415 10,876 6,643 5,469 4,241 3,285 2,710 2,228 1,863 1,479 1,285 1,141 1,010 828 685 558 458 377 315 259 206 132

FTSE 100

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Small Cap

2018 YTD201720162015201420132012201120102009

FTSE 250

FTSE 100




dividend of 1.5 pence, which when added to the interim dividend paid in April of 8.0 pence, equates to totaldividend payable of 28.0 pence (2017: 26.0 pence) for the full year. The final and special dividend will bepaid on 15th November 2018 to shareholders on the register at the close of business on 12th October 2018.

Whilst it is expected that the payment of special dividends will still be a feature of the UK dividend marketfor the year ahead, such payments are difficult to forecast and may not continue at previous levels. Thecompany has, however, built up a significant revenue reserve over the years and the Board will seek toincrease the dividend by at least the rate of inflation.

Gearing and Borrowing Facilities

The Board sets the overall gearing guidelines and reviews these at each meeting; changes in theseguidelines between meetings may be undertaken by the Investment Managers after consultation with theBoard. The Board has determined that in normal circumstances the Company’s gearing range is 5% netcash to 25% geared. Having varied between 0% and 8.0% throughout the year under review, at the end ofthe Company’s financial year the Company was 4.6% geared.

At the end of the reporting year, the Company had two loan facilities in place totalling £40 million, expiringin 2019 and 2020, with the option of further increasing one of the facilities by £25 million. Shareholdersshould expect gearing to remain below 5% on average in the run-up to a clear position on the UK’s futurerole in Europe.

Discount Management

The Board continues to monitor the Company’s discount closely with its advisers and is prepared torepurchase shares when it feels that it is appropriate, taking into account market conditions. The Companyrepurchased 25,000 shares in the year. Any shares repurchased are held in Treasury for possible re-issue.Treasury shares and any new Ordinary shares will only be sold or issued respectively at a premium to netasset value.

Board of Directors

The Directors conduct an assessment of the performance of the Board and its committees, as well as theirown performance, each year and this is supplemented by one-to-one meetings with me. The Chairman’sperformance is assessed by the Senior Independent Director after he has consulted with all of the otherDirectors. A report is made to the Nomination and Remuneration Committee which meets annually toconsider the results of the evaluation exercises. Having completed the process this year, the Nominationand Remuneration Committee is satisfied that all Directors possess the experience and attributes requiredof a Director for this Company. Accordingly, the re-elections of all Directors at the forthcoming AnnualGeneral Meeting (‘AGM’) are recommended to shareholders.

The Board continues to manage succession so that it has the appropriate balance of skills and knowledgeand to have regard to the new Code of Corporate Governance for UK public companies. To this end we planto continue with our staged succession policy for the next two years. Having served as a Director since2008, Margaret Littlejohns will retire from the Board at the AGM in 2019. The Board will shortly commencethe process of recruiting a new non-executive Director to chair the Audit & Risk Committee upon Margaret’sretirement. Having chaired the Board since 2016 and having been appointed to the Board in 2008, I planto step down from the Board at the 2020 AGM, with my successor being confirmed ahead of this time.A further new non-executive director will be appointed in 2020. It is our intention to keep the numberof board members to five over the medium term but this will temporarily increase to six during thissuccession period.


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


Annual General Meeting and Shareholder Contact

This year’s Annual General Meeting will be held on Tuesday, 30th October 2018 at 2.30 p.m. at 60 VictoriaEmbankment, London EC4Y 0JP. In addition to the formal part of the meeting, there will be a presentationfrom Georgina Brittain and Katen Patel, who will also answer questions on the portfolio and performance.There will be an opportunity to meet the Board, the Investment Managers and representatives of JPMorganafter the meeting. I look forward to welcoming as many of you as possible to this meeting. I am pleased tohear from shareholders, and can be contacted through our Company Secretary, whose details are set outon page 75.

If you have any detailed or technical questions, it would be helpful if you could raise these in advance of themeeting with the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP. Shareholders who areunable to attend the Annual General Meeting are encouraged to use their proxy votes.

Prospects

The flexibility of UK mid-cap companies, and in particular their ability to respond rapidly to changingmarkets and technological developments, has been reflected in earnings growth in excess of the growth ofthe economy over the last five years. We are therefore hopeful that whatever the outcome of the Brexitnegotiations, these companies will continue to thrive by identifying opportunities to grow their businessesin both existing and new markets.

Given this, it could be argued that the markets are underplaying the growth prospects of many mid capcompanies in a post-Brexit era. The notable merger and acquisition activity in the mid cap universe wouldsupport this view, as well as suggesting that valuations remain attractive on a long-term view.

We therefore continue to believe that the risk/return trade-off from your Company will provide attractivetotal returns to both existing and new investors.

Michael HughesChairman 27th September 2018


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

Performance & Market Background

The first six months of your Company’s financial year (the second half of 2017) saw strong stock marketperformance, aided by the strength of global growth. 2018 has been more pedestrian, as investors fretted –wrongly in our view – over the sustainability of that growth. In addition, geopolitical concerns haveincreased, and most notably President Trump has introduced the significant threat of trade wars againstboth China and the EU.

In the UK, the economic backdrop to the year saw the first interest rate rise in a decade in November 2017,unemployment at a multi-year low of 4.0%, inflation subdued to around 2.5% and wage growth(ex-bonuses) of 2.7%, leaving the consumer with growing disposable income.

The FTSE 250 Index continued its longer term trend of outperformance, rising more than both the FTSE 100and the Small Cap indices over the year, producing a total return of +11.2%. It is pleasing to report thatyour Company outperformed the Index, producing a total return on net assets of +16.4%. Over the year thediscount narrowed substantially from 13.3% to 5.2%, so the share price return was an impressive +27.4%.

Portfolio

The outperformance of your Company over the last financial year was achieved through stock selection. Keypositives included our large and long-term holdings in Ashtead, Plus500, Electrocomponents and NMC Health.On the negative side, the most significant detractor from relative performance was not owning Ocado(a loss-making business which has now been promoted into the FTSE 100). In addition, there were a number oftake-overs in the FTSE 250 of companies which we did not own.

We have discussed the prevalence of mergers & acquisitions in the FTSE 250 for several years now. Last yearsaw this activity increase yet further. While we benefitted from the take-overs of Fenner, Aldermore andPaySafe in the year, there were many more within the Index, including Fidessa, NEX, UBM, and ZPG, with morein the offing. A significant number of these UK companies have been bought by overseas acquirers – stronglysuggesting both that valuations are attractive, and that the acquirers believe on a long term view, fears of anypotential Brexit impact have been over-played.

Two years ago, in the immediate aftermath of the Brexit Referendum, we described clearly how we hadrepositioned the portfolio. We chose at that time to structure the portfolio for a ‘hard’ Brexit outcome, and havemaintained that stance ever since. This included an increased emphasis within your Company on overseasearners and on exporters, and a significant move to reduce our exposure to domestically focussed companies.Careful analysis went into each individual stock decision, and we chose to retain a number of pure UK holdingssuch as two challenger banks, OneSavings and Aldermore, Softcat, a UK IT reseller, and JD Sports Fashion, oneof the UK High Street’s winners.

During the financial year we exited a number of companies. These included Greencore, TP ICAP and Playtech,all of which had disappointing trading. On valuation grounds we also sold out of Micro Focus (before the profitwarnings) and Melrose Industries. New additions included two IPOs, Amigo Loans, a provider of guarantor loansand Avast, a global leader in consumer cyber security, Integrafin (a B2B platform for financial advisors), andHunting and Rotork as we sought to benefit from the rise in the oil price.

Georgina BrittainInvestment Manager

Katen PatelInvestment Manager


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PERFORMANCE ATTRIBUTION

YEAR ENDED 30TH JUNE 2018 % %

Contributions to total returns

Benchmark return 11.2

Stock & sector selection 5.6

Gearing/cash 0.4

Investment Manager contribution 6.0

Portfolio return 17.2

Fees/other expenses –0.8

Share repurchases —

Other effects –0.8

Return on net assets 16.4

Return to shareholders 27.4

Source: JPMAM/Morningstar.

All figures are on a total return basis.

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


Outlook

As we write this Annual Report in September 2018, a crystal ball would be a very useful accessory. It is (almost)without doubt that the UK will leave the EU within the next financial year, but despite the deadline set byArticle 50 being less than seven months away, we still do not know what that exit will look like. The Bank ofEngland assumes that the most likely outcome will be a gradual transition to new trading arrangements withthe EU. The Prime Minister’s recent Chequers speech on Brexit signalled a very soft exit. However, in our viewthe increased political uncertainty post that speech and the currently stalled negotiations mean that the tail riskof the UK exiting without any deal at all has materially risen. Indeed Liam Fox, the International TradeSecretary, very recently put the chance of no trade deal at 60%.

All of this leads to a huge lack of clarity for both companies and consumers. Add to this the looming threat ofglobal trade wars and it would be easy to become very pessimistic on the short term outlook. However, despitethis, the IMF is forecasting UK GDP growth of 1.4% in 2018 and 1.5% in 2019. In the UK, the all-important PMIdata (purchasing managers’ indices) are still indicating expansion, and lowered inflation expectations arepositive for the consumer. While business confidence metrics have slipped, business investment remains lowbut positive, currently growing at 2-3%.




Recent history, and many years of experience in managing money, teaches us that, despite this backdrop,it is wrong to be too gloomy. The message we hear from companies within our portfolio remains positive.The forecast earnings growth for the companies we own is a striking 16%. As we have argued many timesbefore, it is possible to find some high quality long term winners within the FTSE 250 Index. These are thecompanies, found in diverse sectors, which have embraced the data-driven modern world and adaptedaccordingly. These are the companies which are increasing productivity and will prove to be adept atpositioning themselves for the future. We believe we have identified a number of these, and hold them as largepositions within the portfolio. While the current political backdrop has led us to reduce gearing in the shortterm, we continue to back these investments and expect your Company to benefit from owning them.

Georgina BrittainKaten PatelInvestment Managers 27th September 2018


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T E N Y E A R R E C O R D

TEN YEAR PERFORMANCE

FIGURES HAVE BEEN REBASED TO 100 AT 30TH JUNE 2008

1 Source: Morningstar/J.P. Morgan.2 Source: Morningstar/J.P. Morgan, cum income net asset value.3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts).

JPMorgan Mid Cap – share price total return¹ JPMorgan Mid Cap – net asset value total return² Benchmark total return³

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TEN YEAR PERFORMANCE RELATIVE TO BENCHMARK

FIGURES HAVE BEEN REBASED TO 100 AT 30TH JUNE 2008


JPMorgan Mid Cap – share price total return¹ JPMorgan Mid Cap – net asset value total return² Benchmark total return³

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T E N Y E A R R E C O R D

TEN YEAR FINANCIAL RECORD

At 30th June 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Shareholders’ funds (£’m) 150.9 94.1 110.6 135.6 116.6 172.1 199.1 242.4 218.3 275.9 314.1

Net asset value per share (p) 582.2 371.9 441.0 543.2 483.9 717.3 829.6 1,010.1 909.6 1,157.6 1,319.2

Share price (p) 488.0 321.5 364.5 455.0 393.0 611.5 734.5 886.0 835.0 1,004.0 1,250.0

Discount (%) 16.2 13.6 17.3 16.2 18.8 14.7 11.5 12.3 8.2 13.3 5.2

Gearing/(net cash) (%) 6.8 6.8 4.5 6.0 4.2 12.2 8.1 9.1 (0.5) 2.3 4.6

Year ended 30th June

Revenue attributable to

shareholders (£’000) 4,785 4,758 3,018 2,961 3,938 5,030 5,200 6,847 7,067 7,391 7,888

Revenue return per share (p) 17.64 18.74 11.94 11.81 16.04 20.95 21.67 28.53 29.45 30.88 33.12

Ordinary dividend per share (p) 16.5 17.0 17.0 17.0 17.0 17.0 18.0 20.0 21.0 23.0 26.5

Special dividend per share (p) — 4.9 — — — 1.0 — 4.5 4.5 3.0 1.5

Ongoing charges ratio (%) 0.63 0.78 0.74 0.72 0.80 0.66 0.97 0.95 0.91 0.86 0.83

Rebased to 100 at 30th June 2008

Total return to shareholders1 100.0 70.4 83.4 108.4 97.8 157.6 194.1 240.6 232.6 287.1 365.7

Total return on net assets2 100.0 66.8 83.3 106.9 99.0 151.2 178.8 222.9 205.7 268.1 312.0

Benchmark total return3 100.0 85.2 111.0 146.7 139.1 183.9 216.6 249.1 234.9 285.4 317.3




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

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TEN LARGEST EQUITY INVESTMENTS

AT 30TH JUNE

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

Ashtead Industrials 16,366 5.0 13,189 4.7

Electrocomponents Industrials 15,304 4.7 9,310 3.3

Intermediate Capital Financials 12,551 3.8 7,251 2.6

Sophos2 Technology 10,208 3.1 5,095 1.8

JD Sports Fashion Consumer Services 9,988 3.0 14,356 5.1

OneSavings Bank Financials 9,626 2.9 8,810 3.1

Plus5002 Financials 8,035 2.5 2,707 1.0

Bellway2 Consumer Goods 8,021 2.4 6,543 2.3

Spirax-Sarco Engineering2 Industrials 7,167 2.2 5,612 2.0

Beazley2 Financials 6,821 2.1 5,706 2.0

Total 104,087 31.7

1 Based on total portfolio of £328.6m (2017: £282.3m).2 Not included in the ten largest investments at 30th June 2017.

At 30th June 2017, the value of the ten largest equity investments amounted to £92,150,000 representing 32.8% of the total portfolio.





PORTFOLIO ANALYSIS

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

Industrials 34.4 28.9 32.1 30.5

Financials 27.9 28.3 23.7 24.3

Consumer Services 18.1 16.9 21.0 21.3

Technology 6.4 2.4 7.5 1.5

Consumer Goods 5.3 7.2 7.9 7.8

Health Care 4.3 5.8 4.5 4.6

Oil & Gas 2.0 3.9 1.0 2.8

Basic Materials 1.6 3.9 2.0 4.3

Utilities — 1.5 — 1.4

Telecommunications — 1.2 0.3 1.5

100.0 100.0 100.0 100.0

1 Based on total portfolio of £328.6m (2017: £282.3m).

INVESTMENT ACTIVITY

DURING THE YEAR ENDED 30TH JUNE 2018

Value at Benchmark Change in Value at 30th June 2017 Classification1 Purchases Sales valuation 30th June 2018 £’000 % £’000 £’000 £’000 £’000 £’000 %

FTSE 250 Index companies 249,368 88.3 (26,259) 112,926 (76,708) 24,333 283,660 86.3

FTSE 100 Index companies 27,520 9.7 30,186 — (37,592) 6,424 26,538 8.1

AIM Listed companies 2,707 1.0 (8,209) 3,339 (151) 6,541 4,227 1.3

Other investments2 2,723 1.0 4,282 12,747 (6,710) 1,102 14,144 4.3

Total portfolio 282,318 100.0 — 129,012 (121,161) 38,400 328,569 100.0

1 Movement in relation to the reclassification of the indices during the year.2 At 30th June 2018 Plus500, Amigo and Avast are listed on the main market but not included in any of the above indices (2017: Alfa Financial Software and 888).


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ValuationCompany £’000



INDUSTRIALS

Ashtead1 16,366

Electrocomponents 15,304

Spirax-Sarco Engineering 7,167

Marshalls 5,712

Renishaw 5,179

Babcock International 5,028

BBA Aviation 4,871

Vesuvius 4,870

Howden Joinery 4,472

Hill & Smith 4,348

Rotork 4,200

Bodycote 3,967

RPC 3,963

Hays 3,881

IMI 3,506

Weir 3,400

Grafton 3,249

Morgan Advanced Materials 2,968

Ibstock 2,760

Rhi Magnesita 2,758

DS Smith1 1,902

Coats 1,705

Polypipe 1,578

113,154

FINANCIALS

Intermediate Capital 12,551

OneSavings Bank 9,626

Plus500 8,035

Beazley 6,821

Workspace 5,007

Man 4,739

Bank of Georgia 4,712

Amigo 4,307

FINANCIALS – CONTINUED

Charter Court Financial Services 4,243

Close Brothers 3,891

John Laing 3,525

Savills 3,472

Phoenix 3,315

Shaftesbury 3,274

Tritax Big Box 2,905

Jupiter Fund Management 2,899

CLS 2,873

TBC Bank 2,790

IntegraFin 2,267

Phoenix Rights 370

91,622

CONSUMER SERVICES

JD Sports Fashion 9,988

Wizz Air 6,660

B&M European Value Retail 5,654

Auto Trader 5,321

SSP 5,219

Ascential 3,666

National Express 3,606

WH Smith 3,198

Moneysupermarket.com 2,672

Thomas Cook 2,394

Just Eat1 2,337

On the Beach 2,255

Rightmove1 2,123

888 2,061

Card Factory 1,477

Playtech 1,054

59,685

TECHNOLOGY

Sophos 10,208

FDM 5,385

Softcat 3,557

Avast 1,802

20,952

CONSUMER GOODS

Bellway 8,021

Games Workshop 4,186

Fevertree Drinks2 2,603

Victoria2 1,624

Berkeley1 946

17,380

HEALTH CARE

Indivior 4,387

Dechra Pharmaceuticals 3,892

UDG Healthcare 2,886

NMC Health1 2,864

14,029

OIL & GAS

Hunting 3,647

Petrofac 2,951

6,598

BASIC MATERIALS

KAZ Minerals 3,665

Ferrexpo 1,484

5,149

TOTAL INVESTMENTS 328,569

1 FTSE 100 Index companies.2 AIM listed companies.

LIST OF INVESTMENTS AT 30TH JUNE 2018



B U S I N E S S R E V I E W

The aim of the Strategic Report is to provide shareholders withthe ability to assess how the Directors have performed their dutyto promote the success of the Company during the year underreview.

Business Review

Structure and Objective of the Company

JPMorgan Mid Cap Investment Trust plc is an investment trust andhas a premium listing on the London Stock Exchange. Its objectiveis to provide shareholders with capital growth from investment inmedium-sized UK companies. In seeking to achieve this objectivethe Company employs JPMorgan Funds Limited (‘JPMF’ or the‘Manager’) to manage actively the Company’s assets. The Board hasdetermined an investment policy and related guidelines and limits,as described below. It aims to outperform the FTSE 250 Index(excluding investment trusts), with dividends reinvested.

The Company is subject to UK and European legislation andregulations including UK company law, Financial ReportingStandards, Listing, Prospectus and Disclosure, Guidance andTransparency Rules, Market Abuse Regulation, taxation law andthe Company’s own Articles of Association. The Company is aninvestment company within the meaning of Section 833 of theCompanies Act 2006 and has been approved by HMRC as aninvestment trust (for the purposes of Sections 1158 and 1159 ofthe Corporation Tax Act 2010). The Directors have no reason tobelieve that the Company will not continue to retain itsinvestment trust status. The Company is not a close company fortaxation purposes.

A review of the Company’s activities and prospects is given in theChairman’s Statement on pages 6 to 10, and in the InvestmentManagers’ Report on pages 11 and 13.

Investment Policies and Risk Management

In order to achieve its objective, the Company invests ina diversified portfolio, concentrating on FTSE 250 companies thatdeliver strong capital growth. The Managers seek out both valuestocks and growth stocks, including AIM stocks, to deliver strongperformance throughout the market cycle. The portfolio hasa significant exposure to the UK economy, with selective exposureto overseas earnings. Gearing is used, as appropriate, to increasepotential returns to shareholders.

Investment Limits and Restrictions

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

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

• No more than 15% of the portfolio at prevailing values may beinvested outside the FTSE 250 Index. Investments outside theFTSE 250 Index can include AIM stocks.

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

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

• The Company’s Gearing policy is to operate within a range of5% net cash to 25% geared in normal market conditions.

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

Performance

In the year to 30th June 2018, the Company produced a totalreturn on net assets of +16.4% to give a total return toshareholders of +27.4%. This compares with the total return onthe Company’s benchmark index of +11.2%. As at 30th June 2018,the value of the Company’s investment portfolio was£328.6 million (2017: £282.3 million). The Investment Managers’Report on pages 11 to 13 includes a review of developmentsduring the year as well as information on investment activitywithin the Company’s portfolio.

Total Return, Revenue and Dividends

Gross total return for the year amounted to £47.7 million (2017:£67.8 million) and net total return after deducting finance costs,management fees, administrative expenses and taxationamounted to £44.6 million (2017: £65.2 million). Distributableincome for the year amounted to £7.9 million (2017: £7.4 million).

The Directors recommend a final dividend of 18.5p (2017: 15.0p),plus a special dividend of 1.5p (2017: 3.0p) per share, payable on15th November 2018 to shareholders on the register at the closeof business on 12th October 2018. This distribution, will amount to£4,763,000 (2017: £4,291,000). An interim dividend of 8.0p pershare (2017: 8.0p per share) was paid on 18th April 2018.Following the payment of these dividends, the revenue reservewill amount to £8,194,000 (2017: £6,969,000).

Key Performance Indicators (‘KPIs’)

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

• Performance against the benchmark indexThis is the most important KPI by which performance isjudged. Information on the Company’s performance is givenin the Chairman’s Statement and the Investment Managers’Report. (Also please refer to the graphs on page 14).

• Performance attributionThe purpose of performance attribution analysis is to assesshow the Company achieved its performance relative to itsbenchmark index, i.e. to understand the impact on theCompany’s relative performance of the various components




such as stock and sector allocation and gearing. Details of theattribution analysis for the year ended 30th June 2018 aregiven in the Investment Managers’ Report on page 12.

• Share price discount to net asset value (‘NAV’) per shareThe Board has a share repurchase programme which seeks,where possible, to address imbalances in supply of anddemand for the Company’s shares within the market andthereby reduce the volatility and absolute level of thediscount to NAV at which the Company’s shares trade and inrelation to its peers in the sector. In the year to 30th June2018, the shares traded between a discount of 13.9% and1.6% to the cum income net asset value using daily data.More information on the Board’s share buy back policy isgiven in the Chairman’s Statement.

Discount PerformanceFIGURES HAVE BEEN REBASED TO 100 AT 30TH JUNE 2008

Source: Morningstar.

JPMorgan Mid Cap – share price discount to cum income net asset value pershare (month end data).

• Ongoing chargesThe Ongoing Charges Ratio represents the Company’smanagement fee and all other operating expenses, excludingfinance costs, expressed as a percentage of the average ofthe daily net assets during the year. The Ongoing ChargesRatio for the year ended 30th June 2018 was 0.83% (2017:0.86%). The Board reviews each year an analysis which showsa comparison of the Company’s Ongoing Charges Ratio and itsmain expenses with those of its peers.

Share Capital

The Directors have authority on behalf of the Company torepurchase shares in the market either for cancellation or intoTreasury and to sell Treasury shares or issue new Ordinary sharesfor cash. During the year 25,000 ordinary shares wererepurchased into Treasury (2017: 159,500).

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

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

Board Diversity

When recruiting a new Director, the Board’s policy is to appointindividuals on merit. Diversity is important in bringing anappropriate range of skills and experience to the Board.At 30th June 2018, there were four male Directors and onefemale Director on the Board. Please refer to page 28 for moreinformation on the workings of the Nomination and RemunerationCommittee.

Employees, Social, Community and Human RightsIssues

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

JPMAM believes that companies should act in a socially responsiblemanner. Although JPMorgan’s priority at all times is the besteconomic interests of its clients, it is recognised that, increasingly,non-financial issues such as social and environmental factors havethe potential to impact the share price, as well as the reputation ofcompanies. Specialists within JPMAM’s environmental, social andgovernance (‘ESG’) team are tasked with assessing how investeecompanies deal with and report on social and environmental risksand issues specific to their industry.

JPMAM is also a signatory to the United Nations Principlesof Responsible Investment, which commits participants tosix principles, with the aim of incorporating ESG criteria into theirprocesses when making stock selection decisions and promotingESG disclosure. JPMAM’s detailed approach to how it implementsthe principles is available on request.

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

The Modern Slavery Act 2016 (the ‘MSA’)

The MSA requires companies to prepare a slavery and humantrafficking statement for each financial year of the organisation.As the Company has no employees and does not supply goodsand services, the MSA does not apply directly to it. The MSA

–25

–20

–15

–10

–5

0

5

20182017201620152014201320122011201020092008




requirements more appropriately relate to JPMF and JPMAM.JPMorgan’s statement on the MSA can be found on the followingwebsite: https://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/modern-slavery-act.pdf

Greenhouse Gas Emissions

The Company has no premises, consumes no electricity, gas ordiesel fuel and consequently does not have a measurable carbonfootprint. JPMAM is also a signatory to Carbon Disclosure Project.JPMorgan Chase is a signatory to the Equator Principles onmanaging social and environmental risk in project finance.

Criminal Corporate Offence

The Company has zero tolerance for tax evasion. Shares in theCompany are purchased through intermediaries or brokers andno funds flow directly into the Company. As the Company has noemployees, the Board’s focus is to ensure that the risk of theCompany’s service providers facilitating tax evasion is also low.To this end it seeks assurance from its service providers thateffective policies and procedures are in place.

Principal Risks

With the assistance of the Manager, the Board has completeda robust risk assessment and drawn up a risk matrix whichidentifies the key risks to the Company. These key risks fallbroadly under the following categories:

• Investment and strategyAn inappropriate investment strategy, for examplestock selection or the level of gearing, may lead tounder-performance against the Company’s benchmark indexand peer companies, resulting in the Company’s sharestrading on a wider discount. The Board manages these risksthrough its investment restrictions and guidelines which aremonitored and reported monthly. JPMF provides the Directorswith timely and accurate management information, includingperformance data, both absolute and relative against peers,and attribution analyses, revenue estimates, liquidity reportsand shareholder analyses. The Board monitors theimplementation and results of the investment process withthe Investment Managers, who attend all Board meetings, andreviews data which shows statistical measures of theCompany’s risk profile. The Investment Managers employ theCompany’s gearing tactically, within a strategic range set bythe Board.

Investment performance could be adversely affected by theloss of one or more of the investment management team. Toreduce the likelihood of such an event, the Manager ensuresappropriate succession planning and adopts a team basedapproach as well as special efforts to retain key personnel.

A change of corporate control could also negatively impactthe Company. The Board holds regular meetings with seniorrepresentatives of JPMAM in order to obtain assurance thatthe Manager continues to demonstrate a high degree ofcommitment to its investment trusts business through theprovision of significant resources.

Poor performance may lead to a widening of the discount.The Board monitors the Company’s premium/discount leveland will seek, where deemed prudent, to address imbalancesin the supply and demand of the Company’s shares througha programme of share buybacks.

The Board holds a separate meeting devoted to strategy eachyear.

• FinancialThe Company is exposed to market risk, liquidity risk andcredit risk. The principal financial risk facing the Company ismarket risk arising from uncertainty about the future prices ofthe Company’s investments. It represents the potential lossthe Company might suffer through holding investments thatcould fall in value either due to general market movements orstock specific events. The latter is mitigated throughdiversification of investments in the portfolio. The Boardreviews the portfolio and its gearing on a regular basis andhas set investment restrictions and guidelines for theManager. JPMF reports its adherence to these limits oncea month to the Board. Financial risks faced by the Companyare further disclosed in note 22 on pages 58 to 63.

• Accounting, legal and regulatoryIn order to qualify as an investment trust, the Company mustcomply with Section 1158 of the Corporation Tax Act 2010(‘Section 1158’). Details of the Company’s approval are givenunder ‘Structure and Objective of the Company’ above. Shouldthe Company breach Section 1158, it may lose investmenttrust status and as a consequence capital gains within theCompany’s portfolio would be subject to Capital Gains Tax.The Section 1158 qualification criteria are continuallymonitored by JPMF and the results reported to the Boardeach month. The Company must also comply with theprovisions of the Companies Act 2006 and, as its shares arelisted on the London Stock Exchange, the UKLA Listing Rules.A breach of the Companies Act could result in the Companyand/or the Directors being fined or the subject of criminalproceedings. A breach of the UKLA Listing Rules may result inthe Company’s shares being suspended from listing which inturn would breach Section 1158. The Board relies on theservices of its Company Secretary, JPMF, and its professionaladvisers to ensure compliance with the Companies Act 2006and the UKLA Listing Rules.




Changes to the regulatory, legislative or taxation frameworkwithin which the Company operates may adversely affect theCompany, either directly or indirectly. The Board receivesregular updates about such changes affecting the investmentindustry from the Company's Manager and advisors and alsotrade associations and seeks external advice whereappropriate.

• Corporate Governance and shareholder relationsDetails of the Company’s compliance with CorporateGovernance best practice, including information on relationswith shareholders, are set out in the Corporate GovernanceStatement on pages 27 to 30.

• Operational and cyber crimeDisruption to, or failure of, the Manager’s accounting, dealingor payments systems or the custodian’s or depositary’srecords could prevent accurate reporting and monitoring ofthe Company’s financial position. The Company has appointedThe Bank of New York Mellon (International) Limited to act asits depositary, responsible for overseeing the operations ofthe custodian, JPMorgan Chase Bank N.A., and the Company’scash flows. Details of how the Board monitors the servicesprovided by the Manager and its associates and the keyelements designed to provide effective internal control areincluded in the Risk Management and Internal Control sectionof the Corporate Governance report on pages 27 to 30. Thethreat of cyber attack, in all its guises, is regarded as at leastas important as more traditional physical threats to businesscontinuity and security. The Company benefits directly orindirectly from all elements of JPMorgan’s Cyber Securityprogramme. The information technology controls around thephysical security of JPMorgan’s data centres, security of itsnetworks and security of its trading applications are tested byindependent auditors and reported every six months againstthe AAF Standard.

Long Term Viability

The Company is an investment trust and has the objective ofachieving long term capital growth by investing in liquid, mediumsized UK companies. The Company enjoys the benefit of theclosed end structure and is therefore better able to withstandmarket movements since it is not subject to forced liquidation ofinvestments due to sudden redemptions by shareholders.

Although past performance is no guide to the future, theDirectors believe that the Company has an attractive future forinvestors as a long term investment proposition. However, it isdifficult to look forward too far into the future withoutconsiderable uncertainty, so the Directors have adopteda medium term horizon to assess the Company’s viability, which isfive years. This is regarded as a prudent minimum duration forinvesting in equities.

The Directors have considered the Company over the next fiveyears and examined its prospects, principal risks and the outlookfor the UK economy, its equity market and the market forinvestment trusts and examined the robustness of theseparameters.

The Directors confirm that they have a reasonable expectationthat the Company will be able to continue in operation and meetits liabilities as they fall due over the next five years until30th June 2023. This reasonable expectation is subject to therebeing no significant adverse change to the regulatory or taxationenvironment for investment trusts; and subject to there being nosustained adverse investment performance by the current or anysuccessive investment manager, that may result in the Companynot being able to maintain a supportive shareholder base.

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

27th September 2018


Directors’ Report


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B O A R D O F D I R E C T O R S

Michael Hughes CBE (Chairman of the Board, Nomination &Remuneration Committee and Management Engagement Committee) A Director since May 2008.Last re-elected to the Board: 2017.Other directorships/relevant experience: Director of Aberdeen New IndiaInvestment Trust PLC, T. Bailey Asset Management Limited and actinginvestment consultant to various family offices and charities. Formerlya Director of Baring Asset Management Limited from 1998 and ChiefInvestment Officer from 2000 until his retirement in 2007. Prior to this,he was a Managing Director of Barclays Capital (previously BZW) andChairman of the Board of pension trustees. Before ‘Big Bang’ he wasa Partner at stockbrokers de Zoete and Bevan. Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 12,500.

John EvansA Director since June 2016.Last re-elected to the Board: 2017.Other directorships/relevant experience: Non-Executive Chairman of DrumIncome Plus REIT and Non-Executive Director of Securities Trust ofScotland plc and F&C UK High Income Trust plc. He commenced his careerat Ivory & Sime and was one of the founding partners of AberforthPartners, a specialist investment management firm that invests in UKsmaller quoted companies largely on behalf of institutional investors.Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 5,000.

Richard GubbinsA Director since January 2017.Last re-elected to the Board: 2017.Other directorships/relevant experience: Chairman of HendersonAlternative Strategies Trust PLC and holds a number of other directorships:The Masuri Group Limited, Hero Inc. BV and The American EuropeanBusiness Association. He is also a Senior consultant to Ashurst LLP and anIndian family office. He was a Senior Corporate Partner of Ashurst LLP.Connections with the Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 2,880.

Richard Huntingford (Senior Independent Director)A Director since December 2013.Last re-elected to the Board: 2017. Other directorships/relevant experience: Non-Executive Chairman ofCrown Place VCT plc and Future plc, and Non-Executive Director of TheBankers Investment Trust plc; former Chairman of Wireless Group plc andCreston plc. Prior to this he was CEO of Chrysalis Group plc between2000 and 2007 and Executive Chairman of Virgin Radio between 2007and 2008. He has also been Chairman of Boomerang Plus plc anda Non-Executive Director of Virgin Mobile Holdings (UK) plc. He isa chartered accountant. Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 7,500.

Margaret Littlejohns (Chairman of the Audit & Risk Committee)A Director since July 2008.Last re-elected to the Board: 2017.Other directorships/relevant experience: Chairman of Henderson HighIncome Trust plc, Non-Executive Director of UK Commercial Property REITLtd, Foresight VCT plc and trustee of the Lymphoma Research Trust. In2014 she co-founded The Space Place, a self-storage business in theMidlands, acting as Finance Director until the companies were sold to aregional operator in 2016. Prior to this she held a variety of positionswithin Citigroup from 1982 to 2000, including Managing Director ofCitifutures Ltd.Connections with Manager: None.Shared directorships with other Directors: None.Shareholding in Company: 4,000.


D I R E C T O R S ’ R E P O R T | 2 5

D I R E C T O R S ’ R E P O R T

The Directors present their report and the financial statementsfor the year ended 30th June 2018.

Management of the Company

The Manager and Company Secretary is JPMorgan Funds Limited(‘JPMF’), a company authorised and regulated by the FCA. JPMF isan affiliate of JPMAM and was appointed as the Company’sAlternative Investment Fund Manager (‘AIFM’) from 1st July 2014to ensure the Company’s compliance with the AlternativeInvestment Fund Managers Directive. JPMF is a wholly-ownedsubsidiary of JPMorgan Chase Bank, N.A. which, through othersubsidiaries, also provides marketing, banking, dealing andcustodian services to the Company.

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

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

The Alternative Investment Fund ManagersDirective (‘AIFMD’)

JPMF is the Company’s alternative investment fund manager(‘AIFM’). JPMF has been approved as an AIFM by the FinancialConduct Authority (‘FCA’). For the purposes of the AIFMD theCompany is an alternative investment fund (‘AIF’).

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

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

The Company’s leverage and JPMF’s remuneration disclosures areset out on pages 65 and 66.

Management Fee

The management fee paid to the Manager is a tiered fee of 0.65%per annum on total assets less current liabilities, excluding bankborrowings, up to £250 million and 0.60% per annum for assetsin excess of £250 million. The calculation excludes managementcharges on investments on which the Manager already earnsa management fee and principal amounts of more than £1 milliondrawn down under loan agreements which are either held in cash,on deposit or invested in a liquidity fund.

Directors

The Directors of the Company who held office at the end of theyear and up to the date of signing the financial statements aredetailed on page 24. Details of Directors’ beneficial shareholdingsmay be found in the Directors’ Remuneration Report on page 34.

All Directors will be standing for reappointment at the Company’sforthcoming Annual General Meeting. The Nomination andRemuneration Committee, having considered their qualifications,performance and contribution to the Board and its committees,confirms that each Director continues to be effective anddemonstrates commitment to the role and the Boardrecommends to shareholders the reappointment of thoseDirectors.

Director Indemnification and Insurance

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

An insurance policy is maintained by the Company whichindemnifies the Directors of the Company against certainliabilities arising in the conduct of their duties.

Disclosure of information to Auditors

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

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

(b) each of the Directors has taken all the steps that he/sheought to have taken as a Director in order to makehimself/herself aware of any relevant audit information(as defined) and to establish that the Company’s auditors areaware of that information.



D I R E C T O R S ’ R E P O R T

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

Independent Auditors

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

Section 992 Companies Act 2006

The following disclosures are made in accordance with Section992 Companies Act 2006.

Capital Structure and Voting Rights

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

Voting Rights in the Company’s sharesAs at 26th September 2018 (being the latest business day prior tothe publication of this report), the Company’s called-up sharecapital consists of 23,812,680 Ordinary shares (excluding Treasuryshares) carrying one vote each. Therefore the total voting rightsin the Company are 23,812,680.

Notifiable Interests in the Company’s Voting Rights

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

Number of Shareholders voting rights %

Aberdeen Standard Investments 1,056,798 4.4

Rathbones 948,498 4.0

The Company is also aware that approximately 21% of theCompany’s total voting rights are held by individuals throughsavings products managed by JPMAM, registered in the name ofChase Nominees Limited. If those voting rights are not exercisedby the beneficial holders, in accordance with the terms andconditions of the savings products, under certain circumstancesJPMAM has the right to exercise those voting rights. That right issubject to certain limits and restrictions and falls away at theconclusion of the relevant general meeting.

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

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

securities; no agreements between holders of securities regardingtheir transfer known to the Company; no agreements which theCompany is party to that affect its control following a takeoverbid; and no agreements between the Company and its Directorsconcerning compensation for loss of office.

Listing Rule 9.8.4R

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

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 business willbe proposed at the forthcoming Annual General Meeting:

(i) Authority to issue relevant securities and disapplypre-emption rights (resolutions 11 & 12)

The Directors will seek renewal of the authority to issue up to2,381,268 new shares or sell shares held in Treasury other thanby a pro rata issue to existing shareholders up to an aggregatenominal amount of £595,317 such amount being equivalent toapproximately 10% of the current called-up share capital(excluding Treasury shares). The full text of the resolutions is setout in the Notice of Annual General Meeting on pages 68 to 70.

It is advantageous for the Company to be able to issue new sharesor sell Treasury shares to investors when the Directors considerthat it is in the best interest of shareholders to do so. Any suchissues would only be made at prices greater than the NAV pershare, thereby, increasing the assets underlying each share.

(ii) Authority to repurchase the Company’s shares(resolution 13)

The authority to repurchase up to 14.99% of the Company’scalled-up share capital, granted by shareholders at the 2017 AGM,will expire on 30th April 2019 unless renewed at the forthcomingAnnual General Meeting. The Directors consider that the renewalof the authority is in the interests of shareholders as a whole asthe repurchase of shares at a discount to NAV enhances the NAVof the remaining shares. The Board will therefore seekshareholder approval at the Annual General Meeting to renew thisauthority, which will last until 30th April 2020 or until the wholeof the 14.99% has been acquired, whichever is the earlier. The fulltext of the resolution is set out in the Notice of Annual GeneralMeeting on pages 68 to 70. Repurchases will be made at the



C O R P O R A T E G O V E R N A N C E S T A T E M E N T

discretion of the Board, and will only be made in the market atprices below the prevailing NAV per share as and when marketconditions are appropriate, thereby enhancing the NAV of theremaining shares.

Recommendation

The Board considers that resolutions 10 to 12 are likely topromote the success of the Company and are in the best interestsof the Company and its shareholders as a whole. The Directorsunanimously recommend that you vote in favour of theresolutions as they intend to do in respect of their own beneficialholdings which amount in aggregate to 31,880 sharesrepresenting approximately 0.1% of the voting rights of theCompany.

Corporate Governance Statement

Compliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities in respect of the Financial Statementson page 36, indicates how the Company has applied the principlesof good governance of the Financial Reporting Council UKCorporate Governance Code 2016 (the ‘UK Code’) and the AIC’sCode of Corporate Governance (the ‘AIC Code’), whichcomplements the UK Code and provides a framework of bestpractice for investment trusts.

The Board is responsible for ensuring the appropriate level ofcorporate governance and considers that the Company hascomplied with the best practice provisions of the UK Code and theAIC Code throughout the year under review. The Board notes thepublication of the new 2018 UK Code. The Company will complywith the applicable guidance from 1st July 2019.

Role of the Board

A management agreement between the Company and JPMF setsout the matters over which the Manager has authority. Thisincludes management of the Company’s assets and the provisionof accounting, company secretarial, administration and somemarketing services. All other matters are reserved for theapproval of the Board. A formal schedule of matters reserved tothe Board for decision has been approved. This includesdetermination and monitoring of the Company’s investmentobjectives and policy and its future strategic direction, gearingpolicy, dividend policy, management of the capital structure,appointment and removal of third party service providers, reviewof key investment and financial data and the Company’s corporategovernance and risk control arrangements.

The Board has procedures in place to deal with potential conflictsof interest and confirms that the procedures have operatedeffectively during the year under review.

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

There is an agreed procedure for Directors to take independentprofessional advice in the furtherance of their duties and at theCompany’s expense. This is in addition to the access that everyDirector has to the advice and services of the Company Secretary,JPMF, which is responsible to the Board for ensuring that Boardprocedures are followed and that applicable rules and regulationsare complied with.

Board Composition

The Board, chaired by Michael Hughes, currently consists offive non-executive Directors. All Directors are considered to beindependent for the purposes of the UK Code. The Board believesthat it is appropriate to have a Senior Independent Director andRichard Huntingford fulfils this role. He is available toshareholders if they have concerns that cannot be resolvedthrough discussion with the Chairman. The Directors havea breadth of investment, business and financial skills andexperience relevant to the Company’s business and briefbiographical details of each Director are set out on page 24.

The Board’s policy on diversity, including gender, is to takeaccount of the benefits of this during the appointment process.The Board remains committed to appointing the most appropriatecandidate and seeks to ensure that it does not unwittingly excludeany group. Therefore, no targets have been set against which toreport.

Tenure

Directors are initially appointed until the following Annual GeneralMeeting when, under the Company’s Articles of Association, it isrequired that they be reappointed by shareholders. Subject to theperformance evaluation carried out each year, the Board willagree whether it is appropriate for Directors to seek annualreappointment in accordance with corporate governance bestpractice. The Board does not believe that length of service in itselfnecessarily disqualifies a Director from seeking reappointmentbut, when making a recommendation, the Board will take intoaccount the ongoing requirements of the UK Code, including theneed to refresh the Board and its Committees. Notwithstandingtheir tenures in excess of nine years, the Board believes thatMichael Hughes and Margaret Littlejohns, with their ongoing levelof commitment and proven record of independence of characterand judgment, continue to be effective and continue to be viewedas independent Directors.

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




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

Training and Appraisal

On appointment, the Manager and Company Secretary provide allDirectors with induction training. Thereafter regular briefings areprovided on changes in regulatory requirements that affect theCompany and Directors. Directors are encouraged to attendindustry and other seminars covering issues and developmentsrelevant to investment trusts. As part of the Board’s annualevaluation process the Chairman reviews with each Director theirtraining and development needs.

The Board conducts a formal evaluation of its own performanceand that of its committees and individual Directors. The responsesto questionnaires are discussed at a private meeting. Theevaluation of individual Directors is led by the Chairman, and theSenior Independent Director leads the evaluation of theChairman’s performance.

Meetings and Committees

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

The table below details the number of Board and Committeemeetings attended by each Director. During the year there werefive Board meetings. In addition, a private meeting of theDirectors to evaluate the Manager, two Audit & Risk Committeemeetings, a Nomination & Remuneration Committee meeting anda Management Engagement Committee meeting were held.

Meetings AttendedAudit & Risk

Board CommitteeMeetings Meetings

Director Attended Attended

Michael Hughes 5 2John Evans 5 2Richard Gubbins 5 2Richard Huntingford 5 2Margaret Littlejohns 5 2Gordon McQueen1 3 1

Nomination & ManagementRemuneration Engagement

Committee CommitteeMeeting Meeting

Director Attended Attended

Michael Hughes 1 1John Evans 1 1Richard Gubbins 1 1Richard Huntingford 1 1Margaret Littlejohns 1 1Gordon McQueen1 1 1

1Retired on 31st October 2017.

Board Committees

Nomination & Remuneration Committee The Nomination & Remuneration Committee consists of allDirectors and is chaired by Michael Hughes. The Board believesthat this is appropriate as it is a combined committee. TheCommittee meets at least annually to ensure that the Board hasan appropriate balance of skills to carry out its fiduciary dutiesand to select and propose suitable candidates when necessary forappointment. A variety of sources, including the employment ofexternal search consultants is used to ensure that a wide range ofcandidates is considered. The appointment process takes intoaccount the benefits of diversity, including gender.

The Committee has a succession plan to refresh the Board in anorderly manner over time. For details of the plan please refer tothe Chairman’s Statement on page 9.

The Committee undertakes an annual performance evaluation, asdescribed above, to ensure that all members of the Board havedevoted sufficient time and contributed adequately to the work ofthe Board. The Committee also reviews Directors’ fees and makesrecommendations to the Board as and when required.

Management Engagement Committee The membership of the Management Engagement Committeeconsists of all Directors and is chaired by Michael Hughes. TheCommittee meets at least once a year to review the terms of themanagement agreement between the Company and the Manager,to review the performance of the Manager, to review the noticeperiod that the Board has with the Manager and to makerecommendations to the Board. The Committee also reviews theCompany’s agreements with other major service providers.

Audit & Risk Committee The report of the Audit & Risk Committee is set out on page 31.

Terms of Reference

The Nomination & Remuneration Committee, the Audit & RiskCommittee and the Management Engagement Committee havewritten terms of reference which define clearly their respectiveresponsibilities, copies of which are available on the Company’swebsite and for inspection on request at the Company’sregistered office and at the Annual General Meeting.

Relations with Shareholders

The Board regularly monitors the shareholder profile of theCompany. It aims to provide shareholders with a fullunderstanding of the Company’s activities and performance andreports to shareholders by way of the Annual Report andFinancial Statements and the Half Year Report. This issupplemented by the daily publication, through the London StockExchange, of the net asset value and share price of the Company’sshares.




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 with and answer shareholders’ questions. Inaddition, a presentation is given by the Investment Managers whoreview the Company’s performance. During the year theCompany’s brokers and the Investment Managers hold regulardiscussions with shareholders. The Directors are made fully awareof their views. The Chairman and Directors make themselvesavailable as and when required to address shareholder queries.The Directors may be contacted through the Company Secretarywhose details are shown on page 75.

The Company’s Annual Report and Financial Statements arepublished in time to give shareholders at least 20 working days’notice of the Annual General Meeting. Shareholders wishing toraise questions in advance of the meeting are encouraged towrite to the Company Secretary at the address shown on page 75.

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 Code requires the Directors, at least annually, to reviewthe effectiveness of the Company’s system of risk managementand internal control and to report to shareholders that they havedone so. This encompasses a review of all controls which theBoard has identified, including business, financial, operational(including cyber security), compliance and risk management.

The Directors are responsible for the Company’s system of riskmanagement and internal control which is designed to safeguardthe Company’s assets, maintain proper accounting records andensure that financial information used within the business, orpublished, is reliable. However, such a system can only bedesigned to manage rather than eliminate the risk of failure toachieve business objectives and therefore can only providereasonable, but not absolute, assurance against fraud, materialmisstatement or loss.

Since investment management, custody of assets and alladministrative services are provided to the Company by JPMorganand its associates, the Company’s system of risk management andinternal control mainly comprises monitoring the servicesprovided by JPMorgan and its associates, including the operatingcontrols established by them, to ensure they meet the Company’sbusiness objectives. There is an ongoing process for identifying,evaluating and managing the significant risks faced by theCompany (see Principal Risks on pages 21 and 22). This processhas been in place for the year under review and up to the date ofthe approval of the Annual Report & Financial Statements. TheCompany does not have an internal audit function of its own, butrelies on the internal audit department of JPMorgan. The key

elements designed to provide effective risk management andinternal control are as follows:

• Financial reporting

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

• Management Agreement

Appointment of a manager and depositary, withresponsibilities clearly defined in a written agreement andregulated by the Financial Conduct Authority (FCA).

• Management systems

The Manager’s system of risk management and internalcontrol includes organisational agreements which clearlydefine the lines of responsibility, delegated authority, controlprocedures and systems. These are monitored by JPMorgan’scompliance department which regularly monitors compliancewith FCA rules.

• Investment strategy

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

The Board, either directly or through the Audit & RiskCommittee or Management Engagement Committee, keepsunder review the effectiveness of the Company’s system ofrisk management and internal control by monitoring theoperation of the key operating controls of the Manager andits associates as follows:

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

• reviews an independent report on the internal controlsand the operations of its custodian, JPMorgan ChaseBank, N.A;

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

• reviews quarterly reports from the Company’s Depositary.

By the means of the procedures set out above, the Boardconfirms that it has reviewed and is satisfied with theeffectiveness of the Company’s system of internal control for theyear ended 30th June 2018, and to the date of approval of thisAnnual Report and Financial Statements.

During the course of its review of the system of internal control,the Board has not identified or been advised of any failings orweaknesses which it has determined to be significant. Thereforea confirmation in respect of necessary actions has not beenconsidered appropriate.


D



Corporate Governance and Voting Policy

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

Corporate Governance

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

Proxy Voting

JPMorgan manages the voting rights of the shares entrusted to it asit would manage any other asset. It is the policy of JPMorgan to votein a prudent and diligent manner, based exclusively on ourreasonable judgement of what will best serve the financial interestsof our clients. So far as is practicable, we will vote at all of themeetings called by companies in which we are invested.

Stewardship/Engagement

JPMorgan recognises its wider stewardship responsibilities to itsclients as a major asset owner. To this end, we support the tenets ofthe FRC Stewardship Code, which sets out the responsibilities ofinstitutional shareholders in respect of investee companies. Underthe Code, managers should:

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

– disclose their policy on managing conflicts of interest;

– monitor their investee companies;

– establish clear guidelines on how they escalate engagement;

– be willing to act collectively with other investors whereappropriate;

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

– report to clients.

JPMorgan endorses and complies with the Stewardship Code for itsUK investments and supports the principles as best practiceelsewhere. We believe that regular contact with the companies inwhich we invest is central to our investment process and we alsorecognise the importance of being an ‘active’ owner on behalf of ourclients.

JPMorgan’s Voting Policy and Corporate Governance Guidelinesare available on request from the Company Secretary or can bedownloaded from JPMAM’s website:http://www.jpmorganinvestmenttrusts.co.uk/Governance. Thisalso sets out its approach to the seven principles of the FRCStewardship Code, its policy relating to conflicts of interest and itsdetailed voting record.

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

27th September 2018



A U D I T & R I S K C O MM I T T E E R E P O R T

Role and Composition

The Audit & Risk Committee consists of all Directors and is chairedby Margaret Littlejohns. The Committee meets at least twice eachyear. The members of the Audit & Risk Committee consider that atleast one member has recent and relevant financial experienceand that the Committee as a whole has competence relevant tothe sector in which the Company operates.

The Committee reviews the actions and judgements of the Managerin relation to the half year and annual accounts and the Company’scompliance with the UK Code. At the request of the Board, the Audit& Risk Committee provides confirmation to the Board as to how ithas discharged its responsibilities so that the Board may ensurethat information presented to it is fair, balanced andunderstandable, together with details of how it has done so.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 19), risk management policies(see pages 58 to 63), liquidity risk (see note 22(b) on pages 61and 62), capital management policies and procedures (see page 63),the nature of the portfolio and expenditure projections, that theCompany has adequate resources, an appropriate financial structureand suitable management arrangements in place to continue inoperational existence for the foreseeable future. For these reasons,they consider that there is reasonable evidence to continue to adoptthe going concern basis in preparing the financial statements.

The Audit & Risk Committee also examines the effectiveness ofthe Company’s internal control systems, receives informationfrom the Manager’s Compliance department and also reviews thescope and results of the external audit, its effectiveness and theindependence and objectivity of the external auditors. In theDirectors’ opinion the Auditors are independent.

Financial Statements and Significant AccountingMatters

During its review of the Company’s financial statements for theyear ended 30th June 2018, the Audit & Risk Committeeconsidered the following significant issues, including thosecommunicated by the Auditors during their reporting:

Significant issue How the issue was addressed

The valuation of investments is undertaken inaccordance with the accounting policies, disclosed innote 1(b) to the Financial Statements. Controls are inplace to ensure that valuations are appropriate andexistence is verified through custodianreconciliations. The Company has appointed TheBank of New York Mellon (International) Limited(‘BNY’) as its depositary. BNY has appointedJPMorgan Chase Bank, N.A., as the Company’scustodian. BNY remains responsible for the oversightof the custody of the Company’s assets.

Significant issue How the issue was addressed

The recognition of investment income isundertaken in accordance with accounting policynote 1(d) to the Financial Statements. Incomereporting is conducted by the Manager andreviewed by the Board at every meeting.

Approval for the Company as an investment trustunder Sections 1158 and 1159 for financial yearscommencing on or after 1st October 2012 has beenobtained and ongoing compliance with theeligibility criteria is monitored on a regular basisby the Manager, who reports on a monthly basis tothe Board on the Company’s continuingcompliance.

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

Auditor Appointment and Tenure

The Audit & Risk Committee also has a primary responsibility formaking recommendations to the Board on the reappointment andremoval of external auditors and their fee. Representatives of theCompany’s Auditors attended the Audit & Risk Committee meetingat which the draft Annual Report & Financial Statements wereconsidered and also engage with Directors as and when required.Having reviewed the performance of the external auditors,including assessing the timing of communications and work withJPMF, the Committee considered it appropriate to recommendtheir reappointment. The Board supported this recommendationwhich will be put to shareholders at the forthcoming AnnualGeneral Meeting. The Company’s current audit partner has beenin the position since 2016. Any decision to open the external auditto tender is taken on the recommendation of the Audit & RiskCommittee. EU regulations in relation to the statutory audits ofEU listed companies will require the Company to tender its auditby 2020.

Fair, Balanced and Understandable

As a result of the work performed, the Committee has concludedthat the Annual Report for the year ended 30th June 2018, takenas a whole, is fair, balanced and understandable and provides theinformation necessary for shareholders to assess the Company’sposition, performance, business model and strategy, and hasreported on these findings to the Board. The Board’s conclusionsin this respect are set out in the Statement of Directors’Responsibilities on page 36.

Margaret LittlejohnsAudit & Risk Committee Chairman

27th September 2018

Valuation, existenceand ownership ofinvestments

Recognition ofinvestment income

Compliance withSections 1158 and1159 of theCorporation Tax Act2010

Audit & Risk Committee Report


Directors’ Remuneration Report

D


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

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

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

The law requires the Company’s auditors to audit certain of thedisclosures provided. Where disclosures have been audited, theyare indicated as such. The auditors’ opinion is included in theirreport on pages 38 to 43.

Directors’ Remuneration Policy

The Directors’ Remuneration Policy is subject to a triennialbinding vote. The shareholders approved the resolution in favourof the Company’s Directors’ Remuneration Policy at the 2015AGM. Therefore an ordinary resolution to approve this policy willbe put to shareholders at the forthcoming Annual GeneralMeeting. The policy, is set out in full below and is currently inforce.

The Board’s policy for this and subsequent years is that Directors’fees should properly reflect the time spent by the Directors on theCompany’s business and should be at a level to ensure thatcandidates of a high calibre are recruited to the Board. TheChairman of the Board and the Chairman of the Audit & RiskCommittee are paid higher fees than other Directors, reflectingthe greater time commitment involved in fulfilling those roles.

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

All of the Directors are non-executive. There are no performance-related elements to their fees and the Company does not operateany type of incentive, share scheme, award or pension schemeand therefore no Directors receive bonus payments or pensioncontributions from the Company or hold options to acquire sharesin the Company. Directors are not granted exit payments and arenot provided with compensation for loss of office. No otherpayments are made to Directors, other than the reimbursementof reasonable out-of-pocket expenses incurred in attending theCompany’s business.

Directors’ fees were paid at the fixed rate of £36,000 for theChairman, £30,000 for the Chairman of the Audit & RiskCommittee and £24,000 for the other Directors.

Following a review, Directors’ fees were increased with effectfrom 1st July 2018 and will be paid at the fixed rate of £37,000 forthe Chairman, £31,000 for the Chairman of the Audit & RiskCommittee and £25,000 for the other Directors.

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

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

The Directors do not have service contracts with the Company.The terms and conditions of Directors’ appointments are set outin formal letters of appointment which are available for review atthe Company’s Annual General Meeting and the Company’sregistered office. Details of the Board’s policy on tenure are setout on pages 27 and 28.

The Company’s Remuneration policy also applies to newDirectors.

Directors’ Remuneration Policy Implementation

The Directors’ Remuneration Report is subject to an annualadvisory vote and therefore an ordinary resolution to approve thisreport will be put to shareholders at the forthcoming AnnualGeneral Meeting. There have been no changes to theRemuneration policy compared with the year ended 30th June2017 and no changes are proposed for the year ending 30th June2019.

At the Annual General Meeting held on 31st October 2017, 99.9%of votes cast were in favour of (or granted discretion to theChairman who voted in favour of) the remuneration report and0.1% voted against. Abstentions were received from less than0.01% of the votes cast.

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



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

Single total figure of remuneration

The total figure of remuneration for the Board for the year ended30th June 2018 was £148,360. The total remuneration for eachDirector is detailed below together with the prior year comparative.

Single total figure table1

2018 2017Taxable Taxable

Fees expenses2 Total Fees expenses2 TotalDirectors’ Name £ £ £ £ £ £

Michael Hughes(Chairman) 36,000 619 36,619 29,766 1,054 30,820

Andrew Barker3 — — — 10,671 — 10,671John Evans 24,000 1,741 25,741 23,000 6,271 29,271Richard Gubbins4 24,000 — 24,000 11,500 — 11,500Richard Huntingford 24,000 — 24,000 23,000 — 23,000Margaret Littlejohns 28,000 — 28,000 23,000 — 23,000Gordon McQueen5 10,000 — 10,000 27,000 1,553 28,553

Total 146,000 2,340 148,360 147,937 8,878 156,815

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

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

3 Retired on 27th October 2016.4 Appointed on 1st January 2017.5 Retired on 31st October 2017.

A table showing the total remuneration for the Chairman over thefive years ended 30th June 2018 is below:

Remuneration for the Chairman over the five yearsended 30th June 2018

Performancerelated benefits

received as aYear ended percentage of30th June Fees maximum payable1

2018 £36,000 n/a2017 £33,000 n/a2016 £33,000 n/a2015 £32,000 n/a2014 £31,000 n/a

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

Directors’ Shareholdings1

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

30th June 1st JulyOrdinary 2018 2017

Michael Hughes (Chairman) 12,500 9,000John Evans 5,000 5,000Richard Gubbins 2,880 2,880Richard Huntingford 7,500 7,500Margaret Littlejohns 4,000 4,000Gordon McQueen2 — 1,500

1 Audited information.2 Retired on 31st October 2017

In accordance with the Companies Act 2006, a graph showing theCompany’s share price total return compared with its benchmark,the FTSE 250 Index (excluding investment trusts), is shown below.The Board believes this Index is the most representativecomparator for the Company, given the Company’s investmentobjective.

Ten Year Share Price and Index Total Return to30th June 2018

Source: Morningstar.Share price total return.Benchmark total return.

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

Expenditure by the Company on remuneration anddistributions to shareholders

Year ended 30th June

2018 2017£ £

Remuneration paid to all Directors 148,360 156,815

Distribution to shareholders

— by way of dividend 6,191,000 6,107,000

— by way of share repurchases 260,000 1,477,000

For and on behalf of the Board Michael HughesChairman

27th September 2018

0

100

200

300

400

20182017201620152014201320122011201020092008


Statement of Directors’ Responsibilities

Mid Cap AR p35-36 28/09/2018 08:31 Page 35


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

The Directors are responsible for preparing the Annual Reportand the financial statements in accordance with applicable lawand regulation.

Company law requires the Directors to prepare financialstatements for each financial year. Under that law the Directorshave prepared the financial statements in accordance with UnitedKingdom Generally Accepted Accounting Practice (UnitedKingdom Accounting Standards, comprising FRS 102 ‘TheFinancial Reporting Standard applicable in the UK and Republic ofIreland’, and applicable law). Under Company law the Directorsmust not approve the financial statements unless they aresatisfied that they give a true and fair view of the state of affairsof the Company and of the profit or loss of the Company for thatperiod. In preparing the financial statements, the Directors arerequired to:

• select suitable accounting policies and then apply themconsistently;

• state whether applicable United Kingdom AccountingStandards, comprising FRS 102, have been followed, subjectto any material departures disclosed and explained in thefinancial statements;

• make judgements and accounting estimates that arereasonable and prudent; and

• prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Company willcontinue in business, and the Directors confirm that they havedone so.

The Directors are responsible for keeping adequate accountingrecords that are sufficient to show and explain the Company’stransactions and disclose with reasonable accuracy at any timethe financial position of the Company and enable them to ensurethat the financial statements and the Directors’ RemunerationReport comply with the Companies Act 2006.

The Directors are also responsible for safeguarding the assetsof the Company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrityof the Company’s website. Legislation in the United Kingdomgoverning the preparation and dissemination of financialstatements may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are alsoresponsible for preparing a Strategic Report, a Directors’ Reportand Directors’ Remuneration Report that comply with that lawand those regulations.

Each of the Directors, whose names and functions are listed in theDirectors’ Report confirm 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), givea true and fair view of the assets, liabilities, financial position andreturn or loss of the Company.

The Directors’ Report includes a fair review of the developmentand performance of the business and the position of theCompany, together with a description of the principal risks anduncertainties that it faces.

The Board confirms that it is satisfied that the Annual Report andFinancial Statements taken as a whole is fair, balanced andunderstandable and provide the information necessary forshareholders to assess the Company’s position and performance,business model and strategy.

For and on behalf of the Board Michael HughesChairman

27th September 2018

Mid Cap AR p35-36 28/09/2018 08:31 Page 36

Independent Auditor’s Report

Mid Cap AR p37-43 28/09/2018 08:34 Page 37

I


INDEPENDENT AUDITOR’S REPORT

To the members of JPMorgan Mid Cap Investment Trust plc

Report on the audit of the financial statements

Opinion

In our opinion, JPMorgan Mid Cap Investment Trust plc’s financial statements:

• give a true and fair view of the state of the Company’s affairs as at 30th June 2018 and of its net return and cash flows for the yearthen ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United KingdomAccounting Standards, comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, andapplicable law); and

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

We have audited the financial statements, included within the Annual Report & Financial Statements (the ‘Annual Report’), whichcomprise: the Statement of Financial Position as at 30th June 2018; the Statement of Comprehensive Income; the Statement of CashFlows; the Statement of Changes in Equity for the year then ended; and the notes to the financial statements, which include adescription of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit & Risk Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Ourresponsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section ofour report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financialstatements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled ourother ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not providedto the Company.

We have provided no non-audit services to the Company in the period from 1st July 2017 to 30th June 2018.

Our audit approach

Context

JPMorgan Mid Cap Investment Trust plc is an Investment Trust Company listed on the London Stock Exchange and invests primarily inquoted UK equities from the FTSE 250 Index. The operations of the Company are located in the UK. We focus our audit work primarilyon the valuation and existence of investments and dividend income.

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I N D E P E N D E N T A U D I T O R ’ S R E P O R T | 3 9


Overview

• Overall materiality: £3.1 million (2017: £2.8 million), based on 1% of Net Assets.

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

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

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

• We obtained an understanding of the control environment in place at both the Manager and theAdministrator, and adopted a fully substantive testing approach using reports obtained from theAdministrator.

• Dividend income.

• Valuation and existence of investments.

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. Inparticular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates thatinvolved making assumptions and considering future events that are inherently uncertain.

We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates, andconsidered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. We designed auditprocedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the riskof not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentionalmisrepresentations, or through collusion. We focused on laws and regulations that could give rise to a material misstatement in theCompany’s financial statements, including, but not limited to, Companies Act 2006 and section 1158 of the Corporation Tax Act 2010. Ourtests included, but were not limited to, review of the financial statement disclosures to underlying supporting documentation, enquirieswith those charged with governance and testing the Company’s compliance with section 1158 in the current year. There are inherentlimitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from theevents and transactions reflected in the financial statements, the less likely we would become aware of it.

We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also addressed the risk ofmanagement override of internal controls, including testing journals and evaluating whether there was evidence of bias by the Directorsthat represented a risk of material misstatement due to fraud.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financialstatements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in theaudit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our proceduresthereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and wedo not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

Materiality

Audit scope

Areas offocus

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Key audit matter How our audit addressed the key audit matter

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

We tested the accuracy of dividend receipts by agreeing the dividend ratesfrom investments to independent market data.

To test for completeness, we tested that for investment holdings in theportfolio, all dividends recorded in the year had been declared in themarket, and that all dividends declared in the market by investmentholdings had been recorded.

We tested occurrence by tracing a sample of dividends received to bankstatements.

We tested the allocation and presentation of dividend income between therevenue and capital return columns in the Statement of ComprehensiveIncome in line with the requirements set out in the AIC SORP bydetermining reasons behind dividend distributions.

No material issues were identified.

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

We tested the existence of the investment portfolio by agreeing of holdingsfor investments to an independent custodian confirmation from JPMorganChase Bank, N.A.

No material issues were identified.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statementsas a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which itoperates.

The Company’s accounting is delegated to the Administrator who maintains the Company's accounting records and who hasimplemented controls over those accounting records.

We obtained our audit evidence from substantive tests. However, as part of our risk assessment, we understood and assessed theinternal controls in place at the Manager and the Administrator to the extent relevant to our audit. This assessment of the operatingand accounting structure in place at both organisations involved obtaining and analysing the relevant control reports issued by theindependent service auditor of the Manager and the Administrator in accordance with generally accepted assurance standards for suchwork. Following this assessment, we applied professional judgement to determine the extent of testing required over each balance inthe financial statements.

Dividend incomeRefer to page 31 (Audit & Risk Committee Report),pages 48 and 49 (Accounting Policies) and page 51(Notes to the Financial Statements).

We focused on the occurrence, accuracy andcompleteness of dividend income recognition and itspresentation in the Statement of ComprehensiveIncome as set out in the requirements of TheAssociation of Investment Companies Statement ofRecommended Practice (the ‘AIC SORP’). This isbecause non-occurrence, incomplete or inaccurateincome could have a material impact on the Company’snet assets value.

Valuation and existence of investmentsRefer to page 31 (Audit & Risk Committee Report),page 48 (Accounting Policies) and page 54 (Notes to theFinancial Statements).

The investment portfolio at the year-end comprised oflisted equity investments.

We focused on the valuation and existence ofinvestments because investments represent theprincipal element of the net asset value as disclosed onthe Statement of Financial Position in the financialstatements.

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Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our auditprocedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, bothindividually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality £3.1 million (2017: £2.8 million).

How we determined it 1% of Net Assets.

We have applied this benchmark, a generally accepted auditing practice for investment trust audits.

We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £157,000(2017: £138,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Going concern

In accordance with ISAs (UK) we report as follows:

Reporting obligation Outcome

We are required to report if we have anything material to add or draw attention toin respect of the Directors’ statement in the financial statements about whether theDirectors considered it appropriate to adopt the going concern basis of accountingin preparing the financial statements and the Directors’ identification of anymaterial uncertainties to the Company’s ability to continue as a going concern overa period of at least twelve months from the date of approval of the financialstatements.

We are required to report if the Directors’ statement relating to Going Concern inaccordance with Listing Rule 9.8.6R(3) is materially inconsistent with ourknowledge obtained in the audit.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover theother information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in thisreport, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, orotherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we arerequired to perform procedures to conclude whether there is a material misstatement of the financial statements or a materialmisstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement ofthis other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK CompaniesAct 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06),ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters asdescribed below (required by ISAs (UK) unless otherwise stated).

Rationale forbenchmark applied

We have nothing material to add or to drawattention to. However, because not allfuture events or conditions can bepredicted, this statement is nota guarantee as to the Company’s abilityto continue as a going concern.

We have nothing to report.

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Strategic Report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’Report for the year ended 30th June 2018 is consistent with the financial statements and has been prepared in accordance withapplicable legal requirements. (CA06)

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did notidentify any material misstatements in the Strategic Report and Directors’ Report. (CA06)

The Directors’ assessment of the prospects of the Company and of the principal risks that would threaten the solvency or liquidity ofthe Company

We have nothing material to add or draw attention to regarding:

• The Directors’ confirmation on page 21 of the Annual Report that they have carried out a robust assessment of the principal risksfacing the Company, including those that would threaten its business model, future performance, solvency or liquidity.

• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.

• The Directors’ explanation on page 22 of the Annual Report as to how they have assessed the prospects of the Company, over whatperiod they have done so and why they consider that period to be appropriate, and their statement as to whether they havea reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over theperiod of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

We have nothing to report having performed a review of the Directors’ statement that they have carried out a robust assessment of theprincipal risks facing the Company and statement in relation to the longer-term viability of the Company. Our review was substantiallyless in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statements;checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the ‘Code’); andconsidering whether the statements are consistent with the knowledge and understanding of the Company and its environmentobtained in the course of the audit. (Listing Rules).

Other Code ProvisionsWe have nothing to report in respect of our responsibility to report when:

• The statement given by the Directors, on page 36, that they consider the Annual Report taken as a whole to be fair, balanced andunderstandable, and provides the information necessary for the members to assess the Company’s position and performance,business model and strategy is materially inconsistent with our knowledge of the Company obtained in the course of performing ouraudit.

• The section of the Annual Report on page 31 describing the work of the Audit & Risk Committee does not appropriately addressmatters communicated by us to the Audit & Risk Committee.

• The Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevantprovision of the Code specified, under the Listing Rules, for review by the auditors.

Directors’ RemunerationIn our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with theCompanies Act 2006. (CA06)

Responsibilities for the financial statements and the audit

Responsibilities of the Directors for the financial statements

As explained more fully in the Statement of Directors’ Responsibilities set out on page 36, the Directors are responsible for thepreparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true andfair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.

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

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Auditors’ responsibilities for the audit of the financial statements

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

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

Use of this report

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

Other required reporting

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

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

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

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

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

We have no exceptions to report arising from this responsibility.

AppointmentFollowing the recommendation of the Audit Committee, we were appointed by the members on 29th October 2010 to audit the financialstatements for the year ended 30th June 2011 and subsequent financial periods. The period of total uninterrupted engagement iseight years, covering the years ended 30th June 2011 to 30th June 2018.

Richard McGuire (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondon

27th September 2018

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Financial Statements

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F I N A N C I A L S TA T E M E N T S | 4 5

STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30TH JUNE 2018

2018 2017Revenue Capital Total Revenue Capital Total

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

Gains on investments held at fair value through profit or loss 3 — 38,395 38,395 — 59,181 59,181

Net foreign currency (losses)/gains — (2) (2) — 7 7Income from investments 4 9,238 — 9,238 8,433 — 8,433Interest receivable and similar income 4 37 — 37 141 — 141

Gross return 9,275 38,393 47,668 8,574 59,188 67,762Management fee 5 (593) (1,386) (1,979) (497) (1,158) (1,655)Other administrative expenses 6 (490) — (490) (520) — (520)

Net return on ordinary activities before finance costs and taxation 8,192 37,007 45,199 7,557 58,030 65,587

Finance costs 7 (107) (250) (357) (75) (175) (250)

Net return on ordinary activities before taxation 8,085 36,757 44,842 7,482 57,855 65,337

Taxation 8 (197) — (197) (91) — (91)

Net return on ordinary activities after taxation 7,888 36,757 44,645 7,391 57,855 65,246

Return per share 9 33.12p 154.35p 187.47p 30.88p 241.75p 272.63p

Details of dividends are given in note 10 on page 53.

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

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

The notes on page 48 to 63 form an integral part of these financial statements.


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

At 30th June 2016 6,350 3,650 198,298 9,976 218,274Repurchase of shares into Treasury — — (1,477) — (1,477)Net return on ordinary activities — — 57,855 7,391 65,246 Dividends paid in the year (note 10) — — — (6,107) (6,107)

At 30th June 2017 6,350 3,650 254,676 11,260 275,936Repurchase of shares into Treasury — — (260) — (260)Net return on ordinary activities — — 36,757 7,888 44,645Dividends paid in the year (note 10) — — — (6,191) (6,191)At 30th June 2018 6,350 3,650 291,173 12,957 314,130

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

The notes on pages 48 to 63 form an integral part of these financial statements.


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

AT 30TH JUNE 2018

2018 2017Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 11 328,569 282,318

Current assets 12Debtors 4,399 1,347 Cash and cash equivalents 10,906 10,434

15,305 11,781 Current liabilitiesCreditors: amounts falling due within one year 13 (29,744) (163)

Net current (liabilities)/assets (14,439) 11,618

Total assets less current liabilities 314,130 293,936Creditors: amounts falling due after more than one year 14 — (18,000)

Net assets 314,130 275,936

Capital and reserves Called up share capital 15 6,350 6,350 Capital redemption reserve 16 3,650 3,650 Capital reserves 16 291,173 254,676 Revenue reserve 16 12,957 11,260

Total shareholders’ funds 314,130 275,936

Net asset value per share 17 1,319.2p 1,157.6p

The financial statements on pages 45 to 63 were approved and authorised for issue by the Directors on 27th September 2018 andsigned on their behalf by:

Margaret LittlejohnsDirector


Company registration number: 1047690.



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


2018 2017Notes £’000 £’000

Net cash outflow from operations before dividends and interest 18 (2,514) (1,957)Dividends received 8,807 7,862Interest received 27 24Overseas tax recovered — 42Interest paid (315) (248)

Net cash inflow from operating activities 6,005 5,723

Purchases of investments (124,434) (105,072)Sales of investments 118,351 98,426Settlement of forward currency contracts — (3)

Net cash outflow from investing activities (6,083) (6,649)

Dividends paid (6,191) (6,107)Repurchase of shares into Treasury (260) (1,477)Net drawdown of bank loan 7,000 10,000

Net cash inflow from financing activities 549 2,416

Increase in cash and cash equivalents 471 1,490

Cash and cash equivalents at start of year 10,434 8,957Exchange movements 1 (13)Cash and cash equivalents at end of year 10,906 10,434

Increase in cash and cash equivalents 471 1,490

Cash and cash equivalents consist of:Cash and short term deposits 251 30Cash held in JPMorgan Sterling Liquidity Fund 10,655 10,404

Total 10,906 10,434



F


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


1. Accounting policies

(a) Basis of accounting

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

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

The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 31 of the Audit& Risk Committee Report form part of these financial statements.

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

(b) Valuation of investments

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

The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income andcapital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordancewith a documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors.

Accordingly, upon initial recognition the investments are designated by the Company as held at fair value through profit or loss.They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which arewritten off to capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bidprices for investments traded in active markets. For investments which are not traded in active markets, unlisted and restrictedinvestments, the Board takes into account the latest traded prices, other observable market data and asset values based on thelatest management accounts.

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

(c) Accounting for reserves

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

Increases and decreases in the valuation of investments held at the year end including the related foreign exchange gains andlosses, are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Investment holdinggains and losses’.

(d) Income

Dividends 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.

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

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

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

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




Dividends from Real Estate Investment Trusts (‘REITs’) are taken to revenue on an accruals basis. UK REIT dividends can beProperty Income Distribution (‘PID’) or non-PID for tax purposes. The exact split is determined by the underlying company.PID revenue is taxable. Non-PID revenue is treated similarly to UK dividends.

(e) Expenses

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

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

– Expenses incidental to the purchase and sale of an investment are charged to capital. These expenses are commonlyreferred to as transaction costs and comprise brokerage commission and stamp duty. Details of transaction costs aregiven in note 11 on page 54.

(f) Finance costs

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

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

(g) Financial instruments

Cash and cash equivalents may comprise cash including demand deposits which are readily convertible to a known amount ofcash and are subject to an insignificant risk of change in value. Liquidity funds are considered cash equivalents as they are heldfor cash management purposes as an alternative to cash.

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

Bank loans are classified as financial liabilities measured at amortised cost. They are initially measured as proceeds received netof direct issue costs. Loans are subsequently measured at amortised cost using the effective interest method. Interest payable onthe bank loan is accounted for on an accruals basis in the Statement of Comprehensive Income.

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

(h) Taxation

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

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

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

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

(i) Value Added Tax (‘VAT’)

Expenses are disclosed inclusive of the related irrecoverable VAT.

(j) Functional currency

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

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


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1. Accounting policies continued

(k) Dividends payable

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

(l) Repurchase of shares for cancellation

The cost of repurchasing shares including the related stamp duty and transactions costs is charged to capital reserves and dealtwith in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. The nominalvalue of share capital repurchased and cancelled is transferred out of called up share capital and into capital redemption reserve.

(m) Repurchase of shares to hold in Treasury

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

Should shares held in Treasury be sold, the sales proceeds will be treated as a realised profit up to the amount of the purchaseprice of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will betransferred to share premium.

2. Significant accounting judgements and estimates

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

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

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

2018 2017£’000 £’000

Gains from investments held at fair value through profit or loss based on historic cost 30,319 11,567 Amounts recognised in investment holding gains and losses in the previous

year in respect of investments sold during the year (29,459) (8,123)

Gains on sales of investments based on the carrying value at the previous balancesheet date 860 3,444

Net movement in investment holding gains and losses 37,540 55,743 Other capital charges (5) (6)

Total capital gains on investments held at fair value through profit or loss 38,395 59,181




4. Income

2018 2017£’000 £’000

Income from investmentsUK dividends 7,411 6,465 Overseas dividends 1,575 1,434 Scrip dividends — 186 Property income distributions 252 348

9,238 8,433

Interest receivable and similar incomeUnderwriting commission 6 117 Interest from liquidity funds 31 24

37 141

Total income 9,275 8,574

5. Management fee2018 2017

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

Management fee 593 1,386 1,979 497 1,158 1,655

Details of the management fee are given in the Directors’ Report on page 25.

6. Other administrative expenses

2018 2017£’000 £’000

Administration expenses 215 210 Directors’ fees1 148 157Savings scheme costs2 52 74Depositary fees3 46 51Auditors’ remuneration for audit services4 29 28

490 520

1 Full disclosure is given in the Directors' Remuneration Report on pages 33 and 34.2 Paid to the Manager for administration of saving scheme products. Includes £9,000 (2017: £12,000) irrecoverable VAT.3 Includes £8,000 (2017: £9,000) irrecoverable VAT.4 Includes £5,000 (2017: £5,000) irrecoverable VAT.

7. Finance costs 2018 2017

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

Interest on bank loans and overdrafts 107 250 357 75 175 250


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8. Taxation

(a) Analysis of tax charge in the year 2018 2017£’000 £’000

Overseas withholding tax 197 101Income tax recovered on property income distribution income — (10)

Total tax charge for the year 197 91

(b) Factors affecting total tax charge for the yearThe tax charge for the year is lower (2017: lower) than the Company's applicable rate of corporation tax of 19.00% (2017: 19.75%).The factors affecting the total tax charge for the year are as follows:

2018 2017Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000

Net return on ordinary activities beforetaxation 8,085 36,757 44,842 7,482 57,855 65,337

Net return on ordinary activities before taxation multiplied by theCompany’s applicable rate of corporationtax of 19.00% (2017: 19.75%) 1,536 6,984 8,520 1,478 11,427 12,905

Effects of:Non taxable capital gains — (7,295) (7,295) — (11,690) (11,690)Non taxable scrip dividends — — — (37) — (37)Non taxable UK dividends (1,408) — (1,408) (1,277) — (1,277)Non taxable overseas dividends (178) — (178) (217) — (217)Income taxed in different years (56) — (56) (49) — (49)Tax attributable to expenses and finance

costs allocated to capital (311) 311 — (263) 263 —Double taxation relief (10) — (10) 2 — 2Unrelieved expenses 427 — 427 363 — 363Overseas withholding tax 197 — 197 101 — 101Income tax recovered on property income

distribution income — — — (10) — (10)

Total tax charge for the year 197 — 197 91 — 91

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £9,613,000 (2017: £9,240,000) based on a prospective corporation taxrate of 17% (2017: 17%). The UK corporation tax rate is enacted to fall to 17% with effect from 1st April 2020. The deferred taxasset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of theCompany’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has beenrecognised in the financial statements.

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




9. Return per share2018 2017£’000 £’000

Revenue return 7,888 7,391 Capital return 36,757 57,855

Total return 44,645 65,246

Weighted average number of shares in issue during the year 23,814,255 23,931,396

Revenue return per share 33.12p 30.88pCapital return per share 154.35p 241.75p

Total return per share 187.47p 272.63p

10. Dividends

(a) Dividends paid and proposed2018 2017£’000 £’000

Dividends paid2017 Final dividend of 15.0p (2016: 13.0p) per share 3,572 3,1202017 Special dividend 3.0p (2016: 4.5p) per share 714 1,080 2018 Interim dividend of 8.0p (2017: 8.0p) per share 1,905 1,907

Total dividends paid in the year 6,191 6,107

Dividend proposed2018 Final dividend proposed of 18.5p (2017: 15.0p) per share 4,405 3,5762018 Special dividend proposed of 1.5p (2017: 3.0p) per share 357 715

Total dividends proposed for year 4,762 4,291

All dividends paid and proposed in the year have been funded from the revenue reserve.

The Final and Special dividends proposed in respect of the year ended 30th June 2017 amounted to £3,576,000 and £715,000respectively. However the actual payments amounted to £3,572,000 and £714,000 due to share repurchases after the balancesheet date but prior to the share register record date.

The dividend proposed in respect of the year ended 30th June 2018 is subject to shareholder approval at the forthcoming AnnualGeneral Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the financialstatements for the year ending 30th June 2019.

(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’)The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, shown below.The revenue available for distribution by way of dividend for the year is £7,888,000 (2017: £7,391,000). The revenue reserve afterpayment of the final and special dividend will amount to £8,194,000 (2017: £6,969,000).

2018 2017£’000 £’000

Interim dividend of 8.0p (2017: 8.0p) per share 1,905 1,907 Final dividend of 18.5p (2017: 15.0p) per share 4,405 3,5762018 Special dividend proposed of 1.5p (2017: 3.0p) per share 357 715

6,667 6,198


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11. Investments

2018 2017£’000 £’000

Investments listed on a recognised stock exchange 328,569 282,318

Opening book cost 204,495 187,019 Opening investment holding gains 77,823 30,203

Opening valuation 282,318 217,222

Movements in the year:Purchases at cost 129,012 100,763 Sales proceeds (121,161) (94,854)Gains on sales of investments based on the carrying value at the previous balance

sheet date 860 3,444 Net movement in investment holding gains 37,540 55,743

328,569 282,318

Closing book cost 242,665 204,495 Closing investment holding gains 85,904 77,823

Total investments held at fair value through profit or loss 328,569 282,318

Transaction costs on purchases during the year amounted to £629,000 (2017: £558,000) and on sales during the year amountedto £89,000 (2017: £84,000). These costs comprise mainly stamp duty on purchases and brokerage commission.

During the year, prior year investment holding gains amounting to £29,459,000 have been transferred to gains and losses onsales of investments as disclosed in note 16.

12. Current assetsDebtors

2018 2017£’000 £’000

Securities sold awaiting settlement 2,933 127Dividends and interest receivable 1,410 1,149Overseas tax recoverable 26 49Other debtors 30 22

4,399 1,347

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

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




13. Current liabilities

Creditors: amounts falling due within one year

2018 2017£’000 £’000

Securities purchased awaiting settlement 4,578 —Bank loan 25,000 —Interest payable 60 18Other creditors 106 145

29,744 163

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

As at 30th June 2018 the Company had two floating rate loan facilities in place. A £25 million three year unsecured loan facilitywith Scotiabank (Ireland) Limited expiring on 31st May 2019, and a £15 million three year unsecured loan facility with ING Banktaken out on 16th June 2017, expiring on 16th June 2020.

Under the terms of the three year £25 million Scotiabank (Ireland) Limited loan facility, the Company may draw down up to£25 million at an interest rate of LIBOR as quoted in the market for the loan period, plus a margin of 0.975%, plus mandatorycosts. At the year end, the Company had £25 million (2017: £18 million) drawn down on this facility with Scotiabank (Ireland)Limited.

Under the terms of the three year £15 million ING Bank loan facility, the Company may draw down up to £15 million at an interestrate of LIBOR as quoted in the market for the loan period, plus a margin of 1.00%, plus mandatory costs. At the year end, theCompany had £nil drawn down on this facility with ING Bank.

14. Creditors: amounts falling due after more than one year

2018 2017£’000 £’000

Bank loans — 18,000

15. Called up share capital

2018 2017£’000 £’000

Ordinary shares allotted and fully paid:Opening balance of 23,837,680 (2017: 23,997,180) shares excluding shares held in Treasury 5,960 6,000Repurchase of 25,000 (2017: 159,500) shares into Treasury (6) (40)

Subtotal of 23,812,680 (2017: 23,837,680) shares of 25p each excluding shares held inTreasury 5,954 5,960

1,585,400 (2017: 1,560,400) shares held in Treasury 396 390

Closing balance of 25,398,080 (2017: 25,398,080) shares of 25p each including sharesheld in Treasury 6,350 6,350

Further details of transactions in the Company’s shares are given in the Business Review on page 20.


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16. Capital and reserves

Capital reserves

Gains and Investment Called up Capital losses on holding share redemption sales of gains and Revenue capital reserve investments losses reserve1 Total £’000 £’000 £’000 £’000 £’000 £’000

Opening balance 6,350 3,650 176,853 77,823 11,260 275,936 Net foreign currency losses — — (2) — — (2)Gains on sales of investments based on the

carrying value at the previous balancesheet date — — 860 — — 860

Net movement in investment holding gainsand losses — — — 37,540 — 37,540

Transfer on disposal of investments — — 29,459 (29,459) — —Repurchase of shares into Treasury — — (260) — — (260)Management fee and finance costs allocated

to capital — — (1,636) — — (1,636)Other capital charges — — (5) — — (5)Dividends paid in the year — — — — (6,191) (6,191)Retained revenue for the year — — — — 7,888 7,888

Closing balance 6,350 3,650 205,269 85,904 12,957 314,130

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

17. Net asset value per share

2018 2017

Net assets (£’000) 314,130 275,936 Number of shares in issue 23,812,680 23,837,680

Net asset value per share 1,319.2p 1,157.6p




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

2018 2017£’000 £’000

Net return on ordinary activities before finance costs and taxation 45,199 65,587Less capital return on ordinary activities before finance costs and taxation (37,007) (58,030)Scrip dividends received as income — (186)Increase in accrued income and other debtors (269) (309)(Decrease)/increase in accrued expenses (40) 72Management fee charged to capital (1,386) (1,158)Overseas withholding tax (174) (70)Dividends received (8,807) (7,862)Interest received (27) (24)Realised (losses)/gains on foreign currency transactions (3) 23

Net cash outflow from operations before dividends and interest (2,514) (1,957)

19. Contingent liabilities and capital commitments

At the balance sheet date there were no contingent liabilities or capital commitments (2017: same).

20. Transactions with the Manager and related party transactions

Details of the management contract are set out in the Directors’ Report on page 25. The management fee payable to theManager for the year was £1,979,000 (2017: £1,655,000) of which £nil (2017: £46,000) was outstanding at the year end.

During the year £52,000 (2017: £74,000), including VAT, was payable to the Manager for administration of savings schemeproducts, of which £30,000 (2017: £13,000) was outstanding at the year end.

Included in administration expenses in note 6 on page 51 are safe custody fees amounting to £5,000 (2017: £4,000) payable toJPMorgan Chase, N.A. of which £2,000 (2017: £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 to JPMorgan Securities Limited for the year was £32,000 (2017: £38,000) of which £nil(2017: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMorgan. At the year end this wasvalued at £10,655,000 (2017: £10,404,000). Interest amounting to £31,000 (2017: £24,000) was receivable during the year ofwhich £4,000 (2017: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £5,000 (2017: £6,000) were payable to JPMorgan Chase, N.A. during theyear of which £2,000 (2017: £1,000) was outstanding at the year end.

At the year end, total cash of £251,000 (2017: £30,000) was held with JPMorgan Chase, N.A. A net amount of interest of £nil(2017: £nil) was receivable by the Company during the year from JPMorgan Chase, N.A. of which £nil (2017: £nil) was outstandingat the year end.

The Directors are related parties and full details of their remuneration and shareholdings can be found on pages 33 and 34 andin note 6 on page 51.


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21. Disclosures regarding financial instruments measured at fair value

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

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

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

The best evidence of fair value is a quoted price for an identical asset (or similar asset) in an active market. Quoted in an activemarket in this context means quoted prices are readily and regularly available and those prices represent actual and regularlyoccurring market transactions on an arm’s length basis. This is usually the current bid price.

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

When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as longas there has not been a significant change in economic circumstances or a significant lapse of time since the transaction tookplace. If the entity can demonstrate that the last transaction price is not a good estimate of fair value (e.g. because it reflects theamount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted.

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

If the market for the asset is not active and recent transactions of an identical asset on their own are not a good estimate of fairvalue, an entity estimates the fair value by using a valuation technique. The objective of using a valuation technique is toestimate what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normalbusiness considerations.

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

Details of the valuation techniques used by the Company are given in note 1(b) on page 48.

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

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

Level 1 328,569 — 282,318 —

Total 328,569 — 282,318 —

There were no transfers between Level 1, 2 or 3 during the year (2017: none).

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

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

These financial risks include market risk (comprising other price risk and interest rate risk), liquidity risk and credit risk. TheDirectors’ policy for managing these risks is set out below. The Company Secretary, in close cooperation with the Board and theManager, coordinates the Company’s risk management policy. The Company has no significant direct exposure to foreigncurrency risk.

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




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

– investments in listed equity shares of UK companies, which are held in accordance with the Company’s investmentobjective;

– cash held within a liquidity fund and time deposits;

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

– loan facilities, the purpose of which are to finance the Company’s operations.

(a) Market risk

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

(i) Other price risk

Other price risk includes changes in market prices, other than those arising from interest rate risk, which may affect thevalue of equity investments.

Management of other price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the overall riskof the portfolio. The investment management team has responsibility for monitoring the portfolio, which is selected inaccordance with the Company’s investment objectives and seeks to ensure that individual stocks meet an acceptablerisk/reward profile.

Other price risk exposure

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

2018 2017£’000 £’000

Investments held at fair value through profit or loss 328,569 282,318

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

Concentration of exposure to other price risk

An analysis of the Company’s investments is given on pages 16 to 18. All of the investments are listed in the UK.Accordingly there is a concentration of exposure to the UK. However, it should also be noted that an investment may not beentirely exposed to the economic conditions in its country of domicile or of listing.


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

(a) Market risk continued

(i) Other price risk continued

Other price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase ordecrease of 10% (2017: 10%) in the market value of equity investments. This level of change is considered to bea reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on theCompany’s equities, adjusting for changes in the management fee but with all other variables held constant.

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

£’000 £’000 £’000 £’000

Statement of Comprehensive Income – return aftertaxation

Revenue return (59) 59 (51) 51Capital return 32,719 (32,719) 28,113 (28,113)

Total return after taxation for the year 32,660 (32,660) 28,062 (28,062)

Net assets 32,660 (32,660) 28,062 (28,062)

(ii) Interest rate risk

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

Management of interest rate risk

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

Interest rate exposure

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

2018 2017£’000 £’000

Exposure to floating interest rates:Cash and cash equivalents 10,906 10,434 Bank loans (25,000) (18,000)

Total exposure (14,094) (7,566)

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

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

Details of the bank loan are given in notes 13 and 14 on page 55.




Interest rate sensitivity

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

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

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

Statement of Comprehensive Income – return aftertaxation

Revenue return 34 (34) 50 (50)Capital return (175) 175 (126) 126

Total return after taxation for the year (141) 141 (76) 76

Net assets (141) 141 (76) 76

In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure tointerest rate changes due to fluctuations in the level of cash balances, cash held in the liquidity fund and amounts drawndown on the Company’s loan facilities.

(b) Liquidity risk

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

Management of the risk

Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meetfunding requirements if necessary.

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


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

(b) Liquidity risk continued

Liquidity risk exposure

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

2018Within One to

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

Creditors:Securities purchased awaiting settlement 4,578 — 4,578Other creditors and accruals 106 — 106Bank loans, including interest 25,432 — 25,432

30,116 — 30,116

2017Within One to

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

Creditors:Other creditors and accruals 145 — 145 Bank loans, including interest 248 18,210 18,458

393 18,210 18,603

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

(c) Credit risk

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction couldresult in loss to the Company.

Management of credit risk

Portfolio dealing

The Company invests in markets that operate Delivery Versus Payment (‘DVP’) settlement. The process of DVP mitigates the riskof losing the principal of a trade during the settlement process. The Manager continuously monitors dealing activity to ensurebest execution, a process that involves measuring various indicators including the quality of trade settlement and incidence offailed trades. Counterparty lists are maintained and adjusted accordingly.

Cash and cash equivalents

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

Exposure to JPMorgan Chase

JPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The Company’s assets are segregated from JPMorganChase’s own trading assets. Therefore these assets are designed to be protected from creditors in the event that JPMorgan Chase,N.A. were to cease trading. The Depositary, Bank of New York Mellon (International) Limited, is responsible for the safekeeping ofall custodial assets of the Company and for verifying and maintaining a record of all other assets of the Company. However, no




absolute guarantee can be given on the protection of all the assets of the Company. The Depositary Agreement grants a lien overavailable assets credited to the securities account. The extent of this lien is limited to the amount of unpaid fees payable to Bankof New York Mellon (International) Limited.

Credit risk exposure

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

(d) Fair values of financial assets and financial liabilities

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

23. Capital management policies and procedures

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

2018 2017£’000 £’000

Debt:Bank loans 25,000 18,000

25,000 18,000 Equity:Called up share capital 6,350 6,350Reserves 307,780 269,586

314,130 275,936

Total debt and equity 339,130 293,936

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

The Board’s policy is to limit gearing within the range of 5% net cash to 25% geared, in normal market conditions.

2018 2017£’000 £’000

Investments held at fair value through profit or loss 328,569 282,318

Net assets 314,130 275,936

Gearing 4.6% 2.3%

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

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

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

– the opportunity for issues of new shares, and sales of shares held in Treasury.

24. Subsequent events

The Directors have evaluated the period since the year end and have not recognised any subsequent events.


R

Regulatory Disclosures


R E G U L A T O R Y D I S C L O S U R E S | 6 5

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

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

Leverage

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

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

Gross Method Commitment Method

Leverage ExposureMaximum limit 200% 200%Actual 108% 108%

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

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

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

Remuneration Policy

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

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

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



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

Quantitative Disclosures

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

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

Fixed Variable Total Number of remuneration remuneration remuneration beneficiaries

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

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

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

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


Shareholder Information


S


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

Notice is hereby given that the forty sixth Annual General Meetingof JPMorgan Mid Cap Investment Trust plc will be held at60 Victoria Embankment, London EC4Y 0JP on Tuesday,30th October 2018 at 2.30 p.m. for the following purposes:

1. To receive the Directors’ Report, the Financial Statementsand the Auditors’ Report for the year ended 30th June2018.

2. To approve the Directors’ Remuneration Policy.

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

4. To approve a final dividend.

5. To reappoint Michael Hughes as a Director of the Company.

6. To reappoint John Evans as a Director of the Company.

7. To reappoint Richard Gubbins as a Director of theCompany.

8. To reappoint Richard Huntingford as a Director of theCompany.

9. To reappoint Margaret Littlejohns as a Director of theCompany.

10. To reappoint PricewaterhouseCoopers LLP as auditors tothe Company and to authorise the Directors to determinetheir remuneration.

Special Business

To consider the following resolutions:

Authority to allot new shares – Ordinary Resolution

11. THAT the Directors of the Company be and they are herebygenerally and unconditionally authorised, (in substitution ofany authorities previously granted to the Directors),pursuant to Section 551 of the Companies Act 2006 (the‘Act’) to exercise all the powers for the Company to allotrelevant securities (within the meaning of Section 551 ofthe Act) up to an aggregate nominal amount of £595,317,representing approximately 10% of the Company’scalled-up ordinary share capital (excluding Treasuryshares) as at the date of the passing of this resolution,provided that this authority shall expire at the conclusion ofthe Annual General Meeting of the Company to be held in2019 unless renewed at a general meeting prior to suchtime, save that the Company may before such expiry makeoffers, agreements or arrangements which would or mightrequire relevant securities to be allotted after such expiryand so that the Directors of the Company may allotrelevant securities in pursuance of such offers, agreementsor arrangements as if the authority conferred hereby hadnot expired.

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

12. THAT subject to the passing of Resolution 11 set out above,the Directors of the Company be and they are herebyempowered pursuant to Section 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 11 or by way of a sale of Treasury shares as ifSection 561(1) of the Act did not apply to any suchallotment, provided that this power shall be limited to theallotment of equity securities for cash up to an aggregatenominal amount of £595,317, representing approximately10% of the called-up ordinary share capital (excludingTreasury shares) as at the date of the passing of thisresolution at a price of not less than the net asset value pershare and shall expire upon the expiry of the generalauthority conferred by Resolution 11 above, save that theCompany may before such expiry make offers, oragreements which would or might require equity securitiesto be allotted after such expiry and so that the Directors ofthe Company may allot equity securities in pursuant of suchoffers, or agreements as if the power conferred hereby hadnot expired.

Authority to repurchase the Company’s shares – SpecialResolution

13. THAT the Company be generally and, subject as hereinafterappears, unconditionally authorised in accordance withSection 701 of the Companies Act 2006 (the ‘Act’) to makemarket purchases (within the meaning of Section 693 ofthe Act) of its issued shares of 25p each in the capital of theCompany

PROVIDED ALWAYS THAT

(i) the maximum number of shares hereby authorised to bepurchased shall be 3,569,520 or, if less, that number ofshares which is equal to 14.99% of the Company’scalled-up share capital as at the date of the passing of thisResolution;

(ii) the maximum price which may be paid for a share shall bean amount equal to the highest of: (a) 105% of the averageof the middle market quotations for a share taken from andcalculated by reference to the London Stock Exchange DailyOfficial List for the five business days immediatelypreceding the day on which the share is purchased; or(b) the price of the last independent trade; or (c) thehighest current independent bid;

(iii) any purchase of shares will be made in the market for cashat prices below the prevailing net asset value per share(as determined by the Directors) at the date following notmore than seven days before the date of purchase;


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(iv) the authority hereby conferred shall expire on 30th April2020 unless the authority is renewed at the Company’sAnnual General Meeting in 2019 or at any other generalmeeting prior to such time; and

(v) the Company may make a contract to purchase sharesunder the authority hereby conferred prior to the expiry ofsuch authority and may make a purchase of sharespursuant to any such contract notwithstanding such expiry.

By order of the BoardAlison Vincent, for and on behalf of JPMorgan Funds Limited, Secretary

27th September 2018

Notes

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

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

2. A proxy does not need to be a member of the Company but mustattend the Meeting to represent you. Your proxy could be theChairman, another Director of the Company or another person whohas agreed to attend to represent you. Details of how to appoint theChairman or another person(s) as your proxy or proxies using theproxy form are set out in the notes to the proxy form. If a voting boxon the proxy form is left blank, the proxy or proxies will exercisehis/their discretion both as to how to vote and whether he/theyabstain(s) from voting. Your proxy must attend the Meeting for yourvote to count. Appointing a proxy or proxies does not preclude youfrom attending the Meeting and voting in person.

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

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

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

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

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



provisions of the Companies Act 2006, each such representative mayexercise (on behalf of the corporation) the same powers as thecorporation could exercise if it were an individual member of theCompany, provided that they do not do so in relation to the sameshares. It is therefore no longer necessary to nominate a designatedcorporate representative.

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

8. Members that satisfy the thresholds in Section 527 of the CompaniesAct 2006 can require the Company to publish a statement on itswebsite setting out any matter relating to: (a) the audit of theCompany’s Financial Statements (including the Auditors’ report andthe conduct of the audit) that are to be laid before the AGM; or (b) anycircumstances connected with Auditors of the Company ceasing tohold office since the previous AGM, which the members propose toraise at the Meeting. The Company cannot require the membersrequesting the publication to pay its expenses. Any statement placedon the website must also be sent to the Company’s Auditors no laterthan the time it makes its statement available on the website. Thebusiness which may be dealt with at the AGM includes any statementthat the Company has been required to publish on its websitepursuant to this right.

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

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

11. A copy of this notice has been sent for information only to personswho have been nominated by a member to enjoy information rightsunder Section 146 of the Companies Act 2006 (a ‘Nominated Person’).The rights to appoint a proxy can not be exercised by a NominatedPerson: they can only be exercised by the member. However,

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

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

13. The register of interests of the Directors and connected persons in thecalled-up share capital of the Company and the Directors’ letters ofappointment are available for inspection at the Company’s registeredoffice during usual business hours on any weekday (Saturdays,Sundays and public holidays excepted). It will also be available forinspection at the Annual General Meeting. No Director has anycontract of service with the Company.

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

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

16. As at 26th September 2018 (being the latest business day prior to thepublication of this Notice), the Company’s called-up share capitalconsists of 23,812,680 Ordinary shares (excluding treasury shares)carrying one vote each. Therefore the total voting rights in theCompany are 23,812,680.

Electronic appointment – CREST members

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




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

Total return calculation Page 2018 2017

Opening share price as at 30th June (p) 5 1,004.0 835.0 (a)

Closing share price as at 30th June (p) 5 1,250.0 1,004.0 (b)

Total dividend adjustment factor1 1.023159 1.026639 (c)

Adjusted closing share price (p) (d = b x c) 1,278.9 1,030.7 (d)

Total return to shareholder (e = d / a – 1) 27.4% 23.4% (e)

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

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

Total return calculation Page 2018 2017

Opening cum-income NAV per share as at 30th June (p) 5 1,157.6 909.6 (a)

Closing cum-income NAV per share as at 30th June (p) 5 1,319.2 1,157.6 (b)

Total dividend adjustment factor2 1.021067 1.024477 (c)

Adjusted closing cum-income NAV per share price (p) (d = b x c) 1,347.0 1,185.9 (d)

Total return on net assets (e = d / a – 1) 16.4% 30.4% (e)

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

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

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

Share Price Discount/Premium to Net Asset Value (‘NAV’) per Ordinary Share (APM)If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount, meaning thereare more sellers than buyers. The discount is shown as a percentage of the NAV per share. The opposite of a discount is a premium.It is more common for an investment trust’s shares to trade at a discount than at a premium (see page 5).

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


S


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

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

2018 2017 Gearing calculation Page £’000 £’000

Investments held at fair value through profit or loss 46 328,569 282,318 (a)

Net assets 46 314,130 275,936 (b)

Gearing (c = a / b – 1) 4.6% 2.3% (c)

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

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

Management Fee 51 1,979 1,655

Other administrative expenses 51 490 520

Total management fee and other administrative expenses 2,469 2,175 (a)

Average daily cum-income net assets 299,117 253,125 (b)

Ongoing charges ratio (c = a / b) 0.83% 0.86% (c)

Earnings/(Loss) per Ordinary ShareThe earnings/(loss) per Ordinary share represents the return/(loss) after taxation divided by the weighted number of Ordinary shares inissue during the year.

Performance attributionAnalysis of how the Company achieved its recorded performance relative to its benchmark (see page 12).

Performance Attribution Definitions:

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

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

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

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



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

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

1. Directly from J.P. Morgan

Investment Account

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

Stocks & Shares Individual Savings Accounts (ISA)

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

2. Via a third party provider

Third party providers include:

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

3. Through a professional adviser

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

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

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

AJ BellAlliance Trust SavingsBarclays StockbrokersBestinvestCharles Stanley DirectFundsNetwork

Hargreaves LansdownInteractive InvestorJames BrearleyJames HaySelftradeThe Share Centre



S H A R E H O L D E R I N F O R M A T I O N

Avoid investment fraud1 Reject cold calls

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

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

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

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

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

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

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

Have you been:

• contacted out of the blue• promised tempting returns

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

for a limited time?

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

it probably is!

Be ScamSmart


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

HistoryJPMorgan Mid Cap Investment Trust plc was launched in 1972 as Crossfriars TrustLimited and raised £10 million by a public offer of shares. Its original policy was toinvest up to 25% of its assets in UK unquoted shares. The Company changed itsname to The Fleming Enterprise Investment Trust in 1982. It adopted its currentinvestment policy of concentrating on FTSE 250 companies in 1993 and reaffirmedthis policy in February 1997. The Company changed its name to The Fleming MidCap Investment Trust plc in October 1998, to JPMorgan Fleming Mid CapInvestment Trust plc in November 2001 and adopted its present name inNovember 2005.

DirectorsMichael Hughes (Chairman)John EvansRichard GubbinsRichard Huntingford (Senior Independent Director)Margaret Littlejohns (Chairman of the Audit & Risk Committee)

Company NumbersCompany registration number: 1047690London Stock Exchange number: 0235761 ISIN: GB0002357613Bloomberg code: JMF LNLEI: 549300QED7IGEP4UFN49

Market InformationThe Company’s shares are listed on the London Stock Exchange. The marketprice is shown daily in the Financial Times, The Times, the Daily Telegraph, TheScotsman and on the JPMorgan website at www.jpmmidcap.co.uk, where theshare price is updated every fifteen minutes during trading hours.

Websitewww.jpmmidcap.co.uk

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

Manager and Company SecretaryJPMorgan Funds Limited

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

Please contact Alison Vincent for company secretarial and administrative matters.

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

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

RegistrarsEquiniti LimitedReference 1082Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone: 0371 384 2321

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

Notifications of changes of address and enquiries regarding share certificatesor dividend cheques should be made in writing to the Registrar quotingreference 1082.

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

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

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

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

FINANCIAL CALENDAR

Financial year end 30th June

Final results announced September

Half year end December

Half year results announced February

Half yearly dividends on ordinary shares paid November, April

Annual General Meeting October

A member of the AIC

S H A R E H O L D E R I N F O R M AT I O N | 7 5

www.jpmmidcap.co.uk

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

GB A121 | 09/18

J.P. MORGAN HELPLINE

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

JPMorgan Mid Cap Investment Trust plc

Documents

Transcript of JPMorgan Mid Cap Investment Trust plc